CFO.com has reported that the Senate has passed the 1099 repeal of the requirement of health-care reform law. This is going to President Barack Obama for his signature to make this official.
There was an 87 to 12 vote for the Senate passing the House version of a bill to repeal the provision. It contains an alternate way to raise tax revenue that the requirement was projective to provide. Obama has said he is in favor of this.
The report states:
“Currently, a business must provide a 1099 form to the Internal Revenue Service for any services it receives from an unincorporated firm, such as a partnership. In March 2010, the Patient Protection and Affordable Care Act broadened the requirement so that a business would have to file the form for every vendor it uses, regardless of incorporation status, for both services and goods that exceed $600 in a year. The measure, scheduled to take effect January 1, 2012, was intended to generate additional tax revenue to help fund health-care reform by extracting more tax revenue from vendors that may have previously underreported their income.
In the newly passed amendment, some of the lost revenue would be offset by a new provision mandating that individuals pay back federal health-care subsidies if their income increases. Depending on the increase and the size of the family, the paybacks could range from $600 to $2,500.”
CNN Money’s article regarding this is titled “Senate Sends Repeal of Hated Tax Proviison to Obama.”
“The requirement was designed to fight tax fraud and raise money for the health care reform plan Democrats passed last year. But it quickly became unpopular with both parties when businesses complained it would be too burdensome.”
The Wall Street Journal reports about what Democrats and Republicans have agreed on:
“Republicans and Democrats had agreed that repealing the tax-reporting requirement was a good idea, but had differed over how to compensate for it. The approved repeal would make up for taxes lost to vendor evasion by requiring low- and middle-income Americans who receive a tax credit for buying their own health insurance to repay the credit if their income winds up being too high. The repayment obligation would show up as a tax charge during the tax filing season.
“How would most middle-class families deal with a tax bill of $10,000 or more just because their income may have increased $1 above the eligibility limits during the year they got accepted?” said Sen. Bob Menendez (D., N.J.), who tried and failed to repeal the mechanism for dealing with the cost of the repeal.”