Insights

As employers prepare to send out Form 1099s for tax year 2011, they may recall hearing that the reporting requirements would be greatly expanded this year, and that the process of issuing Forms 1099 would take a far greater effort. No need to worry though-this is one problem that Congress was actually able to solve in 2011.

Back in April 2011, Congress fully repealed the onerous 1099 reporting expansions contained in the Patient Protection and Affordable Care Act (PPACA), as well as the 1099 reporting requirements for rental property expense payments contained in the Small Business Jobs and Credit Act of 2010.

Since then, some confusion has arisen concerning what is still reportable and what is not reportable for the 2011 tax year on IRS Form 1099.

Generally, businesses must file Form 1099 for purchases of services from non-corporate entities in excess of $600. The repealed provisions essentially would have required 1099 reporting for all transactions in excess of $600.

Taxpayers must remember, however, that though the 1099 reporting requirements to corporate entities has been repealed, the exemption from reporting payments made to corporations does not apply to payments for legal services. Therefore, you must report attorneys’ fees to corporations that provide legal services.

The repeal of the expanded 1099 reporting rules is welcome news for businesses and organizations of all sizes, and for millions of taxpayers owning rental properties. The time and cost that would otherwise have been devoted to complying with the repealed rules can now be devoted to more productive activities.

For more information on 1099 reporting, see the instructions to IRS Form 1099-Misc on the IRS website.

© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

Comments