Congressman Fred Upton (R-St. Joseph) today praised Senate passage of House legislation that repeals the harmful 1099 tax reporting requirement from the healthcare overhaul. Upton is an original cosponsor of the House bill – H.R. 4, the Small Business Paperwork Mandate Elimination Act of 2011 – which today passed the Senate by a vote of 87 to 12, after having passed the House 314 to 112 on March 3. The bill now heads to the White House in order for the President to sign the bill into law. The Obama administration has acknowledged that repealing this provision is “the right thing to do.”
“This legislation is a major victory for Michigan’s small businesses who are on the frontlines of our economic recovery,” said Upton. “As this bipartisan legislation clearly demonstrates, even the most unwavering proponents of the healthcare overhaul had no idea what was in it before voting for it. Repealing this hidden tax reporting requirement will save every single business owner from a mountain of IRS paperwork, allowing them to focus their efforts on creating jobs, not complying with new federal requirements. Going forward, we will continue to fight to protect American families and small businesses from the costly, overreaching mandates in the healthcare law – repealing this provision is only the beginning.”
The provision targeted by H.R. 4, found on page 737 of the Patient Protection and Affordable Care Act, will force small businesses to file separate 1099 IRS reporting forms for every single business-to-business transaction that exceeds $600 in a given year, beginning in 2012. Under current law, businesses are required to report services provided by non-corporate entities. This provision of the health care bill greatly expands that requirement by extending it to all corporations that are not tax-exempt.
Compliance means such basic day-to-day business expenses as telecommunication services, utility repairs, and office supplies will now be subject to IRS disclosure. Not only does this provision directly put an onerous tax reporting burden on small business, it also has the added impact of changing the way companies conduct their business with outside vendors. Faced with the prospect of a mountain of IRS forms, many companies will find it more convenient to turn to large global suppliers rather than negotiate with a number of smaller, local companies.
Repealing the 1099 provision is a top priority of the Small Business Association of Michigan. Upton is also an original cosponsor of legislation, H.R. 2, to repeal the healthcare law in its entirety.
