Roger Russell has accurately reported the IRS issues of the 1099 reporting rules ("1099 rules seen as a major burden," Aug. 16-Sept. 12, page 10). What Mr. Russell appears to have omitted is the consequences of these rules on the recipient firms of the 1099s.
Many of these large firms will have to hire additional administrative personnel to process the thousands of forms that will be received. These additional employees, in addition to salary, will require payments for fringe benefits and the employer's share of FICA. All these operating costs will be passed on to the consumers and customers through higher prices.
Smaller firms will either hire additional employees; do the work internally, adding overtime costs; or outsource the process. Any of the choices will add costs to the employers. Since the costs will be passed on to the consumers, additional state and local sales taxes will also be added to the final bill. These higher prices will hinder economic growth.
In addition, there will also be inevitable data entry errors, which will cause additional issues for the IRS and the senders of the 1099 forms.
With the impact of these additional reporting requirements and rules, Congress has shown, once again, a complete disregard for the business community.
Leonard Steinberg, EA, CMC
Steinberg Enterprises LLC
West Windsor, N.J.
