Generally any person engaged in a trade or business who makes payments aggregating $600 or more in any taxable year to a single payee in the course of such trade or business must file a information return (Form 1099) with the IRS and provide a copy thereof to the payee. Regulations, Section 1.6041-3(p) excepted payments to corporations from the reporting requirement. A person whose rental real estate is a trade or business is subject to this reporting requirement but a person whose rental real estate activity is not considered a trade or business is not subject to such requirement. Payments subject to reporting included rent, salaries, wages, premiums, annuities, compensations, remunerations or other fixed or determinable gains, profits and income but did not include payments for goods or certain payments subject to other specific reporting requirements.

Effective for payments made after December 31, 2011 payments to corporate (other than tax exempt) payees must be reported notwithstanding Regulations, Section 1.6041-3(p) unless excepted under other provisions of the Code.

Also effective for payments made after December 31, 2010, persons receiving rental income from real estate are subject to the same information reporting requirement (set forth above) as taxpayors engaged in a trade or business. Exceptions are provided for military personnel who rent their principal residence on a temporary basis, individuals who receive a de minimus amount of rent as determined by the IRS and individuals where the reporting requirement would cause hardship as determined by the IRS.

Also effective for payments after December 31, 2011, the payments subject to reporting will also include “amounts in consideration for property.”

Generally a payor must request a taxpayer identification number (“TIN”) from a payee and if the payee fails to furnish a TIN to the payor, the payor must withhold back up withholding currently at 28 percent on the payment to the payee.

A payor that fails to comply with the information reporting requirements is subject to penalties.