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Dayton Business Journal...
Congress votes to
repeal health care reform provision
by Kent Hoover
Tuesday, April 5, 2011
Congress has voted to repeal a provision in President Barack Obama’s
health care reform law that small businesses say would be a paperwork
nightmare for filing 1099 forms with the IRS.
The U.S. Senate approved a bill Tuesday to repeal a health care reform
provision that requires businesses to file a 1099 form with the
Internal Revenue Service every time they spend more than $600 a year
with another business.
By a 87-12 vote, the Senate passed legislation repealing the 1099
provision, which was included in health care reform as a way to help
pay for that measure. Third-party reporting of income makes businesses
less likely to try to hide income from the IRS, according to supporters
of the provision.
Businesses already are required to file 1099s for payments of more than
$600 to unincorporated service providers. The health care reform bill
expanded this requirement in 2012 to goods as well as services, and
applied it to all types of vendors. Small businesses contend this
expansion would create a paperwork nightmare, forcing many of them to
file hundreds of 1099 forms instead of just a few.
Senate passage of the bill, which previously cleared the House, sends
the bill to President Barack Obama for his signature. The president
supports repeal of the 1099 provision, but he doesn’t like how the bill
makes up for the revenue that would be lost: It requires people who
receive higher subsidies for health insurance than they should have to
repay this money to the government. Obama, however, is expected to sign
the bill.
The Senate defeated an amendment by Sen. Robert Menendez, D-N.J., that
would rescind the bill’s subsidy repayment requirement if a study finds
that would increase health insurance premiums or reduce coverage for
small businesses.
“We all want 1099 repealed,” Menendez said.
But he said small businesses and their employees could be hurt by a
“payback tax” from the subsidy repayment requirement.
Sen. Mike Johanns, R-Neb., said adopting Menendez’s amendment would
force small businesses to wait for relief from the 1099 requirement.
The House would also have to approve the Menendez amendment in order
for the repeal bill to clear Congress.
“Let’s not vote for another alternative that’s just going to stall this
out again,” Johanns said.
This is the seventh time that he’s presented a 1099 repeal bill to the
Senate, he noted. Action is needed now because small businesses are
feeling the pressure to change their accounting systems in order to
comply with the 1099 requirement if it goes into effect next year, he
said.
“Let’s vote to actually solve the problem,” Johanns said.
He also defended the subsidy repayment provision.
“Requiring people to pay back what they should not have received in the
first place,” he said, is “good government, not bad policy.”
Most business groups supported 1099 repeal and opposed the Menendez
amendment.
“Small business owners oppose anything less than complete, immediate
and certain repeal,” read a letter to senators from the Small Business
& Entrepreneurship Council.
“We applaud Congress for taking a positive first step toward removing
the excessive cost burdens and uncertainties imposed on franchise small
businesses as a result of the health care law,” said Steve Caldeira,
president and CEO of the Internatioanl Franchise Association.
Small business owners are worried about the rising health care costs
and the price of implementing new reform rules. Many Republicans in
Congress, including House Speaker John Boehner of Butler County, are
against the law and want to change or repeal it.
Regardless of what happens, there are many large companies that have a
big stake in whether the law is repealed, changed or kept as was passed.
UnitedHealthcare parent UnitedHealth Group Inc. (NYSE: UNH) — which has
a regional headquarters in West Chester that serves both Dayton and
Cincinnati — and Anthem parent WellPoint Inc. (NYSE: WLP) are among
those that have already started implementing some aspects of the reform.
Other large companies that could be affected include drug makers
Johnson & Johnson (NYSE: JNJ), Pfizer Inc. (NYSE: PFE),
GlaxoSmithKline (NYSE: GSK), AstraZeneca (NYSE: AZN), Merck &
Company (NYSE: MRK) and Eli Lilly & Co. (NYSE: LLY), which is based
in Indianapolis.
Both Bayer AG and Abbott Laboratories (NYSE: ABT) have operations in
Ohio, while many of the drugmakers employ sales reps throughout the
Dayton region.
Read it with links at Dayton Business Journal
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