Senate Votes To Repeal 1099; House Ways and Means also Advances Repeal

Unless the 1099 reporting requirement is repealed, beginning in 2012, any business that pays a single vendor $600 or more for goods or services during a year would be required to issue a Form 1099-MISC to that vendor, and this form also must be filed it with the IRS.  We have has worked consistently with other technology associations  to encourage Congress to repeal this onerous provision.

On February 17, the Senate voted to repeal the new 1099 reporting requirement; S.223 passed by a vote of 87-8. Although this legislation deals with FAA Air Transportation Safety and Modernization, it included an amendment that would repeal the new 1099 reporting requirement. That amendment had been added to the FAA legislation earlier by a vote of 81-17.  Accordingly, now that the Senate has taken decisive action for repeal, attention turns to the House.

Also on February 17, the House Ways and Means Committee (on a voice vote) voted to forward its 1099 repeal legislation to the full House.  H.R. 4, the “Small Business Paperwork Mandate Elimination Act of 2011” now will move to the House floor for a vote, although no timing has yet been set by House leadership.

While both parties have been in agreement since last fall that this reporting requirement should be repealed, there has been no firm agreement on how to pay for the repeal, costing $17.1 billion over 10 years. As passed by Ways and Means, the repeal legislation was coupled with another bill that would raise revenue by recovering overpayments of healthcare exchange subsidies from ineligible recipients.

We now expect the House will pass its repeal legislation shortly. At that point, some process will need to unfold to conference the repeal provision passed by the House with the repeal provision included in the Senate’s FAA legislation. So, while the actual timing of this process remains unclear, actions taken so far in both the House and Senate (and by both Democrats and Republicans) indicate that the 1099 reporting requirement will be repealed before it comes into effect next January.