By Robert Freeedman, Senior Editor, REALTOR® Magazine
In a little-noticed but important victory for REALTORS®, particularly those who help households and mom-and-pop owners of small rental properties, Congress this week passed legislation to repeal a short-sighted provision in small business legislation enacted last year (and a similar provision in the big health care reform law) that imposed onerous reporting requirements on small landlords and the real estate practitioners who work with them.
UPDATE: President Obama signed the repeal into law yesterday, April 14, making it official.
The provision required even the smallest property owners — those who might just be renting out a second home or other rental property — to track any work done for them that totals $600 a year or more over the course of a year and to send any vendors whose work reaches that amount an IRS Form 1099, so they can report the income to the federal government. Prior to that change, the reporting requirement only applied to those in the business or trade of rental real estate.
When the provision was included in the small business bill, REALTORS® were among the first and firmest opponents of it, helping to ensure that Congress understood the provision was an example of over-reach that was never intended to burden mom and pop property owners. Members of Congress and President Obama got the message and, in a rare example of agreement between not only Republicans, Democrats, and independents, but also between House and Senate chambers and between the legislative and executive branches, lawmakers agreed the provision needed to come out.
To show his support for repeal, President Obama in his State of the Union address in January pointed to it as an example of something all sides could agree on, that it could and should be repealed as soon as possible. This week it was repealed without fanfare and sent to the President for his signature. “It just involves too much paperwork, too much filing,” the President said back in November.
The action shows members of Congress can work together quickly on issues that are supported on a bipartisan basis, as this provision was.