1099 Repeal Means One Less Headache for Small Businesses

The Puget Sound Business Journal reports that the U.S. Senate has voted to “repeal a health care reform provision that requires businesses to file a 1099 form with the Internal Revenue Service any time they spend more than $600 a year with another business.”

Previously, businesses have had to file a 1099 for contracting for services worth over $600 with an unincorporated business. The health care reform provision added “goods” to services, and included all vendors, so that anything over $600 purchased from another business would require a 1099.

Somehow this made it past our legislative leaders, as if they were in thrall to a mighty bookkeeper lobby. The New York Times reported earlier on the logistics of the expanded reporting provision, noting that if small businesses used a program like QuickBooks, the 1099s would be automatically generated from the payment recorded. Of course, that still left small businesses with chasing down tax IDs for businesses they may have only made a one-time purchase with online. And there’d be those hundreds of envelopes to stuff.

In theory, the provision was to generate some $19 billion in revenue to help pay for health care reform. While there was broad bipartisan support for the repeal of the provision in the face of the extra paperwork it required of small businesses, the question of funding health care reform has become no less contentious. Politico quotes Republican Leader Sen. Mitch McConnell as saying the repeal bill’s passage was, “the first repeal effort of Obamacare.”