Friday, March 4, 2011

House Votes to Repeal 1099 Requirement

Yesterday, the House of Representatives voted to repeal the silly 1099 requirement in health care reform (PPACA). For those who have been in hibernation, this provision requires businesses to provide Forms 1099 to report payments for goods and services in excess of $600.

When this language, that is oh so related to health care, was put in PPACA, it was clear that the drafters were looking for a way to make the act revenue positive. Little did they seem to realize or care about the tremendous burden that this would put on businesses, especially small businesses.

Given the public uproar over this provision, one would think that its repeal would fly through the Senate as well for signature by President Obama. However, Democrats in the Senate are reported to be concerned about how this affects the price tag on PPACA.

To me, this is what happens when we load up a bill with things that are entirely unrelated to the bill's intent,or at best, peripherally related to it. Some may recall that the Pension Protection Act (PPA) of 2006 had pages and pages of provisions that were encouraged by lobbyists. Even going back to my earlier days in this business, the Tax Reform Act of 1986 had provisions that applied, for example, to every company whose primary business is in the field of widget-making and which was incorporated in the State of Delaware on some random date in 1923. Every company, huh?

The 1099 provision needs to be repealed. While I usually try to keep this blog apolitical to the extent that I can, this provision neither improves health care, changes the cost of health care, nor stimulates the economy. Companies can react in one of several ways, but I expect that most small businesses will simply see an increase in their cost of outsourcing their reporting, and that can't be good.

In any event, if the Senate does pass this, I am sure that it will make the news, but I will do my best to cover it here.

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