The Senate last week failed to repeal what is shaping up to be an unpopular provision for businesses in the recent health overhaul that will require a massive increase in filing 1099 tax forms.

Tucked away in the new law, the Patient Protection and Affordable Care Act, is a requirement for businesses to report to the Internal Revenue Service any purchase from a vendor or for goods and services amounting to $600 or more per year, effective in 2012 for such purchases that will need to be reported and filed in 2013.

Two attempts to repeal or scale back the provision failed to reach the 60-vote threshold needed to end debate.

One amendment, proposed by Sen. Bill Nelson, D-Fla., would have raised the annual reporting amount from $600 to $5,000 and would have exempted businesses with 25 or fewer employees. It received a final vote of 56-42.

Another, by Sen. Mike Johanns, R-Neb., would have repealed the provision entirely, as well as exempting certain individuals from being forced to purchase health insurance. The amendment also would have lowered the affordability exemption. It failed on a final tally of 46-52.

The expansion of 1099 reporting was added as a means to capture $2 billion worth of revenue in taxes on income that currently is not reported by smaller businesses, with the intent of offsetting the cost of the health bill.

Small businesses are seen as being particularly vulnerable – although all companies are affected – because they lack the legal and accounting acumen needed to comply and deal with the flood of paperwork expected as a result.

The IRS says about 85 million 1099s are filed each year. The National Small Business Association predicts that an average business will have to file 95 forms a year under the new rules, compared to the current average of less than 20.

While the Senate failed to either repeal or scale back the measures, the matter could be taken up again separately in the near future.


The California Chamber of Commerce is warning that passage of Proposition 19, the Regulate, Control and Tax Cannabis Act, will lead to confusion and “sweeping changes” in the workplace by requiring employers to permit employees to “smoke marijuana at work.”

In its legal analysis issued in August, the chamber said Prop. 19 would add confusion to the current law of establishing a drug–free work place because the current anti-smoking law “only applies to tobacco products.”

“The Act specifies that users can ‘possess’ or ‘share’ marijuana in a ‘non-public place,’ but does not define what a ‘non-public place’ is,” the chamber said.

The measure also would establish a new but as yet undefined standard of “actual impairment,” according the chamber’s employment law adviser, Jennifer Shaw, who issued the analysis after HR California, a division of the chamber, sought to spell out potential work-place issues with the proposition.

Under the current standard, according to Ms. Shaw, “an employer cannot take any action related to an employee’s use of marijuana and their potential threat to workplace safety as is currently the case for alcohol.”

The five-page analysis also said Prop.19 would cause employers to “lose millions” in federal contracts and grants “because they would be unable to comply with federal laws outlawing marijuana use.”

The proposition would require employers provide “a reasonable accommodation” for marijuana users. Employers would also be faced with the prospect of paying for “marijuana-related accidents through workers’ compensation insurance premiums and liability to third parties.”


Submit items for this column to Dan Verel at dverel@busjrnl.com, 707-521-4257 or fax 707-521-5292.