Our Analysis:

The reporting requirement would go into effect in 2012.

The bill holds that the reporting requirements levy “a substantial tax compliance burden on small businesses, forcing them to devote scarce resources to tax filing instead of to business expansion and job creation.” Under current law, if a W-9 is not provided the business is required to withhold at a rate of 28% of the gross amount of the payment unless the payee has already established that the income is exempt from backup withholding.

Similar provisions were agreed to in the Senate Federal Aviation Administration bill, S 223 that pass the Senate 87 to 8. the Senate agreed to the Senator Stabenow (D-MI) amendment that removes the tax reporting requirements on $600 or less spending but pays for the loss of revenue ($21.9 billion) by rescinding $44 billion appropriated but not yet spent. This bill would attempt to offset the loss of revenue by increasing the amount required to be repaid by those who qualified for health insurance subsidies under the Affordable Care Act but during the year lost that qualification due to an increase in earnings. Under the healthcare law those with an income at or below 400 % of the poverty level would qualify for some subsidies but should their income increase they would have to pay back a percentage of the subsidy paid. The payback schedule ranges from $300 to paying back entire subsidies depending on the amount of income earned. Under the House bill the loss of revenue would be recouped by changing the payback rates by doubling them depending on income increases.

Cost to the taxpayers: “The staff of the Joint Committee on Taxation (JCT) estimates that enacting the legislation would increase federal budget deficits by $21.9 billion over the 2011-2021 period, reflecting reductions in revenues.” {Editor's note: this conclusion is based on the loss of tax revenue from vendors who may chose not to claim the small, $600 or less, income and so not pay taxes}

 

“The following statement is made by the Joint Committee on Taxation with respect to the provisions of the bill amending the Internal Revenue Code of 1986: The effects of the bill on economic activity are so small as to be incalculable within the context of a model of the aggregate economy.” (Editor's note: this conclusion focuses only on the budget impact of changing IRS law, not on the loss of revenue the bill would create.

Earmark Certification:   “With respect to clause 9 of rule XXI of the Rules of the House of Representatives, the Committee has carefully reviewed the provisions of the bill, and states that the provisions of the bill do not contain any congressional earmarks, limited tax benefits, or limited tariff benefits within the meaning of the rule.”

Pay-as-you-go requirements: Apply

Cut-as-you-go requirements:  Cannot be determined

Regulatory impact:   The Committee has determined that the bill does not contain Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental mandate on State, local, or tribal governments.

Constitutional Authority:  By Mr. DANIEL E. LUNGREN of California:

H.R. 4. Congress has the power to enact this legislation pursuant to the following:

This bill makes changes to existing law relating to Article 1, Section 7 which provides

that ‘‘All bills for raising Revenue shall originate in the House of Representatives.’’

(Courtesy TheWeekInCongress.com)

Summary:

4/14/2011--Public Law. (This measure has not been amended since it was passed by the House on March 3, 2011. The summary of that version is repeated here.) Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 - Amends the Internal Revenue Code to: (1) repeal requirements for the reporting to the Internal Revenue Service (IRS) of payments of $600 or more to corporations that are not tax-exempt and of gross proceeds paid in consideration for any type of property; (2) repeal requirements for reporting payments made with respect to rental property which is not part of a trade or business; and (3) increase, for taxable years ending after December 31, 2013, the advance applicable dollar amount of the tax credit for health care premium assistance for taxpayers whose household income is less than 400% of the poverty line.

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