I read a recent PPC article which reported on the tax gap between tax paid and not paid on 2006 income. What this is saying is that when there are requirements and guidelines as to the issuance of W-2s and 1099s, the misreporting of income is impacted positively. Fewer taxpayers are misreporting income.
The point of this study will lead to increased reporting requirements in future years, for payment of goods and services. You can expect these requirement increases to be piggy backed on bills that are proposed and probably passed by Congress. The recent repeal of the enhanced 1099 reporting bill passed as part of the Health Affordability Act would have greatly increased the reporting requirements of company payments for goods and services in 2012.
Consider the repeal temporary, with this type of data reported on the income gap between payments and reported income, expect Congress to move in this direction again in the future irrespective of which party controls congress or the executive branch. Bell & Company continues to emphasize to our client base the importance of compliance reporting, especially in the area of 1099’s. If you have any questions, give us a call to discuss.