Another hidden cost of new Healthcare Bill

[shadow401]

It will be another law that nobody follows. There are tons of these that have been in place for years that nobody follows such as... giving your babysitter a 1099, driving below the speed limit, reporting your tips if your a waiter, and leaving the country if your an illegal alien. There's even a tax form to report your income from the sale of illegal drugs.

Speaking of crazy laws, did you hear about the EPA rule that became effective April 22, 2010. If you hire anyone to work on a house older then 1978 and they disturb greater than 5 sf of any painted surface, they must perform lead abatement measures. The house must be sealed off, all workers wear ventilations systems and protective gear, clean every surface, all debris must be treated as hazardous materials.

 

[berkshire]

You know you are not obliged to give a 1099, you only do that if you want to claim the money off your taxes.
You can either pay the tax yourself and say nothing, or you send the form to claim the expenditure.Of course we would like to reduce our taxes so,
in this manner the IRS turns us all into a bunch of finking Freddie's. Grand aint it.
B.E.

 

[cvg]

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.

Thats the beauty of the VAT system, government can raise the VAT any time they want and nobody really knows how much tax they are paying. Ideal system for a liberal tax and spend government where government can balance the budget by raising the VAT whenever necessary. Too bad they never lower it...

 

[berkshire]

One way governments get their camels nose under the tent with VAT, is to offer to cut income tax.
Once the VAT is established, guess what happens to the income tax?
B.E.

 

[beej67]

Somehow I think this changes before it becomes effective in 2012.

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[BJC]

I am with MiketheEngineer.
the right wing, anti-everything has a way of cheery picking everything they don't like, they exagerate things out of context and exagerate it to make it look were going to get tissue out of Linens tomb and recreate him to run the country.

 

[zdas04]

"right-wing, anti-everything". "Linens tomb". "cheery picking".

BJC, your comments would carry more weight if you bothered to spell check, proof read, and avoid ad hominem attacks.

This thread is about Section 9006 of H.R 3962. It is not cherry picking, it is a discussion of the law of the land. The discussion is about the impact on our businesses of this seemingly unrelated add-on to the bill.

You and MiketheEngineer (whoever that is) are certainly welcome to discuss how this part of the bill will affect your business, but please try to keep the personal attacks confined to the other sites you play in.

David

 

[cvg]

here's the complete text of section 9006 - not sure how this affects 1099's

Full bill is available at:

http://americanaffairs.suite101.com...-care-reform-bill-text--read-hr-3590--hr-4872

SEC. 9006. EXPANSION OF INFORMATION REPORTING REQUIREMENTS.
(a) IN GENERAL.—Section 6041 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new subsections:
‘‘(h) APPLICATION TO CORPORATIONS.—Notwithstanding any
regulation prescribed by the Secretary before the date of the enactment of this subsection, for purposes of this section the term ‘person’ includes any corporation that is not an organization exempt from tax under section 501(a).
‘‘(i) REGULATIONS.—The Secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.’’.
(b) PAYMENTS FOR PROPERTY AND OTHER GROSS PROCEEDS.—
Subsection (a) of section 6041 of the Internal Revenue Code of 1986 is amended—
(1) by inserting ‘‘amounts in consideration for property,’’
after ‘‘wages,’’,
(2) by inserting ‘‘gross proceeds,’’ after ‘‘emoluments, or
other’’, and
(3) by inserting ‘‘gross proceeds,’’ after ‘‘setting forth the amount of such’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to payments made after December 31, 2011.

 

[zdas04]

Link to the IRS Code Section 6041 (here's a link to it

http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._6041._Information_at_source)

and make the required changes and you'll see that Section 9006 extends existing 1099 requirements to payments for material goods (i.e., property). The existing law requires "(d) Statements to be furnished...", i.e., a Form 1099, and the new law extends this requirement to tangible goods.

David

 

[cvg]

I admit, I was too lazy to look up the 1986 IRC section that was referenced and make the substitutions. That requires a lot more effort and is likely one reason why this little "adjustment" to the IRS reporting requirements got worked into the bill without anybody noticing.

 

[zdas04]

You're not the only one. It took me almost an hour to understand that little section. I ended up copying the IRS code into a Word document and actually made the changes in a different color to see what the heck they were saying.

I've been very involved with contracts, regulations, and other legal stuff for my whole career and it took me an hour. Most small-business owners have expertise in other areas and don't want to master legal-speak. This "little" change to the tax code (which was stuck in 5 bills this year to try to sneak it through, the author is trying to find unreported income) will change some details about the way every small business works (e.g., I'm going to keep track of where I spend office supply money and as I approach $600, I'll change suppliers, same with vehicle fuel).

By the way, the IRS Code does not require a 1099 for anything. It specifies the list of data that must be provided to the IRS and to the person you paid. A 1099 has blanks for all of the required data, but folks like Fidelity Investments provide the information free form instead of on the form. That is why if you search on "Form 1099" within the Health Care bill or in the referenced section of the tax code you get zero hits. This feels sleazy to me and we should all thank the "right-wing anti-everything" pundit that dug it out.

David

 

[cvg]

I work for a large international company and I would guess we are talking about hundreds of 1099's just for office supplies alone. It will take a team of bean counters to keep track of all of this and I'm sure that will take a sizeable chunk out of our profit and any potential profit sharing, stock dividends or other compensation. However it will likely not result in any additional tax money collected by the IRS.

 

[zdas04]

I used to work for one of those, and across the U.S. the number is tens of thousands (hundreds for office supplies is conservative). I did an analysis in the early 80's to see how many vendors we were going to have to train to give us the "right" information on invoices so our new (mainframe) invoice processing system would work right. I remember breaking the data into total billing categories and the under $1,000 list was REALLY long (hundreds of pages as I recall). I bet that very few of them failed to claim the amount we paid them.

It is funny, one of my clients is a huge multi-national and they have only sent me a 1099 with the right amount once out of 7 years I've been in business. It seems to be hard to get the info right for services, I think it will be impossible to get it right for goods.

David

 

[eyec]

here's the latest
CNN Money

 

[zdas04]

Well, based on that I'd say that the pundit that thought that credit card purchases would be exempt was wrong. It was interesting that they estimated 1/2 hour per 1099 and raising the number from 10 to 200 would increase the burden from 5 hours to 100 hours--and the 200 Form 1099 number did not include purchases from corporations or for stuff (as opposed to services), I bet the number of 1099's will average closer to 400 per business or about 1/12 of your annual gross.

David