NCPA - National Center for Policy Analysis


July 9, 2010

A new report by the National Taxpayer Advocate, which acts as an ombudsman within the Internal Revenue Service (IRS), has warned in a report to Congress that the agency is currently ill-equipped to handle the implementation of the new national health care law and that the legislation will place severe burdens on businesses. 

"I have no doubt the IRS is capable of administering social programs, including health care," advocate Nina Olson said in a press release.  "But Congress must provide sufficient funding and the IRS itself must recognize that the skills and training required to administer social benefit programs are very different from the skills and training that employees of an enforcement agency typically possess." 

In addition, the report expresses concern that a new reporting requirement contained in the Patient Protection and Affordable Care Act may impose significant compliance burdens on businesses, charities and government agencies: 

  • Beginning in 2012, all businesses, tax-exempt organizations, and federal, state and local government entities will be required to issue Forms 1099 to vendors from whom they purchase goods totaling $600 or more during a calendar year.
  • To meet this requirement, these businesses and entities will have to keep track of all purchases they make by vendor.
  • For example, if a self-employed individual makes numerous small purchases from an office supply store during a calendar year that total at least $600, the individual must issue a Form 1099 to the vendor and the IRS showing the exact amount of total purchases.  

The provision will have broad reach.  According to a 2009 analysis of IRS data by the American Spectator: 

  • About 40 million businesses and other entities will be subject to the new requirement, including roughly 26 million nonfarm sole proprietorships, four million S corporations, two million C corporations, three million partnerships, two million farming businesses, one million charities and other tax-exempt organizations, and more than 100,000 government entities.
  • All of these nearly 40 million businesses and other entities are subject to the new reporting requirement.  

Source: Philip Klein, "IRS Ombudsman Says ObamaCare Compliance to Impose "Significant" Burdens on Businesses," American Spectator Blog, July 8, 2010. 

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