Democrats are applauding and Republicans are criticizing the new Patient Protection and Affordable Care Act, Pub. L. 111-148, (the "Act") that was signed into law by President Obama on March 23, 2010. While the Act has generated quite a bit of public discussion, largely ignored by the media, however, is the new tax-reporting requirement that is contained in Section 9006 of the Act. This section amends the Internal Revenue Code and has implications for businesses of all kinds and sizes.

Effective January 1, 2012, businesses will have to provide Forms 1099-MISC to all vendors from whom they purchase goods or services that exceed $600. Goods and services will no longer be exempt.

Most people are familiar with IRS Form 1099. Typically, a person receives one when he or she has earned over $600 in interest from a bank (1099-INT), or over $600 in dividends (1099-DIV). An individual who earns wages from a business, but is not an employee, receives the standard 1099.

Beginning January 1, 2012, if a business purchases equipment, inventory, office supplies, goods or services from a local retailer, and these purchases exceed $600 per calendar year, then that business will be required to issue a 1099-MISC to the local retailer. Examples include hotel stays for business conferences, company holiday parties held at restaurants, office supply deliveries from Staples or Office Max and landscaping services. Detailed records of these expenditures will have to be maintained, so that the 1099-MISC can be issued at the end of the year.

The purpose of Section 9006 is to increase income reporting from small businesses, in order to increase the revenue necessary for the new health care reform. While larger retailers such as Staples or Best Buy typically report their income accurately, smaller businesses, such as the corner store, the landscaper, the caterer, the hairstylist and the home-based business, are viewed by the federal government as being too "flexible" in the reporting of their income. Under the Act, the government hopes to increase records retention, income reporting, and ultimately, the income taxes paid by these smaller businesses.

Congressman Dan Lungren (R-CA), has sponsored the Small Business Paperwork Mandate Elimination Act, which would repeal Section 9006, but leave the remainder of the Act intact. More likely than not, Congressional debate on this bill will begin just before the November elections this year.