Duffy Votes to Repeal Burdensome Regulation, Hails Passage

Statement

U.S.Congressman Sean Duffy issued the following statement today after the House overwhelmingly voted to repeal the onerous 1099 reporting requirement imposed by the new health care law:

"Most Wisconsinites and Americans know that we cannot tax, spend or regulate our way to economic growth. In fact, I have heard consistently from business owners throughout the Seventh District that we will not regulate our way to prosperity.

"Today the House repealed a portion of the health care law that was poised to impose onerous and burdensome regulations on businesses--particularly small businesses. It is precisely this kind of policy coming out of Washington that is stifling our economic recovery, hindering business productivity and expanding the federal government to the detriment of our job creators.

"We need more pro-growth legislation that will empower and encourage the private sector to innovate, invest and get our people back to work."

BACKGROUND:

Section 9006 of Obamacare expands information reporting requirements to the Internal Revenue Service (IRS) for business transactions in excess of $600 in goods or services. Starting in 2012, ObamaCare mandates that all businesses file an IRS Form-1099 for any vendor with which they have more than $600 in yearly transactions.

In July, the Internal Revenue Service's National Taxpayer Advocate highlighted several problems with the 1099 mandate:

* "[T]he new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance."
* "[S]mall businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition."

A recent National Federation of Independent Business (NFIB) Small Business Survey determined that tax paperwork, costing $74 an hour, is the most expensive burden placed on small businesses by the federal government. The NFIB's tax counsel, Bill Rys, has also highlighted the "direct negative impact on small business" of the 1099 mandate. In an extensive June 2010 memo submitted to President Obama's Office of Management and Budget, the Business Roundtable and the Business Council--industry organizations representing the nation's largest private sector employers-- outlined the job-destroying policies of the administration. Referring specifically to the 1099 provision of ObamaCare, the memo noted: "[T]he cost to modify systems to collect the data and send the additional 1099s will not be insignificant."

Further, a September 2010 letter from the U.S. Chamber of Commerce to members of Congress, signed by more than 2,400 member businesses from all industries and regions, stated that the 1099 provision means "40 million entities, including governments, nonprofits, and businesses of all sizes across the nation will be subjected to onerous data collection and IRS information filing burdens." The letter continued: "[T]hese entities will have to institute new complex record-keeping, data collection and reporting requirements that track every purchase by vendor and payment method." This mandate will "dramatically increase accounting costs, expose businesses to costly and unjustified audits by the IRS, and subject more small businesses to the challenges of electronic filing."

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