NU Online News Service, Sept. 1, 3:50 p.m. EDT
The Senate is expected to take up a measure to limit a stringent tax-reporting mandate scheduled to go into effect in 2012 as part of health care reform.
The tax mandate, opposed by a Washington-based agent group, is designed to raise $18 billion in revenue over 10 years.
It states that all businesses, tax-exempt organizations, and federal, state and local government entities are required to issue Form 1099 to vendors from whom they purchase goods totaling $600 or more during a calendar year beginning in 2012.
The provision is particularly irksome to the Independent Insurance Agents and Brokers of America (IIABA).
In a recent letter to congressional leadership, the IIABA said it and many others in the small business community "oppose this mandate."
The letter cites "the massive amount of resources that will be poured into new record keeping, accounting and unnecessary compliance procedures," according to Robert Rusbuldt, IIABA president and CEO.
"The mountain of paperwork required to comply with this provision will cost the federal government time and money, divert resources, and prevent investment in job growth and business expansion at a delicate point in the American economy," Mr. Rusbuldt said.
According to officials of several industry trade groups that are lobbying the issue, including the IIABA and the National Association of Insurance and Financial Advisers, to meet this requirement, businesses and entities will have to keep track, by vendor, of all purchases they make that exceed $600.
For example, the lobbyists said, if a self-employed individual makes numerous small purchases from an office supply store during a calendar year that total at least $600, the individual must issue a Form 1099 to the vendor and the IRS showing the exact amount of total purchases.
The Senate is expected to take up amendments to the provision starting the week of Sept. 13.
An amendment to H.R. 5297, a small-business lending bill sponsored by Sen. Mike Johanns, R-Neb., would repeal the provision.
The Johanns amendment replaces the almost $18 billion in revenue that would be lost by adjusting the subsidies for individual purchases of health insurance.
Sen. Harry Reid, D-Nev., and Sen. Max Baucus, D-Mont., then introduced a Democratic alternative sponsored by Sen. Bill Nelson, D-Fla., that would modify rather than repeal the controversial provision.
The Democratic substitute exempts credit cards from the information reporting requirement, lifts the threshold for 1099 reporting from $600 to $5,000, and exempts firms "employing not more than 25 employees at any time during the taxable year."
It also would authorize the Treasury to exempt "non-troublesome" transactions (such as meals, airplane tickets and hotel rooms) from the reporting requirements.
Critics of the alternative, including business groups as well as GOP lawmakers, argue that exempting firms with under 25 employees from the new paperwork requirements will discourage small businesses from hiring new workers in order to avoid growing large enough to trigger more forms.
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