You’ve got to hand it to Nancy Pelosi. When she said on March 11 that “we have to pass the bill so that you can find out what is in it,” she was actually telling the truth.
Now that ObamaCare is law, every day we’re finding out yet another nasty morsel buried in that 2,000+ pages monster bill.
H/t Fellowship member Richard!
~Steve & Eowyn
By David Hogberg – Investor’s Business Daily – May 13, 2010
Under current law, a company has to file a 1099 only when it pays an independent contractor more than $600. Beginning in 2012, a company will have to file a 1099 every time it makes cumulative purchases of $600 or more from any business. “That means (we’ll file a 1099) for everyone from Staples (SPLS) to United Airlines (UAUA) to FedEx (FDX) to the catering business that brings in box lunches for our conferences,” said Grace-Marie Turner, head of the conservative Galen Institute, itself a small business.
Rep. Dan Lungren, R-Calif., suggests that small businesses will get hit with more than just the compliance costs. “The incentive now will be not to buy from small businesses,” he said. “If you want to minimize the number of 1099s you file, you go to the big guys. If you need to buy hardware, do you go to Lowe’s (LOW) or the small store down the street?” Lungren has filed legislation that would repeal Section 9006.
[…] The Joint Committee on Taxation estimated that the 1099 measure would take in $17 billion in revenues from 2012 to 2019.
Policymakers assume that firms underreport a lot of income, according to Bill Rys, tax counsel for the National Federation of Independent Business. “The theory here is that it is harder for a business to underreport income if there is a third party reporting the income to the IRS,” Rys said. “The other is the deterrent effect, that you won’t under-report income if you know someone is reporting it.” Said Turner: “The government thinks the whole country is a bunch of tax cheats.”
[…] To reduce compliance costs, businesses may try to consolidate their purchases by buying only from megastores such as Home Depot (HD), Staples and Wal-Mart (WMT). This could put local small businesses at a further disadvantage. “We don’t know exactly what the consequences will be, but it’s something worth considering,” Rys said. “There are always consequences to adding new burdens like this, and I don’t think this proposal has been given the time to answer those types of questions.”
To read the entire IBD article, CLICK HERE.