It's that time of year again. Clients sending me W9 forms.

[Harold Mansfield]

More than 10 years in the business and I still have a problem with clients requesting that I submit a W9 form to them as if they paid me income.
They did not. They purchased a service. It was a flat rate service. I was not a subcontractor or temporary employee. They did not pay me income.

I know for a fact that they do not send these forms to their hosting company, or domain registrar. So why is it every year at least one client sends it to me?

[HumaneHosting]

More than 10 years in the business and I still have a problem with clients requesting that I submit a W9 form to them as if they paid me income.
They did not. They purchased a service. It was a flat rate service. I was not a subcontractor or temporary employee. They did not pay me income.

I know for a fact that they do not send these forms to their hosting company, or domain registrar. So why is it every year at least one client sends it to me?

I could think of a few reasons why they are sending it to you compared to their providers/registrar.

1. If your providing a service rather than a product then they could be still thinking your a contractor rather than a business.
2. Tying into "1." if your a "one man" shop then they could think you of a contractor rather than a business owner.

If you already explained what you told us then it could indeed be hard to explain it to them otherwise... What I would do

If you think that it the first reason but not the second, explain to them that they are still paying a flat fee for services. Just like their hosting provider.

If it the latter explain to them that while your the single person your still operating as a business just like their hosting provider.

[Owen]

More than 10 years in the business and I still have a problem with clients requesting that I submit a W9 form to them as if they paid me income.
They did not. They purchased a service. It was a flat rate service. I was not a subcontractor or temporary employee. They did not pay me income.

I know for a fact that they do not send these forms to their hosting company, or domain registrar. So why is it every year at least one client sends it to me?

Probably because people consider you to be a contractor who they put on payroll.

[Harold Mansfield]

Probably because people consider you to be a contractor who they put on payroll.

Yes. This. I don't like this.

If they're telling the IRS they're paying me income, and I'm telling the IRS I have no other income sources and no one else is paying me income I see a problem arising.

[HumaneHosting]

Yes. This. I don't like this.

If they're telling the IRS they're paying me income, and I'm telling the IRS I have no other income sources and no one else is paying me income I see a problem arising.

But it understandable consideration for people who just don't know/understand this.

Just sitting there and complaining here isn't going to help anyone.

Try explaining to them (again) but this time tie their understanding of not doing it to their provider and registrar. Then I am sure they will follow suit.

They may get it when you first do it or you may need to think outside the box as they says but I wouldn't be complaining about it as it very valid consumer's misunderstanding.

[Paul]

I'm not so sure they shouldn't ask if they paid you over the limit. I believe they are obligated, if they are a business, to provide that info to the IRS and to issue a 1099. I've had w9s requested of me. Sometimes I send them sometimes I ignore them. Most don't bother me but some do insist, then I respond if they are important to me. Some won't pay me without one.I don't think the IRS cares about one shot, relatively small amounts. I think its more about larger, ongoing payments. Tax evasion obviously.

[HumaneHosting]

I'm not so sure they shouldn't ask if they paid you over the limit. I believe they are obligated, if they are a business, to provide that info to the IRS and to issue a 1099. I've had w9s requested of me. Sometimes I send them sometimes I ignore them. Most don't bother me but some do insist, then I respond if they are important to me. Some won't pay me without one.I don't think the IRS cares about one shot, relatively small amounts. I think its more about larger, ongoing payments. Tax evasion obviously.

What?? If your a business you are responsible for your income taxes not your customers. Submit under one go and avoid the drama later for your business and/or yourself.

[nealrm]

Why wouldn't you be considered an IC?

[Harold Mansfield]

Why wouldn't you be considered an IC?
Because I'm not. The same reason a domain registrar is not an independent contractor. If I sell a $500 service and you pay $500 for it, how does that make me your independent contractor?

If a locksmith comes out to get you in your car, is he an independent contractor? Or do you simply pay him a flat rate for service? How about a plumber who comes out to fix a leak? Do you send Roto Rooter an W-9? If you get a flat tire fixed on your company truck do you send a W-9 to Big-O tires? Of course you don't.

I could understand if I were contracted to do a job with date, time and pricing variables. Or if I were acting as a sub contractor performing services for their clients for which I bill them as I go. I have clients like that and for them I completely understand the W-9. Fits the description perfectly.

That is not the case with this specific client.

Also, you can't wait till the end of the year and then decide that you're going to designate me an independent contractor for a one time, flat rate service that you purchased. If that's the relationship you wanted you should have made that clear then and I would have sent you the appropriate paperwork spelling out that agreement. You also would have paid what it cost to have me on call as an independent contractor.

For all the reasons above, this is why I have a problem with people sending these out of the blue when I was not a contractor and they did not hire me as one. They're telling the IRS that they're paying me income, while I'm telling the IRS that they did NOT...because they didn't.

