The U.S. Chamber of Commerce and 1,099 other chambers of commerce, associations and businesses representing all 50 states sent an open letter to Congress on Tuesday, August 17, calling for the repeal of a provision in the new health care law that would greatly increase the tax paperwork burden on some 40 million entities in the U.S.
Section 9006 of the Patient Protection and Affordable Care Act requires businesses, local governments and nonprofit organizations to file Form 1099s for virtually every non-credit card purchases totaling $600 or more with any vendor in a tax year. The provision is scheduled to go into effect in 2012.
“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,” the chamber wrote in the letter.
The 1099 provision would impose dramatically higher accounting costs on businesses, as well as make them much more vulnerable to tax audits, the letter said. It could also wreak havoc on small and startup companies, it said, because those who have to report their purchases could consolidate those purchases with larger vendors to cut down on paperwork.
Currently there are bills before Congress to repeal the 1099 provision, but such bills should not seek to make the repeal revenue-neutral by increasing taxes or removing tax incentives from business, according to the letter.
“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,” it said.