As hard as it is to believe, the government is rethinking an obscene new 1099 reporting law that would require businesses to report any payments they make totaling more than $600. 

Passed as part of the health care law, the new reporting requirements are causing a major stir. The problem is they are incredibly overreaching. The law states that any business that pays more than $600 to another during the year would have to issue a 1099 to it. There are some minor exceptions, but this is the basic idea. 

Ah, but you are thinking we already have 1099 requirements like this? Yes, but not nearly as broadly applied. This new provision applies to corporations and, well, everyone. Think it through. Let’s say you buy office supplies from Office Depot because it is close to your office. You spend upwards of $4,000 during the year. Under the new law, you would have to issue a 1099-MISC to Office Depot. The same is true for any other business you pay more than $600 to. 

The sheer paperwork involved would be mind boggling. The first issue is how do you track all this? You basically are going to need to buy new software that parcels every vendor you paid $600 or more to. Then you are somehow going to have to get their tax identification number. They’ll probably have to publish it on a web site. Gee, I wonder what a boon that will be to identity theft criminals! Finally, you will end up filing who knows how many 1099-MISC forms every January in an effort to comply. 

As the new law has gained recognition, businesses have started heatedly complaining to their representatives. If you think this would be burdensome to your business, think about a company like Microsoft trying to 1099 everyone it pays more than $600 to in a year! Regardless, the politicians are getting an ear full and it sounds like they are starting to realize they better do something. 

So, what is the hold up in rejecting this nonsense? Money. It is always money. The provision was expected to bring in $19 billion in revenues. Republicans want to trim $19 billion in spending and Democrats want to find a new tax source to make up the difference. In short, it is the same old argument. What will finally happen? Beats me, but businesses better hope this mess is cleared up by January or the 1099 reporting effort will be a monster.