1099 will end the world in 2012
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This has to be the most mind-numbingly stupid thing I have seen the government do in the last couple of decades -- and that includes bad wars, if that's your thing.
Why can it be so bad? Because it screws with every single economic entity in the nation, in a way that pervasive, subtle, and micro-managing.
If you want to know where "1984" is, with Big Brother watching all of your moves, it's not bullshit programs like TIA. It's making you rat out the guy who is on disability but mows lawns on the side, or the guy who paints houses at nights without reporting the income so he can send his kid to school. Or the mom that babysits kids so that she can stay home.
Yes. These people are law-breakers. In a web of such complexity that 80% of IRS's own employees can't answer sample tax questions, we are all law-breakers. But this takes tax collection to a new low -- now I am going to be responsible for "double-checking" on my neighbor who sold me those used lawn mowers last year. I need to do my part to make sure he's reporting everything.
It is so outrageously stupid and infuriating that I still can't believe it is true. I'm beside myself. So if I eat at Burger King during the week when I travel, about the 120th time I buy a burger, I need to chalk them up for a 1099.
It's the worst thing for small businesses and the underground economy that I've ever heard of the government doing. It just can't be true.
</rant>
ADD: And don't get me started with some bullshit about how the agency hasn't decided yet how to enforce it. This is like saying the Congress voted to install cameras in everybody's homes, but that might not be so bad because the administrative work hasn't been done to decide who exactly gets a camera and when. As if this somehow mitigates things.
Also, for all of you folks down-voting me. Tell me I am wrong. I'm not a tax professional and I don't read the political spin sites. The only reason I've commented now is that this is the 3rd or 4th time I've seen this posted on HN. So please. I would love to be wrong about this.
Also, you, as an individual, won't have to send 1099s to anyone, whether your baby-sitter or lawn-mower or Office Depot. Only businesses will, though this does include small businessmen and sole proprietorships (the way to distinguish a sole proprietor from "just a person" is by whether you're deducting those expenses as business expenses on a Schedule C or not).
Except in this case it's a horrible tyrranical oligarchy that instead of making your life hell gives you a few extra forms to fill out every week.
(Reiterating what madair already replied to sprout, but I felt his point was not as clear as it could be)
Even if that were not the case, it would hardly be a 1984 scenario, especially given that there are no criminal penalties for failing to file the 1099s. That's pretty absurdly embarrassing hyperbole that makes you sound like you came from DailyKos or something. The war on drugs is more of a 1984 scenario than requiring 1099s is, especially since it comes with widespread criminal penalties.
I think that's the key of it right there. The worst the IRS could do if you failed to file the 1099s is... force you to file the 1099s. The horror.
Don't get me wrong, I've been outraged by the practice of concealing unrelated bits of legislation inside various bills for years, but to say that this is worse than war is truly an exaggeration. Major annoyance, yes, but still quite a bit better than being shot.
On the other hand, this is a pretty big deal, and your reply doesn't justify it. Yes, not everyone "is" a business, but everyone relies on the economy every day. Adding a not insignificant overhead to the companies that bring you food, water, electricity, etc. makes those items more expensive. Also, increasing overhead in businesses makes it harder to start businesses, which is sort of relevant given that we're on YC news.
Seriously. Chill out. The thing hasn't even been finalized yet, and there'll be public comment periods and reviews and all sorts of other stuff providing people an opportunity to go froth at the mouth about how this will be the end of the world or whatever.
In the meantime: take a deep breath. Relax. Read and learn. Get as much information as you can instead of going off half-cocked. And actually think through the things you'd like to say, because hyperbolic rants don't do anyone a damn bit of good.
So now it's non CC company to company transactions > 600$/year which is a far smaller pool. The absolute worst possible case is total revenue / 600$ but the reality is most companies have a fairly small number of suppliers. So something like Ln (revenue / 1000) for the average small business.
Haven’t these been targeted by government regulation in the last couple years? I remember reading about police agencies wanting these banned (along with pre-paid cellphones) for enabling the drug trade.
