Our nightmare future is starting to look more like Brazil (1985) than Red Dawn (1984). Or maybe it’s starting to look more like 1984.
This, from a post by Chris Edwards at Cato@Liberty…
Costly IRS Mandate Slipped into Health Bill
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. …
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.
This is another one of those business burdens that fall disproportionately on small business. Large business do most of their business with other corporations anyway, and probably report a lot of unrequired 1099s just to be safe. Since corporations typically transact with each other via auditable transactions anyway, the information is largely redundant.
But the small businessman or woman must is now on the hook for determining the tax ID number of virtually everyone with whom they transact business, in the time frame between January 1 and January 31 every year.
Of course, a lot of crap flew under the radar in the Health Care Bill. One of the few groups that did manage to get its concerns on the record was the Air Conditioner Contractors of America:
The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.
In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.
This is one of the provisions that had Nancy Pelosi anxious to pass the bill so that we could find out what was in it. Yippee.
H/T dennism (my CPA).
Cross-posted at RedState.com.