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Why no 1099's for corporations?
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JayC
Dec 7, 2011, 1:50:49 PM12/7/11
to
My understanding is that, in general, people who pay more than $600 per year
to a corporation for work performed (such as to contractors etc) are not
required to issue a 1099 to that corporation. But, the same work, performed
by an individual or an LLC would require that a 1099 be issued. (NOTE: I do
know that there are some exceptions such as payments to professional
corporations for attorney services etc).
What I am curious about is why 1099's are required for other entities (such
as LLC's) but are not required for corporations. One theory I have had is
that it is more difficult for corporations to receive payments in the name
of the corporation and hide that income from the IRS. For example, I assume
that an individual contractor could receive a payment in his/her own name
and then go to a check cashing agency and cash their check without
depositing it in their own checking account where the payment could be
picked up by the IRS. And, maybe a single-member LLC could do the same
thing. However, I assume that a check to a corporation could not be cashed
without first depositing it in the corporation's own bank account. I don't
know if that is correct, but that is the only logical reason that I can
think of that would have caused the IRS to generally exempt payments to
corporations from requirement that a 1099 be issued to the corporation.
Is there some other reason why corporations (and not individuals, LLC's,
etc.) were excluded from the 1099 requirements?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
to a corporation for work performed (such as to contractors etc) are not
required to issue a 1099 to that corporation. But, the same work, performed
by an individual or an LLC would require that a 1099 be issued. (NOTE: I do
know that there are some exceptions such as payments to professional
corporations for attorney services etc).
What I am curious about is why 1099's are required for other entities (such
as LLC's) but are not required for corporations. One theory I have had is
that it is more difficult for corporations to receive payments in the name
of the corporation and hide that income from the IRS. For example, I assume
that an individual contractor could receive a payment in his/her own name
and then go to a check cashing agency and cash their check without
depositing it in their own checking account where the payment could be
picked up by the IRS. And, maybe a single-member LLC could do the same
thing. However, I assume that a check to a corporation could not be cashed
without first depositing it in the corporation's own bank account. I don't
know if that is correct, but that is the only logical reason that I can
think of that would have caused the IRS to generally exempt payments to
corporations from requirement that a 1099 be issued to the corporation.
Is there some other reason why corporations (and not individuals, LLC's,
etc.) were excluded from the 1099 requirements?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Message has been deleted
Stuart A. Bronstein
Dec 7, 2011, 4:16:52 PM12/7/11
to
"D. Stussy" <spam+ne...@bde-arc.ampr.org> wrote:
>> Is there some other reason why corporations (and not
>> individuals, LLC's, etc.) were excluded from the 1099
>> requirements?
>
> It may have something to do with having to provide a balance
>> Is there some other reason why corporations (and not
>> individuals, LLC's, etc.) were excluded from the 1099
>> requirements?
>
> sheet every year.
>
> Note that law corporations are not exempt - they get 1099s
> because traditionally many of them have played "fast and loose"
> with the rules.
I wasn't aware of that. Is it in the regulations somewhere, or is it
a more informal requirement?
___
Stu
http://DownToEarthLawyer.com
removep...@yahoo.com
Dec 7, 2011, 7:49:21 PM12/7/11
to
On Dec 7, 10:50 am, "JayC" <J...@jtrtyghdfgr.jmb> wrote:
> My understanding is that, in general, people who pay more than $600 per year
> to a corporation for work performed (such as to contractors etc) are not
> required to issue a 1099 to that corporation. But, the same work, performed
> by an individual or an LLC would require that a 1099 be issued. (NOTE: I do
> know that there are some exceptions such as payments to professional
> corporations for attorney services etc).
>
> What I am curious about is why 1099's are required for other entities (such
> as LLC's) but are not required for corporations. One theory I have had is
> that it is more difficult for corporations to receive payments in the name
> of the corporation and hide that income from the IRS. For example, I assume
> that an individual contractor could receive a payment in his/her own name
> and then go to a check cashing agency and cash their check without
> depositing it in their own checking account where the payment could be
> picked up by the IRS. And, maybe a single-member LLC could do the same
> thing. However, I assume that a check to a corporation could not be cashed
> without first depositing it in the corporation's own bank account. I don't
> know if that is correct, but that is the only logical reason that I can
> think of that would have caused the IRS to generally exempt payments to
> corporations from requirement that a 1099 be issued to the corporation.
>
> Is there some other reason why corporations (and not individuals, LLC's,
> etc.) were excluded from the 1099 requirements?
