Senate Finance Committee Chairman Max Baucus (D-MT) has announced that he will introduce legislation that would repeal the new corporate information reporting requirements that are scheduled to go into effect in 2012 [U.S. Senate Committee on Finance News Release, Baucus to Introduce Bill to Repeal Form 1099 Income Reporting Requirements for Small Businesses, 11/12/10].
Background. The 2010 Patient Protection and Affordable Care Act (Health Care Act, P.L. 111-148) included a provision (IRC §6041(h)) that, effective for payments made after 2011, would require a person engaged in a trade or business (payors) to file an information return for all payments totalling $600 or more in a calendar year to a single payee (other than a payee that is a tax-exempt corporation). Under current law, payments to corporations, except those made for medical or health care services, are not required to be reported on an information return.
Businesses owners have raised concerns about the expense and effort that would be required to comply with the expanded information reporting requirements.
The news release. The news release that accompanied the proposed legislation included the following statement from Senator Baucus: “I have heard small businesses loud and clear and I am responding to their concerns. Small businesses are the backbone of our economy in my home state of Montana and across the country, and they need to focus their efforts on creating good-paying jobs — not filing paperwork.”
White House supports revisions to the rules. President Obama made the following comments on the new information reporting requirements during a November 3rd press conference: “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].