Repeal of PPACA Form 1099 Reporting Requirement

On April 14, President Obama signed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,which repealed the provision of PPACA that expanded Form 1099 information reporting requirements for payments of $600 or more to corporations and for other purposes (e.g., rental property expenses). While businesses had long been required to provide Form 1099s to freelancers and other unincorporated service providers for payments of more than $600, PPACA expanded this reporting requirement to include payments made to corporations (other than tax-exempt ones) in the course of trade or business.

Although this provision had little to do with health care reform, it appears to have been included in PPACA as a way to increase tax revenue, which could then be used to pay for some of the other provisions of PPACA. Unfortunately, right from the start, many businesses complained about the increased administrative hassle of the new reporting requirement, so it is not surprising that this provision of PPACA has been repealed. It appears that this provision would have been repealed earlier had it not been for the disagreement in Congress over how to recoup the anticipated revenue lost due to the repeal. In the end, Congress decided to offset the expected loss of revenue from the repeal by requiring individuals who receive premium-assistance subsidies under PPACA (which will be available starting in 2014) to repay to the government more of any portion of the subsidy they end up not needing (since the subsidy is based on income reported in a previous year).

Today’s post was contributed by Cynthia Lee.

Speak Your Mind