Your paperwork load won’t get any lighter, but it at least might stay the same.
U.S. Senator Max Baucus (D-MT) on Friday announced that he would introduce legislation to eliminate the so-called 1099 provision from the recent healthcare reform bill, which would expand current IRS rules that require businesses to report payments to just about anyone in excess of $600. Baucus chairs the Senate Finance Committee.
The original provision, created during the Bush Administration to better track and enforce accurate tax payments, is slated to take effect in 2012. The change generated a good deal of furor — it will require you to complete IRS Form 1099 for nearly everyone you pay more than $600 to during the course of a year. Currently, the rule is much narrower and excludes payments made to corporations, among others.
The theoretical upside? Make sure everyone is paying their fair share to Uncle Sam. Downside: The paperwork, which some argued would hamstring small businesses already working with tight human and financial resources.
“I have heard small businesses loud and clear and I am responding to their concerns,” Baucus said in a statement.
The announcement was lauded by pro-business groups, who had complained that the federal revenue windfall generated by the rule — some $19 billion over 10 years — would come at the expense of small business owners ill-equipped for compliance.
“We are pleased Senator Baucus has announced his support for full repeal of the 1099 provision and are eager for him to formally introduce his bill when Congress returns,” Dan Danner, president and CEO of the National Federation of Independent Businesses, said in a statement. “The sooner Congress repeals this burdensome provision, the better.”
If Baucus’s proposed repeal takes effect, his home state of Montana will have particular reason to cheer: 99 percent of businesses there qualify as small by the SBA’s standard, accounting for nearly 90 percent of all employment.