WASHINGTON, D.C. – April 5, 2011 – (RealEstateRama) — The Senate today approved legislation supported by the National Association of Home Builders (NAHB) to repeal a burdensome tax paperwork requirement that could cost small businesses thousands of dollars each year. The bill now goes to President Obama for his approval.“During the past several months, NAHB has led the effort along with other industry groups to strike all new expanded IRS Form 1099 reporting requirements for small businesses and owners of rental real estate,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “In testimony before Congress and in ‘key vote’ letters to House and Senate leaders, we have spelled out how failing to overturn these rules would kill jobs and place a major paperwork and cost burden on home builders. We applaud Congress for acting to rectify this situation and urge the President to quickly sign this measure into law.”
Under the Patient Protection and Affordable Care Act approved last year, starting in 2012 businesses would have to file an IRS Form 1099 for each vendor from whom they purchase more than $600 in goods over the course of the year.
The annual $600 threshold applies to all vendors, so that businesses could find themselves sending out 1099 forms for such mundane purchases as coffee, fuel and office supplies. Rather than hiring additional workers to expand and grow, small businesses would be spending money on accountants and bookkeepers in order to keep up with these new requirements.
To prevent small businesses from drowning in these onerous paperwork requirements, the Senate by a vote of 87 to 12 passed the Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4), legislation previously approved by the House. In addition to repealing expanded 1099 requirements in the healthcare law, H.R. 4 also repeals an unfair provision in the Small Business Jobs Act of 2010 stipulating that independent landlords as of Jan. 1, 2011 must submit 1099s to firms to which they give more than $600 for services.
Going forward, businesses will still have to comply with long-standing reporting requirements for the purchase of services.