SALEM, Ohio — As you prepare to send off last year’s tax return, there is already a small reprieve for next year’s taxes.
The U.S. Senate voted April 5 to repeal a requirement that any business would have to submit a 1099 tax form to the Internal Revenue Service for any purchases more than $600 for goods or services.
The change in the code was due to a provision in the health care reform bill that was meant to go after businesses who weren’t reporting all of their income.
If this hadn’t been repealed, it would have meant that farmers and small businesses would need to issue a Form 1099 to each business they make a purchase from greater than $600.
Barry Ward, assistant professor at Ohio State University in agriculture, environmental and developmental economics, said the repeal prevented a paperwork nightmare for many farms and small businesses.
“They (1099 forms) would have been issued to anyone and everyone, just about,” he said.
“The requirement would have been extensive in the 1099 forms the farmers would have had to issue,” Ward said. “Luckily, this is not going to make any more paperwork than before for farmers or small businesses.”
Ward said the requirement would have meant more extensive record keeping and would have cost farmers more time in preparing the paperwork.
If the requirement had not repealed, a farmer would have had to obtain the corporate name, address and federal tax identification number for each business and then mail it a 1099 form.
The requirement was not just for one single payment over $600, but the accumulated payments throughout the year. It would have required millions of additional forms to be issued just from the farm sector alone.