1099 will end the world in 2012(academicvc.com)
academicvc.com
1099 will end the world in 2012
http://academicvc.com/2010/07/23/2012/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+AcademicVC-Main+%28Academic+VC+%C2%BB+Main%29
171 comments
"By then, it is almost guaranteed that the rule will be significantly weakened to the point where it is not much different than what we have in place now."
This is probably only true if people flip out over it now.
This is probably only true if people flip out over it now.
Intelligent and measured comment is more likely to be listened to, especially if it comes from people educated in tax law and accounting.
I don't think the IRS is reading angry internet forums.
This law is just noodling. They're just fishing around for new income ideas, throwing spaghetti at the wall, and seeing what sticks.
Don't freak out.
I don't think the IRS is reading angry internet forums.
This law is just noodling. They're just fishing around for new income ideas, throwing spaghetti at the wall, and seeing what sticks.
Don't freak out.
I am not so sure that is true. It is like saying, be polite to people in stores and restaurants and you are more likely to get what you want, but the fact is that you see pissed of people making a stink, and getting treated better for fear of pissing them off.
We wish it was true, but it ain't.
We wish it was true, but it ain't.
I work in a small store, where I'm the only person running the place. I eject people who cause trouble.
The IRS is accepting comments on the issue.
[..]
It was a short-sighted clause put in by a politician
trying to close a loophole.
I just really want to know the reasoning behind this. What would make a person propose such a thing? What loophole were they thinking of closing? How could they not see what is so blatantly wrong with what they are proposing? I wonder, who is this person?
Realistically most new bill have a ton of shitty things in them that get fixed through other bills later on, it's always been like that and the small business lobby is fairly powerful so 2 years should be enough to kill this clause.
What is up is the inflammatory submission title and linked page got people all riled up. There is not really a good reason to be linking tax codes with the end of the world. I'd downvote the submission if I could.
[deleted]
The current rules for the filing date for the copy of the recipient's copy of the 1099 is Jan 31. The electronic filing deadline for the IRS's copy is Mar 31.
Even if it does go through exactly this way, very few people will comply with it, so the probability of getting singled out for serious retribution should be fairly low. So there's yet another reason to chill out.
Ouch. I was just trying to find a lead lining in the asbestos cloud, but that didn't go over too well.
In all seriousness, the Reddit influx is upon us, full tilt.
From the Hacker News Guidelines: [1]
"If your account is less than a year old, please don't submit comments saying that HN is turning into Reddit. (It's a common semi-noob illusion.)"
[1] http://ycombinator.com/newsguidelines.html
"If your account is less than a year old, please don't submit comments saying that HN is turning into Reddit. (It's a common semi-noob illusion.)"
[1] http://ycombinator.com/newsguidelines.html
I just checked, and your account is exactly one year old, so you may submit comments saying HN is turning into Reddit, if you would like.
I left reddit for HN a year ago (yes, I'm a late adopter in this regard), and believe me: HN is no reddit.
There was a discussion recently by a number of long-time accounts on how this seems to actually be coming to pass, and that the quality of submissions hitting the front page has clearly decreased. I can't say I disagree.
That said, I'm just as annoyed as the next guy at the inefficiency that the IRS seems to be trying to foist into the economy to help them raise revenues.
That said, I'm just as annoyed as the next guy at the inefficiency that the IRS seems to be trying to foist into the economy to help them raise revenues.
Already discussed here in-depth: http://news.ycombinator.com/item?id=1306434
(and about 10 more I don't feel like linking)
(and about 10 more I don't feel like linking)
A bunch of uninformed whining is hardly in-depth. You'd think you couldn't file these electronically or that people have to create, gasp, invoices for the vast majority of such transactions.
Cool so where do I send the 1099 for SAMs club, Office Depot, and the restaurant down the street to? Will you come deal with the reporting discrepancies for me. I'll be getting at least 1000 1099's a year, will you deal with those for me? This is needless bueracratic bullshit to the maximum.
[deleted](3)
Sounds like a business opportunity to me? Build a specialized service that handles those for mom'n'pops, small businesses, etc?
And how; a service that just catalogues tax IDs and handles sending out the right paperwork would make mint... this might be perfect for somebody like Indinero (a recent YC addition).
It's things like this that will eventually force me to move my business (and invariably, my employees) to another country. Why do they want to make it even more difficult for small businesses?
[deleted](1)
This can't generate remotely enough revenue to offset the compliance cost to the business sector.
This is nothing more than a Federal jobs program at the expense of the private sector.
This is nothing more than a Federal jobs program at the expense of the private sector.
Part of what they are doing is getting the system ready to put a sales tax on services. That will generate some serious revenue (or provide another effective mechanism to steal money from some people to give to other people, depending on your perspective.)
Aren't services already covered by most states' sales taxes? I paid sales tax when I got my oil changed recently, and my VPS provider charges sales tax if I'm in the same state.
No. There are exceptions, usually made to extract revenue from particular services, sometimes targeting people that don't live in that locality, like hotel taxes, but very seldom do they tax things like attorney services (wonder why...) or software development.
NYC has a weird list of services. http://www.nyc.gov/html/dof/html/business/business_tax_nys_s... The Texas list is more comprehensive, and includes web site creation http://www.window.state.tx.us/taxinfo/taxpubs/tx96_259.html
This is also an option that would be useful in creating a VAT, if the government has access to all of these transactions. Sadly, the states already tax most of this money and it would look bad to have Feds move in there. However, the gap in service taxes would appear to be an opportunity, especially in B2B taxes which would be invisible to most people.
NYC has a weird list of services. http://www.nyc.gov/html/dof/html/business/business_tax_nys_s... The Texas list is more comprehensive, and includes web site creation http://www.window.state.tx.us/taxinfo/taxpubs/tx96_259.html
This is also an option that would be useful in creating a VAT, if the government has access to all of these transactions. Sadly, the states already tax most of this money and it would look bad to have Feds move in there. However, the gap in service taxes would appear to be an opportunity, especially in B2B taxes which would be invisible to most people.
