You have to pass the Bill to know what’s in it–More power to the IRS
May 18th, 2010 by David Anderson
If this is not fixed, it is conceivable that independent contractors like myself will suffer an unbelievable burdern under the new health care law. When ever you make more than $600 in purchases you will be required to send a 1099 to that person or corporation. That borders on insanity. This came from that radical right outpost, CNN. Is it too much to say repeal the bill, Mr. Castle? One of the few places of job growth has been the independent contractor, now Washington wants to crush them and small businesses across America. This is wrong and must be changed right away. I expect our delegation to sponsor a fix.
An all-but-overlooked provision of the health reform law is threatening to swamp U.S. businesses with a flood of new tax paperwork.
Section 9006 of the health care bill — just a few lines buried in the 2,409-page document — mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.
The stealth change radically alters the nature of 1099s and means businesses will have to issue millions of new tax documents each year.
Right now, the IRS Form 1099 is used to document income for individual workers other than wages and salaries. Freelancers receive them each year from their clients, and businesses issue them to the independent contractors they hire.
But under the new rules, if a freelance designer buys a new iMac from the Apple Store, they’ll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.
The bill makes two key changes to how 1099s are used. First, it expands their scope by using them to track payments not only for services but also for tangible goods. Plus, it requires that 1099s be issued not just to individuals, but also to corporations.
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Looks like we are going to need another 16,000 IRS agents.
The only ones that needed to pass the bill to know what was in it were the Senators and Representatives themselves. The citizens that actually read the bill knew it would expand the power of the IRS well before it was voted on.