ObamaCare is complicated. It is one of the largest tax increases in history. The 1099 issue that I talked about in my last email is very real. Hopefully it will be repealed, because it will create a nightmare for you and me.
I got some input from my students on the last email. I hope to step up my emails and the discussion with my students. I want to address two issues that came in from the last email.
(1) 1099 date of implementation.
(2) Does it apply to individuals or just companies?
I stand corrected on the last email notice I sent out. The 1099 reporting requirement in the Health Care Bill doesn’t go into affect until 2012. You don’t have to worry about it this year, as I stated in my last email.
Thank you for everyone’s input on the emails. Please let me know what you want to hear about and what you need. Of course, I appreciate everyone helping me cross the t’s and dot the i’s. Thanks.
The controversial language in last year’s healthcare law requires companies to report goods and services transactions valued over $600 to the IRS.
There are parts of the Healthcare Bill that don’t apply to companies under 25 employees, but this part of the bill applies to all “persons.” However, it only applies to transactions in the “course of a trade or business.”
The healthcare bill rewrote IRS Code 6041. It was there before, but it has radically changed. In the new law, “true individuals” (people whose only and total source of income is W2 wages) don’t have to worry about the 1099 issue.
However, almost all of my students will be affected. You are making money on the side, doing real estate, whatever. If you are selling on eBay, you are making money in addition to your W2 money, and suddenly the IRS is looking at you as a sole proprietor. That means you get caught up in the new law. You will have to give eBay a 1099.
You don’t think you are in a business, but the IRS has funny colored glasses, and they look at things in ways you don’t think about.
The new law puts huge burdens on credit card companies. Transactions handled by credit cards (whether individually or in the course of conducting business) are now required to be reported by the credit card company.
The good news is this whole mess has caused a stir.
Sen. Mike Johanns (R-Neb.) plans to introduce legislation later this month that would repeal the 1099 portion of the healthcare law. In a statement last week, Johanns said he would introduce his bill on Jan. 25, the first day Senate bills can be introduced in the new Congress. Sen. Joe Manchin (D-W.Va.) said last week that he would co-sponsor the legislation.
The entire healthcare bill will not be repealed, but this part of the bill should be repealed in almost everybody’s book. There is clear bipartisan support in both the House and Senate for repealing the “1099 language.”