Your record keeping is about to get more complicated.

Well, I suppose it was only a matter of time. The reach of 1099 reporting will be extended to landlords under a provision in the soon to be signed small business act passed last week.

How's your handyman going to like getting a 1099? Or the local hardware store?


SEC. 2101. INFORMATION REPORTING FOR RENTAL PROPERTY EXPENSE PAYMENTS.


(a) In General- Section 6041 of the Internal Revenue Code of 1986, as amended by section 9006 of the Patient Protection and Affordable Care Act, is amended by redesignating subsections (h) and (i) as subsections (i) and (j), respectively, and by inserting after subsection (g) the following new subsection:

`(h) Treatment of Rental Property Expense Payments-

`(1) IN GENERAL- Solely for purposes of subsection (a) and except as provided in paragraph (2), a person receiving rental income from real estate shall be considered to be engaged in a trade or business of renting property.

`(2) EXCEPTIONS- Paragraph (1) shall not apply to--

`(A) any individual, including any individual who is an active member of the uniformed services or an employee of the intelligence community (as defined in section 121(d)(9)(C)(iv)), if substantially all rental income is derived from renting the principal residence (within the meaning of section 121) of such individual on a temporary basis,

`(B) any individual who receives rental income of not more than the minimal amount, as determined under regulations prescribed by the Secretary, and

`(C) any other individual for whom the requirements of this section would cause hardship, as determined under regulations prescribed by the Secretary.'.

(b) Effective Date- The amendments made by subsection (a) shall apply to payments made after December 31, 2010............

http://thomas.loc.gov/cgi-bin/query/D?c111:6:./temp/~c111543CiE:e162970:

Note this takes affect a year sooner than the original provisions expanding the 1099 reporting to businesses for purchase of goods.

So, Kerry and Tom, you and other landlords will soon have to pay attention to this.
Sorry fellas, I don't writew the music, I just sing the song.

What the hell!!!

__________________
1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13

More paperwork from the IRS, what a surprise.

BTW, the handyman should already be getting a 1099.

Oh dear, 1099 forms are free from the IRS; typically printable from most tax software; what does a wad of blank 1099 forms cost at Staples?

This means landlording is now a business. Big deal. I did it for 25 years as a small business owner.

What kind of small business did you have?

__________________
For the Saved, this world is the worst it will ever get.
For the unSaved, this world is the best it will ever get.

Clk's Ebay Stuff BUY SOMETHING NOW!!!

A small machinery repair, fabrication and manufacturing shop.

What's the point of giving a 1099 to a hardware store?

__________________
1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13

I'm not sure you need to. The link in the OP is timed out.

I was under the impression that I had to report any income to a single person of over $600 on a 1099 form already. So how has it changed if it doesn't require reporting payments to businesses?

__________________
1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13

I'm not sure it has. I haven't read the legislation or a even a synopsis.
Unless the IRS greatly increases its staff, there's no way they could monitor, let alone enforce, compliance.

Kerry,

This was enacted as part of health care reform. 'Twas always the law to send 1099 Misc's to those who provided services greater than $600 in a calendar year. The Health Care bill, as a revenue enhancer (read tax gap closing effort ) extended it to GOODS also!. This was a totally new provision.
http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/

Now, seven months later, to keep this small business bill "revenue neutral", they figured they'd close it further by making you and other landlords send 1099's to whomever you need to. And yes, you should have already been giving the handyman a 1099. And, yes, software vendors will, with little effort update Q/B, etc. to make your life a little easier. But it'll waste your time to send the hardware store or Lowe's a 1099.

The Health care bill made the compliance reporting for businesses buying goods to begin in 2012 for payments made in 2011. This change to include landlords has the same effecetive dates. My op incorrectly said it began a year learlier. My error. They are effective concurrently.

There was an attempt to repeal the original HC provision that went nowhere last month. The Administration opposes it.

Here is the current year 2010 form & instructions.
http://www.irs.gov/pub/irs-pdf/i1099msc.pdf
http://www.irs.gov/instructions/i1099msc/ar02.html

Chas,

Part of the bill increases penalties for not sending 1099's too!! (I didn't want to bore everyone with details of the entire bill).

The provision in post 1 is directly from the bill. I have not seen the wire services mention the rental 1099 provision. But trust me, its in the bill.
This is typical of what's been put out so far.
http://www.businessweek.com/news/2010-09-23/small-businesses-bill-gets-final-approval-in-congress.html

Obama signed it today. Film at 6:00 no doubt.

The Bill is HR 5297

IIRC in the past there was no actual penalty for not filing a 1099, except the filer would be liable for unpaid taxes on the amount of the 1099.
The $600 threshold is ridiculous. There is talk of amending that figure to $5000, but if the bill was signed today it's too late.
Thanks for the links.

O. Penalties
The following penalties generally apply to the person required to file information returns. The penalties apply to paper filers as well as to electronic filers.

See Sect. O
http://www.irs.gov/instructions/i1099gi/ar02.html#d0e2090

"For information on the penalty for failure to file electronically, see Penalty on page 5.

Failure To File Correct Information Returns by the Due Date (Section 6721)

If you fail to file a correct information return by the due date and you cannot show reasonable cause, you may be subject to a penalty. The penalty applies if you fail to file timely, you fail to include all information required to be shown on a return, or you include incorrect information on a return. The penalty also applies if you file on paper when you were required to file electronically, you report an incorrect TIN or fail to report a TIN, or you fail to file paper forms that are machine readable.

The amount of the penalty is based on when you file the correct information return. The penalty is:

$15 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $75,000 per year ($25,000 for small businesses, defined later).

$30 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $150,000 per year ($50,000 for small businesses).

$50 per information return if you file after August 1 or you do not file required information returns; maximum penalty $250,000 per year ($100,000 for small businesses).




If you do not file corrections and you do not meet any of the exceptions to the penalty described below, the penalty is $50 per information return.

Small businesses—lower maximum penalties. You are a small business if your average annual gross receipts for the 3 most recent tax years (or for the period you were in existence, if shorter) ending before the calendar year in which the information returns were due are $5 million or less.

Exceptions to the penalty. The following are exceptions to the failure to file penalty.
The penalty will not apply to any failure that you can show was due to reasonable cause and not to willful neglect. In general, you must be able to show that your failure was due to an event beyond your control or due to significant mitigating factors. You must also be able to show that you acted in a responsible manner and took steps to avoid the failure. ...................."