1099 Tax Reporting Requirements Corporations, LLCs, DBAs

Most common questions by corporations and other business entities on 1099 reporting requirements. Below is a direct IRS response to frequently asked question on 1099 issues.

Mike Habib, EA

IRS provides further guidance on Form 1099 reporting

Questions on Corporations. Generally, payments to corporations are not reported on Form 1099-MISC, Miscellaneous Income. Here are some of the questions that the IRS addressed on this subject during the telephone forum.

Question: Is an S-Corporation treated as a “corporation” when determining whether or not a 1099 should be issued?
IRS answer: Yes. The entity is a C-Corp that makes an election to be treated as an S-Corp. When completing Form W-9, Request for Taxpayer Identification Number and Certification, the S-Corp checks the box for a corporation.

Question: Does a 1099 get issued to a limited liability company (LLC) reporting to the IRS as a partnership or to a single-member LLC that is incorporated with the state?

IRS answer: It is the federal tax status that matters. Therefore, if the LLC is a partnership, then 1099s should be issued as required.

Question: If a company has a “doing business as” (dba) name and they list themselves as a corporation, is it correct they do not need a 1099?

IRS answer: It depends on the type of payment. Corporations are exempt recipients but a 1099-MISC may be required under certain circumstances. See the Form 1099-MISC instructions for further information.

Question: If a sole proprietor has a dba name, and the payments are made out to the dba company, do we use the company EIN number or the name of the sole proprietor on line 1. I thought if we used their Social Security number on Form 1099-MISC, then their first name should be listed on line 1 of the name section. If we used their EIN number, then their dba name would be listed first and then their individual name listed next.

IRS answer: The sole proprietor’s name goes on the first line, the dba goes on the second line; this is true whether the EIN or SSN is used.

Questions on Form W-9.
Question: If you receive a letterhead that indicates that vendor is incorporated are you still required to obtain a signed and completed Form W-9 that certifies to that affect?

IRS answer: Get the vendor to complete and sign the Form W-9. Just because the letterhead indicates a corporation, it may be a “doing business as” name and they may not be legally incorporated.

Question: How often do we need to solicit for updated W-9 information from a vendor that we do business with on an ongoing basis?

IRS answer: The solicitation is good until you have reason to know some of the information may have changed.
Form 1099-MISC Box Numbers.
Question: Is there a box on Form 1099-MISC for reporting wages paid to employees serving in the Armed Services?
IRS answer: Report in box 3. These payments are not subject to FICA or FUTA taxes.
Question: Can you please summarize the differences between Box 7, Nonemployee compensation, and Box 14, Gross proceeds paid to an attorney?

IRS answer: Box 7 is to report fees for services, while box 14 is used to report gross proceeds paid to attorneys generally for settlement payments involved in lawsuit.

Question: Which box should “guaranteed payments” be reported in to a individual (32.22%) owner/shareholder of an S-corporation (non-employee)?

IRS answer: Box 3.
Mileage and Per Diem Reimbursements.
Question: Do we have to issue a 1099 for mileage and per diem reimbursements for employees and/or nonemployees?
IRS answer: Depends if there is an accountable plan. See IRS Publication 463 for more information.
Electronic Filing.
Question: Will Form 4419, Application for Filing Information Returns Electronically, ever be available for on-line completion?

IRS answer: No, because a signature is necessary.
Question: Can I apply for use of FIRE (Filing Information Returns Electronically) to file all the 1099-MISC forms for each company? If so, do I just complete one Form 4419?

IRS answer: You need only submit one Form 4419. Once your TCC (Transmitter Control Code) is assigned you can file for any number of clients.

Question: Is it possible to electronically file a 1099 form without a recipient SSN or TIN? Or will this filing be rejected by the system? Will the system accept an ID number that is perhaps all zeroes or something of that nature to indicate that an ID number is unknown?

IRS answer: You can file 1099s without a TIN, however, if your file has a high percentage of this type of record your file may be rejected. You should make every attempt to obtain a payee’s TIN but when all else fails you should still file it. Leave the field blank. Do not put in all 1s or some similar combination.

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Mike Habib, EA
myIRSTaxRelief.com