The Internal Revenue Service mandates that all businesses — large and small corporations, limited liability companies, nonprofits and partnerships — provide 1099s to certain service providers and independent contractors not long after the end of the tax year. All domestic businesses, including private corporations, must comply with this IRS regulation. However, only private corporations that provide services under certain provisions need to receive 1099s from companies that pay them.
Form 1099-MISC Purpose
You must file Form 1099-MISC for each person to whom you paid income, made certain payments or awarded prizes. Specifically, you must file a 1099 for each person to whom you paid for any services, attorney fees, medical and health care payments or rents. You must also file a 1099-MISC if you paid someone a minimum of $10 in royalties.
IRS Dates and Definitions
Payers must deliver 1099-MISC to recipients by January 31 following the end of the prior tax year. Payers must provide the IRS with the federal tax copies by February 28. This latter deadline extends to March 31 if the payer files electronically. With regards to the 1099, the IRS defines “persons” as individuals and businesses that operate as separate legal entities. These businesses include LLCs and partnerships and corporations. Thus, private corporations are required to file 1099s.
EIN and Certification
As a corporation that will provide 1099s for each applicable service provider and contractor, you must obtain the employee identification number, or EIN or taxpayer identification number, TIN, for each. To do so, request each individual or entity complete a Form W-9. A W-9 provides the company or individual’s name, address, EIN or TIN with a signature certifying the information is true and correct.
Provisions under Which Corporations Must Receive 1099s
Unless your business operates as a financial institution, generally, you do not have to report payments made to a corporation on Form 1099-MISC. However, there are several instances when you must report payments to a corporation. These include payments made for attorney’s fees to attorneys operating under a corporation and health care and medical payments to corporations including physician organizations You must also report any substitute payments to corporations that replaced dividends. In addition, if you are in the fishing business and you paid cash to a corporation for fish purchases, then you must report those cash purchases on Form 1099-MISC.
- Internal Revenue Service: General Instructions for Certain Information Forms [http://www.irs.gov/pub/irs-pdf/i1099gi.pdf]
- Internal Revenue Service: Forms and Associated Taxes for Independent Contractors [http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Forms-and-Associated-Taxes-for-Independent-Contractors]
- Internal Revenue Service: Request for Taxpayer Identification Number and Certification [http://www.irs.gov/pub/irs-pdf/fw9.pdf]