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Senate fails small-business owners on 1099 reform

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Two separate amendments to reform the 1099 reporting requirements in the health-care bill failed today. I imagine that sentence doesn't mean much to you. But it's a bad thing.

The 1099 reporting requirement raises $17 billion in the health-care bill. It says that businesses have to report every purchase from every vendor above $600. Those purchases currently go unreported, and taxes related to them often go unpaid. Tracking them will fix that, and the government will collect some much-needed coin.

But getting there will require a lot of paperwork. Enough, actually, that many people on both sides of the aisle are convinced it's simply not worth it. And they're right. Making the lives of small-business owners miserable isn't a good idea. Some Democrats resist the idea of changing the health-care bill this soon, but any large piece of legislation will need tweaks and modifications as it gets implemented. Making the bill work well is much more important than avoiding a bad headline or two.

The Senate considered two different proposals to reform that law today. One, from Bill Nelson, would've exempted purchases of less than $5,000 (which is 90 percent of them) and paid for the lost revenue by cutting oil and gas subsidies. Another, by Mike Johanns, would've repealed the provision entirely and paid for it by cutting spending on public health and weakening the individual mandate. Both failed. Nelson got a majority, but his 56 votes weren't 60 votes, and so they were meaningless. Johanns got only 46 votes.

But here's the kicker: The votes were almost perfectly opposite. Look at the roll call for the Nelson amendment and the roll call for the Johanns amendment. Nelson's 56 ayes included zero Republicans. Johanns's 46 ayes included seven Democrats. So though both amendments were designed to do the same thing, there was very little overlap among their supporters. Most Democrats weren't willing to weaken the individual mandate or our public health infrastructure. No Republicans were willing to cut oil and gas subsidies to free small-business owners from a law they describe as ruinous.

You could be cynical about this and suggest that Republicans aren't actually that desperate to save small businesses from a law that will make them really hate Democrats. But the reality is that if the Senate didn't rely on rules that require supermajorities to pass anything, the 1099 requirement would've been reformed today. As it is, the incentives for party-line voting are stronger than the incentives to make good policy.

Photo credit: Mark Gail/The Washington Post.

By Ezra Klein  |  September 14, 2010; 1:26 PM ET
Categories:  Health Reform , Taxes  
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Comments

In other words, if I make a lousy $11 in interest the bank has to report it to the IRS, but god forbid businesses have to report on $601, even though they have accounting systems so there should be little actual burden. Indeed, if they don't already have this information these "small businessmen" are almost certainly crooks. (Indeed, even drug dealers keep detailed accounts, as you can see in Freakonomics.)

Posted by: Hopeful9 | September 14, 2010 1:35 PM | Report abuse

"You could be cynical about this and suggest that Republicans aren't actually that desperate to save small businesses from a law that will make them really hate Democrats."

Plenty of time to save small businesses after November, say they.

Posted by: Kevin_Willis | September 14, 2010 1:38 PM | Report abuse

Hopeful9 has obviously never run a business. This law would impact every small business, including sole proprietors. If you buy a computer that costs more than $600 you have to find out the vendor's employer ID and file a 1099, if you fly on business to the other coast 1099 to the airline, take out business clients to a local restaurant a few times 1099, phone bill 1099, rent 1099, car payments 1099, etc. etc. This bill is so onerous it guarantees that every small business will hate the Obama administration and healthcare, and it won't be complied with. It is total lunacy not to fix this.

Posted by: AuthorEditor | September 14, 2010 1:43 PM | Report abuse

Bush also said he would save small businesses too.

How's that going for ya, small business owners? Yeah, I know. It just didnt happen did it?

Small business owners already hate Democrats, though historically they have done better under Dems.

Posted by: lauren2010 | September 14, 2010 1:47 PM | Report abuse

Agree totally with your take on this Ezra (as well as AuthorEditor). Most small businesses are not the well oiled machines that Hopeful9 thinks they are).

And not only that but larger businesses are fretting this because they're already taxed resources wise.

I guess the one bonus to this is that businesses now will be FORCED to hire people to handle this mess. talk about a small business jobs package!!

I also think the compliance will be the side that resolves the issue. I don't think you'll see (maybe I'm wrong) the IRS taking Joe's Butcher Shop to financial task for this. I expect it'll be kind of like the HIPAA compliance where you had at the onset 3 agents handling the entire US HIPAA enforcement division. A running joke in NAHU circles.

