As many of you probably have heard, an obscure provision of the new health care bill adopted in March, Section 9006, requires all 34 million American businesses, governmental agencies, and non-profits to submit Form 1099 for any payments to any provider of goods or services that total more than $600 in a calendar year. This law takes effect on January 1, 2012.
This provision was included in the health care bill because it would supposedly generate additional tax collections of $17 billion over a number of years. It turns out that this figure literally was created out of thin air, with no documentation to support the amount.
Unfortunately, if this expansion of Form 1099 reporting were to go into effect, that would require the filing of billions more tax forms. In the process of collecting all this confidential tax information to enable businesses to comply with this law, there would almost certainly be a huge increase in identity theft.
Coin dealers would be especially burdened by this new law as it would require obtaining the social security number for just about everyone who sells any merchandise to the company, then submitting IRS reports for any sellers where were paid $600 or more in one or more transactions over the course of a calendar year. Just for my own company, Liberty Coin Service, I calculated that we would have to file between 13,000 and 15,000 1099 Forms every year to comply with this new law.
The combination of the massive burden on businesses, government agencies, and non-profits, along with the increased likelihood of identity theft, which, by the way, the IRS warns people about in their instructions for the Form W-9 that sellers would have to fill out as part of submitting these new 1099 Forms, led to a massive public outcry.
I have been in meetings with the US Chamber of Commerce on this issue, been interviewed by newspapers across the country and by Bloomberg and London’s Financial Times, and appeared in ABCNews.com and on Fox Business Channel on this issue. The current November issue of the Journal of Accountancy has my letter to the editor on this subject.
The politicians in Washington received such an onslaught of complaints about Section 9006 that both Republicans and Democrats were looking for way get repeal this law. But, there were two obstacles to the attempts to do so in September. First, any decrease in government tax collections is supposed to be offset by a corresponding increase in other taxes. The Democrat proposals for the replacement taxes were unacceptable to Republicans. The Democrats in Congress wanted to get credit for the repeal, so they wouldn’t support the Republican bill. Finally, President Obama said that he would veto any attempt to change any part of the health care legislation. Observers believe that Obama’s opposition to any change was because once one change might be made, then more pressure might be brought to bear for other changes to the health care law.
Well, the elections are over. On the day after the elections, President Obama addressed the nation on how the results have altered his outlook. In particular the president mentioned that Section 9006 would be an enormous burden and something would have to be done about it.
Congress goes back into session on Monday. Nicholas Pyle, a Washington lobbyist and the coordinator of Numismatists United for Political Action recently told me that there are three major issues that Congress will tackle in the lame duck session. First, they need to provide funding for the federal government for the balance of 2010. Second is the issue of extending some or all of the Bush-era tax cuts.
The third issue is repealing Section 9006. According to Dave Camp (R-MI), the likely incoming chair of the House Ways and Means Committee, “We have the votes now for 1099 repeal.” Information from the Democratic leadership in both chambers and the White House is that they may push for a stand-alone bill to repeal Section 9006 as a political tactic to try to forestall further erosion of other health care law provisions in the next Congress.
It is possible that a bill to repeal Section 9006 may be entered as soon as Monday. It may be repealed before Congress goes home.
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 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.