Action Alert: Revoke the Expanded 1099 Reporting Requirements!

In the midst of the health care reform debate, a small provision—just a few lines in length—was added to the 2,400+ page document and went essentially unnoticed upon passage. This provision, which radically alters 1099 reporting, will place a substantial burden on companies and small businesses, in particular.

E-mail your Members of Congress today and tell them to revoke the new 1099 reporting requirements!
 
Issue:  A new requirement mandates that businesses must file an IRS Form 1099 for all payments of more than $600 a year paid to providers—including corporations—that provide tangible property and services. This new law significantly changes the impact of the 1099 form, which will now apply to corporate sellers of products and services; the previous law applied only to individuals. Payments via credit or debit card will be exempted from these expanded requirements, as this reporting expenditure will be the responsibility of banks and payment processors. In practice, however, this means that business owners will have to track their purchasing by amount, vendor and method, and then issue the appropriate reporting forms to the IRS and suppliers.

While the rule is set to take effect in 2012, the business community and pro-business members of congress are seeking ways to change the new law. Sen. Mike Johanns (R-Neb.) and Rep. Dan Lungren (R-Calif.) have introduced the Small Business Paperwork Mandate Elimination Act (H.R. 5141, S. 3578) to repeal this part of the health care bill.

Action: Contact your Members of Congress and tell them to support the Small Business Paperwork Mandate Elimination Act and eliminate the expanded 1099 reporting requirements.  Send a customizable letter to your congressmen and senators.

Talking Points:

• Expanded reporting requirements will increase my paperwork burden and reduce the amount of time that I can spend running my stores. Current tax paperwork and compliance requirements are major expenses for my businesses, which are already running on thin margins in the staggering economy.

• Requiring that I obtain a taxpayer identification number (TIN) before every transaction will cause me and my management team valuable time away from running our business. If I cannot find the information or it is otherwise unavailable, back-up withholding may apply. This will drastically increase the paperwork burden and potential back-up withholding liability on all businesses because so many more transactions will be subject to reporting.

• A Small Business Administration study indicates that the cost of complying with the tax code for small businesses is 66 percent higher than for large businesses. Since this reporting requirement makes almost every business-to-business transaction potentially reportable to the IRS, my small business costs will dramatically increase.

• Franchisees do business with a high volume of vendors. Mandating that I track purchases each year by amount, vendor and type of transaction (credit/debit or otherwise) will pose a great difficulty for me and my managers.

• Although new requirements do not apply to the duplicative reporting of credit and debit card purchases, my financial burden remains the same, as franchisees must pay high transaction fees for each debit and credit card purchase.

Support the Arbitration Fairness Act

Binding arbitration clauses are increasingly being inserted by businesses when entering into contacts with other parties. These clauses, which often provide businesses with an advantage and go unnoticed by the signer, drastically limit the legal options available to the signing party. The Arbitration Fairness Act bans mandatory binding arbitration clauses in consumer and employment contracts, including franchise agreements. Specifically acknowledging the disparate economic power between the parties, the bill invalidates the enforceability of pre-dispute arbitration agreements in franchise disputes.

History: The Arbitration Fairness Act (H.R. 1020) was introduced by Representative Henry “Hank” Johnson (D-GA) in March, 2009 and currently has 99 co-sponsors. Its Senate companion bill (S. 931) is sponsored by Senator Russ Feingold (D-WI) and has 11 co-sponsors. While the bill has strong opponents, including the International Franchise Association (IFA) and the U.S. Chamber of Commerce, there has been a strong lobby by franchisors to specifically have the franchise provision removed.

Click Here to Take Action

Support the Arbitration Fairness Act!

Do Not Let them Remove the Franchise Provision

Talking Points:
• The Arbitration Fairness Act protects franchisees from having binding arbitration imposed as their only means of dispute resolution
•  Binding arbitration clauses most often benefit franchisors. Generally, franchisors draft the contracts, select and pay the arbiters (who then have a financial incentive to rule in their favor) and determine the venue for arbitration. 
• Binding arbitration clauses are often buried in the fine print of franchise agreements; franchisees are left unaware that their rights have been taken away until a dispute arises.
• Franchisees are often forced into signing binding arbitration clauses as a condition of their contract; if they don’t sign, they cannot start running their businesses.

Senate Set to Pass Small-business Bill

Jay Heflin reports at The Hill that Senate Small Business Chairwoman Mary Landrieu (D-La.) on Wednesday said her chamber will pass legislation by the end of the week that creates a $30 billion lending pool for small businesses and provides approximately $12 billion in tax relief for these organizations.

