TO THE MEMBERS OF THE UNITED STATES CONGRESS:
The undersigned organizations and businesses of every size and industry, representing substantial operations in all 50 states, and employing millions of American workers, stand united in calling for Congress to repeal Section 9006 of the “Patient Protection and Affordable Care Act” before it comes into effect in 2012.
Unless this section, usually referred to as the 1099 reporting mandate, is repealed, 40 million entities, including governments, nonprofits, and businesses of all sizes across the nation will be subjected to onerous data collection and IRS information filing burdens on virtually all non-credit card purchases totaling $600 or more with any vendor in a tax year. When the United States is depending on the private sector to generate jobs and stimulate economic growth, lawmakers are directing precious time and resources to collecting volumes of information and filling out mounds of new paperwork for the government.
If this provision is implemented, the 1099 reporting mandate will impose substantial paperwork and reporting burdens on the backs of governments, nonprofits, and businesses—especially small businesses. In order to comply, these entities will have to institute new complex record-keeping data collection and reporting requirements that track every purchase by vendor and payment method. This provision will also serve to dramatically increase accounting costs, expose businesses to costly and unjustified audits by the IRS, and subject more small businesses to the challenges of electronic filing. In the end, the increased costs will heavily penalize honest taxpayers, creating an even more unlevel playing field between those that pay their fair share of taxes and those that do not.
Moreover, the new 1099 reporting mandate will alter behavior in the marketplace, which could lead to dramatic negative consequences for smaller merchants by driving purchases away from small vendors and startups. In order to minimize reporting, government, nonprofits, and businesses may consolidate their purchases with several large vendors with a broad geographic presence and a more diverse product line instead of a number of smaller ones.
Additionally, the cost of repealing this provision should not be accomplished by levying increased taxes on or removing existing tax incentives from business, thereby eroding American competitiveness and private sector job creation. At a time in which we have seen an unprecedented growth of the federal government, it is imprudent for lawmakers to saddle any one segment of the business community with the obligation to pay for the repeal of this ill-conceived, expanded information reporting mandate.
For these reasons we urge you to repeal expeditiously the 1099 reporting mandate.