Provisions in the new health care law that requires farms, ranches and other businesses to complete an Internal Revenue Service Form 1099 for any expenditure totaling more than $600 in a calendar year creates an unnecessary and costly paperwork burden, according to the Montana Farm Bureau Federation.
These provisions, slated to go in effect in 2012, were placed in the new health care law to help pay for it.
Under current law, businesses that pay more than $600 to unincorporated service providers must file an information report with each service provider and with the IRS reporting the amounts paid for service rendered. However, this new provision would require business to now file a 1099 form for any purchase over $600, for services and goods, whether the payee is incorporated or not.
“This places an amazing burden on small business and especially farm and ranch families,” notes Montana Farm Bureau President Bob Hanson. “This means if you buy more than $600 on seed, horse feed, fence posts, corral panels—anything—you must file a 1099. Even if you go to an auction and spend more than $600 on some piece of equipment, you need to send the auction house a 1099.”
Hanson explained that businesses already report what they’ve purchased on their tax returns, and this will add another expense as they pass on the paperwork to their accountants. The government will also have to spend more time collecting and filing the paperwork. “It’s just a huge, needless hassle for everyone involved, and in many cases, it’s double-reporting,” notes Hanson, a White Sulphur Springs rancher.
The American Farm Bureau is strongly opposing the provision, as well.
Farm Bureau backs bills in the House and Senate, H.R. 5141, by Rep. Dan Lungren (R- Calif.) and S. 3578 by Sen. Mike Johanns (R-Neb.) that would repeal the Form 1099 reporting requirements. In addition, American Farm Bureau filed comments with the IRS calling for repeal of the provisions.
“For small businesses like farms and ranches, this provision will drastically increase the number of Form 1099s that need to be sent each year. Farmers and ranchers will have to hire someone to do the paperwork or spend their own valuable time to do the research and fill out the forms.”
In comments to the IRS, Farm Bureau cited research by LeMaster Daniels, an accounting firm that services numerous agricultural operations across Washington State and Idaho. According to LeMaster Daniels, the number of forms that would be required for a typical cattle operation with $250,000 of gross income would increase over four fold from 16 to 68. For a typical orchard with $175,000 of gross revenue, the number of Form 1099s required would increase from one to 19.
Source: Montana Farm Bureau Federation
Posted by Haylie Shipp