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PIA Urges Repeal of Burdensome Provision in Healthcare Law Requiring 1099 Filings for All Transactions Over $600

WASHINGTON, Tuesday, September 7, 2010 - The National Association of Professional Insurance Agents (PIA) is calling for the repeal of a provision of...
September 7, 2010

Requirement Would Bury Small Business Under a Mountain of Needless Paperwork

WASHINGTON, Tuesday, September 7, 2010  - The National Association of Professional Insurance Agents (PIA) is calling for the repeal of a provision of the Patient Protection and Affordable Care Act before it comes into effect in 2012.

Section 9006 of the new healthcare law requires that businesses of all sizes, as well as governments and nonprofits, file a 1099 form with the Internal Revenue Service reporting any purchases they make of goods or services of $600 or more in a tax year from any individual or business, including corporations. Currently, businesses only need to file 1099s when they buy services and only when the vendor is an unincorporated person or business.

"This places an unacceptably onerous burden on businesses of all sizes," said PIA National Executive Vice President & CEO Leonard C. Brevik. "If allowed to take effect, this provision will impose a substantial reporting and paperwork burden on governments, nonprofits and businesses - especially small businesses - dramatically increasing costs."

"This will bury small business under a mountain of needless paperwork," Brevik said, adding that the expanded 1099 reporting requirement will distort the marketplace by driving purchases away from small businesses. "Small business is the growth engine of the American economy, and this provision throws sand into that engine."

In a September 7 letter to Congressional leaders, PIA noted that "this new, expanded mandate may have the unintended consequence of encouraging buyers of goods and services to consolidate their purchases with large vendors instead of doing business with smaller firms, in order to avoid this excessive paperwork."

"In addition, this expansive and expensive federal requirement also greatly raises costs for nonprofits, and is an unfunded mandate on financially-pressed state and local governments," the PIA letter states.

The Senate is expected to take up at least two amendments to an unrelated bill next week: One would eliminate the 1099 provision; another would exempt businesses with fewer than 25 employees, raise the reporting threshold to purchases above $5,000 and exclude those made with a credit card. In the House, Rep. Daniel E. Lundren (R-Calif.) has introduced the Small Business Paperwork Mandate Elimination Act (H.R. 5141) to repeal the provision. The Senate companion bill, S.3578, was introduced by Sen. Mike Johanns (R-Neb.).

"The IRS is already working on procedures to implement this expanded 1099 reporting requirement," Brevik said. "We need to work hard to kill it."

PIA has joined the U.S. Chamber of Commerce and the National Federation of Independent Businesses (NFIB) in calling for the repeal of Section 9006 of the Patient Protection and Affordable Care Act.

"This is a classic example of unintended consequences," said PIA National Director of Federal Affairs Mike Becker. "Designed as a means of helping to close the tax gap, this new reporting mandate erodes competitiveness, places small businesses at greater risk and jeopardizes economic recovery. Fortunately, fixing it is simple and straightforward."

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America SM. PIA's web address is www.pianet.com.

Click here to read PIA's letter to Congressional leaders (9/7/10)


 

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