new 1099s for 2012


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Gene E. Utterback, EA, RFC, ABA

ps56k said:
I just happen to stumble across this article -
http://blogs.smartmoney.com/tax/2011/01/19/4-reasons-to-repeal-the-new-form-1099-rules

This is just getting nuts !
Does anyone actually have some simple common sense at these meetings ?
Keep in mind that it may be worse than the article lets on.

While the new rules take effect in 2012 for reporting, the reality is that
the 2012 reporting is for 2011 payments. That's THIS YEAR! This means that
payments made this year are subject to the rules for reporting in 2012.

We've been advising our clients to get W-9s completed by anyone they write a
check to BEFORE the mail/deliver the check. Otherwise they may not be able
to get that info later.

Interestingly, there are some compliance issues that remain unanswered -

A - what about payments of real estate taxes to the state/county government?

B - If I spend $750 at the Office Depot in Annapolis and another $750 at the
Office Depot in Severna Park, do I send each a 1099 or do I send one 1099 to
the main company?

C - what about refunds to clients/customers? Normally this would be a
reduction of the purchase price, but what now?

I can hardly wait,
Gene E. Utterback, EA, RFC, ABA
 
M

Mark Bole

Keep in mind that it may be worse than the article lets on.

While the new rules take effect in 2012 for reporting, the reality is that
the 2012 reporting is for 2011 payments. That's THIS YEAR! This means that
payments made this year are subject to the rules for reporting in 2012.
Sorry, you are off by one year (too early). The Patient Protection and
Affordable Care Act (HR 3590) and Reconciliation Act of 2010 (HR 4872)
requires increased reporting on payments made in calendar year 2012,
which will need to be filed in early 2013. See sec. 9006(c) pasted below.

By contrast, many landlords are subject to reporting of payments made in
the current year, 2011, for filing in early 2012. However, these
reports are limited to the current rules for businesses, namely payments
for services only, to non-corporations only.

Also, regarding one of your other comments, tax-exempt corporations and
government entities are not included in the reporting requirements, AFAIK.

It is widely believed that at least this portion of the law is likely to
be modified or repealed prior to its starting date.

"SEC. 9006. EXPANSION OF INFORMATION REPORTING REQUIREMENTS.

(a) In General- Section 6041 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsections:

`(h) Application to Corporations- Notwithstanding any regulation
prescribed by the Secretary before the date of the enactment of this
subsection, for purposes of this section the term `person' includes any
corporation that is not an organization exempt from tax under section
501(a).

`(i) Regulations- The Secretary may prescribe such regulations
and other guidance as may be appropriate or necessary to carry out the
purposes of this section, including rules to prevent duplicative
reporting of transactions.'.

(b) Payments for Property and Other Gross Proceeds- Subsection
(a) of section 6041 of the Internal Revenue Code of 1986 is amended--

(1) by inserting `amounts in consideration for property,'
after `wages,',

(2) by inserting `gross proceeds,' after `emoluments, or
other', and

(3) by inserting `gross proceeds,' after `setting forth the
amount of such'.

(c) Effective Date- The amendments made by this section shall
apply to payments made after December 31, 2011."


-Mark B.
 
S

Seth

Interestingly, there are some compliance issues that remain unanswered -

A - what about payments of real estate taxes to the state/county government?
I think it would be fun to demand they fill out a form that they
can't, and withhold federal income tax. I don't think that would
work, though.
B - If I spend $750 at the Office Depot in Annapolis and another $750 at the
Office Depot in Severna Park, do I send each a 1099 or do I send one 1099 to
the main company?
Do they have the same id number?
C - what about refunds to clients/customers? Normally this would be a
reduction of the purchase price, but what now?
And after the refund, does the client issue a net or gross 1099?

Seth
 
D

D. Stussy

Gene E. Utterback said:
Keep in mind that it may be worse than the article lets on.

While the new rules take effect in 2012 for reporting, the reality is that
the 2012 reporting is for 2011 payments. That's THIS YEAR! This means that
payments made this year are subject to the rules for reporting in 2012.

We've been advising our clients to get W-9s completed by anyone they write a
check to BEFORE the mail/deliver the check. Otherwise they may not be able
to get that info later.

Interestingly, there are some compliance issues that remain unanswered -

A - what about payments of real estate taxes to the state/county government?

B - If I spend $750 at the Office Depot in Annapolis and another $750 at the
Office Depot in Severna Park, do I send each a 1099 or do I send one 1099 to
the main company?

