Affordable Care Act
Posted: February 4, 2011
Our president and other state and national lawmakers are prioritizing their goals to focus on the well-being of small business owners over the next few years. They tell us that they are all for reduced paperwork and making it easier for the nation's largest job creators. For the most part, that is a good thing. But I wonder how politicians who can speak so candidly about their caring attitude have not repealed a measure that is part of the most recent health insurance initiative.
Under the Affordable Care Act that was passed in Congress last year, there is a requirement that would affect small business owners starting with 2012 purchases and 2013 tax filings. If you're not familiar with the law, all businesses will be required to send IRS 1099 forms to all customers, including corporations, if more than $600 trades hands over the course of a calendar year. The bill is part of the health care mandate that aims to collect lost revenue from businesses that under-report on their income tax returns. The measure is expected to raise $17 billion over the next decade.
Under the current rules, business owners send 1099 forms for payments in excess of $600 for rent, interest, dividends and non-employee services to those who are not corporations. Under the new rule, it is estimated that more than 38 million businesses, including 26 million sole proprietorships and two million farmers, will have to comply. Talk about a waste of time, energy and money.
President Obama stated last November, "...the 1099 provision in the health care bill appears to be too burdensome for small businesses. It just involves too much paperwork, too much filing. It's probably counterproductive." Unfortunately, the White House is now backing off that premise because any repeal of its prized health care measure could set a precedent for curcumventing other portions of the law. Either way, the President was correct last fall and the 1099 reporting requirement needs to be quashed.
If that's not enough to convince lawmakers that the bill needs to be amended, then consider what the Internal Revenue Service Director said when asked how he would enforce the 1099 reporting requirement: "HHS (Health and Human Services) is the one that is given the requirement to interpret this entire law ". So, based on that statement, the governing body of tax collections is pushing off the responsibility to the health care people to best decide how to enforce a new tax reporting law. Brilliant.
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