Two new questions on tax returns for businesses are giving tax preparers fits and exposing taxpayers to potentially large penalties.
The IRS wants to know if self-employed, farmers, landlords, partnerships, regular corporations, and S corps made payments that must be reported on 1099s.
If so, they must also check a box stating whether they filed or will file all 1099s.
Preparers of their returns fear they’ll have to act as IRS agents to be sure their clients followed the information reporting rules. And they worry that the IRS will hit them with a preparer penalty if it turns out that clients messed up the 1099 filing rules.
Filing tip: The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 repealed the 1099 rules for landlords. Since the 1099 requirement never went into effect, the question on Schedule E of whether landlords made any payments that required the filing of Form 1099s should be answered “no”.
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