Form 1099 Repeal Signed Into Law

 

Last week President Obama signed the Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011.

The Act repeals the expanded Form 1099 reporting requirements included in the health care reform legislation. Those provisions would have expanded the 1099 reporting to payments for goods and certain rental property expenses.

The Infernal Revenue Code offers us this simple guidance on the “information at source” rules:

“All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income (other than payments to which section 6042(a)(1), 6044(a)(1), 6047(e)(d), 6049(a), or 6050N(a) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2), 6044(a)(2), or 6045, of $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment” (Section 6041(a)).

Did you notice they cover all that in one sentence?

The most common form in the 1099 Series is Form 1099-MISC, Miscellaneous Income. The form has 18 boxes, and some of the items are straightforward, like Rents and Royalties.

Box 3 is pretty broad – “Other Income”. The instructions say that includes, among other things, prizes, awards “or other taxable income”. There’s no definition of “other taxable income”.

You can find Form 1099-Misc at http://www.irs.gov/pub/irs-pdf/f1099msc.pdf

Detailed instructions are at http://www.irs.gov/pub/irs-pdf/i1099msc.pdf . Those instructions will be changed to reflect the repeal mentioned above.