Saturday, February 5, 2011

Senate Passes Provision to Repeal Form 1099 Reporting Rules

By Christine Grimaldi
Publication Date: 02/03/2011

The Senate Feb. 2 adopted an amendment (S. Amdt. 9) to a reauthorization of the Federal Aviation Administration (S. 223) repealing the new Form 1099 reporting requirements enacted under the health care reform law.

The amendment, offered by Senate tax writer Debbie Stabenow (D-Mich.), was considered passed following a 81-17 vote to waive a budget point of order raised against it. Work on the overall FAA bill, which has not yet seen any aviation-related amendment votes, will likely stretch into the week of Feb. 7.

Stabenow's amendment would eliminate the requirements set forth by the Patient Protection and Affordable Care Act (Pub. L. No. 111-148) that mandate all businesses from 2012 onward file an information return for any payment totaling $600 or more in a calendar year to a single payee.

Sen. Mike Johanns (R-Neb.) had filed a 1099 repeal amendment (S. Amdt. 3) Jan. 31, a day earlier than Stabenow, differing only from Stabenow's in language regarding the rescission of unobligated discretionary spending.

“It turns out Senator Johanns did such an outstanding job raising awareness about the 1099 requirement that Democrats took the idea and are now claiming it as their own,” Senate Minority Leader Mitch McConnell (R-Ky.) said in prepared floor remarks. “Which is fine with us. It's not a bad precedent actually. We've got a lot of other good ideas that we'd be happy to share.”

The National Association of Manufacturers, meanwhile, urged lawmakers in a letter to support Stabenow's amendment.

Aric Newhouse, NAM's senior vice president of policy and government relations, wrote that any votes related to the Stabenow amendment “may be considered for designation as Key Manufacturing Votes in the 112th Congress.”

Levin Amendment Revenue Offset Failed
Prior to floor action on the Stabenow amendment, the Senate failed by a vote of 44-54 to adopt S. Amdt. 28 offered by Sen. Carl Levin (D-Mich.) paid for with a number of tax provisions, among them a repeal of the Section 199 domestic manufacturing deduction for oil and gas production and changes to the foreign tax credit rules applicable to dual capacity taxpayers and the rules relating to foreign oil and gas income.

Another pay-for would have required investors using grantor retained annuity trusts to hold the trust for a minimum of 10 years.

“The mechanism that some support to meet that cost would empower the director of the Office of Management and Budget to decide, by himself, which funds we have appropriated but that have not yet been obligated, which of those unobligated funds should be cut to pay the cost of repeal,” Levin said on the floor.

“To some, this may be a convenient way to relieve Congress of its responsibility to make difficult choices,” he continued. “To others, it may be a convenient way to shift the blame for the painful impact of any cuts from Congress onto the president. But what is convenient is not always right. The Constitution places in our hands, and ours alone, the authority to appropriate funds. We cannot statutorily pass that buck, and we shouldn't.”

The complete text of this article can be found in the BNA Daily Tax Report, February 3, 2011. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today.

© 2010, The Bureau of National Affairs, Inc.

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