U.S. Senator Susan Collins today voted in support of an amendment to the Federal Aviation Administration Reauthorization bill that repeals a provision of the health care law that increases costs and creates onerous paperwork for small businesses. The amendment, which passed the Senate with overwhelming bipartisan support, repeals a requirement that every business, church, and charity must submit a separate 1099 tax form for all business transactions totaling $600 or more in a given year. The rule is scheduled to take effect in 2012.
"The 1099 provision creates huge amounts of paperwork for as many as 40 million businesses and other entities, increases overhead costs for small businesses, creates disincentives for businesses to use small suppliers, and discourages job creation," said Senator Collins, who is a cosponsor of similar legislation to repeal the 1099 provision. "Rather than punishing employers with bureaucratic requirements, we should be encouraging businesses to create jobs. Repealing this unfair mandate is a step in the right direction."
Under the current law, small business owners would be required to provide 1099 forms for basic expenses, including phone and internet service, shipping, and office supplies - substantially increasing their cost of doing business. The National Taxpayer Advocate, a division of the IRS, estimates this new requirement will affect 40 million businesses, including more than 26 million sole proprietorships. Furthermore, the sheer volume of resulting paperwork has the potential to result in improper penalties assessed by the IRS.
Senator Collins also cosponsored the Small Business Paperwork Mandate Elimination Act in the 111th Congress and has voted multiple times to repeal the 1099 provision.
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