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Tag Archive | "1099 Reporting Requirement"

Capital Thinking Podcast

Newly-elected Republicans have moved quickly to attempt a repeal of the health care reform legislation. Last week, the Senate voted on an amendment to the Federal Aviation Administration reauthorization bill that would have repealed the Affordable Care Act. The effort failed by a vote of 47-51. Senators voted along party lines with all Republicans voting for the repeal and all Democrats along with Independent Sen. Bernie Sanders voting against it. Sens. Joe Lieberman, an Independent, and Mark Warner, a Democrat, did not vote. This vote comes two weeks after the House successfully voted to repeal ACA. The Senate approved by a wide margin an amendment to eliminate the 1099 reporting requirement mandated by the Affordable Care Act. This followed the introduction of three separate bills to repeal the unpopular provision. The health care reform law requires that all businesses issue Form 1099 to vendors from which they purchase $600 or more of goods annually and file the information report with the Internal Revenue Service. The requirement is effective for payments made after December 31, 2011, and was included in health care reform as a revenue raising provision. The timing for repeal of the 1099 reporting requirement in the House is unclear; however, on February 17, the House Ways and Means Committee plans to mark up legislation to repeal the 1099 reporting requirement.

On January 31, a Federal judge in Florida issued a ruling declaring the entire health reform law – and the individual mandate, in particular – unconstitutional under the Commerce Clause and therefore “void.” The judge dismissed a separate claim challenging the legality of the Medicaid expansion. According to U.S. District Court Judge Roger Vinson, “Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.” The Obama Administration has signaled that it will appeal the decision, and most experts believe that the case will be heard by the Supreme Court in the next couple of years.

On Thursday, CMS Administrator Don Berwick will make his debut on the Hill in appearing before the House Ways and Means Committee at a hearing examining the Affordable Care Act’s impact on Medicare beneficiaries. Richard Foster, Chief Actuary at the Centers for Medicare and Medicaid Services, will also testify at the hearing. During the week of February 14, Department of Health and Human Services Secretary Sebelius and White House Office of Management and Budget Director Jack Lew are scheduled to testify before the Committee about the President’s Fiscal Year 2012 Budget proposal.

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Senate Finance Committee Chairman to Introduce Legislation to Repeal 1099 Reporting Requirement

Press Release from Senate Finance Committee Chairman Max Baucus

 

Baucus to Introduce Bill to Repeal Form 1099 Income Reporting Requirements for Small Businesses

Finance Chairman says small business owners have been heard

For Immediate Release November 12, 2010

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) today announced he would introduce legislation to repeal requirements for businesses to file forms that would report payments made for goods and certain services to the IRS. The proposal was originally written to keep taxes low by giving the IRS more tools to ensure all owed taxes were paid. However, following passage of the law, some business owners expressed concern that when the provision does go into effect, the forms would place too large of a paperwork burden on businesses struggling in a still-recovering economy. In response to those concerns, Baucus said today that he would repeal the new reporting requirements and look for other ways to improve tax compliance and keep taxes low.

“I have heard small businesses loud and clear and I am responding to their concerns,” Baucus said. “Small businesses are the backbone of our economy in my home state of Montana and across the country, and they need to focus their efforts on creating good-paying jobs – not filing paperwork. I have fought hard for small businesses and worked hard this year to pass a Small Business Jobs bill that improves access to capital, stimulates investment and promotes entrepreneurship. It’s my job to work for small business owners in Montana and across the country and that’s exact what this bill will do.”

This type of reporting, which uses Form 1099 to indicate how much money businesses pay to corporations, was an idea proposed by the Bush administration to help better keep track of what businesses spend and earn, which in turn helps better keep track of tax liability. The Treasury Department estimates that more than $345 billion in owed taxes go unpaid each year. As Chairman of the Finance Committee, Baucus worked together with the Bush Administration to begin crafting the policy, with the hopes that more of those unpaid taxes could be collected, helping to keep taxes lower for all taxpayers. However, after the policy was finalized late last year and became law in early 2010, more businesses owners became aware of the new paperwork requirements and raised concerns about the resources required in January 2012 to complete the forms, when the policy was set to go into effect. Baucus’s actions to repeal the reporting requirements today come after recent consultation with small business owners in Montana and across the country.

