April 01, 2011

 

 Fate of tax-reporting repeal uncertain

posted March 18, 2011
 
 

The Obama administration is unhappy with lawmakers' plans for offsetting $19 billion in lost revenue that would result from eliminating an unpopular tax-reporting provision.

Although congressional Republicans and Democrats agreed the provision should be repealed as a hindrance to economic growth, and both houses of Congress did so, they had not resolved their differences over how to pay for the repeal as of press time in March.

The 1099 reporting provision, part of the Patient Protection and Affordable Care Act passed last year and slated to take effect in 2012, requires businesses to submit to the IRS a report of any transactions with vendors totaling $600 a year.

Revenue generated by the provision was intended to help cover the costs of implementing the health care law.

The AVMA is one of many organizations opposed to the 1099 provision, saying it would be an unnecessary burden on small businesses.

"Veterinarians will be hard-hit by the massive amount of red tape this requirement will create if it isn't repealed," said AVMA President Larry M. Kornegay. "The damage created by this requirement on small businesspeople, such as veterinarians, far outweighs the tax revenues it would generate."

For months, lawmakers in both parties have called for the tax-reporting requirement's repeal, and in his Jan. 25 State of the Union address, President Obama expressed his willingness to change the provision.

By early March, the Senate and House had each passed legislation eliminating the 1099 provision and outlining their respective plans for offsetting the lost revenue.

While the White House vociferously objects to the offsets identified by the House and Senate, the Obama administration continues to support repeal of the measure and has vowed to work with lawmakers to find an acceptable offset.