THE FREE COMMUNITY PAPER INDUSTRY

Mr. Keith Brau

Office of Associate Chief Counsel
Procedure & Administration
Internal Revenue Service
1111 Constitution Avenue NW
Washington, D.C. 20224

September 29, 2010

Via email: Notice.Comments@irscounsel.treas.gov.

RE: Notice 2010–51

Information Reporting Under the Amendments to Section 6041
for Payments to Corporations
and Payments of Gross Proceeds
and With Respect to Property

The Association of Free Community Papers (AFCP) and Mid-Atlantic Community Papers Asso-
ciation (MACPA) submit these comments to the Department of the Treasury (Treasury) and the
Internal Revenue Service (IRS) on behalf of the united Free Community Paper Industry (Commu-
nity Papers)1 in response to Notice 2010-51, regarding guidance concerning new requirements with
respect to the reporting of payments made in the course of the payor’s trade or business. Specifically,
the Treasury and the IRS have asked for comments regarding the implementation of the expanded
information reporting requirements included in the Patient Protection and Affordable Care Act of
2010, Pub.L.No. 111-148, 124 Stat. 119 (PPACA).

Community Papers are concerned about the increased complexity and cost this new requirement

1
The Association of Free Community Papers (AFCP) and Mid-Atlantic Community Papers Association (MACPA)
are joined by the following state and regional trade associations of Free Community Paper Publishers: Midwest Free
Community Papers (MFCP), Southeastern Advertising Publishers’ Association (SAPA), Community Papers of Florida
(CPF), Community Papers of Michigan (CPM), Wisconsin Community Papers (WCP), Texas Community Newspa-
per Association (TCNA), Community Papers of Ohio and West Virginia (CPOWV), Free Community Papers of New
York (FCPNY). Collectively, the Industry includes 2,673 hometown publications with a combined, audited circulation
65,187,292, and a small business client base, investing at least $600 a year, well into the millions -- all to grow our inter-de-
pendent economies.
 -2-

will place on small business generally, and on our hometown publishers and their community ad-
vertisers specifically. The potential reach of the new reporting requirement is vast, requiring small
businesses to report almost every business-to-business transaction including commerce-driving
advertising services.

It is our understanding that the goal of this exponential expansion of reporting requirements is to
increase the aggregate amount of income believed to be currently underreported by some in the
business community, and thereby bolster collection of the sum total tax revenue believed to be owed.
Even in theory, it is generally understood that these new burdens will fall on already compliant small
business taxpayers. As a matter of practice, there are concerns even within Treasury and IRS that a
tsunami of new 1099s will not provide any practicable new information, or whether this tidal wave of
data can even be purposefully integrated into current data analysis systems.

Community Papers appreciate the fact that Treasury and the IRS have requested ways to minimize
the expanded burdens on our small business communities. We note that attention has been given to,
and comment sought on, specific concerns including duplicative reporting, disproportionate bur-
dens among types of taxpayers and businesses associated with implementation and compliance, as
well as the privacy concerns arising from the new, widespread wave of soliciting taxpayer identifica-
tion numbers (TINs).

It is our strong and considered belief that these new reporting requirements will wreak havoc be-
yond even that currently contemplated, with a net return to Treasury and IRS far less than hopefully
projected. Plainly stated, this costly scheme will do far more harm than good, and we will continue
working with small business peers across industries united for full repeal measures before Congress.
Here, however, we plead for the specific remedy of exempting advertising expenses from 1099 re-
porting at the new $600 threshold.

Community Papers offer five (5) concrete reasons why advertising -- a commerce-driving, routine
business operating expense -- should be exempt from the duplicative 1099 reporting and the requi-
site and potentially hazardous TIN swapping triggered by $600 of services rendered over the course
of the year:

• First, in practical terms with tax revenue objectives in focus, 1099 reporting on advertising
 -3-

will not provide any bottom-line information about any unreported revenues from client advertisers.
The avalanche of requests for TINs, and subsequent cross-filings of 1099s will not reveal whether or
not our advertisers are underreporting the income generated by their own, respective businesses.
The overriding goal of making sure -- or finding out whether -- the plumber, the pizzeria or the sea-
sonal lawn mowing and snow plowing service is reporting all of their income and paying their taxes
will not be advanced one penny by this futile enterprise.

• Second, advertising expenses are not even remotely likely to involve any real compliance
difficulties. These are tracked by front-end systems, generating a trail of payment and receipts, and
presumably our clients already claiming advertising as a deduction.

• Third, a $600 threshold, or any other nominal and arbitrary baseline, could lead to the
consolidation of advertising with fewer, larger firms -- or even a reduction in advertising by small
business altogether. Advertising generates a proven multiplier effect on economies, and since each
ad dollar lost compounds to a net economic loss of 4 to 10 times or more, this would be a disaster
for small business generally, our hometown publishers particularly -- and quite possibly a net loss to
Treasury and IRS.

• Fourth, given that TINs are unique, very real and powerful identities -- the object of illicit
demand and subject of theft and abuse -- the forced, widespread unprotected sharing among all
businesses based solely on a small dollar amount of aggregate yearly expenditures, would in other ap-
plicable contexts be scorned as dangerously promiscuous. The magnitude of compulsory risk for our
industry, and all of small business, is chilling.

• Fifth and finally, disproportionate burden: Estimates of compliance across industries puts
new 1099 reporting at multiples of ten (10) upwards past fifty (50) times current levels -- Community
Papers, anticipating formal requests for TINs from even our smallest and occasional advertisers, will
see increases one thousand-fold (1,000x) and even higher at larger publications. We are in the busi-
ness of helping businesses generate business, and over the course of a single year even the smallest
hometown publishers provide advertising services totaling $600 to several hundred and more micro
and small businesses, in addition to others. For larger community paper publishers, that could run
into the tens of thousands over the short span of fifty-two weeks.
 -4-

The presumption behind these exponentially expanded reporting measures is the hopeful expecta-
tion that disclosure of this tsunami of new information will translate into significantly reduced illegal
tax avoidance. At the same time, there is a considerable concern bridging industry and government
regarding the resulting paperwork burden and security risks, especially for small businesses. Trea-
sury and the IRS seek comment and have authority to issue rules exempting certain expenses unlike-
ly to involve compliance difficulties, such as advertising, and in particular print advertising.

For the reasons detailed above, Community Papers urge the exemption of advertising from the dupli-
cative 1099 reporting and the requisite and potentially hazardous TIN swapping triggered by $600 of
services rendered over the course of the year.

Respectfully submitted,

Jim Haigh

Government Relations Consultant

Mid-Atlantic Community Papers Association
Association of Free Community Papers
427 Ridge Street
Emmaus, PA 18049
610.965.4032
jimhaigh@fast.net

Consultant to Community Papers

September 29, 2010