What to do when your contractor won’t provide w-9 form

Picture this: you’ve hired a contractor, the work’s done, the invoices are paid, and now it’s tax season. You pull up your accounting software to send out 1099 forms, only to realize—you’re missing one tiny, crucial detail: their W-9. You politely ask for it, thinking it’s no big deal, and then...radio silence. Or worse, they flat-out refuse. Cue the panicked Googling and visions of IRS penalties dancing in your head.

Sound familiar? You’re not alone! Dealing with reluctant contractors who won’t share their W-9 can feel like chasing a runaway horse—you’re doing everything to reign them in, but they’re not budging. Don’t worry; I’ve got your back. In this post, we’ll tackle what to do right now to fix the situation and make sure you never find yourself in this bind again. Let’s turn this tax season headache into a lesson learned—and maybe even a little laugh along the way. 📝💼

Steps to Take Now:

Request W-9 Again in Writing:
Send a formal written request for the W-9 via email or certified mail. Clearly state the legal requirement for you to report payments to contractors on Form 1099-NEC.

1. Inform Them of Backup Withholding:
   Explain that the IRS requires you to withhold 24% of their payments if they fail to provide a W-9 (backup withholding). This serves as a strong incentive for them to comply. Or you may choose not to work with them in the future.

2. Document Your Efforts:
   Keep records of all communications and attempts to obtain the W-9. This documentation may be required if the IRS audits you.

3. File a 1099 Without Their SSN or EIN:
   If they still refuse, file the 1099-NEC form to the IRS using what information you have (e.g., name, address, and amount paid) and write “Refused” or leave the Taxpayer Identification Number (TIN) field blank. Attach Form 1096 and explain the missing information in the remarks section.

How to Prevent This in the Future:

Collect W-9 Before Payments:
Make it a policy to collect a completed W-9 before issuing the first payment to any contractor. This ensures compliance from the beginning.

1. Incorporate into Contracts:
   Add a clause to your contractor agreements requiring the submission of a W-9 before payments are made. Make it clear that failure to comply will result in delayed or withheld payments.

2. Automate the Process:
   Use accounting or payroll software that requires contractors to complete and upload their W-9 before payment is processed.

3. Educate Contractors:
   Provide a brief explanation of why W-9 forms are needed and the legal obligations for both parties. Many refusals stem from misunderstandings or distrust.

By addressing the issue promptly and implementing preventive measures, you can safeguard your business from future complications with 1099 compliance.