I understand that currently small mom and pop type rental owners are not required to file 1099s. So, is that wrong or are you saying that would change?
I believe you either misunderstood or had incorrect information.
There will not be any changes.
If you pay sub-contractors in the course of your business activity (including rental activity) more than $600 per year - that payment is required to be reported on from 1099MICS. That is regardless if you pay as a physical person or via your LLC - so there is no difference.
And you mentioned that income from rentals is reported on a K-1. I assume that means net income or does each member show on a sch E the total income and expenses since the LLC does not file a return?
The LLC with several members is generally treated as a partnership. Th e partnership DOES file income tax return - but does NOT pat income taxes - all income and losses are passed to members - rental passive activities are reported on individual levels.
A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.
Some additional information about partnerships may be found in IRS Publication 541 - http://www.irs.gov/publications/p541/index.html
All business income and expenses are reported on the partnership tax return form 1065 - http://www.irs.gov/pub/irs-pdf/f1065.pdf
Partnership should issue schedules K-1 to each partner reporting pro-rata share of net taxable income - http://www.irs.gov/pub/irs-pdf/f1065sk1.pdf
Let me know if you need any help.