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President Obama signed into law on April 14th a bill to repeal expanded Form 1099 information reporting requirements for certain business payments and rental property expense payments. It repeals the following:
1. The requirement to report payments to companies for merchandise purchased in the aggregate of $600 or more (originally effective for 2012),
2. The requirement for rental property owners to report expense payments in the aggregate of $600 or more (originally effective for 2011), and
3. The requirement to report payments for services and merchandise to corporations (other than attorneys and certain health care providers) in the aggregate of $600 or more (originally effective for 2012).
The repeals under the new law are retroactive, thus reinstating the status quo for Form 1099 reporting as established prior to enactment of the 2010 Patient Protection and Affordable Care Act and the 2010 Small Business Jobs Act. In general, only businesses must report payments to service providers in the aggregate of $600 or more, and the current exception for not reporting payments made to corporations (except attorneys and certain healthcare providers) remains intact. Furthermore, rental property owners must report payments to service providers if their activities rise to the level of a trade or business.
PENALTY NOTICE: As required by U.S. Treasury regulations, you are advised that any written tax advice contained herein was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.