On Tuesday, the Senate voted to advance a bill, pushed by President Obama, that ostensibly is designed to help small business. One key provision of the bill creates “Son of TARP”, a $30 billion fund to encourage small community banks to make loans to small business. Other provisions give small business $12 billion in tax breaks, and allow them to write off 50% of the cost of new equipment in the year that the equipment is purchased. That’s the “we love you” part.
Small businesses will need every penny of those loans and tax breaks to pay for the “we love you not” part.
Senators Mike Johanns (R. Ne.) and Blanche Lincoln (D. Ak.) were co-sponsors of an amendment to this bill that would have repealed a new requirement that all businesses must submit an IRS Form 1099 telling the IRS about any purchases of goods or services that they make from anyone where the total amount of their purchases is $600 or more in any calendar year. The theory was that if Uncle Sam knew how much income everyone made, Uncle Sam could insure that everyone paid tax on their income.
Perhaps the best description of the “cost” of this new IRS Form1099 requirement is:
Think about a midsized trucking company. The back office would have to collect hundreds of thousands of receipts from every gas station where its drivers filled up and figure out where it spent more than $600 that year. Then it would also need to match those payments to the stations’ corporate parents.
Gee, that should be easy and inexpensive to do.
But, the amendment was voted down. So, why did the Senate vote the amendment seeking to repeal this lunacy down?
Over the weekend the Treasury Department pronounced the Johanns amendment “not acceptable in its current form.”
And, why isn’t it acceptable?
The new 1099 filing requirement is part of…Obamacare!
And, why is is part of Obamacare?
Well, Obamacare was proclaimed to be deficit neutral. To get to that mythical “neutrality” the Form 1099 requirement was added as someone in Washington decided that $17.1 billion in “uncollected” taxes would be collected if only the IRS had this information. Personally, if more than 24 cents is collected, I’d be surprised.
What did the Treasury Department previously have to say about this new requirement?
…the Treasury Department’s National Taxpayer Advocate Nina Olson says the costs will be “disproportionate as compared with any resulting improvements in tax compliance.”
One more question…if that was the position of the Treasury Department, why the heck didn’t the amendment calling for the repeal of the new 1099 requirements pass?
It would repeal a portion of Obamacare, and Obama wouldn’t stand for that.