1099 Reprieve Likely
On April 14, 2011, the president signed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011. The act repeals expanded IRS Form 1099 information reporting requirements for certain business and rental property payments. Under PPACA, payments made for goods or services after December 31, 2011, would have required a 1099 when such payments aggregate at least $600 in a calendar year to a single payee (other than a tax-exempt organization). This included payments to corporations.
The Small Business Jobs Act of 2010 would have further expanded 1099 reporting requirements, requiring taxpayers receiving rental income to report payments of at least $600 to service providers for payments made after December 31, 2010.
Upon the president’s signature of the newly proposed legislation, the reporting rules return to the way they read before the enactment of PPACA and the Small Business Jobs Act of 2010. The former rules generally require reporting by payers’ considered to be engaged in a trade or business for payments for services totaling at least $600 in a year. Generally, payments to corporations are exempt from the reporting requirement.
The act pays for the cost of repealing expanded 1099 reporting by imposing new limits on the amount of PPACA’s advance health insurance premium assistance credit required to be repaid by eligible taxpayers who exceed certain income limitations. The offset is effective for tax years ending after December 31, 2013.