The bill to repeal the 1099 Health Care Tax is now on its way to 1600 Pennsylvania Avenue. The Senate passed H.R.4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act, by a 87 to 12 margin, without changing anything in the House-passed bill. So it is now up to the President to decide whether to sign the bill or veto it.
Prior to passage, the Senate rejected a “poison pill” amendment that, if adopted, would have prevented the bill from being sent to the President’s desk as the next step. Sixty votes were needed for approval for the amendment, and the Menendez “poison pill” amendment failed by a vote of 41 in favor and 58 opposed.
While the Administration has not officially put out a statement on what President Obama will do, the President has said on more than one occasion that the 1099 mandate should be repealed.
It will be extremely difficult now for the President to veto this repeal bill.
The 1099 Health Care Tax and What It Means For Your Business
As a result of the passage of Obamacare, every business will be required to issue to any vendor of services OR property to which the business has paid more than $600 a year for those services or property, an information reporting form known as Form 1099. The Form 1099 must also be sent to the Internal Revenue Service. In addition to issuing the forms, a business will have to get Taxpayer Identification Numbers (TINs) from all of those vendors and withhold payments to any such vendor until it receives the TIN. Penalties apply if you fail to issue the Forms 1099 and those penalties have recently been increased!The payments that are included under this expanded requirement are not only those made directly by check but also those made by other means such as credit cards, for example. Think about the airlines, hotels, rental cars, and restaurants that appear on your credit card bill. You might not think of them as vendors of goods and services, but that is what they are. Also, if you are in the business of selling or distributing goods, all of your suppliers of products are also vendors under the new law. And, of course, any business that pays you more than $600 will be sending you a Form 1099.
Why the new rules for 1099? Because Obama and the Democrats needed to fund his new health care bill. This new requirement is supposed to raise $25 billion off the backs of small business to help pay for Obamacare. Luckily, the Senate has entered into a Unanimous Consent Agreement (UC) under which votes will occur today, on H.R. 4 – the House-passed 1099 repeal bill which will do away with this onerous requirement.
This measure only needed 60 votes to prevail, and it received 87. With that said, Senator Robert Menendez (D-NJ) offerred what one might term a “killer” or “poison bill” amendment to H.R. 4. Senator Menendez has opposed repealing 1099 mandate at every corner. The amendment was defeated, and now the bill has been sent to the White House for Presidential approval or veto.