As part of Obamacare, there is a requirement to issue 1099-MISC to
> My understanding is that, in general, people who pay more than $600 per year
> to a corporation for work performed (such as to contractors etc) are not
> required to issue a 1099 to that corporation. But, the same work, performed
> by an individual or an LLC would require that a 1099 be issued. (NOTE: I do
> know that there are some exceptions such as payments to professional
> corporations for attorney services etc).
>
> What I am curious about is why 1099's are required for other entities (such
> as LLC's) but are not required for corporations. One theory I have had is
> that it is more difficult for corporations to receive payments in the name
> of the corporation and hide that income from the IRS. For example, I assume
> that an individual contractor could receive a payment in his/her own name
> and then go to a check cashing agency and cash their check without
> depositing it in their own checking account where the payment could be
> picked up by the IRS. And, maybe a single-member LLC could do the same
> thing. However, I assume that a check to a corporation could not be cashed
> without first depositing it in the corporation's own bank account. I don't
> know if that is correct, but that is the only logical reason that I can
> think of that would have caused the IRS to generally exempt payments to
> corporations from requirement that a 1099 be issued to the corporation.
>
> Is there some other reason why corporations (and not individuals, LLC's,
> etc.) were excluded from the 1099 requirements?
corporations. This starts in 2012. There was talk of repealing the
law as it would be very burdensome in terms of paperwork, and I'm not
sure if that actually happened. I know the Senate voted to repeal it.
There was another law passed that became effective 1/1/2011 that
landlords must issue 1099-MISC. So for example if you do repairs more
than $600 to one place, you must issue a 1099-MISC for the amount.
I believe it is inconsistent to require 1099-MISC to people and not to
corporations, but then again most of our business is often from
corporations, and it's probably easier to audit corporations (like
look at their credit card receipt of payments).
Bob Sandler
Dec 7, 2011, 8:21:49 PM12/7/11
to
>As part of Obamacare, there is a requirement to issue 1099-MISC to
>corporations. This starts in 2012. There was talk of repealing the
>law as it would be very burdensome in terms of paperwork, and I'm not
>sure if that actually happened. I know the Senate voted to repeal it.
The requirement to send a 1099-MISC to corporations has been
>corporations. This starts in 2012. There was talk of repealing the
>law as it would be very burdensome in terms of paperwork, and I'm not
>sure if that actually happened. I know the Senate voted to repeal it.
repealed. President Obama signed the bill repealing it on
April 14, 2011.
Bob Sandler
paultry
Dec 7, 2011, 8:27:07 PM12/7/11
to
On 12/7/2011 6:49 PM, removep...@yahoo.com wrote:
> there is a requirement to issue 1099-MISC to
> corporations. This starts in 2012. There was talk of repealing the
> law as it would be very burdensome in terms of paperwork, and I'm not
> sure if that actually happened. I know the Senate voted to repeal it.
>
This one?: http://www.govtrack.us/congress/bill.xpd?bill=h112-4
> there is a requirement to issue 1099-MISC to
> corporations. This starts in 2012. There was talk of repealing the
> law as it would be very burdensome in terms of paperwork, and I'm not
> sure if that actually happened. I know the Senate voted to repeal it.
>
Pico Rico
Dec 7, 2011, 8:37:16 PM12/7/11
to
<removep...@yahoo.com> wrote in message
news:82b688c7-7413-4263...@k23g2000yqa.googlegroups.com...
I thought - what are the facts here?
Mark Bole
Dec 7, 2011, 10:21:21 PM12/7/11
to
On 2011/12/07 16:49, removep...@yahoo.com wrote:
[...]
voluntary recall on current status of tax laws as the calendar year end
approaches.
Which resources are most preferred by tax professionals for the "latest
and greatest"? Quickfinder/Taxbook? Other annual reference books?
Year-end tax update CPE seminars? Professional organization journals?
Tax research services?
--
Mark Bole
EA in CA
makbo at pacbell dot net
[...]
>
> As part of Obamacare, there is a requirement to issue 1099-MISC to
> corporations. This starts in 2012. There was talk of repealing the
> law as it would be very burdensome in terms of paperwork, and I'm not
> sure if that actually happened. I know the Senate voted to repeal it.
>
> There was another law passed that became effective 1/1/2011 that
> landlords must issue 1099-MISC. So for example if you do repairs more
> than $600 to one place, you must issue a 1099-MISC for the amount.
We could all benefit from a little more hard research and a little less
> As part of Obamacare, there is a requirement to issue 1099-MISC to
> corporations. This starts in 2012. There was talk of repealing the
> law as it would be very burdensome in terms of paperwork, and I'm not
> sure if that actually happened. I know the Senate voted to repeal it.
