Friday, April 8, 2011

What were they thinking?

I haven’t written anything recently, not because there has been a lack of interesting stuff, but a lack of time on my part. Tax Season hits our business and we ramp up hours, production, and stress. All the stories you hear about accountants working late hours in a mad frenzy are true!

This last week saw Congress finally succeed in repealing a small, onerous part of the Obamacare Law that dealt with increased 1099 reporting for businesses. Under that provision, businesses would be required to issue 1099 forms for ALL payments, not just to noncorporate recipients for services. It was draconian in that if allowed to stand it would dramatically increase the amount of 1099 forms being issued by every business, and would not have accomplished its objective.

Some unknown tax writers in Washington theoretically determined that all these 1099 forms flying around would identify lots of previously unreported income that would now be taxed, and politicians were reluctant to let go of that theoretical new revenue. To see the absurdity of this argument, ask yourself this: How much additional revenue would Verizon, So Cal Edison, General Motors, & Office Depot report if they received a 1099 from each of their business customers? Answer: NONE! In fact they would actually have more expenses because they would have to pay someone to handle and throw away all those forms they receive, which would increase their costs and reduce taxable income!

At any rate this third attempt to repeal has made it out of Congress and it looks like the President will sign it.

The thing that I find most disturbing about this repeal effort is that even when faced with overwhelming support by the business community and the public, and even when presented with the estimates of the crushing paperwork burden the law would create as well as all the additional accounting costs to comply, there were still 12 Senators that voted against repeal.

Makes you wonder just what is going on back there.

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