When you acquire a business, you might be struggling to understand who is supposed to file a 1099, especially when payments were made before and after the acquisition. If the acquisition qualifies under IRS successor\/predecessor rules, you are the successor. The predecessor is generally the business that made the reportable payments before the acquisition and was responsible for reporting them. You may need to determine whether you or the predecessor is responsible for each payment.<\/p>\n
In some cases, you can combine the predecessor\u2019s reportable payments with your own, but the IRS has specific conditions for doing so. Let\u2019s deep dive.<\/p>\n
When you acquire a business, you first need to check if the payer and Employer Identification Number (EIN) have changed. If the acquired business continues as the same legal entity with the same EIN, as in many stock purchases, there’s no predecessor\/successor split. That entity stays the payer for the full year.<\/p>\n
But when the acquisition creates a separate predecessor and successor:<\/p>\n
You may also use the IRS combined reporting procedure when the required conditions are met. In that case, you take on the predecessor’s reporting responsibilities for the forms included in the agreement.<\/p>\n
The successor can use combined reporting after an acquisition when the IRS requirements are met and the successor and the predecessor both agree on the forms covered.<\/p>\n
So essentially, you can use combined reporting when all of the following apply:<\/p>\n
With combined reporting, the successor can include the predecessor\u2019s reportable payments with its own for the year of the acquisition. Any federal income tax withheld on those payments is included as well.<\/p>\n
You report all the combined amounts on one return per recipient for each recipient covered by the agreement. For example, if the predecessor paid a contractor $1,200 before the acquisition and you paid the contractor $1,500 after the acquisition, the contractor would receive one Form 1099-NEC from you showing $2,700.<\/p>\n
You do not have to include every information return in the arrangement. You and the predecessor can limit combined reporting to:<\/p>\n
For example, you could combine Form 1099-DIV reporting while filing other Forms 1099 separately.<\/p>\n
Combined reporting changes who files the return, but it does not change the 1099 rules that apply to each payment. You still need to check the payment type, the correct form, and the applicable reporting threshold.<\/p>\n
For 2026 payments, the OBBBA raised the federal reporting threshold for certain Form 1099 payments from $600 to $2,000.<\/p>\n
That change does not apply across the board. Royalties, gross proceeds paid to attorneys, and several other payment types still have their own reporting thresholds and rules.<\/p>\n
So, when you use combined reporting, apply the rule for each payment type before adding the amounts to your return.<\/p>\n
After an acquisition, the payment type still determines which information return applies. Use the applicable rule for each payment rather than applying the $2,000 threshold to every Form 1099 category.<\/p>\n
Payment or transaction<\/strong><\/th>\n| Form<\/strong><\/th>\n | Key 2026 reporting rule<\/strong><\/th>\n<\/tr>\n | Nonemployee services<\/td>\n | Form 1099-NEC<\/td>\n | Generally $2,000 or more<\/td>\n<\/tr>\n | Attorney service fees<\/td>\n | Form 1099-NEC<\/td>\n | Generally $2,000 or more<\/td>\n<\/tr>\n | Rents<\/td>\n | Form 1099-MISC<\/td>\n | Generally $2,000 or more<\/td>\n<\/tr>\n | Certain prizes, awards, and other income<\/td>\n | Form 1099-MISC<\/td>\n | Generally $2,000 where the Section 6041 rule applies<\/td>\n<\/tr>\n | Royalties<\/td>\n | Form 1099-MISC<\/td>\n | $10 or more<\/td>\n<\/tr>\n | Gross proceeds paid to attorneys<\/td>\n | Form 1099-MISC<\/td>\n | $600 or more<\/td>\n<\/tr>\n | Cash payments for fish purchased for resale<\/td>\n | Form 1099-MISC<\/td>\n | $600 or more<\/td>\n<\/tr>\n | Direct sales of consumer products for resale<\/td>\n | Form 1099-NEC or 1099-MISC<\/td>\n | $5,000 reporting rule<\/td>\n<\/tr>\n | Interest<\/td>\n | Form 1099-INT<\/td>\n | Apply the form\u2019s independent reporting rules<\/td>\n<\/tr>\n | Dividends<\/td>\n | Form 1099-DIV<\/td>\n | Apply the form\u2019s independent reporting rules<\/td>\n<\/tr>\n | Payment-card transactions<\/td>\n | Form 1099-K<\/td>\n | Reportable regardless of amount under the payment-card rule<\/td>\n<\/tr>\n | TPSO transactions<\/td>\n | Form 1099-K<\/td>\n | More than $20,000 and more than 200 transactions federally for 2026<\/td>\n<\/tr>\n | Retirement distributions<\/td>\n | Form 1099-R<\/td>\n | Apply the form\u2019s independent reporting rules<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n | Does a Business Acquisition Require Form 1099-CAP?<\/h2>\nA business acquisition does not automatically require Form 1099-CAP, Changes in Corporate Control and Capital Structure. It generally applies when control of a corporation is acquired or the corporation undergoes a substantial change in its capital structure, and shareholders receive cash, stock, or other property as part of the transaction.<\/p>\n For an acquisition of control, the IRS rules generally look for at least 50% control and stock involved in the transaction worth $100 million or more, along with the other applicable requirements. Form 1099-CAP is generally filed by the corporation required to file Form 8806 and furnished to affected shareholders who are not exempt recipients.<\/p>\n These rules are separate from the successor\/predecessor rules, which determine how information-return reporting is handled between the businesses after an acquisition.<\/p>\n Form 1099 Filing Deadlines for 2026 Tax Year<\/h2>\nOnce you know which returns you file and which the predecessor files, check the deadline for each form. The dates can be different, depending on the type of Form 1099 and whether you are filing on paper or electronically.<\/p>\n
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