Generally no. Corporations, including S corporations, C corporations, and LLCs taxed as either, are exempt recipients for most 1099 purposes. Three exceptions break that rule: attorney fees, gross proceeds paid to attorneys, and medical or health care payments. Those are reportable regardless of business structure.
The IRS instructions for Forms 1099-NEC and 1099-MISC state that payments to corporations are not required to be reported on information returns, with specific exceptions. This exemption covers both C corporations and S corporations, as well as LLCs that have elected corporate tax treatment.
The reasoning is practical. Corporations file their own tax returns and are subject to their own reporting and payment obligations. The IRS relies on corporate tax filings rather than requiring third-party information returns for most corporate payments.
This exemption applies to service payments: consulting fees, technology services, marketing work, staffing, and similar payments, regardless of how large the payment is. A $500,000 payment to a corporation for consulting services requires no 1099.
The exemption applies to how the payee is taxed, not what the payee is named. A company called 'Smith Consulting LLC' may be exempt if it is taxed as a corporation, or it may be fully reportable if it is a disregarded entity or partnership. Always collect a W-9 to determine the correct classification before assuming exemption.
| Payment type | 1099 required for C corp? | 1099 required for S corp? | Form and box |
|---|---|---|---|
| General services (consulting, IT, design, etc.) | No | No | N/A (exempt) |
| Attorney fees (legal services) | Yes | Yes | 1099-NEC Box 1 |
| Gross proceeds paid to attorney (settlement funds) | Yes | Yes | 1099-MISC Box 10 |
| Medical and health care payments | Yes | Yes | 1099-MISC Box 6 |
| Rent (office, equipment, land) | No | No | N/A (exempt) |
| Services paid by federal executive agency | Yes (agency files) | Yes (agency files) | 1099-NEC Box 1 |
The IRS explicitly states that the corporate exemption does not apply to payments for legal services. If you pay a law firm, attorney, or any other provider of legal services for their own services, you must file a 1099-NEC, regardless of whether the attorney or firm is incorporated.
What to report: Fees paid to an attorney for legal services performed directly for your business. Examples include contract review, litigation representation, regulatory filings, and legal consulting. Report in Box 1 of Form 1099-NEC.
This rule applies whether the law firm is a sole practitioner, a partnership, an S corporation, a C corporation, or a professional corporation (PC). The exemption simply does not exist for legal service fees.
An attorney is generally required to provide their TIN even if the firm is a corporation. Unlike most corporate payees who are not required to certify their TIN, attorneys must supply it. If the attorney fails to do so, backup withholding at 24 percent applies.
This is a separate and easily confused category. Gross proceeds paid to an attorney are not fees for the attorney's own services. They are funds paid to an attorney in connection with a legal settlement or similar transaction where the attorney is the conduit for the money.
What to report: Settlement payments, insurance proceeds, or other funds paid to an attorney in connection with legal services, where the payment is for the claimant or client rather than for the attorney's own work. Report in Box 10 of Form 1099-MISC.
Example: A company settles a claim and pays $75,000 to the claimant's law firm. The law firm receives the funds and disburses them. The company reports $75,000 in Box 10 of Form 1099-MISC to the law firm. The corporate exemption does not apply.
The distinction between attorney fees (1099-NEC Box 1) and gross proceeds to an attorney (1099-MISC Box 10) matters. Fees for the attorney's services go on the NEC. Settlement funds and similar gross proceeds flowing through the attorney go on the MISC.
It is possible, and common, to file both a 1099-NEC and a 1099-MISC for the same law firm. If you paid a law firm $12,000 for their legal work and separately paid them $50,000 in settlement funds, both amounts are reportable on separate forms.
Payments to physicians, hospitals, clinical laboratories, and other health care providers are reportable on Form 1099-MISC Box 6 regardless of whether the provider is incorporated. The corporate exemption does not apply to medical or health care payments made in the course of your trade or business.
What to report: Payments of the applicable threshold or more to any physician, surgeon, dentist, veterinarian, or other supplier of medical or health care services. This includes payments to clinics, hospitals, and medical corporations. Report in Box 6 of Form 1099-MISC.
Personal health insurance premiums you pay for your employees are not reported here. The Box 6 rule applies to payments to health care providers (the people and entities that actually deliver medical services), not to insurance premiums.
Drug purchases from pharmacies are excluded from Box 6 reporting. The rule targets payments for services, not goods.
Federal executive agencies have an additional reporting obligation. When a federal agency pays a corporation for services, including vendors that would otherwise be exempt, the agency must report that payment on Form 1099-NEC Box 1. This rule is specific to federal executive agencies and does not apply to private businesses.
If you are a federal contractor and a government agency pays you as a corporation, expect to receive a 1099-NEC for those service payments. If you are a federal agency making payments to corporate vendors, the corporate exemption does not apply.
Yes. S corporations are treated the same as C corporations for 1099 exemption purposes. The general exemption applies to both, and the same three exceptions apply to both.
