July 22, 2010
The Honorable Mike Johanns
United States Senate
404 Russell Senate Office Building
Washington, DC20510
Dear Senator Johanns:
On behalf of the more than two million farmers and ranchers who belong to farmer cooperatives, the National Council of Farmer Cooperatives (NCFC) would like to express support for S. 3578, the Small Business Paperwork Mandate Elimination Act. The Act would help farmer cooperatives and their farmer-owners by repealing the burdensome new IRS reporting requirements imposed by the Patient Protection and Affordable Care Act.
For more than 100 years, farmer owned cooperatives have brought individual farmers together to give them a chance to compete against entities with far more market power than any individual farmer. Since 1929, the National Council of Farmer Cooperatives (NCFC) has been the voice of America's farmer cooperatives. We have an extremely diverse membership – our members span the country, supply nearly any agricultural input imaginable, provide credit and related financial services, and market a wide range of commodities and value added products.
As you know, the Patient Protection and Affordable Care Act put in place a requirement that businesses submit a Form 1099 for every business transaction totaling $600 or more in a given year. While the purpose of the provision is to improve compliance and raise revenue, the costs associated with this additional administrative burden would far outweigh the benefits. For example, Form 1099 reporting is administered on a calendar year basis, yet many corporations and most farmer cooperatives (because of the seasonality of agriculture) are fiscal year taxpayers. Therefore, the amounts reported on Form 1099 would not match up with corporate tax return calculations and would not result in more accurate income reporting.
Additionally, the expanded requirement would result in farmers reporting payments in excess of $600 made to their farmer cooperatives, placing additional administrative burdens on farmers. Farmers’ payments for grain drying, agronomy consulting services, or the application of crop protectants, for example, would all be subject to reporting.
Moreover, the new law will likely result in burdensome taxpayer appeals. In fact, the National Taxpayer Advocate Service reported the IRS “will face challenges making productive use of this new volume of information,” and concluded that “it is highly likely that the IRS will improperly assess penalties that it must abate later, after great expenditure of taxpayer and IRS time and effort.”
NCFC opposes the new Form 1099 reporting requirements and urges swift passage of S. 3578, the Small Business Paperwork Mandate Elimination Act.
Thank you for your efforts on this bill and all that you do for U.S. agriculture.
Sincerely,
Charles F. Conner
President & CEO
cc: United States Senate
1