1099 Mandate & Small Businesses

Of all the hidden costs now being discovered in the health care bill, one of the most concerning to the small business community is Section 9006, which would place an unprecedented burden on small business reporting and paper work requirements.

This provision would require any business that purchases more than $600 of goods or services from another business, to submit a 1099 tax form to the Internal Revenue Service. The mandate is to take effect in 2012. Included to help pay for the trillion dollar deficit created by the health care bill, this new tax is reported to raise $17 billion.

Sen. Mike Johanns (R-NE) has introduced a bill that would repeal a costly tax reporting provision included in the new health care law. Johanns’ bill, the Small Business Paperwork Mandate Elimination Act, would repeal this provision and prevent a massive new paperwork requirement from being imposed on businesses, which could increase 1099 filings by 2000%.

“This mandate forces businesses to waste staff time and resources on paperwork that even the IRS says will likely be of little value,” Johanns said. “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 would be particularly burdensome, requiring government paperwork for common, everyday purchases. It is nothing more than a government-imposed obstacle to economic growth and job creation.