The Coming 1099 Avalanche

August 26th, 2010 by Chris

The ObamaCare bill is full of crap. Any time you have something so long that “you have to pass to find out what is in it” you’ll find crap.

Included in the bill is a new requirement that would make all businesses send 1099 forms to all providers of goods and services who you spend more than $600 with, starting in 2012. Currently you have to send them only to contractors really, and those who are not incorporated.

So, you will need a W9 form from every company you do business with. If they fail to provide it you will be legally obligated to withhold a portion of their payments. So if Vonage fails to provide me a W9 I am legally required under federal law to withhold payments to them. Do you think I’ll still have phone service after that?

Imagine you’re a trucker, and every single gas station you stop at along your route you need to get a W9 form from them. Seriously? Yes, seriously.

If you take clients out to dinner or lunch a lot at one restaurant, gotta get it. Your ISP, your host, anyone you buy inventory from, the gas company, the water company, the electric company.

You have to accept W9s from all these places, then file 1099s at the end of the year. The paperwork burden on employers alone has to be enough to move our GDP.

Some people say it could result in a billion, yes, with a b, additional papers being sent to the IRS in January. The IRS will have to hire more people just to deal with these billion pieces of paper. I kinda think they should rename the bill to the “Accountant and Postal Service Full Employment Act” or something like that. What is a stamp times a billion?

Can you imagine a truly big company, perhaps one that did B2B selling. You could be dealing with hundreds of thousands or millions of forms. 1 per customer, 1 per supplier. How many trees must we kill?

Apparently, lawmakers, and I use that term loosely, from both parties hate this provision, which had they read the 2400 page monstrosity they might have seen it, and they pledge to repeal this. What if they don’t? What if they get too busy worried about baseball players taking steroids or scoring political points? Are you ready to start doing this crap?

This is the problem with big bills and big government people. If I were president I would tell congress keep it under 100 pages or it always will be vetoed. No one in Washington has ever heard of K.I.S.S. and when you have ridiculously complicated bills, that the people voting on don’t read, you will always have unintended consequences. This is just one, there are many more, there are most assuredly even more we don’t know about yet.

Write your representatives people, make sure they don’t forget to repeal this stupid requirement, or find yourself spending more and more of your productivity pushing paper around. I wonder if it would be possible to measure what percentage of our GDP is just pushing paper.

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