Graves, Small Business Committee Members Encourage Immediate 1099 Repeal

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Washington, D.C., Feb 9, 2011 | Alexandra Sollberger (202-225-5821) | comments

House Small Business Committee Chairman Sam Graves (R-MO) today led the Committee’s first hearing to examine the health care law’s contentious 1099 reporting mandate.  The hearing, titled Buried in Paperwork: A 1099 Update, featured testimony from Representative Daniel Lungren (R-CA) and four small business owners from North Carolina, Colorado, Maryland and Kentucky.

 “This new 1099 requirement will cause an avalanche of additional 1099 forms to be filed, and affect over 36 million entities,” said Chairman Graves. “At a time when we should be making it easier to create jobs, promote growth and invest in our economy, small firms don’t need yet another costly and burdensome mandate.”

The 1099 reporting mandate, which requires business owners to file a 1099 form for virtually every non-credit card purchase of goods or services of $600 or more per year, is housed within Section 9006 of the health care law.  Representative Lungren is the sponsor of H.R. 4, the Small Business Paperwork Mandate Elimination Act, which would repeal Section 9006.  H.R. 4 has gained bipartisan support from 270 co-sponsors.

During his testimony, Representative Lungren stated, “I would suggest to the Committee that Section 9006 conveys the worst possible message to the small business community.  It reflects a disconnect with the day to day reality faced by the men and women involved with companies in each and every one of our districts.  As one small businessman recently related to me, ‘This is what you would expect from someone who has never laid awake at night worrying about making a payroll.’ He’s right, and we shouldn’t be adding to the worries of those who run small business enterprises.”

The small business owners who testified at the hearing each expressed severe concerns about the problems their businesses would encounter due to the 1099 reporting mandate, and strongly urged its repeal.  Mr. John “Mark” Eagleton, owner of The Egg & I restaurant in Colorado, delivered stirring testimony that illustrated exactly how frightening new federal regulations like the 1099 mandate can be for small business owners, particularly in tough economic times.

“We’ve invested everything we have in this business,” said Mr. Eagleton.  “Any variable can tip the balance from my restaurant being a going concern to another failed business. If sales fall or costs rise and I cannot cover the increased expenses, my business will close very quickly.  My family and I will lose our life savings and 22 other employees will lose their jobs and their livelihood.”

To read more witness testimony and view documents submitted for the record, visit www.smallbusiness.house.gov/hearings. You can view photos from the hearing by clicking here.

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