Payments to Veterinarians Require 1099 (Even If Incorporated)!
Most farmers are used to preparing form 1099s in January of each year for any unincorporated businesses that provide services to them during the year. Once those total payments exceed $600, the farmer is required to issue a form 1099-MISC. If the business providing the services is incorporated, then a form 1099 is normally not required.
However, for many years, Congress has required a form 1099 be issued to any medical provider that provides services exceeding $600 in a calendar year and these rules require a form 1099 for any entity. Therefore, if the medical provider is incorporated, the business would still need to issue a form 1099.
The IRS released guidance late last year indicating that veterinarians meet the definition of a medical provider, therefore, if the farmer pays more than $600 to any vet during the year, they should issue a form 1099 at the end of the year, even if the vet is incorporated. If you have a vet that provides services during the year and these payments exceed $600 for the year, make sure to issue a form 1099 to them at year-end. Instead of being listed in box 7 (non-employee compensation), these payments will be listed in box 6 (medical and health care payments).
Tomorrow starts the three-day AICPA Ag Conference in Austin, Texas. I am looking forward to the line-up of speakers that we have this year and will fill you in on anything worthwhile that may happen.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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