Repeal of 1099 requirement passes Senate

| Thursday, February 03, 2011

The U.S. Senate voted 81-17 on Wednesday to pass an amendment repealing the IRS Form 1099 requirement that has the potential to bury small businesses under paperwork.

Sen. Debbie Stabenow, D-MI, introduced an amendment that seeks to repeal the new requirement on 1099 reporting to the Federal Aviation Administration bill. The FAA bill as a whole has not yet been voted on in the Senate.

The new 1099 requirement is set to go into effect in 2012. For truckers, the provision means filing an IRS Form 1099 for every business and service provider where they spend $600 or more annually.

However, Stabenow?s amendment is a first step toward a full repeal of the 1099 requirement.

The Owner-Operator Independent Drivers Association has actively opposed the reporting requirement and the undue burden it would place on small-business truckers.

?Thanks in large part to OOIDA members, lawmakers are grasping the fact that the filing requirement would be an extraordinary and unnecessary burden on small-business truckers. We have spoken with several Congressional offices about the 1099 requirement, and a good portion of them have said they are hearing from truckers back home,? said OOIDA Director of Government Affairs Rod Nofziger.

In addition to Stabenow?s amendment, a handful of other bills also seek to repeal the 1099 requirement.

Of those, OOIDA has thrown its support behind legislation introduced in both the House and the Senate. Those include HR4 introduced in the House and sponsored by Rep. Dan Lungren, R-CA. The Association is also backing two more bills in the Senate, S18 sponsored by Sen. Mike Johanns, R-NE, and S72 sponsored by Sen. Max Baucus, D-MT.

?It is very encouraging that lawmakers from both major parties in the Senate and the House are producing legislation to repeal the 1099 requirement, but truckers need to keep the pressure on their elected officials to make sure it gets repealed before it goes into effect next year,? Nofziger said.

The 1099 requirement originally passed into law as part of last year?s health care reform bill. Its purpose was to help generate revenue to cover the costs of the health care bill by identifying businesses that fail to report income on tax filings. The requirement was originally proposed by the Treasury Department a few years ago as a way to close the so called ?tax gap? between the amount of taxes that should be collected by the IRS and the amount that actually is paid to the agency.

One hurdle that seems to keep tripping up efforts to repeal the 1099 requirement is how to replace the revenue it?s intended to generate.

Stabenow?s amendment gives the Office of Management and Budget the ability to take away nearly $44 billion of discretionary budget authority ? except from the Departments of Defense, Veterans Affairs and Social Security ? to offset the loss from the 1099 repeal.

The amendment, even if passed along with the full FAA bill, still has some hurdles.

First and foremost, Congressional rules require that all tax-related measures originate in the House of Representatives. That means in order for Stabenow?s repeal amendment to be signed into law the FAA bill would likely have to be rolled into a House tax-related bill.

Regardless of the path the 1099 repeal takes, Nofziger is pleased to see Congress taking the issue seriously and moving forward.

?This is just the first step in the process,? Nofziger said. ?It?s imperative that lawmakers continue to hear from small business truckers. We can?t let up now.?

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