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| Steve Pearce |
Washington, D.C. (March 3, 2011) Today, the House passed the Small Business Paperwork Mandate Elimination Act of 2011, which will save time, money and cost for small businesses, allowing them to create jobs and spur economic growth. President Obama’s health care law dramatically expanded tax information reporting requirements. The new requirements include mandates that a Form 1099 be filed for any payments to corporations and for any payments for property that exceed $600 per year per payee.
This places an overwhelming burden on small business owners, who must spend time, money, and resources on complying with more regulations instead of creating jobs and bolstering the economy. Today’s bill, which Rep. Pearce cosponsored, is expected to reduce taxes by $19.7 billion dollars, save $20 billion in federal spending in its first 10 years, and reduce the deficit by $166 million in the same period. These savings will directly result in more jobs and a stronger America. Pearce, a former small business owner, has consistently advocated for small business as the backbone of America’s economy, and has made job growth his top priority in Congress.
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I disagree with the Republican (and I am one) demand to reverse the 1099 rule. I am sure that many businesses/individuals (sellers) do not report income received from other businesses/indivduals (buyers), while those "buyers" then deduct the payments as business expenses. So the government loses taxes on both sides of the transaction.
I fail to understand why the 1099 rule is such a big administrative burden. Every transaction for my wife's business is recorded in the computer. It is a simple step to print a total dollar amount for every business or person who she has purchased anything from during the business year, and then screen the list for amounts of $600 or more. Every vendor has an address. The only hard part would be getting the vendor's SSN or identification number. Completing the 1099 can be automated. At the IRS, computers would look for suppliers under-reporting income by adding up the 1099 amounts being reported by the buyers.
The only issue is that individuals' SSNs would be given to other people, but this could be corrected by requiring anyone running or selling to a business, even a sole propietor filing one or more Schedule C forms, to obtain a business ID number. (Note that I did not say, "obtain a business license", which costs money.) So if my wife bought ink for her printer through eBay (which she does a lot), the seller would put his/her business ID number on the receipt.
So what is the real problem with the new 1099 rule? Is it "admin burden", or the fact that the government would have a new weapon in its arsenal to ensure that businesses are reporting all of their income and therefore the government would be collecting more of its legally-owed taxes? By endeavoring to repeal the new 1099 requirements, is the message really that it's okay to have some transactions "under the table"?
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