The legislation has been "finalized". The regs aren't written, but the mandate is pretty clear, so they can't have much effect.
If you're a biz and you pay in certain ways, you will have to issue a lot more 1099s than you do now. Regs may change the number by 1-2%, but they won't affect the order of magnitude.
People: Chill the fuck out. The IRS is accepting comments on the issue. The rule doesn't go into effect until, realistically, April of 2013. By then, it is almost guaranteed that the rule will be significantly weakened to the point where it is not much different than what we have in place now.
This isn't a world-ending or economy-destroying fuckup organized by big-governement Democrats. It was a short-sighted clause put in by a politician trying to close a loophole. This is why we have checks and balances- the executive branch, which is actually in charge of implementing these rules, will implement them in a sane way.
So put your conspiracy theories to bed and get on with life. File a comment with the IRS and wait a couple of years. Then maybe you'll see that this was just one big stink over nothing.
"If your account is less than a year old, please don't submit comments saying that HN is turning into Reddit. (It's a common semi-noob illusion.)"
That said, I'm just as annoyed as the next guy at the inefficiency that the IRS seems to be trying to foist into the economy to help them raise revenues.
This is probably only true if people flip out over it now.
I don't think the IRS is reading angry internet forums.
This law is just noodling. They're just fishing around for new income ideas, throwing spaghetti at the wall, and seeing what sticks.
Don't freak out.
We wish it was true, but it ain't.
The IRS is accepting comments on the issue.
[..]
It was a short-sighted clause put in by a politician
trying to close a loophole.
The IRS is accepting comments on this requirement at http://www.irs.gov/newsroom/article/0,,id=225029,00.html
Ostensible justification is likely along the lines that the IRS can already track credit & debit card purchases far more easily than purchase orders, checks and cash. Regardless, this would be a major boon for the credit card industry if it in fact goes forward as planned.
[0] http://www.washingtonpost.com/wp-dyn/content/article/2010/07... (near the end)
Edit: Thanks for the down vote, but as a practical matter the IRS is going to use this as an audit trail. So a company needs to report revenue > the submitted 1099's. While they will get some 1099's their reported gross income is going to be dominated by people who don't need to send 1099's so it's going to have minimal impact. Note: There is zero new tax implications, it’s simply a reporting issue so being sent 1099’s DOES NOT IMPACT the taxes they pay.
The people receiving 1099's that are going to suffer are those who try and hide income. Companies are going to need to report revenue > 1099's or the IRS can easily find issue based on that discrepancy.
On the other hand Apple is going to need to send a lot of 1099's out to developers.
See also: http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...
This is nothing more than a Federal jobs program at the expense of the private sector.
More likely it was an attempt to close a perceived tax loophole without understanding of the cost of compliance. I have no doubt it will get fixed before it actually goes into effect.
And that happens what, 8% of the time? Most online services are evading sales tax.
NYC has a weird list of services. http://www.nyc.gov/html/dof/html/business/business_tax_nys_s... The Texas list is more comprehensive, and includes web site creation http://www.window.state.tx.us/taxinfo/taxpubs/tx96_259.html
This is also an option that would be useful in creating a VAT, if the government has access to all of these transactions. Sadly, the states already tax most of this money and it would look bad to have Feds move in there. However, the gap in service taxes would appear to be an opportunity, especially in B2B taxes which would be invisible to most people.
This forum is filled with entrepreneurs and innovators. It has one of the highest density of job creators of any forum on the web. Has anyone here seen any help from the government in creating jobs? Either on the supply side (grants) or on the demand side (tax breaks)? Or by reducing our administrative workload? From either side of the isle, conservative or liberal?
Instead we have bureaucratic nightmares like this 1099 legislation that create work that has a not insignificant opportunity cost for innovation and job creation in this country. You could be coding, but instead you're issuing 1099's to walmart.
