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1099 Repeal: Not If, But When

The U.S. Senate fell six votes short on November 29 in a bid to repeal a provision of the healthcare law requiring businesses of all...
December 7, 2010

The U.S. Senate fell six votes short on November 29 in a bid to repeal a provision of the healthcare law requiring businesses of all sizes, as well as governments and nonprofits, to file a 1099 form with the Internal Revenue Service reporting any purchases they make of goods or services of $600 or more in a tax year from any individual or business, including corporations.

An amendment by Sen. Mike Johanns (R-Neb.) to repeal the requirement failed on a 61-35 vote. A separate repeal amendment by Sen. Max Baucus (D-Mont.) failed 44-53. A two-thirds vote of 67 was needed to amend the food safety bill. You can view how your Senators voted via PIA National's Scorecard by clicking the following links: Democratic Proposal  GOP Proposal

Another attempt to repeal the 1099 reporting requirement was made on December 4 in the Senate when a repeal provision was attached to a large tax bill (H.R. 4853) that would have extended the Bush-era tax cuts for individuals with annual incomes of $250,000 or less. That bill failed when a motion for cloture on it was defeated on a 53-36 vote. A total of 60 votes was needed. See how your Senators voted via PIA National's Scorecard here.

While there is wide consensus in both the Senate and the House that this measure needs to be repealed, the controversial component remains how to make up for the suspected loss of revenue. Sen. Johanns's amendment did this by committing allocated but unspent federal dollars; the competing repeal amendment offered by Sen. Max Bachus (D-Mont.) would have added the cost directly to the deficit. Additionally, passing revenue related bills has a technical element dating back to the Origination Clause of the U.S. Constitution that can make passage difficult if they do not originate in the House.

"PIA is disappointed that the Senate failed to approve an amendment repealing the expanded 1099 reporting requirement, which places an onerous burden on small businesses including independent insurance agencies," said PIA National Executive Vice President & CEO Leonard C. Brevik. "However, we are optimistic that repeal will be successful - perhaps during the lame-duck session - in part because of the overwhelming support in the Senate. When it comes to repealing the 1099 requirement, it's not a matter of if but when, and when is soon."

Hill staffers have told PIA there may be another repeal attempt in the lame-duck session of Congress.

What It Means to Agents: PIA National remains highly engaged in the ongoing effort to broker a deal that will repeal the 1099 requirement once and for all. There is still a chance that this will happen during the December lame-duck session. But if this gets moved to the new Congress, prospects for a quick repeal could be even better.

Click here to read Congress Fails In Effort To Repeal 1099 Provision (PIA quoted) (National Underwriter 11/30)

Click here to read Senate stumbles in effort to repeal 1099 (PIA quoted) (Ins & Financial Advisor 11/30)
Click here to read Tax Provision Repeal Fails; Foes May Try Again (PIA quoted) (BestWire 11/30)

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