Tax Year Prior to 2020: Sub-contractor paid won't give social security number

Forum|Forum|7 years ago
May 31, 2019
3 replies
15 views

What should I do if i paid a sub-contractor & they still won't give me their social security number?

Anonymous

Ideally, the subcontractor’s Social Security number is obtained before any payments are made for work completed for you. Form W-9 can be used for that purpose, although it is not required.

To maintain compliance with IRS guidelines, you must make a formal request to the subcontractor for his identification number before the end of the year. If you do not have the Social Security number by the time to file Forms 1099-MISC, you should leave the identification number box empty, but still submit the report to the IRS.

The IRS will send a notice stating that the number is missing. This notice must be sent along with a backup withholding notice and W-9 form to the subcontractor. This notifies the subcontractor that he will be subject to withholding until he submits his identification number. He is also subject to a penalty of $50 for failure to furnish the Social Security number to you.

I hope this answers your question. If you have additional questions or comments regarding this issue, please feel free to reply to this post for further clarification. Thanks for trusting TurboTax with your tax preparation.

goldawardrealty

Level 2

Since TurboTax won't let us complete the form w/o the SS or EIN, how is your suggestion to be implemented?

Lizzy18

Level 2

What if they gave you one but it was the wrong one and the IRS sends you a letter letting you know, after you filed for 2018. You no longer have this sub contractor working for you and haven't since 2019 started so you can not withhold anything .. what are you to do following the letter from the IRS? How do you respond ? What are the steps that need to be taken?

Carl

Level 11

If you submit a 1099-MISC without a valid SSN on it, then you the issuer will be fined by the IRS. I don't know how much. But they'll bill you for it.

I can understand why someone would not want to give you their SSN. You understand too. But maybe the contractor isn’t aware of just how fast and easy it is for them to get an EIN (Employer Identification Number)? Make them aware that they can go online to http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online and it will only take them about 10 minutes to get an EIN – which they can then provide to you as required by federal law.

Assuming you have already requested this information from your contractor, and they still refuse to provide it. here is the procedure that you must follow, in order to issue the 1099-MISC without the SSN or EIN.

First, understand that you can not e-file your 1099-MISC's without the SSN or EIN. You will have to print, sign and mail it to the IRS. There is no alternative or workaround for this.

Next, print out a form W-9 (Request for Taxpayer Identification Number and Certification) from the IRS website at http://www.irs.gov/pub/irs-pdf/fw9.pdf.

Fill out the W-9 form with all the information that you know.

Make 2 additional copies of the filled out W-9 for your own records.

Mail the form to the contractor via certified mail. Don’t lose your post office receipt.

The contractor has 10 calendar days to respond. If they respond with the information you need, then you’re good to go. If they have not responded, then on the 11^th day after you mailed it certified mail:

Select the “print and file” option for your 1099-MISC's forms. This will print only the documents required for filing, along with an instruction sheet that contains the address of the specific IRS processing center you will mail it to.

Include in your mailing a copy (not an original) of your proof of notification (the certified mail receipt you got at the post office), and a copy of the W-9 that you sent to the caregiver.

That’s it. While this will delay your refund (it’ll be 6-8 weeks before you get it), you’ll still get it. At this point, it’s no longer your problem – it’s the contractor's.

This action will also negate any penalties being assessed to you.

mikeinaustin62

Level 2

Carl, if you are mailing in a 1099-misc (or 1099-nec), don't you have to send in a 1096 with it? Also, are you saying you only have to provide proof you mailed it and not that they signed for it?

Jbroo

Level 2

Why would a contractor want to apply for an EIN number and use that? If they don't end up paying taxes on the EIN number wont that link back to their ssn eventually anyways?

KarenM90

Level 11

Depending on the form of business the contractor is operating under, they may be required to have an EIN.

Please see the attached link for reasons a contractor may be required to have an EIN: Do I need an EIN?

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Jbroo

Level 2

If they were a sole prop and decided to use an EIN number and didnt pay taxes on those 1099's under that EIN, would it link back to their ssn number and they'd be subject to backup withholding, or would their business just get closed?