The head of the Small Business Administration has added her voice to the drive for repeal of the expanded 1099 information reporting requirements in the health care reform bill.
In an open letter to small business owners, SBA Administrator Karen Mills described the requirements that small businesses report all transactions greater than $600 as “burdensome,” and called for their repeal. Mills said the reporting requirements in the Affordable Care Act, which were to have begun in 2012, add up to “too much paperwork, too much filing.”
Mills said in the letter that the SBA and the Obama administration both support the Small Business Paperwork Relief Act, introduced by Senate Finance Committee Chairman Max Baucus, D-Mont., which would repeal this provision (see Baucus Bill Would Repeal 1099 Requirement).
She pointed to a statement by President Obama at a Nov. 3 press conference, in which he said, “… the 1099 provision in the health care bill appears to be too burdensome for small businesses. It just involves too much paperwork, too much filing. It’s probably counterproductive” (see Obama Pledges to Work on Taxes with GOP).
“Our support for the Small Business Paperwork Relief Act also follows the Administration’s support in September for Senate Amendment 45952 (offered by Senator Bill Nelson), which would have relaxed the reporting requirement,” added Mills (see Senate Fails to Repeal 1099 Requirements).
“All businesses that pay another individual or business $600 or more for goods or services starting in 2012 will be required to issue 1099s,” she noted. “The unintended consequence of a potential paperwork burden resulting from this provision quickly came to light, and we immediately began working across the Administration to reduce the burden of these potential future reporting requirements, as I noted in a letter to small businesses in May. We gathered feedback and comments from the small business community through roundtables, forums, and other feedback mechanisms involving outreach from the SBA, the Treasury Department, the I.R.S. and others.
“Importantly, the repeal of this provision through the Small Business Paperwork Relief Act will not adversely affect the Affordable Care Act, which provides important health care benefits to millions of Americans. Small businesses are already taking advantage of the new tax credits for providing
health insurance to employees this year, and future benefits such as the insurance exchanges in 2013 will provide small businesses with more negotiating power and reduced administrative costs.”
The bipartisan support for repealing the expanded 1099-MISC reporting requirements in both Congress and the Obama administration makes it clear that it probably won’t need to be much of a worry for businesses, unless congressional gridlock somehow gets in the way of repeal.