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Nancy Pelosi Will Have You Know That She Wasn’t Responsible for the New 1099 Requirement Sneaking into Healthcare Reform

“One item that I think we all agree on that was in the Senate bill, not in the House bill, but became part of the law was 1099, which affects small businesses and small contractors and how they report their transactions. They know what it means, and they know they’d like to see it go. I think that’s probably the first place we could go together.”

~ The soon-to-be former Speaker of the House is willing to talk about this one.

The 1099 Party Is Still on for 2012

If the GOP took the “think of all the trees you’re killing” angle, maybe they could have convinced more Democrats to kill the 1099 free-for-all. Unfortunately, they stuck to the usual “red tape is un-American and stealing our freedom” narrative and it didn’t impress.

Senate Democrats defeated an attempt by Republicans to lift a tax-reporting requirement that small businesses face in a move that would have stripped away $17 billion earmarked to help pay for the sweeping health-care law.

In a 46-52 vote, the majority overcame an effort by Senate Republicans to scrap the reporting requirement which was inserted to the health-care legislation that was signed into law by President Barack Obama earlier this year.

The Republicans would have needed 60 ‘yes’ votes to be successful. Seven Democrats sided with the Republicans to support removing the requirement.

The Republican effort was led by Sen. Mike Johanns (R., Neb.), who has argued it is simply piling on unnecessary red tape on small-business owners at the same time as the federal government looks to them to lead the job-creation recovery.

The rule requires businesses to report to the Internal Revenue Service payments to suppliers and service providers that exceed $600 in a single year. It is set to be implemented in 2012.

Senate Defeats GOP Bid to Lift Tax-Reporting Rule [WSJ]

Regulatory Uncertainty Leaves Small Businesses Reluctant to Hire

I know of only one small business owner who has confidently added staff throughout the recession and that’s only because A) he’s really cocky (in the best way, of course) and B) he absolutely needed to in order to survive. Lucky for him he ended up in a fairly recession-proof business and in fact, the recession has been kind as it has driven all sorts of new business to him as the unemployed and jaded look for new career options. But he’s a fluke success and not all small business owners can say they’ve weathered the last two years as well as he has.

Dallas Fed President Richard Fisher and former St Louis Fed President William Poole both feel the hiring problem is based not on the fact that businesses can’t afford it but because business owners are too unsure of the regulatory environment to confidently add staff. I am going to have to agree with them on this one.


Said Fisher in a recent speech:

For some time now in internal discussions with my colleagues at the Fed, I have ascribed the economy’s slow growth pathology to what I call “random refereeing”—the current predilection of government to rewrite the rules in the middle of the game of recovery. Businesses and consumers are being confronted with so many potential changes in the taxes and regulations that govern their behavior that they are uncertain about how to proceed downfield. Awaiting clearer signals from the referees that are the nation’s fiscal authorities and regulators, they have gone into a defensive crouch.

Case in point, Obamacare’s insidious 1099 requirement that we’ve covered plenty up to this point and will continue to cover so long as it threatens to cripple businesses with unnecessary busywork. The House had a chance to kick the requirement in the balls last with with the Small Business Paperwork Mandate Elimination Act (H.R.5141) but failed to pass it, leaving us right back where we were*.

Business owners – and small business owners in particular as they tend to have less capital and fewer chances to “warehouse” out their employee insurance needs in bulk – are understandably reluctant to plug more money into the economy if they are unsure as to how much it’s going to cost just to hire on new staff. Many businesses could hire at this point but have chosen not to simply because they have no idea what sort of financial impact hiring will have on them in the future once new rules are fully written out and implemented.

Seems a bit counterproductive when we’re trying to claw our way out a recession, doesn’t it?

*Full Disclosure: JDA is long Caterpillar at this point in anticipation of the number of bulldozers that will be required just to keep up with the 1099 goodness. How is this helping the economy heal again?

Accounting News Roundup: PwC Chips in $12.5 Million for J.P. Morgan’s FSA Fine; IRS Not Returning to Austin Crash Site; Senate Working on Proposal to Scale Back 1099 Requirements | 08.09.10

PwC To Provide Up To $12.5M To JPMorgan For FSA Fine [Dow Jones]
“J.P. Morgan Chase & Co. (JPM) disclosed in a regulatory filing Friday that PricewaterhouseCoopers LLP agreed to provide up to an aggregate of $12.5 million to the bank related to a fine J.P. Morgan had to pay to the U.K. Financial Services Authority.”

Late Ponzi schemer’s accountant surrenders license [Nashville Business Journal]
This accountant managed to surrender his CPA in just under four months for his role in a Ponzi scheme. Dave Friehling had to be stripped of his license nearly 9 months after pleading guilty. NY DoE should get with Tennessee and see how they do things.

IRS to stay at new Austin site after plane crash [AP]
“An Internal Revenue Service office will not return to the Texas building where a tax protester killed himself by crashing his plane into the structure.

IRS spokeswoman Lea Crusberg said Thursday that the agency has signed a two-year lease on another office space in Austin. She declined to identify the location.”


