House Votes To Repeal New 1099 Rules
Vol. 796 
March 8, 2011

The U.S. House of Representatives voted last week to repeal new 1099 tax reporting rules that are set to go into effect next year. The Senate has also voted to revoke the measure, but the two government branches now have to agree on a bill before President Obama can sign it.  

The original law, which was part of last year’s health care legislation, mandated that beginning in 2012 companies would have to file 1099 tax forms for every vendor that they paid more than $600 to in a given year. The business community and the U.S. Chamber of Commerce have claimed that the measure would burden small businesses with unnecessary paperwork. The House voted by a 314-112 margin to repeal the new rules and restore the requirement that businesses file 1099 forms only for transactions with non-corporate entities, such as independent contractors.

"The purpose of our bill is to help employers do what they do best," said Representative Dan Lungren (R-CA), the lead sponsor of the House measure. "Plain and simple, they create jobs."

While President Obama has said that he supports repeal of the 1099 provision placed in the health care law, there is disagreement about how to make up for the lost tax revenue associated with it. The House and Senate are now scheduled to negotiate a new version of the 1099 repeal measure, and both sides hope to have a new bill on the president’s desk in the second quarter of this year.