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04-29-2010, 04:13 PM #1
Obamacare screws all sole proprietors and small businesses in an unexpected way
Make skis in your garage? Sell real estate? Are you trying to work for yourself instead of working for the Man?
"A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.
Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress."
"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."
Yes, it's complete barking insanity. From another article:
"In practical terms, here is what the new law means. Joe’s Plumbing prints up 100 color presentations at FedEx Kinko’s for a trade show in New Orleans, where they are staying at a Holiday Inn for six days.
At a minimum, Joe’s Plumbing will have to contact FedEx Kinko’s, the airline, Holiday Inn, the rental car company, and the organization sponsoring the trade show and get taxpayer identification numbers from them so they can comply with this tax law. The company will then have to send out 1099 forms to each of these vendors and dozens, hundreds or thousands more vendors, depending upon the size of the company, thus adding significant compliance costs to every business in America. Everyone from a company’s accountant, to building supplier, to carpet cleaner to janitorial service will be trading 1099 forms.
Yes, that’s right, trading 1099 forms, because at the same time, Joe’s Plumbing will also be receiving 1099 forms from every one of their business customers who spent more than $600 with them over the course of the year, which they will be required to keep and reconcile against their books."
I'm not a Dan Lungren fan, but his bill had better pass or every sole proprietor and small business in America is totally fucked.
04-29-2010, 04:28 PM #2?
- Join Date
- Jul 2005
- Verdi NV
But basically the Seller in all these transactions was just supposed to report the revenue. but now the new law mandates the 1099 stuff from the seller.
So the Guberment wants to create a paper trail to make sure they get their pound of flesh?
And we will need to staff the IRS to wade through and enforce this.
How many more government employees will this take?
So Its saying when you itemize your expences there needs to be matching 1099's for each Item over 600$ ??Own your fail. ~Jer~
04-29-2010, 04:29 PM #3
Did you know that only idiots call it Obamacare?
Seriously, just that vocabulary makes me not give a damn about what you have to say. It ties you to the seriously lame end of the "conversation".
04-29-2010, 04:39 PM #4?
- Join Date
- Jul 2005
- Verdi NV
Soo Do you dispute the Claim made by the OP? Or you know its true and decided to shoot the messenger rather than Defend or Dispute the information.
If true what do you think of this little item that has NOTHING TO DO WITH Healthcare.Own your fail. ~Jer~
04-29-2010, 04:55 PM #5
So if you always use the same local gas station and claim gas as a business expense, you have to issue a 1099 to the gas station, because you spent over $600 with that business in one year.
I wish I were making this up.
And what about chains? Are Comfort Inns or Hyatts individual franchises, or are they owned by the parent company? If I stay in three different Comfort Inns in the same year and bill it to the company, do I owe them a 1099 or not? Does the front desk clerk know the Comfort Inn corporate structure?
Welcome to insanity. Call your Reps and Senators about the Lungren bill.
Originally Posted by spindrift
Welcome to modern politics: "Any time I hear a word that has been connected in the past with things I dislike, I shut my brain off and refuse to listen, because it might force me to think."
Obama made passing this bill the primary goal and centerpiece of his domestic policy. Therefore, I think it's fair to call it "Obamacare," just as we referred to "Reaganomics": both presidents made them centerpieces of their own domestic policy.
04-29-2010, 05:03 PM #6
Howsabout this one: do you know that only panty-twisted whiners get all upset when somebody refers to Health Care Reform as Obamacare?
OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE!OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE!OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE! OBAMACARE!
04-29-2010, 06:02 PM #7
Solution: C.R.E.A.M. (Cash Rules Everything Around Me)
dollar, dollar bill yall
04-29-2010, 06:16 PM #8ALSO ACTUALLY JER
- Join Date
- Apr 2008
- THE GRANDSTAND
04-29-2010, 06:22 PM #9
04-29-2010, 06:26 PM #10
This is unbelievable.
Thanks for bringing this up. This would be a fucking nightmare for me. I already have a hard time complying with everything on time, this would be absolutely ridiculous. I am a small small business and this would significantly increase my paperwork load, and for what you ask? It's purely so the i.r.s. can cross reference and see if any business is not reporting revenue.
Complete bullshit. I will be contacting my reps via phone, e mail, and snail mail.
04-29-2010, 06:35 PM #11
04-29-2010, 07:22 PM #12
04-29-2010, 08:04 PM #13
DBS, bushman, archer: exactly.
Then everyone will wonder why everything in the US just got so much more expensive, why any remaining US business gets exported to China or Mexico in order to avoid all this horseshit -- and why the economy is still in the toilet while Wall Street continues to own everything...
04-29-2010, 08:17 PM #14
This probably has nothing to do with Obama and was instead inserted by some short sighted Congressperson that doesn't know jack about taxes. If you can prove to me otherwise, then please do so. The likelihood that it was some dumbass representive is much higher as this sort of crap gets tossed in all the time.
