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Tax Help News: Learn Your New Tax Obligations With Obama’s Health Care Reform
By Michael Rozbruch | September 2, 2010
You may be wondering along with many others exactly what is and what is not in the Patient Protection and Affordable Care Act — also known as President Barack Obama’s health care reform.
Aside from the confusion surrounding the bill, I would emphasize that there is a significant change to the way you do business and pay your taxes that’s worth examining.
Basically, the U.S. Congress used the Patient Protection and Affordable Care Act to legislate a new tax-reporting requirement for companies. This means if your business purchases goods or services valued at more than $600 from any other company or entity, you will be required to report the expenditure to the IRS and the vendor by using a Form 990-MISC. More work for you and more work for the IRS.
What’s bothersome about this new requirement, which will be in effect for purchases made in 2012, is that it forces companies to snitch on their vendors, informing the IRS of revenue streams as tiny as $600. So consider the practicality of this law: Do your have the time, and does your business have the resources, to file forms for each and every vendor to whom you pay $600 or more every year? The American Institute of Certified Public Accountants is betting the answer is no.
In July letters to the U.S. Senate and House of Representatives, Alan Einhorn, chairman of AICPA’s Tax Executive Committee, asked the government to repeal this new requirement. “This expansion of information reporting may prove to be so burdensome to small businesses that we believe it will significantly contribute to hurdles to growth and formation that businesses face,” Einhorn wrote.
The logic behind this requirement is straight-forward enough: Companies will have difficulty underreporting income if all transactions above $600 are reported to the IRS.
But with companies receiving hundreds, if not thousands, of 990 forms every year, how can the reporting requirement work effectively when it’s surrounded by a new paperwork tsunami? In his letter, Einhorn described any annual reconciliation process as “mind numbing.”
Given the budget crunch the federal government faces, it’s not shocking Congress is looking to close that tax gap. But a policy such as this one — which is not only impractical but also pits businesses against their clients — has the potential to overburden U.S. companies at the same time these companies are struggling in an ailing economy.
So how does this affect you? As a business owner, you must prepare yourself for your new tax-reporting obligations. New tax requirements means more ways in which the IRS can penalize you for failure to report cash flow. Arm yourself with the knowledge of what you must do in order to protect the well-being of your business. If you need tax help from a tax attorney or Certified Tax Resolution Specialist, act now before your business becomes over-burdened with tax problems.
At Tax Resolution Services, Co. we are dedicated to providing affordable tax help to businesses and individuals alike who find themselves in trouble with the IRS. For more information or to receive a FREE tax relief consultation, visit www.TaxResolution.com or call (888) 259-1516.
Topics: IRS tax relief, hiring a tax attorney or Certified Tax Resolution Specialist, tax attorney, tax help | No Comments »