Another hidden cost of new Healthcare Bill

[zdas04]

The new Healthcare Bill in the U.S. was a massive document that not enough people read thoroughly. One new burden on business is that anyone you pay more than $600 in a year must get a 1099. If you buy a computer at Best Buy you have to send them a 1099. It used to be that you had to do a 1099 for services, but now according to Section 9006 you have to issue a 1099 for tangible goods--anyone know Wal Mart's Taxpayer ID number?

Read about it at

http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/?hpt=C2

David

 

[MiketheEngineer]

Why do I have a hard time believing this?? Are you sure this is right??

 

[zdas04]

Look up the bill, it is section 9006.

 

[PeterStock]

Imagine the cost for Walmart etc on this, I think they will be screaming to their congressmen.

Peter Stockhausen
Senior Design Analyst (Checker)
Infotech Aerospace Services

http://www.infotechpr.net

 

[zdas04]

Walmart has a legion of accountants, accounting clerks, and computers. They'll just change a limit in a program and pay an extra $100k/year in postage (and I guess send a 1099 to the post office). I'm not going to cry for Walmart.

I'm more concerned about me. I looked at my accounting methods (I don't want to call it a "system") and if I had to do file the 1099 for people I buy stuff from for 2009 it would take about 250 hours of manual work, not counting the effort required to find out the tax id numbers for the people I buy stuff from. At my charge rate that is a lot of money. I don't have an accountant because he wouldn't accomodate my rate sheet (i.e., different rates for retainers, T&M jobs, and teaching, different information capture requirements for each) so I started doing it myself. It has been pretty easy for 7 years.

This new BS may be enough that I won't be able to stay in business much after 2011. I'll be 59-1/2 early in 2013 and can start taking money out of my 401K. Maybe I'll work through tax time 2013 and just not do the 1099 stuff and figure by the time they catch me I'll be retired on an island somewhere. I was planning on shutting down before all the provisions of the Healthcare plan went into effect in 2014 anyway so it is only 10 months early.

David

 

[RacingAZ]

I didn't believe it at first too but it is true. I think I'm getting a case of paranoia here but this is more than about the paperwork involve and putting the burden to all the businesses.

Think about it, it's a way for the government to keep tabs, being big brother. If I buy a used truck from a person or buy all kind of junk from ebay for my business, with that bill, they all get reported now to the IRS if more than $600. Whether the transaction is taxable or not for the seller, that is for the IRS to determine. They can scrutinize these kinds of transactions now because of the paper trail.

It's also like a tax increase because now the government will have their hand on every transaction, looking for potential tax revenue. Also hire more federal workers to do this so a more bloated government.

 

[SomptingGuy]

You guys and your "land of the free" are a constant source of merriment.

- Steve

 

[TravisMack]

My question is where does it stop? Do I have to issue a 1099 to my internet phone service provider? What about my wireless telephone? Restaurants where I may spend more than $600/yr entertaining clients? All of these services are provided by corporations and was not req'd in the past, but does this become fair game now as well? I typically do 3-5 1099 forms per year. It could get near 100 and I am just a single man operation.

Travis Mack
MFP Design, LLC

http://www.mfpdesign.com

 

[zdas04]

It stops at $600. If you take clients to the restaurant 6 times at $100/visit then you have to sent the restaurant a 1099. My cell phone costs over $600/year (hell, I had a $600 month last year) so yep. My phone bill includes Internet and Long Distance so for my, yep. I did more than $600 with three office supply places I would have to sent 1099's to. The US Post Office got more than $600 of my money.

I'm thinking that when the rules are finally published (in 2012 after they are already in effect, the government has stopped caring about the Ex Post Facto clause of the Constitution), they will exclude things you charge on a credit card, but I could easily be wrong about that. The stated intent of this nonsense is to catch the people who do cash/check business and don't report all the money coming in. If you accept credit cards then you are already getting the equivalent of a 1099 from your bank for that part of your income and you are already writing off the 3-5% that the credit card company charges you. At least that is what I'm hoping.

David

 

[berkshire]

I am wondering if you can beat them at their own game, and send 1099 forms for everything, by paper not electronically and overwhelm the system.
Or would this be like wrestling with a pig in the mud?
B.E.

 

[zdas04]

My read is that it is the pig in mud scenario. If the IRS gets behind, they hire more people and after the rush, they keep them on. Empires get larger.

David

 

[berkshire]

Rats
That's not what I wanted to hear.
B.E.

 

[tygerdawg]

Yes, quite irksome, but worry not.

This country has a built-in mechanism for radical non-violent revolutionary change of government called the electoral process. It was set up that way so that so that opportunities for incremental change would occur every two years.

That low, ominous rumbling noise you hear in the background is not the machinery of war or advancing troops. It is the approaching tsunami of angry discontent that promises to sweep the political coastlines. The pendulum will swing back the other way before too long.

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering

http://www.bluetechnik.com

 

[Pud]

Now, now SomptingGuy... have some sympathy. I've just looked up on Wiki what "1099" form is - I'm still not sure, but there appears to be 23 variants of it!

Is it to do with tax payable or claimable?

At least here in the UK, we only have one VAT (Value Added Tax) form, and all accounting packages do it automatically.

H

http://www.tynevalleyplastics.co.uk

 

[SomptingGuy]

How can anyone know what obscure forms they were supposed to have filled in until they miss one? I was perusing the IRS site some years ago and discovered which forms I should have filled in before leaving the US. A bit late!

- Steve

 

[zdas04]

The 1099 form is basically "Other". If you work for someone as an employee, they have to give you (and the IRS) a form W-2. If you hire a consultant it is inappropriate to give them a W-2 and you have to tell them (and the IRS)how much you paid them. In comes the 1099. It is very basic form that used to be pretty easy to fill out (as long as you have the necessary ID numbers). Then the state governments were required to tell the IRS if you got a tax refund--this requirement has a little bit different information so they came up with a 1099-GOV. etc. Ad Nauseum. Now there's 23 variants of the form. I figure for the new requirements they'll make a new variant, and that a very small percentage of the forms they receive will be on the right version.

The VAT is looking better and better, except none of the merchants I dealt with in the London area had a clue about it. When I did my expense statement after my recent extended trip to the UK, I had around 80 receipts and only 12 of them had VAT listed. 5 had two different VAT rates and the clerks couldn't tell me which one I had paid. I'm not sure how clean your "nice clean" VAT program really is.

David

 

[SomptingGuy]

David,

Just out of interest, what can you do with UK VAT receipts? Can you reclaim as a non EU citizen? Whenever we travel overseas on business, we are instructed to bring back all reciepts, although sales taxes paid outside of EU are just lost.

- Steve

 

[zdas04]

The company that is doing the administrative work for the course I'm teaching wants VAT broken out separately. It is a Canadian company and I'm not sure if they get a rebate from UK or if the Canadian tax system treats VAT differently. When I teach classes in Canada they want GST split out, so I was just assuming it was the same thing.

VAT on the crap you buy in tourist places was pretty much just part of the price and if there was any rebate it was beyond me.

David

 

[Pud]

There is, of course a big "catch" in the system. The retailer you buy stuff from has to be registered:

http://www.hmrc.gov.uk/vat/sectors/consumers/overseas-visitors.htm#2

H

http://www.tynevalleyplastics.co.uk

 

[zdas04]

Sure glad that the VAT scheme is so "simple" compared to our "complex" system. That link reads like it was written by the same goobers who are employed by the IRS. And the rules are just a convoluted.

David