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Death by a thousand paper cuts?

BY Ken Clark

Forces armed with common sense appear to be making a courageous stand against a provision buried deep in the 2,560-page “Patient Protection and Affordable Care Act”—a.k.a. healthcare reform.

We’re talking about the 1099 expansion spelled out in section 9006. The law explains that beginning in 2012, all companies must file an IRS Form 1099 on all purchases of $600 or more.

Currently, businesses must file a 1099 form for other businesses only when dealing with independent contractors. So, according to a study from the National Small Business Association, average annual filings would increase for small businesses from about 10 to about 86. Some small businesses believe the burden would be even greater.

The healthcare architects say section 9006 will help pay for healthcare reform.

Business leaders are divided only on which metaphor to apply to the ensuing paperwork burden—a “flood,” an “avalanche” or a “nightmare.”

A new laptop for a salesman? File a 1099 form. Sales dinner (or two) at the Outback Steakhouse? Report it to the IRS.

This is why some have lampooned the provision as “the Paper Industry Salvation Act of 2010.”

In Washington, D.C., the National Lumber & Building Material Dealers Association has been sounding the alarm for more than a year. And around the country, the issue continues to generate shock. In the heartland, Lynn Schwarz of the Ohio Construction Suppliers Association recently told Home Channel News that there’s a sense of anxiety among her group’s members about the prospects of the costly and distracting paperwork.

Earlier this summer, there seemed to be some momentum to eliminate the paperwork provision. In July, Sen. Mike Johanns (R-Neb.) introduced a measure to repeal section 9006. He famously declared the rule expanding 1099 filings as “nothing more than a government-imposed obstacle to economic growth and job creation.”

But section 9006 supporters have rallied, framing the 1099 expansion with a narrative that pits tax cheats against honest Americans. Vendors won’t pay what they rightfully owe the IRS if they aren’t forced, goes the reasoning. And there’s about $16 billion of potential “tax avoidance” on the table.

Sen. Bill Nelson (D-Fla.) sponsored a compromise: The filing requirement is waived for companies with 25 or fewer employees, and the filing trigger is bumped up to $5,000 for bigger companies.

Sure, the compromise is better than allowing the paperwork provision to stand. But ladies and gentlemen, anyone who has ever received a paycheck knows that the tax code should be simplified, not complicated.

Businesses in the home channel and every channel should be encouraged to focus on service, sales, technology and growth. They should not be focused on 1099-form compliance.

And another thing: Expanding 1099 filings will hurt small businesses across the board by encouraging one-stop-shopping by companies intent on simplifying paperwork.

The Senate is expected to vote this month. We salute all those working to ensure that common sense wins the day.

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Pending home sales rise modestly in July

BY HBSDEALER Staff

The Pending Home Sales Index, a forward-looking indicator, rose 5.2% to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, according to the National Association of Realtors (NAR).

The index, released Thursday, is 19.1% below June 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months, according to the NAR.

Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”

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Suspects stalled by flat tires

BY HBSDEALER Staff

Two men suspected of stealing power tools from a Southern California Home Depot were arrested on Aug. 20 after their getaway vehicle developed two flat tires.

Deputies from the Victorville Police Station, summoned by store personnel, arrived at the Home Depot on Bear Valley Road shortly before noon to find a black SUV leaving the scene. One suspect attempted to drive the car, which had two flat tires, along an adjoining road but soon fled the vehicle on foot. He was arrested by sheriff deputies.

Asecond suspect was detained in the parking lot of the store.

Inside the SUV, law enforcement officers found electric drills valued at more than $2,000 that had been allegedly stolen earlier that day at another Home Depot store in Victorville.

Arrested for commercial burglary were Jose Munoz, 34, and Rolando Martinez, 39, both from Los Angeles. The suspects are known gang members, according to authorities.

Karen Hunt, a spokeswoman for the Victorville Sheriff’s Department, told Home Channel News that the commercial burglary charges stem from the suspects’ “intent to steal,” as opposed to “spur of the moment” shoplifting. As for the flat tires, “They tried to drive over an embankment in order to get away the deputies and loss prevention [personnel],” Hunt said.

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