Congress repeals 3% tax withholding policy

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Congress has passed a repeal of a tax policy that would have required businesses receiving federal funds — such as nursing homes receiving Medicare payments — to withhold 3% of those payments starting Jan. 1, 2013.

The bill, called the 3% Withholding Repeal and Job Creation Act, H.R. 674, will be sent to President Obama, who is expected to sign it into law. The bill repeals a portion of the Tax Reconciliation Act of 2005. Under this new legislation, skilled nursing facilities will be allowed to use all payments on products and services made by the government, without being subject to the tax.

Healthcare provider groups hailed passage of H.R. 674, which also includes tax credits for companies that hire unemployed veterans. The American Health Care Association characterized it as a victory for providers and SNF residents.

“As Congress begins to turn more of its focus on finding ways to reduce costs, it is critical that we protect these resources that ensure our seniors and individuals with disabilities are able to access the care they require,” Mark Parkinson, president and CEO of AHCA, said in a statement.

The American Medical Association also applauded the bill, saying the 3% tax burdened physicians who treat Medicare beneficiaries.

“This is an important step forward, but more work still needs to be done on Medicare,” said AMA President Peter W. Carmel, M.D.

Click here to read more about H.R. 674.