Can I Issue a 1099 Without a W9?
Internal Revenue Service (IRS) Form 1099 is used to report interest, dividends and miscellaneous income paid to contract workers who are not permanent employees. Form 1099 is issued to each contractor for services he performed during the year. Most contractors submit Form W-9 to their hiring agency for salary and tax reporting purposes, but a hiring agency or employer can issue Form 1099 without Form W-9.
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Penalties
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You can issue Form 1099 without Form W-9 if a contractor does not submit the completed form to you. Form W-9 requires a taxpayer to provide a Social Security number (SSN) to his hiring agency or employer. The IRS can asses a $50 penalty against you for submitting an incomplete Form 1099. If you submit a letter along with Form 1099 stating that you tried to get the information from the contractor and he was unwilling to give it to you, the IRS can waive the penatly because you had reasonable cause for submitting an incomplete form.
Future Tax Withholdings
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The IRS requires you to withhold backup taxes from an employee's future compensation until he provides you with an SSN. The employee can give you that information without completing Form W-9 if he chooses to do so. According to the IRS, the backup tax withholding rate for a non-compliant contractor is 28 percent. If you do not withhold the required amount of backup tax from the contractor's pay, you can be held responsible for the tax.
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W-9 Alternatives
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Some international contractors are not required to obtain an SSN to work in the United States. In that case, Form W-9 requires an international contractor to provide an alternate identification number known as a Taxpayer Identification Number (TIN). You can use a TIN as a substitute identification number for completing Form 1099. The contractor can give you that information in verbal or written form without completing Form W-9.
Timeframe
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Since Form W-9 is often used to start a business relationship, it is generally completed as part of the contractor agreement. Form W-9 is usually completed by a contractor and given to you before he receives his first check. When tax time rolls around, you will already have the information that you need to complete Form 1099.
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References
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