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Lack of 1099 Repeal Angers Small Business Associations



Members of two of the nation's small business associations reacted negatively last week to the House of Representatives' failure to pass the Small Business Paperwork Mandate Elimination Act (H.R.5141) which would have repealed an expanded 1099 reporting requirement that many small business owners say will be difficult to comply with.

Rep. Dan Lungren's (R-Calif.) 1099 tax reporting repeal bill would have overturned a new 1099 reporting law which will require businesses – even small ones – to report to the Internal Revenue Service (IRS) any purchase from a goods or service provider of $600 or more annually. The reporting requirement is included in the Patient Protection and Affordable Care Act (PPACA) and is effective for purchases made in 2012 that will be reported on 1099 forms filed in 2013. The provision was estimated to cost the government $19.206 billion over 10 years. (This is the amount the expanded 1099 reporting would have brought in to government coffers.)

Senate Democrats proposed a series of amendments in an effort to attract Republican support for the bill, including a modified version of a Republican amendment to repeal the expanded 1099 filing requirement. Senate Majority Leader Harry Reid, D-Nev., has set up votes on the revised bill on Sept. 14, after the Senate returns from its August recess, according to The Hill.

While House Democrats and Republicans agree that the new form 1099 reporting requirements would be burdensome for small businesses, and eliminating the requirement would remove this potential burden permanently, lawmakers could not agree how best to pay for the repeal, with Democrats opting for foreign tax credit changes which was opposed by Republicans, according to a press release issued by the Washington-based National Small Business Association (NSBA), a non-profit that represents 150,000 U.S. small businesses.

"NSBA urges Congress to set politics aside and enact legislation to repeal the 1099 provision," the NSBA said in a prepared statement issued last week."Given that an overwhelming majority of Democrats and Republicans are now on the record as supporting repeal – either as cosponsors of legislation or as having voted for the bill – this should be at the top of the list upon their return in September."

The National Federation of Independent Businesses (NFIB) also made its frustration at the House's lack of action on passing the bill. It held a press conference last week to decry the lack of action on passing the bill. NFIB/Louisiana member Pat Felder, owner of Felder’s Collision Parts in Baton Rouge, La., called the requirement "onerous."

“I will go from filling out four 1099 forms to several hundred because of this law. That just doesn’t make sense,” she said.

The NFIB has made full repeal of the 1099 reporting provision a major priority, the non-profit, Nashville-based organization said in a press release.

Jeanette Mulvey

Jeanette has been writing about business for more than 20 years. She has written about every kind of entrepreneur from hardware store owners to fashion designers. Previously she was a manager of internal communications for Home Depot. Her journalism career began in local newspapers. She has a degree in American Studies from Rutgers University. Follow her on Twitter @jeanettebnd.