Senate Democrats

Nelson, Cantwell, Klobuchar Urge House Speaker To Act Quickly To Fix 1099 Reporting Requirement In Health Care Law — Pledge Speedy Passage In Senate

Lawmakers Say Senate Is Ready To Act To Fix Section of Law That Requires Small Businesses To Do New Record-Keeping

WASHINGTON, DC—Showing their interest in working for targeted improvements to the health care reform law,  Senators Ben Nelson (D-NE), Maria Cantwell (D-WA) and Amy Klobuchar (D-MN) urged House Speaker John Boehner on Thursday to quickly pass a clean measure rolling back a burdensome reporting requirement in the law —the so-called “1099” requirement— to preserve jobs in America’s small businesses, our nation’s engines of economic growth.

The call to repeal the 1099 provision comes a day after House Republicans passed a repeal of the entire health care law. Full repeal lacks the 60 votes to pass the Senate.

“Now that you have moved past repeal of the Affordable Care Act, we encourage you to work on efforts to improve the law moving forward,” the senators wrote in a letter to Boehner.

“This past November, voters sent both parties a clear message: focus on job creation. As President Obama has recently noted, our economy will recover more quickly and create more jobs if we can reduce regulations on business. Repealing this provision would be a great first step as we work together to grow the economy,” they added.

The provision at issue requires businesses to file a 1099 form with the Internal Revenue Service for each vendor with whom they have at least $600 in transactions. Since the health care law’s passage, Democrats have listened to businesses—especially small businesses—that have expressed concern about the potential burden posed by these added reporting requirements.

Because the Constitution requires that tax measures must originate in the House, the Senate must await House action on the 1099 repeal before it can act.

A copy of the letter appears below.

January 20, 2011

Dear Speaker Boehner,

Now that you have moved past repeal of the Affordable Care Act, we encourage you to work on efforts to improve the law moving forward. In this spirit, we urge you to take up and pass H.R. 4, a bill which simply strikes the tax-reporting requirement in the health reform law.  We have heard from small business men and women in our states who have voiced concern that this provision is burdensome and unnecessary, and could potentially undermine our nation’s economic recovery. Repealing this provision would be an important and practical way to improve the Affordable Care Act. We are confident that the Senate can quickly act on H.R. 4 once the House has passed it.

Section 9006 of the Affordable Care Act (P.L. 111-148) requires all business entities to file a 1099 form with the Internal Revenue Service for each vendor for whom they have cumulative transactions of $600 or more.  Small businesses in our states have raised concerns that in order to comply with this new requirement, which takes effect next year, businesses will have to institute new record-keeping methods.  The change is particularly onerous for small businesses, our nation’s engines of growth, who cannot afford to employ extra lawyers and accountants to comply with the new rules. The provision may also have the unintended consequence of distorting behavior in the marketplace, as large businesses will have an incentive to minimize their reporting requirements by consolidating purchases with large vendors, harming small, regional vendors.

This past November, voters sent both parties a clear message: focus on job creation. As President Obama has recently noted, our economy will recover more quickly and create more jobs if we can reduce regulations on business.  Repealing this provision would be a great first step as we work together to grow the economy.

Sincerely,

Senator Ben Nelson                            Senator Maria Cantwell                      Senator Amy Klobuchar

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