Senate Passes 1099 Reporting Repeal; Shortfall to Be Addressed by Repayment of Health Care Insurance Tax Credit

On Tuesday, the United States Senate voted 87–12 to repeal a controversial tax-reporting measure included in last year’s healthcare law, which would have required businesses that made payments in excess of $600 to vendors to file a 1099 form in each instance.  The news will undoubtedly be well-received by businesses, which had argued that the measure—originally designed to combat tax evasion—would have created an unfair burden and increased the costs of tax preparation.

The bill also addresses the expected shortfall that would be created by the removal of this reporting obligation.  Under the bill’s provisions, individuals who receive a tax credit for purchasing their own health insurance would be required to repay that credit if their income rises above a certain level.

Indications are that President Obama will sign the measure into law.  According to a report from Dow Jones Newswires, a White House spokesman announced that the administration was “pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses.”

This post was contributed by David Nardolillo.