Senate Approves 1099 Repeal, Sends Bill to President

The Small Business Jobs Act enacted a requirement making individuals receiving rental income issue Forms 1099 to service providers in 2011 and for payments made for property and to corporations beginning in 2012.

April 2011
by Journal of Accountancy staff

The Senate on Tuesday passed legislation to repeal both the expanded Form 1099 information-reporting requirements mandated by last year’s health care legislation and also new 1099 reporting requirements imposed on taxpayers who receive rental income. The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (HR 4 (PDF)) was approved by the Senate by a vote of 87–12. The House of Representatives passed the bill on March 3, and since the House and Senate have approved the same version it now goes to President Barack Obama for his signature.

The repeal bill was passed in response to two pieces of legislation enacted in 2010 that significantly expanded information-reporting requirements for businesses and for taxpayers who receive rental income. The Patient Protection and Affordable Care Act (PL 111-148) expanded the 1099 reporting requirements to include all payments from businesses aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a tax-exempt corporation), and to include payments made for property, starting with payments in 2012.

The Small Business Jobs Act (PL 111-240) enacted a requirement that individuals who receive rental income must issue Forms 1099 to service providers for payments of $600 or more made during 2011 and for payments made for property and to corporations beginning in 2012. Both of these provisions are repealed by the bill.

Both of the 1099 reporting requirements were intended to raise revenue. To pay for repeal, the bill will increase the amount of the new IRC § 36B healthcare premium assistance credit that is subject to recapture. Under this amendment, taxpayers whose household income is over 400 percent of the poverty line for a particular tax year would have to pay back their advance health care premium assistance credit payments (previously this provision applied to taxpayers whose household income was over 500 percent of the poverty line).

This article has been excerpted from the Journal of Accountancy. View the full article here.