Small Business Paperwork Mandate Elimination Act
The health care bill passed earlier this year includes a new tax provision that will impose new reporting requirements, known as the 1099 paperwork mandate, on every business in the U.S., including those in the horse industry, beginning in 2012. Legislation has been introduced in both the House and Senate to repeal this provision even before it goes into effect. Senators Mike Johanns (R-NE) and Blanche Lincoln (D-AR) have announced that they will offer the provision to repeal the 1099 paperwork mandate as an amendment to the small business lending bill that is to be considered by the Senate on September 14.
The American Horse Council (AHC) supports this repeal provision. Please fax or email this letter to your Senators in support of the repeal of the 1099 paperwork mandate, and please pass it on to your members if applicable.
The Patient Protection and Affordable Care Act ("Health Care Bill") that was signed into law earlier this year includes a provision broadly-expanding 1099 IRS form reporting requirements. Current law requires 1099s to be sent to any independent contractor that receives $600 or more from a business in a year. The new requirement expands that mandate to require that all businesses issue 1099 forms to any individual or corporation from whom they purchase a total of $600 or more in goods or services in the year. Its stated purpose is to identify unreported taxable income, fraudulent tax deductions, and increase tax compliance.
This new requirement will greatly increase the administrative burden on all businesses, particularly small businesses, including those in the horse industry. For example if a horse farm buys $600 worth of hay and grain from a particular retailer, or purchases buckets and bridles for a total of $600 from a tack shop, or an event buys office supplies of $600 from a supply store over the course of the year, or an individual buys a computer for $700 from a local store, they are required to issue each a 1099 form that must be completed and returned to the IRS. This reporting mandate places an added burden on each business involved. The horse businesses would have to collect information and tax identification numbers for every entity they do $600 worth of business with and mail them forms and the business receiving the forms must complete them.
This new requirement would impose a heavy administrative burden on small and large businesses.
In response to the new 1099 provision, Congressman Dan Lungren (R-CA) earlier this year introduced the Small Business Paperwork Mandate Elimination Act (H.R.5141). This bill would repeal this provision. This bill has been referred to the House Committee on Ways and Means and currently has 163 co-sponsors.
Senators Mike Johanns (R-NE) introduced the Senate version of the bill (S.3578) which is identical to the House version. This bill has been referred to the Committee on Finance and currently has 23 co-sponsors.
As indicated above, Senator Johanns and Lincoln have indicated that they will offer the Senate bill as an amendment to the Small Business Jobs and Credit Act of 2010 (H.R.5297), which is expected to be considered by the full Senate when it returns from the August recess. Please fax or email your Senators the attached letter in support of this effort before September 14.
If you have any questions please call the AHC.