Obama signs 1099 fix bill

President Obama has signed H.R. 4 – a bill that will repeal the Form 1099 reporting provision created by Patient Protection and Affordable Care Act (PPACA) Section 9006 – into law.

If PPACA 9006 Section 9006 had taken effect as written, it would have required a business entity to file a 1099 miscellaneous income reporting form with the Internal Revenue Service for a vendor whenever it had $600 or more in transactions with that vendor in a given tax year.
The provision would have taken effect in January 2012.

Small business groups had argued that the provision would create a paperwork nightmare, forcing independent contractors to file a Form 1099 whenever they bought a computer or a suite of office furniture from a large retailer.

The new law created by H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,” also repeals a separate Form 1099 information reporting requirement that would have been imposed on owners of rental real estate.

Analysts have estimated repeal of PPACA Section 9006 will cost $19 billion over 10 years. Drafters of the repeal law have paid for repeal by adjusting a PPACA health insurance subsidy program that is set to start up in 2014.

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The IRS releases interim guidance on W2 reporting requirements

The Internal Revenue Service has issued interim guidance to employers on the informational reporting requirements on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees. The IRS is also asking for comments on the interim guidance. The IRS emphasized that the new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee's income, and is not taxable. To view the guidance click here

U.S. Senate votes to repeal 1099 reporting requirement

WASHINGTON (Reuters)—Bowing to pressure from business groups worried about an avalanche of paperwork, the U.S. Senate voted Tuesday to rescind the Form 1099 tax reporting requirement included in last year's health care overhaul law. With bipartisan support, the Senate voted 87-12 to pass legislation sponsored by Sen. Mike Johanns, R-Neb., that repeals a requirement for businesses and landlords to file a Form 1099 document with the Internal Revenue Service for purchases of goods and services exceeding $600 a year. The tax filing requirement did not directly relate to health care but was intended to help pay for the health care law that is considered one of President Barack Obama's top legislative achievements. The legislation earlier was passed by the House of Representatives and now goes to President Obama, who is expected to sign it into law. It was approved in Congress despite concerns by some Democrats to the way the $22 billion cost to the U.S. Treasury of repealing the tax reporting provision is covered. The bill adjusts the health insurance tax subsidies to be given to middle-income people under the health care law. It would require anyone who receives excessive tax subsidies for health insurance to pay back a greater share than currently required under the law. The Form 1099 reporting provision was meant to improve tax compliance and help pay for the health care law. But small firms and the self-employed complained it would bury them in paperwork. Lawmakers in both parties agreed that the tax reporting requirement should go. To view the full artcile click here.

House Committee Bill Would Restrict Funding for State-Based Exchanges

The ability of the Obama administration to provide unlimited funds to states to establish health exchanges would be ended under legislation reported out by a House committee late Tuesday. The House Energy & Commerce Committee legislation, H.R. 1213, would strike the unlimited direct appropriation of funds provided under the healthcare reform law for creation of state-based exchanges. The bill would also order that unspent money in the hands of the Department of Health and Human Services to provide funds to the states be returned to the Treasury. The bill is among five bills that would rescind authority to fund the law, the Patient Protection and Affordable Care Act. Rep. Fred Upton, R-Mich., chairman of the panel, says the committee passed the bills to “limit the Department of Health and Human Services’ unprecedented power, and restore Congress’ fiduciary duty as representatives of the people.” To view the full article click here.

Certain health care reform law requirements delayed

WASHINGTON—Employers will be given until Jan. 1, 2012, to comply with certain health care reform law requirements, the Labor Department has decided.
One delay involves a reform provision in which health plan enrollees have to be notified of an urgent care coverage decision within 24 hours of receipt by the employer or plan administrator That is a big change from a decade-old Labor Department rule that requires such notifications be made within 72 hours.

In rules issued last July, federal regulators said the 24-hour notification requirement would go into effect Jan. 1, 2011. Then in technical guidance issued in September, the Labor Department said it was establishing an “enforcement grace period” running until July 1, 2011, in which no action would be taken against employers that were working in good faith to comply with the new standard by July 1. The latest Labor Department guidance issued last week extends that grace period to Jan. 1, 2012.

The same Jan. 1, 2012, grace period extension also applies to another new mandate, which requires that notices of available internal and external claims appeals and review processes be provided in a “culturally and linguistically appropriate manner.”
The Labor Department said the delay will enable it to take into account comments it has received on the regulations. It said it will amend those regulations, but gave no indication of what those changes will be.

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Obama Supports Easing Health Law Mandates for States

WASHINGTON — Seeking to appease disgruntled governors, President Obama announced Monday that he supported amending the 2010 health care law to allow states to opt out of its most burdensome requirements three years earlier than currently permitted.

In remarks to the National Governors Association, Mr. Obama said he backed legislation that would enable states to request federal permission to withdraw from the law’s mandates in 2014 rather than in 2017 as long as they could prove that they could find other ways to cover as many people as the original law would and at the same cost. The earlier date is when many of the act’s central provisions take effect, including requirements that most individuals obtain health insurance and that employers of a certain size offer coverage to workers or pay a penalty.

“I think that’s a reasonable proposal; I support it,” Mr. Obama told the governors, who were gathered in the State Dining Room of the White House.

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House panel votes to repeal 1099 reporting requirement

WASHINGTON—The House Ways and Means Committee on Thursday unanimously approved legislation that would to repeal a health care reform law requirement that employers to furnish 1099 statements whenever they do more than $600 in business with a corporate vendor.
The measure, H.R. 4, now goes to the full House.

A similar proposal passed the Senate this month with strong bipartisan support. By the end of the week, the Senate is expected by supporters to approve the broader bill, S. 223, which authorizes funds for the Federal Aviation Administration.

Small employers in particular have complained that the 1099 reporting requirement that is scheduled to go into effect in 2012 is too great a burden.

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