by David M Kendrick, CPA, MST Last month President Obama wisely signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 which, in part, repeals the expanded Form 1099 reporting requirements passed into law last year. What you are hearing is a collective sigh of relief! We applaud congress for this move in the right direction. Earlier legislation would have required nearly every business or rental property owner to report any payments to vendors that exceeded $600, significantly expanding the old reporting rules to include more payors as well as payments for merchandise. If the expanded reporting requirements had not been repealed, businesses and property owners would have been faced with the burden of having to obtain additional documentation, preparation of countless forms and the possibility of having to withhold and remit tax to the federal government! And of course, new higher penalties apply to any compliance failures. Repeal! As a result of the repeal, the basic 1099 reporting rules revert back unchanged as if this controversial legislation hadn?t been passed in the first place! As a refresher, ?all persons engaged in a trade or business and making payment in the course of such trade or business to another person? of $600 or more must report the amount and the name, address & ID # of the recipient to the IRS and to the recipient. This applies to payments of ?at least $600 in rents, services (including parts and materials included with services), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate and any fishing boat proceeds? IRS Publication Instructions F-1099Misc. The Treasury regulations add, ?commissions, fees, and other forms of compensation for aggregating $600 or more? as well as interest (including original issue discount), royalties and pensions (Treas. Reg. ยง 1.6041-1(a)(1)(i)). The 1099 Act did not repeal the increase in the information reporting penalties that were mandated by the Small Business Jobs Act. The penalty for failure to timely file any information return was increased from $15 to $30 (per occurrence), and the calendar-year maximum from $75,000 to $250,000. Other penalties for failure to file increased as well. Please contact our office if you need help ensuring you are in compliance with these reporting requirements. |
