Before recessing for its Presidents’ Day holiday, the Senate voted to repeal the expanded business Form 1099 information reporting requirements under the Patient Protection and Affordable Care Act (PPACA). The Senate vote came after the House Ways and Means Committee approved a similar repeal bill.
The PPACA imposed new business information reporting requirements as a revenue raiser to help fund health care reform. Under the PPACA, all businesses, charities and state and local governments will file an information return for all payments aggregating over $600 or more in a calendar year to a single provider of goods or services (other than a payee that is a tax-exempt organization). The PPACA also repeals the reporting exception for payments made to corporations. The PPACA’s reporting requirements start for payments made after December 31, 2011 and reported in 2013.
Since passage of the PPACA in early 2010, many businesses, especially small businesses, have complained about the burdens of complying with the expanded reporting. In 2010, the House voted to repeal the new reporting requirement but the bill died in the Senate.
The Senate’s repeal bill (Sen. 223) is an amendment to the FAA Air Transportation Act, which passed the Senate by a vote of 87 to eight on February 17. The Senate bill pays for the cost of repealing the expanded business information reporting by rescinding discretionary spending. The Senate considered, but rejected, some repeal bills that were not offset.
The House bill (H.R. 4) also repeals the expanded business information reporting requirements but the bill is not offset. This is an important difference from the Senate bill, which could slow passage of the bill if it is sent to the Senate. The challenge remains of placing the repeal of Form 1099 reporting into a larger bill to which both the House and Senate can agree.
White House position
President Obama has signaled his support to modify but not entirely repeal the expanded business information reporting requirements. In his fiscal year (FY) 2012 federal budget, the president proposed to exclude payments for goods from reporting. Information returns would only be required for payments of services.
If you have any questions about repeal of the expanded 1099 business information reporting rules, or your current obligations under the new information reporting rules in effect now, please contact our office. We will keep you posted of developments.