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Expanded 1099 Reporting Repealed

April 26, 2011

The expanded 1099 reporting requirements mandated under the Affordable Care Act were repealed on April 14 when President Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (H.R. 4 – also referred to as the 1099 Act). The provision would have required institutions to report on Form 1099 all purchases of goods and services totaling more than $600 annually, beginning January 1, 2012. 

The House approved H.R. 4 on March 3 and it was passed by the Senate on April 5. 

Note:  The 1099 Act did not repeal the increase in the information reporting penalties that were included in last year’s Small Business Job Act (P.L . 111-240). The first-tier penalty under Sec. 6721 for failure to timely file an information return was increased from $15 to $30, and the calendar-year maximum from $75,000 to $250,000. The second-tier penalty was increased from $30 to $60, and the calendar-year maximum from $150,000 to $500,000. The third-tier penalty was increased from $50 to $100, and the calendar-year maximum from $250,000 to $1,500,000. For small business filers, the calendar-year maximum increased from $25,000 to $75,000 for the first-tier penalty; from $50,000 to $200,000 for the second-tier penalty; and from $100,000 to $500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard increased from $100 to $250.

The increased penalty amounts were effective January 1, 2011, and remain in effect. The amounts will be adjusted for inflation every five years.

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Mary Bachinger
Director, Tax Policy
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