Senators Introduce Bills to Repeal 1099 Paperwork Mandate, 3 Percent Withholding

In the U.S. Senate Tuesday Senators introduced separate measures to repeal the Form 1099 paperwork mandate enacted in last year’s massive healthcare law, and to repeal the 3 percent withholding requirement on payments to government vendors.  Both provisions are scheduled to take effect on January 1, 2012. Included in the Patient Protection and Affordable Care Act was a provision that requires government, nonprofits, and businesses of all sizes to file Form 1099s with the IRS when goods or services purchased without a credit card from another business exceed $600 in a year.  The provision was passed to help identify businesses that are not reporting or underreporting income to avoid paying their fair share of taxes and to raise an estimated $17 billion to help pay for the healthcare bill.  However, the new requirement will be a tremendous burden on businesses, increasing their paperwork and compliance costs. Senator Max Baucus (D-Mont.) Tuesday introduced legislation to repeal the 1099 paperwork mandate.  The bill, S. 72, the Small Business Paperwork Mandate Elimination Act, is identical legislation to H.R. 4 introduced in the U.S. House of Representatives by Representative Dan Lungren (R-Calif.) on January 12.  Similar legislation failed to pass in 2010 due to disagreements over whether and how the cost of the repeal would be offset.  Both the House and Senate bills do not include offsets; a different Senate bill, S. 18, also introduced this week by Senator Mike Johanns (R-Neb.) would be paid for with unobligated Recovery Act funds.  On January 19, the House passed a bill to repeal the Patient Protection and Affordable Care Act in its entirety, including the 1099 paperwork mandate.  Given that the Senate is unlikely to bring the bill up for a vote, the House has yet to schedule consideration of H.R. 4 or other standalone bill to repeal the 1099 paperwork mandate. Two measures were also introduced in the Senate Tuesday to repeal the 3 percent withholding requirement on federal, state, and local government contracts.  S. 89, introduced by Senator David Vitter (R-La.), and S. 164, introduced by Senator Scott Brown (R-Mass.).  Like S. 18, the bill introduced by Senator Brown would offset the roughly $11 billion cost to repeal the 3 percent withholding law by using unobligated Recovery Act funds. AGC is requesting members us the Legislative Action Center to write their Senators and Representative in support of H.R. 4 and S. 72, to repeal the 1099 paperwork mandate, and S. 89, to repeal 3 percent withholding.  For more information on the 1099 reporting requirement and to write your Members of Congress, use the AGC Legislative Action Center by clicking here. For more information, contact Karen Lapsevic at (202) 547-4733 or lapsevick@agc.org.