A 1099 Mess from the Health Care Bill

This has recently come to light as people continue to find out what's lurking within the Health Care bill that nobody in Congress bothered to read. Here is a letter from the AIGA graphics artists professional trade organization, of which I'm a member:

One of the provisions of the new healthcare reform legislation will significantly influence the administrative burdens of your business unless the IRS interprets it in a way that recognizes the challenges of small business. As of now, the legislation states that, beginning in 2012, if you pay any person or corporation more than $600 in a year for goods or services with cash or a check, you must report that to both the IRS and the entity or person whom you paid with a 1099 form.

In the past this only applied to services from unincorporated individuals or enterprises. But under this new provision, for example, if you bought $600 worth of toner cartridges from a big box store with cash or credit, you would have to issue a 1099 to the company from which you made the purchase (and if you were on the receiving end, you would need to report the 1099 transactions separately from gross revenues, presumably).

The IRS seems to be developing an exemption for credit and debit card transactions, although it has not yet been finalized.

The good news is that the IRS has asked for comments from the public. If you would like to be heard on this issue, you can copy and paste the sample letter below, edit it as you choose (adding the strength of your reaction or personal examples, though in civil terms) and email it to notice.comments@irscounsel.treas.gov. Please be sure that the subject line of your email says Notice 2010-51. Please note that the emails must be sent by Sept. 29, 2010.

We understand the government’s desire to track cash transactions, but the current system would impose an unacceptable record-keeping and reporting burden on small businesses like yours.

Don’t hesitate to copy your Senators and Congressperson, with a little “Save small business! Help us!” note or something similar.

Thank you for your support (and your membership in AIGA).

Sincerely,
Richard Grefé
AIGA executive director

I'd like to encourage everyone to send an e-mail to the IRS about this. Think about it: you buy a new TV? 1099. you get your car fixed? 1099. You have to pay your rent? 1099 (every month). You lend someone some money? 1099.

This is the government sticking its nose into our personal lives now trying to track even our cash transactions.

This madness has got to stop.