Baucus has long worked to bolster small business and provide the tools small businesses need to grow. He recently co-authored the Small Business Jobs Act, which helps small businesses access capital, stimulates investment in small businesses and promotes entrepreneurship. Baucus said today he intends to continue partnering with the small business community to craft innovative solutions to enhance tax administration to make our nation’s tax system fairer and without raising taxes on anyone.

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Election Analysis: What It Means for Health Care Reform

After months of debate and considerable political maneuvering, President Barack Obama signed the Patient Protection and Affordable Care Act (H.R. 3590/P. L. 111-148) into law on March 23, 2010. On March 30, 2010, the President signed into law the Health Care and Education Reconciliation Act of 2010 (H.R. 4872/P. L. 111-152), which makes select changes to H.R. 3590.

Together, these laws, known as the Affordable Care Act (ACA), are designed to expand health insurance coverage to 32 million Americans who are currently uninsured, while reining in rapidly-growing health care costs.  Health care spending is the fastest growing line item in the Federal budget. Health care premiums have doubled in the last decade and have been an increasing burden to employers and employees, as well as State and local governments.

During the 112th Congress, Members will focus their attention on the implementation of the new law. The Republican gains, expanding the bloc of conservative Republicans, resulting in the control of the House and narrower margins in the Senate will bring about a focus on repealing or modifying the Affordable Care Act.

Other forces will be at play, beyond the political makeup of Congress, that may impact the trajectory of health care reform implementation. For example, in a Florida U.S. District Court, a judge allowed a lawsuit to challenge parts of the new health care reform law brought by 20 states, the National Federation of Independent Business, and two private citizens to move forward. The plaintiffs argue that the Affordable Care Act’s mandate that individuals purchase health care insurance and the Medicaid expansion violate the Commerce Clause of the Constitution. A summary judgment hearing where both the plaintiffs and defendants will have the opportunity to argue the merits of their case is scheduled for December 16. The lawsuit is likely to be heard by the Supreme Court in the next two years. A successful challenge would be a victory for Republicans and could result in major restructuring of the law.

In addition, Republicans are expected to win 6-8 governors’ races, resulting in a majority of state executive offices being held by Republicans. Control of these offices will impact funding priorities and health care reform implementation.

While there are many factors at play, the core provisions of health care reform, namely the establishment of state insurance exchanges and premium subsidies, are likely to remain intact in the law. In addition, given the enormous fiscal pressures, many of the Centers for Medicare and Medicaid Services’ (CMS) cost-cutting initiatives are likely to move forward, despite attempts to modify or repeal the reform law. Other provisions of the law, such as the creation of the Independent Payment Advisory Board (IPAB), are more likely candidates for repeal.  Regardless of the final outcome of the elections, we expect the battles regarding the health care reform law to continue up to and through the 2012 elections.

Committees of Jurisdiction

House Ways and Means Committee

Current Chairman Sandy Levin (D-MI) is expected to retain the top Democratic post on the Committee, serving as the Ranking Member of the full Committee in the 112th Congress. Ranking Member Dave Camp (R-MI) will assume the Chairmanship. Rep. Pete Stark (D-CA) will serve as Ranking Member of the Health Subcommittee. Rep. Wally Herger (R-CA) is in line to serve as the Subcommittee Chairman; however, Rep. Charles Boustany (R-LA) may contend for the position.

