RENTAL PROPERTY REPORTING REQUIREMENTS The recently enacted Small Business Jobs Act of 2010 includes a wide-ranging assortment of tax changes generally affecting small business. To offset a portion of the cost of the various tax breaks and incentives in the Act, Congress beefed up certain reporting requirements and penalties, in the hope that the added requirements will generate revenue and lead to more effective tax collection. Here are the details of the new reporting requirements. Increased information return penalties. For information returns required to be filed after December 31, 2010, the penalties in the tax code for failure to timely file information returns to IRS will be increased. For example, the first-tier penalty will be increased from $15 to $30, and the calendar year maximum will be increased from $75,000 to $250,000. For small filers, the calendar year maximum will be increased from $25,000 to $75,000 for the first-tier penalty. The minimum penalty for each failure due to intentional disregard will be increased from $100 to $250. The penalties for failure to file information returns to payees will be similarly increased. Recommended action You will need to obtain an employer identification number if you do not already have one. You should start the information collection process as soon as possible. The applicable information required is contained on Form W-9 which can easily be down loaded from the Internal Revenue Service website at www.irs.gov. You should be aware that there is a mandatory 28% back up withholding requirement should any payee fail or refuse to provide the Form W-9 information. Since this is a mandatory requirement you should obtain a completed Form W-9 BEFORE any payments are made. The backup withholding will be remitted and reported to Internal Revenue Service on Form 945. Please note back up withholding is remitted on a schedule similar to the payroll tax requirements. We hope this information is helpful. If you would like more details about any aspect of the new legislation, please do not hesitate to call.