In most cases, a business organized as a corporation does not get a 1099. Payments to C-corporations and S-corporations are generally exempt from Form 1099-NEC and 1099-MISC reporting because those companies file their own corporate returns with the IRS.1Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return The exceptions are narrow but important: attorney fees, medical and health care payments, cash paid for fish, and substitute dividend payments still require a 1099 even when the recipient is fully incorporated.
Why Corporations Are Generally Exempt
C-corporations file Form 1120 and S-corporations file Form 1120-S, so the IRS already sees their revenue through those returns.2Internal Revenue Service. About Form 1120, U.S. Corporation Income Tax Return A 1099 layered on top would duplicate that reporting. The exemption exists for that reason and applies only when the vendor is actually incorporated. Sole proprietors, partnerships, and LLCs that haven’t elected corporate treatment still trigger 1099 reporting when payments cross the threshold.
The exemption also does not cover every organizational type that people lump in with corporations. Tax-exempt organizations, government agencies, and foreign governments are separately exempt for their own reasons, so you don’t file a 1099 for them either.3Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
Confirming Corporate Status With Form W-9
Don’t rely on “Inc.” in a vendor’s name, or the way they answer the phone, or what they told you in an email. The only reliable proof is a completed Form W-9. Collect one from every vendor before you send the first payment.4Internal Revenue Service. Form W-9 (Rev. March 2024) Request for Taxpayer Identification Number and Certification The form captures the vendor’s legal name, taxpayer identification number, and federal tax classification via checkbox. If the box for C-corporation or S-corporation is checked, the corporate exemption applies. If any other box is checked, treat the vendor as unincorporated.
Keep the W-9 on file. It is your documentation that you correctly applied the exemption, and having it available makes the decision defensible if it’s ever questioned.
LLCs Are the Tricky Ones
An LLC is a state-level entity, and it chooses its own federal tax classification. An LLC can elect to be taxed as a C-corporation, an S-corporation, a partnership, or a disregarded entity (essentially a sole proprietorship). The W-9 will show both the LLC designation and the underlying tax classification.5Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025)
The rule follows the tax classification, not the LLC label. An LLC taxed as a C-corp or S-corp is treated as a corporation for 1099 purposes and generally doesn’t get one. An LLC taxed as a partnership or disregarded entity gets a 1099 the same as any unincorporated vendor.
When a Corporation Still Gets a 1099
Four categories of payments override the corporate exemption. If any of these apply, you file a 1099 regardless of whether the recipient is incorporated.5Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025)
Attorney Fees
Payments of $2,000 or more for legal services must be reported on Form 1099-NEC, even when the law firm is a professional corporation. This is the exception that catches the most businesses off guard, because law firms so often operate as corporations and look, on their W-9, like exempt vendors.
There is also a separate rule for gross proceeds paid to an attorney in connection with legal services rather than for the attorney’s own work. Settlement money that passes through a firm’s trust account is the standard example. Those payments go on Form 1099-MISC rather than 1099-NEC. The distinction turns on whether you’re paying the attorney for services or routing money through the attorney to someone else.
Medical and Health Care Payments
Payments of $2,000 or more to any provider of medical or health care services must be reported on Form 1099-MISC, regardless of the provider’s entity type.3Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) This covers physicians, hospitals, clinics, dentists, and other suppliers of health-related services. When the provider is a corporation, list the corporation as the recipient rather than the individual practitioner. Payments to pharmacies for prescription drugs are carved out.
Fish Purchases and Substitute Dividends
Two narrower categories also override the corporate exemption. Cash payments of $2,000 or more to anyone in the business of catching fish, when you’re buying the fish for resale, are reported on Form 1099-MISC; “fish” here includes all aquatic life. Substitute payments in lieu of dividends or tax-exempt interest paid to a corporation are also reportable on Form 1099-MISC.
Payments Through Credit Cards and Apps Don’t Count
Payment method changes the answer. If you pay a vendor by credit card, debit card, or a third-party payment platform such as PayPal or Venmo, you do not issue a 1099-NEC or 1099-MISC for that payment. The payment processor reports the transaction to the IRS on Form 1099-K, and issuing your own 1099 on top would double-count the income.6Internal Revenue Service. Form 1099-K FAQs – Third Party Filers of Form 1099-K
Only payments made by check, cash, ACH bank transfer, or wire trigger your reporting responsibility. When a vendor received a mix of payment methods during the year, you only report the portion that didn’t go through a card or payment network. This applies whether the vendor is a corporation or not, and it can eliminate a filing obligation you thought you had.
The $2,000 Threshold for 2026
Starting with tax year 2026, the minimum reporting threshold for Forms 1099-NEC and 1099-MISC rose from $600 to $2,000.7Internal Revenue Service. Publication 1099 – General Instructions for Certain Information Returns (2026) The change was enacted as part of H.R. 1, applies to payments made after December 31, 2025, and will be inflation-adjusted beginning in 2027.
For the corporate question, the threshold works alongside the exemption rather than replacing it. Payments to a C-corp or S-corp are still generally exempt above $2,000. Payments to non-corporate vendors under $2,000 no longer require a 1099 in 2026, even though the recipient still owes tax on the income. The exceptions listed above use the same $2,000 figure.
What It Costs to Get This Wrong
Missing a required 1099, filing the wrong form, or filing late carries per-return penalties that grow with time. For returns due in 2026, the penalty starts at $60 per return within 30 days of the deadline, rises to $130 through August 1, and reaches $340 after August 1 or if the form is never filed.8Internal Revenue Service. Information Return Penalties Intentional disregard is $680 per return with no cap.
Two features of the penalty system make front-end classification especially worth getting right. Penalties apply separately to the IRS copy and the recipient copy, so one missed form can generate two charges. And small businesses with average annual gross receipts of $5 million or less get lower maximum caps in the first three tiers, but the per-return amount is the same, and the intentional-disregard penalty has no ceiling for anyone. Confirming a vendor’s status through the W-9 before you pay is cheaper than fixing the record later.