>if I'm in the same state.
And that happens what, 8% of the time? Most online services are evading sales tax.
And that happens what, 8% of the time? Most online services are evading sales tax.
Hell, if you're in Washington, Amazon will ship from an out-of-state warehouse so that you still don't have to pay.
It doesn't matter where the shipment is from; if the business has a point-of-presence in the shipped-to state, they charge you sales tax for that state. For instance, I bought some stuff at the Pendleton store in Portland, Oregon, and had it shipped home to Illinois, and the clerk (very apologetically) told me that he'd have to charge me sales tax since Pendleton owned stores in Illinois. This despite the fact that I was physically in Oregon, the sale was taking place in Oregon, the blankets were still in Oregon, and Oregon has no sales tax at all.
I'd rather pay the 9% to support local services and get my packages a bit earlier.
Sure, but that's not specific to the service/goods split is it? That's basically Amazon's business model with physical goods as well.
Wow. Jump to conclusions without evidence? Sign me up!
More likely it was an attempt to close a perceived tax loophole without understanding of the cost of compliance. I have no doubt it will get fixed before it actually goes into effect.
More likely it was an attempt to close a perceived tax loophole without understanding of the cost of compliance. I have no doubt it will get fixed before it actually goes into effect.
The underground economy will explode. Working under the table will become much more prevalent.
maybe? the problem is that if I pay you under the table, I'm paying you out of /post tax/ money. this is to say, paying people under the table costs me about 50% more than reporting it. I don't think 1099s jack up the cost /that/ much.
[deleted]
Anyone know why this was put into the bill? What good intentioned upside someone is trying to accomplish?
Are cell phone companies going to issue 1099s to most of America, and all users have to do the same?
Are cell phone companies going to issue 1099s to most of America, and all users have to do the same?
Anyone know why this was put into the bill? What good intentioned upside someone is trying to accomplish?
To make sure that retailers/sellers are accurately reporting their sales and not lowballing their revenue numbers on their tax returns. It's basically to reduce tax fraud with the hope that the extra tax income (which is assumed that corps or fraudulently not paying) can be used to pay for health care without having to add additional taxes.
To make sure that retailers/sellers are accurately reporting their sales and not lowballing their revenue numbers on their tax returns. It's basically to reduce tax fraud with the hope that the extra tax income (which is assumed that corps or fraudulently not paying) can be used to pay for health care without having to add additional taxes.
This will be an unmitigated disaster. Office Depot will get 50 million or so 1099's. How do you deal with that many accounting discrepancies? How do you match that many transactions to all those forms. What about under and over-reporting? This is a Democrat clusterfuck if there ever was one.
More likely: most businesses will completely ignore this rule. It will either go away before it comes into force or it will be so impractical to police that it will be useless.
The trouble with rules that remain on the books despite not usually being enforced is that they create opportunities for selective enforcement when they decide to crack down on you for other reasons, such as your political views.
Yup, they create potential for abuse of power. They also erode trust in legislating bodies and the law in general.
See also: http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...
See also: http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...
[deleted]
[deleted]
This does not apply to transaction made with a credit card so I don't think Office Depot is going to notice.
You're saying there are no customers of Office Depot that make a total of $600 in purchases in a given year with means of payment other than a credit card (e.g. cash, purchase order, or check)? Seems quite unlikely.
Sure there is some, but it's impact is going to be far less than a 1% tax increase on them. Especially when most small business start using CC to avoid the hassle and or simply ignore the issue.
Edit: Thanks for the down vote, but as a practical matter the IRS is going to use this as an audit trail. So a company needs to report revenue > the submitted 1099's. While they will get some 1099's their reported gross income is going to be dominated by people who don't need to send 1099's so it's going to have minimal impact. Note: There is zero new tax implications, it’s simply a reporting issue so being sent 1099’s DOES NOT IMPACT the taxes they pay.
The people receiving 1099's that are going to suffer are those who try and hide income. Companies are going to need to report revenue > 1099's or the IRS can easily find issue based on that discrepancy.
On the other hand Apple is going to need to send a lot of 1099's out to developers.
Edit: Thanks for the down vote, but as a practical matter the IRS is going to use this as an audit trail. So a company needs to report revenue > the submitted 1099's. While they will get some 1099's their reported gross income is going to be dominated by people who don't need to send 1099's so it's going to have minimal impact. Note: There is zero new tax implications, it’s simply a reporting issue so being sent 1099’s DOES NOT IMPACT the taxes they pay.
The people receiving 1099's that are going to suffer are those who try and hide income. Companies are going to need to report revenue > 1099's or the IRS can easily find issue based on that discrepancy.
On the other hand Apple is going to need to send a lot of 1099's out to developers.
[deleted]
http://money.cnn.com/2010/05/05/smallbusiness/1099_health_ca...
In any case, the final impact of the law won't be known
until the IRS issues its regulations on the new law,
which aren't expected to arrive until sometime next year.
The IRS has not yet commented on when it will release
regulations or schedule public hearings, and an agency
spokesman was unsure when it will do so.another quote: "Rep. Dan Lungren, R-Calif., introduced legislation last week that would repeal the new 1099 requirements."
Bottom line, a misguided attempt to improve income reporting and tax collection is going to be either watered down by the IRS or killed in congress. Maybe I'm a sad optimist, but to me it looks like democracy's still working well :-)
Bottom line, a misguided attempt to improve income reporting and tax collection is going to be either watered down by the IRS or killed in congress. Maybe I'm a sad optimist, but to me it looks like democracy's still working well :-)
Democracy would be allowing the populace the time to read and digest multi-thousand page bills before voting, and not allowing totally unrelated sweeping changes hidden in bills. This has nothing to do with health care, whatsoever, in any way shape or form.
Then you haven't been paying attention to either health care in general, or the health care effort in specific.
The health care bill was effectively implemented as a tax bill. The entire structure of the bill is a set of rules and initiatives set up to encourage businesses and individuals to get or provide health insurance through a series of tax raises and tax cuts.
