Get ready to add “Section 9006” to the list of ill-advised, anti-growth policies pushed on business by the current administration and Congress. This time, 40 million businesses — about 26 million of them are sole proprietorships — will face an avalanche of paperwork, thanks to the health care “reform” law. From Karen McMahan’s Carolina Journal story about what has been dubbed the “Staples tax.”

Under current law, corporations must send an IRS Form 1099 to any individual or business that it has provided at least $600 in services to per calendar year. But Section 9006 of the Patient Protection and Affordable Care Act dramatically expands the reporting requirement to all corporations, tax-exempt organizations, and government entities, and includes payments for all goods, not just services, that exceed the $600 annual limit. The provision is slated to take effect in 2012.

The new law has been described in some quarters as the “Staples tax,” as it will force millions of companies to begin filing 1099 forms to every business selling them office supplies, snack foods, and cleaning products.

The Heritage Foundation, a Washington, D.C.-based public policy research organization, says the new regulations will affect 40 million businesses, of which 26 million are sole proprietorships. Small businesses face the biggest threat because they lack the resources to track and manage this type of reporting.

The story focuses on the precious metals industry, which will be particularly hard hit by this regulatory mess.

With the new 1099 provisions, dealers will be required to collect and track confidential tax information by customer name, sparking concerns that sales will decline as customers may be reluctant to provide such information. Larry Hyatt, owner of Hyatt Coin Shop in Charlotte, told CJ that some small businesses will go out of business because they won’t be able to afford the cost of collecting, preparing, and mailing out so many forms.

“We’re a small, small business,” said Linda Wright of Wright’s Coin Shop in Asheville. “We’ve been in business for 38 years, and I have to do all the paperwork and bookkeeping. This will really hurt us. With a bad economy, it’s too hard to pass on additional costs to customers.”

“It’s a stupid law that will put a lot of small coin dealers, pawn shops, and small jewelers out of business,” said Jeff Rubenstein, owner of Carolina Silver and Gold in Greensboro. “If you’re a small business and buy a refrigerator, you’ve got to do a 1099. It makes no sense. Commercial property defaults are already high, and now more businesses will go under. That’s what happens when lawmakers don’t read the bills they vote on and don’t understand business.”