House Energy and Commerce Committee

Ranking Member Joe Barton (R-TX) is term limited according to GOP rules. Although he petitioned the Steering Committee to clarify whether the Republican Party’s six-year term limit is applicable to time served in the minority, it is unlikely that he will serve as Chairman. Instead, Rep. Fred Upton (R-MI), a moderate, is expected to rise to hold the top seat on the Committee. Current Chairman Henry Waxman (D-CA) will serve as the full Committee Ranking Member.  Health Subcommittee leadership will not change. Rep. Frank Pallone (D-NJ) will retain the top Democratic seat and Rep. John Shimkus (R-IL) will serve as the Chairman of the Subcommittee. Rep. Upton has signaled that he will seek to repeal the health care reform law and prioritize passage of legislation that would permanently prevent federal funds from being used for abortions. In addition to continued oversight of health care reform, the Committee will also consider Food and Drug Administration (FDA) user fee and reform legislation.

Senate Finance Committee

Sen. Max Baucus (D-MT) will retain his position as Chairman of the Committee.  However, leadership changes are expected on the Republican side of the aisle.  Sen. Orrin Hatch (R-UT) will serve as Ranking Member while current Ranking Member Chuck Grassley (R-IA) will transition to the Judiciary Committee to be the top Republican.  In addition to monitoring health care reform implementation, Senate Finance Committee Republicans will continue to call for a hearing with the Centers for Medicare and Medicaid Services (CMS) Administrator Donald Berwick, who was sworn in on July 13.  Dr. Donald Berwick is a pediatrician and professor at Harvard University and the founder the Institute for Healthcare Improvement.  He launched the“100,000 Lives” campaign to reduce the number of deaths attributable to medical errors in hospitals.  He previously served as Vice Chair of the U.S. Preventive Task Force, member of the Board of Trustees of the American Hospital Association, Chair of the National Advisory Council of AHRQ.  President Obama appointed Dr. Berwick during a recess in the middle of a session, so Dr. Berwick’s appointment will expire at the end of the first session of the 112th Congress.

Senate Health, Education, Labor and Pensions (HELP) Committee

The leadership of the HELP Committee will remain unchanged. Sen. Tom Harkin (D-IA), who has served as Chairman since the death of Sen. Ted Kennedy (D-MA) in August, will remain Chairman.  Sen. Michael Enzi (R-WY) will continue to serve as the Ranking Member of the Committee. Chairman Harkin recently established a health care investigations staff team, signaling his interest in more actively overseeing FDA policies.

House Ways and Means Committee

Current Chairman Sandy Levin (D-MI) is expected to retain the top Democratic post on the Committee, serving as the Ranking Member of the full Committee in the 112th Congress.  Ranking Member Dave Camp (R-MI) will assume the Chairmanship.  Rep. Pete Stark (D-CA) will serve as Ranking Member of the Health Subcommittee.  Rep. Wally Herger (R-CA) is in line to serve as the Subcommittee Chairman; however, Rep. Charles Boustany (R-LA) may contend for the position.

House Energy and Commerce Committee

Ranking Member Joe Barton (R-TX) is term limited according to GOP rules.  Although he petitioned the Steering Committee to clarify whether the Republican Party’s six-year term limit is applicable to time served in the minority, it is unlikely that he will serve as Chairman.  Instead, Rep. Fred Upton (R-MI), a moderate, is expected to rise to hold the top seat on the Committee.  Current Chairman Henry Waxman (D-CA) will serve as the full Committee Ranking Member.  Health Subcommittee leadership will not change.  Rep. Frank Pallone (D-NJ) will retain the top Democratic seat and Rep. John Shimkus (R-IL) will serve as the Chairman of the Subcommittee.  Rep. Upton has signaled that he will seek to repeal the health care reform law and prioritize passage of legislation that would permanently prevent federal funds from being used for abortions. In addition to continued oversight of health care reform, the Committee will also consider Food and Drug Administration (FDA) user fee and reform legislation.

