The Patient Protection and Affordable Care Act (PL 111-148, the “Act”) enacted in 2010 significantly expanded information-reporting requirements for businesses. As part of the Act, 1099 reporting requirements were expanded to include all payments from businesses aggregating $600 or more in a calendar year to a single payee, starting with payments in 2012. So, if your business engaged the services of a local florist to water your plants for $15 a week, under the Act you would have to issue the florist a 1099.
Rep. Dan Lungren (R-CA) accurately labeled the expanded 1099 reporting requirements as the “Snitch Act.” According to Rep. Lungren “[i]t’s basically assuming the people you do business with are cheating.” “So therefore, the government requires paperwork on your side because of something they believe may or may not be occurring with respect to somebody on the other side of a business transaction.”
Recognizing the ridiculous implications of the expanded 1099 reporting requirements, the House of Representatives passed a bill on March 3rd to repeal the expanded Form 1099 information-reporting requirements mandated under the Act. The Senate, by a vote of 87–12, approved the same version of the House bill earlier this month. Sen. Robert Menendez (D-NJ) proposed an amendment that would have required further study of the effects of the Senate bill, but it was defeated by a vote of 58–41.
The bill coming out of Congress is the first piece of legislation that officially repeals part of President Obama’s widely-debated health-care reform movement. While the White House opposes the bill’s method of paying for the expanded 1099 reporting requirement’s repeal, the President is expected to sign the bill into law.
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