Should 1099 be issued to doctors?

[mkedikian]

Have a client that pays out to doctors as independent contractors.  Should my client issue 1099? either for sole proprietor or corporate entity. 

[qbteachmt · Accepted solution]

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.

[sjrcpa]

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

[abctax55]

@sjrcpa  - me too.  I thought that was only for attorneys.  Live/learn.

[sjrcpa]

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

[Just-Lisa-Now-]

Just like anyone else!

[sjrcpa]

yes

[George4Tacks]

Except attorneys. IRS knows they are all crooks. The first audit guide was for attorneys.

[qbteachmt]

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.

[Tk Fresno]

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]

"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.

[EAL33]

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!!

[qbteachmt]

@EAL33 

For this: "My question is complex, but it's in there."

You are a bit lost on the internet. You are asking about Corporate Structure, entity type and operational guidance. This is a Community for peer users of Professional Tax Preparation programs. This is not a forum for legal advice or corporate guidance.

You can call yourself "not for profit" all you want to, but it seems you are Not NFP at all. You really need to consult with someone trained in NFP entity management, operation and governance, because right now, you seem a bit mixed up.

[EAL33]

Hi There,

Yes - We are Incorporated as a Non Profit Corporation, so we are, in fact, a non profit. However, that is separate from 501c3 tax excemption.

Not For Profits are Incorporated without any owners (ie There is no equity, and the Entity cannot be sold).  The 501c3 status is a separate application process, which only an Entity Incorporated as a Not For Profit is able to obtain. However, that is separate from the heart of the question related to 1099s;

My question is more directly related to paying MDs through 1099s

1. Does that automatically make them 'Contractors', or is a 1099 just a form of information reporting so the IRS is able to collect a tax?

2. If you pay a Medical Bill on somebody's behalf, to the Provider, do you file a 1099? (I assume yes, but just checking).

For example, if we operated as a cost free payment processing service, take in funds to cover patients, and pay Doctor Bills on the patient's behalf, would we complete the 1099?

Thanks!

[qbteachmt]

This is the issue:

"However, that is separate from the heart of the question related to 1099s;

My question is more directly related to paying MDs through 1099s"

That isn't the point of this forum. Your question should be more along the lines of: I am trying to prepare my client's 990 or 1120 and have a question regarding form X, lines y-z.

Think of it as, you walked into a bar, and you like ballet, but this bar is all about country music. You wouldn't stand there to discuss ballet. You would go to the right place for what you need.

You don't seem to be using one of Intuit's ProSeries professional tax preparation program. You stumbled onto a product-specific peer user group forum, and seem to be asking personal and direct questions regarding tax regulations as applicable to your operations.

Did you mean to ask the TurboTax people? They can be found at this other link:

https://ttlc.intuit.com/community/discussions/discussion/03/302

[EAL33]

Hi Qbteachmt, 

Thank you - I appreciate your time and suggestions.

If this would be acceptable, I would like to see if there is anybody in the forum with similar experiences or suggestions? We can leave this open for the moment if that works . . .

Thank you community!

[qbteachmt]

@EAL33 

It would help if you are using ProSeries to prepare the tax return, as a professional tax preparer. Because that is what this Topic and this Forum are all about. Have you looked at the top of the Forum page, to see this? I tried to explain that you seem to be in the wrong place on the internet.

Try these people:

https://ttlc.intuit.com/community/other-financial-discussions/discussion/02/216

Or, have you considered asking your own CPA? Because that is why you need one.

Perhaps you are confused by this Forum, which was migrated from an older platform by Intuit who hosts this site, and any topic you see for the first post is dated prior to Dec 7, 2019 as in this specific topic, is an Old topic from a different forum where the topics were not organized like this.

Right now, you don't seem to be asking how to use specific software to prepare your client's tax return. Because everyone else here is busy; the e-file season for tax returns opened yesterday. The people here are working for their own clients, already, and I don't think it is reasonable to keep asking about free guidance here.

Especially with the new tax laws, we all need our own professional consultant that works with us personally and directly, and we respect that they are the experts and we don't keep asking them for free advice when a scenario has this much complexity and it matters as to your specifics.

It is time to Move On.

[EAL33]

Yes - The title of the thread, 'Should a 1099 be issued to Doctors' caused me to ask whether we should issue 1099s to Doctors and how the IRS treats these filings. I am not asking a software question.

Please leave this thread in place, so if somebody wants to comment, they can comment or not.

Thank you!

[EAL33]

Yes - The title of the thread, 'Should a 1099 be issued to Doctors' caused me to ask whether we should issue 1099s to Doctors and how the IRS treats these filings for corporations. You are correct, I am not asking a software question.

Please leave this thread in place, so if somebody wants to comment, they can comment or not.

Thank you!

[qbteachmt]

"I am not asking a software question."

Yet this is a Software forum.

You could have already gotten your answer from an appropriate resource. Are you also harassing any other web forums that don't apply to your question?

[qbteachmt]

For Tax Help, help yourself, by using the IRS and the web for resources, such as:

https://www.law.cornell.edu/cfr/text/26/1.6041-1

And:

https://www.irs.gov/instructions/i1099msc

jump to the section for "Payments made on behalf of another person"