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January 10, 2012

UPDATE ON IRS FORM 1099 AND OTHER PAYMENT RETURNS

Background
An information return is a tax document businesses are required to file to report certain business transactions to the Internal Revenue Service (IRS). The requirement to file Information Returns is mandated by the Internal Revenue Service and associated regulations.

Any person, including a corporation, partnership, individual, estate, and trust, who engages in reportable transactions during the calendar year must file information returns to report those transactions to the IRS. Persons required to file Information Returns to the IRS generally must also furnish statements to the recipients of the income. Filers of 250 or more such returns must file these returns electronically with IRS.

Key Developments & Observations

• Earlier in 2011, previously expanded Form 1099 rules – that were originally passed as a component of the Patient Protection and Affordable Care Act of 2010 – were repealed. If the rules had not been repealed, effective for payments made after December 31, 2011, the general requirement for information reporting by all persons engaged in a trade or business who make payments in any tax year aggregating $600 or more to a single payee would be expanded to include payments made to a corporation (but not payments to a tax exempt corporation). Additionally, the class of payments for which reporting is required would be expanded to include all amounts paid in consideration for property, and other gross proceeds for both property and services.

• Starting January 1, 2011, brokers required to file Form 1099-B regarding a covered security must also report the customer's adjusted basis in the security and whether any gain or loss with respect to the security is long term or short term.

• An entity should use Form W-9 to request the taxpayer identification number of a U.S. person (including a resident alien) who will receive an information return.

• An entity should use the appropriate Form W-8 for foreign persons who will receive an information return.

Checklists of Selected Payment Types, Information Returns, & Recent Instructions
By clicking on the Appendices highlighted below, you can see and/or save for future reference:

• In Appendix A, a list of certain payment types and the information returns to report them
• In Appendix B, a list of information returns and what is reported on them
• In Appendix C, a list of selected developments in the instructions for information returns.

This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.

Redistributed by Maginnis & Carey LLP with permission.