Landlords Must File 1099s for Service Providers

Lisa Henderson, – Tax Services

Beginning January 1, 2011, all commercial and residential landlords will be required to file 1099s for all service providers to whom the landlord pays $600 or more in any calendar year. The first round of 1099s are due to be filed by January 31, 2012. For further clarification, see Instructions for Form 1099-MISC.

The recently enacted Small Business Jobs and Credit Act of 2010 requires landlords (meaning anyone who receives an income from the rental of real estate) to report the same information currently reported by businesses. Specifically, payments of $600 or more (cumulative for the year) to each service provider must be reported to the IRS on Form 1099-MISC. Exceptions may apply for payments made by credit card and for filers who meet certain IRS requirements that have yet to be defined.

Landlords should begin collecting vendor information in January 2011. IRS Form W-9, available at, is used to obtain the required information (name, Federal Tax ID or Social Security number, and address) from service providers. Every individual and business that provides services to your property should complete the W-9. This includes, for example, gardeners, painters, cleaners, plumbers, property managers, and maintenance people.

New service providers should complete the W-9 at the time you engage services and prior to making payment, regardless of whether you expect to reach the $600 threshold. By obtaining the completed form up front, you’ll have the information required to file the Form 1099. Existing service providers should complete the W-9 as soon as possible.

Corporate Service Providers Also Receive 1099s

In the past, Forms 1099 have not been required for payments made to corporations. But this changes in 2012, when reporting for all payments exceeding the $600 threshold is required. We recommend obtaining the completed Forms W-9 as soon as possible for all corporations to which you anticipate payments will be made in 2012.

Penalties for Not Filing

If you fail to file the required 1099-MISC, the penalty will be the greater of $250, or 10% of the amount that was required to have been reported, for each service provider. The state of California has the authority to disallow the tax deductions related to the payments to service providers not reported on Form 1099.

For more information about these reporting requirements, contact Lisa Henderson.