Hated 1099 rule is on the way out
Senators agree to revert to old law and throw out new requirement that businesses send 1099s to vendors. Landlords still must do additional reporting.
They did it! They really did it!
Democratic and Republican Senators actually worked through the 1099 repeal issue yesterday afternoon, agreeing to scrap the expanded reporting version and go back to the way the system operated pre-health care reform.
The repeal of the provision was tacked onto the $34.5 billion Federal Aviation Administration reauthorization bill. Competing versions were debated and votes actually taken.
The 1099 amendment that was approved, offered by Sen. Debbie Stabenow, D-Mich., calls on the Office of Management and Budget to cut unnecessary unobligated spending, but exempts Social Security Administration administrative expenses from the budget ax.
The FAA measure, like the 1099 repeal add-on, enjoys wide bipartisan support, so there's hope that the House will leave the Senate version pretty much as is so that we can finally be done with this controversial reporting requirement.
Reversion rather than outright repeal
And there's one point I want to make very clear.
Although the word "repeal" is being bandied about, by me and many other journalists and bloggers, businesses still will have 1099 tasks to complete. They'll just be the ones they've been complying with before the process was expanded as part of the health care debate.
The pre-Patient Protection and Affordable Care Act law generally requires businesses to file an information return with the IRS reporting payments to non-corporate service providers that exceed $600 in a given year. Payments to providers of goods are excluded from reporting. Payments to a corporation for goods or services are excluded from reporting with some limited exceptions.
So actually, we should be saying the law will revert to the previous statute, rather than it's on its way to being repealed.
Also, it looks like the amendment focused just on the 1099 rules that were part of health care. The new 1099 requirements for rental property owners that's part of the Small Business Jobs Act is still in place.
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