Washington Finally Gets One Right

Last March’s “Patient Protection and Affordable Care Act” included dozens of tax provisions designed to help pay for substantive healthcare reform. But one requirement raised howls of protest almost immediately. Specifically, the law mandated that all businesses, tax-exempt organizations, and federal, state, and local governments file a Form 1099 at the end of the year for any business they spend more than $600 with. (We’re talking 26 million sole proprietorships, 4 million S corporations, 2 million C corporations, 3 million partnerships, 2 million farms, a million charities, and 100,000 government entities.)

The goal was to help pay for healthcare reform by making it harder for businesses to underreport their income. The problem, unfortunately, is that it was the bureaucratic equivalent of using a howitzer to kill a fly. Let’s say Joe the Plumber wants to make an honest buck in a tough economy. Now he’s got to collect taxpayer identification numbers and file 1099s with every gas station, plumbing supply shop, equipment rental store, and quick-lube shop he patronizes during the year. Oh, and he’ll also have to track the 1099s he gets from all his business clients!

Washington cranked  the pain even higher in September with the Small Business Jobs Act, extending the 1099 requirement to landlords filing Schedule E.

House Republicans drew a bullseye on the 1099 requirements before they even took office this year. President Obama agreed and called for repeal in this year’s State of the Union Address. So on April 15, appropriately enough, Washington made life just a little bit easier for those of us who work and pay taxes in the real world.

These are the kinds of news developments that we follow so you don’t have to! If you have any questions, don’t hesitate to call us, at (504)780-8299.