Update on Filing IRS Form 1099 and Other Payment Returns

In the past few months, there has been significant activity regarding 1099 regulation changes.  Here is an update on some of the latest developments as you prepare your 1099 filings for tax year 2011. 

Key Developments & Observations

  • Earlier in 2011, previously expanded Form 1099 rules – that were originally passed as a component of the Patient Protection and Affordable Care Act of 2010 – were repealed.

    Despite a flurry of activity through the end of the year, the rules for filing 1099s remain unchanged and continue to apply as follows according to the IRS: “All persons engaged in a trade or business and making payment in the course of such trade or business to another person of $600 or more must report the amount and the name and address of the recipient to the IRS and to the recipient.” This includes “payments of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income.”  The expanded rules, now repealed, would have required filings for payments to corporations (but not payments to tax-exempt corporations) and would have included all amounts paid in consideration for property, and other gross proceeds for both property and services.

  • Starting Jan. 1, 2011, brokers required to file Form 1099-B regarding a covered security must also report the customer’s adjusted basis in the security and whether any gain or loss with respect to the security is long term or short term.

  • An entity should use Form W-9 to request the taxpayer identification number of a U.S. person (including a resident alien) who will receive an information return.

  • An entity should use the appropriate Form W-8 for foreign persons who will receive an information return.

Checklists of Selected Payment Types, Information Returns and Recent Instructions

By clicking on the Appendices highlighted below, you can see and/or save for future reference:

  • In Appendix A, a list of certain payment types and the information returns to report them
  • In Appendix B, a list of information returns and what is reported on them
  • In Appendix C, a list of selected developments in the instructions for information returns.

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For more information, please contact:

Robert M. Burak, CPA
Partner in charge, Tax Department
330.255.2419
Email

 

This information has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.

Redistributed by Bober Markey Fedorovich with permission.