Go to www.senate.gov or www.house.gov to find your Members of Congress and their websites.    OR TELEPHONE 202-224-3121.

(Thanks to ICTA member Nick Pyle for this “hot off the presses” update.)

• CLEARING UP 1099 CONFUSION
• SPECIAL ICTA SEMINAR AT FUN SHOW IN TAMPA
• TAMPA AIRPORT SECURITY HAS NEW BODY SCANNERS

As a reminder, this 1099b reporting is Federal Law — it is not optional.   Some dealers seem to think this doesn’t apply to them.  Perhaps they weren’t around when others were being audited and being hit with large fines.  The original 1983 proposed law was so broadly written that dealers were required to report as little as one 90% silver dime!  ICTA negotiated directly with the IRS, and this much-less burdensome regulation was the result.  But note that the result is less burdensome, not eliminated!

Especially in this active precious metals market, even the smallest coin dealer may be buying enough to trigger these thresholds on some transactions.   And with all the talk about the new 1099 law, do you want to run the risk that you won’t be audited?  (With the new 1099 law, it is very clear that capturing tax revenues via 1099 information returns is on Uncle Sam’s mind!)

Basic penalties include fines of $50 per form not done; $50 per form that was not sent to the customer (which of course you didn’t do since you didn’t fill out the form to begin with); $50 per form that was not sent to IRS (ditto.)  If you routinely do not file required 1099b forms, you can be pretty sure there will be other fines and penalties for non-compliance.

The NEW 1099 Law  - IRS Form 1099-MISC

This 1099 law (Section 9006 of the health care bill passed earlier this year) is scheduled to go into effect January, 2012.   Under this law you will have to report ALL purchases of goods and services over $600 (including smaller purchases aggregated over the full year.)  Yes, that includes your retail clients, your fellow dealers (no more corporate exemption), office supply stores, show travel providers (hotels & airlines), etc.

Small businesses and associations (including ICTA) have protested this provision so fervently that Congress – and even President Obama – have acknowledged  that it is a problem.  Potential fixes include repeal of Section 9006 (ICTA’s strongly preferred solution), raising the dollar amount threshold to $5,000, exempting businesses with fewer than 25 employees, and exempting transactions paid for via credit or debit cards.  However, the administration is extremely sensitive to the word “repeal” as applied to any part of the health care bill.

What will happen – if anything – during the lame duck session of Congress?  Some believe the current lame duck session is a GOOD time to address the 1099 issue before the new session where some (especially new) legislators will be calling for a repeal of the entire health care act.  Senator Max Baucus is now entering the fray, as per a quick update from CERT’s lobbyists as of November 20th:

Senate Finance Committee Chair Max Baucus, D-Mont., yesterday offered an amendment which would repeal new Form 1099 requirements passed as part of the healthcare reform law earlier in the year.

The proposed amendment, which was attached to the FDA Food Safety Modernization Act (S. 510) — now being debated on the Senate floor — would roll back new rules requiring corporations to file a Form 1099 for payments for goods or services to a single business totaling more than $600 annually starting in 2012.  Lawmakers could vote on the amendment after they return from the Thanksgiving holiday the week of November 29.  Earlier in the month, Baucus introduced the Small Business Paperwork Relief Act (S. 3946), which also would have repealed the provision.  We anticipate that the amendment will pass and we will monitor the FDA bill as well.  Congress is serious about repealing the Form 1099 reporting requirements and the issue is now bipartisan.

This is a top priority issue for ICTA, and we will be keeping you posted on any changes or proposed changes where we may need you to weigh in with your Members of Congress.

Remember, the Congress that convenes in January, 2011 will be a very different one and somewhat unique.  There will be a number of “Mr. Smiths” going to Washington as some newly elected Members of Congress have never served in any elected government position before.

Any information in this newsletter is provided to assist ICTA members and is not intended to be used as a substitute for actual advice from a professional tax or legal adviser.