Major Issues Likely to Be Addressed in 112th Congress

Health Care Reform Implementation. Prior to the election, House Republican leaders, including Minority Leader John Boehner (R-OH) and Minority Whip Eric Cantor (R-VA), announced their conservative agenda should they win enough seats in the mid-term elections to regain the majority in the House.  “A Pledge to America” proposes “to advance policies that promote greater liberty, wider opportunity, a robust defense, and national economic prosperity.” The agenda offers a plan to repeal and replace the health care reform law with “common-sense solutions focused on lowering costs and protecting American jobs.” Specifically, the Republicans plan to enact medical liability reform, allow purchase of health insurance across state lines, expand tax-free Health Savings Accounts (HSAs), ensure access for patients with pre-existing conditions, expand state high-risk pools and reinsurance programs, reduce cost of coverage, and permanently prohibit taxpayer-funded abortions.

Although the Republicans were not able to regain a majority in the Senate, the new House Republican Majority is likely to pass legislation to repeal or modify the Affordable Care Act.  Republicans have acknowledged that fully repealing the health care reform law is unlikely as long as President Obama is in office and Republicans do not have veto-proof majorities in the House and Senate. Furthermore, a Kaiser Family Foundation poll found that only 31 percent of registered voters favor full repeal of the law, making such a move politically unpopular.

While the Senate is not expected to consider legislation to fully repeal the health care reform law, House action will serve to outline the problems with the health care reform law and position the Republicans to articulate market-based solutions. The Republicans will use the next two years to relay to the American public through Congressional hearings and legislative activity that in order for changes to be enacted to the Affordable Care Act, a Republican president must be elected in 2012.

According to a Congressional Budget Office (CBO) analysis, Congress must appropriate more than $115 billion in 2010-2019 for the Internal Revenue Service (IRS) and Department of Health and Human Services (HHS) administrative costs associated with implementation as well as explicit authorizations of discretionary funding.  Republicans will certainly use the appropriations process to try to slow implementation of reform and to continue the debate about health care reform and its merits.

Health Care Reform Technical Corrections. A legislative package to correct provisions of the Affordable Care Act is expected to be introduced in the 112th Congress. Although House Republicans will not be successful in repealing health care reform in its entirety, Republicans in both the House and Senate may be able to modify provisions for which popular support could be garnered:

1099 Reporting Requirement. One provision that may be included in such a legislative package would repeal or modify the requirement that all businesses issue Form 1099 to vendors from which they purchase $600 or more of goods annually and file the information report with the IRS. The requirement is effective for payments made after December 31, 2011. The requirement was included in health care reform as a revenue raising provision that will generate $17.1 billion over 10 years. Congress considered proposals during this session to either repeal or modify the requirement. Republicans are expected to focus on this requirement as a way in which the Affordable Care Act burdens small businesses.

Independent Payment Advisory Board. The 15-member board will make recommendations to Congress to reduce excess Medicare cost growth and improve quality of care for Medicare beneficiaries. If Medicare costs are projected to be unsustainable in any given year, the Board’s recommendations will take effect unless Congress passes an alternative measure that achieves the same level of savings. Republicans have proposed eliminating the authority for the Board. Liberal House Ways and Means Committee Health Subcommittee Chairman Pete Stark (D-CA) has agreed that it is a “dangerous provision” and has pledged “to work tirelessly to mitigate the damage that will be caused by IPAB.”

Patient-Centered Outcomes Research Institute. The Affordable Care Act requires the establishment of a private, non-profit institute to identify national priorities and conduct comparative effectiveness research. Republicans have decried that such research will result in government refusal to provide coverage of more costly treatment options.

