IRS: Obamacare Has Us Doing Things We're Not Remotely Qualified For, Burdens Small Biz

The National Taxpayer Advocate Service, an independent body within the IRS meant to iron out taxpayer problems with IRS systems, said in a report today that the new health care bill has charged the agency with doing things it's not prepared to do:

Though the IRS's main mission is to collect taxes, it has been given a key role administering health insurance premium subsidies, tax credits for small businesses, assessments on employers and the mandate that beginning in 2014 everyone obtain insurance.

"I have no doubt the IRS is capable of administering social programs, including health care," Olson said. "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."

The tension between enforcement and social service missions could affect the IRS's ability to administer health-care credits and penalties "in a fair and compassionate way," Olson said.

I wonder if Olson means they'll need more money than the $10 billion provided for such training in the health-care bill itself. Because who's not a fan of forking over more than $10 billion to the IRS to enforce the health-care bill no one wanted during a down economy?

The mid-year report to Congress also touches on a giant, new administrative tax burden to small businesses and the self-employed, which I mentioned in May.

Beginning in 2012, the health-care legislation enacted in March will require all businesses and tax-exempt organizations to issue an IRS form called a 1099 to vendors from whom they buy goods totaling $600 or more annually -- and to file a copy to the IRS. The requirement is intended to reduce the under-reporting of business income, but it will demand thorough record-keeping on the part of buyers.

"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 IRS release said.

The IRS report estimates this will affect 40 million businesses. It was meant to pay for some of Obamacare, and the IRS estimates it will bring in $13 billion, but that's before you count administrative costs:

The requirement could bury the IRS in tens of millions of paper filings that it will have to pay employees to process or discard, Olson said through a spokesman.

As you can see, none of us had anything to worry about. This health-care overhaul is working like a well-oiled machine.

The full report is here (pdf).