Senate Approves Repeal of 1099 Requirement

February 02, 2011

February 2, 2011 — The Senate today took an indirect but decisive step toward repealing an unpopular tax-form provision of the Affordable Care Act (ACA).

The piece of paper in question is federal tax form 1099. Under the ACA, all businesses, including medical practices, must file a 1099 with the Internal Revenue Service beginning in 2012 if they purchase $600 or more worth of goods or services in a given year from any vendor. Right now, businesses need to file it only for services provided by unincorporated businesses, such as sole proprietors. Organized medicine views the expanded reporting duty as unduly burdensome.

In an 81 to 17 vote today, the Senate amended a bill to reauthorize and modernize the Federal Aviation Administration (FAA) with a provision that eliminates the new 1099 requirement.

With the encouragement of President Barack Obama, Congress has been attempting to delete the 1099 requirement in the ACA since last fall. However, lawmakers have disagreed on how to offset the estimated $19 billion that the provision would raise in the form of tax revenue (the assumption being that the IRS would spot previously unreported vendor revenue). According to the amendment passed today, the White House Office of Management and Budget would identify where to make the cuts. Unobligated funds of the Department of Defense, the Department of Veterans Affairs, and the Social Security Administration are off-limits.

Opponents of the amendment, such as Sen. Carl Levin (D-MI), said that Congress, not the White House, should exercise the budget-cutting ax.

The repeal of the new 1099 reporting duty will not be final until Congress passes the FAA bill. An aide to Senate Majority Leader Harry Reid (D-NV) told Medscape Medical News that the Senate could vote on the FAA measure as early as next week.

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