Senators Urge House to Pass 1099 Reporting Fix

Three Democratic Senators have written a letter to House Speaker John Boehner, R-Ohio, urging him to fix the 1099 reporting requirement in the health care reform law, and have pledged speedy action in the Senate if he does.

The letter was sent to Boehner on Thursday, less than a day after House Republicans under Boehner’s leadership voted to repeal the health care reform law altogether (see House Votes to Repeal Health Reform Law). However, the repeal bill is not expected to pass in the Democratic-controlled Senate. Senators Amy Klobuchar, D-Minn., Ben Nelson, D-Neb., and Maria Cantwell, D-Wash., urged Boehner to instead quickly pass a clean measure rolling back a burdensome reporting requirement in the law —the so-called “1099” requirement— to preserve jobs in America’s small businesses.

“Now that you have moved past repeal of the Affordable Care Act, we encourage you to work on efforts to improve the law moving forward,” the senators wrote in a letter to Boehner. “This past November, voters sent both parties a clear message: focus on job creation. As President Obama has recently noted, our economy will recover more quickly and create more jobs if we can reduce regulations on business. Repealing this provision would be a great first step as we work together to grow the economy.”

The provision at issue requires businesses to file a 1099 form with the Internal Revenue Service for each vendor with whom they have at least $600 in transactions. Since the health care law’s passage, Democrats have listened to businesses—especially small businesses—that have expressed concern about the potential burden posed by these added reporting requirements.

Because the Constitution requires that tax measures must originate in the House, the Senate must await House action on the 1099 repeal before it can act.

The Senate tried on numerous occasions last year to repeal the 1099 provision by attaching it to the Bush tax cuts extension legislation and other bills as an amendment. However, the competing versions offered by Democratic and Republican lawmakers, and differing ways to offset the costs, kept the two parties from giving the amendments enough votes to pass (see Senate Again Fails to Repeal 1099 Requirements).

“The change is particularly onerous for small businesses, our nation's engines of growth, who cannot afford to employ extra lawyers and accountants to comply with the new rules,” wrote the senators in the letter to Boehner. “The provision may also have the unintended consequence of distorting behavior in the marketplace, as large businesses will have an incentive to minimize their reporting requirements by consolidating purchases with large vendors, harming small, regional vendors.”

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