Thursday, May 6, 2010

Billions of 1099 forms

Lunacy in Washington, sheer lunacy. Via Reynolds, TaxProf quotes CNN:

CNN: ObamaCare's Massive, Hidden Tax Change

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.
TaxProf has more links. Warren Meyer has a post: Horrible New Paperwork Requirement Slipped into Health Care Bill.

In the email this morning:
I guess we had to pass the bill to find out what was in it.

I wonder who inserted this provision, and what in the world it is supposed to have to do with health care or health insurance, or anything but destroying the private sector.

1 comment:

Mimi Black said...

Heheheh

Thanks I needed a laugh :)