Senate Votes Down Measures to Address Onerous 1099 Reporting Requirement

Big “I” continues to fight for full repeal of measure requiring businesses to report transactions over $600 to IRS.

On Tuesday, Sept. 14, 2010, the Senate voted down dueling proposals to repeal or scale back the burdensome new Form 1099 reporting requirement. As reported in a previous IN&V, the reporting requirement was originally enacted as part of the new health care law and requires all businesses to report every business-to-business transactions over $600 (cumulatively) to the IRS beginning in 2012.

An amendment for full repeal of the provision authored by Sen. Mike Johanns (R-Neb.), and supported by the Big “I” along with many other business groups such as the NFIB and U.S. Chamber of Commerce, fell by a vote of 46-52. Shortly afterward, a competing amendment sponsored by Sen. Bill Nelson (D-Fla.), and supported by the Obama administration, went down in a 56-42 vote. Instead of full repeal, the Nelson amendment would have only modified the reporting requirement by raising the reporting threshold from $600 to $5,000, exempting companies with 25 or fewer employees and directing the IRS to modify the definition of “property” as it pertains to this mandate.

Adding another dimension to the debate was how to replace the $17 billion in revenue the reporting requirement was estimated to generate. The Johanns amendment would have paid for repeal by making changes to the new health care law, such as cutting funding for a new wellness program. The Nelson amendment would have replaced the lost revenue by increasing taxes on oil and gas companies. These politically contentious revenue offsets, combined with the debate over whether to repeal the reporting requirement or modify it, were enough to bring down both amendments.

At this point it is unclear how the debate over the 1099 reporting issue will unfold, although members of both political parties have expressed their desire to deal with the problem. The battle over how to address this issue is far from over. The Big “I” will continue to fight for full repeal, as this mandate is a huge burden on agencies at a time when many can least afford it.

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