Updated to add:
The Senate is slated to take up a House-passed 1099 repeal bill on Tuesday morning that will likely pass.If the House-passed measure gains approval without being amended, the bill goes to President Obama for his signature. The full article can be viewed online at The Hill.
Momentum to repeal the controversial Form 1099 expanded business information reporting has slowed as the Senate debates how to pay for removal of the recently-enacted provision. The Senate recessed on March 18 for a one-week break with lawmakers still divided over offsets. There are two controversial reporting requirements that most business leaders want to see removed:
– Under the Small Business Jobs Act of 2010 (SBJA), for payments made after December 31, 2010, with limited exceptions, persons (landlords) receiving rental income from real estate are treated as if they are engaged in a trade or business of renting property and therefore must file return, even if they are not actually otherwise considered in an active trade or business.
– Under the Patient Protection and Affordable Care Act (PPACA), for payments made after December 31, 2011, 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).
House bill H.R. 4, as passed by the House, repeals both the SBJA and the PPACA’s business information reporting requirements. H.R. 4, however, is offset by increasing, for tax years ending after December 31, 2013, the advance applicable dollar amount of the tax credit for health care premium assistance for taxpayers whose household income is less than 400 percent of the poverty line. H.R. 4 also repeals information reporting for rental property expense payments made after December 31, 2010.
Senate resistance Some Senate Democrats object to the changes to health care premium assistance and, instead, support a different repeal bill (Sen. 223), which is offset by rescinding discretionary spending. The Senate approved Sen. 223 earlier this year. The Senate may resume debate over repeal when it returns to work on March 28. In the meantime, businesses must start collecting information and putting processes in place to assure full compliance with the new reporting requirements should Congress not come to an agreement that repeals one or both of them.