Saturday, September 18, 2010

Health Care's Hidden Burden

Whatever you think of the Patient Protection and Affordable Care Act (PPACA), it's likely you're unaware of the provision expanding the 1099 reporting requirements:
The new information reporting requirement is an expansion of a law already in place. Businesses currently have to report to the IRS all payments of $600 or more to individuals for the performance of services on 1099 forms. This makes it harder for individuals to avoid paying taxes on income they earned from businesses that did not employ them full-time. The PPACA expanded this requirement to include all transactions with other businesses of more than $600, including those involving tangible goods.

This provision takes effect in 2012, and Congress estimates it will raise $17 billion over 10 years. It was one of 18 separate tax hikes that are part of the law that, combined, will increase taxes more than $500 billion over 10 years.

Few observers recognized the trouble the 1099 reporting requirement would cause businesses at the time Congress passed the PPACA. Other taxes hikes in the PPACA—such as the new excise tax on high cost “Cadillac” health insurance plans, higher payroll taxes, and a new tax on investment—garnered more attention in the debate leading up to congressional passage because they will raise considerably more revenue.[1] But the bureaucratic burden the 1099 reporting requirement will put on businesses will be immense.

This part of the legislation was up for repeal earlier this week - heck, now that President Obama is aware of it, he's against it, too - but it the move to do so was voted down in the Senate because neither the Democrats nor the Republicans liked the other side's proposal.

So it's still in place. A ticking time bomb of government over-reach. Think it won't affect you? Think again when your employer weighs the cost of complying with this provision, as well as upgrading your health care, against giving you a raise or even keeping you on as a loyal, productive employee.

No comments:

Post a Comment