The reality is that even if this passes, we'll all do just fine and keep innovating. But the next time some politician tells you he supports job creation in this country be sure to call bullshit on him. They only say it because it sounds good and they have done nothing to help us create jobs.
for a less dramatic look at things.
In any case, the final impact of the law won't be known
until the IRS issues its regulations on the new law,
which aren't expected to arrive until sometime next year.
The IRS has not yet commented on when it will release
regulations or schedule public hearings, and an agency
spokesman was unsure when it will do so.Bottom line, a misguided attempt to improve income reporting and tax collection is going to be either watered down by the IRS or killed in congress. Maybe I'm a sad optimist, but to me it looks like democracy's still working well :-)
The health care bill was effectively implemented as a tax bill. The entire structure of the bill is a set of rules and initiatives set up to encourage businesses and individuals to get or provide health insurance through a series of tax raises and tax cuts.
The tax code is the mechanism through which this policy is implemented. I'd love to hear what other mechanism you'd prefer for implementing a health care plan. (And copping out by saying "it shouldn't have been implemented" isn't gonna fly)
If they were going to actually try to implement national health care it should be done as constitutional amendment.
Are you seriously going to argue that "Armies" doesn't include the Air Force?
An Amendment wasn't required to create the Air Force any more than it was required to create the DHS, or is required to create any other Federal agency. Congress has the power to create, destroy, and reorganize Federal agencies as it wants to. So in 1947, Congress created the Department of Defense as a Federal Department, which the Constitution allows them to do, and put the Army, Navy, and Air Force (new) under it. There wasn't anything even vaguely unconstitutional about it, even taking a really uncharitable reading.
Congress creates new Departments fairly regularly; there wasn't a need to go through the amendment process for the DoD any more than there was to create the Departments of State, Transportation, Energy, Labor, Education... etc. All it takes to create one is the same process to pass any other piece of legislation.
I would personally not be against requiring an amendment to create new agencies, just on the grounds of controlling governmental scope creep, but that's not the way things are set up. Congress has been creating Departments since the ink was barely dry on the Constitution itself.
I still don't understand your comparison to Obamacare. Are you asserting that the constitution would authorize Obamacare with some tweaks to heirerarchy? Please explain.
I don't see the changes as being remotely comparable in magnitude.
Unless you hear about Democrats getting behind repealing this, you can ignore Republican attempts to do so. (This may change after the midterm elections. Though the most probable outcome is to wind up with deadlock because nobody can break a filibuster.)
(and about 10 more I don't feel like linking)
If I'm being idealistic, I think that a good bit of the historically useful functions of government ( on a more abstract level, historically useful functions of centralized authority )is made quite outdated by the availability of global communications and exchange to the "common man". It's a can of worms of a topic, and I don't really have the time to get into it right now, so I'll leave it at that.
If I'm being extremely idealistic, I think we should be in a state of post-scarcity in terms of shelter and food, and I think that the internet is a large part of the way that humanity will get to that point if it ever does. In the same vein, I lean towards thinking that getting to that state will become rather necessary for the continued growth and survival of our species, if we're going to continue to grow and survive.
But yeah, can o' worms.
Solution: write your congress person. Sign petitions etc and make a whole lot of stinkin noise..
But I'm sure every Fortune 500 corp will be making even more noise about this than small business owners. I can't imagine Walmart likes this anymore than Joe's Hardware
From http://www.businessbrief.com/feds-take-aim-at-small-biz-loop...
Both House and Senate bills address what some lawmakers see as evasion of employment tax by certain individuals. The Internal Revenue Service has stated that many taxpayers receive nominal salaries and take their earnings through distributions by S corps., limited partnerships, or other entities. The House and Senate bills would change that situation by imposing self-employment payroll taxes on 100% of S-corp. pass-through income when:
- The S corp. is engaged in a professional service business, with the key assets being the reputation and skill of no more than three employees, or
- The S corp. is a partner in a professional service business.
echo $response[0];
"Success! New law implemented that will effectively make it so painful to use cash, checks, ach and wire-transfers that everyone will use credit and debit cards which we have full digital access to without direct user knowledge."
echo $response[1];
"Success! New law implemented that will effectively make it so painful to use cash that everyone will start buying everything possible from overseas companies who still accept PO's ( checks, ach and wire-transfers ) because the shipping cost are more easy to predict than cost associated with absolute compliance with this new law."
