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Begich Supports Repeal of IRS Requirement for Small Business

New reporting requirement hurts Alaska business community

In an effort to ease the paperwork burden on Alaska’s small businesses, U.S. Sen. Mark Begich is co-sponsoring legislation to repeal new legislation requiring small businesses to file tax forms with the IRS for every vendor that sells them more than $600 worth of goods. Begich said he supports Alaska’s small business community which has been encouraging the repeal of the new requirement generally referred to as the “1099” provision.

“Alaska’s small businesses need to be focused on creating jobs and expanding their market share, not filling out paperwork,” Begich said. “Health reform has many benefits for small businesses and their workers, but the 1099 approach just went too far.”

The landmark health care legislation passed last year included a new provision requiring businesses to file a disclosure, known as a Form 1099, to the IRS for payments to a vendor that are more than $600 in a tax year.  After hearing from Alaska’s small business community, Begich was one of the first senators to raise concerns with the 1099 tax reporting provision. In July, he wrote to IRS Commissioner Douglas Shulman and was joined in his letter by 11 other senators. He also expressed his concerns to the Democratic leadership and the Obama administration.

After hearing no plans for a concrete solution and after watching two other proposals fail on the Senate floor, Begich in September introduced his own amendment to the Small Business Jobs and Credit Act to repeal the provision outright.

His idea, which never came to a vote, was to use unobligated economic recovery dollars to pay for lost revenue from the 1099 repeal.  Begich said the other amendments were unacceptable.  One would have gutted an important disease prevention fund and the other would have raised oil taxes.

Begich listened to the small business community and worked on the issue for months with Sen. Max Baucus’ Senate Finance Committee staff. The repeal legislation Begich is co-sponsoring is being introduced by Baucus.

“Tougher tax reporting has been proposed in the past by Republicans and Democrats alike – businesses paying their fair share should not be hurt by competitors dodging responsibility. But the 1099 provision is not the answer to this problem. It’s just too cumbersome,” Begich said.

Existing law applies Form 1099 reporting requirements to the value of purchased services, but the new law expands the requirement to goods purchased. Beginning in 2012, the new law expands business tax reporting requirements for annual purchases valued at $600 or more.

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