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Post holiday: Senate to consider repeal of 1099 tax paperwork provisionto

November 29, 2010

Dealers are urged to reach out to both of their U.S. senators and strongly encourage them to vote for two amendments that would eliminate a mandate requiring businesses to file a 1099 tax form after any expenditure of $600 or greater.

A part of this year’s health care reform law, the mandate goes into effect on Jan. 1, 2012, and would create a significant paperwork burden for dealers. The two amendments, offered by Sens. Mike Johanns (R-Neb.) and Max Baucus (D-Mont.), could face a high hurdle, as the Senate’s procedures may require a super-majority of 67 votes.

With votes expected in the final days of November, dealers should call Senate offices on Nov. 29. The Senate switchboard can be reached by calling (202) 224-3121.

Democrats and Republicans have been deadlocked in efforts to roll back the expansion of 1099 reporting. But not over whether the new provision should be eliminated — both agreed that it should be (at least in the House; in the Senate, Democrats proposed softening it rather than eliminating it). The argument, rather, was over how to pay for eliminating it.

Baucus said the 1099 form filing has been used by the IRS for decades to better track income. And, in fact, this type of information reporting was proposed by the Bush administration to help better keep track of what businesses spend and earn, which helps better keep track of what they owe in taxes. "But," Baucus said, "it has become clear the new rules went too far."