U.S. Rep. Fred Upton, R-Mich., praised House passage of the Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4), which repeals the harmful 1099 tax reporting requirement from the health care overhaul.

The legislation, of which Upton is an original cosponsor, passed the House by a vote of 314 to 112.

“American small businesses should be focused on local job creation, not complying with costly, burdensome mandates coming out of Washington,” said Upton. “These new requirements under the health care law threaten the very livelihood of business owners in southwest Michigan and across the country. Under this hidden tax reporting provision, businesses will be forced to needlessly allocate more time and resources toward processing IRS paperwork on their day-to-day transactions. How does this even begin to relate to jobs or healthcare for folks in Michigan? The American people have spoken on the healthcare law’s overreaching requirements: enough is enough.”

The provision targeted by H.R. 4, found on page 737 of Patient Protection and Affordable Care Act, will force small businesses to file separate 1099 IRS reporting forms for every single business-to-business transaction that exceeds $600 in a given year, beginning in 2012.

Under current law, businesses are required to report services provided by non-corporate entities.  This provision of the health care bill greatly expands that requirement by extending it to all corporations that are not tax-exempt.

Compliance means such basic day-to-day business expenses as telecommunication services, utility repairs, and office supplies will now be subject to IRS disclosure.

Not only does this provision directly put an onerous tax reporting burden on small business, it also has the added impact of changing the way companies conduct their business with outside vendors.

Faced with the prospect of a mountain of IRSforms, many companies will find it more convenient to turn to large global suppliers rather than negotiate with a number of smaller, local companies.

Repealing the 1099 provision is a top priority of the Small Business Association of Michigan. Upton is also an original cosponsor of legislation, H.R. 1, to repeal the health care law in its entirety.