We believe we have the 60 votes to get this done,” she told reporters, adding, “We’re hoping at the end that we actually have some Republicans join us for a bill that makes so much sense.”

Landrieu said negotiations were ongoing with Sen. George LeMieux (R-Fla.) on getting him to support the bill.

Click Here to Take Action Now!

 

Help Create Jobs, Give Small Businesses Access to Capital

: Extend Recovery Act’s SBA Loan Provisions

Landrieu did not say if she expected other Republicans to support the bill.

A vote on the measure is expected to occur after the Senate extends unemployment insurance, which is expected later today.

The lending pool in the small-business bill has come under fire by Republicans who contend it will create another TARP scenario by giving the Treasury authority over which small banks receive the funds to lend to small businesses.

Landreiu said the lending provision will be stripped from the original bill and then will be offered as the bill’s only amendment to illustrate who supports the pool.

“We want to highlight the fact of who’s actually stepping up to help small businesses through small banks,” she said.

An amendment on the estate tax offered by Sens. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.) will not be offered.

Landrieu said if the lending amendment fails the other portions of the bill will move forward. The other sections provide small-business tax relief and extend Small Business Administration loans. However, without the lending provision, the senator does not think the bill will pass.

“I don’t think it will pass without this in it,” she said.

 Learn more at: National Association of Government Guaranteed Lendors

Tell Congress to Preserve the Durbin “Swipe Fees” Fix

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CALL TO ACTION: TELL CONGRESS TO PRESERVE

THE DURBIN “SWIPE FEE” FIX
 
In a major victory for retailers, last month the U.S. Senate took action that will greatly reduce the excessive “swipe fees” you pay on debit card transactions. This critical amendment to the Financial Regulatory Reform package was not included in the legislation passed earlier by the U.S. House of Representatives. It is critically important that you contact your member of Congress and ask that they support fixing “swipe fees” in the U.S. House of Representatives!
 
THIS IS WHAT WE NEED YOU TO DO IMMEDIATELY
 
Members of Congress have been swamped by messages from banks and credit card companies to kill this important provision.  It is vitally important that they hear from you to let them know how important it is to preserve the “swipe fee” fix language in any final package considered in the House.
 
Congress must hear from the retail community to counter the banks and credit card companies and preserve this hard fought victory.   Time is of the essence and we need to generate as many contacts into their offices as possible!
 
YOUR VOICE CAN MAKE THE DIFFERENCE!
 
We are near the goal line and can win this issue but only if members of Congress hear from folks back home. Please take the time to contact your Representative. Urge them to support the “Swipe fee” fix. Urge them to support main street business and not the big banks and credit card companies!

TAKE ACTION NOW!

Retailers Poised for Victory in Debit Card Fee Fight

CNN Money reports that retailers are poised for a major victory in the Wall Street reform bill currently pending in Congress. The Senate adopted an amendment late Thursday that will slap sharp restrictions on the fees issuers levy every time a buyer pays with a debit card.

Tell your Congressman & Senators to fight high Credit Card Fees!

Called “interchange” fees, the charges typically consume 1% to 3% of every transaction run through a debit or credit card. Network operators like Visa (V, Fortune 500) skim off a fraction of the fee, while the rest goes to the financial institution that issued the card. Those tiny slivers add up fast: Industry kingpins Visa and MasterCard collected interchange fees of at least $35 billion in 2007, according to government estimates.

The new Senate amendment adds two major restrictions to the rules on interchange fees.

First, it requires that the fee be “reasonable and proportional to the actual cost incurred” by the payment network or issuer for processing the transaction.

The Federal Reserve will have leeway to determine what counts as a “reasonable” fee, but it’s likely to be a lot lower than the current rates. In response to an antitrust probe, Visa Europe recently announced plans to cut its interchange rate to 0.2% on some debit-card purchases, echoing an earlier move by MasterCard. Rates in Australia are capped by regulators at 0.5%.

Second, it allows sellers to offer a discount to customers who pay with cards that carry lower transaction fees.

That’s a change merchants have sought for years. They’re currently contractually obligated to accept all cards on the same terms. If American Express (AXP, Fortune 500) — which has some of the industry’s highest interchange rates — costs a merchant more to accept than a Visa card does, the merchant can’t offer buyers a discount for using Visa.

Backed by Senate Majority Whip Richard Durbin, D-Ill., the amendment passed the Senate 64-33. It’s now part of the broader financial reform bill the Senate hopes to finalize next week.

That the proposal has made it this far is a major victory for retailers, especially small ones, who have fought for years for regulatory curbs on what they view as the monopolistic practices of Visa, MasterCard (MA, Fortune 500) and other payment network operators. For businesses with slim margins, like gas stations and convenience stories, interchange fees can devour or even eliminate their profit on sales.