This sometimes surprises payers who know that S corporations are pass-through entities for income tax purposes. Despite the pass-through nature of S corporation income, the W-9 from an S corporation will show it as an S corporation, and the corporate exemption applies. You do not file a 1099-NEC for general service payments to an S corporation.
No. Tax-exempt organizations under IRC section 501(c), including nonprofits, charitable organizations, and certain other entities, are specifically carved out of the corporate exemption in the 1099 instructions. You generally do not need to report payments made to a tax-exempt organization on a 1099.
However, there is a practical distinction between a nonprofit and a tax-exempt organization. A nonprofit may be organized as a corporation under state law but still be treated as a trade or business that is subject to 1099 reporting in certain contexts. When in doubt, check the W-9 to see how the entity has classified itself.
The W-9 is the definitive answer. Line 3 of the W-9 is where the payee indicates their federal tax classification. A checked C Corporation or S Corporation box means the corporate exemption applies for most payments. A checked Individual/sole proprietor or LLC with P (partnership) means it does not.
Do not assume corporate status from a name. A business name ending in Inc., Corp., or LLC does not tell you how the entity is taxed. Request and retain a W-9 from every vendor before making a payment. If the W-9 shows corporate classification, keep it on file as documentation that you determined a 1099 was not required.
See How to Collect a W-9 from a Contractor Before Filing a 1099 for guidance on collecting and interpreting W-9 information.
An LLC that has elected to be taxed as an S corporation or C corporation is treated as a corporation for 1099 purposes. The corporate exemption applies. The three exceptions (attorney fees, gross proceeds to attorneys, and medical payments) still override the exemption.
For a complete breakdown of how LLC tax classification affects 1099 filing requirements, see 1099 Reporting Requirements for LLC Payments: How Tax Classification Determines Filing.
If one of the three exceptions applies, use Adams® Tax Forms Helper® to file the required form. For attorney fees, enter the amount in Box 1 of Form 1099-NEC. For gross proceeds paid to an attorney, enter the amount in Box 10 of Form 1099-MISC. For medical and health care payments, enter the amount in Box 6 of Form 1099-MISC.
Use the corporation's EIN on the 1099. The corporation's legal name and EIN should appear on their W-9. Enter both exactly as shown.
See About eFiling for step-by-step eFiling instructions.
Generally no. Corporations, including C corporations, S corporations, and LLCs that have elected corporate tax treatment, are exempt recipients for most 1099 purposes, regardless of how large the payment is. A $500,000 payment to a corporation for consulting services requires no 1099. Three exceptions override that exemption.
Attorney fees for legal services, reported in Box 1 of Form 1099-NEC; gross proceeds paid to an attorney, such as settlement funds, reported in Box 10 of Form 1099-MISC; and medical and health care payments, reported in Box 6 of Form 1099-MISC. All three are reportable regardless of business structure. Federal executive agencies also have to report service payments to corporate vendors.
Yes. S corporations are treated the same as C corporations for 1099 exemption purposes, and the same three exceptions apply to both. This surprises some payers who know S corporations are pass-through entities for income tax purposes, but the W-9 will show S corporation status and the exemption applies to general service payments.
The W-9 is the definitive answer. Line 3 shows the payee's federal tax classification: a checked C Corporation or S Corporation box means the exemption applies for most payments, while Individual/sole proprietor or LLC with a P code means it does not. Never assume corporate status from a name, because Inc., Corp., or LLC in a business name tells you nothing about how the entity is taxed.
Subject to change. Verify at IRS.gov or the relevant government site.
Generally no. Corporations, including C corporations, S corporations, and LLCs that have elected corporate tax treatment, are exempt recipients for most 1099 purposes, regardless of how large the payment is. A $500,000 payment to a corporation for consulting services requires no 1099. Three exceptions override that exemption.
Attorney fees for legal services, reported in Box 1 of Form 1099-NEC; gross proceeds paid to an attorney, such as settlement funds, reported in Box 10 of Form 1099-MISC; and medical and health care payments, reported in Box 6 of Form 1099-MISC. All three are reportable regardless of business structure. Federal executive agencies also have to report service payments to corporate vendors.
Yes. S corporations are treated the same as C corporations for 1099 exemption purposes, and the same three exceptions apply to both. This surprises some payers who know S corporations are pass-through entities for income tax purposes, but the W-9 will show S corporation status and the exemption applies to general service payments.
The W-9 is the definitive answer. Line 3 shows the payee's federal tax classification: a checked C Corporation or S Corporation box means the exemption applies for most payments, while Individual/sole proprietor or LLC with a P code means it does not. Never assume corporate status from a name, because Inc., Corp., or LLC in a business name tells you nothing about how the entity is taxed.
Save up to 45 days by skipping the wait for IRS processing.
Save up to 45 days by skipping the wait for IRS processing.
Save up to 45 days by skipping the wait for IRS processing.
