Tag Archive | "legislation"

Will Congress Ease 1099 Requirements in Health Care Bill?

In their last week of summer legislating, Republicans and Democrats alike — on both ends of Capitol Hill — made gestures toward repealing a new tax-reporting requirement, raising hopes among small-business advocates who have lobbied fiercely against the measure.

But with each side claiming the other’s maneuvers are just feints, the prospects for repealing, or softening, the new law are uncertain at best, The New York Times reported.

The reporting provision at issue is Section 9006 of the Patient Protection and Affordable Care Act, which adds “amounts in consideration for property” to the types of payments over $600 for which a business must file an information return with the Internal Revenue Service.

In addition, the provision also closes a loophole that made payments to corporations exempt from the filing requirement. Under the new law, a company will have to file a Form 1099 with the IRS for every vendor from whom it buys more than $600 in goods.

The section was intended to be a fund-raiser for the rest of the health care bill; it was projected to deliver $19 billion over the course of 10 years by making it more difficult for businesses to keep income unreported. But business groups assailed the new provisions.

“This is absolutely unmanageable,” said Bill Rys, tax counsel for the National Federation of Independent Business, which is leading the effort to overturn the law. “It’s not just the amount of time and money businesses will have to spend, but all that goes with collecting this information. Who do you send it to? What do you do with employees who travel and are making purchases on the road?”

The business groups found an ally in the IRS’s own National Taxpayer Advocate, Nina E. Olson, who expressed alarm that the new law “may present significant administrative challenges to taxpayers and the IRS.”

“The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance,” Olson wrote in her mid-year report to Congress, released at the end of June.

Those concerns have been percolating up to members of Congress, said Mathew Beck, a spokesman and adviser to Representative Sander Levin, the Michigan Democrat who chairs the House Ways and Means Committee.

“Member offices were getting more questions after the signature was put to the law about what exactly is the provision, and how it would impact small business.”

In the Senate, the latest incarnation of Majority Leader Harry Reid’s small-business jobs bill, proposed late Thursday night, offers his colleagues a choice: they can vote on an amendment by Republican Mike Johanns of Nebraska to repeal the new requirement, or they can vote for a Democratic alternative that scales it back. (Of course, individual senators could also vote to do both or to do neither.)

The Democrats’ measure would raise the threshold for reporting goods purchased to $5,000 from $600 and would exempt businesses with 25 or fewer employees from the requirement altogether. It also excludes purchases made by credit card, because these will be reported separately by credit card payment processors under a different law that takes effect in January.

These revisions, according to a Finance Committee aide, would likely cost the Treasury $10.1 billion in lost revenue.

Both amendments, however, come with a poison pill that will be tough for members on the other side to swallow. The Johanns amendment is paid for with money from health care programs created by the reform law, while the Democratic proposal is offset by eliminating an income deduction for the five largest oil companies.

With each side making offers the other cannot accept, it is difficult to predict where repeal will end up.

A similar dynamic played when the House tackled the issue during the last week of July. Republicans tried to use the Section 9006 repeal to block a Democratic infrastructure spending bill; Democrats quickly countered with their own repeal — paid for in large part with a suite of new taxes on companies with overseas investments.

“The Democrats have created a bill that pits American employers against other American employers, worker against worker, neighbor against neighbor,” complained Representative Dave Camp of Michigan, the ranking Republican of the Ways and Means Committee, in debate on the House floor.

In the end, only two Republicans voted with most Democrats in favor of the bill. (The bill ultimately failed because under a rule special rule it required a two-thirds vote to pass.)

Both chambers are now in recess through the week of Labor Day. (The House will be back briefly on Tuesday to vote on the state aid bill that passed the Senate last week.) The Senate will hold the first vote to end debate, on Johanns’s amendment, on Sept. 14, according to Regan Lachapelle, a spokeswoman for Reid.

But Republicans didn’t agree to Reid’s road map for finishing the bill, so they could once again filibuster the whole bill.

“It takes a lot of effort to make a partisan issue out of a bill that should have broad bipartisan support,” said Republican Leader Mitch McConnell of Kentucky through a spokesman. But Democrats, he added, “have pulled it off.”

If McConnell attempts a filibuster, Reid will have to win the vote of at least one of the two Republicans who have previously expressed support for the small-business jobs bill, Senators George Voinovich of Ohio and George LeMieux of Florida.

If the bill were to pass, it would still have to be reconciled with the House version of the small-business jobs bill, which has no provision for undoing Section 9006. Meanwhile, House Democrats are repackaging the repeal bill that failed in late July.

Said Katie Grant, a spokeswoman for the House majority leader, Steny Hoyer, “Democrats will bring legislation to the floor the week of Sept. 13 that removes onerous 1099 reporting requirements for small businesses, and it will be fully paid for.”

