New provision in Health Care law hurts small businesses, farmers

5 August 2010

CAJ note–Though we have already included articles here regarding the taxation amendment inserted into the new Obamacare law we wanted to offer the following article which was forwarded to CAJ today. Everything done in Washington usually has a long list of unintended–and very damaging–consequences.

New Law Hurts Small Businesses

RI Farm Bureau Newsletter

Snuck into the massive Obama health care bill was an amendment that had nothing to do with health.

Under current law IRS Form 1099-Misc must be filed when a person who is engaged in a trade or business pays $600 or more to a non-employee for services performed during the calendar year. Rental payments are included in the reporting requirement but payments made to corporations are generally excluded. The business making the payment must provide a taxpayer identification number for each payee. A copy of the 1099 form must be furnished to both the person providing the service and to the IRS.

Beginning in 2012 farms, ranches, and other businesses will be required to complete an IRS Form 1099 for all payments including goods and services aggregating $600 or more in a calendar year to a single non-employee payee. Payments made to corporations will no longer be excluded from the reporting requirement.

Vendors will have to furnish and purchasing businesses will have to collect Taxpayer Identification Numbers (TIN) or Social Security numbers. If a vendor fails to furnish a TIN, purchasing business will be required to withhold 28 percent of the purchase price.

American Farm Bureau is trying to get this law repealed. Senator Mike Johanns (R-NB) introduced S. 3578, the Small Business Paperwork Mandate Elimination Act. This is a companion legislation to H.R. 5141 introduced in May be Rep. Dan Lungren (R-CA). Farm Bureau supports this legislation that would repeal this new tax paperwork requirement passed as part of the Patient Protection and Affordable Care Act.

Update: We’re going to try to contact the Farm Bureau to see if there is another plan of action about this repeal. Since this article was written, the Democrats have decided not to repeal the provision.

Update 2: 8/6/2010 The Hill reports today, “Senate Dem leaders want to soften tax provision in health law.”

Senate Democrats want to scale-back a controversial part of their own healthcare law that imposes new burdens on small businesses.

The proposal — introduced Thursday by Sen. Bill Nelson (D-Fla.) with the support of party leaders — would eliminate a new tax filing requirement that many conservatives, backed by the business community, deem a job killer.

The bill arrives amid growing support for a rival GOP plan that would eliminate the filing requirement more broadly. Sponsored by Sen. Mike Johanns (Neb.), the legislation would offset the repeal with billions of dollars in cuts to preventive healthcare services.

The Democrats’ bill, by contrast, would relax a portion of the small business provision, and pay for it by killing a tax break for the nation’s oil giants, including BP…

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