Posted by: visionbrkr | September 14, 2010 1:48 PM | Report abuse

Ezra,
How much of the "cost savings" in the bill that off set the costs of expanded coverage come from things such as this which are unrelated to actual health care costs?

Posted by: jnc4p | September 14, 2010 1:48 PM | Report abuse

This 1099 thing isn't a big deal.

The President needs simply to issue an exec order for the IRS to not enforce this part of the law. And the IRS can do the same thing without the Presidential order (they can just decide not to enforce it and let everyone know beforehand they won't).

Posted by: lauren2010 | September 14, 2010 1:50 PM | Report abuse

lauren2010,

take your blinders off please. Small businesses may not be fond of Republicans but they HATE Democrats. At least all the ones I talk to. In fact I end up talking many small business owner clients off the proverbial ledge when talking politics and tell them that the Dems aren't that bad for them.

That's like me trying to claim that the unions and Republicans are in lockstep together. Silly.

Posted by: visionbrkr | September 14, 2010 1:51 PM | Report abuse

Shame on the Democrats for putting it in the health care bill to begin with.

Posted by: dave09 | September 14, 2010 1:53 PM | Report abuse

Ezra

What is the total cost or savings for the two different bills, had they passed?

Seems the Dem bill would have been debt neutral, but the GOP version would have added many billions to the debt.

It would be nice to know this info.

Posted by: lauren2010 | September 14, 2010 1:59 PM | Report abuse

It is the American people that lose. "We the People" no longer exists.

Posted by: donnam99 | September 14, 2010 2:02 PM | Report abuse

It is the American people that lose..... "We the People" no longer exists.

Posted by: donnam99 | September 14, 2010 2:03 PM | Report abuse

Also, it would be interesting to see how well these requirements would go over if they were applied to individuals and not just businesses.

Spend more than $600 a year at Wal-Mart and you have to send the IRS a 1099, etc.

The existing rules worked fine. Any non-employee who wasn't a corporation had to receive a 1099 if they received over $600.

Posted by: jnc4p | September 14, 2010 2:04 PM | Report abuse

It is the American people that lose. "We the People" no longer exists.

Posted by: donnam99 | September 14, 2010 2:04 PM | Report abuse

umm vision

Do you know how to read?

Apparently not.

Posted by: lauren2010 | September 14, 2010 2:07 PM | Report abuse

Keep the law as it is, create a computer program to do the paperwork for you, this is crazy... Lazy Americans...

Posted by: tjproferes | September 14, 2010 2:09 PM | Report abuse

The GOP ads write themselves on this one:

"we have to pass the bill so that you can find out what is in it"

http://www.speaker.gov/newsroom/pressreleases?id=1576

Posted by: jnc4p | September 14, 2010 2:10 PM | Report abuse

I think many mistakenly think of most businesses as being a lot larger than they are. Close to 80% of the businesses in the U.S. have 10 or fewer employees, yet these same businesses account for most of the employed people in the country. They don't have accounting departments. Many don't have fulltime bookeepers. This 1099 reporting requirement will be a huge time and cost burden on these typical businesses. I predict it simply won't be complied with because it will just be too costly.

Posted by: AuthorEditor | September 14, 2010 2:11 PM | Report abuse

--"[T]he government will collect some much-needed coin."--

That's Klein for you, singing the collectivist's song. Even if it's a tax he can dig deep and find arguments against, the cloud still has that silver lining: treasure to the tyrants. They *need* it.

Well, they need it to buy new leather that can be fashioned into shiny leather boots that will go just so on the citizens' necks.

They need it as they scale new heights of needing more and more.

Posted by: msoja | September 14, 2010 2:17 PM | Report abuse

lauren2010,

check the time stamps. I was referring to your post at 1:47 and NOT the one at 1:51. I can read. Can you comprehend?

Apologies accepted anytime!

Posted by: visionbrkr | September 14, 2010 2:17 PM | Report abuse

"Keep the law as it is, create a computer program to do the paperwork for you, this is crazy... Lazy Americans.."

It isn't just the paperwork. You need to contact every business to get their employer ID, official business address, etc. Every time you fill up your business car's gas tank you have to determine who owns the gas station and what their employer ID and business address is in case you go over the $600 for the year. Every hotel you stay at. Every vendor of supplies, every service provider, every airline, every travel agent, etc. etc. It would be impossible.

Posted by: AuthorEditor | September 14, 2010 2:18 PM | Report abuse

Anyone have an idea where I can bury this crap?

"Land of the free, home of the brave."

It's starting to stink.

