Efforts to repeal the 1099 reporting provision in the Obama Health Care Bill fails. Bad news in many respects for small property owners and businesses.
Owners who are unaware of the new 1099 provision will either get caught up in the whole ‘your contractor is a statutory employee’ argument or lose legitimate deductions for work performed. If you are not up to speed on the problems you can face by improperly classifying what the government considers an employees that you are treating as a contractor read this post
I am being told that you may even have to file a 1099 on your local government for services like sewer, water and trash collection or lose those deductions.
This will be a HUGE paperwork nightmare even for those of us that only use regular employees for our maintenance. I can hear hectares of tress falling in the background to make the paper that will be needed even as I write. But at least this will solve unemployment as it will take a heck of a lot of people to process the billions of 1099s this will generate. And jobs that are simply shuffling papers add nothing to the productivity of our nation, putting us another step behind other countries as we vie for market shares in a down economy.
From the National Apartment Association
1099 Repeal Effort Fails
Efforts to include a repeal of onerous new 1099 reporting requirements enacted in the health care reform law (P.L. 111-148) were unsuccessful.
Starting in 2012, businesses will be required to file a 1099 report to every business from which it purchases more than $600 in goods and services. (Prior law restricted the reporting requirement to the purchase of $600 or more in services only.) See my note below* –Tim
Despite bipartisan agreement that the provision should be repealed, there is no agreement over how it should be paid for. As a result, repeal provisions were not included in the tax bill and is not expected to pass before the lame-duck session adjourns. Lawmakers are expected to take up the issue early in the 112th Congress, and NAA/NMHC will continue to aggressively advocate for repeal.
*More accurately the old law also excluded services performed by corporations. The new law includes all services and purchases over $600 per year per vendor. This greatly increases the number of 1099s required. Also most smaller property owners were exempt under the old law, Not so now. If you own a single home that you rent you are subject to this.