Senate Defeats Motions to Amend or Repeal Tax Reporting Requirement in Health Care Bill

On Tuesday, the Senate refused to advance two amendments to the Small Business Jobs and Credit Act of 2010 (H.R. 5297) offered by both Democratic and Republican senators that sought to amend or repeal a provision in the newly-enacted Patient Protection and Affordable Care Act (“Affordable Care Act”) that imposes increased tax reporting requirements on businesses. Specifically, the provision requires all businesses, charities, and state and local governments to file 1099 forms if they purchase $600 or more in goods from other entities after December 31, 2011. This reporting mandate has drawn fire from a number of sectors on the grounds that the burden is simply too onerous and will wind up impacting a considerable number of businesses.

The amendment (S. Amt. 4596) offered by Sen. Mike Johanns (R-NE) sought to repeal the tax provision entirely, while that offered by Sen. Bill Nelson (D-FL) (S. Amt. 4595) would have reduced the burden of the reporting requirement by limiting it to cumulative purchases of more than $5,000 per year, and exempting business with fewer than 25 employees from this requirement. Sen. Johanns’ measure failed by a vote of 46-52, 14 votes shy of the 60 needed to be included as an amendment. Sen. Nelson’s amendment failed by a 56-42 margin. Earlier this year, Sen. Johanns introduced the Small Business Paperwork Mandate Elimination Act (S. 3578) which would have similarly repealed this provision.

As reported by Politico, the Obama Administration supported efforts to scale back the tax measure. In a letter to Sen. Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY), Treasury Secretary Timothy Geithner and Health and Human Services Secretary Kathleen Sebelius wrote: “We are committed to reducing the gap between taxes legally owed and taxes paid,” adding: “[h]owever, the administration believes that the burden created on businesses by the new information reporting requirement on purchases of goods that exceed $600, as included in Section 6041 of the Internal Revenue Code as modified by Section 9006 of the Affordable Care Act, is too great.” Some Democrats, while in favor of limiting or repealing the provision, have been hesitant to support efforts seen as chipping away at portions of the health care bill.

Photo credit:  Bartek Szewczyk