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White House Steps Up Pressure for Small Business Bill

The White House Tuesday tried to turn up the pressure on Senate Republicans who they say are blocking a $42 billion bill to help small businesses, The Wall Street Journal reported.

Senators plan to leave Washington at week’s end for their August recess, and it appears increasingly unlikely that they can resolve an impasse on the bill before then.

David Axelrod, senior adviser to President Barack Obama, and Gene Sperling, counselor to Treasury Secretary Timothy Geithner, summoned reporters to the White House Roosevelt Room to blame Republicans for obstructionism on the bill.

Most of its provisions are bipartisan, they argued, yet GOP leaders insist on blocking it. “As we’ve seen on many other issues, there’s enormous pressure from the leadership to take partisan positions, to slow down the process, to block progress on some of these initiatives,” Axelrod said.

Small business is a cause that both Democrats and Republicans claim to embrace, and each party blames the other for not allowing the bill to go forward.

The legislation would create a new $30 billion lending fund, which would go to community banks, which would in turn make loans to small firms.

It also includes such provisions as letting investors avoid capital gains taxes on certain small business stocks. It would also increase the limits on a variety Small Business Administration loans, and it would provide $1.5 billion in grants to small business loan programs run by the states.

Republicans complain that they were not allowed to offer any amendments, that Democrats included unrelated spending in the bill, and that the lending fund is another example of unwarranted federal intrusion into the private sector.

They also say it would have been easy to reach a deal and pass the bill if Democrats really wanted to. “You can manufacture a legislative impasse, but the American people know what’s going on here,” Senate Minority Leader Mitch McConnell (R., Ky.) said recently.

The bill has won the Democrats unusual allies, including the National Federation of Independent Businesses, which represents small businesses.

“The fact that the NFIB specifically praised the small business lending fund does make it more difficult for those who’d like to try to demagogue or mischaracterize it,” Sperling said.

Axelrod warned of political consequences for lawmakers who oppose the bill.

“Those who stand in the way of a vote on this are going to have to go home and face the small business people in their states and explain why they held up progress on this, when people are out there starving for capital and the resources they need,” he said.

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Lawmakers Continue Fight Against Controversial Tax Measure

While the House recently failed to eliminate a controversial tax provision that critics say would unfairly burden small businesses, lawmakers on Capitol Hill say they will keep trying, AOL Small Business reported.

Sen. Mike Johanns (R-Neb.) vowed to continue pushing for a repeal of Section 9006, which failed to pass the House during a vote on Friday.

As AOL Small Business previously reported, Section 9006 is tucked away in the new health-care law, which goes into effect on January 1, 2012. From then on, U.S. companies will be required to issue 1099 tax forms to all businesses and individuals that they purchase more than $600 in goods from. (They already do this when they purchase more than $600 in services from businesses and contract workers.)

Proponents of the measure say that by not reporting these purchases currently, the federal government loses more than $300 billion in tax revenue every year.

Opponents say the added paperwork, and being forced to track what companies are buying and from whom, will overwhelm business owners and freelancers. They also claim the IRS may not be equipped to handle the new influx of paperwork.

While both Republicans and Democrats have expressed support for a repeal, they have not yet agreed on where revenue to replace it should come from.

Democrats wanted to raise taxes on international corporations and limit taxpayers from using special trusts to avoid gift taxes. Republicans wanted to adjust some parts of the new health-care law.

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Republicans Block Bill to Aid Small Businesses

WASHINGTON — Senate Republicans have rejected a bill to aid small businesses with expanded loan programs and tax breaks, in a procedural blockade that underscored how fiercely determined the party’s leaders are to deny Democrats any further legislative accomplishments ahead of November’s midterm elections, reported The New York Times.

The measure, championed by Senator Mary L. Landrieu, Democrat of Louisiana, had the backing of some of the Republican Party’s most reliable business allies, including the United States Chamber of Commerce and the National Federation of Independent Business. Several Republican lawmakers also helped write it.

But Republican leaders filibustered after fighting for days with Democrats over the number of amendments they would be able to offer. A last-ditch offer by Democrats to allow three was refused by the Republican leader, Mitch McConnell of Kentucky.

“The majority leader has graciously given us three amendments and what I’m saying is three amendments is not enough; he knows that,” McConnell said on the Senate floor. “We are not expecting to have an unlimited number of amendments, but three amendments will not suffice.”

The demise of the measure, at least for now, signaled that Democrats would fare no better on other legislation that they had hoped to finish before summer recess begins at the end of next week, including a scaled-back energy bill. The Senate is expected to confirm Elena Kagan to the Supreme Court, but that may be its only substantive action.

With 60 votes needed to advance the legislation, the tally was 58 to 42, with Democrats unanimously in favor and Republicans all opposed. The majority leader, Harry Reid of Nevada, switched his vote to no at the last minute, a parliamentary step that allows him to call for a re-vote.

