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Should 1099 be issued to doctors?

Forum|Forum|6 years ago
December 7, 2019
20 replies
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Have a client that pays out to doctors as independent contractors. Should my client issue 1099? either for sole proprietor or corporate entity.

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Best answer by qbteachmt

Box 6 includes to Corporations:

Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs. If payment is made to a corporation, list the corporation as the recipient rather than the individual providing the services. Payments to persons providing health care services often include charges for injections, drugs, dentures, and similar items. In these cases, the entire payment is subject to information reporting. You are not required to report payments to pharmacies for prescription drugs.

The exemption from issuing Form 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations, including professional corporations. However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States (or its possessions), a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.

qbteachmtAnswer

Level 15

Box 6 includes to Corporations:

Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs. If payment is made to a corporation, list the corporation as the recipient rather than the individual providing the services. Payments to persons providing health care services often include charges for injections, drugs, dentures, and similar items. In these cases, the entire payment is subject to information reporting. You are not required to report payments to pharmacies for prescription drugs.

The exemption from issuing Form 1099-MISC to a corporation does not apply to payments for medical or health care services provided by corporations, including professional corporations. However, you are not required to report payments made to a tax-exempt hospital or extended care facility or to a hospital or extended care facility owned and operated by the United States (or its possessions), a state, the District of Columbia, or any of their political subdivisions, agencies, or instrumentalities.

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sjrcpa

Level 15

Thanks. I was not aware of the exception for healthcare corporations. Learn something new every day.

The more I know the more I don’t know.

sjrcpa

Level 15

Yes if the doctors are sole proprietors or LLCs and they are paid $600 or more. No if the docs are incorporated.

The more I know the more I don’t know.

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qbteachmt

Level 15

One of my largest clients is a Phlebotomist. She does DOT testing, DUI testing, DNA testing, etc, and that means she spends a lot to have Doctors come in to the office, too.

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T

Tk Fresno

Level 2

Does it matter who the medical services are for? What if Dr. #1 pays another incorporated doctor (Dr #2) to do his after hours hospital visits. For Dr. #1, is Dr. #2 providing medical services? Interesting because Dr. #1 is providing medical services to a patient by sending Dr. #2. Dr. #2 isn't providing "medical services" to Dr. #1. So is Dr. #2 just an independent contractor for Dr.#1 and therefore does not get a 1099 because Dr. #2 is incorporated? So if not "medical", there would be not reason to send a 1099 to an incorporated dr.....? (Simple answer is send anyway)

qbteachmt

Level 15

"Does it matter who the medical services are for?"

If this is for Business, then it is Business Expense and to report it as such, you are required to use a 1099-M "Informational reporting" form.

"Dr. #2 isn't providing "medical services" to Dr. #1."

You stated Dr 1 is Paying Dr 2. That = Business expense and business relationship.

All of this part is wrong: "So is Dr. #2 just an independent contractor for Dr.#1" That just means, not acting as an Employee..." and therefore does not get a 1099" which is Wrong..."because Dr. #2 is incorporated?"

Incorporated doesn't apply to medical services. The entity Type is moot.

"So if not "medical", there would be not reason to send a 1099 to an incorporated dr.....?"

Nope. Not Medical is not that same as Incorporated or not. You are confusing too many things that are not related.

Medical services, rent to other than a Property Management Firm, and other details per box are what matters. Reportable thresholds matter, per box, aswell.

I recommend getting a copy of the Instructions for forms 1099 and also, the upcoming 1099-NEC.

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E

EAL33

Level 3

Hi There,

QUESTION

We are a Not For Profit Corporation, which pays for the cost of medical care for patients in need, but we do not seek a 501c3 exception, so we are operating as a 'Corporation' for tax purposes.

Therefore, if we pay for a patient's medical bills, does that mean we are 'retaining Medical Doctors' as our 'primary business'? Once we submit 1099s, and all of our income is sent directly to MDs as 'contractor expenses', would appear that we are primarily operating our 'business' through paying MDs as 'contractors'?

Does the IRS get into all of those details, or are they simply asking us to report the funds so they can collect the tax from the MDs?

We need to structure our entity so that we are not a 'Corporation' that provides 'Medical Services', because we are not Doctors, so we are not permitted to 'employ' doctors (That is called the 'Corporate Practice of Medicine', and this is not permitted in most states). Therefore, I want to make certain that sending 1099s to MDs does not make us appear that we are operating a medical practice comprised of 'contractors'.

At the most, we only want to appear to be a 'Management Services Organization' (Gets us away from the 'Corporate Practice of Medicine' problem), which processes payments and covers the cost of care for patients in need. The Doctor sends us the bill, and we pay - That's our business model.

My question is complex, but it's in there.

Does this all make sense?

Thank you!!

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