$600 1099 Requirement: Still Up for Grabs

March 10, 2011 at 2:40 pm Leave a comment

Back in August, we alerted you to Section 9006 in the healthcare reform legislation that creates a requirement for reporting to the IRS via 1099s any transaction valued at $600 or more.

Since then, there has been a lot of discussion about the documentation nightmare that this would cause.  The forces clamoring for repeal have been vocal.  And until recently, it looked like they might be successful since both the House and the Senate passed bills that included the repeal of the provision.

But as The Accounts Payable Channel points out in its article, “1099 Reporting Saga Reaches a Stalemate?”, repeal is now caught in a disagreement about offsetting the lost in revenue.

Senate Democrats have asked for unspecified spending federal spending cuts, while House Republicans want families to repay healthcare tax subsidies if their income increases during the tax year.

Because of the disagreement, the Senate will likely not approve the House bill and vice versa. The situation has created a political stalemate where each side agrees on what should be done, just not on how to do it.

So what to do?  You can hang tight and hope this goes away.  Given the government’s need to minimize the revenue loss, that doesn’t seem likely.

Our recommendation is to start laying the groundwork that this provision, or some version of it with a higher dollar threshold, will stand.  So get ahead of it by collecting a W9 to your vendor compliance and registration program now, so you aren’t scrambling at the last minute.

Entry filed under: risk management, vendor management. Tags: , , .

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