Form 1099 Reporting Requirements Repealed

On April 14, 2011, the President signed legislation to fully repeal the expansion of 1099 reporting requirements enacted in 2010.  Prior to this legislation, persons receiving rental income from real estate were treated as engaged in a trade or business and were subject to the 1099 reporting rules.  This provision was effective for payments made on or after January 1, 2011.  For payments made on or after January 1, 2012, 1099 reporting requirements were expanded to include all payments over $600 in the year to all forms of businesses, including corporations, and added payments for goods or other property to the reportable transactions.

This legislation, called the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,” essentially returns the Form 1099 Information reporting rules to 2010 standards. 

Payors engaged in a trade or business, making payments in connection with that trade or business of at least $600 in a single calendar year to a single, unincorporated recipient for certain purposes, services for example, are required to report these payments on Form 1099.

Special reporting rules in effect for payments for legal services were not changed.

Contact your local Yeo & Yeo tax professional if you would like to discuss this further.