Quite amusing is the hubbub over the expanded Form 1099 reporting requirements included is the Patient Protection and Affordable Care Act and break-neck efforts over its seemingly inevitable repeal. The House voted overwhelmingly on March 3 to wipe the ridiculous law off the books (Small Business Paperwork Mandate Elimination Act (H.R. 4).
Groucho might say to Congress: “What were you just thinking? Oh, you weren’t thinking of anything? Well, that’s something to think about?” The reality of this ill-conceived law is that, were it to become effective, very few small business could or would comply with its frustrating provisions. Professionals will, of course, urge clients to comply. Sadly, however, the ability to comply will not match the need. The very smallest businesses are simply not equipped to track and report every payment for goods or services exceeding $600, or to obtain the federal ID number of each payee for such goods or services. Small landlords of strip shopping centers, for example, employ managers who are paid little and do a poor job as it is of accounting for rental activity. In this economy, many strip centers are half empty and owners cannot afford to pay a higher management fee for the cost of additional tax compliance. Thus, managers would either absorb the cost or risk the fines. The larger management companies would comply; and, the small managers and other small businesses, already overstressed would simply risk the fines hoping that enforcement will be sporadic given the enormous number of transactions versus the relatively small number of IRS employees.
That is why is it laughable to read how the Senate, now considering an amendment (S Amdt. 161) to theSmall Business Innovation Research and Small Busienss Technical Transfer Reauthorization Act (S. 493), proposed by Senator Mike Johanns (R-Neb), intends to make up the 24.7 billion estimated cost of repeal. This revenue loss is better fiction than a Stephen King bestseller.
It is legislative recklessness to enact laws that Congress should in all common sense know are unlikely to be complied with or enforced. Our revenue laws must strike an administrative balance between over-zealousness and laxity; and, must avoid oppressive measures that place an untenable burden on small businesses or individuals lacking the technological and manpower resources of large public companies.
The Senate will again take up its repeal amendment after the March recess. Hopefully, this potential paperwork nightmare for small businesses and penalty trap (kind of like a speed trap, isn’t is?) will disappear from the radar screen very soon.