Just over a year ago when President Obama, then-U.S. House Speaker Nancy Pelosi, D-Calif., and Majority Leader Sen. Harry Reid, D-Nev., rammed Obamacare through Congress, no one really knew what was in the 2,700 pages of the Patient Protection and Affordable Care Act of 2010 (PPACA). But small business soon learned that it wasn’t so.
For example, the law includes a provision that requires all businesses to file a 1099 form to the Internal Revenue Service for purchases or payments of $600 or more in a calendar year. Currently, businesses must file a 1099 for such payments made to independent contractors or firms that aren’t partnerships or corporations. But PPACA requires that businesses file 1099s for virtually all such payments.
Buy a truck for your business? Send a 1099 to the Ford dealership. Spend more than $600 on printing? Send a 1099 to UPS Store. Run a small dairy? Send 1099s to your hay supplier, the feed store, the corner gas station and every company that sold you equipment or supplies.
The goal of the new requirement was to capture what supporters theorized was $17 billion in fines and lost tax revenue from unreported transactions. Once collected, it would be used to help finance the health reform law. But the provision created a nightmare for the owners of hundreds of thousands of small businesses across America who faced an avalanche of costly paperwork.
The public reaction was so strong that a bill to repeal the requirement sailed through the House on March 3 by a 314-112 vote and breezed unchanged through the U.S. Senate by 87-12 on April 5. Among Washington’s delegation, only Sen. Patty Murray and Congressmen Jim McDermott (Seattle) and Norm Dicks (Bremerton), all Democrats, voted against it.