Sen. Olympia Snowe (R-Maine), the Small Business Committee's ranking member, on Wednesday expressed outrage over the Small Business Administration (SBA) failing to submit comments to the Treasury Department on the new rule beginning in 2012 that requires businesses and organizations submit a form 1099 to the Internal Revenue Service (IRS) for purchases over $600.

The public comment period for the rule ended on Sept. 29.

"The fact that the SBA Office of Advocacy - the government's sole watchdog for small business - had nothing to formally say about this burdensome mandate is troubling," Snowe said in prepared remarks.  

In a letter Tuesday to SBA chief counsel Dr. Winslow Sargent, Snowe called for a specific plan, delivered to her within two weeks, for how the SBA would address the 1099 issue to mitigate unwarranted impact on small businesses.

"I am again troubled why your office did not submit formal comments echoing the concerns raised by the small business community -- and it has lead me to question whether the independence of the office is threatened," her letter states.

The 1099 rule was included in the healthcare reform bill to improve tax compliance. But industry professionals, including the Taxpayer Advocate, have questioned its ability to make taxpayers comply. Many also believe it will be overly burdensome for small-business owners to implement. 

"The practical effect [of this measure] will mean that millions of businesses will have to send billions of new information reporting forms to the IRS and other businesses," Snowe wrote.

House Small Business Committee ranking member Sam Graves (R-Mo.) on Tuesday also sent a letter to IRS Commissioner Doug Shulman asking how he plans to implement the new rule.

Graves sent a similar letter Jun. 23 to Shulman and has yet to receive a response.

The congressman's letter noted that compliance with the new rule weighs heavy on the minds of his constituents. 

"During the month of August, I traveled to every corner of my congressional district, visiting small businesses and holding town hall meetings. A significant issue on my constituents' minds was the burden and expense of compliance with this new 1099 requirement," he wrote.

During debate on the recently enacted small business lending bill, Sen. Mike Johanns (R-Neb.) attempted to repeal the rule. The effort failed to pass, 46-52.