Michael Lacey, owner of Nocchi’s Pharmacy in Freeland, is looking forward to a repeal of federal action that increases the paperwork he has to file.PETE G. WILCOX/THE TIMES LEADER
If Congress does not repeal a burdensome provision of the Affordable Health Care Act by the start of 2012, it will cost small-business owner Michael Lacey two to three hours a week.
That’s the amount of time Lacey estimates he and his employees would spend filling out IRS 1099 forms for purchases. It may not seem like a lot of time, said Lacey, owner of Nocchi’s Pharmacy in Freeland, but it would slow down efficiency, decreasing productivity and cutting into his already thin profit margins.
“It’s just one more burden for small businesses not to continue to grow,” he said. “It’s all about putting barriers in front of small businesses; that just stunts growth.”
The provision in the health care law requires millions of businesses to file tax forms for every vendor selling them more than $600 in goods each year. The House of Representatives voted Thursday to repeal the measure.
The provision sought to partially finance the health care bill by doing more to ensure vendors pay their taxes.
Lori Savoy, a tax attorney who owns Liberty Tax Services franchises in Plains Township and Edwardsville, said the IRS should be more diligent in tracking wages paid in cash through 1099 forms, but requiring purchases from vendors be documented with a 1099 form is overkill.
“Every vendor that you’re buying from has their own bookkeeping for their money that’s coming in,” she said, “so it’s a duplication on all parts.”
Donna Sedor, executive vice president of the Greater Wilkes-Barre Chamber of Commerce and Industry, said “The proposed repeal of the 1099 provision is good news for business.”
Other local business owners also criticized the provision and applauded the House’s move to repeal it. Lynn Banta, co-owner of the Twin Stacks Center in Dallas, rents office space to 28 business owners.
“Small businesses are the engine that drives the economy,” she said. “To burden that engine at a time like this is unconscionable.”
Banta said the 1099 provision makes businesses owners a part of the IRS’s tax collection apparatus, an undue responsibility.
Dentist Stephen Lawrence employs five at his clinic in Forty Fort. He said the provision would have required his business to submit 600 to 700 additional 1099 forms per year.
Ed Savitski, owner of Savitski’s Auto Repair in Wilkes-Barre, said he was not familiar with the intricacies of the 1099 provision, but that the paperwork burden the government places on small businesses has already reached a tipping point.
“I can’t believe it could be any worse than it is now,” Savitski said. “Everything is in triplicate you know. You need a backup for a backup. It’s worse than being in the Army.”