Wednesday, February 02, 2011

Senate Votes on 1099 Mandate in Obamacare Law

The best outcome from the repeal movement of Obamacare in the Senate has been forcing Democrats to use some common sense on some of the most outlandish mandates in the legislation. The vote on the repeal of the 1099 mandate was held in the Senate Wednesday evening.

An easy beginning place for reform of the legislation is to banish the requirement of businesses to issue 1099's for each vendor purchase over $600.00. Michigan Senator Debbie Staubenow brought it to a vote by co-opting the original amendment from the GOP.

The federal government is running a $1.6 trillion deficit in the current fiscal year. Additionally, the new health care entitlement program will create huge cash drains on the federal budget in future years. To help close the tax gap and fund this deficit spending, the federal government has expanded informational reporting requirements of businesses. Under current tax law, if a business makes payments in excess of $600 to a person or a business over the course of a year, it must file Form 1099 to report those payments. One copy of the form is sent to the IRS, and another copy is sent to the person to whom you made the payments. Payments made to a corporation and payments made in exchange for merchandise are not required to be reported on a 1099.

Tucked away in just 23 lines of Section 9006 of the Health care reform bill be a dramatic change in the 1099 reporting requirements. No longer will corporations or payments for merchandise be exempt 1099 reporting. This new law is effective January 1, 2012. A large majority of payments made by a business will now be reported on a 1099. This reporting requirement will have a two pronged effect on those that under report their taxable income. First, most of a business’ revenue will now be reported to the IRS, so understating large amounts of revenue will be more difficult. Secondly, a business will be less likely to overstate its expenses as it will need to report where those expenses were paid.

The vote to repeal this provision passed by a vote of 81-17. But for the repeal of the bill signed into law?

Nope. Not even on this very basic desire to 'fix' the monster mess of Obamacare can Democrats use common sense and help out business owners across our nation. They fully intended to use health care reform to chip away at tax law,too. Implementation of Obamacare will cost billions and there is no money in the government piggy bank.

The vote was on party line basis. Zero Democrats voted for repeal. Senate Minority Leader said, "Senate Republicans promised the American people we would vote to repeal, and we have done that. But this fight isn’t over."

The repeal effort dies 51-47. Those few remaining moderate Democrats left serving in the Senate will feel the repercussions of this vote come November 2012. There is no way the American electorate will allow a moderate to run as a moderate if that Senator continues to support Obamacare in whole cloth. That is not moderation. The bill is a disgrace and a jobs killer.

1 comment:

BJ said...

Besides in stating your own biased opinions...why will moderate Democrats be punished, for after all we all can't be tea baggers, how exactly is the bill truly a disgrace and exactly what jobs are entailed in its killing thereof? And don't drop out by saying it kills jobs by hurting small business, for it is already aiding two-thirds of the smaller small businesses through tax breaks.

Just pondering...