Let’s say there are two companies, A and B. Company A buys 500 widgets from Company B. But when Company B files its taxes, it only reports revenue from 400 widgets sold. The section in question of the health care law will require Company A to let the IRS know it bought the widgets from Company B, so IRS agents can cross-check the two returns.
The provision applies to any business that buys more than 600 dollars of goods and services and starts in 2012. Lungren says the extra paperwork isn’t fair to small businesses.
Lungren: “You would have to keep records of when you purchased hardware, when you purchased food, when you went to a hotel, when you traveled. Virtually anything and everything that could be deemed property or a service is included under this.”
Lungren’s likely Democratic opponent in this fall’s election is Ami Bera, a physician who lives in Elk Grove. Bera says the law’s intention is to bring in lost revenue from companies that under-report on their tax returns, but he’s not so sure that’s how it’ll work out.
Bera: “It really was written to close a $350 billion federal tax gap. The way it was written, though – and how it’s being implemented – may actually put a paperwork burden on small business.”
But even though the two are both concerned about this particular portion of the health care measure, they differ sharply on the overall health care law. Bera supports it, Lungren opposes it.
Lungren’s bill now goes to the Democratic-controlled House Ways and Means committee.