Social Security Administration Direct Operations CenterWilkes-Barre, PA 18769-0001 (for Certified Mail Use ZIP code 18769-0002)
Social Security Administration Direct Operations CenterP.O. Box 3333 Wilkes-Barre, PA 18767-3333.
Reduce the 250-return threshold enacted in prior regulations to generally require electronic filing by filers of 10 or more returns in a calendar year. The final regulations also create several new regulations to require e-filing of certain returns and other documents not previously required to be e-filed.
Require filers to aggregate almost all information return types covered by the regulation to determine whether a filer meets the 10-return threshold and is required to e-file their information returns. Earlier regulations applied the 250-return threshold separately to each type of information return covered by the regulations.
Eliminate the e-filing exception for income tax returns of corporations that report total assets under $10 million at the end of their taxable year, and require partnerships with more than 100 partners to e-file information returns, and they require partnerships required to file at least 10 returns of any type during the calendar year to e-file their partnership return.
Corrections must be filed the same way the original was submitted. If you eFile the original then you must eFile the correction. If you mailed in the original then you must mail in the correction.
Do not cut or separate Copies A of the forms that are printed two or three to a sheet, except for Form W-2G. Generally, Forms 1097, 1098, 1099, 3921, 3922, and 5498 are printed two or three to an 8" x 11"sheet. Form 1096 is printed one to an 8" x 11" sheet.
These forms must be submitted to the IRS on the 8" x 11" sheet. If at least one form on the page is completed, you must submit the entire page. Forms W-2G are an exception and may be separated and submitted as single forms. Send your forms to the IRS in a flat mailing (not folded).
Do not staple, tear, or tape any of these forms. It will interfere with the IRS’s ability to scan the documents.
Pinfeed holes on the form are not acceptable. Pinfeed strips outside the 8" x 11" area must be removed before submission without tearing or ripping the form. Substitute forms prepared on continuous feed or strip form paper must be burst and stripped to conform to the size specified for a single sheet (8" x 11") before they are filed with the IRS.
Do not use a form to report information that is not properly reportable on that form. If you are unsure of where to report the data, call the information reporting customer service site at 1-866-455-7438 (toll free).
Do not submit anything other than red ink copies to the IRS.
Use the official forms or substitute forms that meet the specifications in Pub. 1179. If you submit substitute forms that do not meet the current specifications and that are not scannable, you may be subject to a penalty for each return for improper format. All of Adam’s tax forms meet the proper requirements, so use us as a resource.
Do not use dollar signs ($) (they are pre-printed on the forms), ampersands (&), asterisks (*), commas (,), or other special characters in money amount boxes.
Do not use apostrophes (’), asterisks (*), or other special characters on the payee name line.
No photocopies of any form are acceptable.
Do not print plain ink copies of your W-2 copy A or W-3 form. If a box doesn't apply to you, leave it empty.
Do not add "0".
Do not omit the decimal point and cents from entries.
Do not mistakenly check the “Retirement plan” checkbox in box 13. See page 22 of this IRS PDF for Retirement plan details.
Do not misformat the employee’s name in box e. Enter the employee’s first name and middle initial in the first box; his or her surname in the second box; and his or her suffix (such as “Jr.”) in the third box (optional).
Do not enter the incorrect employer identification number (EIN) or the employee’s SSN for the EIN.
Do not cut, fold or staple Copy A paper forms mailed to SSA.
Do not mail any copy other than Copy A of Form W2 to the SSA.
File the correct form with the correct amount, code, checkbox, name or address, and check the “CORRECTED” box. This overwrites what you originally filed with the IRS under that person or company’s name and TIN. Send the corrected form to the recipient and prepare the red Copy A to send to the IRS with the Form 1096 transmittal if you’re paper filing. If you also had the wrong recipient/payee name or TIN do a Type 2 correction instead.
For Type 2 errors, either the recipient/payee name and/or the TIN are wrong or you used the wrong form (like a 1099-MISC instead of a 1099-NEC). Action: This is a two-step process. First, you must zero out what you filed with the IRS under the wrong name/TIN and then file the new form.
Step 1
File a form with the CORRECTED box checked and the exact same payer and recipient information as on the incorrect form, but with all the amounts as zeros. This will remove the originally filed form from the IRS records.
Step 2
File a new Form 1099 with the right information as an originally filed form (not a corrected form).
Incorrect Payer Name, Payer TIN, or both Action: Write a letter to the IRS.
If you filed with the wrong payer name (yours or your client’s name/company name) or the wrong payer taxpayer identification number (TIN), you don’t need to send in a corrected form.
Instead, you should write a letter containing the following information:
Name and address of the payer
Type of error (including the incorrect payer name/TIN that was reported)
Tax year Payer TIN Transmitter Control Code (if you eFiled),
Type of return, Number of payees, Filing method (paper or eFiling)
You have exceeded the IRS paper filing threshold and are required to file electronically.
