Thu, March 03, 2011
House Repeals 1099 Requirement But Rental Property Owners Still in Limbo
Among the provisions of last year’s Patient Protection and Affordable Care Act was a provision requiring small businesses to issue 1099 forms to every business to which it paid $600 or more in a single calendar year. Today, the House of Representatives passed a bill repealing the provision.
The House passed the Small Business Paperwork Mandate Elimination Act (HR 4) today by a vote of 314–112. In addition to repealing the requirement for businesses, it also repeals new rules created by the Small Business Jobs Act requiring small landlords to follow similar Form 1099 rules.
The House Ways and Means Committee previously stated that the new 1099 provisions created a burden that “is disproportionate as compared with any resulting improvement in tax compliance.” The bill now goes to the Senate, which has already passed its own version of a similar repeal as part of (believe it or not) the FAA Air Transportation Modernization and Safety Improvement Act (S 223).
One matter that remains to be resolved is the way that the change would be paid for. The House bill makes up for the expected loss in tax revenue by changing the amount of the
new health care credit created under the The Patient Protection and Affordable Care Act. The Senate’s repeal provision makes up the revenue lost by reducing $44 billion in discretionary government spending.
So far, the White House has expressed opposition to the funding proposals in both versions, so the prospect for repeal is unclear.
Also, the Senate version does not provide for repeal of the rental property 1099 requirements, and that difference with the House bill must be resolved. Until the outcome is sure, rental property owners should continue to keep records of payments made in 2011 to lawyers, accountants, plumbers, or any other individuals whose services are used for rental property.