Posted by: msoja | September 14, 2010 2:24 PM | Report abuse

These computer programs already exist. My company knows it's vendors and customers and is organized to list their value to the company by the amount of business spent and received in dollar amounts. It's no big deal, a click of a button.

Posted by: clairevb | September 14, 2010 2:35 PM | Report abuse

These computer programs already exist. My company knows it's vendors and customers and is organized to list their value to the company by the amount of business spent and received in dollar amounts. It's no big deal, a click of a button.

Posted by: clairevb | September 14, 2010 2:36 PM | Report abuse

These computer programs already exist. My company knows it's vendors and customers and is organized to list their value to the company by the amount of business spent and received in dollar amounts. It's no big deal, a click of a button.

Posted by: clairevb | September 14, 2010 2:37 PM | Report abuse

Question...... Just for a minute....lets say this does go into law...I work for a company that provides my gas and if I go over 600.00 to my Shell Station...my company must provide the 1099 and my Shell station won't know who the heck my company that I work for is....It would be indisputable??? Anyone could send anyone a 1099....ooh, that gives me a good idea!

Posted by: donnam99 | September 14, 2010 2:39 PM | Report abuse

"Bush also said he would save small businesses too.
How's that going for ya, small business owners? Yeah, I know. It just didnt happen did it?
Small business owners already hate Democrats, though historically they have done better under Dems.
Posted by: lauren2010 | September 14, 2010 1:47 PM | Report abuse"

but we are not dealing with regular dems any more are we...
the business hating left runs the party and the house and senate and whitehouse...
and as long as the lrft rules...
business and jobs will suffer...

Posted by: DwightCollins | September 14, 2010 2:41 PM | Report abuse

Factual question: Does anyone know when the 1099 provision goes into effect?

Posted by: jnc4p | September 14, 2010 2:48 PM | Report abuse

Dwight

To claim the business hating left is in power is a clear indication you have no idea what you are talking about.

Posted by: lauren2010 | September 14, 2010 2:54 PM | Report abuse

How long until Intuit or HR Block or one of the other tax prep and/or accounting software people have a program or add-on for $59.99 to take care of this for businesses?

Posted by: gmart68b | September 14, 2010 3:22 PM | Report abuse

How about this: the USFG will take back ALL the subsidies and tax breaks small business owners receive in a given year in exchange for eliminating the 1099 provision?

Then, small businesses won't have to hire all those darn bookkeepers and accountants and won't have to keep track of taxable expenses and the USFG will get the billions it needs for health care.

No? What? You'd rather have your tax breaks? Thought so.

Posted by: knoelle11 | September 14, 2010 3:23 PM | Report abuse

Hopeful9 and tjproferes are both ignorant fools. I am a small business owner (16 people) and an IT professional. I don't feel a need to re-state AuthorEditor's posts. Just agreeing with them will do.

Posted by: giscone | September 14, 2010 3:25 PM | Report abuse

It must be frightfully boring for Mr. Klein--day after day, week after velcroing his lips to the obamalosi/reid bottom

Posted by: jibe | September 14, 2010 3:49 PM | Report abuse

Factual question: Does anyone know when the 1099 provision goes into effect?

Posted by: jnc4p | September 14, 2010 2:48 PM |

It's effective for payments made after December 31, 2011, so, starting in 2012. [PPACA Section 9006 (c)]

Posted by: Policywonk14 | September 14, 2010 3:59 PM | Report abuse

I see a lot of bogus claims in these comments, so I've decided to register and speak my peace. For the record, I own a small business in Cleveland, Ohio and employee 43. Back of the envelope calculation shows that I'll probably spend 4-6 weeks filling out 1099s for the first couple of years while I track down EIN numbers and keep track of each little receipt. Eventually that will widdle down to 3-4 weeks. Add that month to the other month (added up) paying and filling quarterly and annual taxes, and now'll you get an idea of how many annual hours are spent playing footsie with the IRS, DJFS, exe.

For the record, this 1099 fiasco has nothing to do with the 90% of honest businesses out there. It's an onerous attempt to collect taxes from the 10% of dishonest businesses who under report taxes, by burdening the rest of us. For example, Uncle Joe's pop-shop under reports his mostly cash business taxes, so Uncle Sam thinks if he can get Henry's auto repair, who spends lots of time Joe's in between jobs, to tattle-tale for him, Joe will finally have to pay up. That's the 1099 in a nut shell as it relates to day-to-day business expenses. In essense, Uncle Sam can't get Joe to pay taxes, so he wants Henry to help him collect what he, thinks, he's owed.

