If you thought you already had enough paperwork and expenses at your store, brace yourself. Hidden in the thousands of pages of the healthcare reform bill is a provision that businesses must file tax forms for every vendor who sells them more than $600 in goods. In other words, for every customer who sells and/or consigns gear totaling $600 or more at your store, you would have to send an annual 1099 tax form. Therefore, you would also have to keep records of every small transaction in case the total number of sales exceeded $600 annually. This would not only affect sales at your store; those who sell on eBay or at instrument shows would also be affected.
Businesses currently have to file 1099s when they purchase more than $600 in services from someone in a year. The new provision adds $600 in goods to the requirement. The provision would take effect in 2012. If the provision is not repealed, you would also have to gather Social Security numbers or tax identification numbers of each person or company that sells goods via your store or business.
The goal of the provision is to bring in an estimated $19 billion during the next decade. However, business groups say this stipulation could cause paperwork to mount higher than Mount Everest. Congress has been listening to these groups, but that doesn’t mean the provision will be kicked out the healthcare bill. Political football is being played. According to the Associated Press, Democrats and Republicans want to repeal the provision. But getting the opposing parties to work together is more difficult than rocket science is.
The House rejected a bill in late July to repeal the provision because the two parties disagreed on how to regain the “lost” revenue. “This foolish policy hammers our business community when we should be supporting their job growth,” said Sen. Mike Johanns, R-Neb. “It’s only one example of how the administration’s promise to support small businesses really rings hollow.”
“Despite all of their rhetoric about the need to eliminate this reporting requirement, Republicans walked away from small businesses when it mattered most,” said Rep. Sander Levin, D-Mich.
Clearly, it’s no stretch to say all MI dealers are unhappy with the possible provision. “This has already passed Congress. Unless
Congress acts to amend or change it, this is the law of the land, which will require that we and every other guitar dealer send a 1099 tax form to every person who sells or consigns instruments totaling over $600 per year to us,” said George Gruhn, owner of Nashville-based Gruhn Guitars. “In my case, that could be thousands of separate 1099 forms. Needless to say, this is an extreme intrusion of government into our business.”
Business groups abhor the provision. “Tax paperwork and compliance are already major expenses for small businesses,” a coalition of 80 business groups wrote to lawmakers.
“This 1099 reporting was a well-intentioned provision to try to catch people who were cheating on their taxes,” said Rep. Scott Murphy, D-N.Y. “But it has some unintended consequences, in my opinion, that will create a lot of extra work and hassle for our small businesses.”
Even the Internal Revenue Service (IRS) may be unhappy with this new bill provision. A report by the National Taxpayer Advocate said the bill would affect 38 million businesses and could deluge the IRS with more paperwork.
[ pages: 1 ]
|
you can download this entire issue here >>
