What Happens if an Independent Contractor Refuses to Give You Their Tax Identification Number? | USTaxAid

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What Happens if an Independent Contractor Refuses to Give You Their Tax Identification Number?

Written by Diane Kennedy, CPA on November 16, 2022

In January, your business and possibly your real estate investment company is going to need to prepare some Form 1099s for nonemployee workers for the past year.

The Form 1099-NEC (NEC stands for non-employee compensation) and suddenly you have a problem.

How can you get their Tax ID number?

There is a process to follow to get the information you need for completing Form 1099-NECs.

Step One: Make a request in writing to the vendor with a Form W-9 to receive the vendor’s tax ID number. Send it via email so you have a record of your request. This first request should be done when the vendor first starts working for the company.

Step Two:  Make a second request by December 31st of the year in which the vendor started working. Again, do this in writing and keep proof of the request.

Step Three: Make a third request by December 31st of the second year.

(Of course, if you receive the information you need, you do not need to keep making requests.)

If you do not receive the requested information, begin backup withholding of 24%. This money should be reported to the IRS and remitted pursuant to Form 945.

You also will need to prepare a Form 1099-NEC for the vendor, even if you do not have a Tax ID number. In that case write in the word “refused” in the box where you would normally fill in with a social security number or employee identification number.

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