Also, I'm not really worried about this. It will definitely be repealed. There's no way any business, much less a small one, can deal with the volume of 1099s that will be generated as a result of this law. Both big and small businesses alike will kill this swiftly.
On a related note, I've had to do some research on this lately. Most people don't file 1099s when they should anyway. Generally the IRS looks the other way if you're small enough. If you get audited, they'll ding you; but the fine is small from what I've been able to gather."I knew in an instant that the three dollars I had spent on wine would not go to waste."
04-29-2010, 08:58 PM #15
04-29-2010, 10:10 PM #16
I wonder what other howlers are stuffed somewhere inside the 2700 pages?
04-29-2010, 11:30 PM #17
Last edited by Hugh Conway; 04-29-2010 at 11:42 PM.Lord King of the Beater-Kooks
04-29-2010, 11:55 PM #18
Most implementations don't tax food or rent, leaving the poor relatively burden-free, and the wealthy get most of their income from capital gains, which are allowed to compound burden-free -- leaving the middle class to pay disproportionately.
(As I've said previously, the least burdensome form of taxation, one that encourages the most actual productivity, is to abolish all income and sales taxes, taxing only capital gains and other passive investment.)
But that's not what we'd get with a new VAT: in our case (as in Europe) the VAT wouldn't substitute for income tax, it would just add to it. The problem is that keeping paperwork on every single transaction is a frictional cost that disproportionately hits sole proprietorships and small businesses who are already overtaxed with paperwork -- let alone the actual tax payments, which they're not big enough to avoid via offshore subsidiaries like the big multinational corporations can. And then there's the massive illegal black market that all VAT schemes instantly create...
It's a great idea in theory, but the implementation leaves much to be desired.
04-30-2010, 01:59 AM #19
Issuing 1099s to corporations is wholly unnecessary. While complicated financial transactions like credit default swaps may be difficult to audit and valuate, the major audit firms do an excellent job auditing the basic types of transactions that are covered by 1099s. It's my educated guess that's why there's never been a requirement to issue 1099s to companies, only individuals. Issuing a 1099 to a company, especially a public company, is totally pointless. Having your financials audited quarterly (or yearly for medium to small businesses) serves essentially the same purpose. Additionally, the threat of an IRS audit is a decent incentive for most small businesses to get their books right.
Having to issue 1099s to any entity would produce an undue burden on a company of any size. Arguably, it would be even worse for large corporations. While accounting software has the capability to take a lot of the pain out of it on the front end, you're still talking about a massive cost increase to support the 1099 process. Everything from a huge increase in mailing expenses to the inevitable support calls that come from people who don't feel they should be getting a 1099. For instance, W-2G season at Harrahs was madness when it rolled around every year. Now imagine multiplying that by 100 fold. It's essentially unsupportable.
I dunno, we'll see. But I would be very, very surprised if this didn't get repealed quickly."I knew in an instant that the three dollars I had spent on wine would not go to waste."
04-30-2010, 05:54 AM #20
On the same topic here's a little goodie that's hidden in the Dodd banking reform bill:
It’s amazing to watch the civil libertarians hide when Democrats propose the most sweeping intrusions of privacy in generations. In addition to the litany of bad policies contained in the Dodd Financial Reform bill is this nugget on pages 1039-1040. In short, it extends government reach to every deposit account of every citizen.
Subtitle G of the Dodd discussion draft bill requires that records be maintained and reported “for each branch, automated teller machine at which deposits are accepted, and other deposit taking service facility with respect to any financial institution, the financial institution shall maintain a record of the number and dollar amounts of deposit accounts of customers.”
What’s worse, banks will be required to submit these records to the new super regulatory agency called the Consumer Financial Protection Agency (page 1041). The CFPA will be allowed to use this information for any purpose “as permitted by law” under CFPA rules—rules set by CFPA themselves.
So, lets get this straight—the law requires banks to snoop on its customers MOST PERSONAL INFORMATION and submit it to another government agency so it can be used anyway the CFPA see’s fit.
So, if the CFPA Czar see’s fit, information about your deposit account activity could be shared with the IRS, immigration officials, state officials, or any other entity that the Administration and their various Czar’s think beneficial.
But CFPA will impact your life even before they give away your personal data. Remember that part of the excuse for including this authority is to make policy recommendations. So, be careful not to run your credit limit too high above the amount of money you are depositing in the bank or the CFPA will know you can’t pay your bills and make the appropriate “policy recommendations”.
This is exactly why conservatives have fought so hard against things like national ID cards—if the government is authorized to collect and utilize data, there is no way to prevent the government as a whole or certain individuals within the government from using the information against the citizens.
But passage of the CFPA will settle the whole ID card thing once and for all. There will be no need for them because if you have a bank account, you already have a number and the CFPA will have it.
The breadth of sweeping new powers given to the federal government by these three pages is astonishing. Yet we have heard nary a peep about this provision.
After capitulation and surrender, Republicans will have a chance to amend the legislation when it comes to the floor of the Senate and protect the private details of your banking account.
