1099 Repeal

The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (H.R. 4) repeals expanded information reporting rules that would have required the filing of Form 1099 for payments of $600 or more by businesses.

The House passed the measure on March 3 and the Senate followed with passage on April 5, 2011. The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (The 1099 Act) was approved by President Obama on April 14.

The Obama administration acknowledged that this legislation “corrects a flaw that placed an unnecessary bookkeeping burden on small businesses.” However, the White House also indicated that “we look forward to improving the tax credit policy in this legislation.”

Background Information

In March 2010, Congress approved the Patient Protection and Affordable Care Act which included among its revenue raisers an expansion of business information reporting.

The Patient Protection and Affordable Care Act (PPACA) required businesses, charities and government entities to file a Form 1099 when they make annual purchases aggregating $600 or more to a single provider of goods, other than to a vendor that is a tax-exempt organization, for payments made after December 31, 2011 and reported in 2013 and thereafter. The PPACA also repealed the long-standing reporting exception for payments made to corporations.

These requirements if not repealed would have created enormous amounts of paperwork, decreased operation efficiencies, and increased costs for compliance for businesses.

What does this mean to me, my business, organization or government entity?

  • The repeal means that reporting rules for Form 1099 for business payments continue unchanged, as they were prior to the Patient Protection and Affordable Care Act.
  • Businesses must continue to issue Form 1099s for payments of $600 or more to service providers.
  • Exceptions include payments to certain tax-exempt organizations, government entities, international organizations, and retirement plans.
     

PBS will continue to provide you with updates on the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act and the Patient Protection and Affordable Care Act.

If you have questions about how this Act affect you, your business or your employees, please contact your PBS payroll specialist.