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If you are a 1099 contractor or even incorporated, this will affect you. This is one of the consequences for voting for big government liberals. Remember this in November. Original article from http://www.cato-at-liberty.org/2010/04/26/costly-irs-mandate-slipped-into-health-bill. Posted by Chris Edwards Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly. A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare. Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress. In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules: The 2010 Health Care Act adds “amounts in consideration for property” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and “gross proceeds” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term “payments” includes gross proceeds paid in consideration for property or services.
Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS. Tax CPA Chris Hesse of LeMaster Daniels tells me: Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.
There appears to have been little discussion before this damaging mandate was slipped into the health bill and rammed through Congress, but a few business groups did raise concerns. Here’s what the Air Conditioner Contractors of America said: The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services. In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.
Private transactions are the core of a market economy, and the source of America’s growth and prosperity. Now the federal government is imposing a vast new web of red tape on perhaps billions of these growth-generating private exchanges. For what purpose? So the spendthrift Congress can shake a few extra bucks out of private industry? The business sector is the generator of America’s high living standards, but most federal legislators just see it as a kitty to be raided or a cow to be milked dry. I’m stunned that there wasn’t a broader debate before such a costly mandate was enacted. If it goes into effect, it will waste vast quantities of human effort in filling out forms, reworking computer systems, collecting and organizing data, and fighting the IRS. The struggling American economy can’t afford anymore suffocating tax regulations. This mandate is a giant deadweight loss. It should be repealed. |
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The Emperor’s New Clothes by Hans Christian Anderson is about an emperor who hires two swindlers to create a new suit. The emperor presides over a kingdom of prosperity and peace and is pretty concerned about appearances. The swindlers manage to sell him a new suit of invisible material that they claim is visible only to those worthy to lay eyes upon him. Once it is “finished” they drape him in pantomime and he proceeds to swagger naked amongst his minions only to called out by a child who says “the emperor has no clothes!” The moral of the story is that none of his loyal inner circle bothered to tell him he was naked. It had to be a kid on the street who didn’t have anything to lose to point out his folly.
In today’s age, the fable is a metaphor for those in HR who are unwilling to state an obvious truth to a higher up out of fear of appearing stupid, sacrilegious, or politically “incorrect.” They would sooner let a company’s reputation stick out buck naked than tell the truth about the company culture and reputation. This is co-dependency with a superior who wants Yes-men, not accountable partners.
I arrived at this observation because I am always struck by the stark difference between what companies think their employees think about them and what they tell me when I interview them. I also am always shocked about what those employees will say on Twitter, Vault, and any other number of “pink slip” sites about these top-rated employers. I wonder if anyone in competitive intelligence, PR, marketing, or HR ever reads about the fallout of bad managers making bad decisions, including furloughs, reduced hours, wearing double hats, etc. When did having a bad reputation not count?
I’ll give you an example of something that happened to me at Wal-Mart. I haven’t recruited for Wal-Mart. Last week I watched a show on the Discovery Channel about Wal-Mart’s Super Store operations. They have onboarding sessions and songs that everyone sings that promote team spirit at Wal-Mart. They showed the droves of people who drove for miles to work there. Right after I watched the show, my iPod had to be replaced. Since I was too lazy to go to the Apple store, and I wanted it right now, I went to Wal-Mart. While I was standing at the counter trying to get this chick to hand me the iPod, she turns her back to me and starts complaining about her hours being reduced to another guy who is complaining about his benefits. I finally interrupted them and asked her to please hand me the iPod and take my money. I got home, got down to my iTunes work, and opened up my gmail account, and there was an email about boycotting Wal-Mart on account of some hideous thing that it did to bust a union. In the course of one week, I had some serious employment brand material in my consciousness.
What is interesting about the TV show, the store experience, the e-mail, and the press about Wal-Mart is that there is a level of chatter about its brand that is beyond their control. Wal-Mart feels it is well on the way to rehabilitating its image through a new logo and green Super Stores; yet, that doesn’t match my personal experience in that week. What can it do about Twitter, e-mail chains, at the store, in the news, and across the Thanksgiving dinner table, especially if one incident adds fuel to the fire?