“It’s a wonderful thing,” 7-Eleven shop owner Dennis Lane said Thursday on hearing of the amendment’s adoption. “This is a really personal thing for me. Life is one big negotiation, but not with credit card companies.”

Lane, the former head of the National Coalition of 7-Eleven Franchise Owners Association, has been an outspoken foe of interchange fees. For 36 years, he has owned a 7-Eleven outlet in Quincy, Mass., which has a staff of 12 and annual sales of $2.5 million. Next to labor, credit-card fees are his biggest operating cost — and they’re the only cost he has no control over.

“In 10 years, the fees have doubled,” he said. “If I sell a Boston newspaper, I make approximately 6 cents. If someone whips out plastic, I might as well hand them the paper for nothing, because it costs me 12 to 14 cents to sell them the paper.”

 Read more at: CNN Money

Fight Credit Card Swipe Fees

Visa and MasterCard, who collectively control 80% plus of the card market, each set credit and debit card interchange fees in secret – and all of the banks in each network charge the same fees.  No wonder that Americans pay the highest credit card swipe fees in the world.  Australians pay one fourth of what we pay in swipe fees for the exact same set of card services.

Tell your Member of Congress it’s time to stand up for consumers, not the big banks, Visa, and MasterCard that keep raising credit and debit card swipe fees.   Consumers deserve the right of disclosure and merchants should have the freedom to offer discounts at checkout.

Take action now!

With Obama-Care, Calorie Counters Find a Strange Ally: Fast-Food Restaurants

Bruce Watson reports at AOL Daily Finance that part of the health care bill that President Obama signed Tuesday requires all chain restaurants with more than 20 locations to post calorie listings on their menus and drive-through signs. This ruling, which should affect more than 200,000 restaurants from coast to coast, has found a surprising ally: the restaurant industry.

This is a turnaround from the position that the industry took when calorie postings came to New York City in 2008. At the time, restaurants fought the ruling, and the New York State Restaurant Association took the city to court, claiming that the regulation impinged upon its members’ right to free speech. The case was eventually struck down and the posting rule went into effect.

Uncomfortable Facts

It’s not hard to see why some restaurants had a problem. After all, calorie postings reveal a few uncomfortable facts about what qualifies as a single serving at many fast-food restaurants.

The U.S. Department of Agriculture recommends an average daily intake of roughly 2,000 calories, which works out to roughly 667 calories per meal. Put another way, 2,000 calories is the equivalent of one and a quarter servings of Chili’s Chocolate Chip Paradise Pie with vanilla ice cream, or slightly more than two Wendy’s 3/4 pound Triple Burgers with Cheese. It is 900 calories less than an order of Steakhouse Aussie Cheese Fries with Ranch Dressing from Outback and 710 calories less than a single Awesome Blossom from Chilis. And even the trusty standby — salad — may not fit into the recommended daily caloric intake: Taco Bell’s Border Grande Taco Salad with Taco Beef has 1,450 calories.

Yet a strange thing happened after New York restaurants started posting calorie counts. While consumption habits shifted, brand popularity remained strong. While customers may have ordered lower-calorie foods, they still bought it from their favorite fast-food restaurants.

Noting that lower-calorie items were more popular, many restaurants voluntarily changed their menus and ingredients, increasing their slate of healthier choices and lowering the calorie impact of many common ingredients.

Steering Shoppers to Profitable Items

And as an increasing number of states began contemplating and passing calorie-count legislation, some restaurants decided to jump ahead of the curve. By the end of 2008, Yum Brands (YUM), the corporate owner of Pizza Hut, KFC and Taco Bell, had announced plans to post calorie counts at all of its restaurants. In fact, when Congress considered the current law, many restaurant chains — and even the National Restaurant Association — supported it.

The lesson seems clear: Instead of spelling the end for the fast-food industry, calorie counts can be a tool for steering consumers toward lower-calorie — but equally high-profit — offerings. Franchise restaurants that can bend with the changes in the industry could find that the new law will actually help them get ahead, without expanding their customers’ behinds.

See full article from DailyFinance: http://srph.it/afOVtB

The New Health Care Law: Q&A For Franchisees

Last week, the U.S. House of Representatives passed The Reconciliation Act of 2010 (H.R. 4872) – the “fixes” bill which makes some amendments to the original health care bill. On March 30, President Obama signed the bill into law,  completing the year-long process of passing health care reform. 