C - what about refunds to clients/customers? Normally this would be a
reduction of the purchase price, but what now?

I can hardly wait,
Gene E. Utterback, EA, RFC, ABA
or D: - Sending more than $600 for a hotel room while attending an IRS
Nationwide Tax Forum. ;-)
What will the hotel do for us tax professionals, especially when 5,000+*
all ask for their EIN within 24 hours....?

* - I'm thinking of the Las Vegas edition which averages in excess of 6,000
in recent years.
 
R

removeps-groups

or D: - Sending more than $600 for a hotel room while attending an IRS
Nationwide Tax Forum.  ;-)
What will the hotel do for us tax professionals, especially when 5,000+*
all ask for their EIN within 24 hours....?
Here's now I think it will work: The hotel will issue the 1099. When
you book a hotel they will ask you if it for business or pleasure. If
business, they will generate a 1099 with your hotel receipt, give u a
copy, give themselves a copy, and send one to the IRS electronically.
In fact, the 1099 will be printed at the bottom of the page, just a
little graphic to show the total amount in a different manner. At
least that's how it could be streamlined. They will charge $0.10 for
this service, added to your hotel bill. It's not going to be the old
fashioned way of getting their EIN, filling in the forms, and mailing
one here and there etc.
 
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A

Arthur Kamlet

Here's now I think it will work: The hotel will issue the 1099. When
you book a hotel they will ask you if it for business or pleasure. If
business, they will generate a 1099 with your hotel receipt, give u a
copy, give themselves a copy, and send one to the IRS electronically.
In fact, the 1099 will be printed at the bottom of the page, just a
little graphic to show the total amount in a different manner. At
least that's how it could be streamlined. They will charge $0.10 for
this service, added to your hotel bill. It's not going to be the old
fashioned way of getting their EIN, filling in the forms, and mailing
one here and there etc.

A couple of comments:



1. Pay with a credit card. IRS already announced their
intention to exempt 1099Misc reporting for those who pay with
a card since another law requires credit card companies to report.

That includes Pay Pal.


2. Both houses of Congess and both parties have stated their desire
to revoke that part of the healthcare law, so there's actually a
reasonable chance it will go away.
 
P

Pico Rico

or D: - Sending more than $600 for a hotel room while attending an IRS
Nationwide Tax Forum. ;-)
What will the hotel do for us tax professionals, especially when 5,000+*
all ask for their EIN within 24 hours....?

tell them all "it is printed right on you bill" and end the matter with mo
fuss, no muss?
 
P

Pico Rico

Here's now I think it will work: The hotel will issue the 1099. When
you book a hotel they will ask you if it for business or pleasure. If
business, they will generate a 1099 with your hotel receipt, give u a
copy, give themselves a copy, and send one to the IRS electronically.
I agree with Arthur's comment below (agree or hope,not sure which), but I
have a questions:

Can a business generate multiple 1099s for one person each year? This would
be the scenario if the hotel issues a 1099 after each stay.
 
A

Arthur Kamlet

I agree with Arthur's comment below (agree or hope,not sure which), but I
have a questions:

Can a business generate multiple 1099s for one person each year? This would
be the scenario if the hotel issues a 1099 after each stay.

I know of nothing to prevent issuing multiple 1099s to the same payee.


But the payer has no obliation to isue a 1099 in this case when it's
under $600, but does need to issue one when the 600 amount is reached
by smaller spending throughout the year.
 
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G

Gene E. Utterback, EA, RFC, ABA

Mark Bole said:
snipped
Sorry, you are off by one year (too early). The Patient Protection and
Affordable Care Act (HR 3590) and Reconciliation Act of 2010 (HR 4872)
requires increased reporting on payments made in calendar year 2012, which
will need to be filed in early 2013. See sec. 9006(c) pasted below.

By contrast, many landlords are subject to reporting of payments made in
the current year, 2011, for filing in early 2012. However, these reports
are limited to the current rules for businesses, namely payments for
services only, to non-corporations only.
Snipped some more

OK, Mark caught me. I am off by one year for the business part of the 1099
rule, my mistake. I've read a lot of stuff about this and would have sworn
I was right. I've checked and checked and the general consensus is that
Mark is correct on the dates, though I've seen a few articles that say
payments in 2011 get reported in 2012.

As Mark was kind enough to provide a citation, I have no choice but to bow
to his assessment (and rightly so). Thank you for the correction.

Gene E. Utterback, EA, RFC, ABA
 

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