Comments to the IRS Counsel: Impact of Sec. 6041 Changes

The Patient Protection and Affordable Care Act of 2010 (PL 111-148) enacted a dramatic expansion of transactional reporting. Under the enacted changes, all payments made in a trade or business for goods and/or services whose aggregate value exceeds US$ 600.00 must be reported whether the recipient is an individual or a corporation. Previously, only services provided by proprietorships had been subject to a reporting on Form 1099-MISC. Previously, I had commented on the impact of these changes in Ruminations – An IT Blog. Recently, the Counsel to the Commissioner of the United States Internal Revenue Service solicited comments from those affected. I prepared a summary of these comments in an e-mail to the Service's counsel.

My summary included the following:

Since all payments made through third-party payment processors are subject to separate reporting, they should be excluded from this requirement (duplicative reporting). In plain English: If the payment was made by credit card, there is no need for additional reporting (the payment processor is already required to report the remittance to the IRS).
Firms should be allowed to use their standard invoices/receipts as substitute Forms W-9 by including their Taxpayer Identification Number on the form, as previously discussed in For the Commissioner: Invoices as Substitute Forms W-9.
Transactions below a de minimis amount, presently US$ 25.00, be excluded from the record keeping and reporting requirement. The costs of recording and aggregating these small transactions have a high likelihood of exceeding the transactions themselves, an unreasonable burden on businesses large and small.

A repeal of the reporting provision would be best. Such a repeal has been introduced, but has not been enacted by Congress. In the absence of repeal, the above measures would significantly reduce the adverse impact of the required reporting.

References

Robert Gezelter (2010. September 28) Electronic mail to IRS Counsel Retrieved from http://www.rlgsc.com/blog/ruminations/irs-email-re-sec-6041.pdf on September 28, 2010