1099 Reporting Changes, Again

By: Chris Coldiron, CPA, Tax Manager |  email

As you may have heard, H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011” repealed all new 1099 reporting requirements that were set to take effect January 1, 2012.  The Act was signed into law by President Obama on April 15th.  Basically, 1099 reporting requirements will continue to be the same as they’ve always been.  This change will significantly decrease the compliance burden small businesses were anticipating.  However, this recent change does not do away with the requirement that payers obtain and retain a form W-9, Request for Taxpayer Identification Number and Certification, for all payees.  This requirement applies even to governmental agencies and corporations, although these entities are typically exempt from the 1099 reporting requirement.  Absent obtaining a W-9 that either documents an exemption to the 1099 reporting requirement or provides the necessary information for that reporting, backup withholding at a rate of 28% is mandatory.