What does the recent health care act have to do with 1099 reporting requirements? It sounds like the beginning of a bad joke, but that is the question that many people asked after the Affordable Care Act passed last year.
The good news is that we now have an answer to that question. And, the answer is nothing! President Obama signed H.R. 4 on April 14 repealing the newly enacted 1099 reporting requirements. The new requirement would have caused businesses to basically issue a 1099 to everyone that they pay more than $600 total in a year. Thankfully, that burden has been lifted.
The current 1099 rules require businesses to issue a 1099 to all non-corporate entities that it pays an aggregate of $600 per year for a service. For example, if a business pays a window washer $100/month to clean their windows, then they are required to file a 1099 with the IRS. The 1099 requirement do not apply to the purchase of a product, just a service.
Although the new 1099 would have theoretically created additional work for the accountant types, our industry was overwhelmingly against the implementation. We are glad to see that the Senate and the House, along with the President, agreed to repeal the requirement.