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Monday, August 9, 2010

Form 1099 Information Reporting Requirements as Modified by the Patient Protection and Affordable Care Act

Carol A. Pettit
Legislative Attorney

Edward C. Liu
Legislative Attorney

Under § 6041 of the Internal Revenue Code (IRC), persons engaged in a trade or business who make payments totaling at least $600 to another person in a single year are required to file an information return (typically a Form 1099) with the Internal Revenue Service (IRS) and to provide the payee with a copy. For payments made after December 31, 2011, § 9006 of P.L. 111- 148, the Patient Protection and Affordable Care Act (PPACA), expanded the information reporting requirements contained in IRC § 6041. Under the amended provision, most payments to corporations will no longer be exempt from reporting and the types of payments that can trigger the reporting requirement will include gross proceeds and amounts received by a payee in consideration for property. 

A payer's failure to file a timely and accurate information return with the IRS can result in monetary fines; criminal sanctions may be applicable where such failure is willful. Payers may also be penalized for failing to provide a timely and accurate copy of an information return to their payees. 

In the 111th Congress, several bills and amendments have been introduced that would repeal the modifications made to IRC § 6041 by PPACA § 9006. Both versions of the Small Business Paperwork Mandate Elimination Act, S. 3578 and H.R. 5141, would repeal PPACA § 9006 entirely. Similar provisions have also been proposed in Senate amendments to H.R. 5297 and in § 1 of H.R. 5982. 

Legislation has also been proposed to require landlords to file information returns for payments made with respect to their rental properties and to increase the penalties for failing to file an information return. The House passed such a provision in H.R. 4849. A provision with similar language was passed by the Senate in its consideration of a different bill, H.R. 4213. However, this language was ultimately struck by a House amendment in the nature of a substitute while resolving differences with the Senate

Date of Report: August 6, 2010
Number of Pages: 9
Order Number: R41359
Price: $29.95

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