One reform provision that needs a do-over

Let me first set the record straight: I generally support The Affordable Care Act as a boon to the millions of uninsured and underinsured Americans. It will offer some long-overdue consumer protections and provide a way for high-risk/high-needs patients to obtain coverage.

Overall, I think the Act has more plusses than minuses. Except there’s one mandate that is really bugging me. It requires all small businesses – including charities and freelancers like me – to file a 1099 form for anyone or any business that they have paid $600 or more for goods and services in a year. The vendor(s) also must receive and file a copy of said 1099. It’s an effort to ensure that appropriate tax is paid on these items and raise additional revenue to pay for other parts of the law.

So that means if I buy a new computer, or spend $601 at Staples, or have my website redone, I have to track down all of these vendors – get their tax ID information, fill out 1099s and mail them? Does Staples really want to collect all that information from its customers?

The part about “services” has been in place for a while, but the part about “goods” is going to create a lot of havoc. Even the IRS wants the administration to take another look at this. I know that reform needs to be paid for, but c’mon, there’s got to be an alternative.

Needless to say, business groups are up in arms about this. Republicans want an outright repeal. Sen. Bill Nelson (D-FL) is floating an idea that would exempt businesses of 25 people or less from this “undue burden.” The limit on larger businesses would be upped to $5,000 from $600.

It is really rare that I agree with anything that The Heritage Foundation says, but (gulp) in this case I am going to make an exception. They call the provision “burdensome.” I have to concur. While Heritage thinks the 1099 mandate – in fact the entire law – should be repealed, I draw the line at that.

Senator Nelson may have come up with a reasonable compromise. Every hour I spend filling out a 1099 for gasoline, food, or printer ink, is an hour I am not earning income; therefore not paying taxes on this unearned income. Somehow this seems bass ackwards.

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2 thoughts on “One reform provision that needs a do-over

  1. Liz, I had no idea about this. It was hard enough to track down all my vendors to whom I paid $600 or more. Now I have to look at expenditures??? Yikes! An accounting nightmare! Thanks for the heads-up.

    1. Like Dina, I didn’t know about this requirement either. Unless a freelancer belongs to a trade organization, or has an astute accountant – or reads your blog! – I wonder how any independent would know in advance of this stipulation. Thanks for the heads up!

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