Q: Paying MDs as 1099s - Is this Corporate Practice of Medicine?
We are a Not For Profit Corporation, and we pay for patient medical expenses when they require financial assistance. We do not advise them on treatment, provide facilities to MDs, direct / employ MDs, or share profits with MDs. We simply pay patient Invoices when they are unable to cover the costs of their care (This is our 'Mission', 'Purpose', and 'Business', so to speak). We are *not* tax exempt, so we treat this as a 'business expense'.
The IRS appears to require that we report payments to Doctors on a 1099 (Box 6) at the end of the year.
Therefore, we are concerned that this could appear to the IRS that we are 'retaining' MDs to provide medical services (We are not).
Does reporting this information on a 1099 as a 'Contractor Expense' cause us to appear that we are engaged in the Corporate Practice of Medicine?
Or . . . Will they understand that we just cover patient bills?
I'm not sure which 1099 form you're looking at, but it's probably the wrong one. This shouldn't be a contractor expense for you since the medical professionals do not contract with you -- rather, they contract with your patients.
With no more information than you provided, my hunch is you should be completing Form 1099-MISC for each provider. If so, your payments go in Box 7 of the form, "Nonemployee Compensation." I strongly encourage you to run this by your tax advisor, a CPA, or whoever does your taxes. If you send paper forms to the IRS you'll also need Form 1096, the transmittal form for the Forms 1099-MISC
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