Fate of 1099 repeal still up in the air

That could mean the upper chamber might take up a 1099 amendment offered by Sen. Mike Johanns (R-Neb.) to the small business bill and, if it passes, deem the House-passed measure cleared for Obama’s signature. 

Lawmakers have been talking about clearing the House-passed measure under an agreement although some Democrats and White House object to how the costs are offset. 

What is clear is that nothing is certain with moving a 1099 repeal. The House passed a standalone measure on March 3 and the Senate tacked on an amendment to the Federal Aviation Administration (FAA) authorization bill, which passed the upper chamber, each with different offsets to cover the costs of the repeal. 

The White House and House and Senate lawmakers across both parties back the elimination of the 1099 provision from the healthcare law but are at odds over how to make up for $22 billion in lost revenue as projected by the Joint Committee on Taxation. 

Generally, lawmakers in both parties backed the repeal language included in the FAA bill that pays for the cost with unused, previously appropriated federal funds as determined by the Office of Management and Budget. 

The House’s measure requires taxpayers who receive federal health insurance subsidies to reimburse the IRS if they earn more than 400 percent of the poverty line and are deemed ineligible. Taxpayers would be required to pay back only the amount of the subsidy and wouldn’t levied with penalties above that amount, according to House Ways and Means Republican staff. 

Some taxpayers could receive a subsidy even though they didn’t qualify because the data is self-reported and is based on a two-year window that could see their eligibility change significantly during that time. 

Under current law, those receiving the subsidy are required to report going over the level that makes them ineligible for premium assistance, according to Republican staff.

Some House Democrats argue that the bill’s offset creates a $25 billion tax hike on the middle class because it could ensnare taxpayers who straddle the 400 percent line and that a year-end bonus could push taxpayers over the threshold, forcing them to repay the money. 

Meanwhile, Republicans say it’s the same offset offered by Democrats last year to pay for the Medicare “doc fix.”