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National Restaurant Association - Colorado restaurateur: 1099 repeal vote 'a big relief'

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Colorado restaurateur: 1099 repeal vote 'a big relief'

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When Mark Eagleton testified before the House Small Business Committee in February, he hoped his story would make a difference.

He described how expanded 1099 reporting requirements in the health care reform law would force him to submit additional paperwork to the IRS for even minor transactions. He would have to submit 1099 forms for his daily $1.79 purchase of romaine lettuce from the local grocer, seasonal trips to the nursery and occasional trips to the hardware store for incidentals.

"I gave them a critical story to share with their colleagues," says Eagleton, an Egg & I franchisee in Arvada, Colo. "I hope it reached a few people."

Apparently, Eagleton's testimony and stories from other small business owners made a difference. The Senate voted April 5 to repeal the expanded 1099 reporting requirement, and the measure now awaits President Obama's signature.

"Thank goodness the Republicans and Democrats worked together ... and realized this was overly burdensome," Eagleton says. "[The expanded reporting requirement] wasn't the right thing to do for small business."

The expanded 1099 reporting requirement has generated controversy among small business owners since last March when it was enacted as part of the Patient Protection and Affordable Care Act.

The mandate would have required businesses to use 1099 forms to report all cash/check payments of $600 or more in a year to vendors, contractors
and business partners who supply products and services.

Before the health care law was enacted, Eagleton says he had to provide a 1099 form every time he used a service, such as an attorney or an accountant. That allows the IRS to track transfers of income. But under the expanded 1099 reporting requirement (which was to take effect next year), he would have had to provide a 1099 form for "virtually everything." 

Additionally, he and other business owners would have had to buy software, learn to install it, collect employer identification numbers for every merchant, key in information for each vendor, keep a running total and reconcile the books with every merchant to make sure they match theirs.

The National Restaurant Association has been pressing Congress to repeal the rule to protect its members from the increased costs and paperwork burdens. 

The Senate originally voted in January to repeal the 1099 requirement, but revenue bills must start in the House of Representatives. The House voted in early March to repeal the bill, and it moved back to the Senate.

After Tuesday's vote, Eagleton said he was relieved. He says it was worth his time to testify on behalf of the NRA and Colorado Restaurant Association.

"It's something I'll never forget, and it will help small businesses across America," he said.

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