If you work with several different vendors or subcontractors to keep your business running, it is important that you have them fill out a W-9 Form. Sometimes, for a number of different reasons, you may come across a subcontractor or vendor that refuses to fill one out for you. This can lead to panic. However, there is no need to panic. Mark Dicus & Company is here to talk about what needs to be done if you find yourself in this scenario.
What Do I Do if a Vendor Refuses to Provide W9?
It shouldn’t matter what the reason for the refusal is, if you have a vendor that is refusing to fill out a W-9 Form, there are some steps you can take to make sure you’re covered when tax season arrives.
– Request the W-9 Form in Writing: You need to request that the vendor or subcontractor fills out the W-9 Form when you first start doing working with one another. Make sure your request is done in writing. The best way to do this is via email. If they don’t comply, you will need to make a second request before December 31st of that year. If they still fail to comply, you will need to request it a third time. This should be done before December 31st of the next year.
– Withhold: You will want to start backup withholding 24% right away. All that you withhold should be recorded on a Form 945.
– Form 1099-NEC: If you have paid the vendor of subcontractor over $600 throughout the year, you will need to file a Form 1099-NEC for that payee. This will protect your expenses even though that vendor won’t fill out the form you need. Because you don’t have all the necessary information to fill out the form, you will need to do this one with a paper form rather than using a digital version. You will write the word “refused” in the space where the employee identification number or social security number would normally go.
– Send Copies: Once you have finished filling out the Form 1099-NEC, you will want to make a copy of it and send it to the vendor as well as the IRS.
Penalties Associated with Failing to Fill Out Forms
It is your responsibility to fill out the necessary forms with vendors that you are working with. If you don’t get the W-9 form from the vendor, you will get fined for not completing a Form 1099-NEC for that vendor. The penalty can range anywhere from $50-$270.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
If you have any questions about forms that you need to file taxes for your business, you can turn to Mark Dicus & Company to help answer any questions that you might have. WE have the experience needed to ensure your taxes are filed correctly. Call us today!