Created: 9/02/10 (Thu) | Topic: Issues
Contact our U.S. Senators to repeal 1099 rules
North Dakota Farm Bureau members are encouraged to contact Sens. Conrad and Dorgan to support an amendment to repeal the new Form 1099 rules being promulgated by the Internal Revenue Service. Beginning in 2012, the IRS will require businesses to report more of its purchases to the IRS through the use of 1099s.
Sen. Mike Johanns (R-Neb) has submitted amendment #4596 to the Small Business Jobs Act of 2010 (H.R. 5297.) The amendment would repeal the new Form 1099 rules and pay for repeal by reducing funding for health care prevention and Public Health Fund. The American Farm Bureau Federation has been working for the adoption of this amendment.
Today 1099’s are required for payments of $600 or more made to individuals and non-corporate entities for interest, custom work and rent. Under the new rules, individual businesses and non-corporate entities will be required to issue 1099s for payments of all purchased goods and services of $600 or more.
Farmers and ranchers will have to issue 1099’s on purchases of seed, chemicals, feed, fertilizer, fuel, repairs, etc. The business must report even if it makes several small purchases from one vendor that total over $600 throughout the year. Therefore, farmers and ranchers will have to keep track of all purchases by vendor and indentify their address and tax identification number.
This will create a whole new level of record-keeping that will take time. The cost of your accounting services will also increase, because they will have to charge you for every 1099 they generate.
The reporting burden falls upon the purchaser, rather than the seller who is responsible for paying the income tax.
The new rule is part of the health care reform bill, ostensibly to help the IRS collect some of the tax that currently goes uncollected. Unfortunately, law-abiding citizens are being penalized for the action of those who deliberately avoid paying taxes. As a result, small businesses will be hit with yet another unnecessary government burden. The cost of implementing this new rule could cost more than the government recovers in taxes.
NDFB members are encouraged to contact the Senators clicking on our Action Alert link, http://www.ndfb.org/policy/action, and then on the IRS Action Alert. Talking points are provided for you there or you can create your own letter.
Feel free to forward this information to your family and friends, as well.