New tax paperwork finances healthcare overhaul
Tuesday, October 26th, 2010
Small business owners say a coming tax-reporting requirement could crush them with paperwork. Starting in 2012, companies that do more than $600 worth of business with a single vendor in a year need to file an extra tax form.
The rule was passed this year in the health overhaul law to help finance it.
Kevin Shivers is the Pennsylvania director of the National Federation of Independent Business, a lobbying group for small business owners.
He says the rule requires companies to keep track of minor expenses.
Shivers: If a business owner goes and gets a Big Mac at McDonald's or goes and grabs a cup of coffee, that $2.50 receipt is going to need to be held and if that individual winds up doing more than $600 worth of business with that company, they are now going to have to generate a 1099.
Shivers says completing government paperwork is one of the top expenses for small companies. But he says tracking down tax identification numbers from every mom and pop shop — and filing a 1099 form for each — may be an even bigger problem.
Shivers says one Lancaster County business owner reports he'll have to turn-in an extra 7,000 filings each year.
Igor Volsky is an analyst with the Center for American Progress.
Volsky: The health care law has many sources of funding. This is, I believe $17 billion that will go toward financing the health care expansion and the Affordable Healthcare Act.
Volsky says there's bipartisan agreement that many businesses are not paying all the taxes they should. The new reporting requirement was an attempt to capture some of those dollars. But now, Volsky says, both Republicans and Democrats are looking for ways to make the rule less onerous. In Congress, several draft amendments are in the works