SBE Council joined over 130 small business organizations in signing a letter to all U.S. Senators urging that they vote for the ONLY solution to fix the massive new paperwork mandate that was slipped into the new health care law (Patient Protection and Affordable Care Act). A vote to repeal this costly and expansive 1099 reporting mandate is expected to occur on September 14 in the U.S. Senate as an amendment to the "Small Business Jobs and Credit Act of 2010."
The Johanns Amendment (#4596) would fully repeal the nightmarish paperwork mandate. The Nelson Amendment (#4595) does not remove the massive paperwork burden required by the new law, and in fact could make it more complex and costly for small business. Our position, as outlined by the Coalition for Fairness in Tax Compliance letter below, has been transmitted to all Senators.
As Congress calls on small business to lead the nation out of the recession, now is not the time for government-imposed costs on doing business. The extent of this new paperwork requirement on business owners is astounding, as businesses estimate that they will have to file hundreds and sometimes thousands of new 1099s per year. The IRS National Taxpayer Advocate Nina Olson stated that the administrative costs of small businesses are so high that it “may turn out to be disproportionate as compared with any resulting improvement in tax compliance.” The Johanns Amendment is the only solution that fully protects small business owners from this costly new burden.
The Nelson (FL) Amendment (SA 4595) does not remove the paperwork and administrative burden that is created by this new law. Instead, the Nelson alternative further complicates compliance responsibilities. While the amendment creates exceptions from the “property” information return requirements, those exceptions do not apply to “services” transactions. This lack of clarity will force small business owners to track expenses associated with both “property” and “services,” the amount spent on each, and the method of payment to determine what information must be reported under the new law. Rather than clarify, the Nelson amendment actually creates even greater complexity for those who comply with the law.
The Nelson Amendment gives the IRS the authority to create a list of reportable and non-reportable transactions, but this unleashes a minefield of potential mistakes and unanswered questions. Small businesses lack the book-keeping resources or capabilities to determine whether or not they have to report the transaction – and adding administrative costs takes time and money away from actually running the business. While PPACA created a new and overwhelmingly burdensome paperwork mandate, the Nelson alternative adds an additional layer of confusion to this already complex requirement.
We urge you to pass the Johanns Amendment and oppose the Nelson Amendment. Full repeal of the new 1099 requirement is the only solution that will relieve small businesses of the cost and confusion created by this new burden.
SBE Council will KEY VOTE this important vote. Please call your U.S. Senators at 202-225-3121 and urge that they vote for the Johanns amendment -- vote for FULL repeal of the expanded 1099 reporting requirement.
Karen Kerrigan, President & CEO
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