House Moves 1099 Repeal Bill to Priority

January 19, 2011

On Jan 12, Republicans signaled that repealing the controversial 1099 reporting requirement passed as part of the health care law is one of their most pressing priorities by renumbering it to H.R. 4.

This bill will repeal Section 9006 of the Patient Protection and Affordable Care Act (PPACA) that requires any business that purchases more than $600 of goods or services from another business to submit a 1099 form to the Internal Revenue Service (IRS).

On the first day of the 112th Congress, Rep. Dan Lungren (R-Calif.) had introduced a 1099 repeal bill, the Small Business Paperwork Mandate Elimination Act of 2011, which was numbered H.R. 144. However, by bumping up that bill to H.R. 4, with the exact same language, Republicans have made it clear that they will move this bill on an expedited basis. Traditionally, the House majority controls the first ten bills in Congress (H.R. 1 through H.R. 10), and usually reserves those numbers for high-priority items.

H.R. 4 has 245 co-sponsors, more than the 194 co-sponsors of H.R. 144–a sign that support for 1099 repeal is strong and growing. Twelve Democrats are co-sponsors of the bill, including House Financial Services Ranking Member Barney Frank (D-Mass.).

Several on the hill expect H.R. 4 to be taken up shortly after the House votes on H.R. 2, which would repeal the health care law. Unlike H.R. 2, however, H.R. 4 has a good chance of passing the Senate and being signed into law by the president. The only obstacle standing in the way of passage is how to make up for the $17 billion in tax revenue that the 1099 reporting requirement was projected to generate. The pending House bill does not include any offsets for 1099 repeal, while in the past, the Senate has insisted on offsets.

Businesses are hopeful this question will be resolved quickly. Otherwise, many small businesses will have to start overhauling their accounting systems in order to begin complying with the expanded 1099 reporting requirement in 2012. Money and time they could be spending on hiring new employees and buying new equipment.

In the Senate, Sens. Mike Johanns (R-Neb.) and Joe Manchin (D-W.Va.) plan to offer their own version of 1099 repeal legislation on Jan. 25, the first available day for offering new bills in the Senate.

Please take a few moments now to urge your lawamkers to support repeal of the expanded 1099 reporting provision.