Shaheen: tax mandate a burden.
The letter, sent July 16 to IRS Commissioner Douglas Shulman, was signed by 12 senators who said they "insist" the IRS reduce the paperwork requirement.
The requirement stems from a provision of health reform law that creates a new tax-filing mandate for small-business owners. The aim of the change is to try to capture an estimated $17 billion in unpaid business taxes by making owners list every expense over $600. It would start in 2013.
Firms with fewer than 250 employees would have to file the new 1099 form on paper, while larger firms could file electronically.
This and other provisions in the new tax filing edict prompted Shaheen and colleagues to urge the IRS to find a better way.
"We want health reform to work for America's small business, not burden them," the senators wrote. "We understand that the IRS has an open comment period to welcome ways this provision could be implemented while 'minimizing burden and avoiding duplication' for businesses."
Currently, businesses have to tell the IRS the value of the services they buy. The change would compel them to report all vendor purchases and perhaps have to get taxpayer identification numbers from everyone from whom they buy supplies and equipment.
National taxpayer advocate Nina Olson, an employee of the IRS, told The Wall Street Journal the tracking costs to get at this level of suspected unpaid taxes would be "disproportionate as compared with any resulting tax compliance."
The IRS estimates the new provision would hit some 30 million sole proprietorships and subchapter S corporations, 2 million farms, and 1 million charities and other tax-exempt organizations.
"The new requirements may place a hardship on small businesses by creating an extra paperwork burden," Shaheen and her colleagues wrote to the IRS. "Not only will a 1099 form be necessary for millions of new transactions, the stricter requirements force business owners to collect taxpayer identification information from vendors, contractors and other companies."
The letter added that the IRS "should consider whether there are better ways to structure this reporting requirement and narrow our nation's $345 billion tax gap."
The 12 senators dosed their letter telling the IRS chief they expected the proposal to be altered before it's applied nationwide.
"We insist that the IRS develop ways in which small businesses can reduce expected paperwork from this requirement--possibly through consolidating existing forms for example and that the IRS report its proposed solutions to the Senate Committee on Small Business and Entrepreneurship prior to implementation of this new law."
Shaheen has a seat on that Senate committee.
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|Title Annotation:||Jeanne Shaheen|
|Publication:||New Hampshire Business Review|
|Date:||Jul 30, 2010|
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