I chose Wal-Mart because well, that happened to me last week, and that is a fairly large target. I won’t be the first one to raise this reputation issue about them. Frankly, it probably doesn’t matter what people think about its “employee” brand because they employ groups of people who have limited choices and who presumably grow in faster and larger numbers than let’s say, semiconductor design engineers with PhDs. What is interesting is when all of those things collide and affect more vulnerable brands.
The war for top talent is going to get fought and influenced by Twitter, Vault, users groups, and former employees. And in a country like the U.S. where services and design are the only real place where job growth is, people know each other. Maybe some companies should consider cutting down spend on money for logos and Superbowl ads, and treat people better. |
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Two labor-related reports this week offer no evidence that the recession Wall Street believes is over really is, at least so far as workers are concerned.
The Conference Board’s monthly Help-Wanted OnLine Data Series reported that online job postings dropped by 83,000 in October. The number of newly posted jobs dropped by 24,000.
“The September and October numbers are a further indication that, thus far, the recovery is weak,” says Gad Levanon, senior economist at The Conference Board. “Labor demand is a leading indicator of employment, and the numbers indicate that employment is not likely to rise for the rest of this year.”
That’s bad news for the nation’s 15 million unemployed workers, whose numbers are only expected to swell when the official government report for October is released Friday. One survey of labor economists predicts the U.S. Bureau of Labor Statistics will report that 175,000 jobs disappeared during the month. Another survey predicts the number will be closer to 150,000. Either way, the unemployment rate, 9.8 percent in September, is also expected to rise.
Only a few days old and the beginning of the seasonal hiring slowdown anyway, November is starting off with news of a layoff of 8,000 workers by Johnson & Johnson. The pharmaceutical company said its layoff of between 6 and 7 percent of its global workforce will save it $800-$900 million.
Despite some positive manufacturing and economic news in the last several days, workers are still struggling to find work.
A report from job board operator Beyond.com says 47 percent of the job seekers to its 15,000+ websites reported being recently laid off. Another 22 percent said they are looking because they are unsatisfied or insecure in their current job.
Of the job seekers responding to the quarterly survey on the Beyond.com network, 7.7 percent said they have been looking for a year or more. That’s a 20 percent increase from the previous quarter (April-June 2009) when 6.43 percent reported their job search was taking longer than a year.
The Beyond.com report doesn’t provide numbers or a more detailed breakdown, so it’s not possible to say how many of those are unemployed. However, the BLS September report said that among the unemployed, 35.6 percent were out of work more than 27 weeks, about the time when unemployment benefits begin to run out.
On the Beyond.com network, two-thirds of the job seekers posting resumes had five or more years of experience. The biggest percentage jump in candidates from the second to the third quarters has been among those with 21 years or more experience, suggesting older workers are having a tougher time getting reemployed. No surprise, at least on the Beyond network, where 76 percent of the job postings were for positions requiring less than a year experience. That’s up from the 55 percent recorded in the previous quarter.
Tomorrow, Monster releases its monthly employment index. It’s been stagnant since the beginning of the year, rising a little, then falling back. In September the index was at 119. In September of 2008 it was at 160.
To add to the doldrums, the Consumer Confidence Index released last week by The Conference Board for October was 47.7, down from September’s revised 53.4. |
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Lies, Damned Lies, and Statistics
The economy grew 3.5% in the last quarter, signaling a definite end to the recession and the start of a recovery. That’s great news, but look closer and it doesn’t seem that there’s much to celebrate yet. Six-tenths of a percent came from spending by the federal government and another 2.2% from residential construction and auto purchases. The latter number is directly linked to the cash-for-clunkers and the housing credit. That leaves only 0.7% from private industry. This is why we’re not seeing any growth in jobs. The economy is growing because it’s being propped up by taxpayers (and the Central Bank of China) instead of by real growth in GDP. In some places this is known as a ponzi scheme.
The government claimed this past week that the stimulus package has added 650,000 jobs so far. Well, to be precise, “created or saved” that many jobs.
