The long-awaited repeal of the expanded 1099 requirements was signed by President Obama on April 14, 2011!
In 2010, Congress passed the Patient Protection & Affordable Care Act which expanded the 1099 requirements to include all corporations receiving payments of $600 or more and ‘payments for property’. These changes were scheduled to begin in 2012. In addition, landlords would have been required to comply with the 1099 reporting rules starting in 2011 and adopt the 2012 changes. The major criticisms of these changes were the burdensome increase of paperwork and the increased costs for business owners associated with complying with these new requirements.
The repeal, officially known as the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, means that the 1099 reporting rules will not change. To clarify what the 1099 reporting requirements will be for 2011 and future years, a basic review of the current rules are as follows:
File Form 1099-Misc with the payee and IRS:
For calendar year payments of $600 or more to an unincorporated contractor or individual payee for services rendered (including parts and materials), commissions, fees, rents, prizes and awards, medical and health care payments, crop insurance proceeds, and other income payments
For royalties of $10 or more or broker payments in lieu of dividends or tax-exempt interest
Calendar year payments of $600 or more to a corporate law firm must be reported (exception to the “no corporations” rule)
File Form 1099-Int with the payee and IRS:
For calendar year payments of at least $10 of Interest Income, Early withdrawal penalty or Interest on US Savings Bonds
Report only interest payments made in the course of your trade or business
For more detailed filing instructions for form 1099-MISC, click here.
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