The IRS has passed new rules regarding the issuance of 1099 forms for services performed by independent contractors, landlords, and businesses. I the past, businesses were required to issue a 1099 to any individual or business that was paid more than $600 in a single year. If the business was a corporation, you were not required to issue a 1099 form. The new law has changed these requirements.
Effective January 1st, 2011, this law is extended to landlords. Our property management company has always issued 1099s to owners for the gross rents collected each year. This has not been changed. Landlords will continue to receive a 1099 Form for future gross rents. If you are a landlord and manage your own property, make sure you collect a W9 Form from any individual or business who is paid more than $600 for services in a single year. A W9 will provide you a taxpayer identification number needed to send the 1099 Form to the IRS. If the payee does not provide a W9 or taxpayer identification number, you will need to withhold 28% of the amount to be paid and send to the IRS.
Starting January 1, 2012, all businesses including sole proprietors, corporations, and independent contractors will be subject to these requirements. If you pay a corporation more than $600, you will need to report the disbursement to the IRS with a 1099 Form. Payments for tangible goods will also need to be reported. The IRS has proposed an exemption if you pay for services or tangible goods with a credit card or debit card. If you have any questions or need clarification about the exemption, consult your tax expert.
If you have any questions, please call us at 512-257-9836. Our office provides sales, leasing, property management, and mortgage services.
