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) .

Based on the debate this week, this topic is sure to create a great ongoing dialogue over the coming months. Actually many in the tax blogging world were ahead of the mainstream media and have been discussing this since May (I strongly recommend reading Taxgirl regularly) and there was a great discussion about the impact over on the Exuberant Accountant by Scott Heintzelman as well.   The current size of the tax gap makes it difficult to imagine that Congress or the IRS will completely back-down on these new reporting requirements, however, the real work now begins to figure out how to best implement these new responsibilities in the least burdensome way (Note that eliminating these new reporting requirements does require an repeal of the existing legislation or passage of new legislation – both of which are normally a cumbersome process).

Although the final implementation rules around these new reporting requirements are still a work in progress, it still a smart idea to assess the quality and completeness of the TIN/EIN information you have on all the vendors you do business with.  And it also makes sense to relook at how you currently handle 1099s, whether it is a dozen, several hundred or several thousand.  Accounts Payable departments should be looking for ways to automate all the activities around this process given the burdens it can create on an already taxed (no pun intended) Accounts Payable group during the busy first quarter of each year.

If you are interested in learning more about how to most efficiently assess and improve the completeness of your TIN/EIN information, you can call 888.303.1099.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.