If you own a single piece of rental property in the New River Valley, IRS reporting on your 1099 just got a little bit more involved when you file your 2011 taxes. And if you own multiple pieces of rental property, your 1099 just grew infinitely longer.
A new piece of legislation in the Small Business Lending Fund Act has two small provisions that will affect owners of rental property. The first provision includes new tax reporting requirements for landlords who pay $600 or more in a given year to contractors who do work on the landlord’s property (think: painters, plumbers, landscapers), and would require that a 1099 be furnished to those same contractors for that particular tax year. The second provision calls for steep fines for any individual or business who fails to accurately report those same services and purchases. And those fees – and fines – are why the provisions are included in the SBLFA, because the estimated $17 billion (as reported by Washington Examiner) they’ll bring in are supposed to be funneled back into small businesses. Stop laughing.
The other side of the coin, here, is that while the new legislation requires more paperwork, it also forces those unscrupulous contractors who’ve managed to hide income because they’ve not had to provide work totaling more than $600 in value, which I’ve heard accountants say is a fairly common “problem”. The provisions are missing the mark, though, in my opinion – I own rental property, and if my furnace goes out in a property, I have to put in a new furnace. It’s not a matter of whether I want to or not, because my tenants need heat. Likewise, when I list a property for sale, I hire Sean Shannon to take high-quality photos, but I have the option of hiring him or not. I could take crappy photos and put them in MLS, but I have the choice to do something differently and I’m glad to do it. This is where I think the provisions go awry – it increases government, legislation and documentation, while at the same time going after a source of income the government’s not necessarily been able to get their hands on.
Caesar wants what’s coming to him, in other words.