Health Care Bill Will Mandate That Businesses File Billions Of Additional IRS 1099 Forms
We all know what a 1099 is. When you do over $600 worth of business with a contractor you have to send that contractor a 1099 reporting the amount you paid them.
The health care bill expanded that requirement immensely:
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.
At Cato, Chris Edwards explains what this means:
Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. 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.
Going beyond those examples, if I’m reading this correctly, if you do $600 worth of business with your phone company in a year (not hard for any business to reach) you have to issue a 1099. If you do $600 worth of business with an IT store, you have to issue a 1099. If you do $600 worth of business with a caterer, you have to issue a 1099.
For even a small business, that could mean dozens (if not hundreds) of additional transactions to track and report to the IRS. The cost of compliance alone is going to be an enormous new burden to the economy.
And what, exactly, is being gained with this huge new complication in our tax code? The government gets to track more financial transactions in the economy and dip its fingers into more income. Though, frankly, the ratio between the additional income they’ll receive what they’ll expand trying to get it can’t be a good one.Tags: border fence, liars, Mccain, scott hennen