Senate Democrats Propose Scaling Back IRS Reporting Law [WSJ]
“The Nelson proposal would exempt from the reporting rules firms with fewer than 25 employees. For larger businesses, it would require information returns only in cases where payments to a single vendor exceeded $5,000 in a given year—down from $600 in the health-care law.”

Richtermeyer to Chair Management Accountants [Web CPA]
“The Institute of Management Accountants has named accounting professor Sandra Richtermeyer as the chair of its board of directors for the 2010-2011 fiscal year.

Richtermeyer, who also chairs the Department of Accountancy in the Williams College of Business at Xavier University in Cincinnati, is only the fourth woman ever to hold the position of IMA chair since the organization’s inception in 1919.”

BKD looks to grow health care practice with purchase of Grant Thornton team [Wichita Business Journal (partial subscription required)]
According to the message sent from Stephen Chipman, that we reported on at the end of July, this is the final transition that Grant Thornton will be making. What happens from here is anyone’s guess.

Accounting News Roundup: 1099 Reporting Is the Latest Political Football; Financial Reporting Overhaul in the Works?; Zynga’s CFO Hire Spurs IPO Talk | 08.02.10

Parties Play Politics With Unpopular Tax Measure [WSJ]
The new 1099 reporting requia bit of belly aching to point of many groups asking for a repeal. Too bad the members of Congress are the ones with the power to actually make something happen:

“The House rejected a bill Friday that would have repealed the provision. The two parties disagreed on how to make up the lost revenue.

‘This foolish policy hammers our business community when we should be supporting their job growth,’ Sen. Mike Johanns of Nebraska said in the Republicans’ weekly radio and Internet address Saturday. ‘It’s only one example of how the administration’s promise to support small businesses really rings hollow.’

Democrats blamed Republicans for Friday’s failure.

‘Despite all of their rhetoric about the need to eliminate this reporting requirement, Republicans walked away from small businesses when it mattered most,’ said Rep. Sander Levin (D-Mich.), chairman of the House Ways and Means Committee.”

FASB Alumnus Trashes GAAP (and IFRS) [The Accounting Onion]
“I suspect that the folks being paid the big bucks to make the tough calls on accounting standards don’t pay a lot of attention to to the likes of Tom Whatshisname, even were I to announce that the sky is falling. But, I don’t take it personally. Over the past 40 years, any PhD not drawing a salary from the Big Four has been viewed with more suspicion than respect by the standard setting establishment.

I mention all of this now, because there is a new voice, whose credibility and qualifications cannot be so easily dismissed. That voice belongs to FASB alumnus David Mosso, who has written an 80-page monograph entitled Early Warning and Quick Response: Accounting in the Twenty-First Century). If you don’t want to believe me, take it from him: GAAP is broken.”

Group formed to overhaul financial reporting [Accountancy Age]
Meanwhile: “A project to overhaul company reporting has been launched by a high level group of accountants, businesses, regulators and market participants.

The International Integrated Reporting Committee will look at the wider concerns about financial reporting, in terms of addressing risk, and presenting a clearer and broader picture of companies’ performance, including governance and environmental issues.”


Goldman Details Its Valuations With AIG [WSJ]
“How did Goldman come up with the mortgage-securities prices it used to extract cash from AIG?”

Before There Can Be An IPO, First Comes A New CFO For Zynga [Tech Crunch]
Dave Wehner comes in from Allen & Co. taking the spot of Mark Vranesh who is becoming Chief Accounting Officer. What does all this mean? First, it gives most MSM outlets a day or two worth of stories about when Zynga will go public but mostly it means the business of Farmville, no matter how you hate it, is serious business.

Facebook Would-Be Owner Says He Owes His Claim to Arrest [Bloomberg]
“Paul Ceglia, who claims in a lawsuit that he owns 84 percent of Facebook Inc., said his case wouldn’t have been possible if state troopers hadn’t come to his house in October to arrest him for fraud.”

Forced Employee Engagement and the Overworked Employee [The Exuberant Accountant]
“In my many interactions with business owners, I have heard some speak of employees as being ‘lucky to still have a job.’ While that may be true, thinking (and acting) in such a manner is very short sighted.”

Twitter, Facebook, LinkedIn? [AccMan]
Got business model?

The AICPA Goes to Bat for Small Business; Requests Repeal of Expanded 1099 Reporting

In these pages last week, we brought up the expanded 1099 reporting requirements that could possibly bury some small busineocumentation. The question remains, how big is this pile? Will it require a shovel to dig out of the pile of paper or a bulldozer?

Based on the AICPA’s letter to the U.S. Senate that made the rounds yesterday, it will require a team of angry Ohioans – all with their own dozer – to unbury small business owners.


Alan Einhorn, the Chair of the AICPA’s Tax Executive Committee wrote the letter and in extremely tactful terms, expresses his discontent, “[W]e believe section 9006 of the Act should be repealed because the provision imposes extremely burdensome information reporting requirements on business taxpayers that cannot be justified in terms of the limited utility such information reports will provide to government.”

