Washington D.C.: April 14, 2011 – President Obama signed into law today the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 to rescind the Form 1099 tax reporting requirement included in the Patient Protection and Affordable Care Act (PPACA) of Heath Care Reform.
Under the reporting requirement, businesses would have been required to issue a Form 1099-MISC to corporations as well as non-corporate entities for the purchase of tangible goods and services over $600. The tax filing requirement did not directly relate to health care but was initially included as a funding measure for the health care bill by reducing un-reported and under-reported income that would otherwise be taxable. However, small firms and self-employed individuals voiced concerns that the requirement would bury them in paperwork.
In addition, the law also repeals the expanded Form 1099-MISC reporting under the Small Business Jobs Act of 2010 that required individuals who receive rental income from real estate to report rental property expenses on Form 1099-MISC.
The original requirements were expected to raise nearly $17 billion over 10 years by making it easier for the IRS to identify and pursue businesses and individuals that did not report the required information. The new law makes up for the lost revenue by, beginning in 2014, requiring individuals who receive tax subsidies in excess of what they are eligible for in state health care exchange health insurance plans, to pay back a greater share than formerly required under PPACA.
SRC: Jon J. Kazmierski, Senior Payroll Consultant, Paychex, Inc.
