The IRS has taken another step forward in final implementation of sweeping information return requirements. As required by law, it has formally asked for comments from the public on how to best write the final rules with the least amount of trouble for businesses and other “reporting” entities. “Good luck in minimizing trouble,” many taxpayers are already complaining.
New non-health related reporting requirements imposed by the Patient Protection and Affordable Care Act of 2010 (PPACA) will go into full force in 2012. They expanded existing information reporting requirements to apply to payments made to corporations and generally to include payments of “gross proceeds” for property and services, and all “amounts [paid] in consideration for property.”
The expansion of information reporting was anticipated for corporations, but not for “property transactions” and “gross proceeds.” Many tax practitioners are already complaining loudly that businesses need guidance on what are gross proceeds and what property transactions are covered. Others predict that the new requirements will give rise to an expensive compliance burden for businesses, with as much as a tenfold increase in reporting on Form 1099-MISC.
After comments are received next month, the IRS likely will release preliminary rules on the new information requirement either at year end or by early 2011.