Adrienne boils that down in a less tactful manner, “You don’t have to be a CPA to see why this is a completely moronic idea. What happened to paperwork reduction? I love the use of ‘extremely burdensome’ – as most of you probably know, it’s got to be REALLY annoying to get the accountants to bust out the ‘extremely’ in a complaint.”

She makes a good point. Not to get all English-y on you but the adverb “extremely” doesn’t exactly make it a more effective sentence. Alan was clearly going for exaggeration in order to get his point across that this portion of the Patient Protection and Affordable Care Act is the most useless section of the entire act. And for some of you, that’s really saying something.

AICPA Letter to Congress Supporting Repeal of Expanded 1099 Reporting by Businesses

How Big of a Burden Will the New 1099 Reporting Requirements Be for Small Businesses?

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Slipped into the health care reform bill passed in March was a new tax reporting regulation likely to create a huge burden for businesses, something we wrote about recently. Now a government watchdog, the National Taxpayer Advocate, is questioning the rule’s potential unintended consequences for small companies.

Plus, it looks like the regulation won’t raise a heck of a lot of money anyway.


The rule would require anyone with business income to issue 1099 tax forms to all vendors from whom they bought more than $600 worth of goods and services that year.

In her report, Nina Olson, the Taxpayer Advocate, warned that the rule could prove to be an unacceptable added burden for small businesses, which would face a virtual cyclone of new paperwork to comply with the regulation. “The new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance,” she wrote. And the rule could also give an unfair advantage to large suppliers that have the resources to help customers track purchases.

What’s really going on here? The regulation, which would take effect in 2012, seems to be yet another attempt by federal and state government agencies to shore up revenues by cracking down on unpaid tax liabilities–and taking steps that intentionally or unintentionally impact small businesses in particular. For example, a bevy of agencies, plus Congress, are on a regulatory jihad against corporate misclassification of independent contractors. And there are reports that the IRS is especially eyeing small businesses in that crackdown.

Thing is, like that effort, the new 1099 tax reporting regulation isn’t likely to reap a whole lot of money. For example, the nonpartisan Joint Committee on Taxation recently estimated the rule would raise an underwhelming $2 billion annually in added revenue, according to CNNMoney.com.

Will the Taxpayer Advocate’s remarks have any effect? Even before Olson’s report, there were signs that the IRS had started to backtrack. For example, the IRS announced in May that the rule won’t include transactions made through credit and debit cards. As the tax agency addresses all the compliance complexities of the rule, it’s likely to make other changes, as well.

But with government agencies in desperate need of money, the reporting rule isn’t going to disappear completely.

1099s Are All Evidence We Need to Conclude That Tiger Paid for Sex

tiger_woods2.jpgBy now, we’re sure you’ve heard that Madam Michelle Braun has claimed that Tiger Woods not only paid $60k for sex but that both Holly Sampson and Jamie Jungers, two of T. Dubs [insert most recent number here] mistresses, were prosties for her.
It doesn’t sound like Tiger got down with either of the them while they were hooking for Braun (it was just regular throwing money around type stuff) but the Post does quote Braun about TW being a big fan of the ‘girl-on-girl’ action and ‘booze and sex bender[s].’
ANNNNNND they’ve got 1099s for both Sampson and Jungers. So does anyone doubt that the greatest golfer the world has ever known is basically the same as Eliot Spitzer? We’re sure convinced!
Seriously, if a madam goes to the trouble of filling out 1099s for non-employee compensation, we’ve got no reason to disbelieve anything she says.
You may now return to your regularly non-accounting related Tiger Woods coverage.
Woods ‘bought’ cathouse gals [NYP]
jungers_sampson_1099.pdf
Also see: Lesson Learned: Even Madams Pay Their Taxes [Tax Girl]

Today in Bad Decisions: Borrowing Money from Your Ex-Mother-in-Law

mother-in-law.jpgDo you have a mother-in-law? How well do you get along with her? Not good, huh? Whatever differences you may have, surely it’s not this bad:

When a former son-in-law in Illinois failed to settle an asserted loan by his ex-mother-in-law to her satisfaction, she gave up on collecting but issued a 1099-C reporting the amount as debt forgiveness income.
Ex-Son-in-Law took it badly, and fought back. He sued Ex-Mom, claiming that because she wasn’t required to issue a 1099-C, it was fraudulent for her to do so.

Borrowing money from your mother-in-law, let alone your ex-mother-in-law is not what we would consider a good life decision. Jesus, especially if you’re a deadbeat. We understand that times are tough but hey, next time around he’ll know.
So this guy is in a tough spot. Solution? Sue her for fraud, of course! The judge in the case said someone issuing an unnecessary 1099 did not constitute fraud so the son’s only remedy now is to argue that the contents of said 1099 were fraudulent. Good luck with that, man. You’re finished.
A Victory For Bitter Ex-Mother-In-Laws Everywhere [Tax Update Blog]