Small business rooting for one piece of health reform repeal

WASHINGTON–Mark Bernacki doesn’t hate everything in the health care reform law. But as House Republicans turn their sights to unraveling it piece by piece, he has one suggestion about where to start.

“The thing that’s going to kill us is the 1099 requirement,” said Bernacki, who owns a Sir Speedy printing franchise in New Britain.

He is not the only one dreading this tiny provision, which takes up just a few lines in the 2,000-plus page health care overhaul. In the wake of last week’s party-line House vote to repeal health reform, this small tax measure is likely to get lots of attention.

At issue is a requirement, set to go into effect next year, which would require all businesses to fill out a 1099 tax form for every purchase of more than $600. Companies would have to send one copy of the form to the vendor and one to the IRS.

For a small businessman like Bernacki, the potential paperwork pile up is unimaginable. He would go from filling out no 1099 forms to filling out hundreds–for everything from ink cartridge purchases to phone bills, computers, and even staples.

“There are so many things,” he said of his invoices that come in over $600. “If I’ve got to go back and ask all my vendors for [their federal tax identification] numbers and then see if I’ve gone over the $600 level, I don’t have time to do that.”

Repealing the tax provision is on the House GOP’s to-do list, and it’s the one thing in the health care debate that enjoys bipartisan support.

Even Democrats who want to protect the underlying health overhaul are eager to overturn the 1099 requirement. Rep. Jim Himes, D-4th District, has called it “a silly burden on our businesses.” And Rep. Joe Courtney, D-2nd District, said last week that it’s one of the “bugs in the system” that needs to be fixed.

Rep. Dan Lungren, R-Calif., introduced a bill to nix the 1099 mandate on Jan. 12, and he already has 254 co-sponsors. And last week, three Democratic senators called on House Speaker John Boehner, R-Ohio, to take up the 1099 repeal quickly. (Tax measures must originate in the House, before the Senate can act.)

But even this seemingly small change could prove nettlesome. The provision was initially included by Democrats trying to generate new revenue to help cover the cost of the health care law.

Proponents estimate that it could snag an extra $2 billion a year in taxable receipts on income to small vendors and independent contractors that now goes unreported. Taking it off the books would cost as estimated $19.2 billion through 2020, so finding a way to cover that tab presents one possible sticking point.

And last fall, Congress twice failed to pass provisions either repealing or amending the 1099 requirement, as those proposals became mired in partisan gamesmanship.

Andy Markowski, Connecticut state director of the National Federation of Independent Business, said despite the shift in political power in Washington, he’s not sure how this fight–one skirmish in the much larger battle over reform–will play out.

“I don’t know what’s going to happen,” he said. “NFIB had been flagging this before the first bill passed and yet they still kept it in there.”

House Republicans have not said when Lungren’s bill would come up for a vote. “While we support eliminating the 1099 requirement, it is far from the only job-destroying provision in Washington Democrats’ law,” Michael Steel, a spokesman for Boehner, told the Washington Post.

For right now, GOP leaders have more contentious health care issues in their sights–such as new restrictions on abortion coverage, medical lawsuit caps, and the individual insurance mandate.

Bernacki, for one, says he’ll be watching the health care do-over debate closely.

He has hasn’t been able to afford health care coverage for himself or his company’s three other employees for years now.

“We all went on our spouses’ coverage because it just got too darn expensive,” he said. “And it’s still not going in the right direction.”

He doesn’t think the Democrats’ health overhaul will do anything to ease the health care cost crunch. But he wants to see some provisions of the new law left in place, such as the measure ensuring children with pre-existing conditions can’t be denied coverage.

“I would hope that, based on the results of the election, the president [and Congress] see that Americans just want to know they’re covered, but do it in a way that’s not harmful to the economy and to businesses.”