I have a freight brokerage business. I do alot of business with freight factoring companies. I set up to pay and 1099 if need the factor companies. Some factor companies refuse to give me a W-9 stateing we should W-9 the trucking company, even though we are beholdant to pay thefactoring company. Numerous accountatnt have told me that whomever we pay, that who we should 1099. I even called the irs, and all they could tell me is that if a company refuses to give a W-9 , then you need to withold taxes. I do not want to do that. Does anyone know the LAW to factor companies, and where can I find that. Thanks in advance, Jodie Lucero
I'm a little unsure about exactly what you want the law about.
SeeI.R.C. § 6109(a)(2), (3); and Treas. Reg. § 301.6109-1(b)(1) states that companies must fill out the W-9's to any company that requests it. This is also stated in the instructions of form W-9.
Basically what I have read is document it every time that you request their info. If you can not get their TEIN number by the time you have to file, leave the number blank but file out as much as you can about them. In addition, include a formal letter stating that you had requested their information numerous times. Usually they will fine the vendor that refused to give you the info. I have never seen anyone getting fined if they filed it on time and provided documentation that they made an effort to get it.
In general, I know lots of business that require a W-9 to be filled out before they will pay you in order to avoid having to do the Withholding.