IFA Hails Effort by Reps. Shock, Schilling, to Remove 1099-K Tax Burden on Franchise Small Business Owners

For immediate release

Contact:
Alisa Harrison, 202-628-8000
Matthew Haller, 202-662-0770

aharrison@franchise.org

mhaller@franchise.org

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WASHINGTON, Feb. 7-The International Franchise Association, representing the nation’s 825,000 franchise establishments which support nearly 18 million workers, today hailed new legislation introduced by Reps. Aaron Schock (R-Ill.) and Bobby Schilling (R-Ill), H.R. 3877, the

1099K Overreach Prevention Act
, which will prohibit the Internal Revenue Service (IRS) from implementing a new tax reporting requirement that would have far reaching implications for franchise small business owners.

“Small business owners are already burdened with high costs for complying with federal and state tax reporting requirements, as well as a great deal of uncertainty over the future of tax rates,” said IFA President & CEO Steve Caldeira. “We applaud Congressmen Schock and Schilling for their leadership to ease the tax burden on franchise small business owners so they can focus on hiring more workers and growing their businesses.”

The Housing and Economic Recovery Act of 2008, requires the IRS to collect a new document known as a 1099K from third party payment entities, such as credit card companies. The 1099K will show all credit transactions within a merchant’s business for a given year. The IRS is requiring small business owners to reconcile this report with the merchants own internal numbers, which was not the original intent of the law. Transactions asking for cash back, returning merchandise bought on credit for cash, or collecting the deposits for rentals can all lead to discrepancies when reconciliation occurs.

Last year, President Obama signed into law one of IFA’s top legislative priorities for the 112th Congress, a bill repealing the 1099 IRS reporting requirement included in last year’s health care law. Members of the International Franchise Association supported the repeal of this onerous provision through extensive lobbying directly with The White House, members of Congress and grassroots advocacy due to the excessive cost burden and uncertainty the provision placed on franchise small business owners. IFA will be working with lawmakers in the House to ensure the 1099K bill is addressed in this session of Congress. IFA also is hopeful a companion Senate-version of the legislation will be introduced soon.

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About the International Franchise Association

The International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.