According to the New York Times, both liberal and conservative members of Congress are speaking out against a new tax provision related to the President’s health care reform package. The law in question would require businesses to file a 1099 tax form identifying anyone to whom they pay $600 or more for goods or merchandise in a year.
Businesses will also have to send copies of the form to their vendors, suppliers and contractors.
Businesses denounce the requirement, and even the national taxpayer advocate at the Internal Revenue Service, Nina E. Olson, said the reporting burden might “turn out to be disproportionate as compared with any resulting improvement in tax compliance.”
The White House is nervous about a repeal, fearing that it could set a precedent for rolling back other unpopular features of the law. Moreover, the reporting requirement is expected to lead to a significant amount of revenue — $17 billion over 10 years — to help pay for the expansion of coverage and other health initiatives. It is unclear whether Democrats and Republicans can reach agreements on repealing the provision and on finding a way to offset the loss of money.
Under the law, businesses will be required to report purchases of items like office equipment, food and bottled water, gasoline, lumber and plumbing supplies if payments to any vendor in the course of a year total at least $600. They will, in many cases, also have to report payments for things like travel and telephone and Internet service.
The annual reports must include the vendor’s address and taxpayer identification number.