The tax code is the mechanism through which this policy is implemented. I'd love to hear what other mechanism you'd prefer for implementing a health care plan. (And copping out by saying "it shouldn't have been implemented" isn't gonna fly)
The health care bill was effectively implemented as a tax bill. The entire structure of the bill is a set of rules and initiatives set up to encourage businesses and individuals to get or provide health insurance through a series of tax raises and tax cuts.
The tax code is the mechanism through which this policy is implemented. I'd love to hear what other mechanism you'd prefer for implementing a health care plan. (And copping out by saying "it shouldn't have been implemented" isn't gonna fly)
Of course it shouldn't have been implemented.
If they were going to actually try to implement national health care it should be done as constitutional amendment.
If they were going to actually try to implement national health care it should be done as constitutional amendment.
If the Air Force wasn't a big enough deal to require an amendment, neither is health care.
Except that defending the nation is all over the constitution, whereas giving people health care for free isn't anywhere. Specifically in the preamble, when referring to the "common defense" the framers used the terminology "provide"; when referring to the "general welfare" the term promote was used instead. Air Forces didn't exist then, but health care certainly did.
Article 1, Section 8: The Congress shall have Power To [...] raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
Are you seriously going to argue that "Armies" doesn't include the Air Force?
Are you seriously going to argue that "Armies" doesn't include the Air Force?
Specifically, I meant that the constitution explicitly gives each of the Army and the Navy cabinet-level power and responsibility. The Air Force was given the same power and responsibility, without amending the constitution.
That's not a very good example. The Cabinet consists of the heads of various Departments, whichever ones the President wants to hear from at any given moment. The Departments are created by Congress.
An Amendment wasn't required to create the Air Force any more than it was required to create the DHS, or is required to create any other Federal agency. Congress has the power to create, destroy, and reorganize Federal agencies as it wants to. So in 1947, Congress created the Department of Defense as a Federal Department, which the Constitution allows them to do, and put the Army, Navy, and Air Force (new) under it. There wasn't anything even vaguely unconstitutional about it, even taking a really uncharitable reading.
Congress creates new Departments fairly regularly; there wasn't a need to go through the amendment process for the DoD any more than there was to create the Departments of State, Transportation, Energy, Labor, Education... etc. All it takes to create one is the same process to pass any other piece of legislation.
I would personally not be against requiring an amendment to create new agencies, just on the grounds of controlling governmental scope creep, but that's not the way things are set up. Congress has been creating Departments since the ink was barely dry on the Constitution itself.
An Amendment wasn't required to create the Air Force any more than it was required to create the DHS, or is required to create any other Federal agency. Congress has the power to create, destroy, and reorganize Federal agencies as it wants to. So in 1947, Congress created the Department of Defense as a Federal Department, which the Constitution allows them to do, and put the Army, Navy, and Air Force (new) under it. There wasn't anything even vaguely unconstitutional about it, even taking a really uncharitable reading.
Congress creates new Departments fairly regularly; there wasn't a need to go through the amendment process for the DoD any more than there was to create the Departments of State, Transportation, Energy, Labor, Education... etc. All it takes to create one is the same process to pass any other piece of legislation.
I would personally not be against requiring an amendment to create new agencies, just on the grounds of controlling governmental scope creep, but that's not the way things are set up. Congress has been creating Departments since the ink was barely dry on the Constitution itself.
Actually, I think I agree with you. They should change the org-chart and put the AF back under the Army.
I still don't understand your comparison to Obamacare. Are you asserting that the constitution would authorize Obamacare with some tweaks to heirerarchy? Please explain.
I still don't understand your comparison to Obamacare. Are you asserting that the constitution would authorize Obamacare with some tweaks to heirerarchy? Please explain.
Nope, I was just comparing the magnitude of the changes, not really the structure.
How is the magnitude comparable? Obamacare is not authorized by the constitution at all - to become constitutional, it would need to be eliminated. To become constitutional, the Air Force would need one arrow in the org chart to be changed.
I don't see the changes as being remotely comparable in magnitude.
I don't see the changes as being remotely comparable in magnitude.
We don't live in a true Democracy. We live in Republic which is significantly different. We elect representatives on our behalf that we entrust to read and digest multi-thousand page bills and vote on our behalf.
But realistically it's not in the realm of humanly possible things for elected officials to read all those documents so we should be blaming the assistants and clerks for not reading them right ;p
Right, maybe I should have said the republic is still working well...
Congresscritters are constantly introducing legislation. Most of it goes nowhere. That is doubly true when it is introduced by someone from the party that is out of power.
Unless you hear about Democrats getting behind repealing this, you can ignore Republican attempts to do so. (This may change after the midterm elections. Though the most probable outcome is to wind up with deadlock because nobody can break a filibuster.)
Unless you hear about Democrats getting behind repealing this, you can ignore Republican attempts to do so. (This may change after the midterm elections. Though the most probable outcome is to wind up with deadlock because nobody can break a filibuster.)
There are also lawyers from all sides of the political spectrum who say this won't survive a challenge in court because of the burden it creates and other reasons (can't find the original quotes right now sorry).
New budgeting guideline - spend no more than $599 at any individual supplier.
Or, use a credit or debit card for purchases that would otherwise aggregate to more than $599.
Wait -- wouldn't this help the economy by creating many competing entities in any given space?
Or hurt it by forcing people to use a less efficient supplier. Competition is only good if it organic in nature, (ie: comes about because both have efficient methods and high quality products, even though they differ to some degree) not if it forced competition. Then you end up getting a worse product when you could have gotten a better one.
Unlikely, that sounds like more work than just sending out the 1099.
Check out:
http://www.taxgirl.com/new-rules-about-forms-1099-are-causin...
for a less dramatic look at things.
for a less dramatic look at things.
Thanks that link was the most helpful thing I read on the matter.
The good news is that purchases made with a credit or debit card will be exempt from this requirement. However this requirement is still likely to be a huge pain for me at least because I use PayPal for a lot of vendors for totral purchases over $600 in a year.
