Normally, you are not responsible for sending 1099s to corporations. However, any attorney fees paid should be reported on a 1099 regardless of the law firm's business structure, assuming the fees totaled more $600 during the year and they were incurred in the course of a taxpayer's trade or business.
If your business pays more than $600 to an individual or business, it is responsible for issuing a Form 1099-MISC. The 1099 reports the name, address and identification number of the recipient. It also details the amount of payments made to him during the tax year and the nature of the income. One copy of the Form 1099 is sent to the IRS so it has a record of the income. A second copy is sent to the recipient, who reports it on his or her income tax return.
Attorney Fees and Corporations
Form 1099s must be sent to sole proprietors, S corporations, LLCs and partnerships. As a general rule, a business doesn't need to issue a 1099 to a corporation or an LLC organized as a corporation. There are a few exceptions to that rule, however. According to the IRS 1099 instructions, attorney fees for legal services must be reported on a Form 1099, regardless of whether the law firm or legal service is incorporated or not.
Reporting Payments Made
Report any attorney fees paid in box 7, regardless of whether or not you were the recipient of the legal services. If you paid anything else to the attorney that doesn't qualify as legal fees, report that in box 14. For example, an insurance company that settles a claim would report the settlement proceeds in box 14.
The IRS specifically states that you only need to file a Form 1099-MISC if attorney fees were paid "in the course of your trade or business." In other words, you're responsible for filing a Form 1099-MISC if you paid the legal fees to earn, or protect your ability to earn, taxable income. This means that businesses are always responsible for sending 1099s but individuals don't always have to. For example, if you're a landlord and you paid legal fees to recover payment from a tenant, you're responsible for sending a 1099-MISC. However, if you paid legal fees for a divorce proceeding, you're not obligated to send the form.