In the letter, the senators said the benefits of health reform for small business should not be overshadowed by a provision of the new law requiring more Form 1099 reporting. This new IRS reporting requirement dramatically changes the 1099 reporting requirement—no longer exempting corporations or payments for merchandise.
Specifically, beginning Jan. 1, 2012, the provision would require information reporting—on a Form 1099—for all business transactions with a vendor, whether incorporated or not, valued at more than $600 and the reporting requirement would be for both services and property.
"The new requirements may place a hardship on small businesses by creating an extra paperwork burden," the senators wrote. "Not only will a 1099 form be necessary for millions of new transactions, the stricter requirements force business owners to collect taxpayer identification information from vendors, contractors, and other companies."
The senators went on to say "we insist that the IRS develop ways in which small businesses can reduce expected paperwork from this requirement — possibly through consolidating existing forms, for example — and that the IRS report its proposed solutions to the Senate Committee on Small Business and Entrepreneurship prior to implementation of the new law."
Those senators signing on the letter include: Mark Begich (D-Alaska), Ben Nelson (D-Neb.), Jeanne Shaheen (D-N.H.), Evan Bayh (D-Ind.), Tim Johnson (D-S.D.), Debbie Stabenow (D-Mich.), Patty Murray (D-Wash.), Jeff Merkley (D-Ore.), Sherrod Brown (D-Ohio), Al Franken (D- Minn.), Amy Klobuchar (D-Minn.) and Michael Bennet (D-Colo.)
Since the proposal was first considered, NSBA has argued this information reporting requirement is a costly and time-consuming mandate placed on small business owners. Businesses are already overburdened with tax paperwork and reporting requirements, so the additional requirements included in the PPACA will only increase the cost and complexity of complying with the tax code.
NSBA supports legislation, the Small Business Paperwork Mandate Elimination Act (H.R. 5141), introduced by Rep. Dan Lungren (R-Calif.), which will repeal section 9006 of the PPACA that requires any business that purchases more than $600 of goods or services from another business to submit a 1099 form to the IRS. A companion bill in the Senate has recently been introduced by Sen. Mike Johanns (R-Neb.).
Over the next several months, the IRS will be soliciting input and feedback from business owners and interested parties over this matter before proposing final regulations for implementation of the reporting requirement in the health care law. As the IRS proceeds with their planning, they will be open to considering alternate approaches, including working with Congress to address any potential implementation issues that may arise during this process.
The IRS is currently accepting public comment on the new 1099 reporting requirement and how to minimize the burden on small businesses. To submit your comments, you can:
• Send an e-mail to Notice.Comments@irscounsel.treas.gov with a subject line of “Notice 2010-51."
• Mail written comments to: Internal Revenue Service, CC:PA:LPD:PR ( Notice 2010-51), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
The deadline is Sept. 29, 2010. Please click here for more information.
