U.S. Sen. Mike Johanns (R-Neb.) took his fight to support small businesses and job creation to the floor of the Senate today. Despite the strong support of small businesses across the country, the Senate rejected the Johanns amendment 46-52.
“Regulations, mandates and government spending simply will not create jobs,” said Johanns. “Today’s vote signifies that Senate Democrats and the Obama Administration would rather protect a section of their more than 2,400 page unpopular health care bill than stand up for small businesses. It is wrong to have paid for the President’s health care plan on the backs of small businesses. My amendment would have truly helped small businesses and I am committed to continuing this fight until this provision is repealed.”
The Johanns amendment would have fully repealed section 9006 of the Patient Protection and Affordable Care Act - a provision mandating that every business, charity, and local and state government entity submit 1099 forms for business transactions totaling $600 or more in a given year. The repeal has been endorsed by The Coalition for Fairness in Tax Compliance, the U.S. Chamber of Commerce, The National Federation of Independent Businesses, The American Farm Bureau Federation, and the Americans for Tax Reform, among others.
“This mandate threatens to swamp as many as 40 million businesses, churches, non-profits, and other entities with useless tax reporting paperwork, consuming valuable resources and limiting their ability to grow and hire more workers,” added Johanns. “Small businesses are the job creators that drive our economy and this mandate is a senseless obstacle. Full repeal is the only solution to this problem.”
Section 9006 of the health care law mandates that every business, charity, and local and state government entity submit 1099 forms for business transactions totaling $600 or more in a given year. Mandate adds routine business expenses like phone, office products, shipping costs; increases businesses’ reporting requirement by as much as 2,000 percent.
• Affects as many as 40 million businesses and other entities: Estimate by the National Taxpayer Advocate Service, an IRS ombudsman - includes 26 million sole proprietorships, excluding farms.
• Increases overhead costs for small employers: Additional paperwork requires more staff time and therefore increases costs. A Nebraska small business estimates the mandate will cost $23,000/year.
• Creates a perverse incentive for companies to consolidate suppliers, cut-out small businesses: To avoid paperwork, businesses will likely reduce the number of transactions over $600 by consolidating suppliers, in which case smaller suppliers would lose out.
• Leads to improper IRS penalties: The National Taxpayer Advocate Service reports that the IRS “will face challenges making productive use of this new volume of information,” and that “…it is highly likely that the IRS will improperly assess penalties that it must abate later, after great expenditure of taxpayer and IRS time and effort.”
• Repeal of Section 9006 is broadly supported throughout the country: The Coalition for Fairness in Tax Compliance, U.S. Chamber of Commerce, National Federation of Independent Businesses, American Farm Bureau Federation; collectively represent thousands of businesses and ag producers.
• Click here for a list of businesses across the country supporting repeal of the 1099 paperwork mandate.