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PPACA: Senate Rejects 1099 Fix Efforts

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Republicans in the Senate today blocked efforts by Democrats to eliminate major Affordable Care Act Form 1099 vendor reporting requirements.

Sens. Max Baucus, D-Mont., and Debbie Stabenow, both tried to add a 1099 fix to H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

Form 1099 is the form businesses and others use to report a wide variety of payments to the Internal Revenue Service. A broad new 1099 reporting requirement is part of the new Patient Protection and Affordable Care Act (PPACA), a part of the Affordable Care Act package.

The provision, set to take effect in 2012, is supposed to raise $18 billion over 10 years PPACA - 1099 fixby requiring all businesses, tax-exempt organizations, and federal, state and local government entities to issue Form 1099 to vendors from whom they buy goods totaling $600 or more during a calendar year.

Some critics have suggested that strict enforcement of the provision could require a free-lancer who buys a $700 computer from the local discount store to send a Form 1099 to the discount store.

“Small business owners want us to repeal form 1099 reporting requirements so they have additional resources to grow their businesses and hire new workers,” Baucus said in a statement after the vote on the bill. “Today we should have – and could have – delivered the paperwork relief small businesses need. Eliminating these paperwork requirements is a simple, common-sense idea that senators on both sides of the aisle support and it is deeply disappointing to see partisanship stand in the way of progress for small business owners.”

Senate Republicans have been backing a 1099 fixer proposal developed by Sen. Mike Johanns, R-Neb.; Baucus argued today that the Johanns is a different, broader measure than the fix he was proposing; Johanns says his proposal would eliminate the 1099 problem and avoid adding 1 penny to the deficit. Johanns wants to pay for the fix by having regulators look for unspent funds sitting in federal agency accounts.

Vice President Joseph Biden negotiated the H.R. 4583 compromise with

Senate Majority Leader Mitch McConnell, R-Ky., and incoming House Speaker John Boehner, R-Ohio. The compromise, which passed 81-19 today in the Senate, would extend a variety of tax incentives in the Economic Growth and Tax Relief Reconciliation Act of 2001 for 2 years, and it would set the personal estate tax exemption at $5 million and the top estate tax rate at 35% for 2 years.

The bill also would preserve extended unemployment insurance benefits for 13 months.

Some Republicans and many Democrats in the House have attacked the bill. House Democrats say the bill is too generous to the rich; Republican critics and some Democratic critics say the bill would add too much to the federal budget deficit.


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