

Senate votes to repeal 1099 reporting requirement in health care law - jacoblyles
http://www.portfolio.com/views/blogs/capital/2011/02/02/senate-votes-to-repeal-1099-health-care-requirement

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koanarc
Part of me is strangely disappointed by this.

A profoundly unrealistic tax law that, even if it were feasible, most people
wouldn't have even tried to obey, anyway?

It would have only served to underscore just how out of touch the political
class is, and to remind Americans that priority #1 is squeezing us for every
cent possible without causing a riot. With the right spin from the smaller
government crowd, perhaps, if it had lasted, it would have done more good than
ill?

I guess I'm among the minority, though, in preferring more rapid oppression to
the baby steps that our government is so good at. The boiling frog, etc.

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ibejoeb
My only disappointment is that I was hoping to get in on the software market
that would have been required to track all of this nonsense. It was a gift in
that regard.

I've talked about this quite a bit in the tax industry, and there are a few
popular opinions. My favorite so far is that this was designed to fail to show
just how bad our tax code can get, which would then be used to usher in
simplification/reform, i.e., VAT.

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ck2
I'm curious why 17 voted to keep it.

Was there a rider attached for some other crazy rule?

Gotta find that website that shows who exactly voted for what...

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makmanalp
govtrack?

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ck2
They should have it up eventually I guess.

This is interesting though, all 17 were democrats despite that for months,
President Obama asked them to repeal the provision. Senator Debbie Stabenow is
the one that finally made the proposed amendment to axe it.

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dusing
Good. I wasn't going to do it anyways

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jerf
You and most of the rest of the US; how would you even educate the population
about this massive change quickly enough? Computers have made much paperwork
cheaper and faster but this was simply absurd, a perfect example of doing the
cost/benefit analysis and simply assuming the cost of paperwork is either a
flat zero, or that one can account for the cost of paperwork solely by
considering the cost to the government as if that's the only entity that
matters.

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brainid
I think that tax preparation services were salivating at the prospects. Mine
sent a letter with our tax prep organizer explaining the change and offering
their services to prepare them for me.

I agree that it is absurd.

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marcusEting
I wish they'd repeal the 1099-K requirement for eBay income :)

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bugsy
Good. It would be a huge costly hassle and wouldn't raise one cent in new tax
revenue, despite their wild eyed hallucinations to the contrary.

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ianhawes
Its funny too because they thought it would generate some $44,000,000,000;
which of course now will have to come out of something else.

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bugsy
Yes, it gives them someone to blame for the imaginary "loss" when this
abomination is cancelled.

There are a very small number of criminal underground businesses that are not
declaring income, but those purchase are not made with check or credit cards,
they are cash-only, no receipts. The customers buying blackmarket or illegal
goods from these sketchy places are mostly not legit themselves. Mostly it is
drug dealers and undocumented alien sole proprietor gardeners, not licensed
legitimate long established businesses. They are not going to start filing
1099s. Maybe a few of them will though, and this will bring in an additional
10 million in income tax. That's a huge exaggeration, undoubtedly it will be
less. But let's say 10 million.

Consider though the 99.999% of businesses that have always done legit business
and report income who will be massively burdened by this and to process their
30 billion submitted 1099s each year is going to require new IRS personnel to
the cost of way more than $10 million. In addition, a lot of companies will
forgo purchases rather than have to deal with the additional paperwork.
Submitting requests and filling out these forms and tracking it all to make
sure you got them all is going to mean hiring more people (yay more jobs?) to
handle it, but that means prices go up, or you have to lay off somewhere else.
It's not stimulating the economy to hire people to do busy work at the cost of
producing and earning less, it's stimulating to actually produce more and do
well.

When we have a customer that needs IRS forms to be filled out with a purchase
(often W-9s), it is never ever a simple request. It always comes coupled with
very dense bureaucratic requirements from the other company (usually some
government institution or contractor) which mean in addition to tracking and
filling out forms, there is several hours of busy work, emails and phone calls
because the people that demand this level of bureaucracy are like little
helpless children, but very uptight ones. We have a W-9 filled out and
available. This is followed by requests that they "entered it into the system
and it came back wrong". Entered into what system? "The IRS validation
system." IRS doesn't have that, do you mean an third party one? Did you type
in the name of the business correctly? Yes. Try it again. I already did that,
please mail us the W-9 form again. Two weeks later, same problem. Four weeks
later, oops, they misspelled the name of the business, or the EIN, or they are
using some dodgy company for validation which only has a small fraction of
companies nationally. And never mind that W9s are _not required_ for retail
sales of $20 in off the shelf software as it is, that doesn't matter, it "is
their policy." Likewise, every institutional purchaser is going to demand
several days of work to deal with 1099s as well now for a $20 purchase,
because their policy will now be to collect on ALL purchases regardless of
size just in case they happen to go over that $600 limit. To manage all this,
it will be approved vendors only, which will be large institutional
supplier/resellers who charge ten times normal retail in order to deal with
bureaucracy. What happens to tuition then. And what happens to the small
companies locked out of the system. No longer will it even be an option to buy
the best product or lowest price, it will be whatever the approved vendor
asks.

All this burden to find hidden income from a tiny blackmarket and illegal
sector that isn't going to file these forms anyway.

The software guys salivating at the chance to sell software to manage all this
stupidity should be ashamed of themselves, that is pathetic. Our economy has
collapsed because of greedy non-producers who siphon off value from economic
activity in order to benefit themselves financially while contributing nothing
of real value. This selfishness is what is destroying our country and the
world.

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Bricejm
The 1099 reporting requirement seemed excessive, especially when some
corporations deal with thousands of vendors. Having to ask vendors to fill out
W-9's is already a hassle, following up on every vendor would be a huge
burden.

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DanielBMarkham
For those unfamiliar with the U.S. political system, the senate passing an
amendment is not the same as something becoming law. The amendment is part of
a larger bill, the bill needs to be approved by both houses of Congress, and
then the president needs to sign it. Many times legislators will put a popular
amendment on an unpopular bill in order to get votes for the larger bill. Also
many times the reverse is true: an unpopular amendment is stuck on a popular
bill in hopes it can ride through.

So there are a zillion different games playing out here. Until the reporting
requirement is actually repealed, it could all end up smoke and mirrors.

Because of the complexities involved, I'm really interested in the 17 senators
that wanted to keep such a monstrosity. 90%+ of the business community is up
in arms and a full sixth of the senate sees some reason that this is not worth
voting for? To me this is the most interesting part of the story -- and the
part not covered by the article. Some quotes from the dissenters would have
been great.

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thinkcomp
Now if only they'd supercede and effectively repeal the state money
transmitter laws, we might actually be able to compete with PayPal!

Fortunately there's a hearing in two weeks about the Durbin amendment to Dodd-
Frank, and if it's ever going to come up, it might as well be then.

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Anechoic
Yay!

Not much more to say.

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e40
Why so much hate for this? I think it is a fantastic idea. People have no idea
how much their health care costs.

EDIT: so people really think this is a burden? For my company of 25 it is
trivial. Just a little more info to send to ADP.

As I said above, the extra work will have benefits.

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koenigdavidmj
This has nothing to do with healthcare. Every time your business paid another
more than $600 in a year, you would need to deal with 1099:s. (Unless you use
credit cards.)

That means that if you buy one laptop, a 1099. If you spend that much at
Office Depot, a 1099.

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dangrossman
And OfficeDepot has to receive and reconcile 50 million 1099s from its
shoppers...

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WillyF
"Job creation" at its finest.

