Since the passage of the Patient Protection and Affordable Care Act of 2010 (PPAC), organizations have been wracking their brains trying to determine what exactly the legislation will mean for their 1099 processes. As it turns out, the IRS is open to suggestions.
The Internal Revenue Service is currently seeking public comment concerning the new 1099 reporting requirements outlined in the act.
The PPAC includes new information reporting requirements added to IRS Code Section 6041. Essentially, organizations are required to report payments made to corporations and report certain payments for property. Both types of purchases were previously exempt from 1099 reporting.
Given the sweeping nature of these changes, Congress fortunately gave organizations some time to adjust. The new requirements will affect payments made after Dec. 31, 2011.
However, while Congress gave organizations plenty of time, the same cannot be said about guidance. The legislation does not tell organizations where on the 1099 to report property payments, whether any types of property will be exempt, whether to report sales taxes charged on property purchases, etc.
With many details to iron out, the IRS released Notice 2010-51, which asks organizations to comment on the new reporting requirements and to offer suggestions about how to implement them.
According to the notice, the Treasury Department and the IRS want to implement these information reporting changes in a way that minimizes the burden on organizations and avoids duplicative reporting. Duplicative reporting is when one payment is reported to the IRS on multiple documents.
The following are the key areas where they IRS is looking for guidance:
1. The scope of property that should be reportable
2. How information reporting for corporations should apply to intercompany transactions
3. Whether a change in reporting deadlines is needed
4. Whether to change W-9 and TIN-solicitation procedures
5. How to handle backup withholding under the expanded reporting rules
According to an article published in USA Today, the IRS has already proposed some initiatives to make the new reporting requirements less burdensome. For example, IRS spokesman Terry Lemons said the IRS has proposed exempting some small-business purchases made with credit or debit cards from the new reporting requirement.
With the Congressional Budget Office reporting that the changes will increase tax revenue by $17 billion during the next 10 years, it might be premature to expect the IRS to include any significant reporting exemptions. However, organizations that are interested in shaping the form the new requirements take are encouraged to submit their comments.
Written comments can be submitted to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2010-51), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Hand-delivered comments can be taken to CC:PA:LPD:PR (Notice 2010-51), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC.
Comments can also be emailed to Notice.Comments@irscounsel.treas.gov. The subject line must include the phrase "Notice 2010-51."
All public comments must be received before Sept. 29, 2010.
For more on the notice, including a detailed breakdown of upcoming reporting requirements, see the full IRS Notice 2010-51. Now is the time to make your voices heard.