Purchasing Office Supplies Gets Trickier
One small-business owner, Gina Dorn* is a regular at Costco, where she purchases all her office supplies: copy paper, toilet paper, garbage bags, paper clips, pens, and three-ring binders. Though Gina's computer business is small, expenses add up and certainly exceed $600 a year. This is going to make for some heavy-duty problems, unless there's a way to change things in Washington.
The issue is a provision contained within the new federal health care law which states that beginning in 2012, businesses will need to file 1099 tax forms if they purchase goods and services exceeding $600 from a single vendor during the course of the year. Small-business owners, including Dorn, state that once the law goes into effect, small businesses will be out time and money.
Huge Expansion
The new provision represents a huge expansion in existing requirements for reporting expenses. The aim of this legislation is to create a windfall of tax dollar revenue that can be applied to the expenses of the health care plan.
Small businesses are orchestrating a huge push for getting Congress to repeal the provision. The U.S. Senate has already set aside time during which it will evaluate two possible amendments. One of these would simply remove the 1099 requirement, while the second amendment would change the wording to exclude businesses with fewer than 25 employees while raising the threshold for reportage to purchases of over $5,000. Purchases made by credit card would be exempt from reportage. Co-sponsoring the repeal legislation are U.S. Senators Saxby Chambliss and Johnny Isakson from Georgia.
Staying Afloat
Meanwhile, Dorn says she will be setting up separate accounts for each vendor and either keep track of the monies and do the filing herself or hire an accountant, which would be a significant expense. Dorn says she has owned her company with her husband John for over two decades and that the small business has been struggling. The new provision will just make it harder for the Dorns to stay afloat. The company has just eight employees.
Gina is bitter and says that the government is making it more and more difficult for the little guy to hold his head above water, by adding two many rules and restrictions. What really irks her, she says, is the way that politicians are always stating that developing small-businesses is crucial to creating jobs and a linchpin for economic turnabout. At the same time, she feels, regulations such as this 1099 requirement are forcing small owners to close their doors.
*Names have been changed