ObamaCare's 1099 Tax Reporting Provision Gets the Ax

It's official: ObamaCare's new small business tax reporting requirement—the so-called 1099 provision—is no more, making it the first part of the law to be repealed. Good riddance. ObamaCare required small business owners to file an additional 1099 form with every other business that they did more than $600 in transactions with: The provision was supposed to raise about $17 billion in revenue over the next decade to help pay for all the new spending the law also called for. The repeal bill makes up for that revenue by taking money out of the law's middle class insurance subsidies. Why is that important? Because it shows how tough it is to find new revenue raisers; all the remote plausible ideas (and some not very plausible ones) for coming up with easy revenue got jammed into the health care overhaul. And now now, for the second time, Congress has chosen to eat into the law's subsidies in order to come up with money in order to pass some politically necessary measure (the first was with this year's 13-month extension of the doc fix). The law is already collapsing under its own weight.

President Obama made it known that he didn't like the pay-for used to make up the lost revenue. But he approved it it anyway, declaring in a signing statement that he was "pleased" to be able to help ensure that small business owners "spend their time and resources creating jobs and growing their business, not filling out more paperwork." That's a nice sentiment, I suppose. It would have been a lot nicer if he'd thought of it before he signed the damn provision into law in the first place.

I first noted the 1099 reporting provision last May. 

Comments

[ML]

As a former small business owner, I was glad I wasn't in business any more. You know how many people we did $600 worth of business with? Neither did I.

[West Texas]

All part of the plan, brother. If they need to "get" you someday, this will just give them an additional premise to do so.

Three felonies a day!

[shrike]

Anyone with a $99 check-writing / accounts payable program would find that it auto generates the required 1099's complete with the tax ID numbers.

Cash handlers and coin dealers don't follow the law anyway.

That said, no one will miss the law.

[PIRS]

"Cash handlers and coin dealers don't follow the law anyway."

Why should cash handlers or coin dealers follow the law when Congress does not follow the Constitution?

[Mike M.]

"We had to sign the bill so that we could find out what's in it. And now that we see what's in it, even we realize what a piece of crap it is!"

[Lost_In_Translation]

Well atleast we know that much now. Can we throw it away with the Monday trash?

[Scruffy Nerd Herder]

I'm mildly relieved. I deal with a horde of suppliers and was not looking forward to that requirement at all.

[Lost_In_Translation]

Yeah, well like most things in the tax code, businesses would have just ignored it and crossed their fingers against an audit. As long as enough businesses do that, the provision basically stops being implemented because the IRS can't handle the workload.

[Lord Humungus]

funny things - this requirement would have caused more businesses to _not_ report via the 1099. More "blackmarket" and under-the-table transactions.

[Mike in PA]

The law is NOT collapsing under its own weight!

This is what they wanted. Create a mess so that future legislation would be needed to "clean" it up. As long as they can keep tinkering with something they knew was bad, they win. This is just a bullshit way of trying to keep the damned thing alive instead of repealing the whole monster.

[Rich]

ObamaCare required small business owners to file an additional 1099 form with every other business that they did more than $600 in transactions with

With all due respect, how does requirement differ from the insurance mandate wrt the ICC argument?

[R C Dean]

Exercise of the taxing power, not the interstate commerce power.

[Rich]

So, tomayto vice tomahto?

[West Texas]

Correct. There was a whole bunch of shit crammed into the "health care" bill that had nothing to actually do with health care.

[Rich]

Less snarkily, I see what you're saying, but still don't really get it. If Congress can "regulate" commerce, why is OK to require people to buy insurance but not OK to require people to fill out a form "arguably" used in assessing and probably actually affecting commerce?

[Mr Whipple???]

Why should I be responsible for doing the IRS's job?

[Barack Obama]

Let me be clear.

Simply because we're all in it together.

I take responsibility as well.

[Zeb]

The 1099 requirements are already in the tax code to some extent. This provision only expanded when they had to be used. It is clearly part of the taxation power, where the nature of the healthcare mandate is not so clear.

[James Ard]

What's amazing to me is how the writers of the law claimed the provision would bring in 17 billion dollars without even consulting the IRS.

[Enjoy Every Sandwich]

That's what has me confused. I cannot imagine how this provision would have brought ANY additional money in. What was the theory behind it?