Some lawmakers said a deal was still possible. Meanwhile, the Senate turned to a bill that would provide $26.1 billion in aid to states to help cover Medicaid costs and prevent teacher layoffs.

The vote on the small-business bill followed several emotional exchanges on the floor.

“That is the tradition in the United States Senate: majority rules, but you accommodate the rights of the minority,” said Senator Olympia J. Snowe of Maine, who is the senior Republican on the small-business committee. “We’re faced with a procedural impasse here because we’re being denied the opportunity to offer some amendments.”

She also chastised Democrats as dillydallying on the measure, repeatedly pulling it off the floor to deal with other matters. “We need to create jobs in America,” she said. “This bill has been on the floor for three weeks and three substitutes — 81 days.”

Landrieu harshly criticized McConnell for blocking the measure, and warned that some businesses might fail.

“Our businesses have picked up enough weight; they can’t handle that weight,” she said in a floor speech. “And if we don’t give them some help now, today, many of them aren’t going to be here — I want the senator from Kentucky to know — when we show up in September.”

The bill would create a $30 billion lending program within the Treasury Department, to be administered through local banks. It would also provide more than $12 billion in tax breaks, and would expand or enhance existing lending programs.

The three Republican amendments that Democrats seemed open to debating would eliminate a provision in the new health care law requiring businesses to file 1099 forms reporting when they buy more than $600 in goods from other businesses, extend a tax credit for biodiesel fuel and extend a credit for research and development.

Republicans had also wanted amendments on other topics, including the estate tax, nuclear loan guarantees, border security and the expiring Bush tax cuts.

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Small Business Lending Bill Headed Toward Vote

WASHINGTON – Community banks would be able tap a $30 billion government fund to help them increase lending to small businesses under a bill working its way toward a vote in the Senate, reported The Associated Press.

Democrats say banks should be able to use the lending fund to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. The fund would be available to banks with less than $10 billion in assets.

Democrats and Republicans were negotiating a handful of amendments Wednesday with the goal of scheduling a vote on the bill later in the day. The talks played out as President Barack Obama traveled to Edison, N.J., where during a visit to a sandwich shop he urged the Senate to abandon partisanship long enough to pass the bill.

“Everywhere I go, I hear from small business owners who simply cannot get the credit they need to hire and expand,” Obama said. “And we’ve been hearing from smaller community banks that they want to lend to these folks but need more capital to do it.”

“The initiatives in this bill will help them meet those challenges,” the president added.

The measure is part of a bill that would also provide a series of tax breaks aimed at small businesses. The House passed a bill establishing a similar lending fund in June.

“The bill increases access to much needed capital, encourages entrepreneurship and promotes equity,” said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.

Some GOP lawmakers called the lending fund another bank bailout that would do little to increase lending to small businesses. The measure overcame a Republican filibuster in the Senate last week.

Republicans are hoping to add a handful of amendments before voting on the final bill. One would repeal a new tax reporting requirement for businesses that was included in the massive health care overhaul enacted last spring.

The health care law requires businesses to report to the Internal Revenue Service the names and tax identification numbers of vendors that sell them more than $600 in goods in a year, starting in 2012. The information reporting is already required for the purchase of services.

The new reporting is designed to crack down on vendors that don’t report all their income, raising an estimated $17.1 billion in taxes over the next decade, according to the nonpartisan Joint Committee on Taxation.

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Obama Pushes Congress to Pass Small Business Plan

WASHINGTON – President Barack Obama pushed the Senate on Tuesday to pass legislation he says will benefit small businesses and generate jobs, and called on Republicans to back what he described as a plan similar to programs they had supported in the past, reported Reuters.

The plan includes a $30 billion fund to invest in community banks to bolster lending to small businesses, which account for a large portion of job creation in the U.S. economy. It also would provide tax credits and exclude some small business stock sales from capital gains taxes.

Obama wants Congress to pass as much legislation as possible before adjourning for its August recess, aware that legislators will be in full campaign mode when they return in mid-September, just weeks before the November 2 elections.

He is traveling to New Jersey on Wednesday, where he will tout the bill at a meeting with small business owners at a sandwich shop.

The House of Representatives, which has already passed a version of the bill, adjourns at the end of this week and the Senate aims to leave at the end of next week.

“These are the kind of common sense steps that folks from both parties have supported in the past,” Obama told reporters at the White House in remarks taking aim at Republicans after an hourlong meeting with congressional leaders from both parties that he said was “productive.”

“I hope that in the coming days, we’ll once again find common ground and get this legislation passed. We shouldn’t let America’s small businesses be held hostage to partisan politics and certainly not at this critical time,” he said.

House Republican leader John Boehner, who attended the meeting, wants to repeal and replace Obama’s healthcare overhaul and keep in place tax cuts for wealthy Americans that expire at the end of the year. Obama, who wants to let those cuts expire, has criticized Republicans for supporting economic plans he says helped lead to the recession and favor the rich.

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