Tax and Money Tip of the Week:
House Votes to Repeal 1099 Provision
March 9, 2011 | No. 33
The U.S. House of Representatives voted to repeal an unpopular tax-reporting requirement affecting small business owners, in what would be the first substantial change to the sweeping health-care package signed into law last year.
In a 414-112 vote, the House approved the measure, but the Senate is unlikely to take up the bill as it is currently drafted, adding further delay to the attempt at repealing the measure.
Seventy-six Democrats joined every present Republican lawmaker in voting in favor to repeal the legislation, while 112 Democrats opposed it.
The so-called 1099 provision was included in last year’s health-care law. Official estimates stated it would raise around $18 billion a year, money that would be used toward the cost of implementing the health-care law.
It required smaller business owners to provide an account to the IRS of far more of their business transactions. The goal was that more money owed in taxes would be tracked this way.
But business groups and firm owners quickly attacked the measure, saying the onerous requirements it placed on smaller firms far outweighed any benefit to the Treasury.
Republicans said it would require small-business owners to spend more on tax preparation, rather than invest in their companies and hire new workers.
Congressional Democrats and President Barack Obama agreed, and pointed to efforts to repeal the measure as evidence they were willing to work with Republicans to change their controversial health-care law.
A similar bill passed through the Senate last month, but it was attached to a wider overhaul of the regulation of the aviation industry. Due to that, and because House Republican leaders wanted to change how the revenue lost from repealing the provision would be accounted for, they brought forward their own version of repeal legislation.
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Mark Vitek, CPA/PFS, CFP®
…until next week.