Another IRS Nightmare

Yikes. This is a business killer:

A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.

Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress. [...]

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

I work in a small office. There are five employees, including the business owner. I can't imagine the burden of sending out a 1099, with a copy to the IRS, to every entity we do business with. I suppose it would include, at a minimum, the office supply store, the copy shop, the shipping company, the computer hardware vendor, the computer software vendor, the copy machine vendor, the cell phone company, the internet service provider, the professional liability insurance provider, and the accountant. All that paperwork to keep five people employed. What would the cost of compliance in terms of man hours be for a company of even moderate size?

And all those companies will be receiving 1099s not just from our little office, but from every client they have. And all that will have to be reconciled on their tax returns to satisfy the IRS. And all that paperwork on both ends will produce not a single good or service of any value whatsoever. It will all just be busy work to satisfy government bureaucrats who themselves produce not a single good or service of any value. Talk about eating up what should be productive time for nothing.

If the Democrats pass many more legislative initiatives with these kinds of Easter egg surprises in them, they will destroy private business in this country.