The move to eliminate the 1099 reporting, which is now law but doesn’t go into effect until 2012, suffered a setback last week when the Senate rejected Nebraskan Senator Mike Johanns’ S. 3578, which would have repealed the law. The vote was fairly much along party lines with the Democrats opting to keep the law.
A lame provision by Senator Bill Nelson (D-FL), which would have raised the reporting threshold to $5,000 and exempted business with fewer than 25 employees, was defeated by a wider margin. California’s Rep. Dan Lungren’s H.R. 5141 presently is still alive in the House.
As the law now stands, starting 2012 any business that pays a seller more than $600 in a tax year has to report the transactions to the IRS on 1099s. For precious metals dealers, this bill will be especially onerous because we regularly buy precious metals from clients well in excess of $600. Most business sell to their customers; precious metals dealers do both daily. This bill will result in heavy paperwork for PM dealers, but that is not the worst aspect of the bill.
Reporting under this law will invade investors’ privacy as it will require dealers to obtain Social Security numbers from sellers, along with forms of identification. If you sell in 2012 or later, expect to produce a copy of your Social Security card and, perhaps, your driver’s license. I suspect that the accountants and lawyers will tell dealers to keep that information so that they can prove that they have accurately filed the 1099s.
Because of the reporting and record keeping that complying with the 1099 reporting entails, sellers will be further exposed to identify theft, one of the fastest growing crimes in the country. But, it gets worse.
Because of the reporting, there would now be more paperwork showing that you are an investor in gold and silver. If such information fell into the wrong hands, it could be disastrous. If you sell ten Krugerrands and a burglar finds find outs, could he not logically think that perhaps you own more Krugerrands and perhaps you keep them at home? This bill is a recipe for disaster.
But, does Big Brother care? Of course not. He is in search of still more taxes to pay for his big spending programs.
The defeat of Senator Johanns’ bill obviously was not good, but frankly I never thought that a bill that would reduce the fedgov’s tax take of the economy would ever make it though this Congress. The real hope for getting the 1099 reporting repealed lies with a major change in the House and the Senate this November. Even then, Obama will still occupy the White House for at least two years and seems to care not about what damage he does to the business community.
For the 1099 reporting set to become effective January 2012 to be reversed, there will have to be an uprising by the American people. PM investors need to continue to contact their members of Congress despite S. 3578 being defeated. Even if your Congressperson or senator is up for reelection and looks vulnerable in November, contact him.
Many of the staff of defeated congressmen move to other congressional offices or join the staff of incoming members. Staff members, who read emails, open letters and answer calls can have significant influence on members of Congress when it comes to issues.
For example, if a Congressperson gets asked to sponsor a bill calling for repeal of 1099 reporting, he/she—if not already familiar with the issue—will ask his/her staff, “What are the calls like on repealing 1099 reporting?” We want the answer to be, “A lot of calls, and they’re all for repealing.”
In my August 5 post on this matter, I gave easy ways for readers to find out who their members of Congress are. Here they are again:
The easy way to get the contact information for your representative and your senators is go to their official websites. An easy way to find those websites is to google them. For example, google US Senator Nebraska and up pops links to the websites for Nebraska Senators Ben Nelson and Mike Johanns. Find your senator’s website simply by doing an Internet search.
Finding your member of the House of Representatives is easier than finding your Senators. Go to official House website and use the map, which comes up. A little further clicking may be necessary to determine which Representative’s district you are in.
This will not be an easy battle to win; therefore, we much begin out assault immediately. Rep. Dan Lungren’s H.R. 5141 is still alive in the House and now has 173 sponsors. As of August 5, it had 160 sponsors.
Preferably, write you member of the House asking him/her to sign on to the bill. If your member has already signed on, congratulate him/her for having the wisdom to see what damage such 1099 reporting could cause.
The most effective way to contact members of Congress: a letter, either by word processor or handwritten. Second best way to contact: phone calls. Third, and the weakest: emails. Emails are better than not contacting at all, but letters and calls have much greater impact.
Don’t put this important matter off until even tomorrow. Contact your members of Congress now.