PMAA is continuing to support legislative efforts to repeal the much publicized new 1099 reporting requirements which will be enormously burdensome to all businesses. PMAA is joining forces with other small business groups to send a new letter to all Senators urging them to support Senator Mike Johanns' (R-NE) amendment to fully repeal Section 9006 of the “Patient Protection and Affordable Care Act.” This section was added to the healthcare reform law and mandates all companies to issue 1099 tax forms to any individual or corporation from which they buy more than $600 in goods or services in a tax year. The amendment is still pending to the Small Business Lending Act of 2010 (H.R. 5297) which Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) were unable to reach agreement on before Congress adjourned for August recess.

When the law goes into effect in 2012, the 1099 reporting requirement will impose substantial paperwork and reporting burdens on all small businesses which will dramatically increase accounting costs, impose unjustified audits by the IRS, and subject more small businesses to the challenges of electronic filing. As an attempt to compromise, Senator Bill Nelson (D-FL) introduced a second 1099 reporting requirement amendment which increases the payment threshold to $5,000 (up from $600) for the year for payments made to vendors, and his language would exempt businesses with 25 or fewer employees from having to issue a Form 1099 for payment to vendors. The amendment creates exceptions from the “property” information return requirements, but does not apply to “services” transactions. Essentially, the Nelson amendment would force small businesses to track expenses with both “property” and “services,” thereby further complicating the reporting process and leaving administrative costs high.

PMAA supports Sen. Johanns’ amendment to fully repeal the 1099 reporting requirement. Also, leading the repeal effort in the House is Congressman Dan Lundgren (R-CA), who has introduced H.R. 5141, the “Small Business Paperwork Mandate Elimination Act.” Click here to send a letter in support of the Johanns’ amendment and here to send a letter in support of H.R. 5141.