Nebraska Grain and Feed Association
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NEBRASKA GRAIN AND FEED JOINS NGFA & HUNDREDS OVER CHAMBER OF COMMERCE-LED EFFORT TO OPPOSE 1099 TAX-REPORTING PROVISION

The Nebraska Grain and Feed Association (NGF) has joined with the NGFA on a major effort being led by the U.S. Chamber of Commerce to rescind a provision in the new health care law scheduled to take effect in January 2012 (for the 2012 tax year) that would impose onerous tax reporting [Internal Revenue Service (IRS) 1099 forms] on virtually all non-credit card purchases totaling $600 or more with any vendor during a tax year.

Specifically, the NGFA is supporting an amendment scheduled to be offered to the small business lending bill by Sen. Mike Johanns, R-Neb. that would repeal the 1099 tax reporting requirement. The amendment tentatively is scheduled to be considered on the Senate floor on Sept. 14 – the Senate’s first full day back after its August recess.  Johanns’ amendment reflects the contents of a bill (S. 3578) he co-sponsored with Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark. A companion bill (H.R. 5141) has been introduced in the House by Rep. Daniel Lungren, R-Calif.

Currently, businesses and other entities are required to send 1099 forms only for payments to individuals for services if the total payments to that person in a given tax year total $600 or more.  The 1099 form currently is used most commonly to document income for individual workers, other than wages or salaries, such as independent contractors.  The new mandate contained in the health care law would expand this reporting by requiring businesses to issue 1099s to all vendors, including corporations previously exempted from such reporting, for payments made over $600 for both tangible goods and services.  In so doing, the new mandate subjects to 1099 reporting such routine business expenses as telephone service, office products and shipping costs.  Estimates are that the that the new 1099 reporting mandate would affect as many as 40 million businesses and other entities, and increase businesses’ 1099 reporting by 2,000 percent.  

An estimate by The National Taxpayer Advocate Service, an IRS ombudsman, projects that the change would affect an additional 26 million sole proprietorships, not including the impact it could have on farms.  The health care law leaves to the IRS the responsibility for determining how to implement the sweeping mandate.  Proponents of the Johanns amendment also note that the new mandate would have the perverse effect of encouraging companies to consolidate purchases from as few a number of vendors as possible to reduce the 1099 reporting burden, thereby having a disproportionately adverse impact on small businesses.   

 

calendar of events

August 4, 2017

NeGFA Summer Meeting & Golf Outing

York Country Club

York, NE

 

 

 

 

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Nebraska Grain and Feed Association
4600 Valley Road, Suite 416
Lincoln, NE 68510-4844
Phone: 402-476-6174
Fax: 402-476-3401