From our CPA firm in St Petersburg, FL– After months of debate, Congress has repealed the expanded requirement that businesses report to the IRS all payments made in excess of $600 to vendors. The provision, originally enacted to fund the new health care bill, would have required any business that pays another business or individual more than $600 for goods or services in a year to file a Form 1099 with the IRS for each business or individual such payments were made. This new requirement was to go into effect in 2012.
Additionally, the rental expense reporting requirement effective in 2011 has also been repealed. Under this rule, all taxpayers with rental property would have been required to file a Form 1099 for any expenses paid on the rental property when the expenses totaled more than $600 to any business or individual for the year.
Both reporting provisions were criticized for the huge burden they would have put on both small businesses and taxpayers with rental property. As tax professionals, we cannot stress the importance of the repeal of these expanded reporting provisions. These expanded requirements would have cost taxpayers enormous amounts of time and money by requiring the tracking of every business payment made for things such as office supplies purchased from Staples to rental payments for a lease. Taxpayers would also have had to obtain Taxpayer Identification Numbers from all individuals and businesses that payments were made to.
Each year, taxpayers would have been required to calculate the total payments made to each individual and business, excluding payments made by credit card. A Form 1099 would then have needed to be filed for each vendor that received payments totaling more than $600 in the year. Failure to file any Form 1099 could have resulted in significant penalties.
As tax professionals, McAtee & Associates can help ensure that both individual and business taxpayers file the correct tax forms in a timely manner and help them avoid the ever-increasing penalties. Contact us for assistance in all of your financial and tax matters.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.