Posted on 12/05/2010 10:36:40 AM PST by Graybeard58
This might be a good time to invest in the paper industry and in companies that produce government forms. Republicans and moderate Democrats in the Senate have been unable to roll back a vast expansion in the role of IRS Form 1099. In the past, 1099s mostly were submitted to independent contractors who provided services to businesses, and to the IRS. Under the new law — slipped into one of the Obamacare law's many hidey-holes — a 1099 will have to be submitted for any business-to-business transaction exceeding $600.
That means a landscaper who buys some rakes, lawn-mower blades and fertilizer from a lawn and garden store will have to send a 1099 form to the store and to the IRS.
"This stealth change radically alters the nature of 1099s and means businesses will have to issue millions of new tax documents each year," Neil deMause wrote last May for CNN's Money.com.
In what has become a familiar partisan dance, lawmakers on both sides of the aisle say they want to repeal the new section but can't agree on how the expected revenue from the law — $19 billion over 10 years beginning in 2013 — will be made up in new revenue or spending cuts. The Senate thus was unable to reach consensus Nov. 29.
The estimate itself is of dubious value. It does not appear to include additional labor costs the IRS will incur in processing all the additional forms; nor does it account for new or expanded deductions businesses will be able to claim because of the great costs of compliance.
One might also question what this requirement has to do with health care or insurance. The answer is nothing. It was inserted to promote the fiction Obamacare actually would reduce the federal deficit. It also assumes dishonest tax reporting by businesses that costs the government money to which it is entitled.
"But this 'tax gap' of unreported business income is largely a Beltway myth," The Wall Street Journal said in September, "and no less than the Treasury Department's National Taxpayer Advocate Nina Olson says the costs will be 'disproportionate as compared with any resulting improvements in tax compliance.'"
According to a Heritage Foundation analysis, the 1099 requirement is just one of 18 separate Obamacare tax increases designed to raise $500 billion over 10 years. Should the next Congress fail to muster the votes to resolve this test case in taxpayers' and businesses' favor, Mr. deMause predicts:
"When you think about it, these new requirements could also serve as a very handy bridge to a VAT (value-added tax) — which is surely coming. In fact, it probably shows that the VAT was already in the back of the Democrats' minds when the 'health-care-reform' bill was being cobbled together in the first place."
Ping to a Republican-American Editorial.
If you want on or off this ping list, let me know.
After looking over the last two years it is impossible to escapte the conclusion that Obama and the Dems want to destroy small businesses in this country.
Small businesses don’t create union jobs. Thats all they care about.
Pass a National Right to Work law and be done with these buisiness and economy killing people.
Nor does it take into account the IRS investigators who will look into the businesses making numerous $599 transactions to avoid the 1099 reporting requirement, or the court costs for those prosecuted for deliberately avoiding them.
I can’t imagine the convolution necessary to defend this measure with a straight face. If I buy a few things for my farm or business on eBay or at a live auction or store, am I seriously supposed to demand the seller’s SS or federal tax number????
If it's more than $600, Obama says you are.
Its worse than that the $600 is cumulative over the year so if you buy a block of ice for $2.50 at the c store every working day 240 per year you need their taxpayer ID too. Any business bill over $50 per month will require W-9 and 1099 to be issued. Sure hope they upgraded the IRS computer system because it is about to be overwhelmed.
The current administration has never run a business, and believes, like all marxists, that all businesses should be owned by the government.
IMHO, this onerous POS was stuck in the bill specifically to be a give back later in negotiations.
RAT to Repub, “We’ll give up the 1099 requirement if...”
Did you rent a car or stay in a hotel or fly with an airline ? 1099K.
Collect revenue from PayPal, eBay, or Amazon merchants? 1099K.
I think you’re right about it being a ‘throw away’ clause. But, it could be very useful to an executive branch that wants to use the IRS to target opponents. They could be hung on technicalities and all that information about their suppliers and customers, etc, can be passed on to competing business owners who are the administration’s friends.
The cost of enforcing this Big Government law will be more than the revenue it produces.
I have been involved with business and their taxes for several decades, At the very least this will be a barrier for the new businesses and thus a shield for current businesses. The smart established business will set alarms for transactions whose cumulative costs near this $600 trigger. If it is a commonly available item/service, they will switch to the next preferred provider. If it is near the year’s end, they will delay purchases until the next year. Very quickly you will have software like Quick Books (tm) that will do this automatically.
Not all purchases can be managed and this will be a SIGNIFICANT INCREASE in costs and attention. The new businesses will hit this barrier at the time they prepare their taxes and some will give up simply because they realize that “free enterprise” is neither free not private as the various governments act as silent profit leeches through schemes such as this.
The fact is that Government, especially this business-clueless Obama Administration, is only concerned with those people and businesses that have the means to actively lobby about it’s policies. Small, even medium businesses are not on this list.
The interesting question is who was the author of this provision? I do not think that the IRS clammored for this provision. Legislation should have some accountability. Every clause of a bill should be traceable to a source.
The rats tried to repeal this provision last summer but Republicans in the Senate would not go along for obvious reasons.
To make up the short fall goveco will just raise your taxes to cover the short fall.
Thanks for the ping Graybeard. I want to see, and hear a lot from Darrel Issa in the coming couple of years. I want to see him preparing one “H” of a case against the Socialist Party liars that lied their way into our government, and foisted their sick agenda upon our Nation.
I want them all to suffer for what they have done to, and are doing to us.
I think that has BEEN law for about 20 years or so anyway.
'Contractors' who were paid in cash tended to 'forget' to reveal stuff to the IRS, so anyone who hired them was supposed to report it.
I guess that hasn't worked out soswell either.
I guess they want the underground economy to grow even more.
Collect revenue from PayPal, eBay, or Amazon merchants? 1099K.
THAT is the hidden adgenda.
Of course, the NST would REPLACE nothing, but merely be a new tax.
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