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Ms. HAYWORTH. Madam Speaker, yesterday morning I received a letter from a constituent, Seth Arluck of New Hampton, NY.
Seth's three-generation family business was hit hard by the housing market crash. The 1099 rule in the Affordable Care Act, Seth says, ``would place a disproportionate burden on my very small lumber yard.....I do not need an additional and unnecessary expense that serves no apparent purpose.''
He adds that the penalty for 1099 non-compliance, to fund small-business lending, adds insult to injury: ``How clever, fine the heck out of me, and loan me the money to pay fines.''
Madam Speaker, this is no way to treat the engine of growth for America. Instead of investing in adapting to his clients' needs in changing times, Seth Arluck will now have to spend precious time and money on paperwork.
The bill we must pass today is an important step toward curing the ill effects of the Affordable Care Act. The Senate has already acted and I call on President Obama not to delay helping Seth, and so many other of our Nation's job creators put Americans back to work.
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March 2, 2011.
Hon. NAN HAYWORTH,
DEAR DR. HAYWORTH: I am very concerned about the 1099 reporting provision in the healthcare bill passed in the 111th Congress. This requirement, to issue a 1099 for each business to business expenditure over $600, would place a disproportionate burden on my very small business. I am the third generation of my family to operate this retail lumber yard in Orange County. Our sales and revenues, so dependent on the housing and home improvement sectors, have seriously declined since 2008. We have gone from seven to four employees including myself and my brother; our part time bookkeeper was one of the staff reductions.
Last year we wrote 600 checks for purchases other than payroll. We have about 150 vendors in our accounts payable. Although many of our purchases are with recurring vendors, there are many one time purchases which exceed $600: repairs to vehicles and equipment, replacement of computer and office equipment, one time advertising expenses, dues to business organizations, annual insurance premiums, and sundry expenses. How many 1099's would I have to produce? 50, 75, 100? I know that it would exceed the three that are done now for interest and rent. I am now the bookkeeper; do I attempt this challenge or pay my accountant or another outsource. I have forgone many paychecks in the last two years, I do not need an additional and unnecessary expense that serves no apparent purpose.
Another aspect of this requirement is the need to obtain each vendor's Federal I.D. or Social Security number in order to legally comply with 1099 reporting. That means that if a business has any chance of cumulatively exceeding the $600 threshold, the SSN or EIN has to be asked for in advance. In these times of rampant identity theft, there will be many refusals to furnish these ID numbers. Failure to correctly report a l099 results in fines. As if that was not daunting enough, the previous Congress passed HR 5297 last September, The Small Business Jobs Act, which increased the penalty for 1099 non-compliance from $50 to $250 per violation. The increase in fines was to help fund small business lending. How clever, fine the heck out of me, and loan me the money to pay fines. Thank you 111th Congress.
And what justifies this new layer of regulation? The apparent belief that business is inherently untrustworthy and cheating the U.S. Government of it's rightful tax revenues? Is it the need to find any alleged revenue source, no matter how unsavory, to fund Obamacare? No thank you.
Please repeal the 1099 provision now.
SETH N. ARLUCK,
New Hampton Lumber Co. Inc.,
New Hampton, NY.
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