This installment of Hall Render’s Health Law Broadcast series on health care reform is designed to provide you with the insight, analysis and practical suggestions with respect to the various reform initiatives that will affect your organization.
On April 14, 2011, President Obama signed into law H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,” which was approved by the House of Representatives by a vote of 314-112 on March 3 and by the Senate by a vote of 87-12 on April 5. This new law resolves many months of debate over a burdensome provision of the Patient Protection and Affordable Care Act (“Affordable Care Act”) that expanded the reporting requirements of businesses as a means of raising revenue to offset the costs associated with the Affordable Care Act.
In the absence of this repeal, the Affordable Care Act would have required businesses to expand their annual reporting of payments made in the course of a trade or business as required under Section 6041 of the Internal Revenue Code. Prior to the Affordable Care Act, businesses were required to report payments totaling $600 or more to each recipient, but such reporting was generally limited to payments for services, and it did not apply to payments made to corporations. Beginning in 2012, businesses would have been required by the Affordable Care Act to expand reporting to include payments for goods or other property, as well as payments made to for-profit corporations.
Soon after passage of the Affordable Care Act, concerns were raised over the impact this expanded reporting would have on businesses because of the time and expense that would be devoted to compliance with the requirements, and efforts began to repeal this provision of the Affordable Care Act. The repeal efforts received strong bipartisan support, but lawmakers wrestled with the appropriate mechanism to offset the revenue that would be lost as a result of a repeal, which the Joint Committee On Taxation estimated to be $21.9 billion over ten (10) years. Congress settled on a revenue offset provision that increases the amount of tax credits that a lower-income individual must repay if such individual’s income exceeds certain thresholds. This provision applies for tax years ending after December 31, 2013, which is when lower-income individuals can begin purchasing insurance through an “exchange” as authorized by the Affordable Care Act.
Numerous business organizations and commentators, the White House and both Democrats and Republicans have praised the repeal of these expanded reporting requirements and rightly so. Businesses may now forgo further planning for the expanded reporting requirements, and resources can continue to be focused on operational and strategic initiatives. It is worth noting that this is the first of what may be many amendments or provision specific repeals to the Affordable Care Act, many of which may receive President Obama’s support for strategic purposes.
If you have questions on the repeal, please contact Calvin Chambers at cchambers@wp.hallrender.com or317.977.1459
or your regular Hall Render attorney.
