IRS Form 1099-NEC Hub (2010–2025)

Who Must File Form 1099-NEC?

Any business that made payments totaling $600 or more to a non-corporate recipient for services during the calendar year must file Form 1099-NEC. This includes sole proprietors, partnerships, LLCs, and corporations. The form is filed by the payer — not the recipient — and must be submitted to the IRS and provided to the recipient by January 31 of the following year.

Businesses paying independent contractors

File Form 1099-NEC for any non-corporate service provider paid $600 or more for work performed as part of your trade or business.

Companies paying commissioned sales reps

Report non-employee compensation paid to independent sales representatives who are not on your W-2 payroll.

Law firms paying outside counsel

Attorney payments are always 1099-NEC reportable, even when the attorney operates as a corporation — a specific IRS exception.

Real estate agencies paying agent commissions

Commission payments made to independent contractor agents must be reported on Form 1099-NEC by the issuing brokerage.

Construction firms paying subcontractors

Subcontractor payments in construction are among the most audited 1099-NEC situations due to IRS worker classification scrutiny.

Gig platforms reporting driver and courier income

Platforms historically issued Form 1099-NEC for payments above filing thresholds, though some reporting has shifted to Form 1099-K.

How Form 1099-NEC Works

Form 1099-NEC reports non-employee compensation paid by a business to a non-employee for services. The payer files Copy A with the IRS and sends Copy B to the recipient by January 31. The recipient uses the 1099-NEC income on Schedule C to report self-employment income and pays self-employment tax on it via Schedule SE. E-file is mandatory for businesses submitting 10 or more information returns combined. The IRS matches 1099-NEC data against recipient tax returns using its automated CP2000 matching system.

Form 1099-NEC vs. Other Types of Returns

The correct information return varies based on your payment type and recipient. Refer to this table to identify which form is appropriate for your particular situation.

What Happens If You Don’t File Form 1099-NEC

Failing to file Form 1099-NEC on time or at all creates significant financial exposure for your business. IRS penalties escalate quickly based on how late the filing is.

Late Filing Penalties

The IRS imposes escalating penalties for late returns: $60 if filed within 30 days of the January 31 deadline, $130 by August 1, and $340 or more after that. Small businesses risk annual penalties up to $1.4 million for willful non-compliance.

CP2000 Matching Notices for Recipients

The IRS cross-references 1099-NEC data against recipient tax returns. If a business fails to file, the IRS may still detect unreported non-employee compensation through bank records, audits, or third-party data, triggering CP2000 notices proposing additional tax assessments against both payer and recipient.

Worker Classification Audit Risk

Failing to file Form 1099-NEC while paying contractors raises flags that workers may have been misclassified as employees. An IRS audit can result in retroactive payroll tax assessments, FICA liability, FUTA obligations, and personal liability for business owners who knowingly misclassified workers.

Backup Withholding Liability

If you failed to collect Form W-9 and therefore lack the contractor’s correct taxpayer identification number, you are required to withhold 24% backup withholding on payments. Failure to withhold when required creates additional IRS penalties on top of the missing 1099-NEC penalty.