May 10, 2010

Another unpleasant surprise from Obamacare

By Another unpleasant surprise from Obamacare

Author: Timothy Sandefur

From Michael Tanner:

Unfortunately, most of what it is giving is about as welcome as those little treats your cat drags in.

Almost every day we discover some new little gem hidden in the 2,500-page, 400,000-word redesign of the American health care system. Regulations we hadn’t heard about, new costs, new taxes, new mandates; it’s a bad bill that just keeps getting worse.

The latest surprise is Section 9006(b)(1) — come on, I know you’ve read it — which requires that businesses provide a 1099 form to every vendor with whom they do more than $600 worth of business over the course of a year. A 1099 is similar to a W-2 form, but for income other than wages. Businesses will also have to file a copy of the form with the IRS.

Of course businesses already have to file 1099s for outlays on items like consultants.

But the new rule will mean that even the smallest of businesses will have to issue a form — and file with the IRS — for virtually every purchase or payment.

To pay your rent, you have to issue a 1099. Buy a new set of tools, issue another one. Software, office supplies, airline tickets, gas for your truck, they all could require filing a 1099 — and entail a huge new administrative burden.

The burden falls on the other partner in the transaction too. The business providing the goods and services would have to collect 1099s from all its customers and integrate them with the rest of its tax records.

This would be a significant burden even for businesses with computerized record keeping. For the millions of small businesses that still do bookkeeping by hand, the cost in both time and money will be devastating.

(Read the rest…)

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