IRS to Rethink Debit Card 1099 Rule

August 21, 2003 ( - Internal Revenue Service (IRS) officials are reconsidering rules issued earlier this year requiring employers to issue 1099 forms for all payments made to an employee debit card

>Speaking at a recent conference of the Employers Council on Flexible Compensation (ECFC), Harry Beker, head of the IRS Health and Welfare Benefits unit, announced that officials are looking at a  possible rule waiver.

“What we’re going to look at is whether it is appropriate to delay enforcement of the 1099 requirement or whether it’s appropriate to waive the 1099 requirement with respect to FSA’s and HRA’s entirely,” Beker said.

>In public comment received after the notion was announced this spring, many complained to the IRS that:

  • the payment is being made by the employee/consumer rather than the employer
  • no one has the tax ID numbers to coordinate the receipts and 1099s to technically be able to do it
  • requiring 1099s wouldn’t help provider compliance anyway.