The Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011, HR4, was signed into law by President Obama on April 14, 2011. This is good news for all Ventura County small business owners.
The prior health care reform bill, called the Patient Protection and Affordable Care Act, called for radical changes in the 1099 reporting arena. Most specifically was the requirement for business to include all payments made by check or cash for the payment of goods and services as well as contract services in the reporting. An even greater burden was the requirement that payments to corporations also be included in the reporting requirements. In addition, the health care bill called for individuals with rental properties to begin 1099 reporting starting in 2011.
HR4 repeals the requirement for rental property owners to issue Form 1099-Misc; it repeals the requirement for any business to issue Form 1099-Misc for payments of goods or property; and it repeals the requirement for any business to issue Form 1099-Misc for payments made to corporations. It is important to note that the health care bill increased the fines for issuing 1099-Misc forms late or incorrectly. The penalty increase has not been repealed, and the higher penalty amounts are already in effect for 2011.
PWDM encourages all our business owners to send out new W-4, Request for Taxpayer Identification Number and Certification, forms to its independent contractor vendors to ensure you have the most accurate information available when you begin processing 2011 1099-Misc in 2012. Penalties for incorrect numbers, mismatched names and numbers, etc. can be very high. If you have any questions, please give me a call.