SBE Council Endorses Bill to Stop Small Biz Paperwork Nightmare
SBE Council, the nation's leading advocacy group representing entrepreneurs and small businesses sent a letter to Republican U.S. House Rep. Dan Lungren endorsing the "Small Business Paperwork Mandate Elimination Act" (HR 5141).
The legislation repeals a section of the new health care law recently signed by President Barack Obama that would impose an onerous and costly reporting requirement on small business owners.
Starting in 2012, Section 9006 of the "Patient Protection and Affordable Health Care Act" mandates that small business owners file a 1099-MISC to the Internal Revenue Service (IRS) for every business-to-business transaction totaling $600 or more in a tax year. Some small business owners are familiar with form 1099 in reporting payments made to independent contractors, but this type of reporting is dramatically expanded under the new health care law.
As SBE Council noted in its support letter to Rep. Lungren, the new IRS reporting requirement will pile additional costs and burdens on small business owners, while adding more complexity in complying with the nation's byzantine tax system
"Section 9006 has nothing to do with health coverage, health care reform or affordable insurance. The measure only serves to impose a heap of new paperwork on already over-regulated small business owners," wrote SBE Council in the letter.
Section 9006 was inserted into the "Patient Protection and Affordable Health Care Act" as a way to pay for the massive health care bill. There is no clear research or data to demonstrate that the reporting will close the so-called "tax gap." However, SBE Council pointed out that the effects on small businesses are clear
"What we do know is that the make-work scheme will cause more headaches and costs for struggling small business owners. As the SBA Office of Advocacy has consistently found in its research, small firms are disproportionately impacted by federal regulation - and in the case of tax compliance, these costs are 67 percent higher for small firms than for larger businesses," wrote the group in the letter.