An Ol' Broad's Ramblings
Archive for 21 September 2010
Creating Paperwork, Raising Costs, Destroying Jobs
ObamaCare’s Form 1099 Provision
September 21, 2010
“[W]e have to pass the [Healthcare] bill so you can find out what’s in it.”
—House Speaker Nancy Pelosi, March 9, 2010
Section 9006 of ObamaCare expands information reporting requirements to the Internal Revenue Service (IRS) for business transactions in excess of $600 in goods or services. Starting in 2012, ObamaCare mandates that all businesses file an IRS Form-1099 for any vendor with which they have more than $600 in yearly transactions. With an unemployment rate above nine percent for 16 consecutive months, this monstrous accounting and paperwork burden will not provide any incentive to create jobs. To the contrary, the “1099 Provision” will create additional costs for business owners, particularly owners of small businesses, reducing productivity and further stifling economic growth.
CONDEMNATION FROM ALL SIDES
Businesses—Crushed by It: In an extensive June 2010 memo submitted to President Obama’s Office of Management and Budget, the Business Roundtable and the Business Council, industry organizations representing the nation’s largest private sector employers, outlined the job-killing policies of the administration. Referring specifically to the 1099 provision of ObamaCare, the memo noted, “the cost to modify systems to collect the data and send the additional 1099s will not be insignificant.” Indeed, a recent National Federation of Independent Business (NFIB) Small Business Survey determined that tax paperwork, costing $74 an hour, is the most expensive burden placed on small businesses by the federal government. The NFIB’s tax counsel, Bill Rys, has also highlighted the “direct negative impact on small business” of the 1099 mandate.
A recent letter from the U.S. Chamber of Commerce to members of Congress, signed by more than 2,400 member businesses from all industries and regions, stated that the 1099 provision means “40 million entities, including governments, nonprofits, and businesses of all sizes across the nation will be subjected to onerous data collection and IRS information filing burdens.” The letter continued: “these entities will have to institute new complex record-keeping, data collection and reporting requirements that track every purchase by vendor and payment method.” This mandate will “dramatically increase accounting costs, expose businesses to costly and unjustified audits by the IRS, and subject more small businesses to the challenges of electronic filing.”
Accountants—Against It: The American Institute of Certified Public Accountants (AICPA) advocated against Section 9006 in a July 2010 letter to Senators. Based on excessive implementation costs and the “limited utility” gained by the government from the “generation and receipt of millions of forms,” the AICPA said the 1099 requirement should be repealed as the “extraordinary burden in this instance far outweighs the potential benefit.”
The IRS—Wary of It: In July, the Internal Revenue Service’s National Taxpayer Advocate highlighted several problems with the 1099 mandate:
- “[T]he new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance.”
- “[S]mall businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition.”
House Republican Conference – Mike Pence, Chairman
A Leftist Wish List vs. National Security
One of the foremost responsibilities of the federal government is to ensure the security of our nation. It is right there in the Preamble to the United States Constitution: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” This week the U.S. Senate is scheduled to take up the FY 2011 National Defense Authorization Act. This legislation is necessary to fund the defense of the United States and its interests abroad. The House already passed their bill in May. But Majority Leader Harry Reid (D-NV) would rather talk about amnesty.
Why is Reid doing this? One only need look at the RealClearPolitics aggregate polling data: he is in a dead-heat reelection battle with State Rep. Sharon Angle (R). That is why Reid bypassed usual Senate procedure and included “the DREAM Act” in the defense bill. The DREAM Act creates a “path to citizenship” for illegal immigrants who entered the U.S. before the age of 16, have lived here for 5 years, and either serve in the military or attend college. But the bill also prohibits the government from deporting anyone who has even filed an application for the program. This essentially gives amnesty to anyone who applies regardless of whether they actually qualify for the act’s protections. Worse, the program would also allow applicants to sponsor their immediate family members for a green card. While current law prohibits sponsorship of illegal immigrants living in the United States, this leaves open the possibility that they could fraudulently, through falsified documents or other means, sponsor their parents who are in the U.S. illegally – creating an even larger amnesty.