The Congress has abolished a tax scheme that will force small businesses in doing tons of paperwork and requires them additional cost for the accounting service for their extra work.
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The law was approved last year to look for funds for the health care bill. It requires all businesses to file extra forms for having business with other business worth more than $600 dollars in a year. Imagine the number of paper for every contractor and every worker you hire to help in your business.
Business owners and advocates are happy about the repeal, which rallied to Congress and the White House for the withdrawal of the support which President Obama has initially implemented.
“This would have been an administrative nightmare for small business,” said Scott Hauge, a small-business advocate who runs an insurance brokerage in San Francisco. Had it gone into effect as planned next year, Hauge’s firm would have had to process 700 of the forms, up from 25 that he has to file currently, he said.
Hauge said he had never seen an issue galvanize the small-business community as quickly or as powerfully as this.
The Obama administration anticipates that the new tax scheme’s extra form-filling will be able to help the IRS locate those person or company that are not paying enough taxes. This scheme would help collect about $17 billion in 10 years in order to fund the huge overhaul of the present health care.
However, small-business owners instantly overreacted. They proposed that the measure was unwieldy and unfair. It would have required businesses to send a tax form known as a 1099 to vendors, retailers, utility companies and any other entity they’d contracted with. They also would have had to file a copy of the form with the IRS.
By contrast, the law had previously only required that such forms be filed for freelance workers and others who had been hired as independent contractors.
Because of the clamor, the Obama administration reversed course and agreed to support the repeal. Obama spokesman Jay Carney suggested that the President would approve the bill when it reaches his office.
“We are open to working with Republicans and Democrats to look for funds for the health reform law, and we are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses,” Carney said in a news release Tuesday. “Small businesses are the engine of our economy, and eliminating the 1099 reporting requirement is the right thing to do.”
Joseph Czyzyk, the chairman of the Los Angeles Area Chamber of Commerce, said he hopes the abolish means that Congress and the administration will restrain its effort on the business community and focus in its efforts to look for tax evaders.
“They’re looking in every mouse-hole to see where people may be cheating on taxes, as if that’s the way to increase revenue in this country,” Czyzyk said. “The Chamber is very glad both the House and the Senate saw eye to eye and did the right sensible thing.”
The measure to repeal the tax provision was authored and sponsored by Rep. Dan Lungren (R-Gold River). The Senate passed it Tuesday on a bipartisan vote of 87 to 12 after promoters said they had found an alternative way to pay for the lost tax revenue.