SENATOR COLLINS CO-SPONSORS BILL TO REPEAL 1099 PROVISION THAT BURDENS SMALL BUSINESSES

U.S. Senator Susan Collins is an original cosponsor of a bipartisan bill that would repeal a provision of the health care law that increases costs and creates onerous paperwork for small businesses. The Small Business Paperwork Mandate Elimination Act was introduced this week by Sen. Mike Johanns (R-NE) and has strong bipartisan support. The legislation would fully repeal a new requirement, contained in the Patient Protection and Affordable Care Act, 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.

"This is a critical opportunity to repeal an unfair mandate that burdens our small businesses which are already struggling during these tough economic times," said Senator Collins. "This 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. We must act to repeal this provision, and I am pleased the President agreed to work with us during his State of the Union address last night."

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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