By: Tess Taylor
Source: chamberof commerce.com
Recently, President Barack Obama signed a repeal to the widely feared 1099 tax form requirement for small businesses, sending waves of relief to thousands of small business owners around the country This requirement, which was part of the Affordable Care Act of 2009, would have required that all business owners file an IRS form 1099 for each and every vendor that they work with for transactions over $600. The 1099 requirement may have resulted in the loss of millions in revenues and even less opportunities for job creation – something the healthcare reform bills did not intend.
For the average small business, having to deal with the nagging 1099 requirement could have been an administrative nightmare. Not only would it require careful consideration of every small business owner to set up an internal system for tracking of all purchases and sales, it would have called for more man hours focused on accounting. Instead of looking at ways to expand the business and create jobs, the 1099 requirement would have forced business owners to get mired in tax mumbo jumbo.
It is also very possible that the 1099 requirement would have caused major delays in the entire tax system with thousands of tax forms being sent out year after year. Not to mention the difficulties of filling these forms out correctly throughout the year, on top of all the other administrative red-tape that the government requires. It is difficult enough for small businesses to deal with the ridiculous amount of financial reporting that the IRS requires, so having an additional burden like this would have driven many over the top.
The majority of 1099 filings are done by the small business community, so being mandated to report transactions at the $600 level would have been a daunting task for all. It was estimated that without this repeal, the amount of 1099 forms being processed would exceed 200% over previous years! This would have cost additional time, most companies would have been forced to outsource this process, and it would have taken the focus off the daily operations of running a business for many.
In a recent statement released by the White House, the word came that the repeal was put into action by Obama in efforts to “repeal the expansion in the Affordable Care Act of requirements for businesses to report information to the IRS on payments for goods of $600 or more annually”. This was due to an effort to increase the number of premium assistance tax credits for consumers and businesses that choose to purchase health insurance as part of the healthcare reforms.
That repeal is good news for many small businesses who have limited means by which to provide health insurance to their employees. This also goes for entrepreneurs who have not been able to afford health insurance or choose not to purchase it due to economic factors. Having to worry about reporting cash sales over $600 annually to the IRS could have been detrimental to many small business owners who are struggling to stay afloat in troubled times.
The majority of 1099 filings are done by the small business community, so being mandated to report transactions at the $600 level would have been a daunting task for all. It was estimated that without this repeal, the amount of 1099 forms being processed would exceed 200% over previous years! This would have cost additional time, most companies would have been forced to outsource this process, and it would have taken the focus off the daily operations of running a business for many.
In a recent statement released by the White House, the word came that the repeal was put into action by Obama in efforts to “repeal the expansion in the Affordable Care Act of requirements for businesses to report information to the IRS on payments for goods of $600 or more annually”. This was due to an effort to increase the number of premium assistance tax credits for consumers and businesses that choose to purchase health insurance as part of the healthcare reforms.
That repeal is good news for many small businesses who have limited means by which to provide health insurance to their employees. This also goes for entrepreneurs who have not been able to afford health insurance or choose not to purchase it due to economic factors. Having to worry about reporting cash sales over $600 annually to the IRS could have been detrimental to many small business owners who are struggling to stay afloat in troubled times.
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