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IRS Form 1099 Disclosure Requirement

The health care reform law enacted last year requires nonprofits and businesses, starting in 2012, to report aggregate payments to vendors in excess of $600 for goods and other property. The requirement applies for payments to all vendors, not just those related to health care. Currently, nonprofits and others are required to file Form 1099s for payment of services by independent contractors, but not for goods from vendors. The National Council of Nonprofits Calls urges Congress to repeal the new requirements as overly burdensome and unnecessary.

Why It Matters

The increased recordkeeping and reporting burdens under the new law would fall disproportionately hard on the nonprofit community, made up of largely small businesses. Almost 90 percent of nonprofit organizations operate with revenues of less than $1 million and more than half employ fewer than 10 employees. Many rely on volunteer boards of directors and others for recordkeeping; the cost of tax compliance is already one of their largest expense items. Particularly in this economy, there are no excess funds to hire the extra staff or retain additional consultants to comply with the new obligations. Without repeal of the new administrative burdens, many nonprofits will be forced to divert substantial financial resources away from vital community-focused services, thus shortchanging communities at a time when these services are desperately needed.

Status

On April 14, President Obama signed into law the legislation to repeal the new Form 1099 requirement: Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (H.R.4).

What Nonprofits Can Do

Write your Senators and Representatives and urge them to vote to repeal the new recordkeeping and reporting requirements.

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