Yet again, Congress is demanding that more people issue more 1099-MISC forms. Under the Small Business Jobs Act, landlords will need to issue a 1099-MISC to report payments totalling $600 or more during the course of the year for any expenses relating to their rental properties. This expanded 1099 requirement will take effect beginning with the year 2011. Congress previous expanded the requirement to issue 1099 forms as part of the health care reform package, in particular requiring 1099s to be sent to corporate recipients beginning in the year 2012. The IRS will have the authority to exempt certain landlords from filing 1099s if their rental income is not more than a minimal amount or who can demonstrate that filing the 1099s would cause hardship. These exceptions are to be developed by the IRS.
The penalties for not filing a 1099 will be increased under the Small Business Jobs Act. The following penalties for not filing a required 1099 document will be in effect for the year 2011:
- $30 penalty for filing a 1099 not more than 30 days late (was $15);
- $60 penalty for filing a 1099 more than 30 days late and before August 1 (was $30);
- $100 penalty for filing a 1099 on or after August 1 (was $50);
- $250 penalty for intentional failure to file (was $100).
These penalties apply per 1099 that is required to be issued. The maximum penalty that can be imposed per year have also increased.
The Small Business Jobs Act also makes changes relating to retirement plans, and implements a number of tax cuts targeted towards small businesses.
This post seems to reflect the law as signed by the president. does this mean attempts in Congress to modify the enhanced 1099 requirements (part of the Patient Protection and Affordable Care Act) failed?
The expanded requirement takes effect January 2012 and the first 1099’s issued under this edict won’t be produced until 2013 (to cover the payments made in 2012)
Just wanted to calrify that there aren’t any changes required for 2011.
and, I expect that the most onerous provisions will be repealed.
I just want to clarify. Rental property owners will need to issue 1099s for the year 2011 (which will be filed in early 2012). Then in the year 2012, the 1099 reporting requirement is expanded to cover both corporate and non-corporate vendors (which will be filed in early 2013). So there’s two separate expansions of the 1099 reporting going on here.
Second, I don’t see why Congress should repeal this law when they just passed it. It’s clearly something they are interested in. One could argue Congress didn’t fully understand the impact when they revised the 1099 requirements the first time, but to expand this requirement twice in the same year despite getting feedback from the community, well that’s a pretty clear signal to me that Congress is pretty intent on making sure these 1099s get sent out.
I work with a property manager that takes expenses and management fees out of the rent receipts before they send me the net income. Since they report payments to me on a 1099-MISC, do I have to issue them a 1099-MISC as well, or only if I write them a check for something(s) that exceeds $600 during the year?
How is rental property defined? Does that include self storage units?
Do I now have to send a 1099 to the electric company, Home Depot, the gas company? How about the city for water & sewer? What about the county for my real estate taxes? Or here in Arizona we have to pay a privilege tax on rents collected to the city. Do I have to send them one for that also?
For rental property owners, they will need to issue a 1099-MISC to each person, partnership or other non-corporate business if the property owner pays $600 or more during the course of the year for services. This definition applies for 2011 only. Starting 2012, the rule is expanded to $600 or more for goods or services to each person or business (whether corporate or non-corporate). So… For 2011, the answer is ‘no’ for utilities and Home Depot; but the answer will be yes starting in 2012.