The Senate today rejected a pair of amendments to the health care reform bill that would have repealed or altered an income tax reporting requirement that small-business groups have decried as an onerous burden. One of those organizations, the National Lumber and Building Material Dealers Association (NLBMDA), later today expressed disappointment that the amendment to repeal failed to win passage.
"The building material industry can ill afford this expensive and burdensome new paperwork requirement," NLBMDA president Michael O'Brien said in a statement. "Retailers of building materials alone have lost over 140,000 jobs since 2006. It's unfortunate that small businesses are having to shoulder the costs for this new health care plan especially during this economic downturn."
At issue is a section of the Patient Protection and Affordable Care Act that requires all businesses to send 1099 tax forms to every company or individual from which the business purchased more than $600 in goods and services starting in January 2012. The requirement is expected to generate $17 billion over the next 10 years to help fund the health care reform package.
Today's votes pitted senators concerned with the requirement's impact on business with senators who feared that a "yes" vote could open the carefully crafted, narrowly passed health care reform package to more changes.
Sen. Mike Johanns, R-Neb., sponsored the amendment to repeal the 1099 provision. During today's debate, he called the reporting requirement "a nonsensical job-killing mandate" on businesses, The New York Timesreported. But the Times also quoted Senate Finance Committee Chairman Max Baucus, D-Mont. and an architect of the health care bill, as calling the Johanns amendment "a wolf in sheep's clothing. It's dressed up as an attempt to help small business. In reality, it is just another partisan effort to undermine the new health care law."
The White House and Democratic leaders spoke up for an alternative amendment by Sen. Bill Nelson, D-Fla., that would modify rather than repeal the provision. It would have done so by exempting credit cards from the reporting requirement, increasing the threshhold for reporting to $5,000 from $600, and exempting from reporting any firms that employ no more than 25 employees at any time during the taxable year. In addition, "non-troublesome" transactions like meals, airplane tickets, and hotel rooms also would be exempted from reporting, according to the National Underwriter, a publication covering the insurance industry.
While NLBMDA expressed disappointment over the failure of the Johanns amendment, it applauded the Nelson amendment's failure. That proposal "would have further complicated compliance responsibilities by forcing small business owners to track expenses associated with both 'property' and 'services,' the amount spent on each, and the method of payment to determine what information must be reported on under the new law," NLBMDA said. "Rather than clarify, the Nelson amendment actually creates even greater complexity for those seeking to comply with the new 1099 tax form law."
A recent Washington Post article on the issue also noted Democrats' objection to the Johanns amendment's potential impact on the health care reform package, but it added that Nelson's alternative "is a deal killer for many Republicans and even Democrats because it stops short of repeal and offsets the cost by eliminating tax breaks for certain oil companies."