The Small Business Jobs and Credit Act Will Kill American Jobs
By Boogai staff writer
Since so many Americans are referencing this article, we added an update and decided to let it stay as our top story for a few more days.
“Scoring a prized political victory five weeks before the Nov. 2 elections, President Barack Obama on Monday signed a bill to help small businesses expand and hire by cutting their taxes and creating a $30 billion loan fund,” wrote AP reporter Darlene Superville about the newly passed Small Business Jobs and Credit Act.
Darlene didn’t read the fine print; if she had then she would have realized that the political victory amounts to 15 seconds of fame. Why? This bill increases the fines for not properly filing 1099 forms upwards to $1.5 million. Yes you read that correctly— $1.5 million.
The Patient Protection and Affordable Care Act, known as ObamaCare, was signed into law this year over much hubbub and added a paperwork nightmare for an estimated 40 million taxpayers who employ almost 70 million Americans. To say that this act will cost jobs is an understatement.
The current 1099 regulations require the reporting of earnings to the IRS on workers that make more than $600 in a calendar year but aren’t considered an employee of that company. Usually, these are given to contract workers that intermittently perform small jobs for a company.
Most small-business owners file about 10 of these 1099s a year without much fanfare or thought about the process or cost. This will change come Jan. 1, 2012 when the new ObamaCare 1099 provision comes into full force. It’s at this time that your small-business owner will be required to fill out a 1099 not just for contract laborers, but also for any person, company, or entity from whom they purchased more than $600 in goods or services in a calendar year. Experts agree that most small businesses will now be required to fill out more than 200 1099s on average each year and are required by law to send one to the vendor and the IRS.
This will cost the small-business owner thousands of dollars in record keeping and accounting fees to ensure compliance. The real cost will be the newly increased fines this Small Business lending bill will now charge for failure to file a 1099 for each vendor or improper completion of the form.
The Small Business Jobs and Credit Act of 2010 contains within it new penalties imposed on the small business dreamer by their elected representatives.
If a 1099 is filed incorrectly, a fine up to $100 is assessed for each occurrence. The maximum aggregate penalty was $250,000; this bill raises it to $1.5 million. If you don’t fill out a 1099 for every vendor, then a fine of $250 per occurrence is imposed.
One doesn’t have to look that deep into the current anti-business Congress to realize that beyond the scope of increasing tax revenue, they hope to increase revenue through fines as well.
Imagine that art student who sells a few thousand dollars in paintings a year having to keep up with how much he purchased from his local art shop. How much he paid in commissions to stores. The power bill, water, Internet, cell phone, office supplies, fuel for his car, mechanical work, rent, and the list goes on. Each vendor that is paid more than $600 in a calendar year is required to receive a 1099 from that art student. If one is filled out incorrectly, then a fine is imposed.
This is an all-out assault on every small-business owner in America and was voted for by all of the current Democrat Senators in Congress. If every small-business in America missed just one 1099 it would generate an estimated $10 billion in revenue to the government every year.
In a recent study by the Small Business Administration, it was found that during a 15-year period small businesses were responsible for generating 65 percent of all new net jobs. With unemployment inching toward 10 percent, one would hope that those in Congress would create policies to help the greatest job-creating machine in America be successful.
Here, again, we see the media hype over a bill that the Democrats and President Obama sign into office. However, when the layers are peeled back, the bill that seems to be good for small businesses on the cover, really creates horrific long-term consequences.
Who’s to blame?
Harry Reid is directly responsible for both the 1099 provision and the increased penalties for 40 million small-business owners in America. So I looked to see if small-business owners in Nevada actually endorsed Harry Reid. I was shocked to see that some actually do support him.
Harry Reid supported every tax increase that President Obama has signed into law. Those small-business owners who support Sen. Reid should realize that every time the federal government increases taxes on their customers, those customers have less to spend at their establishments. I know that this is high-level economics, but one would assume that a small-business dreamer would see this as a bad thing.
