In a sign that few things in Washington DC other than monuments are carved in stone, the U.S. Congress acted recently to repeal two key provisions of the 2010 Patient Protection & Affordable Care Act, the landmark healthcare reform law.

First to be repealed is the provision that was to have taken effect in 2012 mandating Forms 1099-Misc reporting for payments in excess of $600 annually made to individuals and businesses for purchases of property or services.

Having nothing whatever to do with healthcare reform, this dramatic expansion of 1099 reporting was included in the final legislation for one reason—to raise $17 billion over ten years to help pay the $1 trillion cost of the new entitlement.

By late last year a crescendo of opposition was loudly heard on Capitol Hill, led by the IRS’ National Taxpayer Advocate, small business representatives and many others. They complained that the new mandate would represent an impossible compliance burden impacting millions of businesses and routine transactions, sending a tidal wave of paper to IRS. Read more.

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Form 1099 and “Free Choice Vouchers” Healthcare Reforms Repealed

Mon Apr 18, 2011

In a sign that few things in Washington DC other than monuments are carved in stone, the U.S. Congress acted recently to repeal two key provisions of the 2010 Patient Protection & Affordable Care Act, the landmark healthcare reform law.

First to be repealed is the provision that was to have taken effect in 2012 mandating Forms 1099-Misc reporting for payments in excess of $600 annually made to individuals and businesses for purchases of property or services.

Having nothing whatever to do with healthcare reform, this dramatic expansion of 1099 reporting was included in the final legislation for one reason—to raise $17 billion over ten years to help pay the $1 trillion cost of the new entitlement.

By late last year a crescendo of opposition was loudly heard on Capitol Hill, led by the IRS’ National Taxpayer Advocate, small business representatives and many others. They complained that the new mandate would represent an impossible compliance burden impacting millions of businesses and routine transactions, sending a tidal wave of paper to IRS.

One of the first priorities for both House and Senate this year was to act quickly to delete this notorious provision from the 2010 law. Late last week the U.S. Senate approved the House-passed measure repealing the 1099 provision and sent it to the White House. President Obama is expected to sign it into law soon.

More surprisingly, and with details still scarce, it appears that as part of last weekend’s cliffhanger Congressional compromise to avoid a government shutdown, another key PPACA provision was eliminated.

The specific provision repealed was the so-called “Free Choice Voucher,” which starting in 2014 would have required employers in certain instances to give employees a voucher equal to the value of the employer’s contribution to health coverage premiums.

Recipients were to have been able to use these vouchers to help pay premiums for health coverage purchased from state health insurance exchanges. The concern of labor unions and some employer groups was, however, that younger and healthier employees might prefer to buy lower cost, voucher-subsidized insurance from exchanges, reducing the size of risk pools and driving up premiums for employer health plans.

While neither the Forms 1099 mandate nor the free choice vouchers could be considered major provisions of the PPACA, their elimination shows that the U.S. Congress views healthcare reform as a continuing process. No one knows what might go next—perhaps the prescription requirement to use FSAs for over-the-counter drugs? Stay tuned!