By MICHELE F. MIHALJEVICH
Indiana Correspondent

WASHINGTON, D.C. — Legislation designed to repeal changes in 1099 tax form reporting requirements should be considered by the U.S. House this month, a tax specialist with the American Farm Bureau Federation (AFBF) said.
The U.S. Senate passed its version of the legislation 81-17 in early February as an amendment to a bill reauthorizing the Federal Aviation Administration. The amendment was proposed by Sen. Debbie Stabenow (D-Mich.), chair of the Senate Agriculture Committee.

The House version of the bill recently made its way out of the House Ways and Means Committee and should be heard on the floor of the House later this month, according to the AFBF’s Pat Wolff.

Under current law, businesses must file an Internal Revenue Service (IRS) 1099 miscellaneous form when they pay more than $600 for services performed during a calendar year by unincorporated providers. Starting next year, the reporting requirements would be extended to goods as well as to incorporated providers.

The change in reporting was put into the health care reform law to help increase revenue, Wolff said.

In order to repeal the new reporting requirements, Congress must come up with new sources of income to make up for what would have been collected, she added.

According to the Joint Committee on Taxation, the new requirements would bring in $18 billion to the federal government over 10 years. The change in reporting doesn’t mean farmers or small businesses would have to pay more taxes, but it does mean more work for them, Wolff noted.

The 1099 form is an IRS informational form.

“The form is used to make sure people are reporting all their income,” Wolff explained.

“It helps the IRS track payments. This would increase the paperwork burden for farmers and ranchers, who have enough regulations they have to worry about without piling more on.

“Support for the repeal cuts across agriculture and cuts across small businesses. There’s tremendous support for a repeal but there’s no agreement yet on how to pay for it.”

In early February, several agriculture organizations, including the AFBF, the National Assoc. of Wheat Growers, the National Cattlemen’s Beef Assoc. and the National Corn Growers Assoc., wrote a letter to Stabenow explaining how the changes would affect their members.

“Farms, ranches and related agribusinesses already are overburdened with tax paperwork and reporting requirements,” the letter stated. “(Under the new reporting rules), virtually all business-to-business transactions will be covered, creating a new major paperwork burden for the farms, ranches and related agribusinesses.

“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.”