The Senate planned to vote on amendments to the White House small business bill that would rescind an ObamaCare mandate that companies track and submit to the IRS all business-to-business transactions over $600 annually. The 1099 reporting footnote was hidden in the ObamaCare bill to raise about $17.1 billion, part of the effort to claim that ObamaCare would reduce the deficit by $100 billion or more.
The Treasury Department’s National Taxpayer Advocate, Nina Olson, indicated the costs would be “disproportionate as compared with any resulting improvements in tax compliance.”
Small businesses will be seriously hit financially in 2013 when the 1099 mandate hits more than 30 million of them. At present, businesses only have to tell the IRS the value of services they purchase from vendors and others. Under the new rules, they’ll need to report the value of goods and merchandise they purchase as well, adding huge accounting and paperwork costs.
For example, let’s take a small trucking company. The company will have to collect hundreds of thousands of receipts from every gas station where its drivers fill up and figure out where it spent more than $600 that year. Then it will also need to match those payments to the stations’ corporate parents.
Now, most Democrats say they didn’t know the provision was in the ObamaCare bill and just how onerous the 1099 provision would be, illustrating how poorly the bill was written. As critics claim, most Members had no idea what they were voting on. Two hundred and thirty-nine House Democrats voted to repeal the 1099 provision last August. The repeal would have passed, but Speaker Pelosi rigged the vote so that it required a two thirds majority. So she provided Democrats with the cover of a repeal vote without actually repealing it!
Nebraska Republican Senator, Mike Johanns, offered an amendment to scrap the new 1099 rules in toto on September 14. But the White House opposed this claiming it might set a precedent for repealing the whole health bill. Over the weekend, the Treasury Department pronounced the Johanns amendment “not acceptable in its current form.” The president’s opposition to the repeal illustrated the emptiness of his so-called support for small business, which he touts at every campaign stop.
So, on September 14, Harry Reid kept most of his Democrat senators together in favor of requiring businesses to report to the IRS annual purchases above $600 from any contractor, resulting in a 46-52 loss of the Johanns amendment. This, despite business groups, especially small businesses, having made a vote to repeal a priority because of the huge costs associated with this mandate. Seven Democrats broke from their caucus, including endangered incumbents Michael Bennett (Colorado) and Blanche Lincoln (Arkansas) who knew how damaging to their re-election bids a vote to retain the 1099 provision would be.
It’s clear this will come up again in the next Congress, but the present defeat demonstrates the power of the statists in goverment to defeat even popular measures, especially if pro-business.