Politics

Sorry Small Businesses, No 1099 Repeal This Time...But Soon!

The Senate is moving ever closer to repealing what small business owners have called an onerous new IRS reporting requirement set to kick in in 2012 under the new health care reform law passed earlier this year, but there will be no proverbial cigar this time around.

Most, if not all, senators appear to agree that the requirement, which mandates that all businesses report payments and purchases totaling more than $600 in a calendar year, regardless of what the money was used to buy, should be eliminated in these difficult economic times, but differences remain strong enough to derail two attempts at repeal set for Monday night, according to Senate sources.

The Patient Protection and Affordable Care Act (PPACA) contains the provision designed to raise revenue without raising tax rates, and removing the provisions would leave a $19 billion hole.

Democrats, led by Senate Finance Committee Chairman Max Baucus, D-Mont., contend that the PPACA is already more than $100 billion in the black, according to the nonpartisan number crunchers at the Congressional Budget Office. Baucus, author of the original repeal measure, said Monday, "The new reporting requirement just went too far....It far exceeds any benefit."

But the author of a competing amendment, Sen. Mike Johanns, R-Neb., who favors repealing the entirety of the new health care law and replacing it with GOP alternative legislation, said any removal of the 1099 requirement should include an offset to make up for the loss of revenue. Johanns' amendment would, according to the senator, "simply (strip) 5% of the nonsecurity related funding that is just lying dormant in federal accounts at the end of the year." Johanns' would empower the head of the president's Office of Management and Budget (OMB) to make the decision on what would be cut.

Both repeal amendments have been offered to a food safety bill that is currently being considered by the Senate.

Johanns, a former Bush Administration Department of Agriculture Secretary, noted that this power has been delegated to the executive branch numerous times over the years to take money that is always left over, adding, "If we cannot agree to this noncontroversial offset, then the public demand for fiscal responsibility voiced in November has fallen on deaf ears."

Baucus' reasoning for not including an offset? "These days finding a $19b offset....is next to impossible," the chairman said Monday.

Two senior Senate Democratic aides tells Fox, however, that though the Senate is not expected to repeal the provision in a round of votes Monday, small businesses can expect Congressional action to stop the paperwork tidal wave before the end of the lame duck session.