Right now, they’re all admitting that they need a cure for a bad law they passed a year ago, but they can’t figure out how to get rid of it. I’m talking about Section 9006 of the health care bill - the section that requires all businesses to file a 1099 tax form with the IRS for every vendor they pay $600 or more for goods or services in a year. While I’ve heard from a few HVAC contractors that this requirement wouldn’t affect them, many more have said that it would increase their paperwork and, thus, their cost of operation.
The original purpose behind the law was to crack down on the black market and get more tax revenue to offset some of the costs of the new health care program. But that’s not how it’s been perceived by small business owners. When I solicited input from HVAC contractors on this law, the majority told me it was “ridiculous,” “absurd,” “crazy,” and a “giant waste of time and money and effort.”
HURTING SMALL BUSINESS
After the bill passed last year, the Air Conditioning Contractors of America (ACCA) was one of the first associations to recognize how this provision could hurt small businesses.According to ACCA’s Charlie McCrudden, ACCA realized “that the cost and burdens of compliance, from collecting the required names, addresses, and taxpayer ID numbers from all vendors to filing the forms with the IRS, would pose a serious hardship on most small businesses.”
So ACCA and its contractor members, along with many other small business owners, have clearly expressed to their representatives that this law needs to be repealed. Even the president has caught on - in the State of the Union address in January, Obama referred to the 1099 provision as a “flaw” in the health care legislation that placed an “unnecessary bookkeeping burden on small businesses.”
In response to all the uproar, the Senate was the first to act and passed a repeal of the 1099 requirement (81-17) in February. This was followed by the House of Representatives, which passed its own version of repeal (314-112) in early March.
So, great, the president’s on board and both houses of Congress have repealed it - the 1099 requirement must be null and void by now, right? No, not yet. The problem is that repealing the 1099 requirement is expected to result in big revenue losses of future taxes, and the Senate and House bills propose different ways to offset these losses. Now no one knows what will happen next.
In my last editorial, I said I wouldn’t whine about gridlock in the capital. What grinds me in this case is that there isn’t any gridlock - there are plenty of votes in both the House and the Senate, as well as presidential support, to kill this law. Despite all this, Congress is still struggling to make it happen.
It’s amazing to me that so much time and effort has already been expended to try to eliminate one bad law - and it’s still on the books.
In this case, it was certainly easier for our legislators to ask for forgiveness instead of trying to get public approval before passing the bill. And it also proves that it takes a big pound of cure (more like a few tons) to try to fix something that wasn’t prevented in the last session of Congress. Thank heavens they’ve still got nine months before it takes effect - here’s hoping that gives them enough time to figure out how to repeal it.
Publication date:03/21/2011