Lawmakers Might Seek Compromise on 1099 Tax-Reporting Measure
Lawmakers might consider a compromise on a repeal of the 1099 tax-reporting provision in the federal health reform law because of a disagreement between the House and the Senate on how to offset the revenue lost by repealing the provision, National Journal reports (McCarthy/Snell, National Journal, 3/9).
Explanation of Tax-Reporting Rule
The tax-reporting requirement -- which is scheduled to take effect in 2012 -- requires businesses, not-for-profit groups and government offices to file 1099 forms with the Internal Revenue Service when they purchase $600 or more in goods or services from another business in a given year. The law previously required 1099 forms only for services above that amount. Federal analysts predicted that the provision would raise $19.2 billion in revenue over 10 years.
Last month, the Senate passed its 1099 repeal as an amendment to the reauthorization of Federal Aviation Administration programs. The amendment would offset the cost of the repeal by requiring the Office of Management and Budget to rescind $44 billion in appropriated but unspent discretionary funds from various sources. The departments of Defense and Veterans Affairs and the Social Security Administration would be exempt from those budgetary rescissions.
On March 3, the House approved its own repeal (HR 705) of the provision, which would offset the cost by changing a reform law provision to allow the federal government to recapture subsidy overpayments to consumers who purchase health coverage through state-based health insurance exchanges, regardless of whether the overpayments were made because of changes in income or by accident.
Current Work on Measure
Originally, Senate Democrats were unlikely to consider the House measure because of the different offset strategy (California Healthline, 3/4). However, certain senators on Tuesday indicated that the chamber ultimately might endorse the House plan (Friel/Lesniewski, CQ Today, 3/8).
According to Senate Finance Health Subcommittee Chair Jay Rockefeller (D-W.Va.), discussions are ongoing and likely will lead to a compromise between the two offsets.
Sen. Ron Wyden (D-Ore.) said, "The bottom line that I think, this is going to be re-litigated."
Sen. Robert Menendez (D-N.J.) rejected the House bill entirely, arguing it would harm middle-income families. Menendez said, "I just think it is fundamentally wrong to take a quarter-of-a-million families and one, take them out of the health care system, and two, punish them."
The White House also opposes the House offset, saying in a Statement of Administration Policy last week that it "could cause serious disruption in a wide range of services provided by the federal government." However, the Obama administration did not threaten to veto the bill (National Journal, 3/9).
House Presses Senate To Finish Repeal Work
House lawmakers are calling for the Senate to work quickly on passing a 1099 repeal. House Ways and Means Chair Dave Camp (R-Mich.) said indications of support among a few Senate Democrats means that the chamber could pass the House proposal and send it to President Obama this week.
On Wednesday, Rep. John Dingell (D-Mich.) said that even if Obama does not agree with the offset, he should sign the repeal. Dingell said, "I don't think the president will waste his time vetoing a bill on which the House has already spoken so clearly," adding, "There are fights that it pays to make and there are fights that it doesn't" (Needham, "Healthwatch," The Hill, 3/9).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.