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Stereotypes are getting a small kick aside this week as a top democratic lawmaker is more or less pushing for a tax cut. Senate Finance Committee Chairman Max Baucus (D-Mont.) is reportedly seeking to repeal a small business tax reporting requirement that has been exceedingly unpopular with business owners. Again running against stereotype, the tax reporting requirement was originally the brainchild of the Bush administration, but was put into the healthcare reform bill to help pay costs.
Baucus says he is responding to the requests of small business in looking to repeal the act, reports The Wall Street Journal. The reporting requirement says companies must inform the IRS of any transactions they have with suppliers that are cumulatively worth $600 over the course of a year. The small business tax reporting requirement stands to raise about $19 billion over the next 10 years. Chairman Baucus has not said how he will replace the earnings.
The purpose of the requirement is, of course, to bring in those small business taxes not currently being paid to the IRS. According to CNNMoney, the requirement would greatly expand the 1099 reporting already in existence. Beginning in 2012, not only would businesses be required to issue 1099 tax forms to contract employees (something already required), but they would also have to issue 1099s to any individual or corporation from which they buy more than $600 in goods or services in a year.
Tax experts say that change would require small business tax filers, including freelancers and sole proprietors, to issue millions more 1099 forms each year, reports CNN. The burden of the paperwork increase "may turn out to be disproportionate" to the benefit it will deliver, says National Taxpayer Advocate Nina Olson.
Chairman Max Baucus said, "I have heard small businesses loud and clear and I am responding to their concerns," reports The Journal.
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