- Businesses are required to file a 1099-MISC with the Internal Revenue Service in relation to any individual that the business pays at least $600 to in the same year. Starting January 1, 2011, this requirement was extended to cover payments to businesses relating to rental property expenses, such as fees to a property management company.
Businesses must also send a copy of the 1099-MISC to the taxpayer. This copy of the form is purely informational and is designed to help the taxpayer complete her own tax returns more easily. - Form W-9 is a form produced by the IRS for businesses to use when requesting a person such as a independent contractor to provide his name and taxpayer identification number. For US citizens, this is usually their social security number. For other citizens, the IRS will issue a taxpayer identification number on request. Although there is an official W-9 form, businesses can use their own substitute form requesting the same information -- for example, as part of a terms of business agreement with the contractor.
- A business will normally issue a W-9 to an individual when it makes the first payment during the year. Some businesses may instead wait until it is certain the total payments will reach $600, but this may increase the chances of problems arising.
There is no need or requirement to send a copy of the completed W-9 to the IRS when filing the relevant 1099-MISC. The W-9 is purely to make sure the correct name and taxpayer identification number appears on the 1099-MISC, making it easier for the IRS to make sure to collect any taxes relating to the payments. - The business making the payments is legally responsible for making sure it supplies the correct details of the contractor on the 1099-MISC. If there is a mistake, the business can be penalized unless it is able to show it collected and accurately reported the details given by the contractor on the 1099-MISC. It is therefore in the interests of the business to retain completed W-9s even after submitting the related 1099-MISC.