1099 Issues
The “hidden” 1099 issue in the health care bill has received a lot of attention of late (see here for an editorial by the Heritage Foundation and here for a more general view with supporting estimates of potential revenue generation by the IRS). In essence, the new health care bill mandates the generation of a 1099 statement to anyone you spend over $600 with in a transaction.
What does the health care bill have to do with your purchases of parts at the John Deere house, you ask? Good question. This is first and foremost about revenue. By inserting that provision in the bill, it was believed that it could generate $300 billion per year, according to the IRS. That goes a long way to covering the costs of the health care bill if it were possible…but, it is not. Revenue is only one side of the equation. First, you have the direct costs of the administration of this provision (more IRS agents/workers to handle the flood of 1099s, etc.). And then you have the massive indirect costs on businesses that will damage the long-term competitiveness of firms. Can you imagine how many 1099s the average farm would have to issue? Insane…
The good news is that there are already bills working their ways through Congress to repeal that provision. Another bit of good news is that provision would not kick in until 2012, so even if they do not manage to pass a repeal this fall, they will have many opportunities in the spring.