Monday, November 29, 2010

Baucus Amendment (#4713) on Small Business Reporting

Senator Baucus has offered an amendment (#4713) to the food safety bill (S. 510) regarding new corporate reporting requirements included in the health care law.  A vote on the motion to suspend the rules to allow for consideration of the amendment is expected to occur this evening; the motion to suspend is subject to a 2/3rds majority vote.
Summary and Background:
  • The amendment repeals Section 9006 of the health care law.  This Section 9006 information reporting provision requires vendors and small businesses to file Forms 1099 for any goods purchases that total over $600 in the aggregate over the course of a year—which will force all businesses, including small businesses, to file tax forms listing the amount of their annual transactions with vendors like their paper supplier, bottled water distributor, caterer, etc.
  • According to an e-mail from the Joint Committee on Taxation, both the Baucus and Johanns amendments have the same effect of repealing the 1099 paperwork requirement.  From the JCT e-mail:

The two amendments (4713-Senator Baucus) and (4702-Senator Johanns) accomplish the same result in that they only repeal the new 1099 requirements in PPACA and leave in place the 1099 rental real estate requirements from the small business bill and the score is the same for both amendments.

There are two versions because Senator Johanns amendment is somewhat unclear in that it says Section 9006 of PPACA and the amendments made thereby are repealed.  That wording is somewhat confusing and suggests that all new 1099 requirements are repealed (including rental real estate).  It turns out that the rental real estate requirements were added as an amendment to section 6041 as amended by section 9006 of PPACA so technically rental real estate is unaffected.  Baucus’ amendment states specifically what is being repealed and makes it clear that the rental real estate reporting requirements are left untouched.

  • Unlike the Johanns amendment, the Baucus amendment is not paid for; thus the $19.3 billion revenue loss will increase the deficit.
Considerations:
  • This amendment is not paid for, and therefore will increase the deficit by $19.3 billion.
  • At a time when the federal government is running budget deficits in excess of $1 trillion annually, many would argue there are plenty of opportunities to reduce federal spending by $19 billion in order to fund the cost of this amendment.
  • This amendment would add tax provisions to a Senate measure, raising potential “blue slip” considerations, as Article I, Section 7 of the Constitution specifies that revenue measures must originate in the House.