Apparently, tucked away inside the Stalinization of Health Care Act of 2010 was yet another little tidbit that will make doing business in America a nightmare of headaches. No, this isn’t even the Stalinization of student loans…
When an independent contractor (say, a business consultant or interior decorator, etc.) does work for another business, he’s paid on contract and the client usually issues an IRS Form 1099. A 1099 (to simplify) basically takes the place of a W-2. Since the independent businessman doesn’t have a “boss” who issues him checks, this is how the IRS keeps track of his income through this work. Now, a 1099 isn’t like writing a receipt. It’s a very intrusive document that collects information like Tax ID numbers, addresses and contact information, state and federal tax witholdings. The simple IRS instructions only take eight pages, though. Fortunately, however, these forms aren’t needed for every contractor or service provider or person from whom you buy something. Oh, until now:
Thanks to SoHCA2010, there are new and much more onerous regulations for anybody who runs a business and purchases goods and services–which is every business. An accounting firm called RIA reports:
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.
From Cato @ Liberty:
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.
In a grubbing attempt to squeeze every penny out of their
subjects citizens, the government is doing an effective job of ensuring the economy does not rebound anytime soon.
Well, at least we finally passed it so we can now find out what’s in it. right, Nance?
-Nick (ColoradoPatriot, from HQ)