By: Ronald Soskin, rsoskin@boselaw.com

A bill enacted by Congress and expected to be signed by the President will place new reporting obligations upon taxpayers deriving rental income from real property.

Effective for payments made after December 31, 2010, a taxpayer who receives rental income from real property and who makes a payment of $600 or more to any service provider (such as accountants, lawyers, maintenance personnel, etc.) in a taxable year, must file an information return (usually Form 1099-MISC) with the IRS and with each such service provider.

Previously, this reporting requirement was placed only upon taxpayers whose rental activities constituted a trade or business. This new statute (solely for reporting purposes) will now treat all taxpayers receiving rental income from real property as engaged in a trade or business.

Exceptions exist for a recipient of a minimal rental income (minimal amount yet to be determined) and for temporary rental of an individual's primary residence.

Please be aware of this new requirement to avoid penalties for failure to comply.