Donna Bordeaux explains what to do when a vendor won't give you a W-9. You need their SSN or TIN, name, and address to file a 1099, and the IRS can penalize you and disallow deductions if you don't. Collect W-9s before paying, document your attempts, or use a payment processor instead.
Donna Bordeaux (with Calculated Moves).
December 27, 2020.
A federal ID number or Social Security number (TIN/SSN), a name, and an address.
Hi, I'm Donna Bordeaux with Calculated Moves. What happens if you can't get a W9 from a vendor where you need to issue a 1099? Well, first off, as a matter of rule, I want you to always make this easy on yourself by collecting the W9 before the payment is issued. Before. I know that's difficult and it puts an extra bump in the process, but it will save you a ton of time and a ton of resources in trying to collect this information later on. It gets very difficult to collect and find these folks at the end of the year. So save yourself the trouble to begin with. Let's just fix that problem from the start. But if you do have a case where you did not get the W9 and you cannot find the person, you cannot get them to cooperate and give it to you, what should you do? Well, first off, I want you to document every attempt that you make to get that W9 and keep that information on file. If you're ever asked by the irs, you want to be able to at least provide documentation that you tried your best. Now, you cannot issue a 1099 to somebody without having a federal ID number or Social Security number, a name and an address. Those are the absolute minimums. So do your best to try to gather that information. There may be other ways you could obtain that information. By all means, if you're ever going to have a future payment coming up to that vendor, don't issue the payment until they give you the W9. So keep that documentation on hand. If you just can't get the 1099 information to prepare and utilize that to talk to the IRS if it ever comes up. The other alternative is that you may not be able to deduct that expenditure if you can't issue the 1099. The IRS does come back in cases and make adjustments to returns. If you don't issue those 1099s, they're serious about this, because that usually means that this other person that you've paid this money to is avoiding taxes. So they're serious about it. They have strong penalties for not complying with issuing 1099s. Another alternative method that I'd suggest is, guess what? You don't have to issue a 1099 if you will pay people by credit card, by PayPal, by some process that goes through a merchant service, because then it changes that information gathering process over to the merchant who will have to gather that information, and you won't have to issue the 1099. So require that they have a paypal account and pay them that way if you want. Those are some alternatives for you to make life a little bit easier. I hope you have a great day. If you have any questions about this process, please feel free to comment below. I'm Donna Bordeaux with Calculated Moves.
