Another Day In Omerica

Hidden in the 1990 pages of the Affordable Health Care For America Act are the tax hikes. Here is a list included in H.R. 3962. The text of this bill can be read here  Complete Bill Text in pdf format. The page number references to each of the tax hikes noted below correspond to those in the pdf.

(Page 275): SEC. 413. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE. (a) IN GENERAL. A contribution is made in accordance with this section with respect to an employee if such contribution is equal to an amount equal to 8 percent of the average wages paid by the employer during the period of enrollment (determined by taking into account all employees of the employer and in such manner as the Commissioner provides, including rules providing for the appropriate aggregation of related employers) but not to exceed the minimum employer contribution described in section 412(b)(1)(A). Any such contribution (1) shall be paid to the Health Choices Commissioner for deposit into the Health Insurance Exchange Trust Fund; and (2) shall not be applied against the premium of the employee under the Exchange-participating health benefits plan in which the employee is enrolled. (b) SPECIAL RULES FOR SMALL EMPLOYERS. (1) IN GENERAL. In the case of any employer who is a small employer for any calendar year, subsection (a) shall be applied by substituting the applicable percentage determined in accordance with the following table for ‘‘8 percent’’:

If the annual payroll of such employer for the preceding calendar year: The applicable percentage is:

Does not exceed $500,000 ………………………………. 0 percent
Exceeds $500,000, but does not exceed $585,000 2 percent
Exceeds $585,000, but does not exceed $670,000 4 percent
Exceeds $670,000, but does not exceed $750,000 6 percent

(2) SMALL EMPLOYER.—For purposes of this subsection, the term ‘‘small employer’’ means any employer for any calendar year if the annual payroll of such employer for the preceding calendar year does not exceed $750,000.

(Page 296): SEC. 501. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE. (a) IN GENERAL. Subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part: ‘‘PART VIII HEALTH CARE RELATED TAXES ‘‘Subpart A Tax on Individuals Without Acceptable Health Care Coverage ‘‘SEC. 59B. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE. ‘‘(a) TAX IMPOSED. In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of ‘‘(1) the taxpayer’s modified adjusted gross income for the taxable year, over ‘‘(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer. ‘‘(b) LIMITATIONS. ‘‘(1) TAX LIMITED TO AVERAGE PREMIUM. ‘‘(A) IN GENERAL. The tax imposed under subsection (a) with respect to any taxpayer for any taxable year shall not exceed the applicable national average premium for such taxable year. ‘‘(B) APPLICABLE NATIONAL AVERAGE PREMIUM. ‘‘(i) IN GENERAL. For purposes of subparagraph (A), the ‘applicable national average premium’ means, with respect to any taxable year, the average premium (as determined by the Secretary, in coordination with the Health Choices Commissioner) for self-only coverage under a basic plan which is offered in a Health Insurance Exchange for the calendar year in which such taxable year begins. ‘‘(ii) FAILURE TO PROVIDE COVERAGE FOR MORE THAN ONE INDIVIDUAL. In the case of any taxpayer who fails to meet the requirements of subsection (d) with respect to more than one individual during the taxable year, clause (i) shall be applied by substituting ‘family coverage’ for ‘self-only coverage’. ‘‘(2) PRORATION FOR PART YEAR FAILURES. The tax imposed under subsection (a) with respect to any taxpayer for any taxable year shall not exceed the amount which bears the same ratio to the amount of tax so imposed (determined without regard to this paragraph and after application of paragraph (1)) as ‘‘(A) the aggregate periods during such taxable year for which such individual failed to meet the requirements of subsection (d), bears to ‘‘(B) the entire taxable year. ‘‘(c) EXCEPTIONS. ‘‘(1) DEPENDENTS. Subsection (a) shall not apply to any individual for any taxable year if a deduction is allowable under section 151 with respect to such individual to another taxpayer for any taxable year beginning in the same calendar year as such taxable year. ‘‘(2) NONRESIDENT ALIENS. Subsection (a) shall not apply to any individual who is a nonresident alien. ‘‘(3) INDIVIDUALS RESIDING OUTSIDE UNITED STATES. Any qualified individual (as defined in section 911(d)) (and any qualifying child residing with such individual) shall be treated for purposes of this section as covered by acceptable coverage during the period described in subparagraph (A) or (B) of section 911(d)(1), whichever is applicable. ‘‘(4) INDIVIDUALS RESIDING IN POSSESSIONS OF THE UNITED STATES. Any individual who is a bona fide resident of any possession of the United States (as determined under section 937(a)) for any taxable year (and any qualifying child residing with such individual) shall be treated for purposes of this section as covered by acceptable coverage during such taxable year. ‘‘(5) ‘‘(A) IN GENERAL. Subsection (a) shall not apply to any individual (and any qualifying child residing with such individual) for any period if such individual has in effect an exemption which certifies that such individual is a member of a recognized religious sect or division thereof described in section 1402(g)(1) and an adherent of established tenets or teachings of such sect or division as described in such section. ‘‘(B) EXEMPTION.—An application for the exemption described in subparagraph (A) shall be filed with the Secretary at such time and in such form and manner as the Secretary may prescribe. The Secretary may treat an application for exemption under section 1402(g)(1) as an application for exemption under this section, or may otherwise coordinate applications under such sections, as the Secretary determines appropriate. Any such exemption granted by the Secretary shall be effective for such period as the Secretary determines appropriate..