The IRS is accepting comments on this requirement at http://www.irs.gov/newsroom/article/0,,id=225029,00.html
The IRS is accepting comments on this requirement at http://www.irs.gov/newsroom/article/0,,id=225029,00.html
Sounds like quite a handout to credit card companies.
It's not so much that as the ability for the IRS to track credit card purchases through other mechanisms[0].
[0] http://www.washingtonpost.com/wp-dyn/content/article/2010/07... (near the end)
[0] http://www.washingtonpost.com/wp-dyn/content/article/2010/07... (near the end)
[deleted]
Exactly. I'd assume most businesses do nearly all their purchasing through credit/debit card. I know we certainly do. So I don't see how this is such a big deal.
The massive processing fees charged by the colluding credit card duopoly? Why aren't checks, electronic funds transfers, and electronic checks included?
Thank's for bringing this out - it really gets to the heart of who is getting paid off and the results of lobbying in creating artificial barriers through regulation.
Ostensible justification is likely along the lines that the IRS can already track credit & debit card purchases far more easily than purchase orders, checks and cash. Regardless, this would be a major boon for the credit card industry if it in fact goes forward as planned.
Ostensible justification is likely along the lines that the IRS can already track credit & debit card purchases far more easily than purchase orders, checks and cash. Regardless, this would be a major boon for the credit card industry if it in fact goes forward as planned.
Small businesses may use credit/debit cards predominantly, but I think you'll find a lot of medium and large size businesses use Purchase Orders.
[warning. rant head]
This has to be the most mind-numbingly stupid thing I have seen the government do in the last couple of decades -- and that includes bad wars, if that's your thing.
Why can it be so bad? Because it screws with every single economic entity in the nation, in a way that pervasive, subtle, and micro-managing.
If you want to know where "1984" is, with Big Brother watching all of your moves, it's not bullshit programs like TIA. It's making you rat out the guy who is on disability but mows lawns on the side, or the guy who paints houses at nights without reporting the income so he can send his kid to school. Or the mom that babysits kids so that she can stay home.
Yes. These people are law-breakers. In a web of such complexity that 80% of IRS's own employees can't answer sample tax questions, we are all law-breakers. But this takes tax collection to a new low -- now I am going to be responsible for "double-checking" on my neighbor who sold me those used lawn mowers last year. I need to do my part to make sure he's reporting everything.
It is so outrageously stupid and infuriating that I still can't believe it is true. I'm beside myself. So if I eat at Burger King during the week when I travel, about the 120th time I buy a burger, I need to chalk them up for a 1099.
It's the worst thing for small businesses and the underground economy that I've ever heard of the government doing. It just can't be true.
</rant>
ADD: And don't get me started with some bullshit about how the agency hasn't decided yet how to enforce it. This is like saying the Congress voted to install cameras in everybody's homes, but that might not be so bad because the administrative work hasn't been done to decide who exactly gets a camera and when. As if this somehow mitigates things.
Also, for all of you folks down-voting me. Tell me I am wrong. I'm not a tax professional and I don't read the political spin sites. The only reason I've commented now is that this is the 3rd or 4th time I've seen this posted on HN. So please. I would love to be wrong about this.
This has to be the most mind-numbingly stupid thing I have seen the government do in the last couple of decades -- and that includes bad wars, if that's your thing.
Why can it be so bad? Because it screws with every single economic entity in the nation, in a way that pervasive, subtle, and micro-managing.
If you want to know where "1984" is, with Big Brother watching all of your moves, it's not bullshit programs like TIA. It's making you rat out the guy who is on disability but mows lawns on the side, or the guy who paints houses at nights without reporting the income so he can send his kid to school. Or the mom that babysits kids so that she can stay home.
Yes. These people are law-breakers. In a web of such complexity that 80% of IRS's own employees can't answer sample tax questions, we are all law-breakers. But this takes tax collection to a new low -- now I am going to be responsible for "double-checking" on my neighbor who sold me those used lawn mowers last year. I need to do my part to make sure he's reporting everything.
It is so outrageously stupid and infuriating that I still can't believe it is true. I'm beside myself. So if I eat at Burger King during the week when I travel, about the 120th time I buy a burger, I need to chalk them up for a 1099.
It's the worst thing for small businesses and the underground economy that I've ever heard of the government doing. It just can't be true.
</rant>
ADD: And don't get me started with some bullshit about how the agency hasn't decided yet how to enforce it. This is like saying the Congress voted to install cameras in everybody's homes, but that might not be so bad because the administrative work hasn't been done to decide who exactly gets a camera and when. As if this somehow mitigates things.
Also, for all of you folks down-voting me. Tell me I am wrong. I'm not a tax professional and I don't read the political spin sites. The only reason I've commented now is that this is the 3rd or 4th time I've seen this posted on HN. So please. I would love to be wrong about this.
Man, talk about hyperbole. This is probably a terrible idea economically, but it's hardly a Nineteen Eighty-Four scenario. It's not becoming illegal to say "the IRS sucks", the IRS will not have cameras in your house looking for the slightest sign of dissent, and it'll actually be nearly impossible to get imprisoned for anything at all (tax penalties are generally merely more taxes, unless you deliberately lie).
Also, you, as an individual, won't have to send 1099s to anyone, whether your baby-sitter or lawn-mower or Office Depot. Only businesses will, though this does include small businessmen and sole proprietorships (the way to distinguish a sole proprietor from "just a person" is by whether you're deducting those expenses as business expenses on a Schedule C or not).
Also, you, as an individual, won't have to send 1099s to anyone, whether your baby-sitter or lawn-mower or Office Depot. Only businesses will, though this does include small businessmen and sole proprietorships (the way to distinguish a sole proprietor from "just a person" is by whether you're deducting those expenses as business expenses on a Schedule C or not).
This is a 1984 scenario, because virtually everyone becomes a criminal, as everyone will fail to fill out all the proper 1099's. Consequently, at any time you do something the government doesn't like, they can come and get you for those incorrectly or unfiled 1099's.
