Fuel Smarts

1099 Rule Change Stalled in Senate

September 13, 2010

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Two amendments that would have addressed a provision in this healthcare reform legislation that would burden businesses with more tax paperwork failed to move forward in the Senate today.


The amendments would have addressed the 1099 reporting requirement that was part of the Health Care Reform Law. This provision requires all businesses, sole proprietors, partnerships, and corporations alike, to issue a Form 1099 report to any entity, corporate, individual, or other, to which they have paid $600 or more during the tax year.

Scheduled to go into effect January 1, 2012, the provision will result in the issuance of millions of additional 1099s. Critics say this provision is unduly burdensome for businesses in exchange for the relatively small tax gain it is supposed to raise.

As the Owner Operator Independent Drivers Association said in its "Call to Action" to its members on the issue, "For small-business truckers, that could amount to hundreds of 1099 forms every year - forms for every fuel stop, repair service, parts provider or restaurant, just to name a few - where a trucker spends more than $600 annually."

The American Trucking Associations, the Owner-Operator Independent Drivers Association, and the truckstop Group NATSO all urged their members to support the Johanns Amendment (Senate Amendment 4596). Introduced by Sen. Mike Johanns, R-Neb., it would have outright repealed the provision. However, it failed in Senate voting Tuesday, 46-52.

There's another amendment being offered by Sen. Bill Nelson, D-Fla., to address the issue. Senate Amendment 4595 exempts businesses with 25 or less employees, at any point in a given year, from reporting; raises the yearly threshold for reporting from purchases made from a business that total $600 to $5,000; exempts credit card purchases; and instructs the Treasury to issue rules that provide exceptions for payments which bear minimal risk of non-compliance.

The Senate voted for this amendment 56-42, but did not have the 60 votes needed for the bill to move forward.

The American Trucking Associations says the Nelson amendment would stlll be "tremendously burdensome" for small businesses.

The White House, according to published reports, endorsed the Nelson Amendment but was against the Johanns Amendment.

This isn't the end of the issue. As TheHill.com notes, lawmakers will most likely look separately at the 1099 issue and possibly repeal it or change its scope. The debate, notes The Hill's Vicki Needham, has not been about whether to repeal or change the requirement, but about how to cover the loss of about $17 billion in revenue to pay for the healthcare law.

Story updated 12:30 EDT 9/14/2010 to reflect result of voting in the Senate.





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