Congress, apparently afraid that this country has too many successful small businesses, has launched on a campaign to bury them in an avalanche of paperwork.
Hidden in the new health care “reform” law is a requirement that every time a business makes a purchase over $600, they must send an IRS form 1099 to that person and the IRS — which includes obtaining that person’s name, address, and taxpayer ID.Â Here’s a summary:
Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, thatâ€™s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS.
Now for large businesses that have an accounting system in place that is capable of handing this it will be difficult and burdensome, but still possible.Â For a small business owner, collecting all this information and sending out these forms will probably require hiring another full time employee.Â Not every mom and pop business out there has $100k in spare profits that they can see eaten up in government compliance costs.