Baucus Introduces Bill To Repeal Expanded Information Reporting For Businesses

On Nov. 15, Senate Finance Committee Chair Max Baucus (D-MT) formally introduced the “Small Business Paperwork Relief Act.” The bill would repeal Sec. 9006 of the Patient Protection and Affordable Care Act (Affordable Care Act, P.L. 111-48).

In general, under current law, information returns must be made to IRS by every person engaged in a trade or business who makes payments for services, aggregating $600 or more, in any tax year to another person (other than corporations) in the course of the payor's trade or business. Effective for payments made after 2011, Sec. 9006 of the Patient Protection and Affordable Care Act would add payments of amounts in consideration for property and gross proceeds—i.e., it would add payments for goods—to the list of payments subject to reporting. In addition, it provides that starting in 2012, payments to corporations (that are not tax-exempt)—which had previously been exempt from the reporting requirement—would be subject to information reporting.

Observation: A bill along the lines of the “Small Business Paperwork Relief Act” stands a good chance at being enacted. Even the President is on board. During a Nov. 3rd press conference, he said: “The 1099 provision in the health care bill appears to be too burdensome for small businesses. It just involves too much paperwork, too much filing. It's probably counterproductive. It was designed to make sure that revenue was raised to help pay for some of the other provisions, but if it ends up just being so much trouble that small businesses find it difficult to manage, that's something that we should take a look at” [White House website, Press Conference by the President, 11/3/10].

It's unclear whether an attempt will be made to offset the cost of repealing Sec. 9006 of the Patient Protection and Affordable Care Act (there is no offset in the Baucus bill). When Congress took up the health care legislation, the Joint Committee on Taxation estimated that Sec. 9006 would raise $17.6 billion over ten years.