If you own rental homes the federal government has made your world a bit more complicated in 2011. Buried in the Small Business Lending Fund Act that passed in 2010 there was a new provision for rental home owners. Now every time you work with a contractor that charges you over $600 you will have to 1099 them.
According to the bill’s proposed new rules on rental property, owners who pay $600 or more for a service such as plumbing, landscaping or painting, would be required to issue 1099 forms to the IRS and whoever provided the work.
“Under the provision, recipients of rental income from real estate generally are subject to the same information reporting requirements as taxpayers engaged in a trade or business,” the JCT reported.
The new rental reporting requirements would go into effect on Dec. 31 this year and would likely affect millions of property owners, say taxpayer advocates.
“You’ve got to be kidding me,” said Tom Schatz, president of the watchdog group Citizens Against Government Waste, when told about the provision. “Honestly, it’s an outrageous burden for rental owners.” via Washington Examiner
And you think that you will ignore giving Washington more information on your business? Think again, if you are caught not 1099′ing your contractors you could face fines up to $250,000 for failing to get the required information.
My advice, which really does annoy me, is to get the 1099 form filled out by every vendor you work with for your rental properties. The cost of non compliance is too high, and as a group you are being targeted by the Federal bureaucracy.
Oh, and you heard on the radio or TV that the government is going to repeal onerous reporting requirements for small businesses? You are right on that one, but as a rental property owner, you are not included in that group. Your new tax reporting requirement was buried in a different bill.