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H.R. 5297: Senate Nixes 1099 Fix

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WASHINGTON BUREAU — The Senate today cleared the way for H.R. 5297, the Small Business Jobs Act bill, to reach the floor without changing a provision that could greatly expand Form 1099 reporting requirements.

Members voted 61-37 in favor of a cloture motion, or limit on debate, on the bill as a whole, which would revive a number of tax breaks that expired in December 2009. All Democrats and independents voted for cloture. Sens. George LeMieux, R-Fla., and George Voinovich, R-Ohio, also voted for cloture.

A Form 1099 amendment that was proposed by Sen. Ben Nelson, D-Fla., and supported by the Obama administration failed by a 56-42 vote. Supporters of the amendment needed 60 votes to invoke cloture and have it come up for a vote.

New Form 1099 reporting requirements are part of the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA). The requirements, set to take effect in 2012, are supposed to raise $18 billion in revenue over 10 years.

All businesses, tax-exempt organizations, and federal, state and local government entities would have to send 1099 forms to any vendor from whom they buy more than $600 in goods during a calendar year.

The Nelson amendment would have exempted firms with 25 or few workers from the reporting mandate and increased the reporting threshold to $5,000 for the other entities.

The Senate also voted 46-52 to reject an amendment by Sen. Mike Johanns, R-Neb., that would have repealed the new Form 1099 reporting requirements altogether.

The Johanns amendment would have paid for the repeal by diverting $11 billion from a new Affordable Care Act prevention and public health fund between now

and 2017. The fund is supposed to shore up anti-tobacco and obesity programs, public health departments, and organizations that provide health care in underserved communities.

The Affordable Care Act calls for the fund get $15 billion in appropriations between now and 2019.

The National Association of Insurance and Financial Advisors, Falls Church, Va., has joined other insurance and employer groups in seeking repeal of the new Form 1099 reporting requirements.

“NAIFA members welcome modifications to the new 1099 requirements to ease the burden on their small business clients,” a NAIFA staffer says.

Nelson accused Johanns and other Republicans of using the Johanns amendment to try to gut the Affordable Care Act.

One section of H.R. 5297 would simplify the rules governing partial withdrawal of funds from an annuity contract.

H.R. 5297 also includes a provision that would let self-employed people deduct their health insurance premiums and a provision that would let individuals with traditional 401(k), 403(b) and 457 plans roll their accounts into the Roth versions of the accounts.

NAIFA officials say the health premium deduction provision would last for just 1 year.

NAIFA has a higher opinion of the Roth rollover provision.

Plan participants now can roll traditional plan assets only into Roth individual retirement accounts, according to outgoing NAIFA President Thomas Currey.

The Roth rollover provision H.R. 5297 “expands the universe,” Currey says.


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