The tax increases that Reid pushed into law immediately created a budget cut to every county and city in Nevada. In January, the Bush tax cuts will expire, and Harry Reid refuses to call a vote on this matter. This expiration will cost the governments in Nevada billions in lost revenue. When an income tax is increased on citizens, it reduces what those citizens are able to spend. Since the majority of taxes come from sales taxes, it is easily understood that if citizens have less to spend, then less is taxed.
Why would any Nevada resident who is experiencing a 14.9 percent unemployment rate vote for a senator who is voting to reduce cash flow by billions from his own state? Why would any small-business owner vote for a senator who not only voted for a historical regulation of massive proportions but was instrumental in creating this regulation? Why would any Nevada mayor, city councilperson, educator, or other government worker vote for a senator who created legislation to reduce sales tax revenue from their citizens, further exasperating the fiscal problems of their budgets?
I hope American’s can read through the fine print and vote to bring real change this November.
UPDATE - This new penalty also comes with a provision to index for inflation. Every 5th year the fines must increase to match the rise in inflation. When it comes to taxes, Harry Reid does not index for inflation, helping to ensure more American’s will have to pay it each year.
Please tweet this article and pass it on . We need to educate the small-business owners of America about this impending disaster.
Boogai.net published a booklet to help educate Americans about these simple economic principles. Until we have an informed electorate, we will never secure our liberties. www.boogai.net/no-more-secrets/
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The Small Business Lending Act included the below fines for not properly filing the new 1099 regulations found in Obamacare.
SEC. 2102. INCREASE IN INFORMATION RETURN PENALTIES.
(a) Failure To File Correct Information Returns-
(1) IN GENERAL- Subsections (a)(1), (b)(1)(A), and (b)(2)(A) of section 6721 of the Internal Revenue Code of 1986 are each amended by striking ‘$50’ and inserting ‘$100’.
(2) AGGREGATE ANNUAL LIMITATION- Subsections (a)(1), (d)(1)(A), and (e)(3)(A) of section 6721 of such Code are each amended by striking ‘$250,000’ and inserting ‘$1,500,000’.
(b) Reduction Where Correction Within 30 Days-
(1) IN GENERAL- Subparagraph (A) of section 6721(b)(1) of the Internal Revenue Code of 1986 is amended by striking ‘$15’ and inserting ‘$30’.
(2) AGGREGATE ANNUAL LIMITATION- Subsections (b)(1)(B) and (d)(1)(B) of section 6721 of such Code are each amended by striking ‘$75,000’ and inserting ‘$250,000’.
(c) Reduction Where Correction on or Before August 1-
(1) IN GENERAL- Subparagraph (A) of section 6721(b)(2) of the Internal Revenue Code of 1986 is amended by striking ‘$30’ and inserting ‘$60’.
(2) AGGREGATE ANNUAL LIMITATION- Subsections (b)(2)(B) and (d)(1)(C) of section 6721 of such Code are each amended by striking ‘$150,000’ and inserting ‘$500,000’.
(d) Aggregate Annual Limitations for Persons With Gross Receipts of Not More Than $5,000,000-
(1) IN GENERAL- Paragraph (1) of section 6721(d) of the Internal Revenue Code of 1986 is amended–
(A) by striking ‘$100,000’ in subparagraph (A) and inserting ‘$500,000’,
(B) by striking ‘$25,000’ in subparagraph (B) and inserting ‘$75,000’, and
(C) by striking ‘$50,000’ in subparagraph (C) and inserting ‘$200,000’.
(2) TECHNICAL AMENDMENT- Paragraph (1) of section 6721(d) of such Code is amended by striking ‘such taxable year’ and inserting ‘such calendar year’.
(e) Penalty in Case of Intentional Disregard- Paragraph (2) of section 6721(e) of the Internal Revenue Code of 1986 is amended by striking ‘$100’ and inserting ‘$250’.
(f) Adjustment for Inflation- Section 6721 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
‘(f) Adjustment for Inflation-
‘(1) IN GENERAL- For each fifth calendar year beginning after 2012, each of the dollar amounts under subsections (a), (b), (d) (other than paragraph (2)(A) thereof), and (e) shall be increased by such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) determined by substituting ‘calendar year 2011’ for ‘calendar year 1992’ in subparagraph (B) thereof.