Do Corporations Get a 1099? Attorney, Medical, and LLC Rules

Corporations generally do not get a 1099. If you pay a C-corporation or S-corporation $600 or more for services, rent, or most other business expenses, you usually don’t need to issue Form 1099-NEC or 1099-MISC.¹ The catch is that several payment categories override that exemption entirely, and one of them, attorney fees, is common enough that most businesses will hit it.

The General Rule

The IRS reasoning is practical: corporations file their own returns under close scrutiny, so a duplicate paper trail from every payer isn’t needed for most transactions. A business paying an incorporated consulting firm $50,000 for advisory work issues no 1099-NEC. Rent paid to a corporate landlord needs no 1099-MISC. The most common $600-threshold payments simply drop out of your reporting obligation when the recipient is a corporation.

The exemption is narrow in one important way: it only covers entities actually classified as corporations for federal tax purposes. Payments to sole proprietors, partnerships, and most LLCs still trigger a 1099 at the $600 mark.²

When You Do Have to Send a Corporation a 1099

The IRS carves out specific payment types where reporting is required no matter what kind of entity the recipient is. If you make one of these payments to a corporation, the corporate exemption doesn’t help you.

Attorney and Legal Payments

Every payment for legal services is reportable, even when the law firm is incorporated. Two separate reporting paths apply depending on what the payment is for:

Attorneys’ fees of $600 or more go on Form 1099-NEC, Box 1. This covers retainers, hourly billing, flat fees, and other charges for the attorney’s professional services.³
Gross proceeds paid to an attorney in connection with legal services, but not for the attorney’s own fees, go on Form 1099-MISC, Box 10, when the amount is $600 or more. A common example is an insurance company paying $100,000 to settle a claim through the claimant’s attorney; that full amount is reported as gross proceeds in Box 10.³

The payer generally doesn’t need to separately report the attorney’s fees that come out of those settlement proceeds. But the full gross amount to the attorney gets reported regardless of the firm’s corporate status.

Medical and Health Care Payments

Payments of $600 or more to physicians, medical providers, and health care corporations are reported on Form 1099-MISC, Box 6. That applies whether you’re a health insurance plan, a government agency, or a private business contracting with a corporate medical practice.³ The scope includes doctor fees, lab work, drug testing, and physical therapy.

Payments to pharmacies and tax-exempt hospitals are generally excluded.⁴ So paying a corporate hospital network for medical services is reportable; buying pharmaceuticals from a pharmacy typically isn’t.

Three Less Common Exceptions

Three other categories override the corporate exemption but rarely come up outside specific industries:²

Cash payments of $600 or more for fish purchased for resale from anyone in the fishing trade go on Form 1099-MISC, Box 11.
Broker substitute payments of $10 or more in lieu of dividends or tax-exempt interest go on Form 1099-MISC, Box 8.
Federal executive agency payments to a corporation for services go on Form 1099-NEC, Box 1.

Most small and mid-size businesses will never touch these. Attorney fees and medical payments are the ones that catch companies off guard.

How to Know a Vendor Is Really a Corporation

You cannot tell whether a vendor is a corporation from the business name, the invoice letterhead, or what the owner said on a call. Form W-9 is how you find out. It collects the vendor’s taxpayer identification number and, on Line 3a, the vendor’s federal tax classification.⁵

If the vendor checks “C Corporation” or “S Corporation,” you can generally skip 1099 reporting for standard payments (subject to the exceptions above). If they check “Individual/sole proprietor,” “Partnership,” or an LLC classification other than corporate, you need to issue a 1099 once payments reach $600.

Collect a W-9 from every new vendor before the first payment goes out, and keep the completed forms on file. If the IRS later asks why no 1099 was issued, the W-9 showing corporate status is your documentation.

