As predicted in the November 2010 Top Drawer Ink article, “The History of Information Returns”, information reporting requirements for US businesses continue to evolve.
Here are changes of note.
New Form. Starting in 2011, credit card issuers will be required to complete Form 1099-K, Merchant Card and Third-Party Network Payments. What does that mean for you? You’ll receive a 1099-K when you accept credit cards and other forms of electronic payments from your customers. There’s an exception when the amount you receive is less than $20,000 and your total transactions are fewer than 200. In that case, the payment provider does not need to send you a Form 1099-K.
New Penalties. Penalties have increased for failure to file information returns. If you fail to file required 1099s by the due date and you cannot show reasonable cause, the maximum penalty is now $100 for each return. Intentional failure to provide a vendor with Form 1099 can cost you a separate penalty of up to $250 per 1099.
New Repeals. Do you own rental property? The requirement that you report your expenses on Form 1099 was repealed. In addition, the provision enacted in the health care bill requiring that you report payments of more than $600 to corporations was also rescinded retroactively, as if it had never been enacted (note that you’ll still have to file Forms 1099 for payments in excess of $600 to other vendors).