One of the provisions of the Affordable Care Act is a requirement that businesses more completely report payments made to others. This is done with form 1099. I believe currently the law requires a 1099 anytime payments exceeding $600 within a year are made to an individual or a company that is not incorporated. I’m not sure how the ACA changed this, but I assume that the $600 threshold is lower, maybe all the way to zero.
The interesting thing here is, this change raises revenue (and it is doubly interesting that nobody argues with that). The only way this could raise revenue is if it puts income on the radar of the IRS that would not otherwise have been reported. In other words, it catches tax cheats.
Of course, the business community and Republicans do not talk about the tax cheats. They talk about the extra burden of the additional 1099’s on business.
Extra burden? If your business is so small that the books are not on computer, then you likely will not be making out very many 1099s, and doing so will not be that difficult since you can probably scan a years worth of checks for relevent payouts in a few minutes. And if your books are on computer, then the next software upgrade will accommodate the new requirement.
I’m sorry, but the extra burden argument is bogus. This is in defense of tax cheats. Remember, every time you hear calls for the elimination of the IRS there is a good chance you are hearing “Tax cheats should be able to get away with it.”
So, to make sure that tax cheats can continue with impunity, Congress wants to remove the heightened 1099 requirement. Since it raises revenue, its removal must be balanced with other revenue or costs must be cut. It seems the choice is to lower the subsidy to low income people.
Obama has said that he is willing to take the 1099 requirement out of the Affordable Care Act. We will see if he is happy with how it is paid for.
The class war continues.