Monday, June 14, 2010

Slow Burn at Stokes McMillan Antunez

Word is getting around on the burdens imposed on businesses (even the small ones like ours) by the Obamacare measures. Among them, Section 9006(b)(1) of the new healthcare law, which requires that all businesses submit a 1099 tax form for every vendor from whom they purchase more than $600 in goods and services each year.

Not only will the firm have to issue a great many more of these forms. (By "the firm" I mean Carol, who wears many hats: VP finance, payroll specialist, purchasing agent, firm benefits manager, IT expert - for that matter all things dealing with firm management and administration other than personnel, on which she gets help from Nancy.) The firm (as defined) must get tax ID numbers from all the vendors. It already takes "the firm" a day and a half each year to ready these things. Now it will probably take three days or more, plus the addition and integration of more software.

Consider also the additional burden on the government, not only from processing these bits of paper, but also creating the extra enforcement capability to make the reporting useful. But it's OK, because the government can just hire more federal workers.

Maybe there will be a net gain for the deficit, that is, maybe there will be something left over after the extra costs to the government are deducted from the additional tax revenues (if any). But I doubt it will be worth the economic costs to private businesses. The extra costs to private businesses will, of course, itself reduce tax revenues. The best we can probably hope for is a wash.

This is what happens when we send to Congress men and women who, mostly, never ran a private business and when people who do run businesses fail to pay attention to what the government is doing.

The tax reporting burden is in addition to what is happening to our health-care benefits, which have been generous for a firm our size from the beginning. (Remember that our "law firm" has just 4 lawyers; the other 8 or so of us are non-lawyers, ranging from the receptionist to the senior paralegal.) But the health-care benefits issue is for another post. I will mention that Carol has attended nearly two days of seminars/webinars presented by our insurance broker Brown & Brown on that particular subject during the last two months. Needless to say, the news is not good on that front either.

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