Research Briefing

Republicans Move To Help Small Businesses Grow Jobs By Repealing Stifling ObamaCare Provision

REPUBLICANS ARE READY TO REPEAL THE GROWTH-STIFLING

1099 PROVISION OVER DEMOCRAT OBJECTIONS

 The House Will Repeal ObamaCare’s Burdensome 1099 Provision. “The House is moving toward a vote to repeal an unpopular tax filing requirement for businesses that was part of the massive health care law enacted last year.” (Stephen Ohlemacher, “House Moves To Repeal Tax Filing Requirement,” The Associated Press, 3/3/11)

“The House Is Likely To Pass A Bill On Wednesday Despite Democratic Objections.” (Vicki Needham, “White House Backs 1099 Repeal, Concerned About How To Pay For It,” The Hill, 3/1/11)

The Obama Administration Supports The Democrats In “Strongly” Opposing The House Republicans’ Plan To Repeal Burdensome ObamaCare Provision.  “‘The administration strongly opposes the House’s offset to pay for this repeal, which would undo an improvement enacted with nearly unanimous support in the Medicare and Medicaid Extenders Act that eliminated an egregious ‘cliff’ in the tax system affecting middle income taxpayers,’ according to Statement of Administration Policy released Tuesday night.” (Vicki Needham, “White House Backs 1099 Repeal, Concerned About How To Pay For It,” The Hill, 3/1/11)

REPEALING 1099 PROVISION WILL REMOVE OBAMA-ERECTED BARRIER

TO GROWING JOBS

ObamaCare “Swamp[s] U.S. Businesses With A Flood Of New Tax Paperwork” By "Radically Alter[ing] The Nature Of 1099s.” “An all-but-overlooked provision of the health reform law is threatening to swamp U.S. businesses with a flood of new tax paperwork. ... The stealth change radically alters the nature of 1099s and means businesses will have to issue millions of new tax documents each year.” (Neil deMause, "Health Care Law's Massive, Hidden Tax Change," CNNMoney.com, 5/5/10)

• Without Repeal, Companies Would Have To Send 1099s To Contract Workers, Individuals, And Corporations If They “Buy More Than $600 In Goods Or Services” From Them.  “Section 9006 of the health care bill -- just a few lines buried in the 2,409-page document -- mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. ... [U]nder the new rules, if a freelance designer buys a new iMac from the Apple Store, they'll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.” (Neil deMause, "Health Care Law's Massive, Hidden Tax Change," CNNMoney.com, 5/5/10)
• The Burdensome Tax Reporting Requirements In ObamaCare Would Effect 10 Times More Small Businesses Than The Tax Credit. “BIG NUMBER - 40 million. That's the number of small businesses that will be subject to the new health reform requirement to file 1099 forms to any vendor where they spend more than $600 in a given year. To put that in perspective, the IRS expects new tax filing requirement to effect 10 times more small businesses than the small business tax credit (earlier IRS estimates placed that number around 4 million).” (Jennifer Haberkorn & Sarah Kliff, “Politico Pulse,” Politico, 7/8/10)

"'It's A Pretty Heavy Administrative Burden,' Particularly For Small Businesses Without Large In-House Accounting Staffs, Says Bill Rys, Tax Counsel For The National Federation Of Independent Businesses." (Neil deMause, "Health Care Law's Massive, Hidden Tax Change," CNNMoney.com, 5/5/10)

The Chairman Of The American Institute Of CPAs Says Requirement Will "Significantly Contribute To The Hurdles To Growth And Formation That Businesses Face." "The revised 1099 law 'may prove to be so burdensome to small businesses that we believe it will significantly contribute to the hurdles to growth and formation that businesses face,' wrote Alan Einhorn in a letter to Congress last week. Einhorn is chairman of the AICPA's tax advisory committee."  (Jeffry Bartash, "Pressure Builds On Congress To Junk 'Nightmare' Tax Rule," MarketWatch, 8/4/10)