(Reiterating what madair already replied to sprout, but I felt his point was not as clear as it could be)
(Reiterating what madair already replied to sprout, but I felt his point was not as clear as it could be)
That would require that "virtually everyone" is a business, which is not the case. Somewhere less than 5% of the U.S. population run businesses. Again, contrary to the misinformation rampant in this discussion, individual expenditures that are not business expenses won't require 1099s. (Did anyone even read the linked article?)
Even if that were not the case, it would hardly be a 1984 scenario, especially given that there are no criminal penalties for failing to file the 1099s. That's pretty absurdly embarrassing hyperbole that makes you sound like you came from DailyKos or something. The war on drugs is more of a 1984 scenario than requiring 1099s is, especially since it comes with widespread criminal penalties.
Even if that were not the case, it would hardly be a 1984 scenario, especially given that there are no criminal penalties for failing to file the 1099s. That's pretty absurdly embarrassing hyperbole that makes you sound like you came from DailyKos or something. The war on drugs is more of a 1984 scenario than requiring 1099s is, especially since it comes with widespread criminal penalties.
To add to your point, a couple weeks ago I saw a dozen hysterical media reports concerning another provision slipped into the bill, this time regarding the sale of gold. Supposedly, the government wants all gold sellers to report any transactions exceeding $600. I've researched a bit and it turned out to be the same legislation - only sales between businesses are required to be reported, and there is nothing specific about gold, it's just part of the same 1099 provision.
Don't get me wrong, I've been outraged by the practice of concealing unrelated bits of legislation inside various bills for years, but to say that this is worse than war is truly an exaggeration. Major annoyance, yes, but still quite a bit better than being shot.
Don't get me wrong, I've been outraged by the practice of concealing unrelated bits of legislation inside various bills for years, but to say that this is worse than war is truly an exaggeration. Major annoyance, yes, but still quite a bit better than being shot.
It's not a 1984 scenario, no one has video surveillance in their house, and you can have sex without being executed. You win.
On the other hand, this is a pretty big deal, and your reply doesn't justify it. Yes, not everyone "is" a business, but everyone relies on the economy every day. Adding a not insignificant overhead to the companies that bring you food, water, electricity, etc. makes those items more expensive. Also, increasing overhead in businesses makes it harder to start businesses, which is sort of relevant given that we're on YC news.
On the other hand, this is a pretty big deal, and your reply doesn't justify it. Yes, not everyone "is" a business, but everyone relies on the economy every day. Adding a not insignificant overhead to the companies that bring you food, water, electricity, etc. makes those items more expensive. Also, increasing overhead in businesses makes it harder to start businesses, which is sort of relevant given that we're on YC news.
>it would hardly be a 1984 scenario, especially given that there are no criminal penalties for failing to file the 1099s.
I think that's the key of it right there. The worst the IRS could do if you failed to file the 1099s is... force you to file the 1099s. The horror.
I think that's the key of it right there. The worst the IRS could do if you failed to file the 1099s is... force you to file the 1099s. The horror.
They could also fine you or use it as an excuse to audit. Both of those things are pretty unattractive for a small business.
It kind of reminds me of Schneier's explanation of cyberwarfare as if an enemy army invaded and all got in line at the BMV.
Except in this case it's a horrible tyrranical oligarchy that instead of making your life hell gives you a few extra forms to fill out every week.
Except in this case it's a horrible tyrranical oligarchy that instead of making your life hell gives you a few extra forms to fill out every week.
If you're trying to Google the referenced explanation, he said "DMV", and it's here: http://www.schneier.com/blog/archives/2010/07/the_threat_of_...
When everyone is a lawbreaker enforcement becomes selective, you could say arbitrary.
And the enforcer gets to decide who is allowed to live normally and who isn't. And that, IMO, is the scariest part of the whole thing. Don't piss off the DA or the police.
[warning: common sense ahead]
Seriously. Chill out. The thing hasn't even been finalized yet, and there'll be public comment periods and reviews and all sorts of other stuff providing people an opportunity to go froth at the mouth about how this will be the end of the world or whatever.
In the meantime: take a deep breath. Relax. Read and learn. Get as much information as you can instead of going off half-cocked. And actually think through the things you'd like to say, because hyperbolic rants don't do anyone a damn bit of good.
Seriously. Chill out. The thing hasn't even been finalized yet, and there'll be public comment periods and reviews and all sorts of other stuff providing people an opportunity to go froth at the mouth about how this will be the end of the world or whatever.
In the meantime: take a deep breath. Relax. Read and learn. Get as much information as you can instead of going off half-cocked. And actually think through the things you'd like to say, because hyperbolic rants don't do anyone a damn bit of good.
> The thing hasn't even been finalized yet, and there'll be public comment periods and reviews and all sorts of other stuff providing people like an opportunity to go froth at the mouth about how this will be the end of the world or whatever.
The legislation has been "finalized". The regs aren't written, but the mandate is pretty clear, so they can't have much effect.
If you're a biz and you pay in certain ways, you will have to issue a lot more 1099s than you do now. Regs may change the number by 1-2%, but they won't affect the order of magnitude.
The legislation has been "finalized". The regs aren't written, but the mandate is pretty clear, so they can't have much effect.
If you're a biz and you pay in certain ways, you will have to issue a lot more 1099s than you do now. Regs may change the number by 1-2%, but they won't affect the order of magnitude.
It's my understanding there is a specific exemption to any purchases made with a Credit Card.
So now it's non CC company to company transactions > 600$/year which is a far smaller pool. The absolute worst possible case is total revenue / 600$ but the reality is most companies have a fairly small number of suppliers. So something like Ln (revenue / 1000) for the average small business.
So now it's non CC company to company transactions > 600$/year which is a far smaller pool. The absolute worst possible case is total revenue / 600$ but the reality is most companies have a fairly small number of suppliers. So something like Ln (revenue / 1000) for the average small business.
Effectively banning cash/check/MO/wire transactions doesn't make this any better. This needs to go away.
That's my understanding as explained by my CPA a few minutes ago.
This will likely boost the prepaid anonymous credit card business (for those who don't like the government being able to track how they spend their own money).
