Senate votes to repeal 1099 reporting requirement in health care law(portfolio.com)
portfolio.com
Senate votes to repeal 1099 reporting requirement in health care law
http://www.portfolio.com/views/blogs/capital/2011/02/02/senate-votes-to-repeal-1099-health-care-requirement
30 comments
My only disappointment is that I was hoping to get in on the software market that would have been required to track all of this nonsense. It was a gift in that regard.
I've talked about this quite a bit in the tax industry, and there are a few popular opinions. My favorite so far is that this was designed to fail to show just how bad our tax code can get, which would then be used to usher in simplification/reform, i.e., VAT.
I've talked about this quite a bit in the tax industry, and there are a few popular opinions. My favorite so far is that this was designed to fail to show just how bad our tax code can get, which would then be used to usher in simplification/reform, i.e., VAT.
I'm curious why 17 voted to keep it.
Was there a rider attached for some other crazy rule?
Gotta find that website that shows who exactly voted for what...
Was there a rider attached for some other crazy rule?
Gotta find that website that shows who exactly voted for what...
I'm not sure, but it might be this part:
"The amendment that passed directs the Office of Management and Budget to tap up to $44 billion in unspent funds appropriated for other purposes to cover the revenue that would be lost by repealing the 1099 requirement.
[...]
The amendment sets "a terribly dangerous precedent," said Senator Daniel Inouye, a Hawaii Democrat, who chairs the Senate Appropriations Committee.
Difficult decisions on how to reduce spending lie ahead, he said, and its Congress’ responsibility to determine where these cuts will be made. Delegating these decisions to the executive branch "may be politically expedient," Inouye said, but it also is "thoughtless and rash.""
"The amendment that passed directs the Office of Management and Budget to tap up to $44 billion in unspent funds appropriated for other purposes to cover the revenue that would be lost by repealing the 1099 requirement.
[...]
The amendment sets "a terribly dangerous precedent," said Senator Daniel Inouye, a Hawaii Democrat, who chairs the Senate Appropriations Committee.
Difficult decisions on how to reduce spending lie ahead, he said, and its Congress’ responsibility to determine where these cuts will be made. Delegating these decisions to the executive branch "may be politically expedient," Inouye said, but it also is "thoughtless and rash.""
Good. I wasn't going to do it anyways
You and most of the rest of the US; how would you even educate the population about this massive change quickly enough? Computers have made much paperwork cheaper and faster but this was simply absurd, a perfect example of doing the cost/benefit analysis and simply assuming the cost of paperwork is either a flat zero, or that one can account for the cost of paperwork solely by considering the cost to the government as if that's the only entity that matters.
I think that tax preparation services were salivating at the prospects. Mine sent a letter with our tax prep organizer explaining the change and offering their services to prepare them for me.
I agree that it is absurd.
I agree that it is absurd.
That's pretty much how I felt too. Imagine every single business ISP and cell phone provider in the country receiving a 1099 from every single customer. This requirement was pretty much the single dumbest thing ever codified into law.
I think this applied to unincorparated providers only. But I agree, this was a very intrusive expansion of reporting requirement for taxpayers. Thank goodness they are getting rid of it.
I was going to handwrite them all so OCR wouldn't work effectively.
I wish they'd repeal the 1099-K requirement for eBay income :)
Good. It would be a huge costly hassle and wouldn't raise one cent in new tax revenue, despite their wild eyed hallucinations to the contrary.
Its funny too because they thought it would generate some $44,000,000,000; which of course now will have to come out of something else.
Yes, it gives them someone to blame for the imaginary "loss" when this abomination is cancelled.
There are a very small number of criminal underground businesses that are not declaring income, but those purchase are not made with check or credit cards, they are cash-only, no receipts. The customers buying blackmarket or illegal goods from these sketchy places are mostly not legit themselves. Mostly it is drug dealers and undocumented alien sole proprietor gardeners, not licensed legitimate long established businesses. They are not going to start filing 1099s. Maybe a few of them will though, and this will bring in an additional 10 million in income tax. That's a huge exaggeration, undoubtedly it will be less. But let's say 10 million.
Consider though the 99.999% of businesses that have always done legit business and report income who will be massively burdened by this and to process their 30 billion submitted 1099s each year is going to require new IRS personnel to the cost of way more than $10 million. In addition, a lot of companies will forgo purchases rather than have to deal with the additional paperwork. Submitting requests and filling out these forms and tracking it all to make sure you got them all is going to mean hiring more people (yay more jobs?) to handle it, but that means prices go up, or you have to lay off somewhere else. It's not stimulating the economy to hire people to do busy work at the cost of producing and earning less, it's stimulating to actually produce more and do well.
