April 7, 2011
Repeal of Expanded Form 1099 Reporting
Earlier this week the Senate approved, and the President is expected to sign, legislation repealing what many considered onerous information reporting rules for businesses and lessors of real estate.
In order to fund health care reform, Congress significantly expanded information reporting requirements by requiring businesses to file a Form 1099, starting in 2012, for all payments aggregating $600 or more in a calendar year to a single payee, including payments made to corporations. Prior to this expansion, the traditional Form 1099 was only issued by businesses to freelancers or independent contractors (i.e., non-employees) who provided services to the business. However, this expansion would cover payments made for both property and services, and therefore require businesses to issue Form 1099s to every business that it paid over $600 for services, equipment, supplies and any other property.
Also included in H.R. 4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, was the repeal of another reporting requirement that would require those who receive rental income to issue Form 1099s to service providers for payments of $600 or more made during 2011 and for payments made for property and to corporations beginning in 2012.
Most in Congress have unanimously renounced the expanded reporting requirements, but there was a lack of consensus on how to fund, or even if there was a need to fund, the repeal. President Obama has previously expressed support for such a repeal, however voiced concern over the revenue offset contained in the repeal that would require certain individuals to repay health insurance exchange subsidies they received if they began making more money in the year the subsidies were received. Despite this concern, the President has indicated he will sign the 1099 repeal legislation.
Read more about the expansion of these reporting requirements here. For questions about the repeal and how it affects your business, contact Tom Schnellenberger, Matt Ehinger or another attorney in Ice Miller's Tax Group.
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