Whether an LLC gets a 1099-NEC depends on how the LLC is taxed, not on the fact that it’s an LLC. If the LLC is a single-member disregarded entity or a partnership, you issue a 1099-NEC once your payments for services reach $2,000 in 2026. If the LLC has elected C-corporation or S-corporation treatment, you generally don’t, with attorney fees the main exception that catches even corporate LLCs.1Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
The IRS doesn’t treat “LLC” as a tax category. Every LLC lands in one of four federal classifications, and that classification is what controls your reporting duty. Getting it right matters because the penalty for skipping a required filing can reach $340 per form.2Internal Revenue Service. Information Return Penalties
How the LLC’s Tax Classification Decides It
Single-Member LLC (Disregarded Entity)
A single-member LLC that hasn’t elected corporate status is a disregarded entity. The IRS treats it as though the LLC didn’t exist for income tax purposes, and the income flows straight to the owner’s return.3Internal Revenue Service. Single Member Limited Liability Companies Because the IRS looks at these the same way it looks at sole proprietors, you file a 1099-NEC once your payments cross the threshold.
Multi-Member LLC (Partnership by Default)
A multi-member LLC is classified as a partnership by default, unless it has filed Form 8832 to elect corporate treatment.4Internal Revenue Service. LLC Filing as a Corporation or Partnership Partnerships don’t get the corporate exemption, so a 1099-NEC is required at the threshold.
LLC Taxed as a C-Corp or S-Corp
An LLC that has elected C-corporation or S-corporation status is treated like any other corporation for reporting purposes. You generally don’t issue a 1099-NEC for service payments made to a corporation.1Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC Both C and S elections get you out of the 1099-NEC for most payment types.
Use the W-9 to Find Out
You can’t tell an LLC’s tax classification from its name or its state paperwork. Request a completed Form W-9 before you make the first payment.5Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification
Line 3a is the field to read. An LLC checks the “LLC” box and enters a letter code: C for C-corporation, S for S-corporation, or P for partnership.6Internal Revenue Service. Form W-9 (Rev. March 2024) A single-member disregarded entity doesn’t check the LLC box at all; it checks “Individual/sole proprietor or single-member LLC.” So the shortcut is:
- C or S: no 1099-NEC for ordinary service payments
- P: 1099-NEC required at the threshold
- Individual/sole proprietor box: 1099-NEC required at the threshold
One quirk of the disregarded-entity W-9: the name and taxpayer identification number should belong to the owner, not the LLC. If the owner is an individual, that’s their Social Security number or EIN. If the owner is a corporation or partnership, the parent entity’s information goes on the form.3Internal Revenue Service. Single Member Limited Liability Companies Keep the completed W-9 in your records. It’s your evidence if the IRS ever asks why you did or didn’t file.
The $2,000 Threshold for 2026
For payments made after December 31, 2025, the 1099-NEC reporting threshold is $2,000. It will adjust annually for inflation starting in 2027.7Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns (2026) The threshold applies to the total you paid a single payee during the calendar year, not to individual payments.
Pay an LLC taxed as a partnership $1,800 across 2026? No 1099-NEC. Pay the same LLC $2,000 or more? File.
Exceptions That Override the Corporate Exemption
The corporate exemption has holes. Two categories of payments require reporting even when the payee is a corporation or a corporate LLC.
Attorney Fees
Payments to attorneys for legal services go on Form 1099-NEC, Box 1, even if the attorney or law firm operates as a C-corp or S-corp. The IRS explicitly says the corporate exemption does not apply to legal services.1Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC For 2026, the 1099-NEC threshold for attorney fees is $2,000.8Internal Revenue Service. Form 1099 NEC and Independent Contractors
Gross proceeds paid to attorneys, such as settlement funds, are a separate matter. Those go on Form 1099-MISC and keep the older $600 reporting threshold in 2026.7Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns (2026)
Medical and Health Care Payments
Payments of $2,000 or more to physicians or other health care providers go on Form 1099-MISC, Box 6, even if the provider is incorporated.7Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns (2026) If you pay an LLC medical practice for employee physicals or occupational health services, corporate status won’t get you out of filing.
Card and Payment-App Payments Don’t Count
If you paid an LLC by credit card, debit card, or a third-party network like PayPal or Venmo for Business, do not issue a 1099-NEC for that payment. The payment processor reports those on Form 1099-K instead.9Internal Revenue Service. Form 1099-K FAQs: Third Party Filers of Form 1099-K When you tally what you’ve paid a particular LLC to see whether you’ve hit $2,000, exclude card and app payments. Only check, cash, ACH, and wire payments count toward your 1099-NEC obligation.10Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
If the LLC Won’t Give You a W-9
You can’t just skip reporting because the payee stonewalls you on the W-9. The IRS requires backup withholding at 24% from each payment when a payee refuses to provide a TIN or gives you a clearly incomplete form. It also applies when the IRS notifies you that a TIN on file is wrong, or when the payee has underreported interest and dividend income in the past.11Internal Revenue Service. Backup Withholding
Most LLCs turn over a W-9 quickly once they hear that the alternative is losing 24% of every payment upfront.
Deadlines, E-Filing, and Penalties
Form 1099-NEC is due to the IRS and to the payee by January 31 of the year following payment.12Internal Revenue Service. About Form 1099-NEC, Nonemployee Compensation There’s no automatic extension. If the 31st falls on a weekend, the deadline shifts to the next business day.
If you file 10 or more information returns of any type during the year, you must file electronically. That count aggregates across form types: 1099-NEC, 1099-MISC, W-2, and the rest.7Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns (2026) The IRS offers a free electronic option through the Information Returns Intake System (IRIS) Taxpayer Portal.13Internal Revenue Service. E-file Information Returns with IRIS If you file on paper because you’re under the threshold, include Form 1096 as the transmittal.
Penalties under Section 6721 for returns due in 2026 climb with delay:2Internal Revenue Service. Information Return Penalties
- Corrected within 30 days: $60 per return
- Corrected by August 1: $130 per return
- After August 1 or never filed: $340 per return
- Intentional disregard: $680 per return, with no annual cap
Non-intentional failures are subject to annual maximums, and those maximums are lower for small businesses. Intentional disregard has no ceiling, and the IRS can assess it as a percentage of the unreported amount in some situations.14Office of the Law Revision Counsel. 26 USC 6721 – Failure to File Correct Information Returns Filing an unnecessary 1099-NEC, such as sending one to a corporate LLC that was exempt, carries no penalty. The risk runs one way. When you’re unsure, file.