Does a C-Corporation Have to Report 1099s?
The Internal Revenue Service mandates that companies issue Form 1099s to independent contractors and small businesses that provided certain services during the tax year. Companies must issue these 1099s to any partnerships, sole proprietors and LLCs for amounts paid that exceeded $600, but the IRS specifically exempts corporations, except in a few scenarios. Therefore, C-corporations do not report 1099s they may receive.
Corporations are wholly separate entities under state and federal law and for tax treatment purposes. C-Corporations must file Form 1120, in which they state all their revenue and expenses. This already encompasses all the information that a corporation would receive on a 1099. In addition, state and federal governments hold corporations to high reporting standards, including conducting shareholder and director meetings and maintaining meeting minutes. Therefore, the IRS generally exempts corporations from requiring or reporting any Form 1099-MISCs they receive.
A few exceptions do exist. C-corporations that receive medical and health care payments must receive Form 1099-MISC from each business customer that paid more than $600 during the year. Attorneys and lawyers that operate as corporations must also receive 1099s for amounts over $600. If your C-corporation received cash paid for fish purchases, then you must receive a 1099-MISC for these amounts. As a C-corporation, you do not need to separately report these transactions, but you must reflect the aggregate amounts on Form 1120.
C-corporations must receive other Form 1099s for various transactions. A C-corporation must receive Form 1099-C for any debt over $600 cancelled on its behalf, and Form 1099-A for sale or abandonment of security property. Corporations must receive Form 1099-B for any barter transaction. Businesses must issue Form 1099-K to a C-corporation for all merchant card payments or third-party network payments exceeding $20,000 and 200 or more transactions. The receipt of these forms helps C-corporations properly reflect these transactions, and facilitates preparation of Form 1120 for these sometimes complex transactions.
Form 1099-MISC supplies information about independent contractors to the IRS similar to a W-2, which provides information about employees. The IRS double checks the 1099s issued to corporations as outlined above to ensure the corporation properly reflected the transactions in its revenue. If your C-corporation operates under any of these scenarios, fill out a W-9 to ensure the reporting entity has the information needed to supply your company with the proper 1099. File the 1099s with your other accounting and financial records.