Jobs have been added, but just how many have been “saved” is another matter. There’s no doubt that spending on jobs has a multiplier effect; the money earned by a nurse at a hospital funded by the stimulus may go to saving the job of the mechanic at the auto repair shop where she has her car worked on. But that connection is impossible to make with any degree of precision. When it comes to estimating the number of jobs saved, the White House’s estimate is as good as yours or mine. And it’s likely that any estimate of jobs saved — since there’s no way to dispute it — is an optimistic reading of the numbers. If you’re going to make things up, then why hold back?
The fact remains that the economy has shed an average of 400,000 jobs per month since the beginning of the year. That rate of decline has slowed, and shows signs of continuing to slow even more, but it’s still a net loss. Economists predict that unemployment will start to drop in February, reaching 9.4% by the end of 2010.
Light at the End of the Tunnel
Despite all the bad news, there are signs that the situation will genuinely get better on the jobs front. Numbers from the U.S. Commerce Department show that exports and investment in equipment are both growing aggressively. That will continue since the dollar remains weak and the economies of India and China are showing significant growth. Construction and related industries will also continue to grow, with or without further tax credits, as the inventory of housing is at its lowest point in 30 years.
2010 is an election year, and nothing focuses the mind of the political class as the prospect of an election that may not go well. So programs like a tax credit for hiring are very likely to pass soon. Unfortunately, having politicians determined to do something can often mean a lot of very bad ideas being implemented. There are already rumblings about a second (or third) stimulus, which will only distort long-term growth prospects further. Recent earnings reports from companies show that plenty of them are back in the black and in a position to make new hires. Lighting a fire under them with a tax credit for new hires is one thing; piling on costs and subsidies for new projects that will undoubtedly result in new taxes on them is another.
Some things are almost always a lie: the check is in the mail; I’ll respect you in the morning; and I’m with the government and I’m here to help. Let’s hope we don’t get reminded of that yet again. |
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The British newspaper whose job board was hacked over the weekend is advising the half-million users whose information may have been accessed to buy identity insurance and notify credit reporting agencies. An indignant Twitter post by one of those whose account with The Guardian jobs site was compromised says she received an email from the newspaper advising her of the illegal access and suggesting she subscribe to an identity protection service. “got the guardian hack email – they suggest I buy identity fraud protection services. Hang on, who let people steal my information?” reads the tweet by Joelle Nebbe-Mornod, a technology consultant and former CTO now in the U.K. The site itself gives no hint of the hack, until you scroll almost to the bottom of the home page where, under a heading of Workplace News, there is a short item headlined: Guardian jobs site – Security Breach. It links to a page of more detailed information.
There, The Guardian reports that the site is now secure and adds, “It is clear that only a minority of Guardian Jobs users are at risk. Some of the data which appears to have been stolen is up to two years old. We have emailed the approximately half a million users whose data may have been compromised. This is out of the total of 10,328,290 unique users the site has per calendar year. The USA jobs site has not been affected.” In an FAQ, The Guardian recommends users whose accounts were compromised obtain fraud protection at their own expense. “The Guardian, in common with our users is also a victim of this crime and we deeply regret that this breach has occurred. We believe our technology and security measures were more than compliant but regrettably the threat from criminal hackers is continually evolving. Whilst our investigation is continuing we suggest that each individual should decide whether to follow the guidance recommended by the police and meet any associated costs.” The Guardian’s British site is powered by Madgex Job Board Software. The U.S. job site is run by Indeed.com. The Guardian says that no personal accounts were accessed, but other, potentially sensitive, information was. “Job application data, material such as covering letters, and CVs. We have no reason to believe that any financial or bank data was compromised in this incident.” Police are investigating the access. No technical details have been released, however some technical publications have offered possible methods. This is the second major security breach of a British job board this year. Monster’s UK site was hacked in January and some 4.5 million records were stolen. Source: http://www.ere.net/2009/10/27/hacked-job-board-tells-victims-to-pay-for-protection-themselves/ |
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