> prepaid anonymous credit card business
Haven’t these been targeted by government regulation in the last couple years? I remember reading about police agencies wanting these banned (along with pre-paid cellphones) for enabling the drug trade.
Haven’t these been targeted by government regulation in the last couple years? I remember reading about police agencies wanting these banned (along with pre-paid cellphones) for enabling the drug trade.
Incidentally, free-enterprise as you describe it is essential for freedom of speech. If everyone's income becomes incumbent on the government, then they don't want to say anything to piss off said government.
Don't worry, it's just a setup to make VAT look good by comparison.
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Next time link to the original article, which is here: http://www.chcchoices.org/Article/28083/Consumer_Power_Repor...
In this case the report was produced by the Hearland Institute which Wikipedia describes as "an American conservative public policy think tank based in Chicago, Illinois that advocates free market policies."
Based on some of the bullshit they have published when it comes to global warming, they seem to be more interested in pursuing a political agenda than sticking to the facts.
"Most scientists do not believe human activities threaten to disrupt the Earth's climate."
"The most reliable temperature data show no global warming trend."
"A modest amount of global warming, should it occur, would be beneficial to the natural world and to human civilization."
"The best strategy to pursue is one of 'no regrets'."
In this case the report was produced by the Hearland Institute which Wikipedia describes as "an American conservative public policy think tank based in Chicago, Illinois that advocates free market policies."
Based on some of the bullshit they have published when it comes to global warming, they seem to be more interested in pursuing a political agenda than sticking to the facts.
"Most scientists do not believe human activities threaten to disrupt the Earth's climate."
"The most reliable temperature data show no global warming trend."
"A modest amount of global warming, should it occur, would be beneficial to the natural world and to human civilization."
"The best strategy to pursue is one of 'no regrets'."
Man, I wish I could cancel laws just by getting a "conservative public policy think tank" to talk about them; have you actually got a link to anyone contradicting this? Because so far I haven't seen one.
Here's a guy who actually quotes the law in question, and since the health care bill manifests as a patch to the original law, also expands out the 1099 law to what it now says: http://thefinancebuff.com/2010/05/1099-filing-requirement-in...
I have no idea what his political affiliation is, I just linked for the law quote.
Or do I not have to worry about this law, because the Heartland Institute are global warming heretics?
Here's a guy who actually quotes the law in question, and since the health care bill manifests as a patch to the original law, also expands out the 1099 law to what it now says: http://thefinancebuff.com/2010/05/1099-filing-requirement-in...
I have no idea what his political affiliation is, I just linked for the law quote.
Or do I not have to worry about this law, because the Heartland Institute are global warming heretics?
Unless you're only suggesting skepticism, which is a good idea in general, this is just ad hominem.
Here's an article at CNN Money if that helps.
http://money.cnn.com/2010/07/09/smallbusiness/irs_1099_flood...
http://money.cnn.com/2010/07/09/smallbusiness/irs_1099_flood...
I am a little concerned about this. While I do some consulting work for large companies and we do 1099s anyway, I also do a lot of very small projects (mostly helping other developers get started or get up to speed on something I know more about than they do). For these little jobs that are paid for via PayPal, now small customers need to do a 1099 with me - a hassle for them probably means not as many little 1 week jobs.
Also, as a consumer of goods and services, now I need to do a 1099 for Amazon, people I hire for small bits of work, the local electronics store, etc.?
Also, as a consumer of goods and services, now I need to do a 1099 for Amazon, people I hire for small bits of work, the local electronics store, etc.?
As for getting paid for small jobs and paying people for small jobs, if you paid the person more than $600 in a tax year, you should have already been giving/receiving 1099s.
The only difference with the new rule is that you'd have to give 1099s to vendors.
The only difference with the new rule is that you'd have to give 1099s to vendors.
We are OK on paying vendors: for hiring a handyman one or twice a year, a plumber about once a year, and a brush removal service we are under the $600 limit - we mostly do things ourselves. I am more concerned with small customers who pay me a thousand or two a year via PayPal - now they have hassles. It would be really good if PayPal had some service that automated this!
They very well may, by the time this rolls around.
It's almost like the government is trying to get its populace to silently replace it.
With what?
I don't have a good "end goal" answer for that right now. I do think that the technology that has popped up over the last few decades allows for means of organization and collaboration for providing life necessities that were not available for the vast majority of human history.
If I'm being idealistic, I think that a good bit of the historically useful functions of government ( on a more abstract level, historically useful functions of centralized authority )is made quite outdated by the availability of global communications and exchange to the "common man". It's a can of worms of a topic, and I don't really have the time to get into it right now, so I'll leave it at that.
If I'm being extremely idealistic, I think we should be in a state of post-scarcity in terms of shelter and food, and I think that the internet is a large part of the way that humanity will get to that point if it ever does. In the same vein, I lean towards thinking that getting to that state will become rather necessary for the continued growth and survival of our species, if we're going to continue to grow and survive.
But yeah, can o' worms.
If I'm being idealistic, I think that a good bit of the historically useful functions of government ( on a more abstract level, historically useful functions of centralized authority )is made quite outdated by the availability of global communications and exchange to the "common man". It's a can of worms of a topic, and I don't really have the time to get into it right now, so I'll leave it at that.
If I'm being extremely idealistic, I think we should be in a state of post-scarcity in terms of shelter and food, and I think that the internet is a large part of the way that humanity will get to that point if it ever does. In the same vein, I lean towards thinking that getting to that state will become rather necessary for the continued growth and survival of our species, if we're going to continue to grow and survive.
But yeah, can o' worms.
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I don't like this at all but if you want to attempt to take a positive spin on it you could see that this would be a lucrative area for many startups to start offering services for handling these 1099's.
Cam here to make this comment. Wouldn't be too difficult to build a quick site that aggregates all your transactions, auto-generates appropriate 1099s and mails them to the company accounting addresses it has on file matching the transaction records.
