President Obama recently announced a series of tax breaks designed to specifically help small businesses, known as the Small Business Jobs Act. As a part of the Small Business Jobs Act, starting in 2011 there is a new tax requirement for landlords. All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year to, and these providers may include but are not limited to accountants, plumbers, carpenters, yard services, and repair people. This new law will require that all landlords be required to track information about contractors that have been hired to perform services to rental property that exceeds $600 a year. This new legislation will ensure that income by contractors gets reported accurately and deductions for work and improvements to the property can be verified by the 1099 form. A 1099 will not be required for contractors or laborers who are paid less than $600.

The new requirement applies to owners of both residential and commercial property. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS. Additionally, if the landlord fails to provide the 1099 form and the contact information of the contractor, it is expected that they will not receive the deduction that they are requesting when the taxes are prepared and submitted to the IRS. In 2012, these requirements will expand to cover providers of goods to landlords. This new law is expected to increase federal tax revenue of over 2.5 billion dollars in the next 10 year time frame.