[Paul]

Also, you can't wait till the end of the year and then decide that you're going to designate me an independent contractor for a one time, flat rate service that you purchased. If that's the relationship you wanted you should have made that clear then and I would have sent you the appropriate paperwork spelling out that agreement.

Good point. They should tell you before the job, not after.

[nealrm]

The reason that you don't send 1099 to a domain register is because they are incorporated. If you are incorporated, they shouldn't request a W-9 from you either. But, unless you tell them that, they likely don't know.

1099 are also only for business expenses. So if you hired a plumber to repair your home drain, no 1099 is needed. If you hires a plumber to repair the drain at your business and it was over $600, you should file a 1099.

To be honest, for the business it is better to file than not file. They don't get into trouble for filing when one is needed.

Personally, I keep a W-9 pdf on file. It get sent via a temporary link when needed.

[HumaneHosting]

The reason that you don't send 1099 to a domain register is because they are incorporated. If you are incorporated, they shouldn't request a W-9 from you either. But, unless you tell them that, they likely don't know.

1099 are also only for business expenses. So if you hired a plumber to repair your home drain, no 1099 is needed. If you hires a plumber to repair the drain at your business and it was over $600, you should file a 1099.

To be honest, for the business it is better to file than not file. They don't get into trouble for filing when one is needed.

Personally, I keep a W-9 pdf on file. It get sent via a temporary link when needed.

That's the point... They are requesting a W9 to be done when it obviously not.

[nealrm]

I don't see why it is obvious. I don't think that he is incorporated (I might be wrong). That means he is either a LLC, sole proprietorship, or a partnership. If a business request a service from any of those and it is over $600, then a 1099 should be filed.

[HumaneHosting]

I don't see why it is obvious. I don't think that he is incorporated (I might be wrong). That means he is either a LLC, sole proprietorship, or a partnership. If a business request a service from any of those and it is over $600, then a 1099 should be filed.

It's a service and it was flat rate. Honestly when you last went to your local bakery, convenience shop, and/or etc and told them that they needed to fill out a W9? Same idea here.

[nealrm]

Services are specifically included as needing a 1099 in the IRS instructions and being a flat rate is irrelevant.

You might want to review this link:
https://www.irs.gov/forms-pubs/about-form-1099-misc-miscellaneous-income
it clearly states "services performed by someone who is not your employee".

Now, 1099 are for business purposes only, not personal expenses. They are also only required for businesses that are not corporations. Nor are they generally used for the purchase of tangible goods. (Interesting fish are the exception) So that is why you don't need a 1099 for a bakery or convenience shop.

[HumaneHosting]

Services are specifically included as needing a 1099 in the IRS instructions and being a flat rate is irrelevant.

You might want to review this link:
https://www.irs.gov/forms-pubs/about-form-1099-misc-miscellaneous-income
it clearly states "services performed by someone who is not your employee".

Now, 1099 are for business purposes only, not personal expenses. They are also only required for businesses that are not corporations. Nor are they generally used for the purchase of tangible goods. (Interesting fish are the exception) So that is why you don't need a 1099 for a bakery or convenience shop.

Either way the business is responsible not the consumer. The problem this owner is having that the consumer is saying that a W9 is needed when it not. Given that as you mentioned a 1099 is filed instead.

[nealrm]

A W-9 is needed to gather the information for the 1099. The purchasing business requests a W-9 so they have the information to create and file the 1099.
This is not a W2, which is for employees.

[Harold Mansfield]

A W-9 is needed to gather the information for the 1099. The purchasing business requests a W-9 so they have the information to create and file the 1099.
This is not a W2, which is for employees.
A 1099 is for Independent Contractors. I was not an Independent Contractor for them, nor did they ever indicate that's what they were considering me because they paid me $499 months ago.

I hear what everyone is saying, and on my end what I see is someone who decided at the end of the year that they were going to call me an independent contractor to the IRS and want me to go along and now report their purchase as a salary payment instead of what it was, a one time purchase of a specific service.

I'm not reporting their purchase as salary because it was not.

[HumaneHosting]

A 1099 is for Independent Contractors. I was not an Independent Contractor for them, nor did they ever indicate that's what they were considering me because they paid me $499 months ago.

I hear what everyone is saying, and on my end what I see is someone who decided at the end of the year that they were going to call me an independent contractor to the IRS and want me to go along and now report their purchase as a salary payment instead of what it was, a one time purchase of a specific service.

I'm not reporting their purchase as salary because it was not.

I don't get why people don't get the different between that. A business incur expenses and thus what you sell/offer never is your salary as such. $500 in revenue and $500 in salary are two way different things as you mentioned.

[Harold Mansfield]

I don't get why people don't get the different between that. A business incur expenses and thus what you sell/offer never is your salary as such. $500 in revenue and $500 in salary are two way different things as you mentioned.
Yes and it is taxed differently.

