House Votes to Repeal Expanded 1099 Reporting Requirements

On Thursday, the House of Representatives approved by a 314-112 margin the Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4), yet another measure that seeks to repeal the expansion of the 1099 reporting requirement for payments to corporations for goods or services of $600 or more, which was included in the health care reform law. The Senate had already approved a different version of the 1099 reporting repeal as part of the FAA reauthorization bill it voted in favor of last month.

By agreement, the text of a slightly more expansive bill – H.R. 705 – was substituted for that of H.R. 4. Therefore, in addition to repealing the 1099 reporting requirement for purchases of $600 or more, the measure would also repeal a similar expansion of information reporting for owners of residential real estate who rent out that property, and increase the maximum amount of health care subsidy overpayments that an individual must repay. With respect to the subsidy overpayment provision, earlier this week Rep. Dave Camp (R-MI), Chairman of the House Committee on Ways and Means and sponsor of H.R. 705, submitted a statement (pdf) to the House Rules Committee claiming that “[c]urrent law fails to adequately protect taxpayers from subsidy overpayments, even in the case of fraud, by limiting the amount of subsidies that can be recaptured if an individual/family receives larger subsidies than authorized in the law.” The new bill would increase the amount of subsidy overpayments subject to recapture depending on a family’s income level.

The bill that the House approved was introduced by Rep. Daniel Lungren (R-CA) and co-sponsored by 273 other House members. Both Democratic and Republican members of the House and Senate – in addition to the President and officials at the IRS – have called for the expanded 1099 reporting provision’s repeal. Many have testified at Congressional hearings that the reporting requirement would greatly increase an employer’s administrative burden, as well as strain the IRS’s enforcement staff.

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