Senate Votes to Repeal 1099 Reporting

February 8, 2011

On Feb. 2, the Senate approved 81 to 17 an amendment to the Federal Aviation Administration (FAA) reauthorization bill (S. 223) currently under debate in the Senate that would repeal new IRS Form 1099 reporting requirements for businesses.

The measure, offered by Sen. Debbie Stabenow (D-Mich.), is offset by retracting $44 billion in previously approved but unobligated discretionary spending, barring the spending of those funds by the Defense and Veterans Affairs Departments and the Social Security Administration.

Stabenow’s amendment would eliminate the requirements set forth by the Patient Protection and Affordbility Act (PPACA) that mandate, starting in 2012, all businesses to file an information return–or 1099 form–for any payment totaling $600 or more in a calendar year to a single payee.

Repeal of this provision has widespread bipartisan support and administration backing, but previous attempts to repeal the bill have failed as lawmakers could not reach an agreement on how to offset the legislation. Sen. Mike Johanns (R-Neb.) had filed a 1099 repeal amendment (S. Amdt. 3) Jan. 31, a day earlier than Stabenow, differing from Stabenow’s language only with regards to the pay-for using rescission of unobligated discretionary spending, more simply put: unused agency funds.

Prior to floor action on the Stabenow amendment, the Senate failed by a vote of 44-54 to adopt S. Amdt. 28 offered by Sen. Carl Levin (D-Mich.) which called for a repeal of 1099 but was paid for with a number of tax provisions, among them a repeal of the Section 199 domestic manufacturing deduction for oil and gas production and changes to the foreign tax credit rules applicable to dual capacity taxpayers and the rules relating to foreign oil and gas income.

NSBA supported the Stabenow amendment, as it is a common-sense solution for business owners who need to be focused on creating jobs, not filling out paperwork for the IRS.

Meanwhile, on Wednesday, Feb. 9, the House Small Business Committee will hold its first full committee hearing entitled, “Buried in Paperwork: A 1099 Update.” During the hearing, the Committee will examine the expanded 1099 information reporting requirements in Section 9006 of the PPACA. The Committee will hear testimony from Rep. Dan Lungren (R-Calif.), the sponsor of legislation (H.R. 4) to repeal Section 9006 of PPACA.