An administrative nightmare was averted when President Obama signed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 on April 14, 2011. The act included the repeal of the 1099 reporting requirements imposed by the 2010 healthcare reform legislation and Small Business Jobs Act.
Before the 2010 healthcare reform legislation, all persons making payments made in the course of a trade or business of $600 or more to another person in a calendar year were required to report the amount on a Form 1099, except for most payments made to corporations. The type of payments required to be reported included rent, fees, and other such items of income. Before the Small Business Jobs Act, most private individuals who owned rental property were not considered to be engaged in a trade or business.
The 2010 healthcare reform expanded the 1099 reporting requirements to include all payments from businesses of $600 or more in a calendar year to a single payee, including corporations. Additionally, the type of payments required to be reported were expanded to include payments for property such as merchandise, raw material and equipment. The expanded requirements were scheduled to begin for payments made after December 31, 2011.
Additionally, the Small Business Jobs Act expanded the 1099 reporting requirements to require all individuals, including private citizens, who receive rental income to issue Form 1099 to service providers for payments of $600 or more made after December 31, 2010. Under this Act, private individuals owning rental property are considered to be engaged in a trade or business.
Thanks to 1099 repeal advocates, such as the AICPA, the Form 1099 paperwork burdens set to begin in 2011 and 2012 are gone. The 1099 reporting requirements continue unchanged.