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  • Ask The Taxgirl: Can I Refuse To Complete A Form W-9?
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Ask The Taxgirl: Can I Refuse To Complete A Form W-9?

Kelly Phillips ErbMarch 19, 2009May 14, 2020

Taxpayer asks:

I have a Q. We run a large tow truck company. We tow for the Police, Sheriff, and Highway Patrol, as well as Federal Military Police. We also take private callers with disabled vehicles. We do our taxes every year with our CPA.

We received an emergency call in January. It was a construction company that their truck had been run off the road by a vehicle going the wrong way. We responded, as we usually do,and pulled this truck back on the highway….A recovery situation. Normally, we impound the vehicles until payment is made. However, this time, the vehicle was running OK, and the driver iof the recovered vehicle wanted to drive away. He gave us a PO from his established company. We trusted the large company.

Then, they refused to pay us the $300 for tow services unless we filled outa W-9. As a matter of principle, I refused to submit my SSN or Federal ID, as recommended by my CPA. It was like extortion. I threatened to turn them into collections,. Now the company has told me they reported me to the IRS for failure to fill out a W-9.

I am not an independent contractor. We do not contract with them. This is the one and only time they called us to respond to this emergency call. I already prepare my taxes every year with a CPA. What is going on here? Do I have to worry? When you go to the store to buy groceries, you don’t force the market to fill out a W-9? We are no different. We are an established business.

Thank you.

Taxgirl says:

Based on these facts, I’m guessing that the company does not have to file a form 1099 for money paid to your company. That would mean that they don’t need you to complete a form W-9.

I’m also guessing, however, that this “big company” routinely issues forms W-9 as a matter of practice. This is because companies who fail to obtain a proper tax ID number when it’s actually required can be subject to a fine. So, as a matter of course, many of those companies issue a form W-9 to every vendor to cover themselves. Most of the time, I advise my clients to complete the form to avoid the agita. Rarely does anything come of it.

That said, I appreciate that you feel that you didn’t have to complete the form and that you should be paid for the work that you’ve done. If you insist on not completing the form W-9, I would ask your CPA (or attorney) to send a letter to the company asking why they believe it is necessary for you to complete one and note that in the absence of a valid reason, you expect to be paid promptly. My guess is that there is no valid reason. And in the absence of a valid reason, there’s no harm, no foul on the IRS side for not completing the form (the form itself doesn’t get sent to the IRS).

But one more word of advice: I highly recommend doing a quick cost analysis. The cost to you – in fees and time – to get paid for the time that you’ve already expended providing a service is probably more than the payments due you. In situations like this, as sucky as it is, I usually advise my clients to bite the bullet, fill out the form, and call it a day. And maybe next time, let ’em sit by the side of the road for a bit… 😉

 

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

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Kelly Phillips Erb
Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.
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9 thoughts on “Ask The Taxgirl: Can I Refuse To Complete A Form W-9?”

  1. john says:
    July 2, 2019 at 11:33 am

    My new bank has asked for a W-9 from my wife, which is odd. We are both self employed real estate agents. I have NEVER been asked for this form before, so I am uneasy with it. Any thoughts?

    Reply
    1. Kelly says:
      August 3, 2019 at 3:42 pm

      Banks and other institutions are increasingly asking for forms W-9 upfront – even when you don’t expect to hit thresholds for forms 1099. My guess is that it’s related to interest (1099-DIV) or another reason for a form 1099 and the bank doesn’t want to get caught at the end without the form W-9 if they need it (there’s an associated fine). I would ask the bank and if the answer is at all related to a form 1099, I’d complete it.

      Reply
  2. Susan taffet says:
    February 27, 2020 at 11:11 am

    In sorry your reply is very poor.

    Federal law, Your are under no obligation to provide w9 if the earning is less than $600. It’s illegal for companies or anyone to withdraw or hold your paycheck for any reasons.

    I’m surprise you lawyer didn’t know this law.

    Bravo to you for not giving your w9. SS number is not safe to give out to every Time , everyone who we do business with under $600. Your SS is out there!!!

    Reply
    1. Kelly says:
      March 10, 2020 at 1:05 pm

      I appreciate your comment but I stand by my answer. I always think risk and cost analysis should be part of the decision-making process. And as an independent contractor, you have to weigh factors including “How quickly can I get paid?”

      I am a big advocate of not giving out SSNs when not necessary (you’ll see this theme consistently throughout my site). And as I noted, I believe it makes sense initially to challenge the requirement to fill out the W-9. I suspect a quick note from the CPA will resolve this matter since the notion that the company would report him to the IRS is nonsense under the facts presented here. But if the company balks and the vendor wants to get paid, there’s a decision to be made: pay someone more than $300 to fight them on it or comply. Compliance is typically easier and it’s definitely cheaper.

      Reply
  3. sheree says:
    September 11, 2020 at 9:10 pm

    My SIL got hired for a job. He was told that we would X amount an hour. but then he was given a W-9 to fill out. pay day comes, the amount of pay he got was minus taxes. Can the “Employer do that”? Isnt my SIL supposed to pay that tac himself?

    Reply
    1. Taxgirl says:
      September 22, 2020 at 6:30 pm

      What kind of taxes were withheld? State or federal?

      Reply

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