Repeal of New 1099 Tax-Filing Requirement for Pharmacies Appears Closer to Fruition


While nothing involving Congress is ever a certainty, efforts to repeal the so-called 1099 provision increasing the tax filing burden on pharmacies and other small businesses appear to be gaining bipartisan support.

Included in the health care reform law was a provision mandating that small businesses provide a 1099 form to any entity from which they purchase more than $600 in goods and services, starting in 2012.  As a result, independent community pharmacies anticipate having to file an additional 100 to 200 new form 1099s. To impose this new significant paperwork burden on pharmacies would only serve to divert resources away from patients and improving health outcomes, and instead direct those resources of time, money and effort toward bureaucratic tax requirements.

For nearly a year, NCPA has advocated repeal of the provision, primarily via a coalition led by the National Federation of Independent Business. Most recently, NCPA flagged the provision in a letter to new House Oversight and Government Reform Chairman Darrell Issa (R-Calif.).

With the start of the new Congress this month, new repeal legislation was promptly introduced and already has the backing of bipartisan majorities in the U.S. Senate and House – a remarkable show of support. On Jan. 12, U.S. Rep. Dan Lungren (R-Calf.) introduced H.R. 4, which now has 258 cosponsors. This week, Senators Mike Johanns (R-Neb.) and Joe Manchin (D-W.V.) introduced a Senate version that enjoys 60 cosponsors. Senate Majority Leader Harry Reid (D-Nev.) and Finance Chairman Max Baucus (D-Mont.) have authored their own repeal legislation.

With this backdrop, President Obama in his State of the Union address expressed his support for, as he put it, “correcting a flaw” that has “placed an unnecessary bookkeeping burden on small businesses.” The statement was met with a standing ovation from lawmakers. Separately, U.S. Department of Health and Human Services Secretary Kathleen Sebelius told The Hill newspaper that the 1099 provision “has far more burden than benefit.”

Newspaper editorial pages, such as the Bristol Press (Conn.) and the Portland Press-Herald (Maine), have also endorsed the repeal.

With the continued engagement and support of community pharmacists, hopefully Congress will repeal this provision long before it takes effect Jan. 1, 2012.

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