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Senate Repeals 1099 Reporting Requirement

02.02.2011 - National Healthcare Reform

On Wednesday, February 2, 2011, the U.S. Senate voted with overwhelming bipartisan support to strike down the 1099 information reporting requirement that was enacted last year under federal health care reform.  As an amendment to the FAA Reauthorization bill, it passed 81-17, with all “no” votes coming from Democrats.  The House must now approve its own version of the legislation, which should occur relatively soon now that Republicans control the lower chamber.

This provision of the health reform package, which requires all business owners to file 1099 tax reporting documents for all cumulative purchases from any single vendor that total more than $600 in one year, has been denounced by politicians from both sides of the aisle.  Its repeal has also enjoyed support from President Barack Obama who called for to be abrogated in his recent State of the Union speech.  Although ostensibly unrelated to health care, it was included in the reform package because it was estimated by the Congressional Budget Office to raise about $17 billion in previously uncollected taxes.

A repeal of this provision, seen by bipartisan business groups as administratively burdensome, has been introduced in Congress numerous times throughout the past few months, but Members of Congress could not come to a consensus on how to pay for it.  The repeal, introduced by Sen. Debbie Stabenow (D-Mich.), would be paid for by requiring the federal Office of Management and Budget to identify unobligated but already appropriated funds.  The amendment, however, expressly prohibits funds to be taken from the Department of Defense, Department of Veterans Affairs, and the Social Security Administration to pay for it.

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