News & Updates

Repeal of Certain 1099 Tax Reporting Provisions

On April 14, 2011, President Barack Obama signed Public Law 112-9, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (the 1099 Taxpayer Protection Act), which repeals certain 1099 tax reporting provisions in Internal Revenue Code Section 6041, as amended by the Affordable Care Act (ACA).

Specifically, this legislation:

• Repeals a requirement that, beginning in 2012, would have required businesses to use 1099 forms to report any payments to corporations totaling $600 or more in a calendar year to the Internal Revenue Service; and
  
  
• Repeals a requirement that became effective for payments made in the 2011 tax year that would subject individuals who receive real estate rental payments to the same reporting requirements as businesses with respect to reporting to the IRS payments over $600 made to a vendor.

The bill also changes the rules regarding the recapture of overpayments of premium tax credits provided under national health care reform. Beginning in 2014 households with income of less than 400% of the federal poverty level (FPL) will be eligible for a tax credit for health insurance coverage and may benefit from advanced premium payments made on their behalf for the purchase of health insurance. In the event these advanced payments exceed the amount of the tax credit for which the household is eligible, the extra payment is subject to recapture by applying taxes to the household. Although the ACA limited the amount of this recapture to $400 ($250 for unmarried individuals), the 1099 Taxpayer Protection Act will recapture a greater amount, based on the level of family income in the following table (the recapture amount for unmarried individuals will be 50% of the amount shown):

For more information on this topic, please see the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, or visit the IRS website.