In the United States, businesses labor under two unfair burdens — one addressed below by Senator Webb, and another which needs to be addressed as we progress with implementing the Affordable Care Act.
This note received from Senator Webb describes legislation that would eliminate the requirement that businesses report on a 1099 money paid to any vendor with whom a business has dealings of at least $600.00 in a year:
Yesterday, I voted to pass an amendment to eliminate a 1099 tax form reporting requirement that was enacted under the federal health care reform law last year. I was an original cosponsor of the amendment, which the U.S. Chamber of Commerce announced it “strongly supports.”
I have now voted four times to eliminate this unfair burden. Yesterday’s vote demonstrates that Congress is willing to resolve concerns about the health care reform law in a bipartisan way.
A 1099 form is used to report to the IRS income other than salaries, tips, and wages. The amendment, introduced by Senator Debbie Stabenow of Michigan, repeals a provision that requires businesses to file a 1099 form with the Internal Revenue Service for each vendor with whom they have at least $600 in transactions. Small businesses have expressed concerns about the potential burden posed by the added reporting requirements.
Businesses already report salaries, tips, and wages, including bonuses paid to workers. This additional reporting requirement is redundant with the reporting requirement of the vendor, and it makes the purchaser responsible for verifying — by separate report — money pad to vendors. The paperwork burden is immense. The verification process is adequately covered by internal audit of businesses and the occasional tax audit. Senator Webb is correct in stating that this requirement, attached to the Affordable Care Act, is not something that should be required of businesses.
This legislation is important for itself and for the benefit it will bring, but two more important aspects merit attention. The first is that with this bill our legislature is doing what they are supposed to do — looking for better ways to do the things we need — and not just engaging in political posing for the “base.” In addition, this legislation demonstrates how problems with the ACA (Health Care Reform) should be addressed, by dealing with the small problems rather than outright repeal, which would disadvantage literally all U.S. citizens in every demographic.
The second burden that businesses bear should be addressed in the same way. That burden is the requirement to provide health care insurance for workers, which for many employers is the second largest budget item after payroll. Businesses must negotiate with health insurance companies for the cost, and determine how much cost they can pass on to their employees for what services. The burden is tremendous, and taken as a tax — which it is — is enough to negatively affect the market when our businesses are trying to compete internationally with similar businesses that are supported in their country with national health care. It is clear that it would be a benefit for businesses to be able to pay a much smaller contribution that could actually be called a tax in support of a public option for health insurance in which their employees could enroll. This part of the ACA was not passed with the original bill, but it is sorely needed by both small businesses and workers.