There are no small business subsidies. If you can prove me wrong, I'd like to offer you a job, otherwise I'll happily trade them for the 1099 reprieve.

On the other hand, I'll probably have to let someone go to hire outside help to manage this mess. Net zero gain to the job market, but a small hit to our productivity and probably revenue. Less taxes from me and the other 90% will most likely cancel out any gains from the increased 1099 revenue.

So, that's a total net zero gain to government revenue, a net zero gain to the private sector job market, and a huge gain the public sector job market thanks to the army of IRS agents that will be required. The end result is an increase in our Federal deficit and debt.

Take this for what it's worth, either a great deal or very little depending on your point of view.

Posted by: nothingtoseehere101 | September 14, 2010 4:33 PM | Report abuse

Like giscone I am a small business owner and an IT professional, but I don't agree, so I guess that makes me an ignorant fool.

If the reg stands, which I doubt, it will be a bit bothersome to me and no doubt more so to anyone who is still trying to run a business by collecting scraps of paper in a shoebox. But I've been in this long enough to know that there is a LOT of business income that goes unreported and a lot of expenses that are over-reported (not by me). I suspect that the prospect of having that exposed is more troubling to many small businesses than the paperwork burden.

Posted by: adagio847 | September 14, 2010 4:38 PM | Report abuse

Quickbooks says they generate 1099's under current rules, I'm sure Peachtree and other outfits do the same. (Quickbooks costs less than $200.)
If you read the IRS taxpayers advocate report, she doesn't recommend an immediate change, but plans more study before submitting legislative recommendations. I'd think it'd be good to look at the overall system (how many years ago was the $600 parameter set) and to phase in the requirement.

Posted by: bharshaw | September 14, 2010 4:54 PM | Report abuse

It really is a pain in the a** to consider filling out so many 1099s. Several years ago I conducted $1500 worth of business with an IT consultant. I couldn't get them to send me their EIN until two months after my fiscal year ended, causing me to re-file an amended tax return.

I routinely take clients to several restaurants and the total bill is almost always over $600 per year. I can't wait to see whether I can get the EIN from the Thai restaurant owner who barely speaks English. I just might have to find a new restaurant!

Posted by: besmit02 | September 14, 2010 5:00 PM | Report abuse

"If the reg stands, which I doubt, it will be a bit bothersome to me and no doubt more so to anyone who is still trying to run a business by collecting scraps of paper in a shoebox..."

My point is the PITA of calling each business and tracking down that EIN come January. Phone tag nightmare. If you call us up to complete that 1099, you'll be lucky to get me or the secretary who knows our EIN number.

Imagine that with every vendor/b2b purchases totaling >$600. These first couple of years are going to be painful for what probably amounts to very little benefit to anyone. It's not the end of the world, though, for sure!

Posted by: nothingtoseehere101 | September 14, 2010 5:03 PM | Report abuse

"...the PITA of calling each business and tracking down that EIN come January."

Granted, the first year or two could be a hassle, but soon all businesses - even that Thai restaurant - will start printing their EIN on their receipts. These things have a way of becoming routine.

Posted by: adagio847 | September 14, 2010 5:31 PM | Report abuse

@nothingtoseehere101:

"There are no small business subsidies. If you can prove me wrong, I'd like to offer you a job, otherwise I'll happily trade them for the 1099 reprieve."

The only legit small business subsidy that I know of is the Section 179 deduction versus having to do a full amortization of assets, but that's more about timing.

Regardless, the more interesting point is that Obama and the Democrats are going to great lengths to pass this bill to ostensibly help small business, but I suspect that 99% of actual small business owners would prefer that they repeal the 1099 provision instead and keep the SBA loans and other provisions of the most recent bill.

I also suspect that the pain in the ass time consuming factor of the 1099 provision will easily generate more outrage and opposition than what an alternative measure that raised the same revenue from small business would have done. I.e. there are a lot less politically painful ways for the feds to get an extra $17 billion a year.

Posted by: jnc4p | September 14, 2010 5:40 PM | Report abuse

Congress is full of complete idiots.

We could replace them all with people selected randomly from phone books and get a much better result.

Posted by: jazbond007 | September 14, 2010 7:22 PM | Report abuse

"But here's the kicker: The votes were almost perfectly opposite. Look at the roll call for the Nelson amendment and the roll call for the Johanns amendment. Nelson's 56 ayes included zero Republicans. Johanns's 46 ayes included seven Democrats. So though both amendments were designed to do the same thing, there was very little overlap among their supporters. Most Democrats weren't willing to weaken the individual mandate or our public health infrastructure. No Republicans were willing to cut oil and gas subsidies to free small-business owners from a law they describe as ruinous."

