Who doesn't get a 1099: card payments, corporations and the attorney and medical exceptions

Crossing $2,000 is only half the question. Many payments never need a Form 1099 from you, because someone else reports them or because the payee is exempt. Here are the main exclusions from the regulation text, and the two exceptions that catch people out.

1. Payments by credit card, debit card or a payment network

If you paid a contractor with a credit or debit card, the card processor reports the payment, not you. The regulation, 26 CFR 1.6041-1(a)(1)(iv), says that payments by payment card or through a third party payment network that would otherwise be reportable under both §6041 and §6050W "are reported under section 6050W and not section 6041". Section 6050W is the rule that makes processors file Form 1099-K.

The same sentence of the regulation adds that, for this purpose, the processor's own minimum (more than $20,000 and more than 200 transactions for third party networks, in 26 U.S.C. §6050W(e)) is disregarded. So a business payment that goes through a third party network still counts as "reported under 6050W" for your purposes, even if the payee is too small to get a 1099-K from the network. Card payments have no such minimum in the first place. Either way, do not issue your own 1099 for those payments as well.

Payment apps and bank transfers: check how you paid

Not every app counts. 26 CFR 1.6050W-1(c) defines a third party payment network as an arrangement in which a central organization has accounts with a substantial number of unrelated providers of goods or services, who have agreed to settle transactions under its terms, and which guarantees payment to those providers. Card-issuing arrangements are excluded from that definition. Whether a particular app or bank-to-bank transfer service fits it, and whether a given payment was sent as a business payment or a personal transfer, depends on the service and how you used it. We have not verified any brand, so treat payment-app and person-to-person transfers as "check" items, not automatic exclusions, and ask your tax professional or the app's own tax documents.

2. Payments to most corporations

26 CFR 1.6041-3(p)(1) lists payments made to a corporation among the payments for which no return is required under §6041. To tell whether a payee counts as a corporation, the regulation points to 26 CFR 1.6049-4(c)(1)(ii)(A), which says you may treat a payee as a corporation (absent actual knowledge otherwise) if, before you pay:

• its name contains "Incorporated", "Inc.", "Corporation", "Corp." or "P.C." (but not just "Company" or "Co."), or an insurance-company term;
• you have a corporate resolution or similar document showing corporate status; or
• it gives you a Form W-9 with an employer identification number and a statement that it is a domestic corporation.

An "LLC" in the name is not on that list. An LLC may or may not be treated as a corporation for tax purposes, so the W-9 is the reliable way to find out.

3. The two corporate exceptions: lawyers and medical providers

The corporate exemption in §1.6041-3(p)(1) has two carve-outs, and they matter now that the threshold is higher:

• Attorneys' fees. Payments made to a corporation after December 31, 1997 for attorneys' fees are not exempt. A law firm organized as a corporation, a professional corporation or an LLC still gets a 1099 if you pay it $2,000 or more in fees for 2026.
• Medical and health care. A corporation "engaged in providing medical and health care services or engaged in the billing and collecting of payments" for them is not exempt either. The regulation then excludes tax-exempt hospitals and extended care facilities, and government-owned ones.

Lawyers have a second rule. 26 U.S.C. §6045(f) requires a return for "any payment to an attorney in connection with legal services", for example a settlement paid to a claimant's lawyer, except for the part already reported under §6041(a) or that would be but for its dollar limit. Which form and box each kind of attorney payment goes on is set by the IRS instructions, which we could not open, so check them before you file.

4. Goods, utilities, freight and storage

§1.6041-3(c) excludes "payments of bills for merchandise, telegrams, telephone, freight, storage, and similar charges". Buying supplies, inventory or equipment from a sole proprietor is not a payment for services. If one invoice mixes parts and labor, ask the vendor to show them separately so you know the services amount.

5. Employees, partners, rent through agents and others

• Employees. Wages reported on Form W-2 are not reported again on a 1099: 26 U.S.C. §6041A(c) says no services return is required where a W-2 statement is required, and §1.6041-3(a) excludes payments reported on Forms W-2 and W-3.
• Rent paid to a rental agent. §1.6041-3(d): the property manager, not you, reports to the landlord.
• Partners. §1.6041-3(f): a partnership's payments to its own partners are reported through the partnership return.
• Tax-exempt organizations and governments. §1.6041-3(p)(2) to (4) exempt payments to organizations exempt under section 501(a), to the United States and to states and their subdivisions.
• Expense reimbursements under an accountable plan (§1.6041-3(h)) and certain payments to foreign persons (§1.6041-4) are also excluded.

A quick decision order

1. Was it wages on a W-2? Stop.
2. Was it paid by card, or through a payment network as a business payment? The processor reports it. Stop.
3. Was it for goods, phone, freight or storage only? Stop.
4. Is the payee a corporation (W-9, name or resolution)? Stop, unless it is an attorney or a medical or health care provider.
5. Is the 2026 total for services or rent $2,000 or more (royalties: $10)? Then a 1099 is likely. See the $2,000 rule.

The free Year-End Vendor Check follows this order on your own bank and card exports. You tag each file as a bank account or a card once, answer a short question per payee (corporation? goods or services? W-9 on file?), and every row says which rule put it in its group. Nothing leaves your browser.