On April 5, 2011, the Senate voted to approve H.R. 4, “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,” (the “Act”) which repeals the expansion of the Form 1099 reporting requirements. President Obama is expected to sign the bill.
The Act repeals the additional Form 1099 filing requirements, as described in Quarles & Brady’s October Tax Newsletter, created by the Small Business Jobs Act of 2010 and the Patient Protection and Affordable Care Act. The Act repeals the requirement that persons engaged in a trade or business file a Form 1099 for aggregated annual purchases that equal $600 or more to a single provider of goods or other property. The Act also eliminates the cancellation of the carve out for reporting certain payments made to corporations. Finally, the Act repeals the expanded filing requirements for all landlords of certain rental property expense payments of $600 or more.
The repeal of these provisions will result in a return to the previous Form 1099 reporting requirements, which continue to require businesses to issue Form 1099s for payments of $600 or more to service providers, and to require landlords, whose rental operations constitute a trade or business, to report payments of $600 or more to service providers on a Form 1099.