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Certain payments made to others in the course of operating a trade or business may require reporting on Form 1099-MISC when they exceed thresholds set by the Internal Revenue Service (IRS). The complete list of reportable payment types and the applicable thresholds can be found on the IRS website.
This article addresses the consequences of filing a Form 1099-MISC with the recipient’s Tax Identification Number (TIN) missing and provides actionable steps to avoid this pitfall in 2025 – or correct the mistake from years past.
The Form 1099-MISC includes fields for various information regarding both the payer and the recipient, including the recipient’s name, TIN, and street address. You should request this information from the recipient before paying them for their services by having the recipient complete IRS Form W-9. However, if you do not have this information prior to payment, you should make a formal request for these details prior to the end of the year in which the payment was made.
While the IRS allows you to file Form 1099-MISC without complete recipient details, payers are required to take additional actions when filing a Form 1099-MISC without a recipient’s TIN. The IRS requires that a payer who is not in possession of the recipient’s TIN at the time of the reportable payment start backup withholding for the recipient at the time of payment. Backup withholding requires the payer to withhold tax at a flat 24% rate from the payments made to the recipient. Additionally, payers must file Form 945, Annual Return of Withheld Federal Income Tax, to report this backup withholding liability.
If you file a Form 1099-MISC without the recipient’s TIN and you do not comply with the backup withholding requirements, you may receive a notice from the IRS with a request for payment of the backup withholding liabilities and a Form 945 for the period. By this time, you may have already paid the recipient for their service in full and any backup withholding liability would be in addition to the full payment made, rather than a reduction in payment to the recipient.
Due to the financial risks associated with filing Forms 1099-MISC with the recipient’s TIN missing, it’s a good idea to proactively review any Forms 1099-MISC you have filed in recent years. If you find that you have filed forms with the recipients’ TINs missing, consider filing amended Forms 1099 to correct this.
Now that the Form 1099-MISC filing deadline for 2024 has passed, start preparing for your Form 1099-MISC reporting requirements for 2025 now. Ensure that you have full recipient details – including name, address, and TIN – for the vendors with which you have an existing business relationship. As you seek out any new service providers for the year ahead, request that they complete IRS Form W-9 prior to paying them. And remember, if any of your vendors do not provide their TIN prior to payment, withhold 24% for backup withholding from the payment.
Elliott Davis can help your business navigate the complexities of Filing Form 1099-MISC for payments to others. Contact our team today to discuss.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
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