How to File IRS Form 1099-MISC Without an EIN
The Internal Revenue Service (IRS) requires businesses to issue Form 1099-MISC to individuals and businesses that earn more than $600 for goods and services. You will need to gather certain information about the individuals and businesses that contract with you to prepare Form 1099-MISC properly. Among this information, you will need to get a business's Employer Identification Number (EIN).
Advice on Obtaining an EIN
The most important advice is to obtain an EIN before issuing payments. It ensures that you have all of the information you need to prepare your Form 1099-MISC annually. Also, it is easier to get the EIN in advance than it is after you have started working on the form, and not having it can create tax problems for your business.
To obtain contractors' EINs, have them complete a W-9, which is a form titled “Request for Taxpayer Identification Number and Certification." It is good business practice to have all new contractors and businesses complete new vendor packets, which should include items such as a personal/business information sheet, a contract, and the W-9.
If You Don't Have an EIN
If for some reason you do not have an EIN, you still are required to complete the 1099-MISC if you meet the filing threshold of paying $600 within a year. Turbotax advises making a formal request to the subcontractor for their EIN before the end of the tax year in question. If you still don't have the EIN by the filing deadline, leave the identification number box empty, but still submit the report to the IRS.
The IRS will send a notice stating that the number is missing, and this must be sent along with a backup withholding notice and W-9 form to the subcontractor. It notifies the subcontractor that he will be subject to withholding until he submits his identification number.
While the individual or business can be subject to a penalty for refusing to provide an EIN, you also can be subject to a penalty for not submitting fully completed forms by the deadline.
Explanation of an EIN
The IRS defines an EIN as a “Federal Tax Identification Number" that is used to identify a business entity. Generally, businesses need an EIN. In simpler terms, consider an EIN to be a substitute for a contractor’s or business’s social security number. It is a unique number assigned to these individuals and businesses for identification purposes.
Penalties for Not Filing a 1099
Small businesses can be fined $50 per late 1099, if filed within 30 days of the due date. If it's more than 30 days late but submitted by August 1, the penalty is $100 per 1099. If it is later than August 1, the penalty increases to $260 per 1099; and completely disregarding the forms can result in fines of $530 per 1099.
It's a good idea to review the 1099-MISC filing requirements with your tax professional prior to filing. The filing threshold is subject to change, so be sure you know what it is at the time that you are filing to ensure you are in compliance with this requirement.