Community Living Assistance Services and Support (CLASS) Program. The law authorizes the establishment of a long-term disability insurance program for adults who have at least two functional dependencies. After a five-year vesting period, the program will provide those insured under the program with a cash benefit to purchase nonmedical services, such as home modifications, assistive technology, accessible transportation, homemaker services, respite care, personal assistance services, home care aides, and nursing support. Republican Senators have introduced legislation to repeal the program and moderate Democrats voiced opposition to the program during the health care reform debate. Senate Finance Committee Chairman Max Baucus (D-MT) has indicated that he is “no fan of the CLASS Act.”

Prevention and Public Health Fund.  The law authorizes a prevention and public health investment fund to provide an expanded and sustained national investment in prevention and public health programs. Republicans have called the fund a $2 billion-per-year slush fund that supports local government projects such as building jungle gyms. Earlier this year, Senate Republicans unsuccessfully tried to use the rollback of the prevention and public health fund to offset the cost of repealing the 1099 reporting requirement.

Medicare Physician Payment “Fix.” Earlier this year, Congress passed the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010,” which extended the Medicare physician fee fix through November 30, 2010. Without further Congressional action, physician payments will be cut by 23 percent beginning on December 1 and reduced by an additional 6.1 percent beginning January 1, 2011. The American Medical Association (AMA) has called for Congress to extend the fix for an additional 13 months through 2011. If Congress elects to move a short-term patch, Members will be forced to act again in the 112th Congress.

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Health Care Podcast

As Members of Congress returned to Washington this week from their summer sabbatical, they took little time in getting back to business to address the long list of items slated for consideration in the remaining weeks before aggressive campaigning begins for the November mid-term elections. On Tuesday, the Senate took up consideration of a small-business lending bill, but rejected amendments from Senators Johanns and Nelson related to a provision in the health care bill that forces businesses to submit a 1099 report to the IRS for any payments greater than $600 in a given year. The Johanns amendment would have repealed the controversial requirement entirely and the Nelson amendment would have scaled it back significantly. After invoking cloture on the substitute amendment, the bill was ultimately passed on Thursday with the support of two Republican Senators and will now proceed to the House.

Also on Thursday, Senator Max Baucus, Chairman of the Senate Finance Committee, released a $50 billion package of tax-cut extensions. The “extenders” bill would renew a number of expired provisions and create a variety of new spending measures, although the cost would be fully offset by an increase in various controversial taxes. Debate over the extenders issue has already raged for much of the year and it appears as though it will only continue as Republicans seem unlikely to support the proposal due to their unwillingness to pay for extensions of existing tax policy.

The Senate appears to have stalled in its consideration of food safety legislation due to the efforts of Senator Tom Coburn, who strongly opposes the bill because of a lack of funding. It now appears doubtful that the bill can be passed before the November recess, much to the chagrin of food safety activists, although many remain optimistic that an agreement can be reached before the end of the year.

The House is scheduled to reconvene on Wednesday, at which time they are expected to consider the small-business lending bill passed by the Senate. Although Speaker Pelosi noted that she preferred the House version of the bill, she made it clear that her chamber would indeed act on the legislation. The Energy and Commerce Committee is also expected to mark up a slew of public health bills this week that were approved by the Subcommittee on Health last Thursday with broad bipartisan support. Additionally, it is being reported that House Democrats will release a new bill to repeal the 1099 reporting provision in the health care law and will attempt to hold a vote on it sometime this week. The cost of the bill will likely be paid for either through changes to the inheritance tax or by implementing a tax on carried interest.

September 23rd will be a major milestone in health care reform, as it marks the six month anniversary of the enactment of the health overhaul bill, the Patient Protection and Affordable Care Act. A number of the laws major provisions are scheduled to go in effect as the staggered implementation of the law begins to ramp up. Unfortunately, however, data released last week by the Census Bureau that shows the number of uninsured Americans to be at an all-time high only added force to the partisan debate on the Hill as both parties interpreted the information as proof for their divergent solutions. It is likely that such partisan feuds will only proliferate as the mid-term election approaches.

Congress plans to remain in session until around October 8, at which point it intends to recess until after the November 2 midterm elections.

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