>
> There was another law passed that became effective 1/1/2011 that
> landlords must issue 1099-MISC. So for example if you do repairs more
> than $600 to one place, you must issue a 1099-MISC for the amount.
voluntary recall on current status of tax laws as the calendar year end
approaches.
Which resources are most preferred by tax professionals for the "latest
and greatest"? Quickfinder/Taxbook? Other annual reference books?
Year-end tax update CPE seminars? Professional organization journals?
Tax research services?
--
Mark Bole
EA in CA
makbo at pacbell dot net
MTW
Dec 8, 2011, 12:13:56 PM12/8/11
to
On Dec 7, 10:50 am, "JayC" <J...@jtrtyghdfgr.jmb> wrote:
>
>
> Is there some other reason why corporations (and not individuals, LLC's,
> etc.) were excluded from the 1099 requirements?
Corporations can use a fiscal year accounting period (ie: a fiscal
> etc.) were excluded from the 1099 requirements?
year ending September 30th) and it would be impractical to trace
calender year 1099 information to such a return.
Further, corporations often use accrual basis accounting, whereas
1099s are always supposed to be issued on a cash basis (payments
actually made). This again would make it difficult to trace payments
in a meaningful way.
MTW
Arthur Kamlet
Dec 8, 2011, 9:55:28 PM12/8/11
to
In article <a496cbd7-f113-4e93...@g20g2000prb.googlegroups.com>,
>Further, corporations often use accrual basis accounting, whereas
And, technically speaking, so can sole proprietors.
>1099s are always supposed to be issued on a cash basis (payments
>actually made). This again would make it difficult to trace payments
>in a meaningful way.
I prefer to say it's all politics.
Obamacare required that corporations be issued 1099s, and they hue
and cry that arose made poliicians on both sides re-exempt corps.
Lots of small businesses just throw away 1099s received, and will
receive a very nasty shock his year when told they have to break
down income into 1099 income and other income.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
MTW <mtwi...@yahoo.com> wrote:
>On Dec 7, 10:50 am, "JayC" <J...@jtrtyghdfgr.jmb> wrote:
>>
>> Is there some other reason why corporations (and not individuals, LLC's,
>> etc.) were excluded from the 1099 requirements?
>
>Corporations can use a fiscal year accounting period (ie: a fiscal
>year ending September 30th) and it would be impractical to trace
>calender year 1099 information to such a return.
And technically speaking, so can individuals.
>On Dec 7, 10:50 am, "JayC" <J...@jtrtyghdfgr.jmb> wrote:
>>
>> Is there some other reason why corporations (and not individuals, LLC's,
>> etc.) were excluded from the 1099 requirements?
>
>Corporations can use a fiscal year accounting period (ie: a fiscal
>year ending September 30th) and it would be impractical to trace
>calender year 1099 information to such a return.
>Further, corporations often use accrual basis accounting, whereas
>1099s are always supposed to be issued on a cash basis (payments
>actually made). This again would make it difficult to trace payments
>in a meaningful way.
Obamacare required that corporations be issued 1099s, and they hue
and cry that arose made poliicians on both sides re-exempt corps.
Lots of small businesses just throw away 1099s received, and will
receive a very nasty shock his year when told they have to break
down income into 1099 income and other income.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Pico Rico
Dec 8, 2011, 11:15:03 PM12/8/11
to
"Arthur Kamlet" <kam...@panix.com> wrote in message
news:jbrtaq$t7b$1...@reader1.panix.com...
>
>
> Lots of small businesses just throw away 1099s received, and will
> receive a very nasty shock his year when told they have to break
> down income into 1099 income and other income.
> --
please explain. Told by who? What is a small business? Schedule C only?
>
> Lots of small businesses just throw away 1099s received, and will
> receive a very nasty shock his year when told they have to break
> down income into 1099 income and other income.
> --
How will the breakdown be reported? this is all news to me.
Don Priebe
Dec 9, 2011, 8:03:26 AM12/9/11
to
>> Lots of small businesses just throw away 1099s received, and will
>> receive a very nasty shock his year when told they have to break
>> down income into 1099 income and other income.
>
>> receive a very nasty shock his year when told they have to break
>> down income into 1099 income and other income.
>
> please explain. Told by who? What is a small business? Schedule C only?
> How will the breakdown be reported? this is all news to me.
>
Long story, but bottom line is that ALL Schedule C income (except for
> How will the breakdown be reported? this is all news to me.
>
statutory employees) goes on the same line for 2011 returns, no matter
if or which of the 1099-X forms it is documented on.
In the beginning, the basic requirement was that all businesses paying
$600 or more to a sole proprietor (Schedule C filer) for services must
issue a 1099-MISC to that sole proprietor.
