The much awaited repeal of the 1099 reporting rules has finally come true.
The Senate approved the retroactive repeal of the expanded 1099 reporting requirements and the legislation was signed by President Obama. The signing of this legislation is sure to put a
smile on the faces of CPAs and business owners everywhere.
As a result of the repeal, businesses are now required to file Form 1099-Misc only to report payments of $600 or more annually for services rendered in a trade or business. Moreover, the 1099s are not required to be filed for payments made to corporations.
Prior to the repeal, these reporting rules had been expanded by the Health Care Act and would have been effective for payments starting in 2012. Under that act, the $600 threshold not only included payments for services but was also expanded to include this reporting requirement for the purchase of any type of property, expense payments in relation to rental property and even those payments made to corporations.
Just thinking about the record keeping requirements that would have been necessary to comply with the expanded reporting rules caused so much turmoil within both small businesses and CPA firms that implementing these changes would have created an accounting disaster.
Luckily, businesses are now off the hook for the expanded reporting rules and the old, but now current, reporting requirements are back in effect.
If you have additional questions regarding 1099 reporting requirements, please contact
us.
