Tax Alert

June 2010

WANTED: PAPER PUSHERS FOR NEW REPORTING REQUIREMENTS ON PAYMENTS TO CORPORATIONS!!!

Congress to expand reporting requirements of 1099 Form

How the New Reporting Requirements Work:

1099 form reporting to change. As added by the Patient Protection and Affordable Care Act, for payments made after December 31, 2011, the exception to the general reporting requirement for payments of $600 or more made to corporations in the course of a trade or business is eliminated, other than for corporations exempt from tax. Consequently, if all payments made by a payor in the course of its trade or business to a corporation total $600 or more in any tax year, the payor must file the appropriate 1099 form.

Example: If a payor pays a corporation interest income of $400 and $250 for miscellaneous services rendered, the payor would need to send to the IRS a 1099-INT for $400 as well as a 1099-MISC form for $250 for the payments made to the corporation.

Note: The class of payments with respect to which reporting is required has also been expanded to include all amounts paid in consideration for property, and other gross proceeds for both property and services. The amount of such gross proceeds is required to be shown on the 1099 form.

What's Next?

Currently, there is no reporting requirement for payments made to exempt or governmental organizations, international organizations and retirement plans. However, many influential commentators believe that Congress will eventually enact reporting requirements that will impact this current exception. So if Congress enacts this additional reporting requirement, expect even more paper pushing!!

 

If you would like to learn more about the new reporting requirements on payments to corporations, please call or e-mail Rob Babek, Principal in Charge of Los Angeles Tax Services, at 310.432.7430, or any other Stonefield Josephson principal. (Toll-free number: 866.225.4511).

 

The information in this document is not intended or written to be used as, and cannot be used as or considered to be a "covered opinion" or other written tax advice, and should not be relied on for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code, or (2) promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein, for IRS audit, tax dispute, or other purpose.

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