WASHINGTON BUREAU — Members of the House today voted 314-112 to pass H.R. 4, a bill that would repeal the new, expanded Form 1099 tax reporting requirements created by the Patient Protection and Affordable Care Act.
The House 1099 fix also would repeal new tax reporting requirements aimed at owners of rental real estate.
The vote sets the stage for contentious talks with the Senate over how the 1099 reporting fix should be paid for.
The PPACA 1099 reporting provision would require businesses to file Form 1099 tax reports with the Internal Revenue Service (IRS) whenever they conduct more than $600 in transactions with a vendor in a given tax year.
Analysts estimate repealing the 1099 reporting provision could increase the federal debt by about $22 billion over 10 years.
PAY-FOR VS. PAY-FOR
The Senate 1099 fix legislation calls for paying for the fix by letting the federal Office of Management and Budget take away about $44 billion in discretionary budget authority from all departments and agencies except for the Defense Department, the Veterans Affairs Department and Social Security.
The House “pay for” would pay for 1099 provision repeal by having the IRS be more aggressive about getting excess PPACA health insurance purchase tax credits back from consumers who earn 400% to 500% of the federal poverty level.
The health insurance tax credit clawback provision would start to take effect in 2014 and 2015. Supporters cite projections showing the provision could reduce the federal budget deficit by $166 million between now and 2021.
House Democrats have called the change – which could start to take effect in 2014 and 2015 — a tax increase on the middle class. Obama administration officials have agreed in a policy statement released Tuesday.
White House officials say in the policy statement that the House pay-for “would undo an improvement enacted with nearly unanimous support in the Medicare and Medicaid Extenders Act that eliminated an egregious ‘cliff” in the tax system affecting middle income taxpayers.”