United Liberty

Do you own a small business? If so, prepare to be buried by the bureaucracy it will bring to your office:

In order to pay for the health care benefits of the Patient Protection and Affordable Care Act (PPACA), the scope of Form 1099 was considerably extended by PPACA Section 9006. Internal Revenue Code Section 6041 currently contains numerous exceptions from Form 1099 reporting requirements. In general, current 1099 reporting covers only services paid to individuals and partnerships. Absent the IRS making regulatory changes, after the PPACA change becomes effective, no meaningful exemptions will exist. If a vendor receives more than $600 in total during the year, a 1099 will be required.
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Take a moment to absorb the day-to-day impact of this. Here are examples of transactions that previously did not involve 1099 reporting, but which will be required under the PPACA. For each of the following, your business will need to collect a taxpayer identification number (TIN), address, and other information for a proper 1099, and then send a completed 1099 shortly after the calendar year is over:

1. You travel out-of-town and pay more than $600 for a hotel room.

2. You occasionally order sandwiches from the local deli so that employees or clients can “work through”. Although each payment is no more than around $20, the aggregate paid throughout the year exceeds $600.

3. In a series of smaller purchases, the office manager purchases more than $600 of office supplies from a vendor over the internet.

4. You pay more than $600 per year to a bottled water vendor who makes delivery to your office.

5. You purchase a few office chairs from a local retailer for a total of more than $600.

6. You purchase gas for a business automobile from certain gas stations, the total of which are more than $600 during the entire year.

7. You pay more than $600 throughout the year in shipping or delivery changes to a single vendor, even though each individual charge may be no more than $15.

I caught this on the radio yesterday and I literally could not believe what I was hearing. In order to manage such a requirement, small businesses are going to have to hire an account or spending more time combing through paperwork, hoping they don’t make a mistake that causes the IRS to get curious and bring them in for an audit.

This is a death of a thousand cuts to small businesses.