In an effort to inform and educate franchisees, the CFA Government Relations Department has provided below “Question and Answers” to help explain the details of the law to it’s association members (DDIFO is a mem,ber of the Coalition  of Franchisee Associations)

Q. Am I mandated to provide health care to my employees?
A.  Employers with 50 or more full-time equivalent (see below) employees are  required to provide health coverage to their full-time employees who are defined  as those who work at least 30 hours per week.

 Coverage must be also provided for their full-time employees’ dependents, which  includes spouses and children under the age of 26.
 
 In all cases, however, employers do not pay penalties for their first 30 full-time  employees. 

 Example: A franchisee has 60 part-time workers, working the equivalent of 30  full-time workers. The same franchisee also has 40 full-time employees. That  franchisee has 70 full-time equivalent employees and therefore must provide  health care for his or her 40 actual full-time employees. However, the first 30  full-time employees are waived, so the employer must pay for 10 full-time  employees OR pay a $20,000 penalty for not providing coverage (see below).

Q. Am I considered one employer for all of my franchises?
A.  An employer is defined by “common control” as laid out in Internal Revenue  Code §414. While determining “common control” can be complicated, the  National Restaurant Association uses the following threshold: “if two or more  restaurants have the same five or fewer owners, collectively owning at least 80%  of the shares or interest, those restaurants shall be considered a single employer.”  This reasoning would apply to all businesses owned by the same person(s).

Q. What type of health care do I need to provide?
A. The law requires employers to provide “minimal essential coverage.” This is  defined as a health benefits package which (1) covers essential health benefits, (2)  limits cost-sharing, and (3) has an actuarial value of at least 60% (i.e. pays for  at  least 60% of the costs).

 “Essential health benefits” will be further defined by the U.S. Secretary of Health  and Human Services.

Q. What are “full-time equivalent” employees?
A. Employers with less than 50 full-time equivalent employees are exempt from all  requirements. Part-time worker hours are considered when determining the  number of full-time equivalents employed.

  For example, 2 part-time workers working 15 hours per week equals 1 full-time  worker SOLELY for the purpose of determining whether the employer meets the  50 full-time worker threshold for the  small business exemption.

 To calculate whether you fall above or below the threshold, use the following  formula:
 
 # of full-time employees (working 30 hours or more a week over a month)
 + Hours worked by all part-time employees/120 hours
 # of full-time equivalents

Q. What are the penalties if I do not provide coverage?
A.  The penalties are quite complicated and vary based on the number and type of  employees:
 
 Employers with 50 or more full-time equivalents who (1) do not offer  minimum essential health care coverage to their full-time employees and  dependents  and (2) have at least one full-time employee who uses the premium  tax credit to obtain coverage in the exchange will pay $2,000 per full-time  employee per year (minus the first 30 full-time employees if not used for other  penalties)

 Employers with 50 or more full-time employees PLUS full-time equivalents  who:
  (1) Offer coverage BUT have at least 1 full-time employee who uses a    premium tax credit to obtain coverage through the exchange must pay    $3,000 for each employee receiving the tax credit.
  (2) Offer coverage but a full-time employee’s contribution is between 8%-   9% of his or her household income: employer must provide a voucher    equal to its monthly contribution for the employee to buy coverage on the    exchange (not applicable if employee receives a tax credit) to avoid    penalties. 

Q. Am I eligible for the small business tax credit?
A.  For the next four years, until the state exchanges are established, businesses with  10 or fewer full-time-equivalent employees earning less than $25,000 a year on  average will be eligible for a tax credit of 35% of health insurance costs.  Companies with between 11 and 25 workers and an average wage of up to  $50,000 are eligible for partial credits.

Q. Do I have to provide coverage immediately upon hiring the employee?
A.  No. An employer with 50 or more full-time equivalents is allowed to wait up to   90 days after hiring an employee before enrolling the full-time employee in the  health plan. If the employer waits longer than 90 days, he or she will pay a  penalty of $2,000 per employee (or 1/12th of $2,000 per month) for each month  not covered.

 Employers with more than 200 full-time employees must automatically enroll all  new full-time employees. Employees may choose to opt out for another plan if  they so choose.

Q. Do I need to notify my employees of this change in the law?
A. Yes.  All employees hired on or after March 1, 2013 must be given written notice  of the following:
  (1) The existence, description and contact information of the Exchange
  (2) The employee’s eligibility for credits if he/she purchases a plan through the Exchange and the employers does not provide a plan with an actuarial rate of at least 60%.
  (3) The loss of the employer’s contribution (if offered) in which all or a portion may be excludable from income for federal income tax purposes if the employee chooses the Exchange.

