Horrible New Paperwork Requirement Slipped into Health Care Bill
This is lifted from an email I got from America Outdoors
A little noticed provision in the recently passed health care reform bill will require every payment to corporations over $600 to be reported on a Form 1099 to the IRS, including payments for the purchase of merchandise and services. This provision takes effect in 2012.
The current law requires a Form 1099 to be submitted to the IRS when your business pays more than $600 for rent, interest, dividends, and non-employee services if the payments are made to entities other than corporations. Currently, payments made to a corporation and payments for merchandise are not required to be reported.
To file the required 1099, a business will have to obtain and keep track of a Taxpayer Information Number (TIN) from every vendor before submitting the 1099 to that business and the IRS. Under current tax law, one copy of the form is sent to the IRS, and another copy is sent to the person to whom the business made the payments.
Rep. Dan Lungren (CA-3) introduced "The Small Business Paperwork Mandate Elimination Act" (H.R. 5141). The legislation would repeal the expanded 1099 reporting requirement. Lungren correctly asserts that the burdens placed on small businesses by this reporting requirement would be overwhelming.
Call your U.S. Representative today and ask them to cosponsor H.R. 5141. The House switchboard number is 202-225-3121. Ask to be connected to your Representative's office.
My small business has over a thousand vendors. I would have to hire someone full time for a month to do this. And it would be to zero purpose. The IRS would be so flooded with forms that there would be no way they could pull any useful information from the blizzard. This is yet another example of legislators operating with absolutely no idea how commerce actually works. We have coined a name for it within our firm -- we call it arrogant ignorance.
Chris Edwards at Cato had more on this a while back.
I'm stunned that there wasn't a broader debate before such a costly mandate was enacted. If it goes into effect, it will waste vast quantities of human effort in filling out forms, reworking computer systems, collecting and organizing data, and fighting the IRS. The struggling American economy can't afford anymore suffocating tax regulations. This mandate is a giant deadweight loss. It should be repealed.
