East Arizona News

WASHINGTON, D.C. — On June9, U.S. Representative David Schweikert (AZ-01) introduced the Small Business Paperwork Savings Act, legislation to increase the Form 1099 reporting requirement threshold from $600 to $5,000 to account for cost-of-living adjustments since 1954, when the $600 threshold was first established in the Internal Revenue Code. 

“For nearly 70 years, small businesses have had to put up with burdensome and unnecessary tax compliance for payments that exceed $600 over the course of a year without any adjustment for inflation despite median family income being over 21 times higher today,” said Rep. Schweikert. “Employers should be focused on creating jobs and growing their businesses instead of drowning in paperwork and bureaucratic red tape. The Small Business Paperwork Savings Act raises the Form 1099 reporting threshold to account for the historically high inflation we are experiencing today due to President Biden’s fiscally irresponsible policies. This legislation creates a better climate for job creation and lifts this incredible burden off our small businesses.”

“Families, farmers, workers, and small businesses are seeing their livelihoods erode because of inflation, which has risen every month of Joe Biden’s presidency,” said Ways and Means Chairman Jason Smith (MO-08). “Working communities across the country have testified before the Ways and Means Committee that they need relief from Washington’s tax and spending policies that are driving up the cost of goods and services and trapping them in a burdensome web of red tape. For the first time in almost 70 years, Rep. Schweikert’s bill, the Small Business Paperwork Savings Act, will raise the 1099 reporting threshold to eliminate paperwork burdens and unnecessary costs for American small businesses that have struggled to deal with recent price increases and worker shortages. Removing this burden will allow American entrepreneurs to focus on what they do best: serving their customers, hiring more workers, and investing in growing their businesses.”

Background:

Section 6041 of the Internal Revenue Code requires businesses to file a Form 1099 if they paid a non-employee a minimum of $600 during a taxable year for business purposes. These payments can be in the form of rent, salaries, wages, health care premiums, and royalties.

However, this reporting rule is nearly 70 years old and has never been adjusted for inflation. According to the Bureau of Labor Statistics, $600 in 1954 would be worth over $6,700 in April 2023. Businesses regularly make transactions that exceed $600, making the process of filing paperwork extremely time-consuming and burdensome when returns are due at the end of January.

The Small Business Paperwork Savings Act spares businesses from filing onerous paperwork and restores Section 6041 to its original intent of tracking businesses’ large transactions.

The full bill text is available here. 

Original source can be found here.