The US Senate today passed H.R. 4 by a vote of 87-12 to repeal the Obamacare expansion of Form 1099 reporting that would have taken effect at the beginning of 2012. The bill had previously passed the House of Representatives and is now awaiting the signature of President Obama to become law.
The legislation was originally included as Section 9006 of the health care legislation enacted in late March 2010. It would have required all 35-40 millions businesses, non-profits, and government agencies to submit a Form 1099 for any goods or services acquired from any party that totaled $600 or more in a calendar year.
This legislation would have been so burdensome on all businesses that even the Internal Revenue Service advocated a major overhaul or repeal of the law. Coin dealers, who purchase inventory from a much wider variety of suppliers (i.e. from customers who sell to them), would have been among the hardest hit by the added paperwork. By my calculation, my own companies would have been required to submit 13,000-15,000 additional tax forms every year, for instance. AT&T estimated that it would have been required to file an extra 3 million forms annually.
Even worse, in the act of obtaining so much confidential tax information from people, the incidence of identity theft would almost certainly have skyrocketed.
This repeal does not become law until the president signs it. Last week, there were some complaints coming out of the White House that the president was concerned about the replacement tax collections included in the legislation. However, there was no statement that the president would automatically veto this bill if it came to his desk.
The “pay for” provision was technically required as any proposed legislation that would increase government expenditures or reduce tax collections is supposed to include provisions on how the financial change would be covered. In this particular bill, the “pay for” provision is that people who receive federal government subsidies to pay for health coverage who subsequently receive higher income will have to repay some or all of the subsidy they received.
Congress has been wrangling over passage of this repeal since September 2010. It had the support of both parties. The day after the November 2010 elections, President Obama stated in a speech that Section 9006 requiring expanded Form 1099 reporting was a problem that needed reform or repeal. What proved to be the obstacle to early passage was that both the Democrats and Republicans wanted credit for this repeal, and each party did not want the other party to be able to claim credit for the change. Several different bills were proposed, and some attempts to amend the repeal on other legislation all came to naught.
I anticipate that the president will sign this legislation. However, I am not counting on it until he actually does so. But, among all the other financial turmoil, we can all be hopeful that this looming paperwork nightmare will finally disappear.
The repeal will also bring another benefit to the public. There was so much disinformation spread about the exact nature of this legislation. Hopefully this will come to an end. For instance, some coin dealers were misinforming (lying?) to potential customers that they would have to report to the federal government all sales of bullion-priced products to retail customers—a deceitful ploy to try to sell higher profit collector coins. Others were claiming that the law was intended to require everyone to report their gold and silver holdings to the US government. I look forward to clearing the air of such stories.
Patrick A. Heller owns Liberty Coin Service in Lansing, Michigan and writes “Liberty’s Outlook,” a monthly newsletter covering rare coins and precious metals. Past issues can be found online at http://www.libertycoinservice.com/ Pat Heller is also the gold market commentator for Numismatic News. Past columns online at http://numismaster.com/ under “News & Articles”. His bimonthly columns on collectibles can also be read at http://www.lansingbusinessmonthly.com under “Articles” and “Department Columns.”His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.