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If a subcontractor refuses to provide form W-9

January 16, 2012

Form 1099-Misc is issued by your business to a subcontractor or anyone who provides services to you for $600 or more during a calendar year. You will skip the 1099 unless the provider of services is incorporated.

In order to know if the providers of services are incorporated, you should hand them a W-9 prior to paying for their services. The provider completes the W-9, by which they can be indicated if they’re a corporation and therefore not subject to receiving a 1099. The W-9 also gives you the tax ID number, without which you cannot file a 1099. This is why you ask for a completed W-9 prior to payment or prior to receiving services, to avoid the sort of conflicts wherein one party asks for the information in order to comply with the IRS regulations and the second party refuses to provide it, while they’ve already received their payment.

What do you do if a subcontractor refuses to provide a W-9 after receiving payment for a service? If they refuse to provide the W-9, you issue form 1099-Misc with writing “Refused” in the Tax ID box of the form and send it off to the IRS and the subcontractor as usual. It’s up to the IRS to deal with the subcontractor, but you’ve fulfilled your responsibility.

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