Maybe it's because Democrats feel guilty about putting the provision in in the first place.

Posted by: krazen1211 | September 14, 2010 7:55 PM | Report abuse

*******This bill is so onerous it guarantees that every small business will hate the Obama administration and healthcare, and it won't be complied with. It is total lunacy not to fix this.*******

It's not lunacy to refrain from fixing it if one is a Republican. If one is a Republican, not fixing it is perfectly rational.

That said, I believe the regulation isn't just burdensome -- it's utterly infeasible. I honestly don't see how the IRS can enforce it.

Posted by: Jasper999 | September 14, 2010 9:14 PM | Report abuse

Opponents to this bill support tax dodgers.
How politically sustainable is that?
If small businesses don't have Quicken or similar, getting it will only help their bottom line.
Does anybody know what are the "loans and tax breaks to small businesses" that the bill establishes - especially "tax breaks?" (that every Republican will support)

Posted by: MeesterJack | September 14, 2010 10:55 PM | Report abuse

How you could leave out the insidious authors of the ACA that put this nonsense in there? It's their fault for coming up with this.

Imagine that every employee in your company has a credit card and spends money at various places while on travel, to buy equipment, etc. I now have to consolidate all of those purchases, find all of the ones that add up to $600 or more across all of the people (nevermind the difficulty of figuring out what the heck things are from paper receipts and cryptic credit card statements is), just imagine trying to figure out if different business are franchises or subsidiaries and which tax id they use. Is WalMart going to get 1 million 1099s sent from random businesses across the country? Do they think Walmart is underreporting sales?

If this does remain law, there is no way they make $17B off of it.

Posted by: staticvars | September 14, 2010 11:17 PM | Report abuse

I've said this before and I guess I'll say it again. I'm a small business owner. I can't imagine a business that's has such poorly organized books that it couldn't in a minute pull up a report of which vendors they spent $600 or more on. That includes the misc. money you spent at the grocery store for employee birthday parties. And the next edition of your tax or accounting software will feed that right into printing a stack of 1099s. How hard is that? If having the vendor's EIN is a big deal it will probably become common courtesy to print it right on the receipt. There are some regulations that are more pain than they are worth, but all the howling about this little thing leaves me thinking there's a lot of fake howling going on.

Posted by: TomCantlon | September 15, 2010 12:52 AM | Report abuse

This is pure insanity on both sides, no matter what you think iof the Healthcare Law. Here is what I KNOW as a CPA of many years. The issue is $17 billion in extra tax from those not under reporting income. However, that is for 10 years. We are talking about less than $2 BILLION A YEAR. OUR FEDERAL GIVERNMENT SPENDS $3,600 BILLION A YEAR ($3.6 trillion), WITH A DEFICIT OF $1,400 BILLION.

There REALLY WILL BE NO LOST REVENUE! 1099s report on a cash basis and on a calender year. Businesses can easily switch income tax returns to the accrual basis, on a fiscal year. In addition, few businesses will properly segregate cash payments from credit and debit card payments, as they now should. If they did it would substantially increase expenses. However, credit card companies will report these payments to Internal Revenue as well, doubling up these amounts. All this GUARANTEES THAT FEW 1099 WILL MATCH, so there will be NO SIGNIFICANT EXTRA 1099 RELATED TAX INCOME.

IRS also says each 1099 takes 16 minutes to prepare. Each of the 4 BILLION new 1099s will involve business payments that did not require prior 1099s. Even if the payee ID# (unlikely) and address was on file, it now must got in a different part of accounting systems. Add time to get numbers and addresses not on file, and usual accounting processing time for a year, and you have more than an hour per 1099 per year.

The average cost of an accounting clerk, plus fringes, supervisor time, CPA time, etc., is more than $25 an hour. That means businesses will spend an extra $100 BILLION on this per year. These added expenses will CUT THE TAX THEY PAY BY AROUND $25 BILLION A YEAR. Internal Revenue also will spend $2 to $4 billion on new IRS agents and related costs.

So, businesses will lose $75 billion net of tax. Governement will lose $27 to $29 billion a year if we do not REPEAL THE 1099 provision. However, these losses are the good news. Do you know how businesses are already being told to sharply cut 1099 costs?

