Bill to end expanded Form 1099
business reporting clears Congress
Wednesday, April 06, 2011
The Senate voted on Tuesday, April 5, to eliminate the controversial Form 1099 reporting rule that has bedeviled businesses even though it never came close to taking effect.
The provision was part of last year's health care reform law. It would have required businesses, charities and state and local governments to file a 1099 form with the IRS on annual purchases from contractors of more than $600. Supporters argued that the additional third-party reporting would generate additional tax revenue vendors who previously had been under reporting their income.
The new reporting rule had been scheduled to take effect on Jan. 1, 2012. But opponents didn't wait long to begin fighting for its removal.
Small businesses were the most adamantly opposed to the requirement, saying compliance would be overly burdensome, both administratively and financially.
Lawmakers heard the complaints.
Both the Senate and House proposed versions of repeal in the last Congress. But the politics of the midterm elections prevented resolution.
One of the big holdups was how to make up the money that would be lost without the 1099 rule.
Under the just-passed bill, some of the money comes from a new provision requiring individuals pay back federal health-care subsidies if their income increases more than 400 percent of the poverty line. Depending on family size and just how much income rises, the paybacks could range from $600 to $2,500.
Opponents of the payback argued that it could in effect be a tax hike on the middle class, affecting taxpayers who straddle the triggering income line. Something as simple as a year-end bonus, they said, could push taxpayers into payback territory.
But more Representatives and Senators were against the expanded 1099 reporting than the revenue offset mechanism. This final version of repeal, which also does away with another Form 1099 reporting requirement on rental real estate owners, got bipartisan support from both houses of Congress.
Obama, who acknowledged opposition to the bill in his State of the Union address in February, indicated he will sign it into law.
"We are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses," said a statement from the White House following yesterday's Senate vote. "Small businesses are the engine of our economy and eliminating the 1099 reporting requirement is the right thing to do."
- 1099 expanded reporting halfway gone
- Senate trying to repeal expanded business 1099 reporting ... again
- Form 1099 repeal fails yet again
- Senate uses Form 1099 as political bludgeon
- Repeal of new Form 1099 reporting rule back
in Congressional sights
- Senator slams SBA for not taking a stand
on new Form 1099 reporting rule
- Lawmakers seek repeal of new 1099 forms
- Effort to repeal 1099 reporting fails
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Thank God for all of my fellow business owners.
Posted by: Mickey Hayward | Wednesday, April 06, 2011 at 03:26 PM