Less than a week into the comment period on Notice 2010-51, scores of taxpayers and certified public accountants have called for the repeal of a law change that, beginning in 2012, will require businesses to report a wider range of payments to contractors, vendors, and others, usually on Form 1099.

The Internal Revenue Service said in a news release (IR-2010-79) accompanying the notice, which sought comments on the new reporting requirements, that it plans to issue guidance that will implement the provision in a way that minimizes burden and avoids duplicative reporting. The requirements, enacted as part of the Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-148), generally require information returns from every person who makes payments, as defined in tax code Section 6041(a), totaling $600 or more in any taxable year to a single payee in the course of the payor's trade or business. In addition, new amendments to Section 6041 expand reporting to payments of gross proceeds and payments to corporations.

IRS and the Treasury Department already have proposed regulations (REG-139255-08) under which many business purchases made with credit or debit cards would be exempt from the new reporting requirement because they already will be reported by banks and other payment processors.

Many commenters expressed concern about the provision, as well as outrage that the government would create requirements that some called burdensome when the Obama administration has voiced its desire to help small businesses.

Margaret Cox of Escalante Builders LLC, Palisade, Colo., said her business is already downsizing due to the state of the economy and that she does not have the personnel to handle the new provision. “Small businesses are all under stress now with the economic conditions,” she wrote in July 2 comments. “This is one change that will detract from the profitability and viability of small business.”

Paul Emmons, CPA, Emmons & Co. PC, Tulsa, Okla., said in July 1 comments that the broad approach taken in the provision will cause small businesses to incur additional costs trying to obtain taxpayer identification numbers (TINs) from large chains such as Staples and Office Depot. “Even if all of the information could be easily gathered, payments identified and the Form 1099's prepared, it is nearly a certainty that the Service will not find any practical use for the forms,” he said.

Emmons said a more effective alternative would be to better enforce the current system and try to reduce the number of individuals conducting work off the books, bringing them into compliance.

Gustavo A Viera CPA

CPA in Miami since 1983

www.vieracpa.com