ABC Sept. 29 submitted comments to the Department of Treasury and the Internal Revenue Service (IRS) as part of the Small Business Coalition for Affordable Health Care regarding the implementation of the expanded information reporting requirements contained in the Patient Protection and Affordable Care Act (PPACA).

Under PPACA, beginning in 2012, businesses will have to file a Form 1099 to all vendors, both incorporated and unincorporated, to which they pay more than $600 annually for both goods and services.

In the comments, the coalition expressed concern about the increased complexity and costs that the expanded reporting requirements will place on small business.  The comments also contained personal stories from small business owners, including an ABC member who is a vice president of a family-owned business.  Over the past two years, the member was forced to lay off half his staff due to the economic difficulties in the construction market.  He pointed out that under the new reporting requirements, instead of hiring workers for actual construction activities, he will have to hire an additional full-time employee for his accounting department.  Because the member works with 1,200 vendors, of which only four or five currently issue a Form 1099, the accounting department will be required to spend countless hours on the increased paperwork and filing, taking time and money away from his business and forcing him to either increase production with fewer employees or pass the costs onto his customers.

In addition, the coalition suggested some areas of the requirement that need clarification, including:  how transactions are to be reported when a business pays a vendor with two forms of payment; how home-based businesses should determine how expenses are reported; how franchises should comply with the reporting requirements; and how the information obtained from the Form 1099 will be used for fiscal or accrual method filers.  However, the coalition also pointed out that the only real solution to the increased confusion and heavier burden on small businesses is to repeal the requirement before it goes into effect.

“We have attempted to address some areas where clarity could be provided to small business owners,” the comments stated. “Unfortunately, the expansion of the reporting requirements included in the PPACA places a major new burden on small businesses and clarity will only provide limited relief. In the end, this new requirement will do little to address the under-reported income the supporters hope to collect.”