This year's tax deadline is barely in the rear-view mirror, but there's already a morsel of good news for next year: hundreds of small neurology practices will not face the burdensome task of sending new 1099 tax forms to the Internal Revenue Service for any vendor to whom they pay more than $600 in a given tax year.
On April 14, President Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, repealing the 1099 mandate, which had been part of a provision in the Affordable Care Act intended to ensnare small businesses that weren't reporting all of their income. If the requirement had not been repealed, neurology practices would have had to obtain the corporate name, address and federal tax identification number for each business or individual that they paid over $600 to in the course of the year, and then mail it a 1099 form.
In his State of the Union address in January, Obama called the requirement “an unnecessary bookkeeping burden on small businesses.”
That's certainly what it would have been for Elaine Jones, MD, a neurologist in private practice in Bristol, RI, who co-chairs the AAN Governmental Relations Committee. “I just finished doing my taxes for this year, and that requirement would have really expanded both the paperwork I would have had to do and the cost of it. I'm not a big firm. I do the books myself and have an accountant who reviews them quarterly and helps me file them. This would have added a lot of unnecessary extra paper to my pile.”
“The Academy supported repeal of the provision like all organizations that would have members impacted by the burdensome requirement, although it did not take any specific action,” said AAN Legislative Counsel Michael Amery.
Other medical organizations supporting the repeal included the American Medical Association and the Medical Group Management Association. Indeed, the repeal had broad bipartisan support (the final Senate vote was 87-12).
“Most people thought it was going to get fixed by Congress and the President,” Dr. Jones said. The only sticking point was how to pay for the $21.9 billion increase in the deficit that would result. Ultimately, Congress settled on allowing the government to recoup a larger share of overpayments to people who receive government subsidies to purchase health insurance as part of the health care reform law.
While the repeal remained an open question, Dr. Jones found herself wondering what transactions she would have had to report and how. “Do I have to report on my office supplies? Do I send a 1099 to Staples? Do I send a 1099 to the people who do repairs on my building? It was very confusing.”
But not every small-practice neurologist thought the mandate would have been that onerous. “I have a very small practice and I use Quickbooks,” said Sara Austin, a neurologist in Austin, TX, and a member of the AAN Governmental Relations Committee. “My accountant comes in at the end of the year and punches a button and generates the 1099s. Right now, they're very few, and it's easy to generate. But with such a small practice, I guess it's hard to know the real impact of something like this.”