AICPA Calls on Congress to Repeal Section 1099 Reporting Requirements
Published November 16, 2010
The American Institute of Certified Public Accountants has called on Congress to repeal burdensome information reporting requirements placed on businesses and rental property owners by the Patient Protection and Affordable Care Act and the Small Business Jobs Act of 2010 because “businesses do not need the added cost of more regulatory requirements at a time when their efforts must be focused on profitability and sustainability.”
“Increased profitability is likely to yield more tax revenues than the expansions to the reporting requirement,” the AICPA said.
Under the Patient Protection and Affordable Care Act, businesses making purchases of $600 or more for goods or services from another business would have to provide the vendor and the Internal Revenue Service with a Form 1099-MISC information return. The first 1099 forms would be due in 2013, so businesses would need to begin keeping records in 2012. Under the Small Business Jobs Act of 2010, similar reporting requirements would apply to owners of rental property for expenses related to the rental property and would take effect in 2011 for reporting in 2012.
The AICPA said this would be first time individual taxpayers who own rental property who are not “engaged in a trade of business” would have to provide Forms 1099-MISC. For example, owners of vacation properties that are rented part of the year to help reduce costs would be covered by the new law. “We are concerned that (1) keeping records to track expenses by provider, (2) obtaining tax identification numbers and other information from providers of property and services and (3) providing Forms 1099-MISC during January, a month when taxpayers would not normally be focused on tax issues, would be extremely burdensome.” Additionally, the AICPA said it questions the need for sending information forms to certain providers of services, such as utility companies.
The business implementation costs associated with the likely generation and receipt of millions of forms and the potentially challenging reconciliation processes for taxpayers should be weighed against the uncertainty of the benefit to be derived by the government, the AICPA said.
Identical letters were sent to all members of the U.S. House of Representatives and Senate. The letter to House members is available here.