(Page 324): PART 3—LIMITATIONS ON HEALTH CARE RELATED EXPENDITURES SEC. 531. DISTRIBUTIONS FOR MEDICINE QUALIFIED ONLY IF FOR PRESCRIBED DRUG OR INSULIN. (a) HSAS. Subparagraph (A) of section 223(d)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following:‘‘Such term shall include an amount paid for medicine or a drug only if such medicine or drug is a prescribed drug or is insulin.’’.  (b) ARCHER MSAS. Subparagraph (A) of section 220(d)(2) of such Code is amended by adding at the end the following: ‘‘Such term shall include an amount paid for medicine or a drug only if such medicine or drug is a prescribed drug or is insulin.’’.  (c) HEALTH FLEXIBLE SPENDING ARRANGEMENTS AND HEALTH REIMBURSEMENT ARRANGEMENTS. Section 106 of such Code is amended by adding at the end the following new subsection: ‘‘(f) REIMBURSEMENTS FOR MEDICINE RESTRICTEDTO PRESCRIBED DRUGS AND INSULIN. For purposes of this section and section 105, reimbursement for expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug or is insulin.’’ (d) EFFECTIVE DATES. The amendment made by this section shall apply to expenses incurred after December 31, 2010.

(Page 325): SEC. 532. LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS UNDER CAFETERIA PLANS. (a) IN GENERAL. Section 125 of the Internal Revenue Code of 1986 is amended (1) by redesignating subsections (i) and (j) as subsections (j) and (k), respectively, and  (2) by inserting after subsection (h) the following new subsection: ‘‘(i) LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS. ‘‘(1) IN GENERAL. For purposes of this section, if a benefit is provided under a cafeteria plan through employer contributions to a health flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement. ‘‘(2) INFLATION ADJUSTMENT. In the case of any taxable year beginning after 2013, the dollar amount in paragraph (1) shall be increased by an amount equal to ‘‘(A) such dollar amount, multiplied by ‘‘(B) the cost of living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting ‘calendar year 2012’ for ‘calendar year 1992’ in subparagraph (B) thereof. If any increase determined under this paragraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.’’. (b) EFFECTIVE DATE. The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

(Page 326): SEC. 533. INCREASE IN PENALTY FOR NONQUALIFIED DISTRIBUTIONS FROM HEALTH SAVINGS ACCOUNTS. (a) IN GENERAL.—Subparagraph (A) of section 223(f)(4) of the Internal Revenue Code of 1986 is amended by striking ‘‘10 percent’’ and inserting ‘‘20 percent’’. (b) EFFECTIVE DATE. The amendment made by this section shall apply to taxable years beginning after December 31, 2010.

