This article was originally printed in Numismatic News.
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After months of uncertainty, on April 5, the Senate passed the House bill repealing the new 1099 reporting to the IRS by the overwhelming vote of 87-12. The measure now goes to the White House.
President Obama will likely sign it.
The passage assures that there will be no requirement to report on 1099 forms coin and bullion sales and corporate purchases and sales that total in the aggregate $600, starting Jan 1, 2012.
At the present time, the Internal Revenue Code provides that if an individual earns more than $600 from work, the “independent contractor” receives a 1099 form that is also copied to the IRS, informing them of the income. This voluntary disclosure is at the core of the federal tax system. There is no comparable disclosure for buyers or sellers of coins or precious metals.
That was changed last year (to be effective in 2012) when Congress passed an amendment to the Internal Revenue Code saying that sales of coins and bullion to and from corporations would become reportable with 1099 forms.
Had it not been repealed, the reporting requirement could have had broad-based unintended consequences.
Even before the repeal of the law, it was clear that 1099 disclosure applied to individuals, not those involved with corporate activities in the same area. The reverse became true under section 9006 of the Internal Revenue Code of 1986, as amended, which is the section that was passed last year.
It meant that millions of meaningless reports would have been generated and millions of hassles for those who would have had to write them.
What Section 9006 provides is that ‘person’ includes any corporation that is not an organization exempt from tax ...” It also provides that under section 501(a), the Treasury “may prescribe such regulation and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.’’
Where 1099 forms for independent contractor work performed records income, the 1099 form disclosure for coins and bullion would not have calculated gains or losses, just proceeds from sales.
The 1099 forms are out now insofar as coin and bullion transactions are concerned. For kids with a summer job, they’ll get a form to add onto their 1040 IRS return, same as last year.