Small Biz Ticked Off About Form 1099 Reporting Requirements

The small business community is in general consensus that lawmakers are failing to support them in its effort to get rid of language in the new health care reform bill that requires expanded Form 1099 reporting requirements.

Congress is back in session this week and failed to pass two amendments on addressing those new requirements set to take effect in 2012.

The measure doesn’t have anything to do with health care, but Section 9006 of the Patient Protection and Affordable Care Act mandates that small business owners file a 1099-MISC with the IRS for payments made to vendors totaling $600 or more in a tax year.

A small business would have to file a 1099 with office supply store Staples, for example, if the business owner purchased at least $600 worth of office supplies from it in one year.

An amendment from Sen. Mike Johanns, R-Neb., would repeal the provision and lower the standard required for the individual mandate to purchase health coverage.

Sen. Bill Nelson, D-Fla., would alter the new 1099 requirement by exempting businesses with fewer than 25 employees from having to comply with it. His measure also would raise the reporting threshold from $600 to $5,000 worth of goods and services. Nelson also favors creating a list of companies, such as utilities, that small business owners would not be required to give forms 1099.

“There is bipartisan agreement in the House and Senate that this provision should be fully repealed,” said a statement from the National Federation of Independent Business. “No ‘alternative’ meant to provide political cover ends this paperwork nightmare that should have never been included in the healthcare law. That’s why NFIB – and hundreds in the business community – made it clear that full repeal of the 1099 provision was the only acceptable option for our nation’s job creators.”

Sen. Mary Landrieu, D-La., who chairs her chamber’s small business committee, said she would introduce separate legislation dealing with the issue in the near future.

A survey from the National Association for the Self-Employed shows that these businesses will face an over 1,250 percent paperwork increase under the current regulation set to begin in 2012.

The NASE also signed on to a letter by the Coalition for Fairness in Tax Compliance supporting the amendment by Sen. Johanns. The National Small Business Association, the National Federation of Independent Business, the National Association of Manufacturers and the Small Business and Entrepreneurship Council are among the signatories.