A provision contained in the Patient Protection and Affordable Care Act (PPACA) will significantly increase the amount of paperwork businesses will have to file with the Internal Revenue Service (IRS).
Beginning in 2012, businesses will have to file a Form 1099 to all vendors, both incorporated and unincorporated, to which they pay more than $600 annually for both goods and services. This is a shift from current law that requires a Form 1099 to be filed for only services from an unincorporated vendor for which the cost totals $600 or more.
The Taxpayer Advocate Service (TAS), an office within the IRS that is tasked with identifying unfair policies, estimated in its mid-year report to Congress that 40 million businesses and other entities will be subject to this new requirement, including 26 million non-farm sole proprietorships, four million S corporations, two million C corporations and three million partnerships.
In a victory for merit shop construction and businesses nationwide, the expanded 1099 tax reporting requirements included in the Patient Protection and Affordable Care Act were repealed April 14 when President Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (H.R. 4).
The House voted for repeal March 3 and the Senate passed H.R. 4 April 5.