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[mefree]

This might have some interesting implications.

By David S. Hilzenrath
Washington Post Staff Writer
Wednesday, July 7, 2010; 7:04 PM

The new federal health-care law may pose compliance challenges for taxpayers and the Internal Revenue Service, an IRS ombudsman reported Wednesday.

The agency, which will be responsible for administering major aspects of health insurance finance, is neither structured nor funded to effectively oversee social programs, the National Taxpayer Advocate Service said in a news release.

In addition, a tax reporting requirement in the health-care law "may impose significant burdens on businesses, charities, and government agencies," the advocate service reported.

Those burdens "may turn out to be disproportionate as compared with any resulting improvement in tax compliance," the head of the advocate service, Nina E. Olson, said in the release.

The advocate service is an independent organization within the IRS that helps taxpayers solve problems with the agency and recommends reforms.

Though the IRS's main mission is to collect taxes, it has been given a key role administering health insurance premium subsidies, tax credits for small businesses, assessments on employers and the mandate that beginning in 2014 everyone obtain insurance.

"I have no doubt the IRS is capable of administering social programs, including health care," Olson said. "But Congress must provide sufficient funding and the IRS itself must recognize that the skills and training required to administer social benefit programs are very different from the skills and training that employees of an enforcement agency typically possess."

The tension between enforcement and social service missions could affect the IRS's ability to administer health-care credits and penalties "in a fair and compassionate way," Olson said.

The comments accompanied Olson's routine mid-year report to Congress.

Beginning in 2012, the health-care legislation enacted in March will require all businesses and tax-exempt organizations to issue an IRS form called a 1099 to vendors from whom they buy goods totaling $600 or more annually -- and to file a copy to the IRS. The requirement is intended to reduce the under-reporting of business income, but it will demand thorough record-keeping on the part of buyers.

"For example, if a self-employed individual makes numerous small purchases from an office supply store during a calendar year that total at least $600, the individual must issue a Form 1099 to the vendor and the IRS showing the exact amount of total purchases," the IRS release said.

By reducing the under-reporting of business income,

Previously, such disclosures were required for the purchase of services but not goods.

The Taxpayer Advocate Service estimated the new requirement will affect 40 million businesses and other entities. Those include about 26 million sole proprietorships, not counting farms.

more at http://www.washingtonpost.com/wp-dyn/content/article/2010/07/07/AR2010070702826.html

[ethercat]

This might have some interesting implications.

Perhaps you could speculate a bit on the possible implications? 

[mefree]

Well, IANATL but...

At the very least, it will require some careful documentation of purchases, some of which might be revealing in certain tax-exempt organizations.

Not only does the purchaser have to issue a 1099 to the vendor, but a copy to IRS for any purchases to the same vendor that total $600. This includes smaller purchases over the course of the year that total $600.

Of course, there is the matter of compliance, but it seems to produce a documentation trail.

I have to agree that the law appears to be burdensome and I wonder how efficiently it will be implemented.

[ethercat]

So, for instance, if the local narconon buys its vitamins from the local scientologist who just happens to have a shop selling vitamins, the narconon will have to issue a 1099 to the shop, and the shop will have to report that on their taxes? 

So for instance, where the shop might have sold the vitamins to narconon for more than they're worth on the open market, and the narconon could include them in a report of "supplies," there will now be a paper trail of what these "supplies" consisted of, and how much was paid? 

And where the shop could have inventoried the vitamins at the regular price, and reported less than they actually got for them, they won't be able to do that now, due to the paper trail?

Of course, any excess paid for the vitamins would have probably been "donated" back to the "church" as a tax-exempt donation. 

I have to agree that the law appears to be burdensome and I wonder how efficiently it will be implemented.

Government jobs, paid for by the rest of us.       

I say these non-profits, if they aren't supposed to make a profit, should fall under the same tax laws as every other organization.  If they genuinely don't make a profit, there won't be any taxes - if they do make a profit, then they should pay taxes like the rest of us.

   When are y'all gonna make me king?   

[mefree]

This is one case where the law applies to non-profits.

King? 

[Lorelei]

Empress!

[ethercat]

Health-care law may pose challenges for IRS, taxpayers

[SocialTransparency]

 Within my industry, the issuing of 1099 forms has been tax law for years. Those individuasl that are "Free Lancers" receive a 1099 form from multiple employers for their services if the monetary amount of those services within a tax year exceeds $600.00

 I do not know how the tax law applies to LLC's, S corps or C-corps etc. As free lancers, we that are not incorporated file and PAY taxes to the state and federal government on a quarterly basis. Yep! I pay taxes on estimated income every 3 months. 

 Those in my industry that fly under S-corp/C-corp file and pay taxes every MONTH!

 Personally, i have no problem with this arrangement. But I would never incorporate (S-corp). The paperwork is a monthly pain.

[ethercat]

Not only does the purchaser have to issue a 1099 to the vendor, but a copy to IRS for any purchases to the same vendor that total $600. This includes smaller purchases over the course of the year that total $600.

The scientologists will probably just create more shell corporations to keep the totals under $600.