1099 Reporting Reminder for 2011

There have been a few failed attempts at legislation to change the new 1099 reporting requirements.  The new reporting requirements were passed as part of the two healthcare bills in 2010.

The summary reminder that follows was developed by Janet Graves, CPA and Matt Curbeau, CPA.  Janet is a manger and Matt is an experienced staff in our tax practice .  

Future 1099 Requirements – will you be prepared?


Effective January 1, 2012 businesses will be required to issue Forms 1099 for virtually all payments made to vendors of $600 or more, unless the payee is a tax-exempt recipient. Items which will be subject to the new reporting requirements include merchandise, equipment, inventory and raw materials.

Under the new law, businesses will be required to collect and enter into their accounting systems taxpayer identification numbers from corporate payees, providers of merchandise, equipment, etc. If a correct TIN is not provided, the businesses will also be required to make backup withholding from payments.

The reporting requirements by businesses can be eliminated if payments are made via a credit or debit card. The IRS has stated that the reporting requirements will fall on the credit card companies.

Beginning with payment made in 2011, most landlords will be required to comply with current 1099 reporting requirements.  In the past, landlords were not considered to be in a trade or business (which is a requirement to need to issue 1099's) for purposes of 1099 reporting.  Beginning on January 1, 2011 for 1099 reporting purposes, landlords will be considered to be in a trade or business and will therefore need to prepare and file form 1099 for applicable payments.

What is the next step?

Businesses that have purchases in excess of the $600 limit should start evaluating their current accounting system to ensure that it can track and report non-credit card payments by vendor and reviewing vendor information to be sure that correct TIN’s are on hand for reporting.

Team DKB will keep you updated as further guidance on the new law becomes available.