Posted on 04/29/2010 10:10:00 AM PDT by kara2008
Remember this?
(Video of Pelosi: "We have to pass the bill so you can see what's in it.")
Cato’s Chris Edwards has found another of Nancy Pelosi’s surprises in ObamaCare, and this one’s a doozy. We have already noted the strange assignment of health-insurance approval to the IRS, an agency with no expertise in the field whatsoever. Now it appears that the IRS will have to hire a lot more people to track an avalanche of paperwork, too:
Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly.
A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.
Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress.
This comes from claims routinely made by Congress that businesses dodge their tax liabilities through fraud. Even if one accepts that premise, the cost of collection to both the IRS and the economy eventually meets a point of diminishing returns, if you’ll pardon the pun. Where does that point lie? I’d guess well above the threshold set by the new law, emphasis mine:
The 2010 Health Care Act adds “amounts in consideration for property” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and “gross proceeds” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term “payments” includes gross proceeds paid in consideration for property or services.
That means any time a business pays any one entity $600 or more in a year, they will have to create a 1099 to file with the IRS. That means that the businesses have to get all of the tax information for every vendor, provide separate accounting for every payee, and then send the forms to both the IRS and the payees at the end of every year — as the payees do the same with their vendors, and so on. Edwards puts the scope in context:
For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS. …
Private transactions are the core of a market economy, and the source of America’s growth and prosperity. Now the federal government is imposing a vast new web of red tape on perhaps billions of these growth-generating private exchanges.
And they did it as part of a health-care bill. Instead of directing capital towards growth-stimulating efforts, Nancy Pelosi and the Democrats just buried the private sector in an avalanche of compliance costs.
The list, ping
Oh Jeeze
Here's a funny question from someone at HotAir:
What happens if you spend $600 on 1099 forms? Send one to NanZi, one to Dingy, and one to B+? LOL!!
As a trucking company, need I say more about how much of a mess this will cause us?
To distribute a 1099, you will have to have the company complete a W9, also.
Guess, we’ll just keep our transaction BELOW $600.
Or off the books.
This can’t be true. The cost to business, large and small will be unfathomable. Maybe the idea is to give the USPS more business. Billions and billions of forms sent out via USPS.
WELL WELL! Surpise again! But...she did say we would find out what is in it after it passes. No one knows because no one read. Thanks for doing your job Congress!
That is the way it is now. What is different?
send it viral!
http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home
http://www.cprights.org/2010/04/obamacare-taxes-home-sales.php
http://localhealthguideonline.com/view-obamacare-taxes-now-services-later/
March 28, 2010 http://www.spokesman.com/stories/2010/mar/28/health-laws-heavy-impact/
Health law’s heavy impact
Paul Guppy
Special to The Spokesman-Review
In the days leading up to the dramatic late-night vote on President Barack Obama’s health plan, Speaker Nancy Pelosi said, “We have to pass the bill so that you can find out what is in it …” Now that ObamaCare has passed, it is slowly dawning on people what the new law means for the country and for Washington state.
ObamaCare sweeps away a host of state regulations and permanently alters our state’s insurance market. From now on, the federal government will manage the health care of all Washingtonians. The 2,700-page law contains a complex web of mandates, directives, price controls, tax increases and subsidies.
Federal officials will now decide what kind of insurance people in Washington must have, what medicines will be covered, what treatments are allowed and which are not. Early reports indicate, however, that President Obama, Vice President Biden, the Cabinet, senior members of Congress and leadership staff are exempt.
The new law falls well short of universal coverage. ObamaCare will leave about 6 percent of Washington residents without coverage. The measure is conservatively expected to cost $2.4 trillion in its first full decade. Thousands of older Washingtonians will lose their Medicare Advantage coverage, and the state’s 120,000 Health Savings Account holders may need to buy new policies or face stiff penalties.
Washington residents will begin paying ObamaCare taxes this year, while most benefits don’t start until 2014. The law includes some 19 new taxes. Here’s a rundown of what Washingtonians can expect in the coming years.
Penalties on individuals. Individuals will pay a yearly penalty of $695, or up to 2.5 percent of their annual income, if they cannot show they have purchased a government-approved health policy.
Penalties on families. Families will pay a yearly penalty of $347 per child, up to $2,250 per family, if parents cannot show they have purchased a government- approved policy.
Penalties on employers. Business owners with more than 50 employees must buy government- acceptable health coverage or pay a yearly penalty of $2,000 per employee if at least one employee receives a tax credit.
Tax on investment income. ObamaCare imposes a 3.8 percent annual tax on investment income of individuals making $200,000 or more and on families making $250,000 or more. The new tax is not indexed to inflation, so more people will fall under it each year. Seniors on fixed incomes and people with IRAs and 401(k) plans will be hit particularly hard.
Tax on “Cadillac” health plans. Starting in 2018, imposes a 40 percent annual tax on health care plans valued at $10,200 for individuals and $27,500 for families.
Medicare tax increase. Requires single people earning $200,000 or more and couples earning $250,000 or more to pay an additional 0.9 percent in Medicare taxes.
Tax on Home Sales. Imposes a 3.8 percent tax on home sales and other real estate transactions. Middle-income people must pay the full tax even if they are “rich” for only one day – the day they sell their house and buy a new one.
Tax on medical aid devices. Creates a new 2.9 percent tax on medical aid devices. Certain items intended for personal use are exempt.
Tax on tanning. Imposes a 10 percent tax on services at tanning salons. Business owners will collect the tax from customers and send it to the federal government. This appears to be the first federal sales tax in the United States.
ObamaCare will be enforced by the Internal Revenue Service. The tax agency plans to hire 16,500 new auditors, agents and investigators, and to increase enforcement audits. The IRS can confiscate tax refunds, place liens on property and seek jail time if health-related penalties and taxes are not paid.
President Obama had said people could keep their coverage if they want, yet the Congressional Budget Office estimates that under ObamaCare 8 million to 9 million people will lose their employer-provided coverage.
The ObamaCare law passed over bipartisan opposition in Congress. Republicans say they will run on a “repeal and replace” platform this fall, and Washington has joined 12 other states in a lawsuit challenging the federal government’s power to force state residents to buy a product – insurance – from private companies. The long-term prospects of ObamaCare are unclear. In the meantime, Washingtonians should prepare for major changes in their tax burden.
Paul Guppy is vice president for research at the Washington Policy Center, a research organization with offices in Spokane, Seattle, Olympia and the Tri-Cities ( www.washingtonpolicy.org).
Start making a 1099 file for every place you do business with and every person you may use to do any private repair work with because in trucking there isn't such a thing as under $600 a year. We will be filling out 1099's for every entity we do business with.
This is their attempt to stop the black market on labor that is growing in our communist command and control economy.
Many unemployed are now collecting unemployment and getting tax rebates, all while making 75,000 a year and not paying taxes. The “underground” economy is growing fast.
Cash only. Starve the beast.
Don’t get too worried about this. It will be one of the fixes when Congress passes the new VAT tax later this summer.
Crikeys! How will small business owners continue to operate? Or, perhaps more apropos, should they?
ping
There was never a requirement to issue 1099's to businesses you purchased goods or services from, now there is.
Does she now have to apply for an EIN and issue 1099’s for these services?
I have to issue a 1099 for any independent contractors that I pay more than $600 in a year, according to my accountant.
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