The 1099 issue in the new Health Care Bill has been much
talked about and it is going to be a burden. Well it is looking more and
more like it is here to stay. In the Budget & Tax news section published
but the Heartland Institute on 9/14/10 the Senate Failed to Repeal the Obama
Care 1099 Reporting Requirements. This is huge as it going to be a burden
on small business’s all over the country and frankly I cannot see how the
Internal Revenue Service can keep up with all the 1099’s that will be
coming their way. I guess time will tell.
Here is the article in its entirety.
Senate Fails to
Repeal ObamaCare 1099 Reporting Requirements
The U.S. Senate today failed by four votes to pass a measure that would have
saved businesses billions of dollars and sharply reduced the number of income
tax forms they will need to file with the Internal Revenue Service and business
vendors. The measure received a majority of votes -- 56 -- but needed 60 to
pass. A separate measure to repeal the reporting requirement received only 46
votes.
The new reporting requirement was buried deep inside the more than 2,000
pages of healthcare overhaul legislation that became law earlier this year. It
came as a surprise even to lawmakers who voted for the bill. The requirement
will vastly increase the number of 1099 tax forms businesses will need to file
under provisions of the ObamaCare healthcare overhaul. Businesses across the
country have come out against the reporting provision.
Senator Mike Johanns (R-Nebraska) led the charge to repeal the measure. His
Democrat counterpart, Senator Ben Nelson of Nebraska, proposed a measure that
would have modified the reporting requirement to do away with about 90 percent
of the additional paperwork.
Politics Trumps Policy
“Today the Senate had an opportunity to repeal a huge paperwork burden
for all small businesses. But once again, politics trumped helping small
business and senators failed to pass the Johanns amendment which would have
fully repealed this onerous new 1099 reporting requirement," said Susan
Eckerly, senior vice president of the National Federation of Independent
Business.
“Those who voted against full repeal must think it’s appropriate to
punish all small business owners with needless and costly new paperwork for the
slight possibility that this new reporting requirement may help the government
capture some unreported revenue. They are punishing all small business owners
for this slim chance that they may catch a few business owners who might make a
mistake on their tax forms. It’s ludicrous. A much better idea would be
to simplify the tax code," Eckerly said.
The reporting requirement will force businesses to report every purchase of
every good or service from every vendor that totals $600 or more each year.
White House officials estimate this level of detail will result in $17 billion
of additional tax revenue for the government because many purchases go
unreported. But the Treasury Department's Taxpayer Advocate, Nina Olson, has
said the enormous paperwork burden this would impose on businesses -- many of
which would have to track and total purchases of goods and services from
thousands of vendors -- would be "disproportionate as compared with any
resulting improvements in tax compliance."
Nelson's amendment would have exempted purchases of less than $5,000 from
the reporting requirement. This would have reduced the paperwork burden by
approximately 90 percent. The Johanns amendment would have eliminated the
reporting requirement.
'Congress Ignores Damage'
"Senator Johanns is to be commended for trying to fix this problem. It
is simply outrageous that this Congress continues to ignore the damage that
they are doing to our nation's job producers through massively expensive
paperwork burdens. It's almost as if they don't want people to get jobs,"
said Bill Wilson, president of Americans for Limited Government. "The
failure of this Congress to fix this single, obviously destructive provision,
shows just how out of touch the current leadership is."
More than 100 business organizations calling themselves the Coalition for
Fairness in Tax Compliance had sent a letter to senators to explain why they
are so strongly opposed to the 1099 reporting requirement. The letter stated in
part:
"As Congress calls on small business to lead the nation out of the
recession, now is not the time for government-imposed costs on doing business.
The extent of this new paperwork requirement on business owners is astounding,
as businesses estimate that they will have to file hundreds and sometimes
thousands of new 1099s per year. The IRS National Taxpayer Advocate Nina
Olson stated that the administrative costs of small businesses are so high that
it 'may turn out to be disproportionate as compared with any resulting
improvement in tax compliance.' The Johanns Amendment is the only solution that
fully protects small business owners from this costly new burden.
"The Nelson (FL) Amendment (SA 4595) does not remove the paperwork and
administrative burden that is created by this new law. Instead, the
Nelson alternative further complicates compliance responsibilities. While the
amendment creates exceptions from the "property" information return
requirements, those exceptions do not apply to "services"
transactions. This lack of clarity will force small business owners to
track expenses associated with both 'property' and 'services,' the amount spent
on each, and the method of payment to determine what information must be
reported under the new law. Rather than clarify, the Nelson amendment actually creates
even greater complexity for those who comply with the law.'"
