1099’s and a Health Reform Meeting in D.C.

The call came right before the 4th of July holiday.  Would I fly to Washington, DC and represent WIPP, Women Impacting Public Policy, at a meeting on health care reform and small business with Nancy-Ann DeParle, the White House Director of Health Reform? 

Ten small business representatives were invited to attend.  It was to be a “dialogue” with small business groups and senior administration officials.  I puzzled over what the key issues would be but no more information was available.

When I walked into the room and found myself shaking hands with two high-ranking Treasury officials, the major issue became clear: the onerous new 1099 requirements. Businesses are now going to be required to issue 1099’s to all vendors for both goods and services over $600. The goal is to capture $17 billion in much needed revenues to fund health reform.

One of the few areas of agreement among business groups is our opposition to this provision of the law. Treasury officials and Small Business Administration executives were not unaware of how much additional paperwork and record-keeping would be needed to prepare these 1099’s.  They wanted to discuss possible solutions with us as representatives of small business and accounting organizations.  

One solution on the table was the exemption of all credit card transactions from 1099 reporting requirements.  However, we advised that only half of small businesses accept credit cards for payment; this provision could actually be disadvantageous to small companies.

I found it fascinating to participate in this critical conversation.  No one was defensive; everyone was engaged in wrestling with a tough problem.   As a representative of WIPP, my voice was heard.  At the end of the meeting I was invited to stay connected with staff and share my concerns and ideas to assure that health reform works for small business.

I'm pleased to report that fixing the 1099 provision is gaining traction in Congress. Senator Johanns (R-NE) has offered an amendment repealing the new 1099 requirements to the small business jobs bill being debated on the Senate floor this week. He has publicly stated that he is going to offer this amendment on anything moving forward in the Senate until the requirements are repealed. In addition, Congressman Dan Lungren (R-Ca) has drafted legislation to repeal this requirement. Twelve Democratic senators have signed a letter insisting that the IRS develop ways to reduce the expected paperwork burden. 

We all look forward to resolving this issue very quickly!

Comments

[Stephen Cornell]

Some updates, I think Senator Johanns amendment got shot down today. Also the the exemption of all credit card transactions from 1099 reporting requirements is now in.

Both bad news
Stephen Cornell

[Mackenzie]

Can you link to the exact text of the regulation?

I do not understand if you are talking about health care insurance goods and services or if this applies to any and every good and service in the general economy.

[Pam Chanfrau]

I'm afraid that vendors will try to make it easy on themselves and start putting their tax i.d. on invoices and statements. This could explode identity theft. Especially for individuals who use their SS# for their business.

[Susan Shargel]

The law applies to all goods and services that exceed $600, it is not specific to certain industries.

You may want to read this update from today's Wall Street Journal:

http://online.wsj.com/article/SB10001424052748703578104575398003212963276.html?mod=djemHL_t