Wednesday, 05 May 2010

Rants

ObamaCare Easter Egg: Paperwork explosion!

Congress loves business (just ask ’em!)  Dept
Warren Meyer:
A little noticed provision in the recently passed health care reform bill will require every payment to corporations over $600 to be reported on a Form 1099 to the IRS, including payments for the purchase of merchandise and services.  This provision takes effect in 2012.

The current law requires a Form 1099 to be submitted to the IRS when your business pays more than $600 for rent, interest, dividends, and non-employee services if the payments are made to entities other than corporations.  Currently, payments made to a corporation and payments for merchandise are not required to be reported.

To file the required 1099, a business will have to obtain and keep track of a Taxpayer Information Number (TIN) from every vendor before submitting the 1099 to that business and the IRS.  Under current tax law, one copy of the form is sent to the IRS, and another copy is sent to the person to whom the business made the payments.
This is an horrible additional burden for any business, as for most businesses the only 1099s filed are for payments of dividends.  My own (micro) company, for example, typically issues two or three 1099s each year. In 2012, that number will grow to probably 100.

Warren continues:
My small business has over a thousand vendors.  I would have to hire someone full time for a month to do this.


And there’s another little catch: If 1099-requiring payments are made to someone who fails to supply either a TIN or a Social Security number[1], the payer must reduce that payment by a “backup withholding” amount, and forward that difference to the IRS.

So let’s see: Track every vendor.  If their payments cross $600, obtain a TID.  Otherwise, start withholding taxes.  Prepare and mail a 1099 every year (and don’t forget those copies for the government!).

None of which makes any contribution to the bottom line.  And all of which will affect every business.

And the government gets far more information, in far more detail than it ever has had before, about the commercial activities of the citizens.

Chris Edwards at Cato@Liberty says:
I’m stunned that there wasn’t a broader debate before such a costly mandate was enacted...
And I’m shocked that there might be gambling going on over there at Rick’s, too. (spit!)

As I’ve said before, I’m over giving those weasels any benefit of the doubt.  There are hundreds of lawyers in Congress: There’s no reason they shouldn’t have known exactly what they were doing.

Finally this note, from one of Warren’s commenters:
I can’t believe the several blogs and news sites where I’ve read of this, no one, not even the commenters, recognize what’s going on with this new requirement.  It most certainly is the basic framework data collection that would be required to enforce a VAT.  Now does it’s insertion into ObamaCare make sense?


LATER (100506 20:15), elsewhere:
Disrupt the Narrative:  Barak Obama Hates Trees
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[1]  Actually, it’s more complicated than that.  The recipient must also certify that it is exempt from backup withholding.  Effectly, this requires obtaining another federal form (W-9) from every vendor, every year.

Posted by: Old Grouch in Rants at 21:55:56 GMT | Comments (3) | Add Comment
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