Every year some of our clients go through a mad rush getting the information needed to file 1099s timely and correctly. How does one stop this madness? A Form W-9 should be obtained from the vendor BEFORE any payments are issued. W-9s can be more easily obtained while the vendor is awaiting approval, when the vendor has more incentive to cooperate than after payment has been made. Actually, without the W-9 information the payer is required to withhold tax at the rate of 24% from all payments made to the vendor.
For every vendor to whom a business pays more than $600 during the year, a 1099 is required to be issued that reports the amount paid along with the vendor’s name, address, AND tax identification number. This identifying information is collected by the payer on the W-9.