The American Institute of CPAs has written to Congress urging lawmakers to repeal the controversial new 1099 information reporting requirements in the health care reform bill.

The provisions require businesses to report to the Internal Revenue Service on a Form 1099-MISC when they purchase more than $600 worth of goods and services from a particular vendor in a calendar year. However, the provision has been widely decried by businesses, and a number of bills have been introduced in Congress to repeal the provision by lawmakers in both parties, including most recently Senate Finance Committee Chairman Max Baucus, D-Mont. (see Baucus Bill Would Repeal New 1099 Requirements).

In letters to both the Senate and the House, Patricia A. Thompson, chair of the AICPA’s Tax Executive Committee, wrote, “Businesses do not need the added cost of more regulatory requirements at a time when their efforts must be focused on profitability and sustainability.”

Under the Patient Protection and Affordable Care Act, the first 1099 forms would be due in 2013, so businesses would need to begin keeping records in 2012, the AICPA noted. Under another recently passed law, 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 the 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,” wrote Thompson.

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.

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