The IRS requested comments on 2012-effective amendments to IRC § 6041 expanding requirements to report on Form 1099 business payments totaling $600 or more to any person in a calendar year. The amendments were made by the Patient Protection and Affordable Care Act of 2010 (PL 111-148). They provide that, notwithstanding Treasury regulations issued previously, persons who are payees subjecting payors to the reporting requirement include corporations (generally exempted currently by Treas. Reg. § 1.6041-3(p)(1)), other than organizations exempt from tax under section 501(a) (section 6041(h), as amended). The amendments also provide that reportable payments include those “in consideration for property” and “other gross proceeds” in addition to other types of payments currently specified in section 6041(a). Because the new law would generally include most business payments to vendors, commentators have said it could vastly increase the number of Forms 1099-MISC businesses must issue and thus impose a recordkeeping and reporting burden on them (see “The Coming 1099 Revolution: Are You and Your Clients Ready?” JofA, Aug. 2010, page 40).
In proposed Treasury regulations issued in November 2009 (REG-139255-08), the IRS proposed amending Treas. Reg. § 1.6041-1(a)(1) to provide that payments reported under section 6050W (payment card and third-party network transactions) for calendar years 2011 and following would be exempted from duplicative reporting under section 6041. In public statements, IRS Commissioner Doug Shulman has indicated the IRS intends for the proposed exemption to apply to the expanded reporting requirements under section 6041 as amended by the Patient Protection and Affordable Care Act.
In Notice 2010-51, the IRS also noted this proposed exemption and requested comments on rules to prevent duplicative reporting under section 6041 in other circumstances. One such circumstance, the Service said, might be mandatory 3% withholding for payments made by certain government entities (effective after Dec. 31, 2011) under section 3402(t).
In addition, the Service requests comments on the following issues:
- The appropriate scope of the terms “gross proceeds” and “amounts in consideration for property” and how to interpret them to minimize any reporting burden and avoid duplicative reporting.
- Whether or how the provisions should apply to payments within consolidated groups or between affiliated corporations.
- The appropriate time and manner of reporting to the IRS, and what changes to existing reporting practices for Form 1099 might be needed to minimize compliance burdens.
- Any changes that might be needed to Form W-9, Request for Taxpayer Identification Number and Certification, and related rules for soliciting taxpayer identification numbers (TINs), and other concerns regarding identifying payees.
- How to administer backup withholding requirements for missing TINs to minimize related burdens.
Comments are requested by Sept. 29, 2010. They may be submitted by e-mail to firstname.lastname@example.org, with “Notice 2010-51” in the subject line, or by postal mail to IRS, CC:PA:LPD:PR (Notice 2010-51), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
Notice 2010-51, 2010-29 IRB
By Tax Matters editor Paul Bonner.
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