Sens. Landrieu, Baucus Introduce Bill to Repeal Form 1099 Small Business Requirement

In testimony before the Small Business Committee’s Nov. 18 hearing on the regulatory and administrative burdens on America’s small businesses, Larry Nannis, Chairman of the National Small Business Association (NSBA), said that small business owners “face an overwhelming regulatory burden in complying with Internal Revenue Service regulations.”Unlike large corporations, he said, small businesses “are an easy target,” as they lack the “hordes of accountants, benefits coordinators, attorneys, and personnel administrators” to help them keep pace with “the overwhelming regulatory and paperwork demands of the federal government.”

According to the Small Business Administration (SBA) Office of Advocacy research, Nannis said, the cost of tax compliance for small firms is 67% higher than for their larger counterparts. “For firms with fewer than twenty employees, the per-employee cost of complying with the tax code is $1,304,” he said. “This data tells us that we have crafted a tax system that is so complex and burdensome that small businesses are spending valuable time and financial resources on recordkeeping and outside help to ensure compliance instead of using these resources to invest and grow their business.”

A new form 1099 reporting requirement, Nannis continued, “signed into law as part of the Patient Protection and Affordable Care Act (PPACA) will only increase these costs. The new filings substantially increase the current requirement by expanding both the types of businesses and transactions considered reportable.”