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AAPA Notices

April 2011
Senate Votes to Repeal Expanded 1099-MISC Reporting; Next Step Is President's Signature
On April 5, the U.S. Senate voted, 87-12, to approve H.R. 4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011. The House passed the same version of this bill last month, so it will now go to President Obama, who is expected to sign it into law.

Once enacted into law, the bill will repeal provisions in the Patient Protection and Affordable Care Act (Pub. L. No. 111-148) that expand the information reporting requirements under IRC §6041(a). Those provisions, which had been scheduled to take effect for payments made by a trade or business after December 31, 2011, eliminate the general exception to the reporting requirement for services provided by corporations and expand the class of payments for which information reporting is required to include gross proceeds payments and payments for property that total at least $600 in a calendar year.

March 2011
Repeal of Expanded 1099-MISC Reporting May Be Near
The Patient Protection and Affordable Care Act (PPACA), enacted on March 23, 2010, includes a provision modifying the information reporting requirements regarding services provided to a trade or business. It eliminates the exception for payments to corporations and expands the class of payments for which information reporting is required to include gross proceeds for property as well as services. Effective in 2012, it will require a business that purchases $600 or more worth of goods or services from a single vendor to report the total amount on Form 1099-MISC, Miscellaneous Income, to both the IRS and the vendor.

The provision has drawn fire ever since its enactment, including from the National Taxpayer Advocate, who recently recommended its repeal.

In the weeks since January 5, when the 112th Congress opened, at least four bills have been introduced in the U.S. Senate and six in the House of Representatives that would repeal the expanded information reporting requirements:

• On February 17, the Senate voted 87-8 to approve S. 223, the FAA Air Transportation Modernization and Safety Improvement Act, with several amendments – including one (S.Amdt. 9 to S. 223) that would repeal the expanded information reporting requirements under the PPACA "as if [they] had never been enacted." The House has not yet acted on this bill.

• On March 3, the House voted 314-112 to approve H.R. 4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, which would repeal the expanded 1099-MISC reporting requirement. H.R. 4 also would repeal recently enacted 1099 reporting requirements involving rental property expenses. The anticipated revenue loss would be paid for by amending health care reform legislation to require taxpayers who receive tax credits for purchasing health insurance to give them back once their income exceeds 400% of the federal poverty level rather than 500%. The Senate has not yet acted on this bill, and the inclusion of the health insurance "claw back" amendment may complicate its passage.

March 2010
Health Insurance Reform Bills Enacted
On March 23, President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law, then followed up on March 30 by signing the Health Care and Education Reconciliation Act of 2010 (HCERA), which added some provisions and amended others.

Among other things, the bills roll out a variety of new reporting requirements, including expanded 1099-MISC reporting. The general information reporting requirements regarding services provided to a trade or business are modified. The exception for payments to corporations is eliminated. In addition, the class of payments for which information reporting is required is expanded to include gross proceeds for both property and services. The current regulatory exception for payments to tax-exempt organizations is not affected. The changes will take effect for payments made after December 31, 2011.

Go to http://www.americanap.org/newsroom/ for details on how PPACA/HCERA provisions will impact your operations.

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