Efforts to repeal the so-called 1099 provision buried in the health care reform act are well underway. The provision was designed to help finance the expansion of health insurance coverage by identifying vendors that are underreporting their income and not paying taxes that are due to the federal government.
As mandated by the Patient Protection and Affordable Care Act, companies are required to begin filing 1099 federal tax forms beginning Jan. 1, 2010 for all suppliers to whom they had paid $600 or more for goods obtained during a calendar year. In the ten years ending in 2020, this new provision alone was projected to raise about $19 billion.
Business owners have been particularly vocal about what they view as the excessive paperwork burden that this provision creates. Testifying before the House Committee on Small Business, owners of several of the nation’s small businesses testified that the added burden of tracking purchases and requesting tax IDs from vendors would be excessive. Tasks such as adding up purchases and requesting tax IDs from vendors would be overwhelming for many small businesses, witnesses testified.
Both president Obama and members of the Senate agree. The Senate has already approved repeal of Form 1099 on Feb. 2, 2011, with one caveat; the Office of Management and Budget must find $19 billion in savings elsewhere to offset projected tax revenue. Should the House approve a similar measure, the President is expected to endorse the final version.