A law was passed that all credit card and other third party financial
intermediaries must issue a 1099-K to their clients documenting the
revenue processed.
The Health Care act provided that all businesses paying $600 or more to
ANYONE for GOODS or services must issue a 1099-MISC to that entity.
A law was passed that classified rental real estate as business for the
purposes of issuing 1099-MISCs.
In order that the IRS could track all this new information, it was
speculation that forms used by business entities (including Schedule C)
would require that revenue be broken down into these various categories.
The expanded requirements in the Health Care act were repealed.
The expansion to the rental real estate was repealed.
Schedule C was printed, showing a separate line for 1099-K receipts.
The IRS decided that the 1099-K process really wasn't ready for use, so
the Schedule C instructions were issued saying to put -zero- on the
1099-K line, even if you received them.
Don
EA in Upstate NY
Arthur Kamlet
Dec 9, 2011, 10:47:51 AM12/9/11
to
In article <jbt0un$qpc$1...@dont-email.me>,
Ah! Thanks for the update. I also see if you should have filed
a 1099 they now ask you if you should have and if you did.
And I see there's no way from the Sch C alone to figure out
how much mileage was in the first half and how much in the second
half of the year.
a 1099 they now ask you if you should have and if you did.
And I see there's no way from the Sch C alone to figure out
how much mileage was in the first half and how much in the second
half of the year.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Gene E. Utterback, EA, RFC, ABA
Dec 12, 2011, 4:21:45 PM12/12/11
to
"Stuart A. Bronstein" <spam...@lexregia.com> wrote in message
news:Xns9FB4870D5D5B9s...@130.133.4.11...
> "D. Stussy" <spam+ne...@bde-arc.ampr.org> wrote:
>
>>> Is there some other reason why corporations (and not
>>> individuals, LLC's, etc.) were excluded from the 1099
>>> requirements?
>>
>> It may have something to do with having to provide a balance
>> sheet every year.
>>
>> Note that law corporations are not exempt - they get 1099s
>> because traditionally many of them have played "fast and loose"
>> with the rules.
>
> I wasn't aware of that. Is it in the regulations somewhere, or is it
> a more informal requirement?
Stu - This is covered on page 1 and 2 the 2011 instructions for Form
>
>>> Is there some other reason why corporations (and not
>>> individuals, LLC's, etc.) were excluded from the 1099
>>> requirements?
>>
>> It may have something to do with having to provide a balance
>> sheet every year.
>>
>> Note that law corporations are not exempt - they get 1099s
>> because traditionally many of them have played "fast and loose"
>> with the rules.
>
> I wasn't aware of that. Is it in the regulations somewhere, or is it
> a more informal requirement?
1099-MISC - http://www.irs.gov/pub/irs-pdf/i1099msc.pdf and search for the
word "attorney".
You can also check IRC 6041 & 6045
Gene E. Utterback, EA, RFC, ABA
Stuart A. Bronstein
Dec 12, 2011, 4:33:08 PM12/12/11
to
"Gene E. Utterback, EA, RFC, ABA" <ge...@alliancetax.com> wrote:
>> I wasn't aware of that. Is it in the regulations somewhere, or
>> is it a more informal requirement?
>
> Stu - This is covered on page 1 and 2 the 2011 instructions for
> Form 1099-MISC - http://www.irs.gov/pub/irs-pdf/i1099msc.pdf and
> search for the word "attorney".
>
> You can also check IRC 6041 & 6045
Thanks. Very interesting.
>> I wasn't aware of that. Is it in the regulations somewhere, or
>> is it a more informal requirement?
>
> Stu - This is covered on page 1 and 2 the 2011 instructions for
> Form 1099-MISC - http://www.irs.gov/pub/irs-pdf/i1099msc.pdf and
> search for the word "attorney".
>
> You can also check IRC 6041 & 6045
___
Stu
http://DownToEarthLawyer.com
JayC
Dec 13, 2011, 2:04:40 PM12/13/11
to
JayC wrote:
> My understanding is that, in general, people who pay more than $600
> per year to a corporation for work performed (such as to contractors
> etc) are not required to issue a 1099 to that corporation. .....
> My understanding is that, in general, people who pay more than $600
> per year to a corporation for work performed (such as to contractors
> ....
> What I am curious about is why 1099's are required for other entities
> (such as LLC's) but are not required for corporations. ....
Thanks everyone for all of the replies. It doesn't seem like there is any
clear answer as to why 1099's are not required to be sent to most
corporations. From all of the possible theories that were presented, the
one that seems most likely to me is that corporations tend to have more
shareholders than other types of entities, and they already have more
requirements regarding accounting for and reporting income to their
shareholders.
