Why Some Companies Issue 1099s — and Others Do Not

Every year, right around January and February, the same question starts popping up from business owners and independent contractors alike. Someone will call or email and ask, “Why did one company send me a 1099, but another company I worked for didn’t?”

It’s a fair question, and it’s one that causes a lot of confusion. From the outside, it can feel inconsistent or even careless. In reality, whether a company issues a 1099 is driven by specific IRS rules that focus less on the type of work performed and more on how the payment was made and who received it.

Understanding this distinction helps businesses stay compliant and helps contractors avoid surprises when it’s time to file their tax return.

What a 1099 Is Really About

A 1099-NEC is often misunderstood. It isn’t a tax bill, and it doesn’t mean extra taxes are being charged. Instead, it’s an information form. When a business issues a 1099, it’s simply telling the IRS, “We paid this person for services, and they are responsible for reporting that income.”

If a 1099 is not issued, it does not mean the income disappears or becomes non-taxable. It usually means the reporting obligation falls under a different rule or is handled by a different entity altogether.

Why One Company Sends a 1099 and Another Doesn’t

This is where things start to feel confusing, especially for contractors who work with multiple clients.

One of the biggest factors is how you were paid. If a business paid you by check, ACH transfer, or cash, those payments typically fall under 1099-NEC reporting rules once they reach $600 for the year. That same work, however, paid through a credit card or a third-party payment processor like PayPal or Stripe, follows a completely different reporting path.

In those cases, the business does not issue a 1099-NEC at all. Instead, the payment processor may issue a 1099-K. This is intentional and designed to prevent the IRS from seeing the same income reported twice.

Another common reason a 1099 is not issued has to do with the type of business being paid. In many cases, payments made to corporations—both C-Corporations and S-Corporations—are exempt from 1099 reporting. That’s why businesses are supposed to collect a W-9 before issuing payment. The information on that form determines whether a 1099 is required.

Then there’s the $600 threshold. If total payments to a contractor don’t reach $600 during the year, a 1099 is not required. That often leads to confusion, especially for part-year or project-based work. The key thing to remember is that even without a 1099, the income is still taxable and still needs to be reported by the person who earned it.

Why This Feels So Inconsistent to Contractors

From a contractor’s perspective, it can feel like there’s no rhyme or reason. One client sends a 1099 on time, another never does, and a third says they aren’t required to.

What’s easy to miss is that the IRS rules don’t focus on fairness or consistency from the worker’s point of view. They focus on payment mechanics. Two clients can pay you the exact same amount for the exact same service and still have completely different reporting obligations.

Common Mistakes Businesses Make With 1099s

Many businesses get into trouble not because they’re trying to avoid reporting, but because they don’t fully understand the rules. We regularly see companies issuing 1099s for payments made entirely by credit card, failing to issue required forms because a vendor never asked for one, or misclassifying workers altogether.

Another frequent issue is failing to collect W-9s upfront. By the time January rolls around, businesses are scrambling to track down tax information, which often leads to late or incorrect filings.

Why 1099 Accuracy Matters More Than Ever

The IRS is relying more heavily on automated matching systems than ever before. Income reported on 1099s, 1099-Ks, W-2s, and business returns is cross-checked for consistency. When numbers don’t line up, it increases the likelihood of notices, questions, and audits—for both the business and the individual being paid.

This is why getting 1099 reporting right on the front end is so important. It reduces risk, saves time, and prevents unnecessary stress down the road.

The Bottom Line

Some companies issue 1099s because the law requires them to. Others don’t because the reporting responsibility falls somewhere else—not because the income doesn’t count.

For businesses, understanding these rules is about compliance and protection. For contractors, it’s about knowing that your tax obligation exists whether or not a form shows up in your mailbox.

If you’re unsure whether your business should be issuing 1099s, or if you’re wondering why you didn’t receive one, getting professional guidance before filing can help you avoid costly mistakes and uncomfortable surprises.