Last year a customer accidentally double entered my invoice in their system, and paid me two checks instead of one. I contacted them to let them know of the discrepancy, and never cashed the second check. Their system was never corrected, and I got a 1099 showing I earned double the actual amount. I'm still trying to iron this mess out, and it's just one 1099.
The good news for you is that the uncashed second check will eventually show up as a discrepancy on their books and they will have to deal with it. It make take some time but it will happen.
And if he gets audited before then for under-reporting his income?
The original invoice and uncashed check would substantiate his explanation of the error. I don't enjoy filling out forms etc., but somehow I manage to keep my tax paperwork and business receipts chronically organized in case I ever need to verify something.
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So, is this going to be mitigated somehow, or will everyone just ignore the requirement, or will somebody launch Fresh1099s.com and make a pile of money to reduce my headaches considerably? Stay tuned . . .
I'd be curious to hear how many of the outraged people in this thread already deal with at least, say, 4-5 1099s (other than the obligatory one your bank sends you to report interest earned) in a year.
Theoretically, an Age of Bureaucracy can last until a paper shortage develops, but, in practice, it never lasts longer than 73 permutations. — Adam Weishaupt
Fiction aside, I predict this law will get repealed pretty quickly and quietly before it goes into effect. The amount of added annual tax revenue from this is projected to only be $20 billion, and as soon as various interest and trade groups realize how much more the extra paperwork is going to cost them, then they'll be screaming at the Congress-critters. They already went through this process with SOX.
It's the Government's duty to maximize tax revenues, so if the cost of doing business in general causes a decrease in many company's profits, then there is less overall income to tax. If that amount of lost tax revenue is more than the projected increase of $20 billion, and I bet it is, then it makes sense to repeal that particular law.
— Robert Anton Wilson, The Illuminatus! Trilogy
Fiction aside, I predict this law will get repealed pretty quickly and quietly before it goes into effect. The amount of added annual tax revenue from this is projected to only be $20 billion, and as soon as various interest and trade groups realize how much more the extra paperwork is going to cost them, then they'll be screaming at the Congress-critters. They already went through this process with SOX.
It's the Government's duty to maximize tax revenues, so if the cost of doing business in general causes a decrease in many company's profits, then there is less overall income to tax. If that amount of lost tax revenue is more than the projected increase of $20 billion, and I bet it is, then it makes sense to repeal that particular law.
> I predict this law will get repealed pretty quickly and quietly before it goes into effect.
> They already went through this process with SOX
Has SOX been repealed, then? I know of at least two businesses it's prevented from an IPO.
It only makes sense to repeal if the gov't motive is to maximize revenue. As we've seen repeatedly, "duty" is not a concept that impacts career politicians in the slightest.
> They already went through this process with SOX
Has SOX been repealed, then? I know of at least two businesses it's prevented from an IPO.
It only makes sense to repeal if the gov't motive is to maximize revenue. As we've seen repeatedly, "duty" is not a concept that impacts career politicians in the slightest.
It's easy to see that this is much ado about nothing: if it actually happens as described, it will do significant harm to major politician-owning interests. Therefore it won't happen.
There is an incredible amount of rhetoric from both sides of the isle on supporting small businesses, supporting the entrepreneur, that entrepreneurs are the job creators, that innovation will lead us out of this recession. But it's all just politically correct talk.
This forum is filled with entrepreneurs and innovators. It has one of the highest density of job creators of any forum on the web. Has anyone here seen any help from the government in creating jobs? Either on the supply side (grants) or on the demand side (tax breaks)? Or by reducing our administrative workload? From either side of the isle, conservative or liberal?
Instead we have bureaucratic nightmares like this 1099 legislation that create work that has a not insignificant opportunity cost for innovation and job creation in this country. You could be coding, but instead you're issuing 1099's to walmart.
The reality is that even if this passes, we'll all do just fine and keep innovating. But the next time some politician tells you he supports job creation in this country be sure to call bullshit on him. They only say it because it sounds good and they have done nothing to help us create jobs.
This forum is filled with entrepreneurs and innovators. It has one of the highest density of job creators of any forum on the web. Has anyone here seen any help from the government in creating jobs? Either on the supply side (grants) or on the demand side (tax breaks)? Or by reducing our administrative workload? From either side of the isle, conservative or liberal?
Instead we have bureaucratic nightmares like this 1099 legislation that create work that has a not insignificant opportunity cost for innovation and job creation in this country. You could be coding, but instead you're issuing 1099's to walmart.
The reality is that even if this passes, we'll all do just fine and keep innovating. But the next time some politician tells you he supports job creation in this country be sure to call bullshit on him. They only say it because it sounds good and they have done nothing to help us create jobs.
In addition to the 1099 nightmare, there's also the S-corp self employment tax nightmare where all s-corp income has the 15.3% self-employment tax imposed, not just the earned income. I predict a mass switch to C-corps.
From http://www.businessbrief.com/feds-take-aim-at-small-biz-loop...
Both House and Senate bills address what some lawmakers see as evasion of employment tax by certain individuals. The Internal Revenue Service has stated that many taxpayers receive nominal salaries and take their earnings through distributions by S corps., limited partnerships, or other entities. The House and Senate bills would change that situation by imposing self-employment payroll taxes on 100% of S-corp. pass-through income when:
- The S corp. is engaged in a professional service business, with the key assets being the reputation and skill of no more than three employees, or
- The S corp. is a partner in a professional service business.
From http://www.businessbrief.com/feds-take-aim-at-small-biz-loop...
Both House and Senate bills address what some lawmakers see as evasion of employment tax by certain individuals. The Internal Revenue Service has stated that many taxpayers receive nominal salaries and take their earnings through distributions by S corps., limited partnerships, or other entities. The House and Senate bills would change that situation by imposing self-employment payroll taxes on 100% of S-corp. pass-through income when:
- The S corp. is engaged in a professional service business, with the key assets being the reputation and skill of no more than three employees, or
- The S corp. is a partner in a professional service business.
The great injustice here as I see it is, Wall Street destroys the economy, makes billions doing it, passes the cost on to US Government via skilled use of FUD (especially the F part), capture, and paid-for access, and gets away clean (with a few show trials like Madoff).
