Sent a 1099 to a S-Corp contractor and they're furious - did I mess up their taxes?

But if they presented themselves as an e-card company doing business as a video company, couldn't that cause confusion about their actual business structure? I'm curious if the OP had clear documentation that they were definitely dealing with an S-Corp rather than a sole proprietor?

You're asking a good question. The business name on the W9 can sometimes be confusing, but what matters legally is the tax classification box that's checked on the W9 form. If the "S-Corporation" box was checked, then regardless of the business name, they should not receive a 1099. The DBA (doing business as) arrangement is actually fairly common and doesn't change their tax status. What matters is their actual legal classification as indicated on the W9. If the contractor checked "S-Corporation" on their W9, then sending a 1099 was incorrect regardless of how sketchy their name arrangement seemed.

Does taxr.ai help with figuring out which business types need 1099s in the first place? I'm always confused about who needs one and who doesn't.

I'm a bit skeptical about these AI tax tools. How accurate is it with actual IRS regulations? The last thing I want is to rely on something that gives incorrect advice and then face penalties.

Yes, taxr.ai has a fantastic guide that breaks down exactly which business entities require 1099s. It clearly explains the exceptions for S-Corps, C-Corps, and when you do need to issue 1099s to them (like for legal services). They have a whole decision tree that makes it super simple. The accuracy is excellent because they update the system whenever IRS regulations change. Everything is sourced directly from current IRS publications and tax code. I was skeptical too at first, but their explanations include direct references to the relevant tax regulations, so you can verify everything. No penalties since I started using it!

Wait, how does this actually work? I thought nobody could get through to the IRS these days. Is this service just putting you on hold for you or something?

Sounds like BS to me. Nobody gets through to the IRS, especially during tax season. I've tried calling dozens of times and always get the "call volume too high" message. What's their magic trick, paying off IRS agents?

It's not putting you on hold - they use a callback system. Basically, their system continuously calls the IRS using smart dialing technology until they get through, then they immediately call you to connect with the agent they reached. You don't have to wait on hold at all. No magic tricks or paying off agents - they're just using technology to solve the phone wait problem. I was connected to an IRS representative within about 2 hours of signing up, after previously trying for days on my own with no success. The IRS agents are the same ones anyone would talk to, Claimyr just handles the frustrating part of getting through the phone system.

Thanks for that perspective. Is there a deadline for when I need to get the corrected 1099 filed? The contractor is making it sound like this needs to be done ASAP or there will be serious consequences.

You should file the correction as soon as reasonably possible, but there's no strict deadline specifically for corrections. The original 1099s are due January 31st each year, but corrections can be submitted after that. Your contractor is definitely overreacting. While it's annoying for them, it's not going to destroy their business. We just include a note with our tax filing that explains the discrepancy. If anything does come up, the S-Corp has documentation (their W9 showing their status) to easily resolve it. I'd still get the correction done within the next month to be professional, but the panic is unwarranted.

This is an excellent point. You can verify business information through your state's Secretary of State business entity search. Check if the S-Corp is properly registered and if the names match up with what's on the W9. DBAs should be formally registered too.