In a bi-partisan 87-12 vote, the Senate just approved H.R. 4, a bill that would repeal the very unpopular 1099 provision of the health reform legislation. The House had previously approved the bill by a vote of 314-112, so now it goes to President Obama for his signature.
This provision would have required employers, beginning next year, to issue 1099s to any vendor that they pay more than $600 during the tax year. This would be a drastic change to what 1099s have historically been used for, which is to report payments to contractors – people who perform a service for your company but are not on the payroll.
Under the new rules, employers would report payments for goods as well as services. That means that an employer might need to issue a 1099 to the electric company, their landlord, Sam's Club, and their favorite airline. It would have been an administrative nightmare for employers, a fact which they quickly recognized.
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