Upon taking office last month, Chairman Issa asked the business community, including CompTIA, to assist in identifying issues that limit job growth. In a letter to Chairman Issa, dated January 7, 2011, we pointed out two tax issues that will cost small businesses unnecessary time and money: (1) Form 1099 IRS Reporting Requirement (beginning in 2012, any business that pays a single vendor for goods or services valued at $600 or more must provide that vendor with a Form 1099-MISC); and (2) 3% Federal Income Tax Withholding on Government Contracts (beginning in 2012 most all federal, state and local government entities and instrumentalities will be required withhold 3% of payments made for goods and services).
We are pleased to learn that the report specifically discusses the burdens posed by the expanded 1099 reporting requirements; it also cites our comments on the 3% withholding issue:
‘The Computing Technology Industry Association (CompTIA) expressed concern for the impact that Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) has on small business. This provision is scheduled to go into effect in January 2012, and requires the government to withhold 3 percent of all payments for goods and services from government contractors. CompTIA notes that this withholding requirement ‘departs from the traditional scheme of federal tax payments, because the static 3 percent withholding rate bears no relation to anticipated taxable income.’ ”
We expect the findings of this report will lead to a number of regulatory relief hearings this year, as Congress strives to identify methods to re-invigorate job growth, especially among small businesses. We will involve member companies actively in the ongoing efforts with Congress and the Administration to provide regulatory relief and stimulate sustainable growth.
