Cumbersome 1099 Rules Repealed

In mid April, President Obama signed the Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011. The Act repeals the provision of the Health Care Act of 2010 requiring 1099 reporting for the gross proceeds from the disposition of property. The Act also repeals the provision of the Health Care Act expanding the 1099 reporting rules to cover payments to corporations. However, the 1099 reporting requirements of §1041(a) continue to apply (as was the case prior to the Health Care Act) to payments made for attorneys' fees, and amounts paid to a corporation that provides medical or health care services.

The Act also repeals the provision of the Small Business Jobs Act of 2010 providing that landlords are considered to be in a trade or business and are therefore, required to file 1099s. In other words, under the Act, the general information reporting requirement for payments of $600 or more does not apply to persons who receive rental income from real estate who are not otherwise engaged in the trade or business of renting property. Therefore, the treatment of a person as engaged in a trade or business for purposes of the 1099 reporting requirement, based solely upon the receipt of rental income from real estate, is repealed.

All of the repealed items above were retroactively effective to January 1, 2011.

brad@mcarthurco.com
704.5448429