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Monday, November 22, 2010

SBA Administrator Backs Repeal of Expanded 1099 Reporting

Repeal of the 1099 paperwork nightmare is picking up steam. As most of our readers know, expanded 1099 reporting was tucked into the new health care law. Several efforts to repeal the burdensome requirement failed in the House and Senate, but we knew this issue would not die. Democrats have now climbed aboard the repeal bandwagon, offering legislation in the Senate to repeal Section 9006 of the new health care law without raising taxes. Last week, SBA Chief Counsel for Advocacy Winslow Sargeant announced his support for repeal, and now -- today -- SBA Administrator Karen Mills has also weighed in for repeal.

In an open letter to small business owners, Mills described the new mandate as “burdensome” and will add up to “too much paperwork, too much filing.”

The text of the Mills letter (which is posted on the SBA Website at follows:

Dear Small Business Owner,

I’m writing to update you on the progress that we have made regarding concerns stemming from the expanded 1099 reporting requirement in the Affordable Care Act, which could affect small businesses starting with 2012 purchases and 2013 filings.

The SBA and the Administration support the Small Business Paperwork Relief Act (introduced by Senator Baucus) which would repeal this provision.

As President Obama said on Nov. 3: “… the 1099 provision in the health care bill appears to be too burdensome for small businesses. It just involves too much paperwork, too much filing. It’s probably counterproductive.” Our support for the Small Business Paperwork Relief Act also follows the Administration’s support in September for Senate Amendment 4595 (offered by Senator Bill Nelson), which would have relaxed the reporting requirement.

All businesses that pay another individual or business $600 or more for goods or services starting in 2012 will be required to issue 1099s. The unintended consequence of a potential paperwork burden resulting from this provision quickly came to light, and we immediately began working across the Administration to reduce the burden of these potential future reporting requirements, as I noted in a letter to small businesses in May. We gathered feedback and comments from the small business community through roundtables, forums, and other feedback mechanisms involving outreach from the SBA, the Treasury Department, the I.R.S. and others.

Importantly, the repeal of this provision through the Small Business Paperwork Relief Act will not adversely affect the Affordable Care Act, which provides important health care benefits to millions of Americans. Small businesses are already taking advantage of the new tax credits for providing health insurance to employees this year, and future benefits such as the insurance exchanges in 2013 will provide small businesses with more negotiating power and reduced administrative costs.

Thank you for the input and feedback that many of you have provided on the impact that the expanded 1099 reporting requirement could have on your business. Overall, with your help, we will continue to ensure that America’s entrepreneurs and small business owners operate in an environment not burdened by excessive regulation, allowing you to continue doing what you do best: grow businesses, create jobs and lead America’s economic recovery.


Karen Mills
SBA Administrator

As SBE Council predicted, this misguided mandate will not stand. The Senate votes on two measures to repeal the 1099 mandate on November 30. We anticipate there will be some action in the House shortly thereafter.

Karen Kerrigan, President & CEO

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