(Page 327): SEC. 534. DENIAL OF DEDUCTION FOR FEDERAL SUBSIDIES FOR PRESCRIPTION DRUG PLANS WHICH HAVE BEEN EXCLUDED FROM GROSS INCOME. (a) IN GENERAL. Section 139A of the Internal Revenue Code of 1986 is amended by striking the second sentence. (b) EFFECTIVE DATE. The amendment made by this section shall apply to taxable years beginning after December 31, 2010.
(Page 336): SEC. 551. SURCHARGE ON HIGH INCOME INDIVIDUALS. (a) IN GENERAL. Part VIII of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as added by this title, is amended by adding at the end the following new subpart: ‘‘Subpart B—Surcharge on High Income Individuals ‘‘SEC. 59C. SURCHARGE ON HIGH INCOME INDIVIDUALS. ‘‘(a) GENERAL RULE. In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000. ‘‘(b) TAXPAYERS NOT MAKING A JOINT RETURN. In the case of any taxpayer other than a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), subsection (a) shall be applied by substituting ‘$500,000’ for ‘$1,000,000’. ‘‘(c) MODIFIED ADJUSTED GROSS INCOME. For purposes of this section, the term ‘modified adjusted gross income’ means adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest (as defined in section 163(d)). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e). ‘‘(d) SPECIAL RULES. ‘‘(1) NONRESIDENT ALIEN. In the case of a nonresident alien individual, only amounts taken into account in connection with the tax imposed under section 871(b) shall be taken into account under this section.

(Page 339): SEC. 552. EXCISE TAX ON MEDICAL DEVICES. (a) IN GENERAL. Chapter 31 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subchapter: ‘‘Subchapter D—Medical Devices ‘‘SEC. 4061. MEDICAL DEVICES. ‘‘(a) IN GENERAL. There is hereby imposed on the first taxable sale of any medical device a tax equal to 2.5 percent of the price for which so sold. ‘‘(b) FIRST TAXABLE SALE. For purposes of this section ‘‘(1) IN GENERAL. The term ‘first taxable sale’ means the first sale, for a purpose other than for resale, after production, manufacture, or importation. ‘‘(2) EXCEPTION FOR SALES AT RETAIL ESTABLISHMENTS.Such term shall not include the sale of any medical device if ‘‘(A) such sale is made at a retail establishment on terms which are available to the general public, and ‘‘(B) such medical device is of a type (and purchased in a quantity) which is purchased by the general public. ‘‘(3) EXCEPTION FOR EXPORTS, ETC. Rules similar to the rules of sections 4221 (other than paragraphs (3), (4), (5), and (6) of subsection (a) thereof) and 4222 shall apply for purposes of this section. To the extent provided by the Secretary, section 4222 may be extended to, and made applicable with respect to, the exemption provided by paragraph (2). ‘‘(4) SALES TO PATIENTS NOT TREATED AS RESALES. If a medical device is sold for use in connection with providing any health care service to an individual, such sale shall not be treated as being for the purpose of resale (even if such device is sold to such individual). ‘‘(c) OTHER DEFINITIONS AND SPECIAL RULES. For purposes of this section ‘‘(1) MEDICAL DEVICE. The term ‘medical device’ means any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for humans. ‘‘(2) LEASE TREATED AS SALE. Rules similar to the rules of section 4217 shall apply. ‘‘(3) USE TREATED AS SALE. ‘‘(A) IN GENERAL. If any person uses a medical device before the first taxable sale of such device, then such person shall be liable for tax under such subsection in the same manner as if such use were the first taxable sale of such device. ‘‘(B) EXCEPTIONS. The preceding sentence shall not apply to ‘‘(i) use of a medical device as material in the manufacture or production of, or as a component part of, another medical device to be manufactured or produced by such person, or ‘‘(ii) use of a medical device after a sale described in subsection (b)(2). ‘‘(4) DETERMINATION OF PRICE. ‘‘(A) IN GENERAL. Rules similar to the rules of subsections (a), (c), and (d) of section 4216 shall apply for purposes of this section. ‘‘(B) CONSTRUCTIVE SALE PRICE. If ‘‘(i) a medical device is sold (otherwise than through an arm’s length transaction) at less than the fair market price, or ‘‘(ii) a person is liable for tax for a use described in paragraph (3), the tax under this section shall be computed on the price for which such or similar devices are sold in the ordinary course of trade as determined by the Secretary. ‘‘(5) RESALES PURSUANT TO CERTAIN CONTRACT ARRANGEMENTS. ‘‘(A) IN GENERAL. In the case of a specified contract sale of a medical device, the seller referred to in subparagraph (B)(i) shall be entitled to recover from the producer, manufacturer, or importer referred to in subparagraph (B)(ii) the amount of the tax paid by such seller under this section with respect to such sale. ‘‘(B) SPECIFIED CONTRACT SALE. For purposes of this paragraph, the term ‘specified contract sale’ means, with respect to any medical device, the first taxable sale of such device if ‘‘(i) the seller is not the producer, manufacturer, or importer of such device, ‘‘(ii) the price at which such device is so sold is determined in accordance with a contract between the producer, manufacturer, or importer of such device and the person to whom such device is so sold. ‘‘(C) SPECIAL RULES RELATED TO CREDITS AND REFUNDS. In the case of any credit or refund under section 6416 of the tax imposed under this section on a specified contract sale of a medical device ‘‘(i) such credit or refund shall be allowed or made only if the seller has filed with the Secretary the written consent of the producer, manufacturer, or importer referred to in subparagraph (B)(ii) to the allowance of such credit or the making of such refund, and ‘‘(ii) the amount of tax taken into account under subparagraph (A) shall be reduced by the amount of such credit or refund.’’

