IRS Memo Explains that Not All LLCs Are Exempt from Section 6041

Brief Background All persons engaged in a trade or business who, in the course of that trade or business, make payments of $600 or more to another person are required to report the payments to the IRS under section 6041 (e.g., Form 1099-MISC).[1] There are, however, exemptions under Treasury regulations.[2] Notably, returns of information are not required under section 6041 for payments made to a "corporation described in § 1.6049-4(c)(1)(ii)(A)."[3] Sometime individuals get confused and believe that LLC stands for “limited liability corporation.” As a result, they believe that LLCs are therefore exempt from information reporting. Recent Guidance On Friday November 21, 2014, the IRS released ILM 201447025, which succinctly clarifies that limited liability companies (LLCs) that have not elected to be classified as a [...]