What If Someone I Paid Does Not Have A Taxpayer Identification Number TIN?

A Taxpayer Identification Number or TIN is used by the IRS in managing taxes. They could be one of the following:

  • Social Security Number “SSN”
  • Employer Identification Number “EIN
  • Individual Taxpayer Identification Number “ITIN
  • Taxpayer Identification Number for Pending U.S. Adoptions “ATIN
  • Preparer Taxpayer Identification Number “PTIN

If a payee withholds their TIN number, you may file paper versions of W-2, 1042-S, or 1099-MISC forms without the payee’s TIN. However, you must follow the following procedures. Here are the legal requirements for filling out IRS forms under Treasury Regulation 301.6109-1(C)

You must provide a payee’s TIN on any tax returns or statements

The law requires you to provide a payee’s Taxpayer Identification Number if they know it and the forms or instructions require it. If you do not know the payee’s TIN number, then you must make a written request to the payee for their TIN and state that it is legally required on the form. Then you can fill out the affidavit on the transmittal document to say you have requested the TIN and file it with the return.

This affidavit allows you to avoid any IRS penalty for not having a payee’s TIN. This affidavit is called a Withholding Certificate. You must file a withholding certificate if you are claiming:

  • Tax treaty benefits
  • Exemption for effectively connected income
  • Exemption for certain annuities
  • Exemption based on an exempt organization or private foundation
  • Being a qualified intermediary, a withholding foreign partnership, a grantor trust with fewer than five grantors, exempt organization, or a U.S. branch of a foreign person treated as a U.S. Person

There is no function to file the affidavit with a digital form, so you must file the paper forms with the affidavit. You must keep a copy for yourself, send a copy to the IRS, and another copy to the payee. This affidavit should be attached to any of the following paper forms if you do not have a payee’s TIN number:

  • W-2
  • 1042-S
  • 1099
  • 941
  • 943
  • 945
  • 1042

Under the law, you can still pay your payee if they do not have a TIN. The IRS does have the ability to penalize any businesses which do not have the payee’s TIN on any forms or statements. If you have “reasonable cause” for not supplying the payee’s TIN, such as the payee refusing to supply their TIN then you may avoid penalties. To show “reasonable cause” you must have taken every reasonable step to secure your payee’s TIN. If you take every reasonable step and the payee still refuses to supply a TIN or does not have one for whatever reason, then the IRS will not penalize you. It is important to ask for a W-9 form when beginning a business relationship with new payees. That way, you can identify any issues of TIN and study the “reasonable cause” clause in Treasury Regulation 301.6724-1 and what reasonable steps you must take to be exempt from any penalty.

Brad Nakase, Attorney

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