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President Obama Expected To Sign 1099 Repeal Legislation
April 14, 2011
FEI Summary
On April 5, the U.S. Senate passed legislation to repeal the 1099 reporting requirement. The vote resulted in the passage of H.R. 4, with 87 ayes and 12 nays and passed the House last month by a vote of 314-112. Yesterday President Barack Obama signed the repeal bill into law.
The 1099 reporting requirement was a provision included in the Patient Protection and Affordable Care Act and was intended to increase tax revenue to help pay for the health care law. The provision requires companies to complete and submit 1099 tax forms for every vender to which they pay $600 or more for goods and services in a single year. Once this provision of the law was discovered, it immediately drew criticism from both sides of the aisle as being extremely burdensome. Businesses would have to send copies of the form to their vendors, suppliers and contractors, making it particularly difficult and costly for small and mid-sized companies that do not have the employees or systems to comply with such a requirement.
While the president had expressed disapproval for the offsets used in H.R. 4 to pay for the 1099 repeal, he was not expected to veto the legislation in light of the broad support gained for repealing this requirement on businesses. In a statement released by the White House after the bill’s passage, President Obama said that “Small businesses are the engine of our economy and eliminating the 1099 reporting requirement is the right thing to do.”
Until now, the effort to repeal the 1099 reporting requirement has been complicated by disagreements as to how to pay for the resulting loss in revenue. This disagreement was reflected in dissimilarities between H.R. 4 and the previous 1099 repeal bill that had passed the Senate. H.R. 4 included a pay-for provision that requires certain individuals to pay back a portion of the subsidies they receive to join health insurance exchanges created under the law if their income increases. The measure was nearly delayed by an amendment introduced by Sen. Robert Menendez (D-N.J.), which would have required the director of Health and Human Services to study the impact of the pay-for used in H.R. 4 on the quality and cost of health care, whereas the offsetting provision would not take effect if a detrimental impact was found. This amendment did not pass, however, clearing the way for the president’s signature.
Prepared April 5, 2011 by Daniel Arant (darant@financialexecutives.org), legislative aide, Government Affairs, Financial Executives International (FEI). This summary does not represent FEI opinion specifically noted above.
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