New law repeals expanded 1099 reporting rules


Were you aware that on April 14, 2011, President Obama signed a new legislation?

This new legislation called the Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011 essentially repeals expanded reporting rules for businesses and landlords that had been created by previous laws passed in 2010.

Major changes included:

In regards to business reporting:

The Form 1099 reporting rules were changed by the 2010 health care legislation. Under the Patient Protection and Affordable Care Act of 2010, every business, charitable organization, and governmental unit was required to file a Form 1099 for payments to any vendor or supplier of goods or services (other than a tax-exempt organization) totaling $600 or more for the year. Both the recipient and the IRS had to receive a copy of the Form 1099. These rules were scheduled to take effect for payments made after December 31, 2011.

Before the passage of the health care law, payments to corporations were generally exempt from the Form 1099 reporting requirements. The 1099 law just signed by President Obama completely repeals the expansion of business reporting requirements, and the reporting rules return to what they were before health care legislation.

In regards to rental property reporting:

Similarly, new Form 1099 reporting requirements were recently imposed on landlords. Under the Small Business Jobs Act of 2010, owners of rental properties were generally required to file a Form 1099 for rental-related payments to any provider for services totaling $600 or more for the year. These reporting rules were to apply to recipients who provided professional services, such as accountants, as well as workers like plumbers and electricians. They were to be effective for payments made after December 31, 2010.

The new law repeals these expanded Form 1099 reporting rules for landlords. As with the repeal for business reporting, it’s like the requirements never existed.

Repeal of the expanded business and rental property expense reporting rules will eliminate a flood of paperwork for most small business and rental property owners.

SG Partners Inc. keeps up to date with new and updated taxes and legislation to ensure that their clients are receiving the most updated information.   We pride ourselves on our commitment to excellence.  For these or other important tax tips please feel free to contact one of our tax specialists and you will be assured that you are getting the most benefits and tax deductions that you are entitled to.