Congress approves repeal of tax reporting provision in health reform law

Medical practices had complained that the 1099 requirement presented an undue administrative burden.

By Doug Trapp — Posted April 5, 2011

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By a vote of 87-12, the Senate on April 5 approved a House-passed bill that would amend the national health system reform law for the first time, repealing a provision that requires physician practices and other small businesses to disclose any vendor on which they spend $600 or more in a year. The passage sends the legislation to President Obama's desk.

"We have to avoid imposing any tough regulations on our small-business owners," said Sen. Olympia Snowe (R, Maine), who voted for the bill. The House had adopted the legislation on March 3.

The so-called 1099 provision would increase projected tax collections from vendors by about $20 billion by requiring businesses that buy their goods and services on or after Jan. 1, 2012, to start reporting the transactions. Obama supports repealing the provision, which initially was included in the health reform law to help offset insurance coverage expansions.

However, a White House statement issued immediately after the Senate passage did not indicate whether Obama would sign the bill. The administration has said that the president does not support the bill's method of paying for the repeal. Under the approved language, certain recipients of health insurance assistance under the health reform law would need to repay those subsidies if their incomes were to increase above a certain threshold later in the year. While the 1099 repeal bill was pending in Congress, Obama issued a statement opposing the offset but stopped short of threatening a veto.

The American Medical Association urged Obama to sign the legislation, saying the 1099 requirement is unnecessary and burdensome to physicians and other small businesses. "Existing administrative burdens already weigh heavily on physicians, taking up time that is better spent caring for patients," said AMA Immediate Past President J. James Rohack, MD.

Congress began in 2010 what became a bipartisan effort to rid the health reform law of the reporting requirement. The House and Senate adopted multiple bills to repeal the 1099 provision during the past several months, but lawmakers were unable to agree on how to offset the repeal's cost until the Senate vote on April 5.

House Speaker John Boehner (R, Ohio) applauded the Senate action. "Now we need to repeal the rest of the law," he said.

An amendment to the 1099 repeal offered by Sen. Robert Menendez (D, N.J.) would have required the Dept. of Health and Human Services secretary to study whether the bill would affect the cost and availability of certain health insurance. However, the amendment failed on a 41-58 vote.

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