(Page 344): SEC. 553. EXPANSION OF INFORMATION REPORTING REQUIREMENTS. (a) IN GENERAL. Section 6041 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections: ‘‘(h) APPLICATION TO CORPORATIONS. Notwithstanding any regulation prescribed by the Secretary before the date of the enactment of this subsection, for purposes of this section the term ‘person’ includes any corporation that is not an organization exempt from tax under section 501(a). ‘‘(i) REGULATIONS. The Secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.’’ (b) PAYMENTS FOR PROPERTY AND OTHER GROSS PROCEEDS. Subsection (a) of section 6041 of the Internal Revenue Code of 1986 is amended (1) by inserting ‘‘amounts in consideration for property,’’ after ‘‘wages,’’, (2) by inserting ‘‘gross proceeds,’’ after ‘‘emoluments, or other’’, and (3) by inserting ‘‘gross proceeds,’’ after ‘‘setting forth the amount of such’’. (c) EFFECTIVE DATE. The amendments made by this section shall apply to payments made after December 31, 2011.

(Page 345): SEC. 554. DELAY IN APPLICATION OF WORLDWIDE ALLOCATION OF INTEREST. (a) IN GENERAL. Paragraphs (5)(D) and (6) of section 864(f) of the Internal Revenue Code of 1986 are each amended by striking ‘‘December 31, 2010’’ and inserting ‘‘December 31, 2019’’. (b) TRANSITION. Subsection (f) of section 864 of such Code is amended by striking paragraph (7).

(Page 346): SEC. 561. LIMITATION ON TREATY BENEFITS FOR CERTAIN DEDUCTIBLE PAYMENTS. (a) IN GENERAL. Section 894 of the Internal Revenue Code of 1986 (relating to income affected by treaty) is amended by adding at the end the following new subsection: ‘‘(d) LIMITATION ON TREATY BENEFITS FOR CERTAIN DEDUCTIBLE PAYMENTS. ‘‘(1) IN GENERAL. In the case of any deductible related-party payment, any withholding tax imposed under chapter 3 (and any tax imposed under subpart A or B of this part) with respect to such payment may not be reduced under any treaty of the United States unless any such withholding tax would be reduced under a treaty of the United States if such payment were made directly to the foreign parent corporation. ‘‘(2) DEDUCTIBLE RELATED-PARTY PAYMENT. For purposes of this subsection, the term ‘deductible related-party payment’ means any payment made, directly or indirectly, by any person to any other person if the payment is allowable as a deduction under this chapter and both persons are members of the same foreign controlled group of entities.

