1099 Requirement, LLCs

[Nashville]

As we understand it, 1099-MISC is supposed to be sent to any recipient for services. Requirement is waived if recipient is a corporation.

In our fair state, all LLCs are treated as corporations for tax purposes. The payer does not have visibility as to how the LLC files its federal return. There is no capital stock, or corporate resolutions as such, but Tennessee Dept of Revenue expects a corporate return from every LLC granted by the Secretary of State.

Is a Tennessee LLC that performs services required to be issued a 1099-MISC? I know Tennessee does not write Internal Revenue Code, but to what extent does local treatment determine this?

[JohnH]

I think you have to follow how the W-9 is prepared. If they checked LLC and indicate Corp or SCorp in the tax classification box, no 1099 would be required. (This all assumes they fill out the W-9 according to how they file their Federal return)

I have a client who receives lots of W-9's, and LLC's are the most problematic. People often don't complete them properly, especially when they are an LLC. I just tell the client to assume they are a disregarded entity if they check LLC and don't provide the rest of the information. The downside to not filing a 1099 when required is much greater than the downside to filing one when not required.