Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011

Floor Speech

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Ms. SNOWE. Mr. President, I rise in support of H.R. 4, to repeal the mandate on small businesses throughout this country. The failure to repeal this onerous mandate of the 1099 requirement would have a profound impact on millions of businesses across this country and on the already stressed job market, as employers have to grapple with the enormity of this cost, not to mention the compliance with this regulation.

I certainly commend the author of this legislation, the Senator from Nebraska, Mr. Johanns, for his tenacity, his perseverance, his relentlessness in bringing this to the forefront not only of the Senate but to the Congress and to the country. I hope we can join with our counterparts in the House of Representatives in an impressive, bipartisan vote because we do need to bring this to a conclusion.

I also appreciate that the Senator from Nebraska included in this repeal the provision I recommended, which was to repeal the provision that the mandate would be extended to rental property owners. This was a requirement that was included in the Small Business Jobs Tax Relief Act that became law last fall--inexplicably, given the fact that the 1099 quagmire was already well known to everyone. Yet it was included in that legislation that became law--so those who are rental property owners will have to comply with this mandate as well. The big difference is, this requirement takes effect in January of this year so unsuspecting owners will already be subject to the burden of reporting to the Internal Revenue Service any business expenditures for goods and services that exceed $600 per vendor, similar to all the other requirements under the law that will begin for 2012 for all small business owners.

As we all know, this new mandate on small businesses was imposed in the health care reform law. Yet it had nothing to do with reforming the health insurance industry. It had everything to do with raising revenues and placing inordinate burdens on small businesses. The rental real estate was added to this paperwork morass, and what is disconcerting is the fact that it directly affects those States that depend on tourism, such as my State of Maine, with respect to rental property.

I think it is going to be very important to make sure people understand this requirement will be repealed as part of this legislation. Failure to repeal this mandate will raise the compliance costs for small businesses astronomically. Already, as estimated by the NFIB, the major voice for small businesses in this country--they have estimated that small business compliance costs with respect to tax compliance alone is $74 an hour. Tax compliance is the most expensive form of paperwork. So the burden on small businesses will be strenuous and inordinate. It is already disproportionate. Their costs are 67 percent higher than larger firms.

There is no question, given the ubiquitous nature of this requirement, that small businesses all across this country will come under the weight of these very stringent regulations, having to submit 1099 forms. In fact, I was talking to an individual the other day who heads up an organization which has 1,650 members and what did he say? He said every one of these members will have to file anywhere from 200 to 600 forms every day. That is 200 to 600 forms on a daily basis.

They didn't want to talk about taxes. They didn't want to talk about anything else. They wanted to talk about whether we were going to repeal the 1099 requirement. That is why there is so much support for this repeal. It is so important, during these difficult economic times, that we avoid imposing any tough regulations on our small business owners.

The other point to be made is, this 1099 requirement is vastly different from what is familiar to most Americans. For most Americans, 1099 forms generally come from their financial institutions to report the interest they have earned on their savings accounts or to report the interest they pay on their mortgage to their lenders. That requirement is specific, to make sure they report directly their tax liability on the income earned in that specific tax year. Now we are reverting to a very different form by requiring businesses to report in the aggregate all their expenditures for goods and services to any vendor. That is a very different requirement.

My concern is one that has not been widely discussed. The fact is, by doing so, by making this conversion how we use the 1099 form, it is essentially putting in place an infrastructure, a system for a value-added tax, by requiring businesses to report all this information. So we could essentially have a system in place, where we could have a functioning value-added tax by taking the next step based on the information that is already required to be submitted by this requirement.

It is urgent we repeal this mandate. It is important to send that message. It is important to repeal this mandate in its entirety.

I yield the floor.

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