GAO Finds 1099 Non-Reporting Is Tax Gap Problem
Mar 10th, 2009 | By Dawn R. Rivers | Category: ResearchThe GAO has released yet another tax gap report undertaken at the request of Senate Finance Committee top lawmakers Max Baucus (D-MT) and Chuck Grassley (R-IA), this time a review of payer noncompliance with 1099-MISC filing requirements. The report found that the IRS has no way of knowing how many small businesses are required to report payments to individuals or companies and did not. Unreported income paid to Schedule C filers means possibly significant amounts of unreported income and unpaid taxes for the payees, GAO noted.
The main problems, according to the report, are confusing reporting requirements and inconvenient reporting procedures. To fix the problems, one wonders if it will be possible for Congress and the IRS to adjust 1099-MISC reporting requirements without unduly burdening microbusinesses or stifling the independent contractor landscape that will eventually replace traditional job creation in an evolving 21st century economy. Of course, there is little reason to assume that anyone on the Senate Finance Committee is familiar with the way that 21st century economy is evolving, which always increases the chances that they will unwittingly get in its way.
