On March 3, the U.S. House will vote on H.R. 4, the Small Business Paperwork Mandate Elimination Act of 2011. The legislation will repeal Section 9006 of the Patient Protection and Affordable Care Act (PPACA), as well as expanded 1099 reporting for owners of certain rental property that was inserted into the “small business lending bill” last year.
These reporting mandates vastly increase our paperwork burden, compelling small business owners and individuals to devote significant time and resources on tedious compliance activity rather than productive work.
SBE Council sent a letter to all U.S. House members, alerting them that we will KEY VOTE H.R. 4 for our Small Business Ratings of the 112th Congress. A vote for H.R. 4 is a vote for our nation’s entrepreneurs!
The expanded 1099 reporting provision in PPACA mandates that small business owners file a 1099-MISC to the Internal Revenue Service (IRS) for all payments made to vendors totaling $600 or more in a tax year. Likewise, as part of the small business lending bill, individuals that receive rental income are now required to distribute and file 1099s on payments made in excess of $600 annually.
There has been no research conducted to substantiate how or if expanded 1099 reporting will close the so-called "tax gap" or raise enough revenues to justify its steep costs and economy-wide impact. We do know, however, that the mandate will be time-consuming and costly for small business owners.
As the SBA Office of Advocacy has consistently found in its research, small firms are disproportionately impacted by federal regulation - and in the case of tax compliance, these costs are 67 percent higher for small firms than for larger businesses. SBE Council surveys of member companies found that the mandate will increase the paperwork burden by more than 1000 percent for some firms, while accounting costs will double and quadruple in many cases. Business owners report that they will cut jobs, raise prices and be forced to devote more of their personal time to mind-numbing, which means their energy, passion and expertise will not be focused on growing their firms.
The expanded 1099 reporting requirement must be repealed. SBE Council urged all House members to stand with small business owners, jobs and American entrepreneurship by voting for H.R 4!
Karen Kerrigan, President & CEO