Domestic Taxes

Senate lines up 1099 repeal bill for Tuesday

Clearance of the bill would end a yearlong debate about repealing the 1099 provision in the healthcare law, which requires businesses to file the forms with every business with which they buy at least $600 in goods and services each year. 

The White House and House and Senate lawmakers across both parties back the elimination of the 1099 provision from the healthcare law but are at odds over how to make up for $22 billion in lost revenue as projected by the Joint Committee on Taxation.

The House’s measure requires taxpayers who receive federal health insurance subsidies to pay back the IRS if they earn above 400 percent of the poverty line and are deemed ineligible.  

Some taxpayers could receive a subsidy even though they didn’t qualify because the data is self-reported and is based on a two-year window that could see their eligibility change significantly during that time. 

Under current law, those receiving the subsidy are required to report going over the level that makes them ineligible for premium assistance, according to Republican staff.

There also was support for the repeal language included in the Federal Aviation Administration bill that pays for the cost of the repeal with unused, previously appropriated federal funds as determined by the Office of Management and Budget. 

Sen. Mike Johanns (R-Neb.), who has offered an amendment to the small-business bill that mirrors the House-passed measure, has been pressing for lawmakers to move forward. 

Some House Democrats argue that the bill’s offset creates a $25 billion tax hike on the middle class because it could ensnare taxpayers who straddle the 400 percent income line, and that a mere year-end bonus could push taxpayers “over the cliff” and force them to repay the money. 

Meanwhile, Republicans say it’s the same offset offered by Democrats last year to pay for the Medicare “doc fix.”

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