Amendments to Repeal 1099 Provision Set for Vote
The U.S. Senate is set to consider two amendments that would repeal
a provision of the healthcare law requiring that 1099 forms be filed with the IRS
for all transactions over $600.
A bill by Sen. Mike Johanns (R-Neb.) would repeal the requirement. A separate bill
by Sen. Spencer Baucus (D-Mont.) would also repeal it. The Johanns' measure covers the
cost by using unspent and unobligated federal money, while the Baucus version adds
about $17-19 billion to the federal deficit.
What It Means to Agents:
PIA strongly supports repeal of the 1099 provision. The expanded 1099 requirement
places an onerous burden on small businesses, erodes competitiveness, and jeopardizes
our nation's economic recovery.
Section 9006 of the new healthcare law requires that businesses of all sizes, as well
as governments and nonprofits, file a 1099 form with the IRS reporting any purchases
they make of goods or services of $600 or more in a tax year from any individual or business.
"This places an unacceptably onerous burden on businesses of all sizes," said PIA National
Executive Vice President & CEO Leonard C. Brevik. "If allowed to take effect, this
provision will impose a substantial reporting and paperwork burden on governments,
nonprofits and businesses—especially small businesses—dramatically
"This will bury small business under a mountain of needless paperwork," Brevik said,
adding that the expanded 1099 reporting requirement will distort the marketplace by
driving purchases away from small businesses. "Small business is the growth engine
of the American economy, and this provision throws sand into that engine."
In a letter to Congressional leaders, PIA noted that "this new, expanded, mandate
may have the unintended consequence of encouraging buyers of goods and services to
consolidate their purchases with large vendors instead of doing business with smaller
firms, in order to avoid the excessive paperwork."
"In addition, this expansive and expensive federal requirement also greatly raises
costs for nonprofits, and is an unfunded mandate on financially-pressed state and
local governments," the PIA letter states.
Two bills were introduced in the Senate. One would eliminate the 1099 provision
completely; another would exempt businesses with fewer than 25 employees, raise the
reporting threshold to purchases above $5,000 and exclude those made with a credit
card. In the House, Rep. Daniel E. Lungren (R-Calif.) introduced the Small Business
Paperwork Mandate Elimination Act (H.R. 5141) to repeal the provision. A Senate
companion bill, S.3578, was introduced by Sen. Mike Johanns (R-Neb.).
All of the attempts to repeal or significantly change the 1099 reporting requirement failed.
The Senate voted 46-52 on September 14 to reject an amendment by Johanns that would
have repealed the new Form 1099 reporting requirements altogether. On the same day,
the Senate also rejected by a 56-42 vote on amendment proposed by Sen. Bill Nelson
(D-Fla.) and supported by the Obama administration to limit the 1099 requirement.
PIA supports the Johanns amendment providing for outright repeal.
"Without a change by 2012, agencies and other small businesses will face an overwhelming
reporting requirement," said Mike Becker, PIA National Director of Federal Affairs,
in comments to BestWire. "A full repeal remains a top PIA priority."
Brevik said there is a "need for speed" in repealing the 1099 provision. "The IRS
is already working on procedures to implement this expanded 1099 reporting requirement,"
he said. "We need to work hard to kill it."