Repeal of the 1099 Reporting Requirement

A new Form 1099 reporting requirement was enacted under §9006 of the Patient Protection and Affordable Care Act, also known as healthcare reform. Under this provision, beginning in 2012, any business that pays a single vendor for not just services (as now required under current law) but also goods valued at $600 or more must provide that vendor and the IRS with a Form 1099-MISC.

Policy Goal: This provision has a disproportionately negative effect on small businesses, requiring resources and man-hours to ensure compliance. While it has been argued that the provision was enacted in an effort to close the tax gap, it is questionable whether it furthers this goal and in fact would impose a sizeable economic burden on SMB tech firms. It should be repealed.