House Passes 1099 Repeal
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The U.S. House of Representatives passed U.S. Chamber-supported legislation to fully repeal a controversial provision in the federal health care reform law that would have required more paperwork for small businesses.
House members voted 314 to 112 on the Small Business Paperwork Mandate Elimination Act, H.R. 4. The 1099 reporting mandate was used as an unrelated “pay for” in the health care reform law.
“When the United States is depending on the small business community to generate jobs and grow the economy, lawmakers are diverting their precious time and resources to collecting volumes of information and filling out mounds of new paperwork for the government,” the Chamber noted in a key vote letter sent to members of the House ahead of the March 3 vote.
The expanded 1099 reporting mandate would require business owners to use 1099 IRS tax forms to report all cash transactions greater than $600 each year, beginning in 2012. Currently, a 1099 filing is required for only services—not goods—provided by self-employed independent contractors.
It’s estimated that the new regulation will affect 40 million businesses, of which 26 million are sole proprietorships. The requirement is most threatening to small businesses because they lack the resources to track and manage this type of reporting.
The Senate passed its version of the 1099 repeal in February as an amendment to the Federal Aviation Administration reauthorization legislation. However, the two bills contain different provisions on how to pay for the expected $19 billion shortfall. The Senate calls on Office of Management and Budget to find unspent federal funds to use as an offsets, while the House version would go after overpaid tax subsidies in the health insurance exchanges from families whose income ended up disqualifying them for the subsidies. Congress will have to iron out the differences in a compromise bill.
The Chamber is encouraging small business owners to tell their health care story at healthreformimpacts.com.