Form 1099-MISC and Backup Withholding Requirements

Form 1099-MISC and Backup Withholding Requirements

If PPG Partners prepares your Forms 1099-MISC, your office manager is probably familiar with us needing completed W-9 forms from various vendors (payees) that you make payments to, such as attorneys, landlords, laboratories, or independent contractors. A completed Form W-9 includes the payee name, tax classification, address, Taxpayer Identification Number (TIN) or social security number, and signature.

While you certainly need the correct legal name and address of the payee, the TIN/social security number is the most significant part of the W-9 request and is what can trigger a “backup withholding” requirement. If you solicit the payee’s TIN and the payee refuses or neglects to provide a TIN then you must, per the IRS, “begin backup withholding immediately on any reportable payments.” If the TIN provided by the payee is incorrect or doesn’t match the legal name on the 1099, then after the 1099 has been filed you will receive a notice from the IRS, which in case backup withholding may also then need to be initiated.

The Backup Withholding rate is 28%. You pay the amount withheld from payments to the IRS, and report these IRS payments on Form 945. Keep in mind that there are exceptions to these requirements, and some payees will return a W-9 indicating that they are exempt from 1099 reporting and backup withholding requirements.

If PPG Partners prepares your Forms 1099-MISC and does your solicitation of TINs, we will contact if you should begin backup withholding. The current filing deadline for 1099s is January 31, 2018.