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FR-er CPA's help! Is the framework for a VAT in Obamacare?
Journal of Accountancy ^ | 03/31/2010 | taildragger

Posted on 03/31/2010 8:56:04 AM PDT by taildragger

Freeper CPA and other Financial Pro's and Small Business Owners help!

Spoke with a small business owner who's better half is a CPA of note, and too busy to pass this along during taxtime. Reading this made their blood pressure go up. I need some other professionals opinion to see if you read this the same as they did

What they have stumbled upon may be the "Framework" for a VAT within Obamacare.

Read this from the exective summary from the Journal of Accountancy:

Information Reporting

The act requires employers to disclose on each employee’s annual Form W-2 the value of the employee’s health insurance coverage sponsored by the employer, effective for tax years beginning after Dec. 31, 2010. The act requires businesses to file an information return (e.g., a Form 1099) for all payments aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a tax-exempt corporation). The provision is effective for payments made after Dec. 31, 2011.

The way they interrupt this is that it is not just hiring a contract or other employee over $600, but any thing you may purchase greater than that price point that you may resell in the process of conducting business. Ergo, you hire a cabinet guy for some new cabinets and he picks them out and buys them for $601, he has to file a 1099. Is this a paperwork trail needed for a VAT?

If I am wrong tell me so, and I will have the "Moderator" pull this thread....


TOPICS: Business/Economy; Government; Your Opinion/Questions
KEYWORDS: 1099; cpas; obamacare; vat
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1 posted on 03/31/2010 8:56:04 AM PDT by taildragger
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To: taildragger
Remember “Glenn” says this guy is an architect, what are they building here if anything?
2 posted on 03/31/2010 8:57:19 AM PDT by taildragger (Palin/Mulally 2012)
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To: taildragger

I think they are only talking about health insurance paid by the employer in excess of $600. I think that the government will eventually start taxing insurance premiums paid by an employer as income for the employee. For example, if your employer pays $10,000 a year for your insurance, that $10,000 will be included as part of your income. It’s the way I see it.


3 posted on 03/31/2010 9:00:50 AM PDT by DallasDeb (USAFA '06 Mom)
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To: taildragger

I’m not an expert, but it sounds like you have to detail every expense made with a 1099. That is impossible to comply with and impossible to account for by the gov’t.


4 posted on 03/31/2010 9:01:20 AM PDT by Erik Latranyi (Too many conservatives urge retreat when the war of politics doesn't go their way.)
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To: taildragger

This administration is getting ready to drop a VAT tax on us in the fall - right after his commission gives its report, and right before all the defeated Democrat congress-scum leave office after November defeats.

If we don’t mobilize now, it will be forced through - Every potential congressional candidate, R or D, needs to be put on the record before November as to whether they’ll vote for a VAT - even if it is the key recommendation of Obama’s budget commission.


5 posted on 03/31/2010 9:03:26 AM PDT by Stosh
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To: taildragger

Hi,

I am a busy CPA as well. If they are going to require 1099’s for all payments to a payee in excess of $ 600, it could be what you say. Presently, 1099’s are required for purchased services, etc if $ 600 or more. I think we need more information. I’m suspicious of a new 1099 requirement coming from this legistlation.

Good catch.


6 posted on 03/31/2010 9:05:46 AM PDT by marsed
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To: Erik Latranyi
That is impossible to comply with and impossible to account for by the gov’t.

Which was what made the BP go up, The CPA would have to maintain the paper trail or check them for the clients and the small business owner would have to keep them and organize them.

But IMHO this smells of a EURO-VAT since they tack on something along the way something is done or made.

7 posted on 03/31/2010 9:05:50 AM PDT by taildragger (Palin/Mulally 2012)
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To: taildragger

My thoughts during the health care debate was that since employers could just write off the costs and employees were not affected, that meant there was alot of tax free dollars circulating in the economy. You can’t have that if you’re a ‘progressive’.

As far as submitting a 1099 to all who I pay more than $600 to...Well, that could take me all year. Imagine all the 1099’s I’d have to send to all the fuel stops across the country. I’ve spent more than $600 on fuel at alot of places. And we’re operating multiple trucks...for now.


8 posted on 03/31/2010 9:06:54 AM PDT by griswold3
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To: taildragger

This is the reporting mechanism through which the Feds will tax your health care benefits.


9 posted on 03/31/2010 9:09:15 AM PDT by Uncle Miltie (Civil Disobedience: Refuse Unconstitutional 0bummerCare. Let them try to arrest millions.)
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To: taildragger

I think you will find that people may start doing work for $600 and do the rest for cash. Remember, this government is wanting to tax the rich. That’s especially anyone making over $250,000. When the rich run out of money, the government will drop it down to $200,000. When those people run out of money, the government will drop it down to $150,000......and so on and so on. Everyone will have their taxes raised until we are totally under their control.


10 posted on 03/31/2010 9:09:16 AM PDT by RC2
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To: taildragger

This is how the new “Unearned Income” is calculated. You the employer must keep track of this, the employee now owes tax on this. I’m sure down the road the employer will be responsible for withholding and then down the road again, employer will be required to match certain withholding. Kind of like SS/Medicare.


