A group of Democratic senators has written to IRS Commissioner Douglas Shulman expressing concerns about new requirements for expanded 1099 reporting.
The group, which includes Ben Nelson, D-Neb.; Mark Begich, D-Alaska; Jeanne Shaheen, D-N.H.; and Evan Bayh, D-Ind., called on the IRS to reduce the paperwork burdens that could fall on small businesses from the expanded information-reporting provisions in the new health reform law.
In a letter sent Monday to Shulman, the senators said the benefits of health reform for small business should not be overshadowed by a provision of the new law requiring more Form 1099 reporting. Beginning in 2012, all businesses, tax-exempt organizations, and federal, state and local government entities will be required to issue Forms 1099 to vendors from whom they purchase goods totaling $600 or more during a calendar year.
The new requirements may place a hardship on small businesses by creating an extra paperwork burden, the senators wrote. Not only will a 1099 form be necessary for millions of new transactions, the stricter requirements force business owners to collect taxpayer identification information from vendors, contractors, and other companies.
We insist that the IRS develop ways in which small businesses can reduce expected paperwork from this requirement possibly through consolidating existing forms, for example and that the IRS report its proposed solutions to the Senate Committee on Small Business and Entrepreneurship prior to implementation of the new law, they wrote.
The IRS is currently accepting public comment on the new 1099 reporting requirement and how to minimize the burden on small businesses (see IRS Wants Input on Expanded 1099 Requirements).
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