Having just participated in several recent industry conferences and shows, Convey is more aware than ever that the Tax Information Reporting Industry continues to see constant change in 1099 compliance rules and regulations- Corporate Reporting, Merchant Reporting, Cost Basis Reporting, Foreign Account Reporting (FATCA), Potential Penalty Increases – and the list goes on. 

Last week, Convey presented a webinar addressing the impact of the new tax information reporting changes on Accounts Payable departments due to recent changes to 1099 reporting introduced in the Healthcare reform bill in March (e.g. elimination of the Corporate exemption and reporting on payments of “goods” as well as services).  John Adams and Jeff Cronin, from Convey’s Product Management team, outlined the additional work effort around vendor master file clean up, how long the process will likely take, and what the penalties can be for non-compliance.  They also took the time to introduce Taxport A/P, the newest tax information reporting solution in the Convey family of services. Convey’s Tax Identity Management services and Taxport A/P have been designed specifically for Accounts Payable professionals to help them manage the increased vendor/supplier reporting. 

Last week the Senate proposed a Small Business Jobs Act that includes provisional changes to Tax Information Reporting.  The changes to 1099 reporting are included in the bill as a way to generate revenues to fund the bill and close the Tax Gap.

It was an interesting week of media and industry attention around the new 1099 reporting requirementsimposed by the March Healthcare Reform Package.   Much of this flurry of coverage surrounded the mid-year  Taxpayer Advocate Report released to Congress this week.  IRS Taxpayer Advocate Nina Olson commented that “The submitted report expresses concern about the adequacy of IRS taxpayer service, particularly as the IRS begins to implement health care reform, about new information reporting burdens facing small businesses and others, and about certain IRS collection practices”.  Although coverage in many mass media outlets (USA Today, Wall Street Journal, Washington Post) has stimulated public debate on this topic this week, the IRS is looking for formal comment from industry by September 29th, 2010 on the best way to implement these reporting requirements in order to minimize burden to business (click here to learn more about how to comment) .

As of January, 1 2010, it has been a requirement in the state of California to withhold tax on income that was also subject to Federal backup withholding. The logic here is pretty straightforward: if the Federal government sees the need to require withholding because they were not sure if they were going to be able to collect tax in the future, why then should California not act in the same way? In addition, the state has been facing record deficits, and this was a way to increase tax receipts without actually resorting to a tax increase. The law was passed in July 2009 and was scheduled to go into effect starting in January. Of course, most were not prepared to handle the increased withholding.