Tax Efforts Successful In 2011; Work Ahead In 2012Source: CompTIA
By Lamar Whitman
While the tax agenda for small businesses faces a number of challenges in 2012, there were two major successes in 2011. Congress repealed two provisions that should never have been enacted in the first place:
- New Form 1099 filing requirements and
- 3% withholding on government contracts
Both of these provisions found their way into tax legislation without public notice, vetting or comment by the business community. The underlying reason was seeking new sources of revenue; that is, both of these provisions were scored to bring in revenue needed to support the larger tax packages to which they were attached. This made it more difficult to repeal each of these provisions, as some legislators argued that new taxes should be generated to replace the revenue lost on repeal.
Thankfully, as a result of advocacy by CompTIA and other business groups, Congressional repeal of these provisions means that the Form 1099 reporting requirements will continue as last year, and businesses will not have to file Form 1099 for cumulative purchases of $600 or more. Also, those businesses that contract with government to provide goods or services will not be penalized by the nowrepealed 3% federal income tax withholding requirement. Both of these provisions were bad for businesses, imposing additional compliance costs.