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Washington Watch - August 4, 2010

Wednesday, August 04, 2010

House Discusses Repeal Of Form 1099 Law

Before the House of Representatives departed for the August recess, members from both sides of the aisle clashed over efforts to repeal a provision of the health care law pertaining to small-business owners and IRS Form 1099.

Set to go into effect in 2012, the provision in the health care law (PL 111-148, PL 111-152) requires small businesses to file 1099 forms with the IRS for all payments of $600 or more made in a tax year for services or products. The Joint Committee on Taxation estimated that the provision would increase revenue by $17.1 billion through fiscal 2019.

Small business groups, including the NASE, believe the new Form 1099 requirement to be an unnecessary paperwork burden on small businesses and have been working to repeal it. A stand-alone bill to repeal the provision (H.R. 5982) contained offsets targeting estates and multinational corporations and so attracted little Republican support, leading to the bill’s rejection in a vote on July 30.

During recent debate on an infrastructure tax package (H.R. 5893), Republicans threatened to strip the language of the infrastructure bill and replace it with an unrelated repeal of the 1099 provision, prompting House Democrats to push the infrastructure tax package to the fall. Representative Dave Camp (R-Mich.), Ranking Member of the House Ways and Means Committee, offered a motion to recommit that would have repealed the provision and offset the cost with another change to the health care law, forcing people who inadvertently receive too much in health insurance subsidies to pay back more to the government than the law currently requires.

The NASE strongly supports repealing the Form1099 provision, and is currently working to ensure this onerous regulation does not negatively impact the micro-business community.


HHS Offers $51 Million Incentive For Insurance Exchange System

The implementation of state-based insurance exchange systems will be one of the key elements of the new health care reform. Starting in 2014, the exchanges will set up a marketplace for insurance. Since the creation of that kind of organized distribution of health insurance translates into easily accessible and affordable options of insurance to individuals and small businesses, the NASE supports the creation of a health marketplace such as an exchange.

States are already struggling to balance their budgets, yet the research and planning necessary to implement a state-based insurance exchange system into the current field of healthcare options is a pricey endeavor. The Department of Health and Human Services (HHS) announced last Thursday, July 29, that it will facilitate this process by making up to $51 million available in grants and seeking public participation in the logistical planning of the exchanges.

HHS is offering up to $1 million in grant money to each state and Washington, D.C., as an incentive to begin blueprinting the infrastructure necessary to allow state-based marketplaces of insurance to develop. A group of states might also combine their HHS grants to establish the groundwork for future regional exchange systems.

Additionally, HHS is collecting public suggestions about what standards would result in a successful exchange until October 4. They are calling for the opinions of consumers, health-care providers and others about the particulars of an effective exchange system. HHS plans on setting up exchanges on the behalf of any state that does not request the grant money informed by this collective input. 

For more information on submitting comments, please visit: http://www.healthcare.gov/center/regulations.


SBA Programs Reauthorized

Congress has approved another short-term extension for the Small Business Administration's programs and outreach efforts. The agency's activities have been reauthorized several times, beginning under former President George W. Bush, as Congress has worked to restructure the body as a whole.

The SBA was created in 1953 to offer aid and educational programs to small businesses. Today, it remains a nationwide force through its regional field offices and through public and private partnerships.

For more information, visit SBA.gov.


Subcommittee Discusses Impact of Interchange Fees on Small Businesses

On Thursday, July 29, the Subcommittee on Investigations and Oversight of the House Committee on Small Business held a hearing called “The Impact of Interchange Fees on Small Businesses.” Interchange fees are the charges associated with processing debit card transactions.

Subcommittee Chairman Rep. Jason Altmire (D-Pa.) stressed that many small businesses are trying to cut costs to stay afloat during these hard times. One such cost is the interchange fee. Currently, debit card issuers determine the rate of interchange fees, but the Durbin Amendment on the Wall Street Reform signed by President Obama on July 21 will transfer control to the Federal Reserve to ensure that they are “reasonable and proportional” to the total amount of each transaction.

Small-business owners at the hearing pointed out that the Durbin Amendment will affect businesses differently across industries. For example, convenience stores have reported a surge in purchases made with a credit or debit card over the past few years, whereas customers increasingly use checks and cash to pay for pizza deliveries. The witnesses expressed favor for the provisions of the Durbin Amendment and hope for the recovery of the American economy.

Alternatively, the bank and credit union representatives were more concerned about restrictions or regulation on interchange fees. They pointed out the high costs to institutions providing a debit card service. Some credit unions even run their debit program at a deficit. These witnesses concluded that consumers will bear the weight of any changes in the price of transaction fees and that community banks will be at a significant disadvantage.

For more information, please visit:  http://www.unfaircreditcardfees.com/


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