Harmful Provision for Small Business Needs to Go
Ever since the new healthcare law passed, whether people love it or loathe it, there is one thing that draws unanimous consent: Congress must do away with the cumbersome 1099 paperwork regulation, a well hidden provision in the 2,409 page bill to help pay for the unprecedented healthcare expansion.
Currently, IRS Form 1099 is used by free-lancers and by companies to document income for individual workers other than wages and salaries. Starting in 2012, this tax hike on doing business/ reporting mandate will force all businesses, charities, churches, and state and local governments to file a 1099 tax form with the IRS every single time they purchase $600 or more in goods from other businesses throughout the year.
The stealth change radically alters the nature of 1099s and means businesses will have to issue millions and millions of new tax documents each year. Experts predict that as many as 40 million businesses across the country will be forced to comply with this burdensome and time-consuming requirement.
The National Association for the Self-Employed reports that the new healthcare law will have a particularly tremendous impact on small business. Specifically, for those companies with 10 or fewer employees, their paperwork burden will jump from an average of two 1099s per year to roughly 27 per year, mostly to large corporations. That is a whopping 1250% increase in the amount of paperwork that small-business owners will have to file. Main Street Mom and Pop shops do not need the added cost of more regulatory requirements at a time when their efforts are rightly focused on staying in business.
Locally, Highland Fire Protection Company in Anna averages 12 1099s each year. An increase of 1250% translates to 150 1099s per year! As Glenda Pinkston, the owner of Highland Fire Protection Company puts it, the 1099 reporting requirement will “impose undue hardships on already overworked employees and/ or business” and “the gain in taxes would be greatly offset by the cost to businesses and government to implement it.”
To help folks like Glenda, I cosponsored legislation that would repeal the 1099 paperwork nightmare, the Small Business Paperwork Mandate Elimination Act.
While this onerous requirement does not go into effect until 2012, Congress should act quickly to remove the provision from law and provide our small businesses with more certainty and security. As a member of the Ways and Means Committee and an appointee to the Joint Committee on Taxation, please know that I will continue to be a vocal critic of this absurd mandate and advocate for immediate repeal.
We all know that small businesses are the engines of job growth here in Texas. The federal government should not be forcing job-killing policies and regulations on our job creators, especially during a time of near 10 percent national unemployment.