Carroll County Times Local News

A mandate in the federal health-care reform law could cause a significant burden on small businesses like his own, a Hampstead jeweler told a House committee.

A mandate in the federal health-care reform law could cause a significant burden on small businesses like his own, a Hampstead jeweler told a House committee.A mandate in the federal health-care reform law could cause a significant burden on small businesses like his own, a Hampstead jeweler told a House committee.

The mandate would require businesses to file a Form 1099 with the IRS beginning in 2012 for any vendor a small business pays more than $600 annually for items such as equipment, furniture, software or fuel. The government has estimated that the mandate would bring $22 billion a year in revenue to help close the tax gap.

Seth Shipley, owner of Shipley's Fine Jewelry, told the House of Representatives Committee on Small Business Wednesday that the mandate was frustrating and frightening and would cost his business an estimated 1,000 hours of extra work and $35,000 a year to handle all the paperwork.

"Requiring reporting for all non-credit card transactions over $600 in a year will create a blizzard of reports that will needlessly bog down commerce while also swamping the IRS," Shipley said. "There is nothing positive or economically stimulating about it."

Shipley, who represented the National Retail Federation, was one of four small business owners from around the nation who testified in front of the House committee, a week after the U.S. Senate repealed the reporting requirement in an 81-17 vote.

During his State of the Union Address Jan. 25, President Barack Obama referred to the need to repeal the mandate that "placed an unnecessary bookkeeping burden on small businesses."

The legislation to repeal Section 9006 of the Patient Protection and Affordable Care Act was introduced and sponsored by U.S. Rep. Daniel Lungren, R-Calif., who has 270 bipartisan co-sponsors.

Lungren told the committee that at a time when the nation needs to stimulate job growth, the expanded 1099 reporting requirements would do just the opposite.

He called the expanded requirements an administrative nightmare for small businesses, many of which are already struggling to survive in the current economy.

"It boggles the mind to think that we think this could be effective," Lungren said.

U.S. Rep. Roscoe Bartlett, R-District 6, introduced Shipley during the hearing, saying that Carroll County is a small business district that would be hit hard by the mandate.

The government estimates that it takes 18 minutes to file each Form 1099, but Shipley said for businesses like his that work with hundreds of vendors, trying to track expenditures throughout the year to see if they pass the $600 threshold would be daunting.

Having to do so may kill the American dream he has worked hard for, he said.

"If this law takes effect next year, I believe that dream will vanish for me and tens of thousands of small business owners across our great nation," Shipley said.

Those who are against the repeal worry how the loss of potential revenue would hurt the nation. But House Committee on Small Businesses Chairman Rep. Sam Graves, R-Mo., said the government couldn't claim it will lose revenue if the mandate is repealed since the requirement has yet to go into effect.

House Committee on Small Business Ranking Member Rep. Nydia Velazquez, D-N.Y., agreed that the mandate is a roadblock to small business growth and said she was confident it would be repealed soon.

"I don't see any reason why we cannot bring this to the floor in the next week or two," Velazquez said.

After the hearing, Shipley said he was glad he could be a voice for small businesses.

"It was great to be able to stand up and let Congress hear what I believe in," Shipley said. "I'm very excited and am confident this will get repealed."