As you were on those IRS 1099 Forms. The Congress paused in its effort to fund the government and provided administrative tax relief to 2 million farmers. The House voted 314 to 112 and the Senate voted 87 to 12 to repeal the mandate that farmers issue a 1099 Form to any input supplier which had provided over $600 worth of products or services to your operation. The workload on tax preparation for 2012 just got easier.
The initial requirement for farmers to issue the IRS 1099 Form came about in several back door methods. The first was the all-encompassing health legislation that was approved a year ago. In the bill was a section to pay for the costs of the health initiative. That section was designed to raise $25 billion dollars from potential tax receipts that were not being collected by requiring millions of 1099 forms to be filed, says University of Illinois tax specialist Gary Hoff. When the Congress lifted the prohibition on the 1099 Forms being sent to corporations that opened the flood gates on the paperwork. Think how many farmers would have had to obtain corporate names, addresses and tax identification numbers for companies such as Monsanto or Pioneer; and how many hundreds of thousands of those forms Monsanto and Pioneer would have to attach to their tax return. When the burden is considered, there were substantial majorities in favor of the repeal.
Additionally, Congress also repealed a second requirement for Form 1099 that was affecting many farmers, which was part of the Jobs Legislation that passed in September. That requirement would have caused landowners, receiving rental income, to issue a 1099 Form to anyone who is paid for providing a service for maintenance of that land. A landlord receiving rental income from CRP may have paid for weed control, tile repair, fence mending or something of the sort and would have had to issue a 1099. That has also vaporized.
Not repealed is the requirement for cash rent operators to issue a Form 1099 to a landowner itemizing the rent that was paid. Also still on the books is the requirement for farm operators to issue a Form 1099 to an independent contractor for services provided, unless it is a corporation. Unless your neighbor with the backhoe is a corporation, his services that were compensated more than $600 would still earn him a Form 1099 from you.
Another part of the Health Care Act affecting some farmers, which remains on the books, is noted by Iowa State University tax law specialist Roger McEowen. He says the legislation provides for a refundable tax credit for use in covering all or part of the health insurance premiums that are paid to a state health benefit exchange which are not part of a typical employee benefit plan. This provision is scheduled to become effective in 2014 and would require a taxpayer to report their income to the state health benefit exchange to determine the amount of a credit against the health insurance premium. The US Treasury would make up the difference, but the amount of the credit varies per household depending on total income, as it relates to the poverty level, and some taxpayers will have to repay the credit or portions of it.
Congress has come to the aid of an estimated 2 million farmers and repealed the sections of a health bill and a jobs bill that would have caused each farmer to issue dozens of IRS 1099 Forms to all of the suppliers of farm inputs. The repeal of the requirement was approved by large majorities in both the House and the Senate.