a. File a 1099 without a TIN: This is generally not the best option, but it can be done if necessary. The IRS requires the payer to make a good faith effort to obtain the TIN from the payee. If after multiple attempts the TIN is not obtained, the IRS instructs the payer to file the 1099 form with all other information completed, leaving the TIN field blank. However, this may lead to backup withholding requirements and potential penalties for the payer for not obtaining the TIN.
b. Not file and just keep documentation of all contact attempts: Keeping detailed records of your attempts to obtain a W-9 is important and can demonstrate your due diligence to the IRS. However, choosing not to file a 1099 form because you don't have a TIN is not compliant with IRS rules. You are still required to file the 1099 forms for your vendors, even without a TIN, and to perform backup withholding if the TIN is not provided.
If they do eventually get one to you:
c. File late: If the vendor eventually provides the W-9 after the filing deadline, it is better to file the 1099 form late rather than not at all. Late filing may result in penalties, but the IRS may abate penalties for reasonable cause if you can demonstrate that you made consistent and earnest efforts to obtain the necessary information. Filing late shows compliance with the tax laws and reduces the risk of more severe penalties for failing to file.
d. Not file, and just keep documentation of all contact attempts prior to the filing deadline, and hope your client does better next year with requesting W-9s: This option risks non-compliance with IRS filing requirements. It's important to file the 1099 forms to comply with tax laws, regardless of when you receive the necessary information. Relying on better practices next year does not absolve the responsibility for the current tax year.
Best Practice:
Attempt to obtain the W-9 multiple times and document these attempts.
If the deadline approaches without receiving a W-9, file the 1099 without a TIN and perform any required backup withholding.
If you receive the W-9 after the deadline, file the 1099 as soon as possible and correct any previously filed 1099s if necessary.
This approach ensures compliance with IRS regulations and minimizes potential penalties. Always consult with a tax professional or accountant to ensure that you're following the current tax laws and IRS guidelines for your specific situation.
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