By Agri-Pulse Staff
© Copyright Agri-Pulse Communications, Inc.
Washington, Sept. 9 – The National Cotton Council and 27 state and national farm, livestock and commodity organizations are urging Congress to repeal a proposed 1099 tax reporting requirement.
Under existing law, a federal 1099 tax form must be issued to unincorporated service providers that are paid more than $600 during a tax year. Under new reporting rules set to start in 2012, a 1099 will be required for payments to incorporated vendors and will be expanded to cover payments made for goods as well as services which total $600 or more in a calendar year to a single non-employee payee. Payments made to corporations would no longer be excluded from the reporting requirement.
The organizations sent letters to Senator Mike Johanns (R-NE) and to Representative Dan Lungren (R-CA) saying that under the proposed new requirement, “Virtually all business-to-business transactions will be covered, creating a new major paperwork burden for the farms, ranches and related agri-businesses. The business of producing food, fiber and fuel is a hands-on venture where productivity and competitiveness is compromised by government rules and regulations that turn producers into bookkeepers. Prompt action is needed by Congress to reverse this onerous tax-reporting requirement.”
When the Senate returns on September 14, there will be cloture votes on two amendments to H.R. 5297, the Small Business Jobs Act of 2010. One amendment by Senator Johanns would repeal the new Form 1099 rules and “pay for” repeal by reducing the number of people subject to the individual mandate to buy health insurance. An alternative amendment by Senator Bill Nelson (D-FL) would exempt firms with fewer than 25 employees from reporting requirements and raise the threshold for reporting for larger firms from $600 to $5,000. Credit card purchases would be exempted from information reporting requirements. Under Senator Nelson’s amendment, the changes would be paid for with a provision to repeal the manufacturing deduction allowed for oil companies.
The Sept. 7 letter was signed by 28 ag organizations including the American Farm Bureau Federation, the American Soybean Association, the Farm Credit Council, the National Association of Wheat Growers, the National Cattlemen's Beef Association, the National Corn Growers Association, the National Cotton Council, the National Council of Farmer Cooperatives, the National Milk Producers Federation, United Egg Producers, the USA Rice Federation, and United Dairymen. The complete text of the letter follows:
“We the undersigned agricultural organizations support repeal of new IRS Form 1099 information return filing requirements. While this new provision might improve tax compliance, it is certain to increase compliance costs for our members.
“Farms, ranches and related agri-businesses already are overburdened with tax paperwork and reporting requirements. Under existing law, a Form 1099 must be issued to unincorporated service-providers that are paid more than $600 during a tax year.
“Under new reporting rules set to start in 2012, Form 1099s will be required for payments to incorporated vendors and will be expanded to cover payments made for goods as well as services. Virtually all business-to-business tractions will be covered, creating a new major paperwork burden for the farms, ranches and related agri-businesses.
“The business of producing food, fiber and fuel is a hands-on venture where productivity and competiveness is compromised by government rules and regulations that turn producers into bookkeepers. Prompt action is needed by Congress to reverse this onerous tax-reporting requirement.”
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