March 4, 2011
March 4, 2011
Walden votes to kill 1099 tax reporting law
Congressman Greg Walden Press Release,
WASHINGTON, D.C. — The House of Representatives today voted overwhelmingly by a 314-112 margin to scrap a widely-panned new tax-reporting burden that more than 175 small business organizations have asked Congress to repeal. Buried deep in section 9006 of last year’s sweeping health care reform law is a requirement for businesses to complete 1099 tax forms for most business-to-business transactions above $600 in a calendar year.
For many businesses, this means hundreds of new pieces of paperwork to fill out, and according to the Small Business Administration, the cost of complying with the new tax code is 66 percent higher for small business than for large business.
“As a former small business owner for nearly 22 years, I understand well the frustration that job creators nationwide feel toward this onerous provision,” Rep. Walden said. “Small businesses should be focused on business expansion and job creation, not devoting precious limited resources to additional tax filing.”
In fact, the 1099 reporting mandate is so overbearing that the IRS ombudsman has determined that the agency is ill-equipped to handle all the resulting paperwork.
“Repealing the 1099 requirement removes a huge new tax compliance burden on small businesses and reduces the deficit by $166 million over the next ten years,” Rep. Walden said. “I hope the Senate acts quickly to send this commonsense legislation to the President.”
The bill repealing the 1099 mandate is H.R. 4, the “Small Business Paperwork Mandate Elimination Act.”
‘Exhibit A for why taxpayers demanded reform’
The 1099 provision was slipped into the health care reform law, which was infamously written behind closed doors and rushed to a vote with little public scrutiny.
“This is the kind of junk that makes it into a bill when you write it behind closed doors and rush it to a vote,” Rep. Greg Walden (R-Ore.) said. “It’s Exhibit A for why taxpayers demanded a reform to the way Congress does business and more transparency in the nation’s capital.”
“Through the Transition Team that I led, we were able to deliver on our promises in the Pledge to America to add more transparency and openness to the legislative process. Damaging provisions like this wasteful 1099 reporting requirement are exactly what we can avoid with a careful, open, and transparent process,” Rep. Walden said.
What others are saying
Oregon Farm Bureau: “The new requirements will dramatically increase these costs, pulling capital out of the business that could be better used to reinvest in the business and create jobs. It is also feasible that this requirement will force a business to streamline its vendor relationships and not seek competitive prices best for their businesses and ultimately the consumer.”
National Federation of Independent Business: “A bookbinding business in Denver, Colorado would see an increase in 1099 filings from less than a dozen last year to more than 1,000. The business does not have an in-house accountant and would have to consider hiring a part-time employee just to complete the forms. The owner said, ‘If I have to hire a part-timer, I don’t want them filling out government forms, I want them to be binding books.’”
Assisted Living Federation of America: “The requirements of this provision are unnecessarily burdensome on our senior living providers. Our members predict that they will have to generate thousands of new 1099s per year – an extraordinarily expensive and unnecessary exercise. In addition, our senior living providers will also have the expense of buying new data collection software necessary for complying with these new requirements.”
American Farm Bureau Federation: “The negative impact of new reporting requirements on farmers and ranchers is further compounded by increased penalties for the failure to comply that were passed [and] included in the Small Business Jobs Act of 2010…Not only will farm operators be required to prepare additional 1099 forms, they will also face a new administrative burden from reconciling the forms they receive from the sales of their products.”
American Medical Association: “A 2005 study published in the Annals of Family Medicine estimated that paperwork, or documentation, takes up as much as a third of a physician‟s workday. Physicians already deal with piles of charts, and encounter and billing forms from innumerable insurance companies, which takes away from their time with patients. Under Section 9006, more 1099 reporting forms will be added to that paperwork burden.”
American Institute of CPAs member from Alpharetta, GA: “A prime example of the burden exists with a client of mine who travels extensively. Under the law he would need to get the EIN of every hotel he may stay at in the chance that he pays them over $600 throughout the year. His travel is mainly to the same regions of the country and he may stay at the same hotel, eat at the same restaurant a few times during the year. Many hotels are franchisees so you can‟t just issue Hilton Hotels a 1099, but each franchisee. So when his credit card bill arrives his bookkeeper will need to track every payee, find out who the owners are, and get their EIN. If the law does remain in effect my client would most likely need to hire an additional person to assure he remains compliant. The cost for salary alone would be in the range of $25,000 to $30,000.”
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