But if they don’t, smile the next time you go to the ATM because Big Brother will be watching.
05-06-2010, 09:06 AM #21
More info from a god-awful mainstream news source:
Health care law's massive, hidden tax change
By Neil deMause, contributing writer
May 5, 2010: 11:00 PM ET
NEW YORK (CNNMoney.com) -- An all-but-overlooked provision of the health reform law is threatening to swamp U.S. businesses with a flood of new tax paperwork.
Section 9006 of the health care bill -- just a few lines buried in the 2,409-page document -- mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.
The stealth change radically alters the nature of 1099s and means businesses will have to issue millions of new tax documents each year.
Right now, the IRS Form 1099 is used to document income for individual workers other than wages and salaries. Freelancers receive them each year from their clients, and businesses issue them to the independent contractors they hire.
But under the new rules, if a freelance designer buys a new iMac from the Apple Store, they'll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.
The bill makes two key changes to how 1099s are used. First, it expands their scope by using them to track payments not only for services but also for tangible goods. Plus, it requires that 1099s be issued not just to individuals, but also to corporations.
Taken together, the two seemingly small changes will require millions of additional forms to be sent out.
"It's a pretty heavy administrative burden," particularly for small businesses without large in-house accounting staffs, says Bill Rys, tax counsel for the National Federation of Independent Businesses.
Eliminating the goods exemption could launch an avalanche of paperwork, he says: "If you cater a lunch for other businesses every Wednesday, say, that's a lot of information to keep track of throughout the year."
The paper trail
Why did these tax code revisions get included in a health-care reform bill? Welcome to Washington. The idea seems to be that using 1099 forms to capture unreported income will generate more government revenue and help offset the cost of the health bill.
A Democratic aide for the Senate Finance Committee, which authored the changes, defended the move.
"Information reporting improves tax compliance without raising taxes on small businesses," the aide said. "Health care reform includes more than $35 billion in tax cuts for small businesses ... indicating that during these tough economic times, Congress is delivering the tax breaks small businesses need to thrive."
The new rules could drastically alter the tax-reporting landscape by spotlighting payments that previously went unreported. Freelancers and other independent operators typically write off stacks of business expenses; having to issue tax paperwork documenting each of them could cut down on fraudulent deductions.
More significantly, the 1099 trail would expose payments to small operators that might now be going unreported. If you buy a computer for your business from a major chain retailer, the seller almost certainly documents the revenue. But if you buy it from Tim's Computer Shack down the street, Tim might not report and pay taxes on his income from the sale.
The IRS estimates that the federal government loses more than $300 billion each year in tax revenue on income that goes unreported. Using 1099s to document millions of transactions that now go untracked is one way to begin to close the gap.
While all but unnoticed at the time -- a Pennsylvania business group issued the first warning last October as the idea emerged in draft Senate legislation -- the 1099 rule changes began sparking attention in the blogosphere in the last week. The libertarian Cato Institute called it a "costly, anti-business nightmare"; Rep. Dan Lungren, R-Calif., introduced legislation last week that would repeal the new 1099 requirements.
The notion of mailing a tax form to Costco or Staples each year to document purchases may seem absurd to small business owners, but that's not the worst of it, tax experts say.
Marianne Couch, a principal with the Cokala Tax Group in Michigan and former chair of a citizen advisory group to the IRS on small business and self-employed tax issues, thinks the bigger headache will be data collection: gathering names and taxpayer identification numbers for every payee and vendor that you do business with.
But she also sees a silver lining in the new law.
Her firm already recommends collecting tax data on all vendors, since the IRS requires that you have it on hand at the time of the transaction, not just at tax-filing time. And eliminating the corporate and goods exemptions at least means that businesses will no longer have to pour over every transaction to determine if it needs a 1099. The new rule is simpler: If it crosses the $600 threshold, it's in.
"There are probably going to be some hiccups along the way, because systems will need to be redesigned," says Couch. "But overall I believe it will make compliance on the payor end a lot more streamlined and easier."
In any case, the final impact of the law won't be known until the IRS issues its regulations on the new law, which aren't expected to arrive until sometime next year. The IRS has not yet commented on when it will release regulations or schedule public hearings, and an agency spokesman was unsure when it will do so. The new requirements kick in January 1, 2012.Balls Deep in the 'Ho
05-06-2010, 09:29 AM #22
could this have been avoided, if the republicunts had worked with the dumbocrats on this bill instead of simply obstructing it?
05-06-2010, 09:34 AM #23
^^^ Like when they were told just vote on it and we'll tell you what's in it later ?? That kind of "working together" ?
I know the republicans played the "no" card, but this is exactly the kind of shit big gov't types (see: democrats, progressives) do to gain more power and money for gov't and it's growth."You damn colonials and your herds of tax write off dressage ponies". PNWBrit
05-06-2010, 11:50 AM #24"We don't beat the reaper by living longer, we beat the reaper by living well and living fully." - Randy Pausch
05-06-2010, 11:58 AM #25