Costly IRS Mandate Slipped into Health Bill

[mrjarrell]

Well, if you're a small business person you better get ready to start cranking out 1099's. You're going to be giving them out to everyone and their mother that you do business with.

via CATO

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.
In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

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.
​

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.
Tax CPA Chris Hesse of LeMaster Daniels tells me:

Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.
​

Do yourself a favour and read the rest at the source. Then warn your friends and family.

 

[jedi]

I have a small net biz and if this is true I'm going to go craZy next tax season trying to get all these 1099s out BEFORE 01 FEB 2011 when you are required to have them sent out by. 30 days (basically jan) is just not enough time with the small number of 1099s I currenlty do.

Guess I best start asking my vendors for their TIN right now.
If the big ones (PayPal, eBay, Office Max, etc..) would even give me such a thing being such a small small biz!

gggggrrrrrr

 

[Pami]

I dropped this link to my dad, who owns two small businesses here in Indy, and this was his response (emphasis mine):

yes, i was aware.

in the new bill, the IRS was authorized to hire 16,000 new employees to handle the expected increase in paperwork.
but, they didn't allocate anything for businesses to hire more people.

just another blow to the small businesses and another step towards total socialism.

His businesses have the potential to take off like mad, but with this kind of maneuvering, it will be difficult. /sigh

 

[Waveraider]

The more you hear about the healthcare bill, the less it's about healthcare and more about complete socialism.

 

[UncleMike]

The more you hear about the healthcare bill, the less it's about healthcare and more about complete socialism.

The bill was NEVER intended to be about health care.
It's 100% about CONTROL!!
The Feds now control one sixth of our entire economy and have the authority to take over in the rest of it in the name of "Health Issues".
We are finished as a Capitalist System unless something happens to stop the complete takeover by BHO and his Socialist henchmen.
Mike

 

[SavageEagle]

So I have a question. If I were to start mowing lawns on the side and bought a new mower for that purpose, I would have to send a 1099 to Tractor Supply Company AND the IRS?

 

[jedi]

So I have a question. If I were to start mowing lawns on the side and bought a new mower for that purpose, I would have to send a 1099 to Tractor Supply Company AND the IRS?

If the lawn mower you buy cost $600+ you will need to send the 1099 to both yes. Not sure how you get the TIN from TSC.

 

[SavageEagle]

If the lawn mower you buy cost $600+ you will need to send the 1099 to both yes. Not sure how you get the TIN from TSC.

That's gonna suck. This is stupid. What's a TIN?

 

[Bill of Rights]

That's gonna suck. This is stupid. What's a TIN?

Taxpayer Identification Number.

 

[jedi]

Taxpayer Identification Number.

When you fill out your PERSONAL tax returns your "TIN" is your SSN.
When a company (anything other than a sole proprietor) fills out their taxes then use a TIN. It's just a way for the IRS to keep track of who (what entity) is filing. As a sole proprietor you have the option to use your own SSN or to get a TIN.

 

[SavageEagle]

Wow, yea, this is gonna be GREAT! Everyone giving everyone each other's SSN and TIN... Yea, there won't be ANY problems with that...

 

[UncleMike]

Wow, yea, this is gonna be GREAT! Everyone giving everyone each other's SSN and TIN... Yea, there won't be ANY problems with that...

Now, now SE.
Let's not get angry.

Just consider it one of the "small" prices that we have to pay to live in "The Chosen Ones" Socialist Utopia.
Mike

 

[SavageEagle]

Now, now SE.
Let's not get angry.

Just consider it one of the "small" prices that we have to pay to live in "The Chosen Ones" Socialist Utopia.
Mike

You're right, you're right. I should be happy to give my identity to someone less fortunate. Here. Would anyone like my SSN? It's 622-62-78257. (grab a phone if you can't figure that one out. )

 

[UncleMike]

You're right, you're right. I should be happy to give my identity to someone less fortunate. Here. Would anyone like my SSN? It's 622-62-78257. (grab a phone if you can't figure that one out. )

That's the spirit!!

