Oh am I ever miffed...maybe you guys can help out...
Sold some surplus electrical parts to a big company, pretty hard/expensive to find new. I sent them in with the understanding I send the parts, then an invoice (For a total of $110), then get a check.
The guy said he got the parts, and I e-mailed the acounts dept. an invoice. Didn't hear anything back so I e-mailed them again asking if they got it, is there a problem, etc.
Yesterday I got an e-mail from another person I need to fill out a W-9 (appilcation for taxpayer ID) in order for them to process the invoice. Call this morning, and that person is out till Monday. Talked to another one and she said its a standrard policy for the W-9 to be filled out on sales over $600 in case they get audited, need one filled out or they will charge ME tax!!! I'll need to fill one out, get setup with as a vendor, all for $110 bill, and more than likely this is a one time sale, so I won't be approaching the $600 limit!
Okay they have my parts and I need money-any ideas? I have a bad feeling about this, we have sent invoices out to companies before (including the gov't) well over $600 and never had to fill out a W-9...I sure hope this is not run around in order to avoid paying me! :mad:
I have ran into this a few times. I do not think that they legally are required to get a W-9, but its a form that says you are not subject to backup witholding tax. I do not think it is right, and I do not know who is teaching the people to send these, but I do get this sometimes. I just fill them out, I am not worried about it.
They have also sent my 1099's too after that. Which the accountant says throw in the garbage because it does not matter. Its not like it was for work performed, its for buying a machine. They are not paying me they are paying the company for an invoice. Strange.
I don't give every supplier that I pay a 1099 form, so I dont have a clue why they do it.
Its mostly big companies, someone thought it was a good idea so they do it.
I have never found anything in any law that says I should send a 1099 or have a vendor fill out a W-9. But some like paperwork I guess.
The government likes everything neat and tidy. The company claims they spent $110 for parts, but without having proof of that. The W-9 shows the government auditors which company, or individual, received the $110.00. It's S.O.P. anymore, with most companies.
If you're incorporated and furnish proof of incorporation such as a federal tax ID #, then they'll be happy. What they're concerned about is sole proprietorships and simple partnerships where they are in fact paying the individual because the individual and the company are inseperable. Any payment to an individual of $600 or more requires the payer file a 1099 for that payment regardless of the nature of the transaction (labor performed, goods purchased, etc). If you're incorporated they're not going to file a 1099 even if they do a million a year with you, but, if you're a sole proprietorship then federal law says $600 or more in a year requires a 1099.
I would just fill it out for them and get your money.
I have a very large customer that does multi-million dollar masonry work. They insist on sending me a 1099 every year even though I am an equipment dealer, have business license and collect sales tax. I just put it in with my tax info. All my sales are invoiced and kept in my computer.
Some companies have gotten burned by sub contractors who didn't pay their taxes. The company needs to do withholding or 1099.
Okay, great information guys thanks! I'd have no problem filling out the W-9 now...But it looks like it got resolved-another lady called and said there's no need to fill it out, and didn't know why they wanted me to, since I was providing a product that was to be used, and not working as a contractor, which would make sense...at any rate they said the check would be sent out, (in 30 days of course. :D )
But its strange that if they are required by law to do the W-9/1099 thing with a sole proprietorship, every company doesn't do it. Unless its limited to corporations?