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ASBA and NSBA are hopeful the Senate will look to repeal of the expanded 1099 reporting provision as an ideal vehicle to display both sides' commitment to small business and bipartisanship.


Subject:  Repeal Expanded 1099 Reporting Requirements

Dear Senator _________,

As a small business owner, I am writing to ask that you support efforts to repeal Section 9006 of the Patient Protection and Affordable Care Act (PPACA) that requires any business that purchases more than $600 of goods or services from another business to submit a 1099 form to the Internal Revenue Service (IRS).

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. With millions of small businesses filing two forms for each vendor, it is likely that the number of 1099s filed each year by small businesses could easily exceed 100 million.

This new and costly provision stands to greatly harm small businesses for a number of reasons. First, it poses a vast new burden on us by increasing the number of firms for which small-businesses must file a 1099 report from an average of 10 to an average of 86. Another severely concerning by-product is the fact that it will hamper business-to-business transactions by spurring customers of small businesses to look to ease this reporting requirement by consolidating purchases. This will give a significant and inherent advantage to big-box stores over small businesses like mine.

This mandate has nothing to do with health care coverage or reform, and instead was used as an unrelated "pay for” as a way to help the IRS track and collect taxes on income that now goes unreported by enlisting businesses to help create a paper trail.

As enacted, every small-business owner—including myself—will face increased paperwork and administrative burden for each additional 1099 form prepared. Increased costs are incurred for mailing additional forms and for hiring outside assistance to ensure that businesses are correctly complying with the law. Furthermore, if a business previously has not been required to utilize the Form 1099 filing system, greater difficulty with compliance is likely to ensue. While it may seek to capture non-compliant corporations, it clearly places the burden on the wrong taxpayer—the compliant small-business.

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. 

I am hopeful that you will take every opportunity to oppose this burdensome new requirement and support efforts to repeal Sec. 9006 of PPACA.

Now is the time for Congress to support proposals that are fair and reasonable, and that do not hinder the survival, growth and innovation of our nation’s entrepreneurs.

Thank you for your consideration.