Creating Paperwork, Raising Costs, and Destroying Jobs
Washington,
Sep 24, 2010 -
Buried in the 1900 pages of the healthcare bill is a little-known provision that will create a tax reporting nightmare for business owners, especially small companies. This provision is a vast expansion of the form 1099 tax reporting requirement. Under current law, information reporting is required for the purchase of non-corporate services but not for the purchase of goods. Beginning in 2012, the new healthcare bill will require businesses to file a 1099 form for all goods and services over $600 a year, including phone service, internet, shipping, paper products…you name it.
This heavy and unnecessary new reporting requirement is yet another example of the damaging effects of the new healthcare law. Small businesses create 65 percent of new job growth in America. This mandate will impose substantial paperwork and reporting burdens. Smaller companies often do not have a staff large enough to handle additional paperwork requirements. This provision will also serve to dramatically increase accounting costs, expose businesses to costly and unjustified audits by the Internal Revenue Service, and subject more small businesses to the challenges of electronic filing. For these reasons, I cosponsored the Small Business Paperwork Mandate Elimination Act, which would repeal the 1099 provision and prevent a massive new mandate from being imposed on businesses.
However, rather than working with Republicans to expeditiously repeal the 1099 provision, the Democratic Congress recently passed the Small Business Jobs and Credit Act, which will actually increase penalties—to the tune of $419 million— for failure to comply with the new healthcare law. In addition, this legislation will expand the 1099 mandate to income from rental properties, possibly requiring a landlord renting an apartment to send a 1099 form to their local hardware store or electrician.
This is just one more mandate that stifles small businesses at the same time that Washington urges them to hire workers. For businesses already struggling to emerge from a recession this is particularly burdensome— requiring government paperwork for common, everyday purchases. It is nothing more than a government-imposed obstacle to economic growth and job creation. We simply cannot afford to impose yet another burden on job creators. While it is not possible to repeal the healthcare bill with President Obama in office, it should be a no-brainer to roll back the 1099 regulation.
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