Momentum is growing in Congress to repeal a new tax reporting rule in the health law. The provision requires all businesses, charities and state and local governments to file 1099 tax forms with the Internal Revenue Service when they buy $600 or more in goods from another business. Before the health reform law was enacted, the reporting requirement pertained only to purchasing services of $600 or more from unincorporated providers. Under the new rule, though, firms would have to send a 1099 to Apple, to use one example, every time they bought an iMac. The provision, unless repealed, will take effect in 2012.
The business community is trashing the provision, saying it will pile a massive amount of new paperwork on companies, putting a burden on small companies that can least afford it. It’s especially ill advised during a time of economic fragility, they say.
Sen. Mike Johanns (R-NE) is taking up the cause, pledging to add an amendment that would repeal the reporting requirement to the Senate version of the small business lending bill, which the Senate hopes to take up in September. If he’s successful, the matter would have to be resolved in a conference committee, since the House version contains no such provision.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But dropping the requirement will mean a loss of tax revenue. And Congress will have to find another way to raise the $17 billion the provision was estimated to yield from 2012 to 2019 by making it harder for firms selling goods to understate their income to the IRS. A need for revenue was the only reason the provision was included in the $940-billion health law.
The issue is sure to be used as a political bludgeon by Republicans in their campaigns against Democrats in the fall. They’ll point to it as another example of excessive government regulation, pushed by the Democrats, that’s antibusiness and harmful to economic recovery.
-
M&A Is Why UnitedHealth Group Stock Is in of the 100,000% Return ClubUnitedHealth has given a master class in mergers and acquisitions over the years.
-
How GLP-1 Drugs Could Revolutionize RetirementGLP-1 drugs like Ozempic and Wegovy are already changing the way we age and manage chronic conditions.
-
Donald Trump Tests His LimitsThe Kiplinger Letter President Encounters Legal Obstacles in Pursuit of Ambitious Agenda.
-
Another Down Year for AgricultureThe Kiplinger Letter Farmers brace for falling incomes, widening trade deficits
-
What To Know if You’re in the Market for a New Car This YearThe Kiplinger Letter Buying a new car will get a little easier, but don’t expect many deals.
-
How AI Will Impact Our Lives in 2025 and BeyondThe Kiplinger Letter Now that breakthrough artificial intelligence is here, the next decade of computing will be dominated by AI.
-
What Could Derail the Economy This Year?The Letter While the outlook for the U.S. economy is mostly favorable, there are plenty of risks that bear watching.
-
Three Ways President Trump Could Impact the EconomyThe Letter Some of Trump's top priorities could boost economic growth, but others risk fueling inflation.
-
Europe Faces Economic and Political Headwinds Next YearThe Letter Challenges for Europe: Potential tariffs, high energy prices and more competition from China will weigh on the bloc in 2025.
-
Don't Sleep on Japan's Economic TransformationThe Letter After almost three lost decades, Japan — one of the world's biggest economies — is finally showing signs of life.
