Costly IRS Mandate Slipped into Health Bill

[formerlurker]

Costly IRS Mandate Slipped into Health Bill

Posted by Chris Edwards

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.

In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

The 2010 Health Care Act adds “amounts in consideration for property” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and “gross proceeds” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term “payments” includes gross proceeds paid in consideration for property or services.

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.

http://www.cato-at-liberty.org/2010/04/26/costly-irs-mandate-slipped-into-health-bill/

[SSG Snuggle Bunny]

If you complain about this it means you want children to die in the streets.

[JohnnyReb]

So, let's take this to the extreme....because you know DUmmie politicians will.

The kid down the street does your yard work once a week for 16 weeks every year. He does an excellent job and you pay the kid $40 a week. That's $640 a year so you have to send him a 1099 as per the law....and if he doesn't pay the taxes, SS, etc.. the IRS comes after you for them.

Death and taxes... one of these years there's going to be more death than taxes.

[IassaFTots]

So, let's take this to the extreme....because you know DUmmie politicians will.

The kid down the street does your yard work once a week for 16 weeks every year. He does an excellent job and you pay the kid $40 a week. That's $640 a year so you have to send him a 1099 as per the law....and if he doesn't pay the taxes, SS, etc.. the IRS comes after you for them.

Death and taxes... one of these years there's going to be more death than taxes.

Geez.  I am just going to start buying beer for my lawn dude.

[NHSparky]

And they call it "deficit neutral".  Riiiiiigggghhhhttt.

I guess we now know why they needed those extra 16K employees.

And Iassa--I'll be over.  First case is Bud Light, after that is Arrogant Bastard.

[JohnnyReb]

Geez.  I am just going to start buying beer for my lawn dude.

Careful or you'll have to give the beer truck driver a 1099.

[IassaFTots]

And they call it "deficit neutral".  Riiiiiigggghhhhttt.

I guess we now know why they needed those extra 16K employees.

And Iassa--I'll be over.  First case is Bud Light, after that is Arrogant Bastard.

I don't buy Bud Light.  No problem with the Arrogant Bastard.   

[IassaFTots]

Careful or you'll have to give the beer truck driver a 1099.

I probably should already.