Sub contractor is applying for ITIN. How do I send 1099-MISC if they don’t have ITIN yet?

[Boblythe]

I am a contractor and I have a sub who I am very close with. I am helping him set up his w-7 for ITIN but I fear he won’t have it by the time I need to send out 1099’s. He has done a substantial amount of work for me this year, and he is eager to receive ITIN for his future growth.  My question is how do I send him a 1099-MISC if he does not have ITIN but has applied?  Also, the W-7 implies that he sends in his application with a tax return. It is November of 2023 does he need to submit a return for 2022 even if he had no earnings? Or does he submit for 2023 earnings even tho the year is not over. 

Thank you! 

sincerely, a contractor and friend 

[tagteam]

@pk?

[pk]

@Boblythe , please help me understand the situation a  little bit better:

(a) should I assume that you a US person ( citizen/ Green Card / Resident for tax purposes ) , having a US tax home and having a sole proprietor business/ self-employed person ?

(b)  your sub-contractor is located where  -- in the USA ( on what visa ? ) or  in  another country ?

(c) does the sub. have a business  or self-employed or what  ?

(d) If the sub is  working in another country, then which ?  ---- Tax treaty  may come into play 

I will circle back once I hear from you

pk

[boblythe126]

Thank you!

yes, I am a US citizen running a single member LLC contracting business. My sub is located here in the US not on a visa.  The sub is currently self-employed. 

[Mike9241]

the 1099 does not have to be filed for 2023 until 1/31/2024.  if they applied online they could get it immediately. 

[boblythe126]

The W7 application process is 8-12 weeks out and potentially longer during tax season.  Also we will be applying for W7 in person as we do not want to mail off his original documents (which is required.).  With that being said yes potentially he will receive his ITIN before Jan 31, 2024. I am curious what I should do if he does not.  I still need to file his 1099-MISC without a ITIN.  Do I leave it blank? Can I include documentation that he has applied? 

Thanks for all the help

[Opus 17]

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@boblythe126 wrote:

The W7 application process is 8-12 weeks out and potentially longer during tax season.  Also we will be applying for W7 in person as we do not want to mail off his original documents (which is required.).  With that being said yes potentially he will receive his ITIN before Jan 31, 2024. I am curious what I should do if he does not.  I still need to file his 1099-MISC without a ITIN.  Do I leave it blank? Can I include documentation that he has applied? 

Thanks for all the help

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If you want a real answer you may want to talk to a tax professional or attorney.  We can't offer legal advice.

My layperson's opinion is that you should wait to file the 1099 until the ITIN is issued.  You can't e-file a 1099 without it, and if you mail a paper 1099 (requires a special form) I suspect it would be returned as incomplete.  I believe the fine for filing a late 1099 is $50, but I don't think the IRS will press the issue unless your contractor complains, which seems unlikely under the circumstances.  I don't know of any way to issue a 1099 without some kind of tax number, and waiting for the correct number seems to be a far better option than using a fake number.  

[pk]

@boblythe126 , from your response to my question, I am assuming that you a US person ( citizen/ GreenCard / Resident for tax purposes) , have used the services of a  Non-Resident Alien (? )  whom does not have a work visa  ( any visa ? ), living in the USA.    If I assume the person ( sub-contractor ) is an Un-documented  alien, by trying to issue a 1099-NESC   and /or filling a W-7 for issuing of ITIN,  the person would be at risk of being deported and prohibited from any visa for 10 years.    I hope my interpretation  of the situation is wrong.  Please  clarify the situation.

pk