While Congress deserves credit for including pro-patient, pro-community pharmacy provisions in health care reform legislation, the law’s far from perfect. Case in point: A “revenue raiser” that would make many minor business transactions a tax-reportable event.
Under section 9006 of the Patient Protection and Affordable Care Act, beginning in 2012, all companies will have to issue 1099 tax forms not just to contract workers, but to any individual or corporation they buy more than $600 in goods or services from in a tax year. Currently, 1099s are just used to document income for individual workers for services other than wages and salaries, not used for corporations or for the purchasing of goods.
NCPA is urging Congress to repeal this provision before it ever takes effect. Working with the Coalition for Fairness in Tax Compliance, 75+ like-minded small business advocates organized by the National Federation of Independent Business, we recently wrote to Congress in support of repeal legislation offered in the U.S. Senate and House of Representatives by Senator Mike Johanns (R-Neb.) and Rep. Dan Lungren (R-Calif.), respectively.
“The paperwork mandate is a double whammy for small-business owners,” Sen. Johanns recently wrote in Roll Call. “Not only will their tax reporting burden increase because of additional tax filing requirements, but businesses will think twice before purchasing goods and services from smaller companies. … If you want purchases to go only to the giant retailers, Section 9006 of the health care law is for you. If you want vibrant Main Streets where small businesses thrive, then my legislation hits the mark.”
In the coalition’s letters, NCPA and others pledged to work with Sen. Johanns and Rep. Lungren to enact this legislation into law. As that letter states, “The new reporting has nothing to do with health care, but is deemed as a way to raise revenue by closing the tax gap … Even worse, under this proposal, the burden of finding noncompliant taxpayers is placed on the compliant taxpayers required to file these new forms.”
Even the IRS doesn’t seem to want all these 1099s. IRS taxpayer advocate Nina Olson told USA TODAY that, “I’m not sure that the information that we get from this will be so valuable that the burden it puts on taxpayers is justified.” To its credit, the agency appears to recognize what an enormous burden this would be and is pursuing ways to mitigate it, such as exempting certain credit or debit card purchases.
Community pharmacists who want to stop this requirement well ahead of 2012 can contact their Member of Congress and urge them to support S. 3578 in the Senate and H.R. 5141 in the House. To get started click here for the NCPA Legislative Action Center.