Owning a rental property was previously not treated as a trade or business for purposes of reporting payments to service providers. However, the Small Business Jobs Act, passed into law in September of 2010, changed that.

Now landlords must issue Forms 1099 to providers of services beginning with payments made in 2011. These forms must be sent to the service providers and the IRS beginning in 2012. Further, beginning in 2012, landlords must comply with the expanded Form 1099 reporting law enacted by the health care reform legislation enacted in March of 2010. That legislation requires businesses to issue Forms 1099 to providers of both services and goods. Previously, Forms 1099 were only required for services. The health care legislation also expanded the reporting requirement to include all to corporate providers of goods and services.

This might change, but for now you must comply.

Both of these expansions of reporting requirements are currently the subjects of proposed legislation to repeal or amend them. However, it is a good idea for landlords to now obtain the names, addresses and tax identification numbers of all service providers to whom the landlord expects to pay $600 or more in 2011. A Form W-9 should be requested from each of your service providers.

If you have any questions or concerns, please contact me or any Kaufman, Rossin professional.

This information is not intended or written to be used for the purpose of avoiding tax penalties and it cannot be used for that purpose. Further, this information is a general description of current tax law and is not presented as a tax opinion on any general or specific tax issue or situation. This information may not be used to promote or market any transactions stated herein. Readers are advised to seek advice from their own tax advisors if they have questions.