HN Explorer

How to decline sending a W9 to client?

3 points by Apane101 ↗ HN
So, I've been working with a client for the last 8 months now. And I built their entire web application from the ground up. I also outsourced some of the work because of the scale.

Anyhow, they've just asked me to send over a W9 and they will send over a 1099. However, I'd rather not go that route because I'm going to have to track down my outsourced workers and get them to send me their W9's and it's just a nightmare.

How can I decline their request?

Cheers!

15 comments

[ 0.25 ms ] story [ 44.2 ms ] thread
debacle
You will be financially penalized if your client has to file a 1099 without your tax ID number(s). You are required by law to provide them with your tax ID.

Edit: This is also how consulting and contracting works. If you've never requested or sent someone an W-9/1099 before, get used to it.

Apane101
How so? They don't have my SIN number or anything. Please elaborate. I'm open to all suggestions here.
debacle
Either you report that income on your taxes via 1099 and then the IRS goes to the company that created the 1099 and asks them why the 1099 doesn't have a TIN or you don't report the income on your taxes and the IRS finds out and fines you for tax evasion.

Edit: I see that you are Canadian. Unfortunately for your aspirations of tax evasion, the US and Canada have a very friendly information sharing relationship.

Apane101
Look, I'm not aspiring to do what you are suggesting. I'm simply inquiring more into the process. Also, if they don't have my information how will they find out who's who? There are at least 100 people in my city with the same name. I'm geniuinely curious as to how this whole thing works..
7Figures2Commas
You seem to be confused. Refusing your client's W-9 request doesn't eliminate your need to issue 1099s for your subcontractors.

There are potential penalties associated with each. Additionally, if you refuse to provide the W-9 and are still doing work for your client, don't be surprised if the client starts backup withholding.

Apane101
All of the work is done at this point. And I am a bit confused, as I'm based up in Canada and they're in the U.S. We don't have 1099's and W9's here from what I understand.
7Figures2Commas
That's a critical piece of information you omitted. It sounds like your client is not aware of the fact that you're a Canadian citizen (?) and did not perform work in the United States.

Sometimes companies will require that you certify that you're a foreigner using a Form W-8BEN. If you're not able to resolve this issue with your client by explaining your status and it's creating issues for you, you should consult with an attorney.

It also sounds like it would be worthwhile for you to consult with an accountant who can educate you about your obligations to your clients and your subcontractors generally.

Apane101
Thanks for the feedback. They're well aware that I'm located in Canada as all of that information was outlined on the initial agreement. I'm just a bit taken back as I've worked with other clients who have never asked for this. It's likely that these particular clients would like to declare these expenses/right them off to lower their taxable income, I just wish they would have mentioned this before hand so I could have prepared for this.. The sub-contractors are based in Europe so it's really a massive loss for me if I were to go that route.

Also, I've already been paid in full. So at this point I have nothing to lose really.

alain94040
You still sound very confused about your obligations and your client's obligations. It sounds like you expect to keep all your transactions under the radar and not declare any of them to any tax authority. Don't.
Apane101
Just for this project in particular because of the complexity with sub-contractors. All other ones there isn't any issues because they are in-house.
saurik
You don't get to pick and choose which transactions you report to the government and which you don't based on how hard it is for you to bother with the reporting.
tonyarkles
I'm Canadian, but not a tax lawyer. When I've done consulting work in the past for an American company, it has been done B2B; invoices were sent from my (personal) company to their company. They then paid the invoices. There wasn't anything more complicated than that; I wasn't hired as an American employee or anything like that, software development was a service that they paid my company to do and I invoiced them for it.

At the end of the year, it was simply recorded as a sale and was taxed appropriately.

Apane101
Right, that's pretty much the same as my process. Did you deal with a W9? or 1099 though? Probably not because you're incorporated right.. So they listed your business. In my case a sole-proprietorship they need my personal info. Makes sense.
tonyarkles
Sole proprietorship here too, but I've registered a company name and do all business through that. The invoices I send have the company name on them, not my personal name.
tannk11001
Just talk to them. Standard Operating Procedure would be for them to file a 1099, which generally requires a W9 that provides your information.

The person asking for a W9 from you is probably not familiar with how this changes when working with workers outside the US. You can explain that you won't be able to complete a W9 because they're only for US citizens and residents and see where the conversation goes from there.

They still need to declare and classify their expense, so may need you to complete some other paperwork, but it doesn't really effect anything about your own tax obligations or filing requirements. Don't worry about it.