A CNNMoney article by By Jennifer Liberto, March 3, 2011 titled “House and Senate ping-pong hated small biz tax rule” talks about the difference in approach by the US Senate and House to solving this problem, i.e. expansion of the requirements for filing form 1099. (Read Article)
The house passed a bill the first of the month eliminating this provision from the Healthcare bill. However the Senate disagrees with the approach to keep it “revenue neutral”.
The House, the Senate and the President have all said they want this fixed. But in typical Washington fashion, they cannot get it done because of….POLITICS!
Really? Let me give you my thoughts:
1) The idea that this will improve revenues from increased compliance is bogus at best. Do you really think that Office Depot or Staples don’t report all of their income? Also it only applies to amounts paid by check, not credit cards. My guess is that the “real” amount of found income is close to zero meaning the tax revenues created are also close to zero.
2) The amounts are not reconcilable. The revenues reported by business include revenues from all payment types, Cash. Check, Credit and Debit Cards, yet 1099s are required only for certain transactions. So this helps assure all revenue is properly reported, how?
3) The cost of compliance by small business outweighs the benefit. Remember, the cost of compliance is tax deductable…..This will reduce tax receipts!
What I am saying is simply this, In my opinion, they are arguing how to pay for something that isn’t real in the first place and not supportable in reality. This law is worse than a bad idea. It lacks practicality and the point of trying to keep something revenue neutral lacks credibility.
Come on Washington, GIVE US A BREAK. Do away with this crazy law, forget about the fiction of revenue neutrality and quit playing political ping pong with small business.