Today's guest author, Jim Lansing, of San Francisco Management Group, shares some timely information about a legislative repeal that is especially important to independent consultants and therefore to PATCA members.
First, some background. All independent consultants who have clients have had to deal with the 1099 MISC issued by their clients after year end if they have been paid over $600 over the course of that calendar year for their services. So, that is no surprise and an easy tax requirement to live with for clients engaging independent consultants as well as consultants themselves.
However, when the Healthcare Bill was passed by Congress last year, it contained a provision requiring all businesses, including landlords, to submit a Form 1099 MISC to the Internal Revenue Service for every vendor from which they purchased $600 or more worth of goods or services during the course of the calendar year, starting in 2012. The idea was that such a requirement for third-party reporting of income would make businesses less likely to try to hide income from the IRS. What a bureaucratic paperwork headache!
The effect of this new 1099 requirement on clients in having to file hundreds of 1099 forms during the year instead of just a few would likely have been to put a selective damper on the use of vendors. Since the 1099 requirement would not have applied to corporations, the pull on clients to use corporate consultants instead of independent consultants would have been strong.
Now both the House and Senate have passed legislation to repeal this reporting provision of the Healthcare Law and the President is expected to sign it.
Most of PATCA's members are independent consultants, not corporate consultants, so it is with great relief that this latest threat to obtaining future business clients has been repealed.
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