Bill Puts Kibosh on 1099 Nightmare
WASHINGTON, DC—In a victory for millions of small businesses across the country, Congress voted to repeal the unpopular aspect of President Obama’s health care legislation that would have forced businesses to file Form 1099 tax forms for every vendor that sold them in excess of $600 in goods. Though not related to health care, the Form 1099 law—slated to take effect in 2012—would have helped pay for part of the reforms.
The U.S. Senate voted to repeal the filing requirement by an 87-12 vote, which followed a House vote in early March. President Obama then added his signature to the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011.
The bill repeals the expansion in the Affordable Care Act of requirements for businesses to report information to the Internal Revenue Service on payments for goods of $600 or more annually to other businesses, and increases the amount of overpayment subject to repayment of premium assistance tax credits for health insurance coverage purchases through the exchanges established under the Affordable Care Act.
Currently, businesses are only required to send a Form 1099 to individuals who provide rent, interest, dividends and non-employee services in excess of $600 to a business. Payments to a corporation and payments for merchandise do not need to be reported.
The provision had been expected to raise nearly $25 billion during a 10-year stretch by ensuring that vendors pay their taxes. The money will be made up by changing another part of the health care bill, requiring more families to repay tax credits designed to help them cover insurance premiums.