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02 Feb 2011

1099 Law May Change and Bring Relief to Churches

Raul Rivera

In April of 2010, I wrote an article about a new law that made it tougher on churches.  The law mandates all churches, ministries, non-profit organizations and businesses to issue a 1099-Misc form to any and all people, businesses and corporations for payments of $600.00 for services, exchange for property or gross proceeds.   This law requires your church to issue a 1099-Misc even if you buy merchandise.

Since that day businesses, churches, nonprofits and some members of congress on both sides of the isle have been making serious efforts to have that law repealed.  The problem in repealing it is that it is a provision of the 2010 Health Care Act, which was passed on March 30th, 2010.  This provision of the healthcare act is projected to raise over 19 billion in ten years and was included to make the Healthcare Act revenue neutral. 

Congress has passed on three occasions to repeal this provision.  But now traction has begun to take and proposals in the senate and the house have been introduced to repeal it.  U.S. Senator Debbie Stabenow introduced an amendment to repeal a burdensome recordkeeping requirement.  Her office projected that it will increase the number of 1099 forms that will have to be issued by over 2000%. 

You can see that the effect that this will have on churches of all sizes is very burdensome.  Penalties to comply with this provision can result in penalties ranging in the thousands of dollars not counting interest.

Is it possible that the law will be repealed?

A vote on her amendment was taken today and it passed congress by a vote of 81-17.  Does that mean that the provision has been repealed?  NOT AT ALL; at least, not yet.  The vote was an amendment to an aviation that still has to pass the Senate and then get sent to the House of Representatives for consideration.  Momentum for repeal of this provision is gaining traction fast. 

More good news!

A similar bill (H.R. 4) was introduced in the House of Representatives with high hopes of passing.  With 245 members sponsoring it, it is sure to pass.     This bill repeals Section 9006 of the healthcare law and resets us back to the old way for processing 1099-Misc forms.  When it passes the house it will go to the senate for consideration.  The question is which of the two bills will reach the President's desk and will he sign it?  I think he will

What happens if the president signs the repeal?

If the president signs the repeal into law, churches will still have to file 1099 forms every year just like always.  It will not eliminate the requirement to file 1099 forms it just makes it so that your church will not have to file as many.  Below is a quick comparison.

Who gets a 1099 from your church

The old law 

If it does not get repealed

Unincorporated individual contractors



Guest speakers

Guest musicians

Unincorporated landlord


Guest speakers

Guest Musicians

Coffee vendors such as Starbucks, Caribou and others

Landscapers and lawn care providers

Doctors and hospitals, chiropractors


Cleaning/Janitorial companies

Video companies

StartCHURCH, for the services we provide

Copier maintenance agreements

Parcel delivery companies such as FedEx, UPS and DHL

Drinking water companies

Vending machine companies

Insurance companies

Subscription magazines, books and pastoral study aid providers

Fitness centers

Painters, contractors, renovation companies

Restaurants and catering companies

Church cruise/tour companies

Cell phone companies

Telephone companies

Internet service providers

Utilities companies such as water, sewer, electric and gas

Hotels and retreat centers


Office supply stores such as Office Depot, Staples and Office Max

Wholesale vendors such as Sam's Club, Costco and BJ's

Car dealerships, whether used or new

Gasoline stations

Get educated

The laws that govern churches are changing fast.  I cannot reiterate how important it is to attend one of our conferences.  We cover all of the necessary topics you need to learn to keep your church in compliance with the law.  If you have been considering attending one, let me encourage you to go ahead and do it.  I believe that what you will take away from our conference will impact your life and ministry for years to come. 

Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Raul Rivera

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About the Author

Church Planter. Speaker. Author. CEO. Raul Rivera has had ample experience in the church planting world. His current venture, StartCHURCH, has helped 1000's of churches to start right. Raul has compiled an array of manuals and software tools that help churches stay compliant with the IRS. He also hosts over 35 national conferences per year, training pastors on how to launch their churches. Raul is married to his wife Genel, and they and their five children live in Atlanta, GA.