Johanns slams Dems' alternative to his 1099 repeal bill

Responding to concerns that new tax filing law will hobble small businesses, Senate Democrats last week proposed to scale back their newly enacted paperwork requirements.

But don't hold your breath for Sen. Mike Johanns's endorsement. The Nebraska Republican, who's leading the charge to repeal the new filing requirement altogether, says the Democratic alternative would still cripple businesses with expensive new paperwork burdens.

"The alternative is complicated, unfair and impossible to administer," Johanns said in a statement last week. "It hurts small businesses, costing them money on useless paperwork and discourages hiring."

At issue is a provision of the Democrats' new health reform law requiring businesses to file 1099 forms with the IRS when goods purchased from another business, even a corporation, exceed $600 in a year. 

Under previous law, businesses had to file 1099 forms only when purchasing services, not goods, and only when those services were provided by unincorporated entities, not corporations.

Behind the U.S. Chamber of Commerce, the business community has cried foul, leading Senate Democrats last week to propose relaxing the new filing requirements, which take effect in 2012.

Sponsored by Sen. Bill Nelson (D-Fla.), the Democrats' proposal would eliminate the filing requirement for small businesses — those with fewer than 25 employees — purchasing goods from other businesses, either incorporated or not. It would also hike the threshold for larger businesses reporting purchased goods — from $600 to $5,000 — and exempt all purchases made with a credit card.  

The nuanced approach has done nothing to satisfy Johanns, who's urging a decidedly unnuanced full repeal of the new filing requirements. 

"If you are a business owner with 25 employees, why would you hire more if your reward is a mountain of new tax paperwork?" he said. "This approach simply defies logic at a time when our country continues to struggle with high unemployment."

A procedural vote on Johanns's amendment is scheduled for September 14, when Congress returns from its summer vacation. The Senate is then expected to move immediately to the Nelson proposal.