Rep. Daniel Lungren (R-Calif.) has introduced legislation to repeal a provision in the new health reform law that he believes will place a huge tax-reporting burden on small businesses.
The provision, scheduled to take effect in 2012, would require any business that purchases more than $600 worth of goods or services from another business to submit a 1099 tax form to the Internal Revenue Service, said Lungren, ranking member of the House Administration Committee, during a briefing.
Large corporations have entire divisions to handle such transaction paperwork but for small businesses, which don't have the manpower to handle such requests, “This is another brick in their back,” Lungren said.
He was quick to characterize the new tax-reporting provision as a “rat tax,” since it seems to be conscripting companies to “rat out” other companies they do business with over their revenue.
The provision is purported to raise $17 billion over 10 years. “I understand the need of the House leadership to be able to claim yet another revenue source to fund the healthcare bill,” Lungren said, continuing, “This is one of the dumber things I’ve seen in Congress.”
The legislation Lungren has introduced would eliminate the provision in the reform law, and is likely to be sent to the House Ways and Means Committee for consideration, he told reporters.
The National Federation of Independent Business, which represents small businesses, has endorsed Lungren’s bill. “At a time when our economy needs small businesses to help our country grow out of this recession, saddling them with expensive new requirements and paperwork burdens will only further hamper their ability to aid in our economic recovery,” said Susan Eckerly, NFIB’s senior vice president, in a written statement.