The House Small Business Committee held its first hearing on the 1099 repeal issue yesterday, and the consensus of the committee was in favor of repeal.  The only real controversy was a small debate over whether the budgetary impact necessitated an offset.

The hearing was composed of two panels.  The first panel was Congressman Dan Lungren (R-CA), who is the sponsor of HR 4, the House’s 1099 repeal legislation.  Lungren commented on the bipartisan nature of the issue (of his bill’s 270 cosponsors over 30 are Democrats) and anticipated a quick passage on repeal language.  His testimony also noted that the National Taxpayer Advocate estimated 40 million small businesses and entities would be subject to the provision, including over one million nonprofit organizations.  When questioned by committee Democrats if the Senate amendment to the FAA bill repealing the 1099 was sufficient for the House to pass, Lungren noted that the House leadership has placed their support behind his bill.

Committee Democrats almost unanimously expressed support for 1099 repeal and complimented Lungren on his legislation, but pushed back on his insistence that the legislation would not need an offset.  The 1099 provision is anticipated to raise $22 billion to fund provisions in the health care bill.  Lungren and committee Republicans pushed back on this idea by questioning if the estimate was reasonable and saying an uncollected tax does not need an offset.

The second panel was composed of small business owners representing the National Association of Home Builders, the National Retail Federation, the National Restaurant Association, and the National Federation of Independent Businesses.  Their panel testified on the impact the new reporting requirement would have on their businesses and associations.

“I have worked hard and been blessed with a small part of the American dream,” said Seth Shipley, owner of a jewelry in Hampstead, MD.  “If this law takes effect next year, I believe that dream will vanish for me and tens of thousands of small business owners across our great nation.”

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