Collecting W-9s is a Pain. But…It’s the LAW

The W-9 is an official form furnished by the IRS for employers or other entities to verify the name, address, and tax identification number of an individual receiving income.  Without the completed W-9, a business cannot issue the appropriate 1099 which is reported to the IRS.  Collecting W-9s then is critically important to operating a successful business and staying on the right side of IRS code.

#1 Rule for W-9 collection

Get the W-9 upfront!   No W-9. No Work.

Top Five reasons W-9s don’t get collected

  • W-9 request doesn’t get sent in the first place because it’s a pain
  • Vendor is confused by the W-9
  • Vendor loses, doesn’t complete, or doesn’t return the W-9
  • Vendor doesn’t have an incentive to complete the W-9 (how about 24% backup withholding)
  • “Oh, I’ll deal with it in January.”

Why collecting W-9s should matter to you

  • The IRS is tracking ‘nonemployee compensation’ on a new Form 1099-NEC starting in 2020
  • If you don’t have W-9s you can’t issue 1099-NECs to vendors or file them with the IRS
  • You are required to withhold 24% (Backup Withholding) in federal taxes from vendors who haven’t provided a W-9 and report and deposit the funds to the IRS
  • The penalty for not filing / incorrect 1099s ranges from $50-$500 PER 1099
  • Your vendors are also subject to penalties for not providing you with a W-9

I need help collecting W-9s