In 2012 all businesses will face an increased burden related to Form 1099 informational reporting requirements. In 2011, any recipient of rental income will be considered to be engaged in a trade or business and will be subject to Form 1099 reporting rules.
1099 Changes in 2011 reporting
The Small Business Jobs Act of 2010 included increased reporting requirements that will impact persons receiving rental income. Specifically, payments made after December 31, 2010 for rental property services totaling $600 or more to a single payee will need to be reported to that payee on a Form 1099 MISC. For example, if a rental property owner hires a ABC to fix the wash room sink in a rental property for $605 dollars, he will be required to issue ABC a Form 1099 MISC for 2011.
Furthermore, the penalties related to delinquent and omitted Form1099 filings have been increased.
However, there is one bright spot in the numerous changes discussed above. The IRS issued regulations that exempt payments made after December 31, 2010 by debit or credit cards from Form 1099 reporting requirements since these payments will already be reported under Sec. 6050W by the payment processors. In summary, the impact of these changes will be significant as businesses may need to gather taxpayer information numbers from additional vendors/service providers, maintain more detailed records, and issue a greater number of Forms 1099. It is worth noting that there have been proposals in Congress to reverse or reduce all or a portion of the additional reporting requirements.
Thus, one should continue to monitor the requirements for any changes.
1099 Changes in 2011 reporting
The Small Business Jobs Act of 2010 included increased reporting requirements that will impact persons receiving rental income. Specifically, payments made after December 31, 2010 for rental property services totaling $600 or more to a single payee will need to be reported to that payee on a Form 1099 MISC. For example, if a rental property owner hires a ABC to fix the wash room sink in a rental property for $605 dollars, he will be required to issue ABC a Form 1099 MISC for 2011.
Furthermore, the penalties related to delinquent and omitted Form1099 filings have been increased.
However, there is one bright spot in the numerous changes discussed above. The IRS issued regulations that exempt payments made after December 31, 2010 by debit or credit cards from Form 1099 reporting requirements since these payments will already be reported under Sec. 6050W by the payment processors. In summary, the impact of these changes will be significant as businesses may need to gather taxpayer information numbers from additional vendors/service providers, maintain more detailed records, and issue a greater number of Forms 1099. It is worth noting that there have been proposals in Congress to reverse or reduce all or a portion of the additional reporting requirements.
Thus, one should continue to monitor the requirements for any changes.
No comments:
Post a Comment