1099s and the Analyzation of Congress
I recently pointed out to someone that there is no such word as “analyzation*,” but if there were, it would apply to Monday’s US Senate as they ran around with their heads firmly placed out of the sunshine.
Not one but TWO Amendments were defeated that would repeal 1099s for purchases. In case you didn’t know, Section 9002 of the health care act (see page 737) amended TITLE 26 > Subtitle F > CHAPTER 61 > Subchapter A > PART III > Subpart B > § 6041 of the US Code. Section 9002 says you have to send 1099s not only to your contractors and maids, but also to anybody you from whom you BOUGHT $600 in goods over a year.
The rationale for defeat? “It wasn’t paid for!”
Here’s the problem: somebody pulled a number out of the place they usually keep their head, and ESTIMATED that 38 million businesses filing who-knows-how-many 1099s for goods would “discover” enough under-reported income to somehow generate $19 billion in new income taxes over ten years.
SO … there may or may not be unreported income … the government doesn’t know if it exists, but the imaginary number that they came up with has to be PAID FOR by reducing REAL budgets … and nobody wants to cut REAL expenditures. Hence, no repeal.
Meanwhile, even the tiniest businesses would have to track down the name, address, phone number, and EIN of everybody from whom they buy $600 worth of stuff. Preparing 1099s and sending copies to both vendors and the Feds.
In a good year, I make (and file Schedule C) a little over $1,000/year coaching. If I ever have to replace the $900 in athletic equipment I originally needed to provide my students, I’d also have to file a 1099.
My wife used to write for a living. Four out of five years, she barely made a profit (and filed a Schedule C every year). Her only big expense was a computer … in those days, she made so little that she had to depreciate it over three or five years … but the $1,200 expense would have required a 1099.
I know rural farmers with small “spreads.” I’m sure they file Schedule F, but now they’ll have to prepare 1099s for the feedstore, the gas station, the lumber yard, and probably the dealer from whom they bought that little four-wheeler ATV to check the fences or the tractor-mower to cut the grass.
Set up a one-person law office, and you will probably need to send 1099s for your desk, your computer, your law books, and your Lexis-Nexis subscription.
If I could afford a maid, I’d currently have to file a 1099 (like CongressCritters oft fail to do). But as a “person” under the law, do I have to file 1099s for Costco, Walmart, and Best Buy? Probably not, for the moment, if those expenses aren’t related to business.
This is a STUPID law. Both Democrats (Sen. Max Baucus) and Republicans (Sen. Mike Johanns) oppose it. Amazingly, the Democrat didn’t think it needed to be paid for, but the Republican did.
PLEASE, Senators: see the light and remove this provision. It does not of itself generate any taxes, it is a burden to small business (and large, as well), and will bury the IRS in 1099s.
* Actually, I’m wrong: it is a misformed construct that first appeared in 1742. The phrase “…began with the analyzation of …” can easily be replaced by “…began with analyzing…” for instance.