Its a rare occurrence when Democrats and Republicans agree on an issue. But on the issue of a particular Obama health care tax requirement, both sides agree that it could hurt businesses.

As reported by CBS News, Republicans in the Senate want to repeal a part of President Obama’s health care reforms they say place undue burden on businesses — and so do, apparently, Democrats.

Senate Democrats, led by Florida Sen. Bill Nelson, introduced on Thursday a measure to roll back a provision of the health care reforms that requires businesses to fill out more tax forms, the Hill reports.

Republicans had already introduced a plan to repeal the provision, and the measure was gaining support — including the support of one Democrat, moderate Sen. Blanche Lincoln of Arkansas.

The provision in question requires businesses to fill out a 1099 form with the IRS once the goods it purchases from another business in the span of a year exceed $600. It does not create a new tax, but simply requiring businesses to fill out the paperwork would generate approximately $17 billion over 10 years, the nonpartisan Congressional Budge Office estimates.

Senate Minority Leader Mitch McConnell said this week the provision would create “an enormous amount of paperwork and complexity” for businesses, the Hill reports. Republicans are pointing to the new requirement as an example of how the president’s policies hurt business.

Given that repealing the provision would leave the government $17 billion short, the Republican proposal would cut billions of dollars in preventive health care services, according to the Hill.

By contrast, the Democratic proposal would scale back the filing requirement — only requiring businesses with more than 25 employees to fill out a 1099 after purchasing $5,000 worth of goods. To make up for the lost revenue, the Democratic measure would reportedly eliminate a tax break for large oil companies.

The Senate is slated to take a procedural vote on the Republican bill on Sept. 14, according to the Hill, and subsequently take up the Democratic alternative as an amendment.

Both Democrats and Republicans in the House also want to repeal the provision, but they failed to pass a bill to do so last week, because of differences of opinion over how to make up for the $17 billion lost.

Meanwhile, some states continue to challenge more significant portions of the health care reforms, such as the individual mandate — the requirement that all Americans acquire health care. A district judge this week denied the White House’s request to dismiss a lawsuit against the requirement. The Virginia General Assembly passed legislation this year exempting state residents from the federal coverage mandate, and the Virginia Attorney General filed suit against the federal law. Several other state attorneys general have filed a separate lawsuit challenging the federal law.

Former Vermont Gov. Howard Dean, a longtime liberal advocate for health care reform, predicted on MSNBC today that the individual mandate would be taken off the law books by 2014, when most of the reforms will be in place.

“Academically you want a mandate. The American people aren’t going to put up with a mandate,” Dean said. “I made this prediction before and I’m going to make it again: by the time this thing goes into effect in 2014, I think the mandate will be gone either through the courts or because it’s unpopular. You don’t need it.”

Even in the rare instance when both parties agree on a measure, they fail in passing it into law.

For once, can the House and Senate put politics aside and do the right thing?

source: cbs.com

Starting in 2010, small businesses and tax-exempt organizations can get tax relief offered by the new Small Business Health Care Tax Credit. This tax credit, signed into law by President Obama earlier this year, takes effect beginning in the tax year 2010. It is designed to help small businesses and small tax-exempt organizations afford the cost of covering their employees.

“We want to make sure small employers across the nation realize that — effective this tax year — they may be eligible for a valuable new tax credit. Our postcard mailing — which is targeted at small employers — is intended to get the attention of small employers and encourage them to find out more,” IRS Commissioner Doug Shulman said. “We urge every small employer to take advantage of this credit if they qualify.”

The tax credit is available to small businesses that pay at least half the cost of single coverage for their employees in 2010. It was created specifically to offer tax help to small businesses and tax-exempt organizations that primarily employ low and moderate-income workers.

Below are specifics and answers to tax questions you may have about the tax credit:

Eligibility Rules
To qualify for this tax relief, small businesses and tax-exempt organizations must meet certain eligibility rules pertaining to the percentage of health care costs they provide, the firm size and average annual wage of it’s employees. The specific eligibility rules are as follows:

• Health care coverage
  A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• Firm size
  A qualifying employer must have less than the equivalent of 25 full-time workers (small businesses with fewer than 50 half-time workers may be eligible).
• Average annual wage
  A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify

Amount of Credit
The maximum tax credit is 35% of premiums paid for small businesses and 25% for tax-exempt organizations. Since the credit is targeted to help those who employ low- and moderate-income workers, the maximum credit goes to smaller employers — those with 10 or fewer full-time equivalent (FTE) employees — paying annual average wages of $25,000 or less. Below are more details on the Amount of Credit:

• Maximum Amount
  The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
• Phase-out
  The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Small business or tax-exempt organizations can determine if they qualify for the Small Business Health Care Tax Credit with three simple steps.

To recap, starting in the tax year 2010, the new health care tax credit will offer small businesses tax help as an incentive to provide their employees health care coverage.

To get more information about the tax credit or get answers to your tax questions go the IRS website.

source: irs.gov