Current law requires businesses that buy more than $600 in services from a self-employed independent contractor to file a Form 1099 with the U.S. Internal Revenue Service disclosing the name, address, and taxpayer identification number of the contractor, and the amount paid. Purchases of goods or services from corporations are currently exempt from this requirement.
Beginning in 2012 under the health care reform law, businesses will have to keep track of all non-credit card purchases over $600 in a calendar year. Among other things, this means that every staffing firm client that buys more than $600 in staffing services will have to file a Form 1099 with the IRS relating to the staffing services the company received in the year.
The consensus among senators is that there is a need to ease or repeal the 1099 requirements, and it was anticipated that the Small Business Jobs Act would be the vehicle to accomplish this. Ultimately, the amendments were defeated because other portions of the proposed amendments were unacceptable to many senators.
After the amendments were defeated, Sen. Mary Landrieu (D-LA), chairman of the Senate Committee on Small Business and Entrepreneurship, indicated that the 1099 reporting issue does not need to be addressed in the small business bill because the reporting requirements do not go into effect for a year and a half.
Business groups have voiced opposition to the 1099 reporting rules, which they deem costly and burdensome.
Sen. Landrieu indicated that she is committed to repealing the provision and would like to do so by the end of 2010.
Anne Duffy, ASA Staffing Week