[nealrm]

A 1099 is for any service that is performed for a business over $600. You don't have to be an IC. It is used for services, rent, prizes, awards and many other things. I get them regularly from my larger clients and I'm clearly not an IC.

There is really no advantage for them to call you an IC over a purchase. Both would be deducted from total income to determine profit. The result is the same.

As for reporting it as income, you really should do that. Not reporting it would be fraud and you posted your intentions on a public website. In addition, the company can still file the 1099 without your SSN and stated you refused to provide the information. The IRS would then be unhappy with both you and them. It is definitely something that could provoke an audit or worse. At best you will only get an automatic letter stating you didn't file it with a bill.

Also, a 1099 goes under revenue for your business, not wages.

If you don't believe me, talk to an accountant.

[nealrm]

A 1099 goes on the schedule C for your business. It is part of the total revenue. They do not go under salary. So the expenses and such would be remove before determine profit. It is the profit that is taxed.

[Harold Mansfield]

A 1099 goes on the schedule C for your business. It is part of the total revenue. They do not go under salary. So the expenses and such would be remove before determine profit. It is the profit that is taxed.
So if they report the $500 as salary paid to me as an independent contractor, and I don't report that as a separate income, but have listed the sale of the service....you're saying there's no problem with the 2 different ways we are reporting this payment?

They're reporting it as salary paid to me, I'm reporting it as a product sold.

No issues?

[nealrm]

The 1099 only reports they purchased a service from you. It is used for both for the self employed providing services and the IC. The amount should be in box 7 "nonemployee compensation". The amount on the 1099 just gets included in with the gross receipts on the schedule C (Line 1 under income). Here is a link from the IRS.

https://www.irs.gov/faqs/interest-dividends-other-types-of-income/1099-misc-independent-contractors-and-self-employed/1099-misc-independent-contractors-and-self-employed-3

If you are using software to do your taxes, it should ask you about 1099 income. I use turbotax. I put the 1099 in, and remove that amount of income from gross receipts. The software will combine the 2 into gross receipts and see that it gets reported correctly. So you end up reporting the same gross receipts, but this way those 1099 are shown as being included in that revenue.

[tallen]

FWIW, the organization I work for in my "day-job" requests a W-9 from from every single vendor that they deal with, before they will deal with them -- doesn't matter whether the vendor is some huge multi-national corporation with a million-dollar contract, or a guest speaker who is going to get a $150 honorarium.

ETA -- I second what Neal posted. Any business that pays out $600 or more for services to a non-incorporated service provider is supposed to report those payments on a 1099-MISC. If the service provider is incorporated, then they don't have to file the 1099-MISC, but they might still request a W-9 in order to verify the legal business form of the service provider...

[Harold Mansfield]

FWIW, the organization I work for in my "day-job" requests a W-9 from from every single vendor that they deal with, before they will deal with them --


The key word there is "before". Not months later when it's tax time. And what they purchased didn't amount to $600.

[Bobjob]

We get requests for W9 regularly. I believe it is because it has all pertinent information on it so they can set you up in their system for payment.

[Business Attorney]

A 1099 is for Independent Contractors.

Harold, that may be your impression but it is not correct. A business is required to report any payment for service of $600 or more unless it falls within an exception. One exception is for businesses that are corporations (including an LLC taxed as a corporation) which is why you don't have to send one to your hosting company. If a business pays you more than $600 and doesn't send you a 1099-MISC when it should, it is liable for penalties.

Likewise if a business has properly requested a W-9 from you and you refuse to supply the information, you are violating the law. That requirement is in section 6109 of the Internal Revenue Code and the related Treasury Regulations. See I.R.C. § 6109(a)(2), (3); see also Treas. Reg. § 301.6109-1(b)(1).

However, you mention getting paid $499. That is under the threshold of $600 and that particular business has no reason to send you a 1099-MISC.

[Harold Mansfield]

Harold, that may be your impression but it is not correct. A business is required to report any payment for service of $600 or more unless it falls within an exception. One exception is for businesses that are corporations (including an LLC taxed as a corporation) which is why you don't have to send one to your hosting company. If a business pays you more than $600 and doesn't send you a 1099-MISC when it should, it is liable for penalties.

Likewise if a business has properly requested a W-9 from you and you refuse to supply the information, you are violating the law. That requirement is in section 6109 of the Internal Revenue Code and the related Treasury Regulations. See I.R.C. § 6109(a)(2), (3); see also Treas. Reg. § 301.6109-1(b)(1).

However, you mention getting paid $499. That is under the threshold of $600 and that particular business has no reason to send you a 1099-MISC.

Thanks David, that clears it up nicely. Much appreciated.

[g.geramo@web.de]

Good point. They should tell you before the job, not after.
Can u pls tell me where people do it otherwise ? :D

[businessexpert]

What type of service do you provide?