Sunday, 6 January 2013

Tax form 1099 reporting requirements for year 2012-2013 have been repealed.

Earlier it was said that from 2011 onwards there would be huge changes in the reporting requirements for form 1099.  However, fortunately two of those 1099 filing rules which would have created disturbance and chaos among business owners, brokers, agents and other intermediaries have been revoked by the congress.
On a brief background check, a 1099 form is an informational reporting form required to be filed with the IRS by business owners or any individual who hires the services of an independent contractor/freelancer and pays him at least $600 in remuneration for his services. The reason why Congress started informational return reporting was to reduce the tax gap that had risen out of no reporting of income earned by freelancers.
When the new legislation was passed for the new 1099 reporting requirement for year 2013, it was a great deal of concern for the business owners as the new 1099 requirements would have resulted in huge filing and administrative costs. The new 1099 filing regulation would have surely lead to thousands of additional and unnecessary 1099 form filing.
The new 1099 filing rule required that 1099 forms should be issued to all business owners both under service and property for $600 and above. Moreover, even corporations were no longer exempt from filing form 1099. Hence, business had to issue large number of 1099s and they had to obtain a TIN from the vendor in order to avoid the required backup withholding of federal income tax.
Another rule under the new legislation was to include rental property owners, which means that if you are a house owner and you rented your house and paid an individual around $1000 to paint your house, you would then have to issue form 1099.  Property owners would have been required to file 1099s as early as 2011 and would have been required to comply with the all the other troublesome 2012 form 1099 changes
However, businesses need not worry about the new 1099 reporting regulations and the new rules have been repealed by the government. 1099 reporting remains the same as it was earlier. Businesses can continue filing 1099 forms without any hindrance and troubles.
Pointers on current 1099 rules
·         Businesses should issue a Form 1099-MISC to appropriate vendors (non-corporate) to whom they paid more than $600 for services during a calendar year. The Form should be provided to the vendor by January 31st. (The due date is extended to February 15, 2013, if you are reporting payments in boxes 8 and 14) and should be mailed to the IRS (along with Form 1096) by February 28th 2013. If you are electronically filing form 1099, then last date to submit form to IRS is April 1st 2013
·         A non-corporate entity includes individual sole proprietorship, partnership or limited liability company (LLC). Additionally a Form 1099-MISC is required for services paid to attorneys regardless of their entity type.
·         Examples of payments that might require a 1099-MISC would be rents, attorney fees, contract labor, director fees, commissions, royalties (when payments exceed $10) and any compensation not included on W-2.

A business should use form 1099-misc to report any payments they have made in the course of their business. A 1099 misc. form is issued by businesses to individuals/ independent contractors to whom they have paid $600 and more. If you are unsure whether you are legible to file form 1099 misc. or which 1099 form should you file, contact an IRS approved e-file provider to e-file your 1099 forms and answer your queries on 1099 form filing.

1 comment:

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