Last year, as part of the health care reform legislation, the 1099 reporting requirements were expanded to include all payments from businesses $600 or greater in a calendar year to a single payee including corporations (except tax-exempt corporations). This would have proved onerous on most businesses and individual taxpayers (those receiving rental income and making payments to vendors, service providers, etc.).
Last Thursday, President Obama signed a repeal of these expanded 1099 reporting requirements. Essentially the requirements are back to where they were before the rules were expanded within the health care reform legislation. It is important to note that this repeal did not affect the increased reporting penalties as well as penalties for failure to provide correct payee statements mandated by the Small Business Jobs Act. These increased penalties are already in effect for 2011. Those penalties were increased significantly per information return including calendar year maximum penalties. These maximum penalties can be up to $1,500,000 ($500,000 for small business filers).
The repeal is good news as many in the business community were fretting about having to comply with the greatly expanded 1099 reporting requirements.