OOIDA: 1099 requirement could be ‘straw that breaks the camel’s back’

| Wednesday, February 09, 2011

If the expanded IRS Form 1099 requirement is not repealed, its damage on small businesses, including truckers, could be devastating.

That?s the message Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, delivered in a letter to Rep. Sam Graves, R-MO, chairman of the House Committee on Small Business.

The letter thanked Graves for calling a hearing on the 1099 provision. The impending requirement would mandate that businesses file 1099 forms on every business they spend $600 or more with annually.

?That requirement will be an unnecessary and costly burden to thousands of small-business trucking professionals who are already contending with difficult economic circumstances and a myriad of overly burdensome regulations,? Spencer wrote to Graves.

?The Form 1099 filing requirement ? may very well serve as the proverbial ?straw that broke the camel?s back? for many small-business truckers.?

Spencer?s letter detailed the burden that small-business truckers would face in having to file Form 1099 requirements on every company they spend $600 or more with.

?Running a small trucking operation is fairly dynamic, and many of our members are going to be expensing out well over $100K annually on fuel and operational expenses to a large number of assorted vendors. The new 1099 filing requirement would be a paperwork and time-consuming nightmare for them,? Spencer wrote.

Support for a repeal of the expanded Form 1099 requirement was widespread during the hearing held Wednesday, Feb. 9. Lawmakers from both parties expressed their desire to repeal the requirement ? but differences surfaced when talk turned to exactly how it should be repealed.

The committee first heard from Rep. Dan Lungren, R-CA, sponsor of HR 4, the Small Business Paperwork Mandate Elimination Act. Lungren?s bill currently has 270 co-sponsors, including 34 Democrats.

While many members of the committee expressed support for the legislation, noting even that they were co-sponsors, Rep. Nydia M. Vel?zquez, D-NY, debated whether or not the legislation should include an ?offset.?

The Form 1099 requirement was included in Patient Protection and Affordable Care Act as a way to help generate revenue to help cover the costs of the act. The Form 1099 requirement is intended to identify taxpayers who fail to report income.

Lungren?s bill, HR4, does not propose a way to ?offset? the income that the Form 1099 requirement would generate. Vel?zquez questioned Lungren if that was the right approach to repealing the requirement.

Lungren?s reasons for not including an offset were plentiful. He pointed out that the government has not received that tax revenue before.

But Lungren was especially displeased with the way the Form 1099 provision was not debated before Congress and not presented to the American people.

He believes that Congress made a mistake in passing the requirement.

?I offered that question to my constituents. Because you made a mistake last year, don?t double down on that mistake by increasing our taxes,? he told the Committee members.

Lungren pointed out that the revenue the requirement will generate is estimated and not a current source of revenue.

?My bill simply gets rid of a provision of law that has never existed before,? he added.

In Spencer?s letter to Graves, he also thanked the congressman for his co-sponsorship of Lungren?s bill.

?I would also like to thank you for co-sponsoring H.R. 4, the ?Small Business Paperwork Mandate Elimination Act of 2011.? OOIDA wholeheartedly supports that legislation and other efforts to repeal Section 9006 of the Patient Protection and Affordable Care Act,? Spencer wrote.

Click here to read Spencer?s full letter to Graves.

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