President Signs Repeal of Recently Added 1099 Reporting Obligations
Following considerable pressure from business interests, the President has signed into law H.R. 4—the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (the “Act”). This Act retroactively repeals the very unpopular additional Form 1099 information reporting rules added by 2010 legislation.
Before amendment by the Small Business Jobs Act of 2010 (“SBJA”) and the Patient Protection and Affordable Care Act (“Affordable Care Act”), Internal Revenue Code Section 6041 generally required payments totaling at least $600 in a single calendar year to a single recipient be reported to the Internal Revenue Service (“IRS”). Reporting on an IRS Form 1099 was required only when the payor was considered to be engaged in a trade or business and had made the payment in connection with that trade or business. The type of payment that most commonly triggered the reporting requirement was payment for services. There were a number of exemptions from the reporting requirements under prior law. Perhaps the most significant exemption was for payments to corporations.
To read the complete newsletter, click here.