11 posted on 03/31/2010 9:09:45 AM PDT by poobear
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To: taildragger
No, that's not a VAT framework. Don't get me wrong, the 1099 series information-reporting forms could be used as the barebones skeleton of some sort of a VAT crediting system, but as it stands, it's not sufficient unto itself.

I'm not sure what game the fascists, I mean democrats, are up to with requiring that employers report the value of insurance provided, although my gut tells me that that is a prelude to treating the value of employer-provided insurance as taxable income (currently it's not treated as taxable income - even though it should be in a sane tax system, since it's the functional equivalent of your employer sending a part of your paycheck directly to your electric company, for example, which would still result in the entire paycheck being taxable income to you), or else is a means for the fascists, I mean democrats, to identify private individuals who are "getting too much" and therefore should be subjected to even more punitive "taxes" than the rest (union members excepted as usual, of course).

The language regarding the 1099 information-reporting requirements are most likely intended to parallel the employee-reporting requirements in cases where a business uses independent contractors who receive part of their compensation in the form of health insurance coverage.

In the example that you give, the cabinet-maker who pays $601 for cabinets to be installed in your building would not need to file a form 1099 (technically, it would be a Form 1099-MISC) because payments for the purchase of merchandise are generally not reportable payments. See the 2010 instructions to Form 1099-MISC here. Absent a statutory provision or an IRS regulation that expressly extended reporting coverage to amounts paid for the purchase of merchandise, I do not think that the provision in the new Obastardcare legislation would require your hypothetical cabinet guy to file a form 1099 to report the purchase of those new cabinets for you.

Three Rs II, small version
12 posted on 03/31/2010 9:12:53 AM PDT by Oceander (The Price of Freedom is Eternal Vigilance -- Thos. Jefferson)
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To: taildragger

While I am glad I don’t own my own Small Business, I am saddened that the future prospect of ever starting my own looks dimmer and dimmer as the days go by...


13 posted on 03/31/2010 9:13:04 AM PDT by GraceG
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To: taildragger

BTTT.....


14 posted on 03/31/2010 9:19:52 AM PDT by taildragger (Palin/Mulally 2012)
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To: taildragger
A Value Added Tax is a method by which all intermediate steps in producing a product is taxed.

Take Campbells Tomatoe Soup.

The farmer sells the tomatoes to a Campbells and the value of the tomatoes is taxed.

The mining company that Sells the the aluminum ore to Reynolds pays a tax for extracting the ore.

Reynolds smelts the ore and makes aluminum sheets and adds a tax when it sells the aluminum to a can manufacturer.

The cans are made and a tax is added to the can which is sold to Campbells.

A tree is harvested and sold to the lumber mill and a tax is added.

The lumber is made into paper and a tax is added when the paper is sold to the printing factory,

A label is made using ink which was taxed and it is sold to Campbells and a tax is added.

And so it goes on and on. many layers of production and the tax is collected at each step. Now your Campbells soup is sold and a sales tax is added.

Government slurpping at every level!

15 posted on 03/31/2010 9:27:57 AM PDT by Young Werther ("Quar cum ita sunt" Since these things are so!)
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To: Young Werther

And can the “1099” become the vehicle from which they get to slurp at the trough? That is the million dollar question I am asking....


16 posted on 03/31/2010 9:29:40 AM PDT by taildragger (Palin/Mulally 2012)
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To: taildragger
No. The 1099 comes in many editions.

1099A Acquisition or Abandonment of Secured Property and Cancellation of Debt.

1099B Proceeds from Broker and Barter Exchange Transactions

Form 1099-C Cancellation of Debt (Info Copy Only)

Form 1099-DIV Dividends and Distributions (Info Copy Only)

and so it goes. A separate tax form will be designed for this form of taxation.

I had a contract job with DalTile who had business in Canada which has a VAT. A quarterly report was submitted with the costs associated which each level of manufacturing of the Taltile products, Roofing tiles, floor tiles, glue, nails etc.

17 posted on 03/31/2010 9:44:29 AM PDT by Young Werther ("Quar cum ita sunt" Since these things are so!)
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To: Oceander; taildragger
It looks like, effective 2013, payments exceeding $600 made to individuals and corporations will be reportable on 1099-MISC, and will include goods and services.

"Reporting of Payments to Corporations and for Goods.

Effective for payments made beginning in 2013, the Reform Act expands the current Form 1099 information reporting requirement for compensation paid for services to individuals and partnerships to payments made to corporations and to payments made for goods as well as services

Health care reform has arrived

18 posted on 03/31/2010 10:15:29 AM PDT by Madame Dufarge
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To: Madame Dufarge

Do you have the specific statutory language? That is what controls and is, ultimately, what the IRS will use to promulgate any regulations. And no, I still do not think it’s even remotely related to implementing a VAT because the information-reporting arrangements using the various forms 1099 is already comprehensive and has been in place for years.


19 posted on 03/31/2010 10:17:32 AM PDT by Oceander (The Price of Freedom is Eternal Vigilance -- Thos. Jefferson)
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To: Young Werther
You forgot the last step.

You buy a can of Tomato soup and it costs $5.

20 posted on 03/31/2010 10:22:03 AM PDT by USNBandit (sarcasm engaged at all times)
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