House Fails To Repeal New 1099 Reporting Requirements

Everyone seems to agree that the new 1099 reporting requirements contained in the health care reform bill are a bad idea, but nobody wants to take the time to repeal them.

As I noted last week, tucked into the health care reform law is a change to the tax laws that will vastly increase tax reporting requirements for businesses nationwide. Despite several complaints from small business that this will require unreasonable administrative costs to be incurred by small businesses, Congress has failed in an effort to repeal the new law:

WASHINGTON – Tucked into the new health care law is a requirement that could become a paperwork nightmare for nearly 40 million businesses.

They must file tax forms for every vendor that sells them more than $600 in goods.

The goal is to prevent vendors from underreporting their income to the Internal Revenue Service. The government must think vendors are omitting a lot because the filing requirement is estimated to bring in $19 billion over the next decade.

Business groups say it will swamp their members in paperwork, and Congress is listening. Democrats and Republicans want to repeal it, but getting them to work together on the issue is proving difficult in an election year.

The House rejected a bill Friday that would have repealed the provision. The two parties disagreed on how to make up the lost revenue.

“This foolish policy hammers our business community when we should be supporting their job growth,” Sen. Mike Johanns of Nebraska said in the Republicans’ weekly radio and Internet address Saturday. “It’s only one example of how the administration’s promise to support small businesses really rings hollow.”

Democrats blamed Republicans for Friday’s failure.

“Despite all of their rhetoric about the need to eliminate this reporting requirement, Republicans walked away from small businesses when it mattered most,” said Rep. Sander Levin, D-Mich., chairman of the tax-writing House Ways and Means Committee.


Republicans want to repeal the filing requirement and pay for it by changing other parts of the new health care law, a strategy that Democratic leaders won’t support. Democrats want to repeal the filing requirement and pay for it by raising taxes on international corporations and limiting taxpayers’ ability to use special trusts to avoid gifts taxes. Republicans won’t support that.

The House rejected the Democratic bill Friday after Democratic leaders brought it up under a procedure that requires a two-thirds majority for approval. The vote was 241-154, with nearly all Democrats voting in favor of the bill and nearly all Republicans opposed.

This is the same procedure that caused Congressman Weiner’s tantrum on the House floor yesterday over another bill, and was implemented for the same reason; to prevent House Republicans from being able to offer amendments to the bill. Basically, both sides agree that the new reporting requirement is a bad idea, but they can’t come to an agreement on how to pay for by raising revenue from some other area. As with much of what comes out of Congress, it makes absolutely no sense to the average person.

How about this one guys ? Repeal the reporting requirement now, before it starts turning tax season into a nightmare for America’s small businesses which could sort of use some help right now. Worry about paying for it later, it’s not like you worry about paying for much of anything else these days. See how easy that was ?

At this point, I don’t think small business can count on any action to get rid of this burden until the 112th Congress convenes in January.

FILED UNDER: Congress, Healthcare Policy, Taxes, US Politics, , , ,
Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed far too young in July 2021.


  1. ponce says:

    Oh, Boo Hoo.
    Any company that doesn’t have the software able spit out 1099s automatically deserves to fail.
    This must be about something other than the “burden” of setting one variable in their accounting software.

  2. Pete says:

    Ponce, why don’t you go back to the swamps at Kos? You’re starting to sound like Limbaugh ( I hope he fails).

  3. Zelsdorf Ragshaft III says:

    Ponce could never sound like Rush.  Many hate and disparage Rush, but few are willing to take him on.  His truth always defeats those who attempt it.  Call Rush what you like but no one has caught him in a lie yet.  Since Obama made the statement he was going to fundamentally transform America, which is not the job of the President of the United States, I hoped he failed too.  We will know in November how the rest of the country feels.

  4. Herb says:

    I have to agree with Ponce on this one. This requirement isn’t going to be as burdensome as the detractors think it will be. I mean, some extra paperwork? Yeah, it’s a hassle. But a burden? C’mon.

    Get rid of the requirement, I don’t care. But don’t tell me it’s a “burden” that’s going to “swamp small businesses in paperwork.” There’s a difference between “don’t wanna do it” and “can’t do it.”

