Thursday, April 29, 2010

The Health Care Follies Continue

I didn't realize the health care bill was this unfriendly to small business...
Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly.

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. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.
This is friggin' insane. Ed Morrissey at Hot Air puts it well...
And they did it as part of a health-care bill. Instead of directing capital towards growth-stimulating efforts, Nancy Pelosi and the Democrats just buried the private sector in an avalanche of compliance costs.
Morrisey calls it "another Pelosi Easter egg." It's an Easter egg filled with manure.

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