ACA Joins U.S. Chamber Call to Repeal IRS Reporting Requirement in Healthcare Bill

As the new health care bill slowly begins to take effect and people begin to examine the small details within the legislation, little known provisions have been discovered that have the potential to impose large burdens on small business in the very near future. One of these provisions is known as the 1099 reporting requirement.

This requirement, added to the health care bill because of the need to reduce a tax gap and raise revenue for the bill without raising taxes, amends the 1099 reporting requirement in the Internal Revenue Code by removing the reporting exemption for companies and expanding the types of payments that need to be reported to include property and other gross proceeds.

Opposition to this reporting requirement has steadily grown in the months since passage of the health care bill because of the unnecessary paperwork imposed on business by expanding the 1099 reporting requirements. Unlike other reporting requirements that have had their monetary thresholds periodically increased through legislation or indexing for inflation, the 1099 reporting requirement has remained unchanged since 1954. Thus, a company must fill out a 1099 information return with the Internal Revenue Service (IRS) if the payments to a payee in the course of a trade or business equal at least $600 dollars. In this day and age, a frustratingly high number of minor business expenditures will now have to be carefully documented and submitted to the IRS.

While large companies may have the infrastructure and accounting departments to deal with this level of paperwork, small business will be overwhelmed by the new administrative burden and will be unable to function under the new standards. This has created tremendous opposition to the requirement, with businesses and industry associations calling for immediate repeal of the requirement. In response, the U.S. Chamber of Commerce is circulating a letter of concerned parties to repeal this onerous regulatory requirement, and ACA International has signed on to this letter. Legislation has also been proposed by Senator Mike Johanns (R-NE) and Representative Dan Lungren (R-CA) to repeal the reporting requirement.

ACA will continue to monitor federal legislative and regulatory developments to prevent harmful provisions from impacting the industry. If there are any questions regarding the 1099 reporting requirement, please contact ACA Government Affairs Specialist Nick Morgan at 202-547-2670 or morgan@acainternational.org.