President Obama has signed into law legislation that repeals onerous new reporting and paperwork requirements. This is good news for small businesses.
Under last year’s Patient Protection and Affordable Care Act, taxpayers would have been required in 2012 to submit IRS Form 1099 for payments made to every corporations in the course of a trade or business that totaled more than $600 in a year. The requirement would have applied to both goods and services.
Given the possible number of transactions that would have been subject to the new mandate, and the fact that there are more 30 million non-C Corporation businesses, it is easy to see that this law would have produced an avalanche of paperwork: easily 100 million or more new 1099 forms.
NAHB surveys revealed that the average home builder would have been required to submit 40 additional 1099s, with nearly 20% of those surveyed expecting to file an additional 100 1099s. The compliance cost of this requirement could easily have run into the thousands of dollars per business in terms of staff time or other expenses .
The new law also repeals a requirement that independent landlords (owners of rental property for which the rental activity is not their primary trade or business) submit 1099 returns for similar $600 payments in a year. This requirement was in place for 2011 but is now repealed.
NAHB had testified to Congress on these issues earlier this year.
Prior law requirements for 1099 reporting, including payments for services to noncorporate entities (such as independent contractors), remain in place.
President Obama issued the following statement in connection with the signing of the repeal:
“Small business owners are the engine of our economy and because Democrats and Republicans worked together, we can ensure they spend their time and resources creating jobs and growing their business, not filling out more paperwork.”