One aspect of the health care reform bill’s passage has little to do with health–unless, of course, you count headaches. The bill contains a requirement that, beginning in 2012, all businesses must file tax forms for every vendor from whom they buy more than $600 in goods.
Already required to report all purchases of services in excess of $600, businesses must now track what they spend on goods as well. The uproar over the provision is growing as more groups realize how onerous a burden it will be. The provision applies to some 38 million businesses, tax-exempt organizations, and charities, but will hit small businesses and smaller organizations particularly hard. Many small purchases over the course of a year will now have to be tracked lest they exceed $600. Not only that, but businesses must also include vendors’ tax identification numbers in the paperwork they file.
Efforts to change the requirement so far have failed. Democrats and Republicans cannot agree on how to replace the revenue the provision is supposed to raise – estimated at $19 billion over the next ten years. The latest effort took place on Friday, July 30, as a Democratic bill proposing to eliminate the requirement and pay for it by raising taxes on international corporations and limiting the use of special trusts to avoid gift taxes went down to defeat. Republicans want to replace the revenue by taking it from other areas of the already-passed health care law.
Transactions paid for by credit cards, by the way, are so far exempt from the reporting requirement, since they will be reported by credit card payment processors. However, using credit cards is not the answer, say business groups, since many vendors refuse credit cards to avoid the fees they must pay banks on each transaction.
Read a story about small businesses and healthcare reform from the archives of InvesmentAdvisor.com.