Push to repeal expense reporting provision of health reform law continues

The requirement is expected to improve tax collections by at least $17 billion over a decade, but groups argue it's a burden on employers.

By Doug Trapp — Posted Dec. 16, 2010

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The first bipartisan attempt to revise the national health reform law -- a proposal to repeal a business expense reporting requirement -- failed. But it will not discourage the lead senators on the issue from introducing similar bills later.

The law is paid for in part by a provision to improve tax collections. Businesses will be required to file a 1099 form with the Internal Revenue Service for every vendor with whom they spend at least $600 annually on goods and services. Current law exempts corporations and goods from such reporting, according Giovanni Coratolo, vice president of small-business policy for the U.S. Chamber of Commerce.

The expanded reporting requirement, scheduled to begin with transactions on Jan. 1, 2012, is expected to improve tax collections by at least $17 billion total over a decade. It exempts credit card purchases, according to the chamber.

Republicans and business groups such as the chamber say the 1099 provision should be repealed because the additional reporting is an unfair burden on employers. Unlike other GOP criticisms of the reform law, President Obama and some Democratic senators, including Senate Finance Committee Chair Max Baucus (D, Mont.), agree the 1099 language should be stricken. The American Medical Association also supports repealing the provision.

Sen. Mike Johanns (R, Neb.) is leading the effort to repeal the 1099 provision. He offered an amendment to the Food and Drug Administration Food Safety Modernization Act on Nov. 29 that would have removed the reporting provision. The bill failed to get the necessary votes for passage.

The Johanns bill would have replaced at least $17 billion that the reporting provision would generate with money that would have been applied to the federal deficit.

Johanns spokesman Steve Wymer said other senators suggested paying for the 1099 repeal by cutting federal spending across the board by 2%, but Johanns does not want to reduce spending on programs to help the poor and children. However, that's an option he is considering because of the failure of his measure, Wymer said.

Baucus offered his own bill to repeal the 1099 provision on Nov. 29, but just 53 senators supported it, including one Republican: Sen. Mark Kirk (R, Ill.). The Baucus measure would have added the cost of the repeal directly to the federal deficit.

Baucus pledged to work with Johanns on repealing the 1099 provision, Wymer said. A Baucus spokeswoman did not respond to questions about his repeal plans by this article's deadline.

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