Now the government is so cash strapped that they're looking to squeeze the rest of the country to make up for it. This appears to be the greatest reverse wealth transfer I've ever witnessed or even read about.
Now the government is so cash strapped that they're looking to squeeze the rest of the country to make up for it. This appears to be the greatest reverse wealth transfer I've ever witnessed or even read about.
All they did was make corporations the same as people for 1099 reporting. Don't you just LOVE the hypocritical irony?
seems like an opportunity for automation. I bet you could do something where you slurp down a csv of your credit card transactions (most banks let you do this) and then go through the merchant IDs to figure out who to send the 1099 to. Now, sure, going from the merchant ID to a tax id and address for a 1099 would be quite a lot of work, but that's where the central service comes in. You could either sell the credit card id-> tax id database, or you could 'crowdsource' it- (though you would have to solve a major trust problem) when one user of your service figured out the tax id mapping they would share it with the others.
I know this is a really alarming issue, but there's no way this will ever happen. Business lobbies are far too powerful to allow something like this to slip by without a serious fight, and we've got 2 years.
Solution: write your congress person. Sign petitions etc and make a whole lot of stinkin noise..
But I'm sure every Fortune 500 corp will be making even more noise about this than small business owners. I can't imagine Walmart likes this anymore than Joe's Hardware
Solution: write your congress person. Sign petitions etc and make a whole lot of stinkin noise..
But I'm sure every Fortune 500 corp will be making even more noise about this than small business owners. I can't imagine Walmart likes this anymore than Joe's Hardware
I think that we feel a loss of control over our common politic and that is making even the most rational of us feel like we have to yell and curse to have our disagreements registered, even in a quiet room.
I see this as an immense opportunity to automate this via an software by your identity at purchase. Why can't this be part of the software transaction and automatically reported and available at the IRS real-time.
Our tax system is way too form and administrative based still. It is always delayed and never real-time. Get this stuff out of the way and automate it throughout the year. Hide income taxes and 1099s for contractors just like they hide sales tax in transactions, or just rid of the income tax altogether and go another direction.
Our tax system is way too form and administrative based still. It is always delayed and never real-time. Get this stuff out of the way and automate it throughout the year. Hide income taxes and 1099s for contractors just like they hide sales tax in transactions, or just rid of the income tax altogether and go another direction.
While I disagree with the manner in which many of the "calm down, folks"-esque comments take for granted that this issue will automagically sort itself out, I do agree with them that there are more constructive ways to deal with it than writing rants on HN.
Please, if you are, as I am, concerned about the potential consequences of this provision, please calmly inform your representatives (especially ones on the [very powerful] House Ways & Means Committee) that you would like them to support HR 5141 ( http://www.opencongress.org/bill/111-h5141/show ), which selectively voids this provision.
Concisely and realistically emphasize the impact you believe this provision will have on your present or future business(es). Also, IMHO, it would be constructive to mention that (regardless of your stance of the ACA) you are not expressing concern about the ACA as a whole, but rather about this specific provision; Democrats may otherwise interpret your message as a general attack on their hard-fought (perhaps Pyrrhic?) victory and Republicans may take it as encouragement to frame the debate over HR 5141 as part of an overall attack on the ACA, which would likely cause the the bill to fail. IOW, know your audience.
Please, if you are, as I am, concerned about the potential consequences of this provision, please calmly inform your representatives (especially ones on the [very powerful] House Ways & Means Committee) that you would like them to support HR 5141 ( http://www.opencongress.org/bill/111-h5141/show ), which selectively voids this provision.
Concisely and realistically emphasize the impact you believe this provision will have on your present or future business(es). Also, IMHO, it would be constructive to mention that (regardless of your stance of the ACA) you are not expressing concern about the ACA as a whole, but rather about this specific provision; Democrats may otherwise interpret your message as a general attack on their hard-fought (perhaps Pyrrhic?) victory and Republicans may take it as encouragement to frame the debate over HR 5141 as part of an overall attack on the ACA, which would likely cause the the bill to fail. IOW, know your audience.
what this means in practice I suspect is that audits will result in more findings of non-compliance, therefore more penalty revenue for the IRS. While I agree it's stupid paperwork, if your vendors pay their taxes, and you are keeping your accounts correctly, it probably won't be the biggest deal on the planet to generate a bunch of 1099's for your expenses.
If (Government && GetRidOfCash)
$response = MakeCashUnusable($year=2012); // Returns array with multiple options
echo $response[0];
"Success! New law implemented that will effectively make it so painful to use cash, checks, ach and wire-transfers that everyone will use credit and debit cards which we have full digital access to without direct user knowledge."
echo $response[1];
"Success! New law implemented that will effectively make it so painful to use cash that everyone will start buying everything possible from overseas companies who still accept PO's ( checks, ach and wire-transfers ) because the shipping cost are more easy to predict than cost associated with absolute compliance with this new law."
echo $response[0];
"Success! New law implemented that will effectively make it so painful to use cash, checks, ach and wire-transfers that everyone will use credit and debit cards which we have full digital access to without direct user knowledge."
echo $response[1];
"Success! New law implemented that will effectively make it so painful to use cash that everyone will start buying everything possible from overseas companies who still accept PO's ( checks, ach and wire-transfers ) because the shipping cost are more easy to predict than cost associated with absolute compliance with this new law."
People: Chill the fuck out. The IRS is accepting comments on the issue. The rule doesn't go into effect until, realistically, April of 2013. By then, it is almost guaranteed that the rule will be significantly weakened to the point where it is not much different than what we have in place now.
This isn't a world-ending or economy-destroying fuckup organized by big-governement Democrats. It was a short-sighted clause put in by a politician trying to close a loophole. This is why we have checks and balances- the executive branch, which is actually in charge of implementing these rules, will implement them in a sane way.
So put your conspiracy theories to bed and get on with life. File a comment with the IRS and wait a couple of years. Then maybe you'll see that this was just one big stink over nothing.