1099 Reporting Requirement Repeal Efforts

In April 2011, the Senate passed and the President signed the bill to repeal the new 1099 reporting requirement that was scheduled to kick-in in 2012. The House had approved the same bill (H.R 4), introduced by Congressman Lungren (R-CA), earlier this year.

The bill repeals only the new broader reporting requirements.  Businesses will still have to send 1099s to independent contractors as current law requires.

The 1099 paperwork mandate was a provision of the health care bill passed last year that imposed new tax reporting requirements, on every business in the U.S., including those in the horse industry, beginning in 2012. 

There were several attempts to repeal the 1099 requirement last Congress which failed.

Background

The Patient Protection and Affordable Care Act (“Health Care Bill”) that was signed into law last year included a provision broadly-expanding 1099 IRS form reporting requirements starting in 2012.  Currently the law requires 1099s to be sent to any independent contractor that receives $600 or more from a business in a year.  The new requirement requires 1099s be sent not only to independent contractors but also to any individual or corporation from whom a business purchases a total of $600 or more in goods or services in any given year.  Its stated purpose is to identify unreported taxable income, fraudulent tax deductions, and increase tax compliance.

This new requirement will greatly increase the administrative burden on all businesses, particularly small businesses, including those in the horse industry.  For example if a horse farm buys $600 worth of hay and grain from a particular retailer, or purchases buckets and bridles for a total of $600 from a tack shop, or an even buys office supplies of $600 from a supply store over the course of the year, or an individual buys a computer for $700 from a local store, they are required to issue each business a 1099 form that must be completed and returned to the IRS.  This reporting mandate places an added burden on each business involved.  The horse businesses would have to collect information and tax identification numbers for every entity they do $600 worth of business with and mail them forms and the business receiving the forms must complete them.

Senate Action

On February 17, 2011 the Senate passed the FAA Air Transportation Modernization and Safety Improvement Act (S.223) that includes an amendment that will repeal the recent 1099 paperwork mandate.   

On April 4, 2011 the Senate passed The Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4).

House Action

On March 3, 2011 the House passed The Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4)  introduced by Congressman Dan Lungren (R-CA) that would repeal the new 1099 requirement.

Status

On April 14, 2011 the President signed the bill (H.R 4) into law that repealed the new 1099 reporting requirement.

AHC Position

The AHC supported repeal of the new 1099 reporting requirement.