Now lets all join hands and sing a rousing chorus of
Kum Ba Ya.

While you're doing that I'll just load some more mags over here.
Mike

 

[Fletch]

Well, at least now we know the answer to hornadylnl's question: Barack Obama is John Galt, because he's stopping the engine of the world.

 

[jedi]

Wow, yea, this is gonna be GREAT! Everyone giving everyone each other's SSN and TIN... Yea, there won't be ANY problems with that...

Yup... I only have to fill out one 1099 right now (have been doing that one for the past 3 years for royalties I pay to someone) so I have his SSN but we have know each other as biz "vendors" and have a solid relationship.

However I can't imaging having to ask USPS, eBay, PayPal, OfficeMax, and several online only stores for their TINS. I'm going to be laughed at since I'm such a tiny, tiny fish for them. Also I wonder how on earth I'm to give a 1099 to online vendors that don't even have a US addresses!

Looks like next year I may not be able to do my own taxes. Not even sure if a software program (ie. Turbo Tax) is going to help.

 

[mrjarrell]

CNN/Money takes another look at this bill and how it came about. Looks like its roots go all the way back to the Bush regime.

via CNN/Money

NEW YORK (CNNMoney.com) -- The massive expansion of requirements for businesses to file 1099 tax forms that was hidden in the 2,409-page health reform bill took many by surprise when it came to light last month. But it's just one piece of a years-long legislative stealth campaign to create ways for the federal government to track down unreported income.
The result: A blizzard of new tax forms that the Internal Revenue Service will begin rolling out next year.
"It was actually something that we were following back under the Bush administration under the 2008 budget -- we started to see these kinds of rumblings about the 'tax gap' and whether or not businesses were paying their fair share," says Tom Henschke, president of the Pennsylvania-based SMC Business Councils, which was one of the first organizations to call attention to the health care amendment when it was introduced last fall. "So two administrations can claim credit for this."
The first tax-reporting expansion was buried in a different bill, the Housing Assistance Tax Act introduced by House Speaker Nancy Pelosi and signed into law by President George W. Bush in July 2008. Best known for its first-time homebuyers' credit, the bill also created a new addition to the family of 1099 tax forms: the 1099-K.

More at the source.

Looks like a good excuse to go under the table and into the black or gray markets.

 

[Hotdoger]

CNN/Money takes another look at this bill and how it came about. Looks like its roots go all the way back to the Bush regime.

via CNN/Money

More at the source.

Looks like a good excuse to go under the table and into the black or gray markets.

The result: A blizzard of new tax forms that the Internal Revenue Service will begin rolling out next year.
"It was actually something that we were following back under the Bush administration under the 2008 budget -- we started to see these kinds of rumblings about the 'tax gap' and whether or not businesses were paying their fair share," says Tom Henschke, president of the Pennsylvania-based SMC Business Councils, which was one of the first organizations to call attention to the health care amendment when it was introduced last fall. "So two administrations can claim credit for this."

I call BS.

Mass Filings of 1099s was passed under OBAMA and a Democrat controlled congress. NOT PRESIDENT BUSH.


Saying "So two administrations can claim credit for this." is MORONIC!

 

[indykid]

I wonder what would happen if enough small businesses, and I mean millions of small business owners would stand up to the IRS, contact their state legislators and say; "I HAVE HAD ENOUGH AND I AM NOT GOING TO TAKE IT ANYMORE!!!"

 

[mrjarrell]

I wonder what would happen if enough small businesses, and I mean millions of small business owners would stand up to the IRS, contact their state legislators and say; "I HAVE HAD ENOUGH AND I AM NOT GOING TO TAKE IT ANYMORE!!!"

A new government spending bill would be instituted. It would fund new prisons and expanded tax courts and they'd all be thrown in prison, have their businesses seized through asset forfeiture laws and it would be business as usual after that.