Posts Tagged ‘Tax Code’
There are just days when all the accountants of the world get to sit back and take a deep (and thankful) breath. Last Thursday, April 14, 2011 was one of those days! That’s the day that President Obama signed into law the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011”.
That’s a really long name for a long and fervently discussed 1099 reporting requirement that had been tacked onto the health care reform legislation that was passed in 2010. I find it interesting that a huge piece of health reform legislation would end up with something tacked onto it that had such far reaching implications in the business world. But – then I’m not a politician, and it’s really not surprising with legislation that numbered greater than 2,000 pages. I’m just that practical person who lends my background in the world of accounting to my client-base of NonProfit and Governmental clients who utilize the Sage MIP Fund Accounting product.
Whenever there is new legislation that affects our clients, we worry on their behalf.
Our consulting services to an extensive client base of these users span not only training on the actual functionality of the product, but also consulting services in the governmental compliance areas of 1099 and W-2 reporting. We also often assist our clients as they prepare for their annual audit, typically a Single Audit required since they are often funded by significant Federal and State Grants. So – we do see it all in our work with our clients.
The administrative burden that would have been required by the threatened additional 1099 reporting requirement was incredible. Every organization would essentially have had to issue a 1099 to every payee from whom they purchased goods or services aggregating $600 or more in a calendar year.
Prior to that health reform legislation rider with relation to 1099 reporting, of course organizations were certainly required to issue 1099’s. However that requirement related only to payments for services provided by attorneys and non-corporate entities where total payments for a calendar year were the $600 or greater.
There’s a huge difference in the paperwork burden between those two very different reporting requirements.
That burden would not only have extended to the reporting entities, but also to the compliance entity — to the IRS. At a time that the national debt has grown to incredible proportions – it’s near impossible to imagine the additional cost to the government to manage the compliance auditing required as a result of that legislation. I’m not sure there are enough computers in the world to deal with that one.
So, I realize it’s unusual to think of a bunch of accountants standing up to cheer. But – it’s a new day – and life is good! Those politicians surely did the right thing this time!! Congratulations to all!
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