Free Markets, Free People

IRS


More goodies found in ObamaCare

Since no one apparently read – or had the time to read – the ObamaCare bill before it was passed into law, parts of it are just now coming to light that, to most, are going to be a surprise. For instance, a mandate having very little to do with health care but certainly a very costly tax mandate for business was slipped into the bill. Maybe this is why those additional 16,000 IRS agents are needed:

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.

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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.

As one CPA notes:

Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.

This mandate will generate new compliance costs which will, as the CPA notes, cost businesses “more than any additional tax that the IRS might collect as a result”. As little as $600 in business supplies generates a 1099. It is no longer limited to the categories listed above, but to the size of the purchase. The practical fallout?

The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.

In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.

As Chris Edwards at CATO notes:

Private transactions are the core of a market economy, and the source of America’s growth and prosperity. Now the federal government is imposing a vast new web of red tape on perhaps billions of these growth-generating private exchanges.

If it were me I’d be figuring out how to make a whole bunch of $599 purchases, but that’s not the point, of course. This mandate and imposition on business is going to require a huge effort toward compliance and cost a lot of money. It’s just another reason for a business to postpone hiring because the money they were going to put toward a new employee is now shifted to the compliance requirement.

This is how government interferes in the economy in a non-productive way and ties up money that would otherwise be put toward productive economy and job expanding use.

~McQ


Individual mandate unenforceable? Ask the IRS

If there is any doubt about the individual mandate being enforceable, the chief of the IRS certainly sees no problem:

Individuals who don’t purchase health insurance may lose their tax refunds according to IRS Commissioner Doug Shulman. After acknowledging the recently passed health-care bill limits the agency’s options for enforcing the individual mandate, Shulman told reporters that the most likely way to penalize individuals that don’t comply is by reducing or confiscating their tax refunds.

“These are not the kinds of things we send agents out about,” Shulman said. “These are things where you get a letter from us. Congress was very careful to make sure there was nothing too punitive in this bill.”

Well, I guess that depends on how you define “punitive”.  But be advised – others may claim the individual mandate is unenforceable.  The IRS doesn’t share that belief.

~McQ


Privacy – With Health Care, Not A Priority

The left certainly likes to give the right of privacy at least lip service as they tell you what you should be concerned with concerning government. But when it concerns something they want, privacy isn’t such an important right.

HR 3200, the infamous house health care insurance bill apparently proves that point quite handily. Nestled within its 1,000 plus pages is a provision, on top of all the other provisions noted previously, that should give real privacy rights advocates pause:

Section 431(a) of the bill says that the IRS must divulge taxpayer identity information, including the filing status, the modified adjusted gross income, the number of dependents, and “other information as is prescribed by” regulation. That information will be provided to the new Health Choices Commissioner and state health programs and used to determine who qualifies for “affordability credits.”

Section 245(b)(2)(A) says the IRS must divulge tax return details — there’s no specified limit on what’s available or unavailable — to the Health Choices Commissioner. The purpose, again, is to verify “affordability credits.”

Section 1801(a) says that the Social Security Administration can obtain tax return data on anyone who may be eligible for a “low-income prescription drug subsidy” but has not applied for it.

Of course the Privacy Act, that inconvenient law that requires agencies to get information not from other agencies but from the individual, is being pointedly ignored here. In fact, reading above, you’d think our “lawmakers” were completely unaware of their own laws.

Given most of them haven’t even read the bill, you’d be exactly right. Additionally, we find out that not all health care insurance reform is contained in the pending versions of health care insurance legislation:

A better candidate for a future privacy crisis is the so-called stimulus bill enacted with limited debate early this year. It mandated the “utilization of an electronic health record for each person in the United States by 2014,” but included only limited privacy protections.

That’s right – already passed into law, in the “stimulus” bill, and without any debate, is a mandate for the use of electronic health records.

Sound like “representative government” at work for you? Or does it sound like an increasingly intrusive government discarding your privacy for the sake of its own hoped for efficiency? Not that such access will provide a more efficient bureaucracy, but it sure will provide that bureaucracy with almost unlimited access to tax information about you and your family.

And that’s without ever getting into what this “Health Choices Commissar Commissioner” is supposed to do. Wouldn’t Orwell have a field day with all of this?

~McQ


Of “Greed” and “Fairness”

One of the reasons we’ve reached a tipping point between freedom and welfare statism is because much of the country pays no taxes and increasingly the burden of taxes is being shifted to a smaller and smaller percentage of the population. Now I’m not a tax advocate by any stretch. But it is obvious we’re not going to be able to avoid them, especially with this new crowd in town who wants to tax just about everything.

But back to the point – if you’re not paying taxes, but the government is taxing others to your benefit, why wouldn’t you want more stuff? Oh I know the moral argument and I agree with it. What I’m describing is a dynamic which plays on human greed. It’s funny, we hear politicians talk about the “greed” of Wall Street, or the “greed” of big oil or the “greed” of big pharma.

But what is never discussed is the “greed” of those who don’t pay taxes but demand more benefits paid for by others. Or how politicians have “incentivized” that greed.

How ridiculous has it gotten?

Check this chart out:

tax-burden

Yes, that’s right – the top 1% pay more taxes than the bottom 95%. And the plan is to have them pay even more as this health care boondoggle comes on line.

So the next time you hear your favorite “progressive” begin their “greed” or “fairness” nonsense, show them this chart. If that doesn’t shut them up, nothing will.

~McQ


IRS Workers See A Double Standard And Lack Of Leadership

A little dissention in the IRS?

The Treasury secretary, who oversees the IRS, didn’t pay all his taxes. Neither did five other top nominees for the Obama administration, or their spouses.

Now, as Wednesday’s tax deadline looms, some Americans are wondering why they should comply with the arcane requirements of the Internal Revenue Service when top administration officials failed to do the same. Even some IRS employees are upset at what they see as a double standard.

The most criticized example has been Treasury Secretary Timothy Geithner, who admitted not paying $34,000 in payroll and Social Security taxes, saying his failure to pay was an oversight. Five other nominees disclosed similar tax issues, including one as recently as two weeks ago when Kathleen Sebelius, President Barack Obama’s pick for secretary of health and human services, admitted she didn’t pay $7,040.

“Our members are upset and angry,” said Colleen Kelley, president of the National Treasury Employees Union, referring to concern bubbling up within the IRS over unusually strict rules that can cost agents their jobs if they make a mistake.

Indeed – while the man who has Cabinet level authority over the IRS was essentially a tax cheat, IRS employees are held to a very strict standard concerning their taxes and returns:

In some cases, IRS employees have lost jobs for simply filing a late return or failing to report a few hundred dollars of interest income.

Of course, the union representing IRS workers doesn’t want to see Geithner or anyone else held to the same standard. Oh, no – instead they want those standards loosened:

In an interview Tuesday, Kelley said the Geithner case underlines the need for a change of the rules governing IRS employees.

“My issue is not that I want Geithner or anyone else punished,” Kelley said. “I want there to be a re-examination of the law that holds IRS employees to a separate standard: one in which a simple mistake can cost them their jobs with no right of appeal.”

Yup – again, something the Obama administration and some of our commenters don’t seem to understand – the essence of leadership is setting the proper example – not do as I say but not as I do. That “essence” is still missing from this bunch.