In mid-February the Senate attached an amendment to the FAA Air Modernization and Safety Improvement Act that would repeal Sec. 9006 of the Patient Protection and Affordable Care Act, the section of that act which increased 1099 reporting requirements. Yesterday the House passed H.R. 4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidiary Overpayments Act of 2011, which would repeal Sec. 9006. In addition, H.R. 4 also would repeal the provisions of the Small Business Jobs Act of 2010 that instituted new 1099 requirements for landlords and other people who receive rental income. H.R. 4, to help offset the lost revenue of repealing the new reporting requirements, would modify the repayment requirements on a tax credit introduced by the healthcare act to help lower income individuals pay for healthcare. H.R. would be effective after December 31, 2011, but the tax credit adjustment would be effective for tax years ending after December 31, 2013. The Joint Committee on Taxation has said the measure would produce $166 million in revenue over the next decade.
How the two efforts will or will not be reconciled remains to be seen. The Obama Administration has voiced disapproval of the tax credit modifications in H.R. 4, arguing it will increase the tax burdens of middle class families. It is unclear how the President would respond in H.R. 4 made it to his desk in its current state.
For more on this or other tax issues, contact Horowitz & Weinstein.