The Senate approved House legislation (H.R. 4), which would fully repeal all the expanded Form 1099 information reporting requirements enacted in 2010. The veto-proof 87 to 12 majority vote was sent to the President and virtually assures that it will become law.
H.R. 4 would fully repeal all three new Form 1099 provisions that expanded reporting to include payments made for property, to corporations and in connection with earning rental income. Before these provision were added, trades and businesses generally were only required to report payments over $600 per year to a vendor for services, and the regulations generally exempted payments made to a corporation (typically on a Form 1099).
The health care bill enacted in 2010 expanded the rules to require reporting beginning in 2012 (for reporting in 2013) on both payments made for property and to corporations. Later in 2010, a small business bill amended the law to require reporting beginning in 2011 (for reporting in 2012) on any payments made in connection with earning rental income.
The congressional Joint Committee on Taxation estimated that the 1099 provision would increase federal revenue by $17.1 billion over 10 years. This revenue offset would further modify the health care bill by increasing the limit on the amount of overpayment of premium assistance tax credit that taxpayers must include in income. The 1099 tax provision has been criticized roundly by business groups since it was included in the reform law as a way to increase tax revenues and to help offset the costs of federal health care reform programs. The administration, previously opposed, plans to seek to revisit the offset later.