ObamaCare provision seeks to kill forests, small business

From the Cato Institute, comes another revelation of what's in the 2,000 page ObamaCare law:

Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly.

A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.

Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress.

In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

The 2010 Health Care Act adds “amounts in consideration for property” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and “gross proceeds” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term “payments” includes gross proceeds paid in consideration for property or services.

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS. ...

Read the rest here. If this interpretation is accurate, the FedGov has just imposed a massive tax on business (and thus their customers and employees), as the amount of paperwork and associated time and effort to comply with this requirement will be a job and business killer. Small business, in particular, will be hit hard. Many, already teetering on the edge, will go out of business with this extra tax on their limited time. Their tax compliance costs just went through the roof.

Not to mention the billions of pieces of paper that will be generated. Looks like ObamaCare will be the death of many forests. Not to mention all the unproductive time spent tracking down information, correcting errors, reissuing corrected 1099s, dealing with the cuddly folks at the IRS to sort out errors, etc., etc. On the bright side, the US Postal Service just got its own "stimulus" package, as those billions of pieces of paper won't deliver themselves. Get ready for more unemployment when this kicks in in 2011. Chains We Can Believe In.