Payroll departments take note!…. Under tremendous pressure from all sides, President Obama on Thursday (4/14) signed into law a bill repealing Obamacare’s 1099 tax reporting requirement, the first provision of the Obamacare to be repealed. The Senate finally passed the law on April 5. The Republican controlled House cleared it in March. Obama signed the bill, which was previously defeated several times, even though he had issue with the way it’s paid for: a “clawback” provision that goes after people who get more in health care subsidies than entitled to under the health care reform law. The president stated (…and we are not making this up…) “Today, I was pleased to take another step to relieve unnecessary burdens on small businesses by signing H.R. 4 into law”
Ever since the passage of Obama’s health care law and the realization of the 1099 requirement, there has been a big push to get this law repealed. The law which would have gone into effect in 2012, would have required all businesses to file 1099’s for every business and individual they made payments to in excess of $600. For example, if you spent over $600 purchasing gas for the company car at a local gas station, you would have been required to issue that gas station a 1099. The purpose of the law was to help collect tax on on supposedly unreported income. Lawmakers estimated the requirement would have resulted in $17 billion in additional annual taxes collected. However, the IRS estimated it would have to hire at least 15,000 additional agents to enforce the rule and that enforcement would cost approximately $30 billion annually.
On a related Obamacare topic, in the month of March, 128 new business entities were allowed an exemption from the new health care plan. This means that since its inception, 1,168 businesses, insurers, unions and other organizations have received at least one-year exemptions from the health care reform provision. Proponents of the plan state that these exemptions are necessary while the health care industry adjusts to the new model. Opponents point out that if the new health care plan is so good, then why all the exemptions?