U.S. Chamber Leads Effort to Repeal Burdensome Reporting Requirement Impacting Small Businesses

‘Congress Prioritized Regulation Ahead of Job Creation,’ Josten Says

WASHINGTON, D.C.—The U.S. Chamber of Commerce today led more than 1,099 local chambers of commerce, associations, and businesses of all sizes in sending a letter to Congress calling for a repeal of the burdensome reporting mandate included in the health care law. This tax filing requirement imposes a substantial burden on nonprofits, governments, and businesses—especially small businesses.

“By including this burdensome reporting requirement in the health care bill, Congress prioritized regulation ahead of job creation,” said Bruce Josten, executive vice president of Government Affairs at the U.S. Chamber. “Small businesses will now have to spend time and money implementing new accounting systems and filling out stacks of forms instead of growing their businesses and hiring new employees.”

The letter expresses the business community’s commitment to repealing Section 9006 of the Patient Protection and Affordable Care Act before it goes into effect in 2012. It outlines the major concerns, including:

• Forty million entities—including businesses of all sizes, nonprofits, and governments—will be required to report to the IRS on virtually all non-credit card purchases totaling $600 or more from any vendor in a tax year.
• The 1099 reporting mandate will impose substantial paperwork and reporting requirements on these entities, with the burden falling particularly hard on small businesses. Compliance will require these entities to institute complex record-keeping systems that can track every purchase by vendor and payment method.
• This provision will dramatically increase accounting costs, expose businesses to costly and unjustified IRS audits, and subject more small businesses to the challenges of electronic filing.
• The mandate could alter marketplace behavior to the detriment of small businesses and startups. In order to minimize reporting, customers may consolidate their purchases by using several large vendors with broad geographic presence and more diverse product lines instead of a number of small vendors.
• The cost of repealing this provision should not be offset by levying higher taxes on—or removing existing tax incentives from—business, as this would only erode American competitiveness and private sector job creation.

To read the full text of the letter or to become a signatory, click here.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

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