Bipartisan Bill Strips Form 1099 Requirement From Health Care Law

April 11, 2011

CQ.com

Eugene Mulero and Emily Ethridge

Congress has sent to the president the first alteration to the health care overhaul, clearing a bill to remove a tax-reporting requirement that had provoked dissent from many quarters. But for now it may be the only overhaul-related issue that Republicans and the executive branch will agree on.

The Senate on April 5 easily cleared legislation (HR 4) to strip the requirement that businesses report all purchases of $600 or more to the IRS on Form 1099. After the 87-12 vote, the White House said it was “pleased Congress has acted to correct a flaw” in the law (PL 111-148, PL 111-152). (Senate vote 49, p. 830)

The bill marked the first major change to the law and a victory for Republicans, who have repeatedly sought to scale back or repeal it. The House had passed the measure last month, with 76 Democrats backing it.

Senate Minority Leader Mitch McConnell, R-Ky., said the bill is a “big win for small businesses” and a step toward dismantling the overhaul. But his counterpart, Senate Majority Leader Harry Reid, D-Nev., has made clear that the Democratic majority does not intend to move toward wholesale repeal.

Business groups, including the Chamber of Commerce and the National Federation of Independent Businesses, lobbied hard for repeal.

Sen. Mike Johanns, R-Neb., who had offered a Senate version (S 18), said the cleared bill would reduce the deficit by $166 million in the next decade. The $22 billion cost of the 1099 repeal is covered by requiring some people, if their income increases during the year, to pay back a portion of the subsidies they receive to join insurance exchanges created under the law.

Before passage, the chamber rejected, 41-58, an amendment offered by Robert Menendez, D-N.J., that would have directed the government to study whether the offset used to pay for the 1099 repeal would increase either insurance premiums in the exchanges or the number of uninsured. Under the amendment, if the study revealed increases, then the offset would not take effect. (Senate vote 48, p. 830)

“It repeals the 1099 reporting requirements, but at the same time I am concerned that it increases the health care burden on the very same people we are seeking to provide relief to,” Menendez said before a vote on the amendment.

Although the Obama administration disapproves of the way the legislation pays for the repeal, the use of that budgetary offset did not affect White House support.

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