CRISISBOOM

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Florence Delva/Getty Images A stack of coins is shown in this file photo. A new IRS rule that will start in 2012 will require sellers, buyers of gold coins to file IRS paperwork.

(Kitco News) Both chambers of the U.S. Congress have approved legislation to eliminate controversial new Form 1099 tax-reporting requirements that coin dealers and other business organizations had complained was too onerous.

The measure is on its way to the desk of President Obama after Senate passage by an 87-12 vote Tuesday. A number of news reports suggested that the White House is expected to sign the bill into law.

Sen. Mike Johanns (R-Neb.), who introduced Form 1099 repeal seven times, said the Senate measure was identical to a version that already passed the House of Representatives. This means the measure does not have to go to a conference committee and instead goes directly to the White House. An amendment that would have resulted in further delay of 1099 repeal was rejected, he said.

“I appreciate that my colleagues have seen the wisdom of avoiding further delays and getting this costly, looming paperwork burden off the backs of our job creators,” Johanns said. “We now need only a simple signature from the president and this bill will become law, saving jobs and much needed capital for our small businesses.”

The House passed a bill for repeal of the Form 1099 rules in early March. Both parties have favored repeal for months now, although it was held up by a fight over how to offset to any health-care funding that purportedly would be lost. According to news reports, the House and Senate bills would limit health-care subsidies for families over a certain income threshold.

The Industry Council for Tangible Assets said Tuesday night it was cautiously optimistic that the repeal will become law. ICTA is a trade group for the rare coin, precious metals and tangible assets industry.

The group noted that as of early last month, a statement of administration policy indicated that the White House did not agree with the House of Representatives’ method of offsetting any health-care funding lost through the repeal. However, ICTA pointed out, both the House and Senate passed repeal by large margins and potentially could override any veto. Furthermore, ICTA said, President Obama has indicated that the 1099 rules are a problem and the Senate is controlled by his Democratic Party, so “a veto by President Obama would seem unlikely.”

Still, ICTA added: “Remember, this fight isn’t over until the president actually signs the bill.”

The rules in their current form would require entities to file a Form 1099 with the Internal Revenue Service whenever they make transactions paying out $600 a year to another party. This would not have created a new tax, but was meant to create a paperwork trail to force those who should be paying taxes to do so, if they aren’t already. The rules were included in the nation’s health-care reform act passed last year and were meant to generate funding for health programs. It was expected to raise around $20 billion over the next decade.

However, businesses complained that they would have created massive amounts of paperwork and extra expense.

The rules were not scheduled to go into effect until 2012. However, coin dealers told Kitco News last month that they were anxious for a repeal far ahead of the Jan. 1 effective date so they would not have to wonder whether to start undertaking expenses, such as new computer software, to keep track of the data.

The laws would have affected a wide range of businesses, but coin dealers were thought to be among the most heavily impacted, since a single ounce of gold is more than double the law’s $600 reporting threshold, meaning most transactions would have been reportable. Furthermore, many dealers’ inventory comes from many members of the public, compared to some businesses that might rely upon only a handful of suppliers, meaning far more 1099s for coin dealers than most other companies.