Senate Repeals Controversial 1099 Provision

Words: Jacob AllenAfter several failed attempts in the last Congress, the Senate finally voted to repeal the controversial 1099 requirement, originally passed as part of the health care reform bill.

In a bipartisan, 81-17 vote, the Senate agreed to erase the provision that would've required small businesses to file an Internal Revenue Service form 1099 for every vendor from whom they annually buy $600 worth of goods or services. The measure was originally enacted as a revenue generator, but quickly drew the ire of small business owners and advocacy associations nationwide, eventually becoming universally reviled.

The repeal came in the form of an amendment attached to the Federal Aviation Administration (FAA) Reauthorization bill.

"Today we provided a common-sense solution for business owners so they can focus on creating jobs, not filling out paperwork for the IRS," said Sen. Debbie Stabenow (D-MI), who proposed the successful 1099 repeal amendment. "Since last year, I have worked with my colleagues on both sides of the aisle to address this problem. If left unchecked, 40 million small businesses would see their IRS 1099 paperwork increase 2000%."

Repeal efforts in the House continue, however, most recently in the form of a hearing, titled "Buried In Paperwork: A 1099 Update," held in the House Committee on Small Business. "This new 1099 requirement will cause an avalanche of additional 1099 forms to be filed, and affect over 36 million entities," said committee chairman Sam Graves (R-MO). "At a time when we should be making it easier to create jobs, promote growth and invest in our economy, small firms don't need yet another costly and burdensome mandate."

Due to the tax implications inherent in a repeal measure, any bill that eliminates the 1099 requirement will have to pass through the House's Ways and Means Committee, which has jurisdiction over the tax code, before reaching the full House for a vote. However, Ways and Means Committee Chairman Dave Camp (R-MI) has indicated that he expects his committee to take up the repeal effort before March 1, 2011.
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