Recent Developments Impacting Business Planning

Keith Cox


(Info provided by Gross, Duke and Nelson)

Relief From Stringent 1099 And W-2 Reporting Requirements

Over the past 18 months, Congress enacted new information reporting requirements for businesses. After much pressure from the business community, both Congress and the IRS have recently provided the following relief from some of these new reporting requirements:

Congress Repeals Recently-Enacted 1099 Reporting Rules

New rules enacted in 2010 expanded the 1099 reporting rules to include payments aggregating $600 or more made to "corporations" (previously, payments to corporate payees, other than attorneys and certain health care providers, were exempt from the 1099 reporting rules). These changes also expanded the 1099 reporting requirements to include payments of $600 or more for 'property'(previously, the 1099 reporting rules applied predominantly to payments for 'services'). Both of these changes were effective for payments made after 2011. In addition, effective for payments made after 2010, Congress imposed 1099 reporting requirements on taxpayers receiving real estate rental income, whether or not the taxpayers were in the rental real estate 'trade or business.'; The Comprehensive 1099 Taxpayer Protection Act of 2011 has now retroactively repealed all three of these provisions as if they had never been enacted.

Practice Alert!

If you are considered to be in the "trade or business" of renting real estate (traditionally a facts & circumstances determination), you may still be
required to file a Form 1099 for payments of $600 or more to a service provider (e.g., payments to a plumber or painter). Also, the 1099 reporting requirements continue to apply to payments made to corporations for attorneys' fees, and to corporations providing medical or health care services.

IRS Provides Relief From Reporting Cost Of Employer-Provided Health Insurance On W-2s

Beginning with 2011 W-2s, employers were generally required to report the cost of employer-provided health insurance coverage on Forms W-2. In 2010, the IRS announced that this reporting \would be 'optional' for all employers for 2011 Forms W-2 (generally given to employees in January, 2012). The IRS recently extended this interim relief by making reporting of the health Insurance cost 'voluntary' for '2012 Forms W-2' for employers that file less than 250 2011 W-2s. Therefore, if your business files less than 250 2011 W-2s (i.e., for compensation paid to employees in 2011), it will not be required to report the health insurance cost on the 2012 W-2s (generally filed in January 2013).

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