Gene E. Utterback, EA, RFC, ABA
Dec 14, 2011, 2:12:24 PM12/14/11
to
"JayC" <Ja...@jtrtyghdfgr.jmb> wrote in message
news:jc8666$c2g$1...@speranza.aioe.org...
> JayC wrote:
>> My understanding is that, in general, people who pay more than $600
>> per year to a corporation for work performed (such as to contractors
>> etc) are not required to issue a 1099 to that corporation. .....
>> ....
>> What I am curious about is why 1099's are required for other entities
>> (such as LLC's) but are not required for corporations. ....
>
> Thanks everyone for all of the replies. It doesn't seem like there is any
> clear answer as to why 1099's are not required to be sent to most
> corporations. From all of the possible theories that were presented, the
> one that seems most likely to me is that corporations tend to have more
> shareholders than other types of entities, and they already have more
> requirements regarding accounting for and reporting income to their
> shareholders.
I don't recall whether I responded to your original post or not, so I'll do
>> My understanding is that, in general, people who pay more than $600
>> per year to a corporation for work performed (such as to contractors
>> etc) are not required to issue a 1099 to that corporation. .....
>> ....
>> What I am curious about is why 1099's are required for other entities
>> (such as LLC's) but are not required for corporations. ....
>
> Thanks everyone for all of the replies. It doesn't seem like there is any
> clear answer as to why 1099's are not required to be sent to most
> corporations. From all of the possible theories that were presented, the
> one that seems most likely to me is that corporations tend to have more
> shareholders than other types of entities, and they already have more
> requirements regarding accounting for and reporting income to their
> shareholders.
so now for informational purposes.
My understanding is goes like this -
1 - keep in mind that much of the tax law was written long ago, at a time
when a corporation was a BIG deal and not something just anyone started up;
2 - corporations are assumed to be more sophisticated that the average
individual - whether that is true or not remains to be seen;
3 - corporations, especially C corporations can elect any fiscal year they
like. For any other entity to use a non-calendar year they have to file an
IRC 444 Election and PUT ON DEPOSIT a dollar amount roughly equal to the
amount of tax that is being deferred because of the fiscal year. This is a
LOT of work and it costs money so few actually do it. Think about this -
A) my corporation has a July 1 to June 30 year end;
B) your corporation has a October 1 to September 30 year end;
C) 1099s get issued on a calendar year basis
D) how would the government reconcile the 1099 to either the payor or
the recipient in cases like this?
That's how it was explained to me. But for the sake of full disclosure, I
don't actually know any more than you or anyone else. If you REALLY want to
get a better grip on why you can research the appropriate Internal Revenue
Code section and trace it back to the Congressional Committee reports and
notes for the year the law took effect. This too is a LOT of work.
Gene E. Utterback, EA, RFC, ABA
Michael Roberts
Oct 12, 2020, 6:57:01 PM10/12/20
to
John Levine
Oct 13, 2020, 12:47:28 AM10/13/20
to
In article <3dd0b248-8049-4b2f...@googlegroups.com> you write:
>On Wednesday, December 14, 2011 at 12:12:24 PM UTC-7, Gene E. Utterback, EA, RFC, ABA wrote:
>> ...
>On Wednesday, December 14, 2011 at 12:12:24 PM UTC-7, Gene E. Utterback, EA, RFC, ABA wrote:
Any chance the answer could have changed in the nine years since that
question was asked?
>I believe the reason corporations do not get a 1099, is because first, they will have (or should have)
>reported income from sales, and issue periodic financial statements. Adding 1099 income would be double
>counting. And then they are subject to audits, whereas independent contractors are not.
--
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
Stuart O. Bronstein
Oct 13, 2020, 12:52:28 AM10/13/20
to
Michael Roberts <wyost...@gmail.com> wrote:
> I believe the reason corporations do not get a 1099, is because
> first, they will have (or should have) reported income from sales,
> and issue periodic financial statements. Adding 1099 income would
> be double counting. And then they are subject to audits, whereas
> independent contractors are not.
You may be thinking about public companies, that have disclosure
> I believe the reason corporations do not get a 1099, is because
> first, they will have (or should have) reported income from sales,
> and issue periodic financial statements. Adding 1099 income would
> be double counting. And then they are subject to audits, whereas
> independent contractors are not.
requirements. Most corporations are private. And if they want to
cheat, there's only the IRS to stop them.
But the exemption from filing a 1099 doesn't apply to law corporations.
I guess they don't trust lawyers as much as they trust everyone else.
--
Stu
http://DownToEarthLawyer.com
--
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