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Architecture, engineering, and design firms roil over new tax-reporting requirement 

FAYETTEVILLE, ARK. — Firms in the architecture, engineering, planning, and environmental consulting sphere are joining the national chorus of opposition to a provision that would significantly boost tax-reporting requirements, adding an undue burden on smaller businesses.

The rule — included in the national health care overhaul — would require businesses to submit a 1099 form to the Internal Revenue Service for any purchases more than $600, starting in 2012. While efforts mount in Washington, D.C., to repeal the rule, those in the A/E/P and environmental consulting fields also are speaking out, according to a report in the Jan. 31 edition of The Zweig Letter, a weekly management journal published by ZweigWhite.

“Instead of preparing a couple of dozen 1099s to individual practitioners and landlords, we will now have to prepare hundreds,” said Candace Macomber Tobin, chief financial officer (CFO) with Cambridge Systematics Inc., a transportation consulting engineering firm in Cambridge, Mass.

Tobin hopes that at least one aspect of the new rule requiring that firms reconcile the 1099s they receive gets thrown out. The IRS wants to use that requirement to identify under-reported income, and firms will need to ensure that there are no material misstatements. “We are cautiously optimistic that this portion of the bill will be repealed, but we are working diligently to ensure our vendor records are accurate, just in case,” she said.

Larry Van Horn, senior vice president and CFO with GLMVArchitecture in Wichita, Kan., said the legislation was extremely poor in intent and method and not well thought out. “We have an executive branch of our federal government that has a poor understanding and opinion of business, as well as economics, and think they correct all the ills by law,” he said. “We have the laws, we just need to enforce them. President Obama and very few of his advisors have ever worked in business and have no concept of their actions’ effects on business.”

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Architecture, engineering, planning (A/E/P) and environmental consulting firms offer a broad spectrum of services within the engineering design and construction industry. For civil engineering (and many multi-discipline) firms, important markets include transportation, water/wastewater, environmental, and power and energy. Following are brief summaries of these market sector outlooks excerpted from ZweigWhite's "2012 A/E/P and Environmental Consulting Industry Outlook"


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