When we have a customer that needs IRS forms to be filled out with a purchase (often W-9s), it is never ever a simple request. It always comes coupled with very dense bureaucratic requirements from the other company (usually some government institution or contractor) which mean in addition to tracking and filling out forms, there is several hours of busy work, emails and phone calls because the people that demand this level of bureaucracy are like little helpless children, but very uptight ones. We have a W-9 filled out and available. This is followed by requests that they "entered it into the system and it came back wrong". Entered into what system? "The IRS validation system." IRS doesn't have that, do you mean an third party one? Did you type in the name of the business correctly? Yes. Try it again. I already did that, please mail us the W-9 form again. Two weeks later, same problem. Four weeks later, oops, they misspelled the name of the business, or the EIN, or they are using some dodgy company for validation which only has a small fraction of companies nationally. And never mind that W9s are not required for retail sales of $20 in off the shelf software as it is, that doesn't matter, it "is their policy." Likewise, every institutional purchaser is going to demand several days of work to deal with 1099s as well now for a $20 purchase, because their policy will now be to collect on ALL purchases regardless of size just in case they happen to go over that $600 limit. To manage all this, it will be approved vendors only, which will be large institutional supplier/resellers who charge ten times normal retail in order to deal with bureaucracy. What happens to tuition then. And what happens to the small companies locked out of the system. No longer will it even be an option to buy the best product or lowest price, it will be whatever the approved vendor asks.
All this burden to find hidden income from a tiny blackmarket and illegal sector that isn't going to file these forms anyway.
The software guys salivating at the chance to sell software to manage all this stupidity should be ashamed of themselves, that is pathetic. Our economy has collapsed because of greedy non-producers who siphon off value from economic activity in order to benefit themselves financially while contributing nothing of real value. This selfishness is what is destroying our country and the world.
There are a very small number of criminal underground businesses that are not declaring income, but those purchase are not made with check or credit cards, they are cash-only, no receipts. The customers buying blackmarket or illegal goods from these sketchy places are mostly not legit themselves. Mostly it is drug dealers and undocumented alien sole proprietor gardeners, not licensed legitimate long established businesses. They are not going to start filing 1099s. Maybe a few of them will though, and this will bring in an additional 10 million in income tax. That's a huge exaggeration, undoubtedly it will be less. But let's say 10 million.
Consider though the 99.999% of businesses that have always done legit business and report income who will be massively burdened by this and to process their 30 billion submitted 1099s each year is going to require new IRS personnel to the cost of way more than $10 million. In addition, a lot of companies will forgo purchases rather than have to deal with the additional paperwork. Submitting requests and filling out these forms and tracking it all to make sure you got them all is going to mean hiring more people (yay more jobs?) to handle it, but that means prices go up, or you have to lay off somewhere else. It's not stimulating the economy to hire people to do busy work at the cost of producing and earning less, it's stimulating to actually produce more and do well.
When we have a customer that needs IRS forms to be filled out with a purchase (often W-9s), it is never ever a simple request. It always comes coupled with very dense bureaucratic requirements from the other company (usually some government institution or contractor) which mean in addition to tracking and filling out forms, there is several hours of busy work, emails and phone calls because the people that demand this level of bureaucracy are like little helpless children, but very uptight ones. We have a W-9 filled out and available. This is followed by requests that they "entered it into the system and it came back wrong". Entered into what system? "The IRS validation system." IRS doesn't have that, do you mean an third party one? Did you type in the name of the business correctly? Yes. Try it again. I already did that, please mail us the W-9 form again. Two weeks later, same problem. Four weeks later, oops, they misspelled the name of the business, or the EIN, or they are using some dodgy company for validation which only has a small fraction of companies nationally. And never mind that W9s are not required for retail sales of $20 in off the shelf software as it is, that doesn't matter, it "is their policy." Likewise, every institutional purchaser is going to demand several days of work to deal with 1099s as well now for a $20 purchase, because their policy will now be to collect on ALL purchases regardless of size just in case they happen to go over that $600 limit. To manage all this, it will be approved vendors only, which will be large institutional supplier/resellers who charge ten times normal retail in order to deal with bureaucracy. What happens to tuition then. And what happens to the small companies locked out of the system. No longer will it even be an option to buy the best product or lowest price, it will be whatever the approved vendor asks.
All this burden to find hidden income from a tiny blackmarket and illegal sector that isn't going to file these forms anyway.
The software guys salivating at the chance to sell software to manage all this stupidity should be ashamed of themselves, that is pathetic. Our economy has collapsed because of greedy non-producers who siphon off value from economic activity in order to benefit themselves financially while contributing nothing of real value. This selfishness is what is destroying our country and the world.
The 1099 reporting requirement seemed excessive, especially when some corporations deal with thousands of vendors. Having to ask vendors to fill out W-9's is already a hassle, following up on every vendor would be a huge burden.
