Do LLCs and C Corps Get a 1099? Exceptions and W-9 Rules

An LLC that has elected to be taxed as a C corporation generally does not get a 1099. Payments to corporations are exempt from Form 1099-NEC and 1099-MISC reporting under federal regulations, and that exemption extends to any LLC whose federal tax classification is C corp. There are a handful of exceptions, most importantly legal fees and medical payments, that punch through the corporate shield no matter what. The way you know for sure which rule applies to a given vendor is by collecting a Form W-9 before you pay them.

Why the Corporation Exemption Applies

Treasury Regulation § 1.6041-3 exempts payments made to corporations from the general information-return requirements.¹ A business paying a corporation for services generally owes no 1099 for that payment. The exemption covers both C corporations and S corporations, and it applies to an LLC once the LLC has elected corporate tax treatment by filing Form 8832 with the IRS.²

The state-law label on the vendor does not control this. A vendor can be an LLC on its Articles of Organization and still be a corporation for federal tax purposes. What matters for your 1099 decision is the federal classification the entity has chosen.

This is also where payers make the most common mistake in either direction. Seeing “LLC” on an invoice and reflexively issuing a 1099 produces an unnecessary form. Skipping a 1099 for an LLC that is actually taxed as a partnership or is a disregarded entity produces a reportable failure. By default, a single-member LLC is a disregarded entity and a multi-member LLC is taxed as a partnership, and payments of $600 or more to either require a 1099.³ Only the C corp (or S corp) election flips the switch to exempt.

Confirming C Corp Status With Form W-9

Form W-9 is how you document the vendor’s classification for your files.⁴ Look at line 3a. An LLC taxed as a C corporation checks the “LLC” box and writes the letter “C” in the space next to it.⁵ That single character is your evidence that the corporation exemption applies to this vendor.

If the LLC writes “P” for partnership, or leaves the classification blank, the exemption does not apply and you owe a 1099 for qualifying payments. If the vendor writes “S,” the corporation exemption also applies (with the same exceptions discussed below).

Get the W-9 before you make the first payment, not in January when you’re chasing forms to meet a filing deadline. Keep it on file, and ask for an updated form if the vendor tells you its classification or legal name has changed. The IRS also offers a TIN Matching service that lets you verify a name-and-TIN combination before filing, which catches errors before they turn into IRS penalty notices.⁶

When You Still Have to Issue a 1099 to a C Corp LLC

Certain payment categories override the corporation exemption. Even if the vendor’s W-9 shows “LLC” with a “C,” these payments still get reported.

Legal Services

Payments of $600 or more to an attorney or law firm for legal services must be reported on Form 1099-NEC, Box 1, regardless of whether the firm is incorporated.⁷ This is the exception most payers hit. Contract review, litigation work, general counsel retainers: if it was paid to a law firm, it gets reported.

A separate rule covers gross proceeds paid to an attorney. Those are settlement funds and similar amounts that pass through a lawyer’s hands but are not fees for the lawyer’s own services. Gross proceeds of $600 or more go on Form 1099-MISC, Box 10, and the corporate exemption does not apply.⁸ The distinction matters because fees and gross proceeds land on different forms and different boxes.

Medical and Health Care Payments

Payments of $600 or more to physicians and other health care providers for medical services must be reported on Form 1099-MISC, Box 6, even when the provider is a corporation.⁸ Medical corporations, individual practitioners, and entities that bill for health care services are all in scope. Payments to hospitals or extended care facilities that are tax-exempt under Section 501(c)(3), or to hospitals owned by federal, state, or local governments, do not have to be reported.¹ Private, for-profit medical corporations do not fit that carve-out.

Narrower Exceptions

Payments for fish purchased for resale from anyone in the fishing trade are reported on Form 1099-MISC, and payments by federal executive agencies for services are reported on Form 1099-NEC, both regardless of corporate status.⁹ Most small businesses will never touch these, but they complete the list of places the corporate exemption breaks down.

Payments by Credit Card or Payment App

The payment method also affects your reporting duty. If you paid the vendor by credit card, debit card, or a third-party payment network such as PayPal, you do not issue a 1099-NEC or 1099-MISC for that payment. The payment processor reports it on Form 1099-K.⁷

When a payment could be reported under both the general information-return rules and the payment-card rules, only the 1099-K applies.¹⁰ For a C corp LLC the payment was already exempt, so this mostly matters for the vendors whose classification you have not yet confirmed. Card payments are off your 1099 list either way.

If the Vendor Won’t Provide a W-9

When a vendor fails to give you a valid taxpayer identification number, the exposure lands on you. Federal law requires you to withhold 24% of each payment as backup withholding and remit it to the IRS.¹¹ Backup withholding is triggered when a payee refuses to furnish a TIN, when the IRS notifies you that the TIN provided is incorrect, or when the payee has a history of underreporting.¹²

If you should have withheld and didn’t, the IRS can hold you liable for the full 24% you should have withheld, plus interest and penalties.¹³ That money comes out of your account, not the vendor’s. So a missing W-9 is a real problem: either get the form, or start withholding.

Deadlines and Penalties If You Get It Wrong

Recipient copies of Form 1099-NEC are due by January 31 following the tax year. When January 31 falls on a weekend the deadline moves to the next business day, which for tax year 2025 means February 2, 2026.¹⁴ The IRS filing deadline is February 28 on paper and March 31 electronically. Form 1099-MISC recipient copies are due January 31 for amounts in Boxes 8 and 10 (including attorney gross proceeds) and February 15 for other boxes, with the same IRS filing dates.

Penalties for a late or incorrect information return scale with how long you take to fix it:

Within 30 days of the due date: $60 per return
More than 30 days late but by August 1: $130 per return
After August 1 or never filed: $340 per return
Intentional disregard: $680 per return with no annual cap

A parallel penalty in the same amounts applies for failing to furnish the correct statement to the recipient.¹⁵ A completely missed 1099 can cost up to $680 in combined penalties: $340 for the IRS copy and $340 for the recipient copy.

If you filed a 1099 for a C corp LLC that turned out to be exempt, or you reported the wrong amount, submit a corrected return. Guidance for corrections is in Part H of the General Instructions for Certain Information Returns and, for electronic corrections, in IRS Publications 5717 and 5718.⁷ File corrections as soon as you find the error. The penalty tiers reward speed.

1
GovInfo. 26 CFR 1.6041-3 – Payments for Which No Return of Information Is Required Under Section 6041
2
Internal Revenue Service. About Form 8832, Entity Classification Election
3
Internal Revenue Service. Limited Liability Company – Possible Repercussions
4
Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification
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Internal Revenue Service. Form W-9 (Rev. March 2024)
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Internal Revenue Service. Taxpayer Identification Number (TIN) Matching
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
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Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025)
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Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
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Internal Revenue Service. Form 1099-K FAQs: Third Party Filers of Form 1099-K
11
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
12
Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding
13
Internal Revenue Service. Tax Withholding Types
14
Internal Revenue Service. General Instructions for Certain Information Returns (2025)
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Internal Revenue Service. Information Return Penalties