The United States House of Representatives has voted to repeal the expanded Section 1099 reporting requirements that were part of the massive health care reform law passed last year.
H.R. 4 was introduced on Jan. 12 by Rep. Daniel E. Lungren, R-Calif., and passed the House March 3 on a 314 to 112 vote. The legislation will now be sent to the Senate for consideration.
The Senate will have to decide whether to approve the House bill or stick to the measure it approved earlier seeking to repeal the expanded 1099 reporting.
The Senate voted 81 to 17 on Feb. 2 to repeal the expanded reporting requirements in a measure attached to the Federal Aviation Association Transportation Modernization and Safety Improvement Act, S. 223.
The House, Senate and the president agree that these requirements are burdensome.
In his State of the Union Address, President Barack Obama called for the repeal of the requirements.
$21.9 billion in lost revenues
At issue if the reporting law is repealed is where the government will obtain the estimated $21.9 billion in lost revenues through 2020 that expanded reporting requirements were anticipated to generate.
Congress’ Joint Committee on Taxation had earlier anticipated $19 billion in revenue from capturing lost taxes on income that now goes unreported. A Congressional Budget Office Cost Estimate dated Feb. 18 raised that level to nearly $22 billion.
The Patient Protection and Affordable Care Act was signed into law on March 23, 2010. Section 9006 of that law would require companies and organizations to file 1099 tax reporting forms for all goods and services valued at more than $600 starting in 2012.
For many small businesses, this would extend to purchases of routine items, like office supplies and gasoline, and cause a substantial administrative burden.
Currently, the 1099 tax form is used to report nonwage income from individual workers, and the expanded reporting requirements would extend it to corporations and for property purchases.
The National Taxpayer Advocate estimates that should the expanded reporting requirements remain, 1099 filings for businesses would increase an estimated 2,000 percent, affecting as many as 40 million businesses worldwide.
After the vote, House Speaker John Boehner, R-Ohio, said, “The 1099 mandate has been a major source of uncertainty for small businesses trying to grapple with the costs and consequences of the government takeover of health care.”
House, Senate differ
The Senate’s version of the repeal would offset the lost revenue by rescinding $44 billion in appropriated discretionary funds, while protecting unobligated funds of the Department of Defense, the Department of Veterans Affairs and the Social Security Administration.
In contrast, the House version would pay for the repeal by revising a section of the health care law that provides subsidies to individuals to be used to purchase health-care insurance.
Repealing the reporting requirements has been a hot issue in the 112th Congress since it convened.
The House voted to repeal the health care law — which would have included repealing the 1099 reporting requirements — on Jan. 19. The measure then moved to the Senate, which fell short of voting to repeal the health care law.
Small businesses have been vocal about their concerns about the expanded reporting requirements, saying that they would make it even harder for small businesses to succeed.
Coin dealers have been especially worried as the expanded reporting requirements would make them responsible for collecting personal information including name, address and Social Security numbers for all who sell them goods or services in excess of $600.
As American Numismatic Association Executive Director Larry Shepherd pointed out at an Aug. 13 meeting, this would create substantial privacy concerns and would increase the risk of identify theft for collectors who buy and sell numismatic material. ■