NCPA - National Center for Policy Analysis

Health Care Tax Filing Rule Burdens Small Businesses

January 19, 2011

The health care law includes a provision that requires even the smallest businesses to send a 1099 form to the IRS whenever they buy more than $600 a year in goods or services from a single company or individual.  The IRS estimates the provision could affect 40 million businesses, charities, nonprofit associations and other entities that would be required to file the additional reports, says the Dallas Morning News.

Andy Ellard, who runs a 20-employee manufacturing shop in Dallas, estimates the provision will take 160 hours of his bookkeeper's time.  After hearing from business people like Ellard, most members of Congress and President Barack Obama agree, the 1099 provision needs to be repealed before it takes effect in 2012.  Attempts to strip it from the law last year won majorities in the House and the Senate but still failed to get through, says the Morning News.

  • Democrats, using estimates provided by the nonpartisan Congressional Budget Office, say the health care law as passed will save $143 billion between 2010 and 2019.
  • Republicans have said that the law would raise spending on health care and that the budget office used faulty assumptions.

The 1099 provision came out of the Senate Finance Committee as Democrats were trying to find ways of lowering the cost of extending health insurance to 32 million more Americans.  The IRS has said it will not require 1099 filings when businesses make payments with credit and debit cards, since those are now going to be filed with the IRS by credit card companies under a new, separate law.

Source: "Health Care Tax Filing Rule Burdens Small Businesses," Dallas Morning News, January 11, 2011.

For text:


Browse more articles on Health Issues