UPDATE: New 1099 Reporting Requirements Repealed!

The IRS has issued a proposed regulation to help deal with the flood of paperwork associated with the new 1099 reporting requirements that are set to take effect in 2012.

Under the proposed regulation, any business purchases made with a credit or debit card will be exempt from the new reporting requirement because those purchases are already reported by banks and other payment processors.

Do you have any brilliant ideas for how to reduce the avalanche of paperwork even further?? The IRS would like to hear your thoughts!  They have invited public comments on how to most effectively carry out the new law.  To give the IRS your opinion, send an email to Notice.Comments@irscounsel.treas.gov and be sure to include “Notice 2010-51″ in the subject line.

If you paid any unincorporated service providers $600 or more during 2009, it’s almost time to send your 1099s out.  The due date this year is February 1, 2010.

So, who might need a 1099 from you?  You send 1099s to service providers, but not to vendors who sold you merchandise.  Also, if your service provider operates as a corporation, you don’t need to send them a 1099.  Who’s left?  Any unincorporated:

• Computer support or repair techs
• Freelance graphic designers
• Virtual assistants and other virtual professionals
• Office cleaning services and janitorial services
• Accountants and bookkeepers
• Attorneys
• Landscape maintenance, including snowplow companies
• Any other consultant who was paid by your business
• Any other person who received referral fees or commissions from your business

Remember that the vendor gets a copy of the 1099 and so does the IRS.  With the IRS copies, you need to include a Form 1096 summary sheet that totals up all of your 1099-MISC forms.

This IRS has a handy Guide to Information Returns that will answer even more questions.