Late last year, we started telling you about 1099 changes in 2011 and 2012. As of January 1, 2011, all people receiving real estate rental income would need to issue a 1099 to all contractors who provided services to you valued at more than $600 in a year. Then, starting in 2012, you’d be sending a 1099 to every person or business you bought more than $600 worth of goods OR services, including corporations?
Yeah … well, never mind.
On April 5th, Congress voted to repeal all of the provisions enacted in both the Small Business Jobs and Credit Act of 2010, AND the H.R. 3590 Patient Protection and Affordable Care Act. These were the two pieces of legislation that introduced the expanded 1099 reporting requirements, allegedly as a way to help pay for the cost of implementing said legislation.
Unfortunately, Congress perhaps didn’t quite understand the administrative nightmare that they had unleashed upon American businesses. The reality of what they had proposed – for example, having to send a 1099 to Office Depot, or trying to get a W-9 from your local McDonalds, or your gas station, quickly turned this legislation from something that was supposed to help raise dollars to help pay for healthcare reform into a political liability. So, after the dust had settled from the fall elections, the reform negotiations got underway.
Although several versions of the legislation were proposed by both the House and Senate, the two finally agreed on a single unified approach, in H.R. Bill 4. The legislation was passed by the House earlier, and was today approved by the Senate. H.R. Bill 4 now goes to the President’s desk, where he is expected to sign it.
So, as of now, we are back to where we have been with 1099 reporting requirements. If you have been issuing 1099s all along, there are probably no changes for you. If you have NOT been issuing 1099s, it may be time to check in with your tax advisor to make sure that you are indeed exempt from any reporting requirements.