Q. When does this requirement become effective?
A.  All employer mandates become effective in 2014. A timeline of key  implementation dates is as follows:
2010 — Small business tax credit available
2010 — Grandfathered plans comply with some insurance reforms
2013 — Notification requirements for all employers to their employees    begins March 1
2014 — Employer requirements begin
2014 — Individual mandate begins
2014 — Health insurance exchanges begin
2017 — Large employer participation allowed in exchanges at discretion of   each state

URGE YOUR SENATORS TO OPPOSE THE HEALTH CARE RECONCILIATION PACKAGE!

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Yesterday, President Obama signed the Senate’s version of the health care bill into law. The next step is for the Senate to pass the Reconciliation Package which passed out of the House earlier this week.
 
The Reconciliation Act of 2010 contains increased penalties for non-compliance and requires employers to include part-time workers when determining whether their company qualifies as a small business. The Senate is currently debating the bill and will begin considering amendments shortly before voting on the bill. As you may recall, the bill only needs 50 votes (with Vice-President Biden as the tie-breaker) for passage.
 
Please contact your U.S. Senators TODAY to voice your opposition to H.R. 4872, the Reconciliation Act of 2010. Click here to send a personalized email to your senators or call the U.S. Capitol Switchboard is (202) 224-3121 and ask to speak to the legislative assistant handling health care in your state’s senate offices.  Phone calls, e-mails and faxes all work!

If you prefer to call your Senators, please use the following talking points provided by the National Restaurant Association on H.R. 4872, the Reconciliation Act of 2010: 

•  I am calling to ask Senator _____ to vote NO on the Health Care Reconciliation bill! (H.R. 4872)
• The legislation weakens the small business exemption, imposes severe administrative burdens, & includes extremely onerous penalties on small business owners like me. 
• The Senate-passed bill (H.R. 3590) included important protections for small businesses that rely on long-standing definitions of small business employment. 
• The changes made by the Reconciliation bill will include part-time workers in the employer mandate and increases penalties for uncovered workers.  That makes it unworkable for franchisees like me. 
• I am already operating on thin profit margins and trying to do what’s right for our employees.  But by imposing these onerous penalties and requiring small businesses to do this, you will add huge new costs and administrative obligations that I just can not take on, especially in these difficult times.
• Part-time employees are and have always been a large and essential component of our industry labor force. Many of our employees work for multiple employers to build a flexible work schedule, or receive coverage under another’s health plan. 
• I fear this new cost & burden will prevent us from maintaining and creating the jobs our economy needs to recover and the jobs that my business can provide. 
• I ask Senator ____ to Vote No on Health Care Reform Reconciliation!

Time is running out! Please do all that you can to protect your business from this harmful legislation!

OPPOSE HEALTH CARE BILL AND RECONCILIATION PACKAGE!

Click for Action!

There are only hours left and considering the recent developments explained below, it is imperative that you make your voice heard! Go to CFA VOTES! to oppose both the Senate-passed version of health care refom and the reconciliation bill, which was introduced yesterday.
 
Yesterday morning, the Congressional Budget Office released its score of the reconciliation bill (H.R. 4872, the Reconciliation Act of 2010). The cost is $940 billion over 10 years, more than both the House and Senate bills.  It reduces the deficit by $130 billion in the first 10 years and by $1.2 trillion in the second decade.
 
Later yesterday afternoon, Congress released the language of the reconciliation bill. As you may remember, this bill is intended to address the concerns of more liberal members of the House of Representatives who do not support the Senate-passed version of the bill. Procedurally, the House is planning on passing the Senate-passed version and Congress will then consider the reconciliation bill which requires only a simple majority to pass.
 
Regarding employer mandates, the reconciliation bill contains the following language and amendments to the Senate-passed version of health care reform:

• Increases penalty from $750 per full-time employee (FTE) to $2,000 per FTE for large employers (>50 employees) that do not offer coverage and have at least one FTE that receives a premium tax credit or cost-sharing subsidy

• Large employers that offer coverage and have at least one FTE that receives a premium tax credit will pay penalties of $3,000 per employee receiving a premium credit.

• New provision disregards the first 30 workers employed by the employer in calculating the amount of the penalty.

• Repeals assessments on employers who require employees to wait more than 30 days to enroll in the employer’s health insurance coverage.

• Allows employers to count part-time workers’ time as “full-time equivalents,” based upon a 30-hour work week per FTE, for the purpose of calculating the penalties.

The language of the bill is still being analyzed and interpreted, but the impact on businesses across the country will be devastating. If you haven’t yet done so, contact your Members of Congress and tell them to oppose health care reform – both the Senate-passed version and the recently publicized reconciliation bill. 

Tell your elected officials where you stand! Do it now!

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