In April, the IRS repealed the changes to the 1099 rules. Originally the new Health Care Act required business owners and taxpayers to issue 1099s to anyone providing $600 or more of labor on any project. When the Health Care Law was first passed it impacted Schedule E filers (those people with rental real estate).
In 2011, the IRS was going to be required taxpayers to issue 1099s to anyone who worked on their rental properties and billed for repairs in an amount of $600 or more for the year for labor. That would include the lawn maintenance people, plumbers, carpenters and painters. You did not have to issue a 1099 if you paid by debit or credit card only payments by check or cash counted. If the bill included materials, the amount of the materials were not included. The plumber that billed you $1,200 but $1,000 was for a new water heater and $200 in labor to install it would not get a 1099.
Starting in 2012 any business would have been required to issue a 1099 to anyone they paid more than $600 to for anything. That would include the power company, the gas company, Home Depot and Lowe's and Office Depot. That would also include me if I charged more than $600 for your tax return. Again except if you paid by debit or credit card.
These two items were expected to raise $19 billion in additional taxes to pay for the Health Care Act. By eliminating these items I expect new tax issues to come up as congress works to increase taxes to cover the short fall.
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