Senate Fails to Approve Amendment to Repeal Form 1099 Reporting Requirement in Health Care Bill

Despite two attempts, the Senate on Monday failed to approve amendments to the FDA Food Safety Modernization Act (S. 501) that would have repealed the much-maligned provision in the Affordable Care Act that expands a business’s 1099 information reporting requirements. Specifically, the highly contentious provision requires all businesses, charities, and state and local governments to file 1099 forms if they purchase $600 or more in goods from another business after December 31, 2011. Business interests and the IRS have decried this mandate, claiming the burden of compliance and administration will be too great for all involved.

Efforts to repeal the reporting provision were included in two competing amendments to the food safety bill. Senate Amendment 4702, which was introduced by Sen. Mike Johanns (R-NE), failed approval by a vote of 61-35. A two-thirds majority vote was required to suspend the rules and approve the amendment. This amendment – in addition to repealing the reporting provision – would have given the director of the Office of Management and Budget (OMB) the authority to identify and rescind unspent appropriations in order to offset the cost that would result from the repeal. Opponents of this amendment claimed that its provisions would provide an unelected official with unprecedented power to rescind unobligated funds, and transfer too much power from Congress to the Executive branch.

The second failed amendment (S. Amt. 4713) was introduced by Sen. Max Baucus (D-MT). Baucus’s amendment would have been a straight repeal of the reporting provision without any offset measures. In addition, the amendment would have granted the Secretary of the Treasury the authority to issue rules and guidance, including rules to prevent duplicative reporting of transactions. Critics of this amendment claimed that the lack of any offset provisions would drastically increase the federal deficit. The Senate’s 44-53 vote in favor of this amendment proved insufficient.

Although the 1099 reporting requirement has been unpopular with both Democrats and Republican lawmakers, many health care law supporters have been reluctant to act on what would be viewed as the first of several anticipated efforts to dismantle the Affordable Care Act. A number of similar bills to repeal the reporting provision have been introduced in recent months to no avail. Earlier in November, Sen. Baucus introduced his repeal measure as a standalone bill (S. 3946). The Small Business Paperwork Mandate Elimination Act (H.R. 5141, S. 3578), sponsored by Rep. Daniel Lungren (R-CA) and Sen. Mike Johanns (R-NE), was introduced this summer. In August, Democratic lawmakers similarly introduced a bill (H.R. 5982) that would a have repealed this provision, but because it included a tax on foreign business operations, it was defeated largely along party lines.

This entry was written by Ilyse Schuman.

Photo Credit: MBPHOTO, INC.