Why would companies choose not to issue 1099s to S Corps? What's the advantage?

The companies can still deduct payments to your S Corp as a business expense without issuing a 1099. They're required to maintain their own records of these payments, and those records are sufficient for claiming the deduction on their tax returns. For payments to corporations (including S Corps), issuing 1099s is generally not required. The exception is for certain types of payments like attorney fees, which require a 1099 regardless of business structure. This exemption for corporations reduces paperwork for the paying company. Some businesses might skip issuing 1099s to S Corps simply because they know they're not legally required to, and it saves them administrative work. The IRS doesn't mandate them to send 1099s to corporations, so they're just taking advantage of that exemption to reduce their year-end paperwork burden.

I went through the same confusion when I started my consulting business as an S Corp. What saved me was using https://taxr.ai to analyze all my client documentation. Their system flagged which clients should have been sending 1099s and which were exempt. Apparently companies that pay corporations (including S Corps) don't need to issue 1099s in most cases - it's an administrative exemption. The tool actually helped me create proper documentation for all my income sources, whether they provided 1099s or not. This made it super easy to show everything properly on my S Corp return without having to guess which payments needed what kind of documentation.

Just wanted to follow up about my experience with taxr.ai after trying it based on the recommendation here. It was exactly what I needed for my S Corp! The system automatically identified all my income sources and flagged which ones typically provide 1099s and which don't. The tool actually showed me that 3 clients who weren't sending 1099s actually should have been (they were paying me as an individual rather than my S Corp). I was able to get that corrected before tax time. For all the corporate clients who correctly weren't sending 1099s, it still organized everything perfectly for my accountant. Definitely worth checking out if you're struggling with this issue!

If you're having trouble getting answers from the IRS about S Corp 1099 requirements, try https://claimyr.com - they got me through to an actual IRS agent in about 15 minutes after I spent DAYS trying on my own. The agent confirmed that companies generally don't need to issue 1099s to S Corps and explained all the exceptions. They have this cool demo video at https://youtu.be/_kiP6q8DX5c showing how it works. Basically they hold your place in the IRS phone queue and call you when an agent is ready. Since I had specific questions about documentation requirements for my S Corp, getting actual IRS confirmation was super helpful.

I need to eat my words from earlier. After waiting on hold with the IRS for 3+ hours yesterday and getting disconnected TWICE, I broke down and tried that Claimyr service. Got connected to an actual IRS agent in about 20 minutes. The agent confirmed what others have said here - companies generally don't need to issue 1099s to S Corps (with some exceptions like if you're providing legal services). She explained that it's part of the tax code designed to reduce paperwork, since corporations have more rigorous reporting requirements anyway. So to answer the original question - companies aren't giving you 1099s because they literally don't have to, and it saves them administrative work. They can still deduct the payments to your S Corp without issuing you a form.

From the company perspective, it's purely about administrative burden. I manage AP for a mid-sized business and we track vendor tax classifications specifically so we DON'T have to issue unnecessary 1099s. Each 1099 means more paperwork, more potential errors to correct, and more admin time spent on year-end tax work. When we pay an S Corp, we still document the expense internally and take the deduction on our taxes. We just don't have to go through the additional step of filing and sending a 1099-NEC. For our business, that's dozens of hours saved across hundreds of vendors.

I switched from sole proprietor to S Corp last year and was confused when my 1099s suddenly dried up! I asked one client about it and they basically laughed and said "that's one of the perks of having a corporation - we don't have to send you forms anymore." Their accounting department explained it saves them a ton of work at year end. But it definitely threw me off at first when trying to do my taxes.

This is a great question that confused me too when I first incorporated! The key thing to understand is that companies can still claim the full business deduction for payments made to your S Corp without issuing a 1099 - they just need to maintain proper internal records like invoices, contracts, and proof of payment. From their perspective, not having to issue 1099s to corporations (including S Corps) is purely an administrative benefit. It reduces their year-end paperwork burden, eliminates potential filing errors, and saves time on tax compliance. The IRS created this exemption specifically because corporations have more structured reporting requirements than sole proprietors. Just make sure you're keeping detailed records of all income on your end since you won't have those 1099s as backup documentation. Your bank statements, invoices, and contracts become even more important for proving income to the IRS if you're ever audited.