On Tuesday April 5th, there was a huge win for small business because additional new government red tape has been stopped before it was enacted. The U.S. Senate passed H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,” to repeal the 1099 reporting requirement newly required under the recent health care reform law. Since the House of Representatives had already passed the bill by a 314-112 vote on March 3, 2011, it now heads to President Barack Obama’s desk for his signature. President Obama is expected to sign the legislation.
The 1099 reporting mandate was intended to increase tax compliance by requiring businesses to file a 1099 for all business-to-business transactions for goods or services totaling more than $600 cumulatively over the tax year. Businesses would be forced to track down and record the name, address and taxpayer identification number of each vendor. Then the small businesses would then have to file a 1099 with the IRS and send a copy to each vendor at the end of the year. This burdensome mandate would have created a mountain of paperwork for small businesses and diverted precious resources away from business expansion and job growth. Many other new twists of the health care reform law may be eliminated before they become required in 2014.