Legislative / Regulatory | Taxation | Technology & Social Media

Congress revisiting 1099, tax preparer regulations

Congress Don't look now, but Congress is showing signs of -- gasp! -- rationality.

The first sign comes from the Senate, which has offered amendments to the Small Business Jobs Act that would roll back the onerous 1099 reporting requirements for businesses. Those requirements, part of the health care reform law, would force businesses to report to the IRS any purchase of $600 or more from a vendor of goods or services beginning in 2012.

The revised bill should come up for a vote sometime in mid-September.

Even so, the New York Times' Robb Mandelbaum says "the prospects for repealing, or softening, the new law are uncertain at best."

That's because the Senate's amendment actually comes in two parts. According to Mandelbaum, senators will vote either for a Republican provision to repeal the requirement, or a Democratic provision to raise the reporting threshold from $600 to $5,000 and exempt businesses with 25 or fewer employees.

"Both amendments, however, come with a poison pill that will be tough for members on the other side to swallow," Mandelbaum writes. "The Johanns amendment is paid for with money from health care programs created by the reform law, while the Democratic proposal is offset by eliminating an income deduction for the five largest oil companies. With each side making offers the other cannot accept, it is difficult to predict where repeal will end up."

Maybe it's not so rational after all.

Somewhat better news is emerging from the House. The AICPA reports that 31 House members from both parties have sent a letter to Treasury Secretary Timothy Geithner urging him to support changes to the IRS's plan to regulate paid income tax preparers.

"The House lawmakers are asking Treasury and the IRS to exempt non-signing tax preparers -- employees of CPA firms who prepare returns but do not sign them –- from onerous registration requirements," the AICPA reports. "Lawmakers are further asking for a delay and more study of an IRS proposal to create a poorly defined nationwide examination of tax preparers."

Read the letter in its entirety.

Election-year politics are as entertaining as ever, aren't they?

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Bill Sheridan