Some of the benefits of health care legislation passed by Congress earlier this year have already been seen. Young adults can stay on their parents’ insurance longer and coverage cannot be denied to those who have pre-existing conditions, for example. But one provision of the sweeping law must be repealed.
As part of the plan to pay for the insurance reforms, better tracking of business purchases was included in the bill. The provision, which requires a filing with the Internal Revenue Service for all purchases over $600 in a year, will require businesses to complete a lot of unnecessary paperwork. The provision, which is slated to go into effect in 2012, is intended to increase the payment of taxes on business-to-business transactions. The Congressional Budget Office estimates the requirement to fill out Form 1099 could bring in $17 billion over 10 years.
According to the National Taxpayer Advocate Service, the 1099 provision will affect 40 million businesses, charities and other organizations. It is estimated that this requirement will add more than $190 billion in administrative costs.
About 85 million 1099s are now filed each year. If this provision goes forward, the filings will increase fivefold. The average company will have to file nearly 100 1099s each year, up from fewer than 20 today, according to Sen. Susan Collins, who, along with Sen. Olympia Snowe, has been working to get the provision dropped.
Although Democratic leaders in the House and Senate agree that the measure should be repealed, such an effort has failed in the Senate.
Last week, two amendments to the Food Safety Bill that dealt with the 1099 provision failed. One, that would have made up for the lost revenue by cuts elsewhere in the federal budget, as determined by the Office of Management of Budget, received 61 votes, but needed 67 for passage. Another, which did not come up with another source for the revenue, got just 44 votes.
Rather than ignore this problem, the Senate should include a fix on one of the few other bills that must be passed before the end of the year. Finding another way to come up with the $17 billion in savings will continue to be a sticking point.
While fixing this problem is important to businesses in Maine and around the country, there is also a symbolic aspect to the difficulty of passing a fix. There are likely to be other aspects of the health care reform bill that need amending. If Congress can’t solve the egregious 1099 problem, it doesn’t inspire confidence that it can fix other problematic parts of the bill.
Still, amending portions of the bill where appropriate is much smarter than repealing the legislation in its entirety, as many Republican have pledged to do.