WASHINGTON, D.C., Aug. 12, 2010 — The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) sent a letter to Congressional leaders urging the repeal of a provision in the new health care law that will require all businesses to file a Form 1099 for any business-to-business transaction for goods or services over $600 (cumulative throughout the tax year) starting in 2012. At the end of the tax year, businesses will have to file a Form 1099 with the IRS and send a copy to each vendor. Senators Mike Johanns (R-Neb.) and Blanche Lincoln (D-Ark.) have introduced an amendment that would repeal this 1099 provision to H.R. 5297, the Small Business Jobs and Credit Act of 2010. Senator Johanns’ and Lincoln's amendment could be considered as soon as Sept. 14, 2010, after the Senate returns from recess.
“The Big ‘I’ and many others in the small business community oppose this mandate citing the massive amounts of resources that will be poured into new record keeping, accounting and unnecessary compliance procedures,” says Robert Rusbuldt, Big “I” president and CEO. “The mountain of paperwork required to comply with this provision will cost the federal government time and money, divert resources and prevent investment in job growth and business expansion at a delicate point in the American economy.”
The text of the letter follows:
August 11, 2010
The Honorable Max Baucus The Honorable Charles Grassley
Chairman Ranking Member
Senate Finance Committee Senate Finance Committee
The Honorable Sander Levin The Honorable Dave Camp
Chairman Ranking Member
House Ways and Means Committee House Ways and Means Committee
Dear Chairman/Ranking Member:
On behalf of the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) and our more than 300,000 agents, members and employees nationwide, we write to respectfully request the repeal of the new 1099 reporting requirement contained in section 9006 of the “Patient Protection and Affordable Care Act” (P.L. 111-148).
As you know, beginning in 2012 this provision will require all businesses to file Form 1099s for all payments for goods and services of $600 or more, or for a series of payments cumulatively adding up to $600 or more, during the tax year. In order to comply, businesses will be forced to institute costly new record keeping procedures for every business to business transaction, including tracking the name, address and taxpayer identification number (TIN) of the each vendor. The following year businesses will be required to file each Form 1099-MISC with the IRS and send a copy to its business counterparty.
We understand this provision was intended to close the “tax gap” of businesses not in compliance with the tax code. However, for insurance agencies and brokerages and their many small business clients, this onerous provision will cost jobs. The amount of resources that will have to be poured into new record keeping, accounting and compliance procedures will be especially burdensome for small businesses such as those in our membership. At a time when we are attempting to recover from a deep recession, this provision will stretch already thin resources to the breaking point.
In addition, although this provision is intended to target businesses evading taxes, in reality it is the compliant businesses that will pay the price. Noncompliant businesses will continue to avoid paying taxes, and compliant businesses will be saddled with increased costs and unjustified audits by the Internal Revenue Service (IRS). Meanwhile little to no net revenue will be raised for the government, especially when increased costs at the IRS are factored in.
As evidenced by the recent legislative action in both the House of Representatives and the Senate, there is bipartisan support for repeal of this provision. We are encouraged by these developments and urge full repeal as soon as possible.
Thank you for your attention to this important matter.
Robert Rusbuldt Charles E. Symington, Jr.
President and Chief Executive Senior V.P., Government
Cc: House and Senate Leadership
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.