Senate Finance Committee Chairman Max Baucus (D-Mont.) on Nov. 15 introduced legislation to fully repeal IRS Form 1099 information reporting requirements for small businesses and independent landlords contained in recently enacted health care and small business laws.
Starting in 2012, the Patient Protection and Affordable Care Act will require all businesses to file information returns (generally IRS Form 1099) for payments to entities that total more than $600 in a given year. The Small Business Jobs Act of 2010 further expands Form 1099 information reporting requirements so that independent landlords must now submit 1099s to businesses with which they have more than $600 of annual business as of Jan. 1, 2011.
The Small Business Paperwork Relief Act, S. 3946, would repeal these new and expanded requirements without providing any revenue offsets to cover the $19.2 billion cost over 10 years.
The lack of offsets could prove controversial with some Republican deficit hawks. Senator Mike Johanns (R-Neb.) has reintroduced his own legislation, the Small Business Paperwork Reduction Act, which fully repeals the 1099 reporting requirements but offsets the cost with unspent and unobligated federal dollars. Senate Democrats have opposed this offset in the past, with the Senate previously voting 46 to 52 to reject a similar amendment offered by Sen. Johanns.
Introduction of the Baucus bill is a positive development because both parties are now on record to completely overturn these small-business tax reporting provisions. Senate Democrats had previously proposed a small business carve-out, rather than a full repeal as espoused by Republicans, because they were looking for offsets to make up for revenue that would be lost.
NAHB continues to oppose all the expansions of the 1099 requirements and push for a full repeal because they are a costly and unfair administrative burden for small businesses. NAHB has submitted comments to the Treasury Department opposing the new rule, and is working within a broad coalition of business groups to seek congressional repeal.
In announcing his plans to introduce S. 3946, Baucus said he heard the message from small business owners that these reporting requirements would place too large of a paperwork burden on businesses struggling in a still-recovering economy.
“I have heard small businesses loud and clear and I am responding to their concerns,” Baucus said in a statement.