In the months following passage of the health care overhaul law, the Big “I” and others have deemed many provisions from the 2,000 plus page bill problematic, the latest of which is the new IRS Form 1099 reporting requirement for businesses. This provision is slated to take effect in 2012 and would require all businesses to file a Form 1099 for any business-to-business transaction for goods or services over $600 (cumulative throughout the tax year). Businesses will be forced to track down and record the name, address and taxpayer identification number of each vendor. At the end of the tax year, businesses will have to file a Form 1099 with the IRS and send a copy to each vendor.
The Big “I” and many others in the small business community oppose this mandate citing the massive amounts of resources that will be poured into new record keeping, accounting and compliance procedures. The mountain of paperwork required to comply will divert resources and prevent investment in job growth and business expansion.
The Big “I” recently sent a letter <http://na.iiaa.org/Email_Communications/08.12.10/letter.pdf> outlining this position to the Chairmen and Ranking Members of the tax-writing committees as well as Congressional leadership asking for repeal of the provision. In addition to its own letter, the Big “I” signed onto similar letters authored by the U.S. Chamber of Commerce and the American Society of Association Executives (ASAE), both of which will be sent out in early September.
The Big “I” letter notes that this provision is unrelated to health care and was added only to partially offset the cost of the bill at large.
The additional reporting requirements are aimed at closing the “tax gap,” or the amount of money owed to the federal government but never collected. The Congressional Budget Office (CBO) scored this provision as raising $17 billion for the federal government but many question this prediction since tax evaders will likely continue to be successful. The provision is expected to dramatically increase the cost of doing business for entities of all sizes, especially hitting small businesses hard. Additionally, with the increased costs at the IRS associated with enforcing this mandate, any net revenue collected by the federal government will be negligible.
Bipartisan support recognizing the damage this provision could do to the economy is growing in Washington. Most notably, the Senate has scheduled a vote for Sept. 14 on a clean repeal amendment authored by Sen. Mike Johanns (R-Neb.). This proposal also recently garnered support from across the aisle from Sen. Blanche Lincoln (D-Ark.). If that amendment is voted down, a proposal authored by Sen. Bill Nelson (D- Fla.) will be brought up to modify the 1099 reporting provision by repealing it for businesses with less than 25 employees, and for larger businesses, raising the $600 threshold to $2,000. The Big “I” strongly prefers a full repeal.
Since the House and Senate are both currently in recess until mid-September, nothing more can happen legislatively until they return.
However, the Big “I” is working diligently to build support for repeal and will keep members abreast of events as they unfold.