Key Vote Letter Supporting H.R. 4, the "Small Business Paperwork Mandate Elimination Act of 2011"

March 2, 2011

TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, strongly supports H.R. 4, the “Small Business Paperwork Mandate Elimination Act of 2011,” which would repeal the onerous paperwork burdens imposed on business by the illconceived expanded information reporting mandate contained in Section 9006 of the “Patient Protection and Affordable Care Act” (PPACA). This provision, commonly referred to as the 1099 reporting mandate, was used as an unrelated “pay for” in PPACA.

Unless this section is repealed, businesses across the nation will be subjected to the folly of data collection and information filing on virtually all business-to-business transactions they make aggregating $600 or more in a year at a time in which many can least afford it. When the United States is depending on the small business community to generate jobs and grow the economy, lawmakers are diverting their precious time and resources to collecting volumes of information and filling out mounds of new paperwork for the government.

Section 9006 of the PPACA will also have a chilling effect on new business relationships, most of which will be small businesses and startups. Many businesses in an attempt to reduce data collection and paperwork burdens will simply reduce vendors and refuse to entertain new business dealings, which will have a disproportionate impact on small businesses and entrepreneurs attempting to get a foot in the door.

The ultimate irony of these new burdens is that the IRS neither has the resources nor the ability to use the new information to reconstruct an accurate picture of a company’s revenues since a large volume of business-to-consumer transactions are not reported. While the vast majority of compliant taxpayers will bear the cost of implementing this law, it will have only minimal benefit as a government tool in reducing non-compliance.

Moreover, the U.S. tax system is only as strong as the willingness of its participants to voluntarily comply. Imposing vast new data collection and reporting requirements may be viewed by many small business owners as unreasonable and overreaching. In the end, this could serve to undermine confidence in the government and further frustrate tax collection
efforts.

Ninety-six percent of the Chamber’s members are small businesses with fewer than one hundred employees. The Chamber strongly supports H.R. 4 and may consider votes on, or in relation to, this issue in our annual How They Voted scorecard.

Sincerely,

R. Bruce Josten