| Since the passing of the Patient Protection and | | | | There are some concerns about one of the tax |
| Affordable Care Act (PPACA) there has been a | | | | provisions that, if literally enforced, will increase |
| lot of noise about how all of this will impact small | | | | the bookkeeping burden for small businesses. The |
| business. For the most part, the noise consists of | | | | tax provision is one of those things that you just |
| warnings that it will hurt small business with very | | | | have to step back from and ask yourself, what in |
| little specific information about exactly how. For | | | | the!@*% were they thinking? In what many of us |
| the reasons explained below, the potential | | | | perceive to be a misguided effort to recover |
| negative impact on small business is probably | | | | some of the estimated $300 billion in unreported |
| greatly exaggerated. | | | | income tax each year, the new law will require |
| By addressing some of the problems currently | | | | that every expenditure of or to a small business |
| faced by individuals and by small business, the | | | | of $600 or more must be documented with the |
| benefits could outweigh the relatively few | | | | issuance of a 1099 form. This expands the |
| short-comings that have been identified so far. | | | | requirements of existing law in that corporations |
| We know that the lack of reasonably priced | | | | are now defined as "persons" to whom forms |
| healthcare to individuals and the exorbitant cost of | | | | 1099 must be issued; and sales of tangible items |
| providing decent healthcare plans to their | | | | must now be reported in addition to the existing |
| employees has hurt small businesses for years. | | | | requirements to report expenditures for services, |
| Many would-be entrepreneurs have been tied to | | | | rents and financial transactions. |
| their existing job with a large company because | | | | Okay, that's the bad news. The good news is that |
| they could not afford to lose the insurance | | | | as with everything else involving the Tax Code, |
| benefits for themselves or their family members | | | | the IRS gets to pretty much interpret the rules - |
| with expensive medical conditions. This has | | | | and the rules if strictly interpreted will greatly |
| prevented some people from taking the leap and | | | | increase the record keeping burden of the IRS. |
| starting their own business. And it has prevented | | | | That's why some observers believe the IRS will |
| highly skilled and potentially valuable employees | | | | ultimately take advantage of a loophole in the law |
| from coming to work for small businesses that | | | | that says: |
| could not afford to offer good healthcare plans. | | | | The Secretary may prescribe such regulations |
| By 2014, individuals with pre-existing conditions | | | | and other guidance as may be appropriate or |
| and who do not otherwise have insurance | | | | necessary to carry out the purposes of this |
| available to them through an employer will have | | | | section, including rules to prevent duplicative |
| access to insurance at the same rates as healthy | | | | reporting of transactions. (emphasis mine) |
| individuals in the same market. Small businesses | | | | In spite of all of the "sky is falling" handwringing |
| and start-ups that cannot afford healthcare | | | | that you may have seen on the internet, we will |
| coverage for their workers may not face this | | | | not really know how this will impact businesses |
| obstacle as the deal breaker that has prevented | | | | until the IRS publishes its regulations on the new |
| them from getting the best talent in the past. | | | | law for the requirements that take effect January |
| Small businesses should also be in a better position | | | | 1, 2012. One possibility considered likely by some |
| to provide insurance to their workers because | | | | observers is that because the banks and credit |
| under the community rating rules, insurance | | | | card companies will be required to report all of |
| companies will no longer be allowed to discriminate | | | | these transactions, the requirement that |
| against small businesses with less healthy workers | | | | businesses report the same credit card payments |
| by charging them more than larger companies or | | | | would be duplicative and therefore, not required |
| by raising their rates when one of their workers | | | | for business purchases by credit card. For most |
| gets sick. | | | | small businesses, that could eliminate most of the |
| Today, small businesses pay on average eighteen | | | | additional reporting requirements. But no one |
| percent more for the same healthcare coverage | | | | knows for sure until the new rules are published. |
| large businesses provide for their employees. The | | | | Of one thing you can be sure: as long as the new |
| new law will give a tax credit of up to 35% of | | | | tax law makes things tougher for the big guys |
| the premiums small businesses pay to cover their | | | | (as a strict interpretation of it currently would), |
| workers in the first year. By 2014 these credits | | | | they will be in your corner fighting to change it. |
| increase to up to 50%. | | | | And they already are. The IRS wants to collect |
| The new law does not place additional insurance | | | | more unpaid taxes. But the IRS doesn't want to |
| "requirements" on small businesses with fewer | | | | increase its internal administrative costs in a way |
| than fifty workers. But businesses with more than | | | | that doesn't accomplish that goal. The odds are |
| fifty employees will face a penalty if they do not | | | | very good that a less paper intensive means of |
| provide insurance for their workers. | | | | tracking small expenditures will be adopted. |
| What About the New Tax Provisions? | | | | Copyright © 2010, Rick D. |