Why LLCs Cause the Most Confusion

An LLC’s legal structure doesn’t determine its tax classification. The same LLC can be taxed as a sole proprietorship (single-member), a partnership (multi-member), or a corporation, depending on what the LLC has elected with the IRS.²

On the W-9, an LLC taxed as a corporation checks the LLC box and notes “C” or “S” for its classification. That LLC gets the corporate exemption. An LLC that entered “P” for partnership, or left itself as a disregarded entity, does not qualify. You must issue a 1099 to those LLCs just as you would to a sole proprietor.⁵ Don’t assume an LLC with “Inc.” in its marketing is incorporated for tax purposes. The W-9 is the only reliable answer.

Situations That Change the Answer

Payments Made by Credit Card or Payment App

When you pay a vendor through a credit card, debit card, or third-party network like PayPal or Stripe, you do not report that payment on a 1099-NEC or 1099-MISC. The IRS prohibits double-reporting: payments that could fall under both regimes are reported only by the payment processor, on Form 1099-K.⁶ The current 1099-K threshold is $20,000 in gross payments and more than 200 transactions per year, after Congress reverted it under recent legislation.⁷

If you pay an unincorporated contractor $5,000 by check and $3,000 by credit card, you report only the $5,000 check payment on Form 1099-NEC. For corporate vendors, card payments are doubly irrelevant: the corporate exemption already removes your obligation, and the processor handles any 1099-K reporting.

Foreign Corporations

The domestic 1099 system doesn’t apply to foreign corporations. Instead of a W-9, you request Form W-8BEN-E to document the foreign entity’s status under the international withholding rules.⁸ Payments to foreign corporations for services performed in the United States are reported on Form 1042-S, not any 1099 form.⁹ Those payments may also be subject to 30% withholding unless a tax treaty reduces the rate. If the foreign vendor doesn’t provide a completed W-8BEN-E, you’re generally required to withhold at the full 30%.

Backup Withholding Still Applies

Even when a corporation is exempt from 1099 reporting, backup withholding can kick in on the vendor’s payments if the TIN situation goes sideways. You must withhold 24% when:¹⁰

The vendor doesn’t provide a TIN when required.
The IRS notifies you that the TIN provided is incorrect.
The IRS instructs you to begin withholding because the vendor underreported income.

The 24% rate applies for 2026.¹¹ It’s a strong reason to collect a valid W-9 before the first check goes out, even from vendors you believe are exempt.

What It Costs to Get It Wrong

If you should have issued a 1099 and didn’t, or you filed one late or with bad information, penalties are tiered based on how quickly you fix the problem. The 2026 amounts, from Revenue Procedure 2024-40:¹²

Corrected within 30 days of the due date: $60 per return. Annual maximum of $239,000 for small businesses (gross receipts of $5 million or less), $683,000 for larger businesses.
Corrected after 30 days but by August 1: $130 per return. Maximum of $683,000 or $2,049,000.
Filed after August 1 or not filed at all: $340 per return. Maximum of $1,366,000 or $4,098,500.
Intentional disregard: at least $680 per return, or 10% of the amount that should have been reported, whichever is greater, with no annual cap.

Penalties apply per form, so skipping 1099s for 50 vendors is 50 penalties, not one. A separate penalty structure applies to failing to furnish the correct statement to the payee, so one missed 1099 can generate two penalties: one for the IRS copy, one for the recipient copy.¹³ The intentional-disregard tier is where the numbers get uncapped, and the IRS treats “we didn’t bother collecting W-9s” as exactly that kind of case.

1
Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
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Internal Revenue Service. Form 1099 Reporting for Federal Agencies
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Internal Revenue Service. Instructions for the Requester of Form W-9
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Internal Revenue Service. Form 1099-K FAQs: Third Party Filers of Form 1099-K
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Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill
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Internal Revenue Service. Instructions for Form W-8BEN-E
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Internal Revenue Service. Instructions for Form 1042-S (2026)
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Internal Revenue Service. Topic No. 307, Backup Withholding
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Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
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Internal Revenue Service. Rev. Proc. 2024-40
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Internal Revenue Service. 20.1.7 Information Return Penalties