For those unfamiliar with the U.S. political system, the senate passing an amendment is not the same as something becoming law. The amendment is part of a larger bill, the bill needs to be approved by both houses of Congress, and then the president needs to sign it. Many times legislators will put a popular amendment on an unpopular bill in order to get votes for the larger bill. Also many times the reverse is true: an unpopular amendment is stuck on a popular bill in hopes it can ride through.
So there are a zillion different games playing out here. Until the reporting requirement is actually repealed, it could all end up smoke and mirrors.
Because of the complexities involved, I'm really interested in the 17 senators that wanted to keep such a monstrosity. 90%+ of the business community is up in arms and a full sixth of the senate sees some reason that this is not worth voting for? To me this is the most interesting part of the story -- and the part not covered by the article. Some quotes from the dissenters would have been great.
So there are a zillion different games playing out here. Until the reporting requirement is actually repealed, it could all end up smoke and mirrors.
Because of the complexities involved, I'm really interested in the 17 senators that wanted to keep such a monstrosity. 90%+ of the business community is up in arms and a full sixth of the senate sees some reason that this is not worth voting for? To me this is the most interesting part of the story -- and the part not covered by the article. Some quotes from the dissenters would have been great.
Now if only they'd supercede and effectively repeal the state money transmitter laws, we might actually be able to compete with PayPal!
Fortunately there's a hearing in two weeks about the Durbin amendment to Dodd-Frank, and if it's ever going to come up, it might as well be then.
Fortunately there's a hearing in two weeks about the Durbin amendment to Dodd-Frank, and if it's ever going to come up, it might as well be then.
Yay!
Not much more to say.
Not much more to say.
Why so much hate for this? I think it is a fantastic idea. People have no idea how much their health care costs.
EDIT: so people really think this is a burden? For my company of 25 it is trivial. Just a little more info to send to ADP.
As I said above, the extra work will have benefits.
EDIT: so people really think this is a burden? For my company of 25 it is trivial. Just a little more info to send to ADP.
As I said above, the extra work will have benefits.
This has nothing to do with healthcare. Every time your business paid another more than $600 in a year, you would need to deal with 1099:s. (Unless you use credit cards.)
That means that if you buy one laptop, a 1099. If you spend that much at Office Depot, a 1099.
That means that if you buy one laptop, a 1099. If you spend that much at Office Depot, a 1099.
And OfficeDepot has to receive and reconcile 50 million 1099s from its shoppers...
"Job creation" at its finest.
To a point, it would probably have been a boom for Office Depot. If you are a company and need to get the number of 1099s down, you would probably be wise to pick a vendor who could provide a rather large chunk of your supplies. Office Depot and it brethren have the IT to track all that.
The whole point of it was that it was one of the many tricks used to "pay" for the healthcare bill.
Without, the healthcare bill will increase the deficit to an even greater extent.
Without, the healthcare bill will increase the deficit to an even greater extent.
that is what they want you to think..ask yourself why they had to 'borrow' 1.5 billion form medicaid for this..
Uh... the health care bill is projected to reduce the deficit, mostly due to decreased consumption of Medicare/Medicaid (because more people on those plans would be covered in the private sector). The current FOX news bugabooo "individual mandate" is, in fact, one of the "tricks" used to prevent the costs from being borne directly by the federal budget.
Now, one might argue that this is essentially the equivalent of a tax increase, and that's sort of true. The left wing version of that argument is that it's a dumb and complicated scheme when it would have been simpler to just raise revenue and pay for health care directly.
But the core point is that whoever told you the health care bill "increases the deficit" was lying to you.
Now, one might argue that this is essentially the equivalent of a tax increase, and that's sort of true. The left wing version of that argument is that it's a dumb and complicated scheme when it would have been simpler to just raise revenue and pay for health care directly.
But the core point is that whoever told you the health care bill "increases the deficit" was lying to you.
This sounds like you're replying to the wrong link... how could anyone not see the immense amount of work involved in 1099ing almost every business, retail store and website anyone in your company buys anything from?
Actually, it would have had no benefit whatsoever, and that's per the IRS. They looked at the estimated collections, calculated the associated processing costs, and concluded that the whole thing was a wash (or 'revenue-neutral', to use their language).
However, it would have provided a solid bit of business for supporters of the accounting lobby, who have - I suspect - contributed to the campaigns of each and every one of those 17 who heard what the IRS had to say, and backed this anyway.
However, it would have provided a solid bit of business for supporters of the accounting lobby, who have - I suspect - contributed to the campaigns of each and every one of those 17 who heard what the IRS had to say, and backed this anyway.
A profoundly unrealistic tax law that, even if it were feasible, most people wouldn't have even tried to obey, anyway?
It would have only served to underscore just how out of touch the political class is, and to remind Americans that priority #1 is squeezing us for every cent possible without causing a riot. With the right spin from the smaller government crowd, perhaps, if it had lasted, it would have done more good than ill?
I guess I'm among the minority, though, in preferring more rapid oppression to the baby steps that our government is so good at. The boiling frog, etc.