Ag groups urge repeal of 1099 rule

"Virtually all business-to-business transactions will be covered, creating a new major paperwork burden for the farms, ranches and related agri-businesses," the letter states. "The business of producing food, fiber and fuel is a hands-on venture where productivity and competitiveness is compromised by government rules and regulations that turn producers into bookkeepers."

The Senate is expected to review the reporting requirement when it debates legislation providing tax relief and loan opportunities to small businesses. That bill is expected to be the first issue debated when senators return next week.

Under current law, just about every organization must issue a Form 1099 to the IRS for every unincorporated service provider it pays more than $600 during a tax year. The rule covers payments made for goods and services that cannot be tracked by payments made by credit card.

During debate on the small-business bill before the August break, Sen. Mike Johanns (R-Neb.) sought to repeal the requirement. Sen. Bill Nelson (D-Fla.) suggested amending it by exempting firms with fewer than 25 employees from the rule. Nelson also wanted to raise the reporting threshold to purchases over $5,000, not $600 as is current law.

Sen. George Voinovich (R-Ohio) on Thursday signaled he would support the small-business bill if Senate Majority Leader Harry Reid (D-Nev.) allowed a debate on the 1099 rule.

Voinovich's support could mean that Democrats have the 60 votes they need to pass the legislation from their chamber.