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Curing Form 1099 ills

By Kay Bell · Bankrate.com
Thursday, January 20, 2011
Posted: 3 pm ET

How are you feeling today? I ask because, as you've probably heard, the House of Representatives repealed health care reform laws on Wednesday.

OK, I'm being a bit flip. Everyone knows that the House, now in Republican control, is only one part of the legislative equation. To actually have the Patient Protection and Affordable Care Act erased from the list of public laws, the Senate has to follow the House action.

Democrats still have a slim lead in the Senate, so don't expect health care repeal to get any traction there. And even if it somehow did, President Barack Obama has already said he'll veto any effort to eliminate his signature piece of legislation.

So the big health care vote was mostly for political show.

Today the House is assigning four committees, including the tax-writing Ways and Means Committee, to look at ways to tweak health care along lines that Republicans find more acceptable. This should be fun.

As I recall, we got the new health care reform law in much the same way last year, via tinkering of multiple committees all looking for nips and tucks to provide services and come up with taxes to pay for them. How else do you think we ended up with the tanning tax?

But there is one measure from the health care law that all of Capitol Hill agrees needs to eliminated, the enhanced Form 1099 reporting requirement for businesses.

Starting in 2012, every business will have to file a 1099 form for every supplier with whom they spend at least $600. The law is supposed to help the Internal Revenue Service catch tax-cheats who aren't reporting all their income. It also is projected to raise $17 billion to help pay for health care reform measures being phased in over the next few years.

But businesses, especially smaller ones, say it will be a burden, both in terms of the actual dollar cost  as well as the time necessary to track and report the expenditures.

Several attempts to repeal the new 1099 rule were made in the last Congress. But despite bipartisan support, even from the White House, to remove the new rule before it takes effect, election year politics got in the way. Now some House Democrats are urging their GOP colleagues to work on making the health care law better.

There probably will be some speechifying and demagoguing; it is, after all, Capitol Hill. But soon I expect Form 1099's repeal to be among the first, if not the actual number one, official law of the 112th Congress.

And that prospect makes representatives, senators and businesses feel much, much better.

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