Why didn't a 1099 get generated for attorney's fees even though I paid with a credit card?

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@john-pero wrote:

2. Lawyers are exempt from receiving 1099. If you issued one to a lawyer you could be fined for issuing a fraudulent 1099

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I'm having trouble finding that, the instructions for the 1099-misc do have attorneys being eligible

Except payments to attorneys go in box 7 of the 1099-MISC.

From the 1099-MISC instructions, page 2:

Payments to attorneys. The term “attorney” includes a law firm or other provider of legal services. Attorneys' fees of $600 or more paid in the course of your trade or business are reportable in box 7 of Form 1099-MISC, under section 6041A(a)(1).

Hello everyone.

Allow me to join the thread and help share additional information about fees paid through credit card.

Payments made through credit card are reported to the Form 1099-K. Credit card payments won't be reported to the Form 1099-Misc.

For additional reference, you may check this article: Payment Card Transactions FAQs.

Our doors are always open here in the Community. Feel free to add a comment below if you have any other concerns about Form 1099. I'm always here to help!

For Law firms and attorneys, read the info for Box 14 and Box 7. All Attorneys are reported, even if they are operating under a Corporate structure.

Get the 1099-Misc Instructions package from the IRS website. That's your Best Resource. Not a QB user forum.

Credit Card Payments fall under the 1099-K rules. Not the 1099-Misc rules.

What about an attorney that was paid with a credit card? I know attorneys receive a 1099-MISC even if they are a corporation but if they were paid with a credit card, do I not have to report it via the 1099-MISC since the merchant account will issue a 1099-K? Or Does the law require me to issue it regardless of how they were paid?

Thanks for joining in the thread @lisaz,

Per Internal Revenue Service (IRS), credit card payments are exempted to report for a 1099-MISC. I suggest contacting the IRS to know what exact form you can submit for attorneys paid by credit card and as to how it's processed.

Also, it’s best to consult for an attorney if they will be having their 1099-K as well.

You can visit this link for the detailed overview instructed from the IRS for 1099-MISC: https://www.irs.gov/instructions/i1099msc.

Please leave a message on the reply button below if you have related concerns. We’re glad to help.

"2. Lawyers are exempt from receiving 1099. If you issued one to a lawyer you could be fined for issuing a fraudulent 1099"

This is hugely wrong and misleading - lawyers are the one case you MUST send a 1099 regardless of corporate structure.  I think you need to back up where you are getting this info and correct the mistake for the benefit of anyone reading this post. 

2. Lawyers are exempt from receiving 1099. If you issued one to a lawyer you could be fined for issuing a fraudulent 1099

This is hugely wrong and misleading.  Lawyers are always reported. I would appreciate you updating your post to clarify where you got this info and to correct it if you are in fact wrong like the rest of the community seems to think.

Payments to lawyers are confusing.  With 2 different 1099's it has actually cleared it up slightly:

 - 1099-NEC - ALL payments to attorneys for fee services are reported in Box 1. Regardless of their corporate status. Only exception would be if they were paid by credit card, in which case they will receive a 1099-K from the CC company.

 - 1099-MISC - Attorney payments that are part of a settlement or lump sum are reported in Box 10. NOT their 'hourly' fee services. 

And if you "over-report" on a 1099, it is always easy to fix with a corrected 1099, and often just a promise not to do it again.  Sending one to an attorney is NOT dangerous, except for the attorney who will have to report the income and pay taxes!

Lawyers? You are SO WRONG!

@cbcavnar 

Assuming payments are not made by credit card, when you say "ALL payments to attorneys for fee services are reported", does this mean even if the total amount for the year is less than the $600 Box 1 Threshold? For example, we paid a law firm about $381 by check for fees last year. Do I need to report that amount on a 1099-NEC, Box 1 or do I not need to send a 1099 at all because the amount does not meet the threshold of $600?

Thanks!

I'll provide some details about 1099, BWay.

The IRS only requires you to file a Form 1099-NEC if you paid $600 or more in cash during the previous year. Yes, you're right. Since the amount $381 dollars doesn't meet the threshold, you' aren't required to send 1099. You can also check out the IRS Website for more information. I've also provided this particular section for your reference. See the screenshot below:

(Instructions for Forms 1099-MISC and 1099-NEC  page 2/12 )

You can also browse this article so you can check out some of the frequently asked questions about 1099: Create And File 1099 With QuickBooks Online.

In addition, QuickBooks provides list of payroll reports that you can use to view useful information for your business and employees. To know more, I've added this link for your reference: Run Payroll Reports.

Please touch base with us here if you have any other questions about 1099s. We're here to make sure everything is covered. Have a nice day!

@MariaSoledadG 

Thanks for the quick reply. Tracks with what I was thinking.

Happy filing, everybody!

It's great to see you again on this thread, BWay.

I'm delighted to learn that the information shared by my colleague has successfully resolved your concern regarding the attorney's fees not being reported on the 1099 form. Your valuable input motivates us to work harder and ensure our customers receive the best possible resolution.

I have collected various resources that address topics such as resolving 1099 issues, missing contractors, and payment discrepancies:
 

•  Fix missing contractors or wrong amounts on 1099s
• Troubleshoot missing contractors or wrong amounts on 1099s
• Understand payment categories for the 1099-MISC and 1099-NEC
  
  

Feel free to visit again if you have accounting concerns or need further assistance navigating through QuickBooks. I'm always ready to help and make sure everything is taken care of. Enjoy the rest of the day, BWay.

Completely incorrect.  
I honestly cannot believe QuickBooks is allowing you to keep your comment up. Per IRS code all fees paid from a business to an attorney must be reported to the attorney in 1099 Box 7. No matter how the law firm is structured. They must receive a 1099..  Ifyou do not believe me take the time to read the IRS code yourself. https://www.irs.gov/pub/irs-pdf/i1099mec.pdf

Hi @Tuckerestesaccounting 

Y'know, this stuff is super confusing. I think what we are discussing here is what amounts and what kind of payments are reportable on a 1099-NEC or 1099-MISC, not how the attorney's firm is structured. I think the argument to exclude payments by credit card from Box 1 of a 1099-NEC for attorney's fees (or most other payments to other vendors on the 1099-NEC) is supported by those payments needing to be reported on a 1099-K by the processing companies. You can see this information in the same 2024 Instructions for 1099-MISC and 1099-NEC booklet you attached to your post, under the "Exceptions" instructions in the middle of page 9 under "Form 1099-K". 

Also, in looking back to the originating date of this post (2019), some of the information contained in the questions, comments and replies MAY not be 100% accurate now as things that were reported on a 1099-MISC have now changed and some of those items are now being reported on the 1099-NEC instead.

Not true