At the end of January there is always mass panic about W-9 forms, whether that’s missing forms, or vendors who refuse to fill out a W-9 form. However, there is no need to worry, we have some W-9 form frequently asked questions to set the record straight.
What Do I Do If My Subcontractor or Vendor Refuses to Fill Out a W-9 Form?
The reasoning behind a subcontractor or vendor’s refusal to fill out a W-9 form is irrelevant. You need to focus on the steps you need to take:
- Make sure you have written evidence of your attempts to get a W-9 form from the vendor, by email is perfectly acceptable. The IRS requires you have requested it at least three times in the following forms:
- The first “solicitation” is when you first start the business relationship.
- The second solicitation is on the 31st of December of the year when you first started working together. If you only started working together in December, then by the 31st of January.
- The third solicitation is to be made by the 31st of December in the following year.
- You must withhold 24% as a backup immediately and report the withheld money on form 945.
- If you have paid the subcontractor or vendor over $600 in a calendar year then you need to file Form 1099-MISC for the payee. This means that your expenses will be reported correctly. You will need to fill out the paper form rather than the digital form as you will not have all the information necessary. The digital form does not allow for blank spaces.
- In the Tax Identification Number box on form 1099-MISC you will need to put “refused” where you would usually put the social security number.
- Send the IRS and vendor a copy of the form 1099-MISC as usual.
What Happens If I Forgot to Ask For a W-9 Form?
Sometimes it happens, you start doing your taxes and realize that you don’t have a W-9 form because you forgot to ask for it. Just contact your vendor and ask for them to fill one out, most will be happy to help. Just collect the information and fill out a form 1099-MISC for this vendor.
Is There A Penalty If You Don’t Have A W-9 Form For A Vendor?
It is the business owner’s responsibility to have a W-9 form for all contractors and vendors. Usually, you will get this when you start working with a subcontractor or vendor, however, sometimes it doesn’t work out that way.
The ideal scenario is that you receive a W-9 form before any work or payment happens but the main thing is you correctly complete and file a 1099-MISC form for each vendor. For this you just need the W-9 form and information before tax time. You will be penalized if every vendor and subcontractor does not have a 1099-MISC form. Penalties could be anywhere from $50 to $270 for every missing form.
If you are a contractor, vendor, or payee of a business then failing to fill out a W-9 form may attract IRS penalties.
What Do I Do With W-9 Forms?
Just put them in a safe place. You need to keep them somewhere you can refer to them to fill out a 1099 Form for each payee. This is the only purpose of the form and the information needs to be kept confidential.
If I Don’t Have an EIN or SSN How Do I Fill Out A 1099-MISC Form?
If the vendor or subcontractor does not give the information required then you can fill out a paper form which unlike a digital form will allow you free-form answers or to leave boxes blank. In the TIN box write “refused” to let the IRS know that the vendor did not give that information.
Can I Keep Working With This Vendor or Subcontractor If They Don’t Give Me A W-9 or TIN?
The IRS requires that you request a W-9 form in writing from the vendor a minimum of three times. After this, the IRS says you must withhold 24% of the amount you pay the vendor or subcontractor until you get a TIN. Following those steps will cover you against IRS penalties.