Hey, Freelancers! Fun With Obamacare!
At reason, Peter Suderman writes that the Patient Protection and Affordable Care Act, President Obama's trillion-dollar overhaul of the nation's health care system, is already adding costs, is likely to reduce people's existing insurance programs, and is going to cause a big old pain in the ass for those of us who are self-employed:
Small businesses, meanwhile, have discovered that their tax preparation costs just went way up. The PPACA will require small business owners and the self-employed to fill out 1099s for every company they do more than $600 worth of business with. That means any freelancer who buys a mid-range laptop from Best Buy will technically be required to fill out a 1099, no matter if the retailer is an indifferent chain giant. As with the drug subsidy modification, the idea is to beef up compliance and raise additional revenue--about $17 billion worth.Yet if it works, it will drive up compliance costs--how many home-based freelancers are likely to generate a docket of 1099s, complete with tax identification numbers, for big corporate suppliers all by themselves? And if, as seems likely, the requirement is widely ignored, it will have the exact opposite of its intended effect, pushing more and more taxable transactions into illegal, unrecorded territory.
This is how a black-market is created. When you make it too difficult to do things above the table, things get done under it.
If those boneheads in Congress think I'm going to look up the corporate offices of every company I do more than $600 worth of business with to send them a 1099 they don't give a flying fuck about, they're out of their minds.
Which means, of course, the next step for government is to make a law that all credit card transactions will be reported to the IRS for screening. They'll likely wrap it up in "terrorism prevention". You heard it here first!
brian at May 17, 2010 7:24 AM
It's also a barrier to entry for new competitors. You have to hire consultants to teach you how to operate within the system, set up new accounts and new transaction systems, yada yada, all under the threat of prosecution if you make one little mistake. It's a lot easier and less risky to just go work for someone else.
Cousin Dave at May 17, 2010 7:39 AM
In another country.
irlandes at May 17, 2010 7:45 AM
Looks like we'll all be going to the barter system very, very soon.
Ann at May 17, 2010 11:13 AM
That 1099 requirement says a lot about this administration's intent. You can't control society very well unless you track what people are doing. Computers will now track everything, and they will call this filing 1099's. Call this the very warm and personal service aspect of our new style nanny government.
For compliance, every business customer of Best Buy will have a Business Account with them, which will track all purchases. Then Best Buy will issue 1099s to itself.
The government *just* wants Best Buy and everyone else to turn over a record of its transactions. Compliance will be streamlined to provide government with all of that information.
Andrew_M_Garland at May 17, 2010 4:49 PM
This stuff is ridiculous. Maybe I'll just have my local handyman split up his visits some, so that no particular visit exceeds 599 dollars (I'll try and find somebody less expensive sooner or later). That should put his mind at ease. What annoying rubbish!
mpetrie98 at May 17, 2010 9:12 PM
@mpetrie98:
It's not $600 per transaction, it's total of $600 over the course of a tax year (or is it calendar year? who knows?).
Which is why this is such a pain in the ass. I now have to go through quickbooks at the end of the year, run reports on everything I've purchased, subtotal by vendor, and issue a 1099 to everyone I did more than $600 worth of business with during the year.
What's next? Making me keep receipts for all my personal spending and making sure that the outgo and income tie out at the end of the year?
Let them eat dick.
brian at May 18, 2010 6:59 AM
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