1099s will bury businesses
October 06, 2010 - Among the numerous weapons in government's vast arsenal to kill businesses, the two deadliest are taxes and unnecessary bureaucratic paperwork.
If something isn't done soon, these two grim reapers of free enterprise will begin claiming victims in 15 months.
Section 9006 of the massive 2,409-page health care bill mandates that beginning in 2012, all companies must issue 1099 tax forms to any individual, corporation, vendor or supplier from which they buy more than $600 in goods or services within a tax year.
It's estimated this provision will raise $17 billion over 10 years to pay for the new Prevention and Public Health Fund.
Let all this sink in more a moment or two.
This law will require the filing of not hundreds, not thousands, but millions of additional 1099 forms every single year.
That's terrific news if the federal government's plan to cut unemployment is to hire an army of new Internal Revenue Service (IRS) workers to handle the avalanche of paperwork.
The IRS has already indicated it won't be able to deal with the onslaught of new forms with its current staffing levels.
Let's see, if the IRS has to hire thousands of new employees, guess who's going to pay their salaries and benefits?
Here's a hint, it won't come out of Nancy Pelosi's butter and egg money.
If the IRS, a federal agency that already has approximately 100,000 employees, won't be able to handle this new burden, how do you think businesses are going to fare?
For small businesses that don't have large, in-house accounting staffs, all this extra paperwork amounts to an administrative nightmare with the very real potential to cripple them.
Even U.S. Sen. Debbie Stabenow (D-Michigan) admitted it. "This new reporting requirement would have a devastating effect on small business owners," she wrote.
Look at the small businesses in our own community and consider the unnecessary burden this will place on them.
Imagine Victoria's Delights and Red Knapp's American Grill having to send out 1099 forms to every vendor they buy their food and restaurant supplies from.
Imagine Patterson's Prescription Pharmacy having to fill out 1099 forms for all the pill bottles and labels it buys every year.
Imagine this newspaper having to send 1099 forms to the companies from which we purchase paper, ink and computer equipment.
Every single advertiser who spends more than $600 per year with this newspaper – which amounts to one full page ad – will be required to send us a 1099 form. Every landscaper, handyman and guy with a snow plow who spends more than $600 in classified ads will have to send us a 1099 form.
Despite the utterly absurd announcement by elitist academics at the National Bureau of Economic Research that the recession ended in June 2009, the fact is many businesses, both large and small, are still struggling to keep their heads above water.
This new tax filing requirement basically amounts to the federal government throwing the business community a concrete block when it needs life-preserver.
Last month, two amendments – one to repeal the 1099 requirement and one to modify it – failed in the Senate.
Hopefully, when voters go to the polls in November, they'll be shift the balance of power in Congress and restore a more pro-business attitude to the nation's legislature.
Remember, the more you hurt business, the more you hurt people and families.
Without businesses, there are no jobs, no paychecks, no food on the table and no clothes on our backs. – CJC