Have a Finance Question? Ask a Financial Expert Online.
Non profits are usually set up as corporations. 1099 Rules indicate that corporations are exempt from receiving 1099 statements, EXCEPT for certain items which you must report on a 1099. Medical or Health care payments are reportable, but non-employee compensation (contractor payments) are not reported. A non-profit is considered to be engaged in a business or trade. Therefore, a 1099 IS REQUIRED to be sent for Medical payments.If you are ever unsure, there is no penalty for sending a 1099 to someone who wasn't supposed to get one, but if you are required to send one and you don't, then you may be subject to a penalty. In other words, send a 1099 when unsure and you are always safe.Source: 1099MISC instructions Page 1, Column 2. http://www.irs.gov/pub/irs-pdf/i1099msc.pdf
1099MISC instructions Page 1, Column 2: doesn't that section refers to non-profits needing to issue 1099s, not necessarily if they should receive them?
But your answer makes sense in the fact that non-profits are set up as corporations (vs. sole proprietors, individuals, etc.) which I did not consider. Also, since attorneys and medical/healthcare are supposed to received 1099 regardless if they are a corporation or not, I will make sure I continue to issue 1099 for the medical/healthcare services (attorneys are never not-for-profit LOL!), but not for other services.
I greatly appreciate you answer. It was extremely helpful.