Sen. Max Baucus (D-MT) on Monday introduced a bill to repeal the onerous 1099 reporting requirements included in the Patient Protection and Affordable Health Care Act.

By Mr. BAUCUS (for himself, Mr. BEGICH, Ms. LANDRIEU, Ms. STABENOW, Mrs. SHAHEEN, and Mr. BROWN of Massachusetts):

S. 3946. A bill to repeal the expansion of information reporting requirements for payments of $600 or more to corporations, and for other purposes; to the Committee on Finance.

Sen. Baucus vowed its repeal in remarks in Missoula last week.

(Missoula, MT) – Montana’s senior U.S. Senator Max Baucus announced plans to introduce legislation to repeal new requirements for businesses to file forms with the IRS reporting payments for goods and services during a meeting in Missoula with state business leaders today.  Baucus told Montana business leaders he is working to nullify the provision in response to their concerns the requirement would place too large of a paperwork burden on small businesses.

“I have heard Montana businesses loud and clear and I am responding to their concerns,” Baucus said.  “Small businesses are the backbone of our economy, especially in Montana where we have more workers employed by small businesses than anywhere else in the country.  Montana businesses need to focus their efforts on growing and creating good-paying jobs – not filing paperwork.  Montana businesses have made clear these reporting requirements won’t work for them and it’s my job to fix that.  And that is exactly what I’m going to do.”

The Senate already missed an opportunity to repeal the provision in September, when during debate on H.R.5297, the Small Business Jobs and Credit Act, it rejected an amendment from Sen. Mike Johanns (R-NE) to repeal Section 9006 of the new health care law.

The roll call vote shows that Sen. Baucus and the new bill’s cosponsors all voted against invoking cloture on the Johanns amendment. Sen. Landrieu (D-LA) later introduced a bill to change the reporting trigger from $600 to $5,000.

The Patient Protection and Affordable Care Act, the new health care law, is sickening small business with its requirement that companies file IRS 1099 forms to report every purchase 0f $600 or more. Yes, that’s a lot of reporting, a lot of paperwork.

Reuters has a good report on the ins and outs of this stomach-churning provision, “1099 tax rule may bring big pain to small business“:

Who will it affect?
It will affect all businesses, including sole proprietors, consultants, self-employed people and freelancers, who are considered businesses for tax purposes, but may not think of themselves that way. It also will apply to charities and other tax-exempt organizations. The National Taxpayer Advocate, based on Internal Revenue Service data, figures that it will affect 26 million sole proprietorships, 4 million S corporations, 2 million C corporations, 3 million partnerships, 2 million farms, 1 million charities and other tax-exempt organizations, and likely more than 100,000 federal, state and local government entities. All told, that’s more than 38 million taxpayers and taxpaying entities.

The story notes the NAM’s concerns, especially as the law will create all sort of disparate record-keeping and reporting requirements — an exemption for credit card purchases, but not cash?

“It’s a headache, there are increased costs, and I think there is also significant concern about how they will implement it,” says Dena Battle, director of tax policy at the National Association of Manufacturers, one of the business groups that has pushed for repeal. “Any time you have these ‘tax gap’ provisions, there are gigantic unintended consequences.”

Earlier Shopfloor posts:

• Senate Votes to Continue IRS Paperwork Nightmare
• The Only Fix for this Filing Burden is Repeal
• Get Rid of This Business-Crushing IRS Filing Mandate

Take that, small business!

The Senate today defeated both amendments to change the IRS tax filing mandates included in the health care law discussed earlier here and here.

A cloture vote on the Sen. Mike Johanns’ amendment to strike the onerous filing mandate failed on a vote of 46-52. A cloture vote on Sen. Bill Nelson’s amendment to keep the requirement while changing it on the margins failed 56-42, with 60 votes needed.

Anticipating the vote, The Wall Street Journal editorialized today:

[This] issue won’t go away. The President’s opposition to a clean repeal shows the hollowness of his alleged support for small business, which he expresses at every campaign stop but is less a priority than preserving his health-care legacy.

The larger political story here is that ObamaCare is already under bipartisan siege—and in the same Congress that passed it. The 1099 provision is only one plank, but repealing the law plank by plank may be the right strategy. Sooner or later the whole thing becomes unworkable. Voters should watch this vote to see who’s really on the side of small business.

The Senate subsequently invoked cloture on the underlying small business financing bill, H.R.5297, with 61 votes. Senate Majority Leader Harry Reid called it the biggest most important vote to support small business since the stimulus bill.

Sen. Mary Landrieu (D-LA) then took to the Senate floor saying she’s going to introduce a bill today to repeal the IRS 1099 filing requirement, acknowledging the legitimate protests but arguing that immediate action is not necessary. We have a year and a half to fix 1099, we don’t have any more time to help small business.”

The Obama Administration on Monday signaled its support for amending the onerous tax filing mandate included in the new health care law, which requires any business making purchases of more than $600 from a vendor to file an IRS 1099 to report the exchange. It’s a paperwork nightmare — especially for small business — that the IRS estimates could hit 40 million businesses.

Unfortunately, while acknowledging the problem, the Administration has only endorsed the amendment sponsored by Sen. Bill Nelson (D-FL) that would lift the filing threshold from $600 to $5,000 and apply it only to companies with more than 25 employees.

Talk about an anti-jobs message. Say you’re an small business owner with 22 employees. You really want to expand your product line, have the financing to buy the equipment, but will need to add six new workers to operate the machinery. But then you see that the new hires will push into past the threshold requiring the additional IRS filing. Not only are the burdens and costs of the new paperwork a disincentive, there’s the increased potential error and IRS liability.

Forget it, you say. I just won’t bother.

Isn’t this obvious? The Nelson amendment discourages the growth of small business, which is supposed to drive hiring in the coming years. The National Association of Manufacturers instead supports an amendment sponsored by Sen. Mike Johanns (R-NE) that would repeal the provisions.

In acknowledging the problem, the Obama Administration has at least expressed a willingness to amend the new health care law. It’s not sacrosanct, which is a big political concession.

But the only cure for this horrible IRS filing requirement is its repeal.

Coverage …

• Wall Street Journal, “The 1099 Insurrection”
• Los Angeles Times, “White House pushes bill to scale back tax-reporting law for small businesses”
• FoxNews, “Nebraska Senator Aims to Repeal Tax-Reporting Mandate in Health Care Law”
• The Hill, “Business lobby urges Senate to repeal 1099 tax-filing requirement“
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