(Page 349): SEC. 562. CODIFICATION OF ECONOMIC SUBSTANCE DOCTRINE; PENALTIES. (a) IN GENERAL. Section 7701 of the Internal Revenue Code of 1986 is amended by redesignating subsection (o) as subsection (p) and by inserting after subsection (n) the following new subsection: ‘‘(o) CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE. ‘‘(1) APPLICATION OF DOCTRINE. In the case of any transaction to which the economic substance doctrine is relevant, such transaction shall be treated as having economic substance only if  ‘‘(A) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer’s economic position, and ‘‘(B) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction. ‘‘(2) SPECIAL RULE WHERE TAXPAYER RELIES ON PROFIT POTENTIAL. ‘‘(A) IN GENERAL. The potential for profit of a transaction shall be taken into account in determining whether the requirements of subparagraphs (A) and (B) of paragraph (1) are met with respect to the transaction only if the present value of the reasonably expected pre-tax profit from the transaction is substantial in relation to the present value of the expected net tax benefits that would be allowed if the transaction were respected. ‘‘(B) TREATMENT OF FEES AND FOREIGN TAXES. Fees and other transaction expenses and foreign taxes shall be taken into account as expenses in determining pre-tax profit under subparagraph (A). ‘‘(3) STATE AND LOCAL TAX BENEFITS. For purposes of paragraph (1), any State or local income tax effect which is related to a Federal income tax effect shall be treated in the same manner as a Federal income tax effect. ‘‘(4) FINANCIAL ACCOUNTING BENEFITS. For purposes of paragraph (1)(B), achieving a financial accounting benefit shall not be taken into account as a purpose for entering into a transaction if the origin of such financial accounting benefit is a reduction of Federal income tax.

(Page 357): SEC. 563. CERTAIN LARGE OR PUBLICLY TRADED PERSONS MADE SUBJECT TO A MORE LIKELY THAN NOT STANDARD FOR AVOIDING PENALTIES ON UNDERPAYMENTS. (a) IN GENERAL. Subsection (c) of section 6664 of the Internal Revenue Code of 1986, as amended by section 562, is amended (1) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively, (2) by striking ‘‘paragraph (3)’’ in paragraph (4)(A), as so redesignated, and inserting ‘‘paragraph (4)’’, and (3) by inserting after paragraph (2) the following new paragraph: ‘‘(3) SPECIAL RULE FOR CERTAIN LARGE OR PUBLICLY TRADED PERSONS. ‘‘(A) IN GENERAL. In the case of any specified person, paragraph (1) shall apply to the portion of an underpayment which is attributable to any item only if such person has a reasonable belief that the tax treatment of such item by such person is more likely than not the proper tax treatment of such item. ‘‘(B) SPECIFIED PERSON. For purposes of this paragraph, the term ‘specified person’ means ‘‘(i) any person required to file periodic or other reports under section 13 of the Securities Exchange Act of 1934, and ‘‘(ii) any corporation with gross receipts in excess of $100,000,000 for the taxable year involved. All persons treated as a single employer under section 52(a) shall be treated as one person for purposes of clause (ii).’’. (b) NONAPPLICATION OF SUBSTANTIAL AUTHORITY AND REASONABLE BASIS STANDARDS FOR REDUCING UNDERSTATEMENTS. Paragraph (2) of section 6662(d) of such Code is amended by adding at the end the following new subparagraph: ‘‘(D) REDUCTION NOT TO APPLY TO CERTAIN LARGE OR PUBLICLY TRADED PERSONS. Subparagraph (B) shall not apply to any specified person (as defined in section 6664(c)(3)(B)).’’ (c) EFFECTIVE DATE. (1) IN GENERAL. Except as provided in paragraph (2), the amendments made by this section shall apply to underpayments attributable to transactions entered into after the date of the enactment of this Act.

Click On Links:
Affordable Health Care For America Act “H.R. 3962″
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H.R. 3962 Summary
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