Our tax system is way too form and administrative based still. It is always delayed and never real-time. Get this stuff out of the way and automate it throughout the year. Hide income taxes and 1099s for contractors just like they hide sales tax in transactions, or just rid of the income tax altogether and go another direction.
Are cell phone companies going to issue 1099s to most of America, and all users have to do the same?
To make sure that retailers/sellers are accurately reporting their sales and not lowballing their revenue numbers on their tax returns. It's basically to reduce tax fraud with the hope that the extra tax income (which is assumed that corps or fraudulently not paying) can be used to pay for health care without having to add additional taxes.
Please, if you are, as I am, concerned about the potential consequences of this provision, please calmly inform your representatives (especially ones on the [very powerful] House Ways & Means Committee) that you would like them to support HR 5141 ( http://www.opencongress.org/bill/111-h5141/show ), which selectively voids this provision.
Concisely and realistically emphasize the impact you believe this provision will have on your present or future business(es). Also, IMHO, it would be constructive to mention that (regardless of your stance of the ACA) you are not expressing concern about the ACA as a whole, but rather about this specific provision; Democrats may otherwise interpret your message as a general attack on their hard-fought (perhaps Pyrrhic?) victory and Republicans may take it as encouragement to frame the debate over HR 5141 as part of an overall attack on the ACA, which would likely cause the the bill to fail. IOW, know your audience.
Also, as a consumer of goods and services, now I need to do a 1099 for Amazon, people I hire for small bits of work, the local electronics store, etc.?
The only difference with the new rule is that you'd have to give 1099s to vendors.
Now the government is so cash strapped that they're looking to squeeze the rest of the country to make up for it. This appears to be the greatest reverse wealth transfer I've ever witnessed or even read about.
— Robert Anton Wilson, The Illuminatus! Trilogy
Fiction aside, I predict this law will get repealed pretty quickly and quietly before it goes into effect. The amount of added annual tax revenue from this is projected to only be $20 billion, and as soon as various interest and trade groups realize how much more the extra paperwork is going to cost them, then they'll be screaming at the Congress-critters. They already went through this process with SOX.
It's the Government's duty to maximize tax revenues, so if the cost of doing business in general causes a decrease in many company's profits, then there is less overall income to tax. If that amount of lost tax revenue is more than the projected increase of $20 billion, and I bet it is, then it makes sense to repeal that particular law.
> They already went through this process with SOX
Has SOX been repealed, then? I know of at least two businesses it's prevented from an IPO.
It only makes sense to repeal if the gov't motive is to maximize revenue. As we've seen repeatedly, "duty" is not a concept that impacts career politicians in the slightest.
In this case the report was produced by the Hearland Institute which Wikipedia describes as "an American conservative public policy think tank based in Chicago, Illinois that advocates free market policies."
Based on some of the bullshit they have published when it comes to global warming, they seem to be more interested in pursuing a political agenda than sticking to the facts.
"Most scientists do not believe human activities threaten to disrupt the Earth's climate."
"The most reliable temperature data show no global warming trend."
"A modest amount of global warming, should it occur, would be beneficial to the natural world and to human civilization."
"The best strategy to pursue is one of 'no regrets'."
Here's a guy who actually quotes the law in question, and since the health care bill manifests as a patch to the original law, also expands out the 1099 law to what it now says: http://thefinancebuff.com/2010/05/1099-filing-requirement-in...
I have no idea what his political affiliation is, I just linked for the law quote.
Or do I not have to worry about this law, because the Heartland Institute are global warming heretics?
http://money.cnn.com/2010/07/09/smallbusiness/irs_1099_flood...