Simple, use credit cards (which add to costs) and CUT THE NUMBER OF SUPPLIERS! THIS WILL DEVASTATE SMALL BUSINESSES. Small businesses produce 80% to 100% of net new jobs, so this will send unemployment through the roof.

Remember in Novermber!

Don't reelect ANYONE!

Posted by: MikeBlockCPA | September 15, 2010 2:11 AM | Report abuse

My successful small business has 2 employees. It's almost 10:00 pm and I've been working for 15 hours-not uncommon. In my opinion, the people who are saying this will be easy to comply with by simply using bookkeeping software don't get it.

Earlier today I made a run to Costco then to Office Max. That's just two examples today of companies we'll need to 1099. It will take a few hours to set up a system to track this, several hours over the course of the year and a several hours at the end of the year to prepare the additional 1099 forms. Just for grins, lets say this takes only an hour a week. That's 52 hours a year. We pay an outside bookkeeping company $45 and hour for this type of work. That will be $2,340 BEFORE the additional cost of our CPA to review this additional work.

This is nuts and reflects how out of touch most of our elected officials are with the very basic realities of running a small business.

Posted by: mauitv | September 15, 2010 4:26 AM | Report abuse

I agree with most of the people who have posted. The thing that some people aren't getting is, it will raise the cost of EVERYTHING purchased. If the "small business" owner has to 1099 Office Max or Best Buy or Lowes etc. then those companies will have to hire more people to handle the influx of 1099's they receive each year, thus the cost to buy paper for your home printer, or the cost of buying a printer cartridge or a piece of lumber etc will also increase. This in return will affect every person who buys anything.

This issue is NOT a small business issue!! It is the "average Joe's" issue also. Don't be fooled, this law is going to affect every man, woman and child that purchases anything. This is a fact, no one will be untouched by this law.

It is NOT an issue where someone is trying to get out of paying their fair share of taxes etc. It is an issue where, once again, the people in Washington aren't thinking.

Some laws make no sense; and this, my friends, is one of them!! Please call your senator and congress person to have them fix this.

Posted by: dmean119 | September 16, 2010 4:12 PM | Report abuse

Per Max Baucus on Senate Floor on 9/14/09 regarding amendment to Small Business Bill that would remove 1099 filing requirements.

"CURRENT LAW, EVEN BEFORE HEALTH CARE REFORM, REQUIRES ALL BUSINESSES TO SEND A FORM 1099 INFORMATION RETURN TO ALL UNINCORPORATED SERVICE PROVIDERS WHOM BUSINESSES PAY $600 OR MORE DURING THE YEAR." Max Baucus

I phoned his office to inform him his statement was incorrect. His staff agreed, but Baucus didn't correct his statement today when pushing for the Bills passage.

A Business need only to send a supplier or business or individual a 1099 if they are considered “contract labor”. I verified this with my tax attorney. You can verify this at this website:
http://www.irs.gov/instructions/i1099gi/ar02.html

I also asked my tax attorney what the government hoped to gain by this law. We both assumed an increase in revenue, but we also agreed increasing revenue via this law was inprobable and that this was not going to be significant at all.

We both also agreed that it was only included in the Health Reform Bill so that the CBO could score it's “possible” generating of revenue to bring the final scoring of the cost of Health care reform down. The same reasonthey included the College Loan Act.

My attorney also said, “it will never happen”, there is no possible way for the IRS to match every 1099 against what a business reports as income. It is far more complicated. For one, you may pay a company that is on a cash basis rather then an accrual basis say at the end of December. If they don’t receive the check/payment until Jan. it is claimed as income in Janurary.Also, how in the world is a small business going to ask their utility companies/suppliers for their tax I.D. Can you imagine the paperwork and time a small business office will spend and the additional accounting costs.

And, how will the IRS make sure businesses send the required 1099? Businesses only file their businesses expenses by category of payer not by the individual name of each payee in each category.(i.e. electic, phone, office supply, etc.)

They will need thousands of additional IRS employees to monitor this. Even then it is next to impossible per my Accountant.

I phoned Baucus’s office and informed them of his error. I was conforting when his staff told me that even Senator Baucus felt the 1099 provision would be dropped before it was due to take effect.

So why the political games on the Senate floor? I think they don't want to take this provision out of the health bill because "on paper" it will increase the already underestimated cost of the Health Bill.

Can we trust anyone to speak the truth.Why didn't Baucus correct his error today before the final vote on the bill was made.

Posted by: fedupwithgovernment | September 16, 2010 11:09 PM | Report abuse

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