Form 1099 Repeal Bill Moves to Obama for Signature

On Tuesday, the Senate passed bill H.R. 4, "The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayment Act," by an 87 to 12 vote. The bill, which repeals much-contested changes to tax information reporting, now awaits a signature from President Obama.

The original provision, which was passed as part of the health care reform, sought to increase tax revenue by expanding requirements for businesses to file 1099 tax forms. Previously limited to freelance workers and independent contractors, the change would have forced small businesses to file a 1099 form for every person or company with whom they did more than $600 worth of business.

A multitude of industries, including the promotional products industry, were united in opposition of the reporting changes, saying they would overburden business with unnecessary and costly paperwork. The changes, outlined in the Small Business Jobs Act of 2010, would require small businesses to send 1099 forms to vendors, utility companies and other contractors, as well as file these reports with the IRS.

Congressman Dan Lungren (R-Calif.) introduced bill H.R. 4 to the House of Representatives in 2010, which was passed on March 3, 2011. In the Senate, Sen. Mike Johanns (R-Neb.) sought to reform the 1099 regulations, and brought the bill that passed yesterday. It was unchanged from the U.S. House bill.

In a statement issued late Tuesday, new White House Press Secretary Jay Carney indicated the president would likely sign the bill when it reached his desk.

"As the president said during the State of the Union, we are open to working with Republicans and Democrats to improve the health reform law and we are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses," the statement said. "Small businesses are the engine of our economy and eliminating the 1099 reporting requirement is the right thing to do. As we move forward, we look forward to improving the tax credit policy in this legislation to ensure we protect small businesses and middle-class families. And the administration remains eager to work with anyone with ideas about how we can make health care better or more affordable for all Americans."

Stay tuned to PromoMarketing.com for more news about laws that affect distributors in the promotional products industry.