  5. john personna says:

    $19B is below the accuracy of future budget projections.  To even want to “make it up elsewhere” you have to have a fundamental misunderstanding of budget and prediction.
    Nearly $55 billion in food stamps may be redeemed this year [2009], up from about $37 billion in 2008 and $31 billion in 2007, according to The Nilson Report.”

    There’s an unpredicted (and unpredictable) $20B right there.

  6. Christopher says:

    lol!  Everyone remember: it is the DEMS that control congress, and the presidency.  How is it that R’s get lumped in with this mess when dems created the mess in the first place and dems have all the power?  Sen. Levin actually blames the republicans!  Despicable! 

    Fact is, this is on THEIR shoulders!  Just like the economy, the wars, health care, the current anti-business climate, and the high High HIGH unemployemtn rate with NO end in sight!  Its a crying baby that argues otherwise.

  7. Pete says:

    Herb and Ponce, we spend close to 300 billion a year to comply with the tax code. A 65,000 page code of goodies for friends and punishment for enemies. Now, the government who is so good at managing things wants to add additional compliance costs. The IRS will have to add people to manage this, ie.more govt expansion. Is this what you call a well managed, efficient  tax revenue collection system? Oh, let’s add a VAT and more IRS agents to enforce it. Let’s add 10,000 more pages to the  tax code and then more govt bureaucrats to try to understand it. Great idea. Do you two have any business ownership experience?

  8. Idiot says:

    I have a small business with revenues ranging from a few hundred thousand to a couple of million depending on the year that I run by myself.  This is an incredible burden.  Sorry, Ponce, I don’t think I deserve to fail because Congress and the Administration think I am responsible for reporting my vendors revenues.

  9. ponce says:

    Who’s your accountant, Id?
    Bob Cratchit?

  10. Herb says:

    Pete,  I don’t have strong feelings for or against this 1099 requirement.  What I object to is this view that America’s small businesses are so incompetent and so incapable that they can’t handle it.  Gimme a break.  How are they going to save our economy if they can’t fill out some forms?

  11. Pete says:

    Herb, are you an accountant? Ponce, are you twelve years old? Herb, we can fill out forms, but the more compliance and form filling out we have to do, the higher our operating costs. The higher our costs, the higher our prices, the lower our payroll and/or the less quality we can provide. The tax code is a quagmire of inefficiency with a negative cost to benefit relationship. The revenue collection system in this country needs to be reformed; not further complicated and added to.
    Do you realize that in 2005, americans earned approximately 10 trillion dollars. After deductions, exemptions, discounts and other goodies, 5 trillion dollars were left to be taxed. Now how can you say that is efficient? Why not do away with all Federal income taxes and allow that 10 trillion to stimulate the economy through a consumption tax?

  12. Herb says:

    Why not do away with all Federal income taxes and allow that 10 trillion to stimulate the economy through a consumption tax?

    It sounds like a good idea, but I’m not so sure it would work.  We’re not debating a radical transformation of the tax code, although that’s definitely a worthy debate.  We’re talking about whether businesses can cope with these specific changes.  I say they can.

  13. Christopher says:

    lol Herb you are such a typical liberal!  Yes, yes, small businesses CAN handle the extra paperwork, but their burden gets heavier and heavier from you liberals every minute congress is in session!  Taxes regulations paperwork rules procedures departments processes laws guidelines directives STOP ALREADY!

    Read the novel “Atlas Shrugged”, probably the greatest political novel ever written.  Tells the story of what happens when the producers finally shrug off their burden of carrying the economy.  Can you guess?

  14. Juneau says:

    Mataconis, quit toeing the line for the liberal cause, or just announce yourself a partisan and get it over with for heaven’s sake.  You avoid the patently obvious in order to promote your agenda of not calling the Dems to task for … anything.  Ever. 

    “Congress” did not fail to repeal the 1099 provision, the Democrats failed.  In your zeal to insulate the left from any blame, you comveniently stay away from the fact that the Democrats could have repealed it if they really wanted to.  Anyone that follows the issue knows they instituted the neccesity for a two-thirds majority in order to gain cover (and an excuse) for not doing anything about it.   Of course, their “answer” revolved around trying to suck more money from the citizenry.  Hey, never let a crisis go to waste. right?

  15. Juneau says:

    Spelling  — yeah.  Will we ever get preview back?