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Tuesday, July 27, 2010

The IRS is Watching You…

And There’s More than One Reason to Be Concerned

By Bob Bauman and Andrew Packer, of the Sovereign Society

Americans are already outraged by President Obama's new health care law. And now, many are up in arms about a little-noticed provision buried deep in the 906 pages of that law.

“The 2010 Patient Protection and Affordable Care Act” (Health Care Act, P.L. 111-148) contains a sneak provision (IRC §6041(h)) that is set to directly impact you.

This law requires any person engaged in a trade or business to file an IRS Form 1099, reporting all payments totaling $600 or more in a calendar year to any single person, other than a tax-exempt corporation (non-profit).

No, they don’t care to know who donated $600 to a local animal rescue. Only that Joe Schmo sold you an old pick-up truck for $750 for your lawn service company.

He’d better pay tax on that transaction! And you are responsible for getting him the forms and, at the same time, submitting them to the IRS.

And when you mail off your rent check for your equipment bay, guess what…

Time to send the old 1099s to the IRS and your landlord.

But that’s not all!

Even corporations are affected.

That’s right. That John Deere lawnmower you just bought? Again, you’ll need to mail a 1099 to the IRS and John Deere.

Until now, IRS 1099 forms have been used to track and report miscellaneous income paid for services of independent contractors or self-employed individuals.

Under current U.S. law, payments to corporations -- except those for medical or health care services -- are not required to be reported to the IRS. Now almost all corporations will be affected.

Small Businesses Outraged. Rightfully So.

Pat Heller, owner of Liberty Coin Service in Lansing, Mich., is mad, according to ABC News. He said, “I'll have to hire two full-time people just to track all this stuff, which cuts into my profitability.”

And you know what less profitability means for the IRS?

Less tax revenue.

Just think for a minute about every financial transaction between businesses and individuals or other businesses which exceed $600…

That’s a whole lot of paperwork!

Hard on small business, hard on big business. That translates to, “hard on the economy.”

Is this really the time to be creating extra hassles for small businesses struggling to stay afloat?

Every U.S. business, and individuals as well, will be forced to obtain the tax ID number and/or the Social Security number of everyone with whom they do more than $600 worth of business in a year.

It takes effect on Jan. 1, 2012 -- and it applies to all U.S. business and private transactions.

Based on 2009 IRS data, about 40 million businesses and other entities will be subject to this 1099 debacle, at greatly increased cost and trouble.

There’s only one word to describe the paperwork and reporting requirements: Draconian.

Small-business owners are already complaining that the time and effort it will take to obtain this documentation will be a drag on business. That’s assuming that a lot of small transactions aren’t driven to the black market!
America: Land of the … Tax Evader

This provision is based on the IRS’s unproven belief that millions of Americans are evading taxes.

The bureaucrats’ idea is that IRS computers can process hundreds of millions of Form 1099s, comparing them against each buyer’s Form 1040, to see if reported income and purchase numbers match.

Of course, this onerous restriction was never explained during the health care debate in Congress -- and if it had been it would have likely been defeated. But that’s what you get when you can’t determine what’s in a spending bill until it becomes law. Shame on Congress.

This is yet another example of legislators using sneak provisions in an inches-thick bill to impose policies that would otherwise have been rejected. The same tactic was used in March when the “HIRE Act” was adopted containing a potential 30% tax on offshore banking transactions by U.S. persons.

An exercise in total fiction: [Congressional] sponsors claimed the Form 1099 provision will expose what the IRS thinks is a vast ocean of uncollected income taxes … and will supposedly help to pay the trillions the health care law will cost.

Without any proof, they predict the 1099 requirement will raise $17 billion over the next 10 years.

And this was the law that Obama insisted would impose no new taxes.

1 comment:

Amusing Bunni said...

What else are they hiding in there?
This is awful, and obama is a lying thief.