Industry Lauds U.S. Congress for Push to End Tax Provision

This story appears in the March 21 print edition of Transport Topics.

Trucking industry officials have hailed congressional action to repeal an unpopular Internal Revenue Service reporting requirement contained in the 2010 health-care reform law and said they were confident Congress would approve repeal.

The provision requires businesses to issue an IRS Form 1099 to every vendor from whom they buy goods worth $600 or more in a year. Current rules require reporting only on payments for services, such as the use of independent contractors and truck owner-operators.

Beginning in 2012, the health-care bill expands the reporting requirement to include payments made for property and payments made to corporations, which have been interpreted to include payments for any type of goods.

Although the bill is scheduled to take effect next year, the Senate voted 81-17 in February to approve repeal, and the House of Representatives took similar action on March 3.

“The expansion of Form 1099 reporting requirements are very unpopular, and the lopsided vote in the Senate means that repeal is expected before the requirements take effect,” said Mel Schwarz, a partner with the public accounting firm Grant Thornton LLC in Washington.

The 1099 requirement “will create a tremendous burden on businesses of all sizes across the country,” said Tom James, president of the Truck Renting and Leasing Association.

James said TRALA appealed directly to Sen. Max Baucus, (D-Mont), chairman of the Senate Finance Committee, who offered an amendment removing the reporting requirement from a bill reauthorizing the Federal Aviation Administration.

The Senate approved the amendment, but it has not yet taken action on the FAA reauthorization bill.

Schwarz said the Senate may have to wait for the House to complete an FAA reauthorization bill so the bills can go to conference committee. Repeal also could be attached to another measure, he said.

“The fact that both houses of Congress have voted to repeal this onerous and burdensome reporting requirement signals that repeal is close to becoming a reality,” James said.

The Obama administration has signaled its support for repeal as well, saying the 1099 requirement would place an unnecessary bookkeeping burden on small businesses.

While there is no clear strategy or timetable for passage of repeal, Robert Pitcher, vice president of state laws for American Trucking Associations, said repeal is important to the trucking industry.

“We need it done,” he said.