[Scruffy Nerd Herder]

It was the first step towards VAT

[PIRS]

Hopefully the USSC will ax the rest.

[Fist of Etiquette]

Barack Obama: Hero to the Small Business Owner

[rather]

Girls, do you find that lumberjack hands interesting too?

[Mainer]

Are you thinking, big hands and big feet..you know what that means ! Big gloves and big shoes.

[Trollbait]

Whare is Tony! I want to hear what Tony has to say about this!

[Trollbait]

And Max!

[shrike]

Only a true Christ-fag would ask such questions.

[VangVoo]

Yeah, no surprise there, once agaion the Sheeple ge the short end of the stick. Bought and paid for politics at its finest!

http://www.web-anonymity.at.tc

[PIRS]

Ummm, I think you need to be reprogrammed. Not realistic enough of a comment given the context of the article.

[PIRS]

Paperwork requirements like this will only enlarge the size of the black market and cost the government "revenue". Hmmm, maybe I should SUPPORT more requirements like this [evil grin]

[Small Business Owner]

One thing I have never seen in any of the reporting on the 1099 requirement just repealed: which Member of Congress, or congressional staffer, was responsible for adding this heinous requirement to the bill in the first place?

Does anyone know? All I've ever seen is a generic "Congress" passed the provision. No individual attribution for its inclusion has been seen by me, and, probably wisely, I've never seen any member or staffer advocate for it after the law passed and the public caught on to it.

If not commonly known, some reporter needs to dig into it and out this monster.

[Your Representive]

Hey, don't look at me!

[Mr Whipple???]

There were some who felt that this requirement was a precursor to a VAT. I do 't know, but I'm breathing a sign of relief. At the vet least I won't ha e to worry about higher accountant's fees.

[Mr Whipple???]

Sorry for the typos, I'm on a Droid.

[West Texas]

I am all for the VAT provided it comes attached to an elimination of income taxes.

(Unfortunately, that will never happen in a million gazillion years, so I'll just follow the old American tradition of dichotimization and allow myself to be classified as "against.")

[mad libertarian guy]

What would happen, however, is the promise to ditch income tax to be replaced with VAT, but that we still need the income tax for the transition. Then the income tax would just never go away, and we'd be stuck with both.

I wouldn't trust a bill to introduce VAT unless it had within it as part of the same bill the abolition of the income tax, or if they abolished the income tax, before a VAT.

I won't, however, be holding my breath.

[Mr Whipple???]

No, no. I don't like the VAT. I would prefer a national sales tax at the retail level, but like MLG stated, it would have to replace all other federal taxes.

I heard someone from that Debt Commission, or whatever they called it, talk about a 2 year income/payroll tax holiday for a national sales tax. My question would be, what happens at the end of 2 years? We get stuck with both? Thanks, but no thanks.

http://www.fairtax.org/site/PageServer

[P Brooks]

What's amazing to me is how the writers of the law claimed the provision would bring in 17 billion dollars without even consulting the IRS.

I believe Max Baucus has been beating the "tax cheat" drum for quite some time. That would, of course, be the same Max Baucus who absolved Timmay of any wrongdoing in his minor "filing error" regarding an amount larger than the total income of many American families.

[Mr. FIFY]

It was never about revenue... the real goal was millions of new government tendrils rooting around in businesses.

[West Texas]

That and upping the "score" on Obamacare...

This bill reduces the deficit!!! Chumps!

[Oso Politico]

I am a bit confused here. Was part of the justification for Obamacare a reduction in the deficit? We have experts like Krugnutz saying that deficits don't matter. Now, if deficits don't matter, why not just make the whole process much simpler: Anybody can go to any doctor at any time for any service. The doctor simply bills the US Treasury, who, in turn reimburses the doctor, and then proceeds to print more money. Except for the insurance companies going out of business,what's not to like about it?

[mad libertarian guy]

We'd like to have some value to our currency which is more than kindling.

[kasdo]

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[Paul Davidson]

Great article. Thanks for the info, you made it easy to understand. BTW, Just in case anyone needs to fill out a 1099 tax forms, I found a blank forms in this site PDFfiller. This site also has some tutorials on how to fill it out and a tons of fillable tax forms that you might find useful. Here is a blank IRS form 1099-MISC that I was able to fill out.