Outsourcing services provided by independent contractors or otherwise referred to as freelancers are of great benefit to small businesses or individual clients.
These professionals can do the work they are specialized in, in a timely manner with no hustle and bustle until it comes to filling out a W-9 form. The latter is an IRS requested fillable document. It is assigned to complete whenever over $600 are paid to a freelancer during one tax year. The paper includes the vendor’s name, TIN, address. All requested withholdings for federal taxes are also to be informed here. IRS provides W-9 forms to print for free. But what can one do if the contractor refuses to provide the accurate TIN? Definitely, this is an unfavorable situation that needs a solution.
Requesting the Necessary Data
Whenever you intend to pay an individual contractor more than $600, you’d better request him to fill out a W-9 form beforehand. This will help you avoid possible problems with the IRS. As a rule, vendors agreeably provide their contact and personal data, as well as the TIN. There are also cases a freelancer makes a mistake when completing the paper by transposing a number that, as a result, generates an error. In such occasions, an IRS Form (either CP-2100A or CP-2100) is sent back. Remember to ask your vendor for the accuracy of TIN. However, he can provide the Employer Identification Number or the Social Security Number, too. Both numbers are acceptable.
Completing the 1099-Misc
Nevertheless, there are still cases when a vendor categorically refuses to complete a printable W-9 form. In such cases, the business owner can process a 1099-Misc form and report about the refusal. Find the box of the Recipient’s TIN, and just write “refused” in it. Remember that you will have to prepare the 1099-Miscform manually, as digital formats do not accept unfinished documents. Once the paper is ready, send a copy to the IRS and another copy to the vendor. After this, it will be the vendor’s business to deal with the IRS and pay the assigned taxes. You, as a client, will only get a warning to request W-9 from a freelancer before starting the work.