As the tax season has progressed, a little-noticed provision in the American Rescue Plan Act (ARPA) enacted last spring is garnering more attention, and much of that attention revolves around a fundamental misunderstanding. Several commenters have characterized the changes as a tax increase, but they are not.
Generally, when a business hires an independent contractor, they are required to issue a Form 1099 (1099-MISC until 2020, now 1099-NEC) if the business makes payments of $600 or more. This reporting requirement has been law for more than a century (since 1918) and was originally used to report compensation of more than $800.
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