mam98031 • Volunteer Community Member • Buyer/Seller since 1999
@pburn wrote:
@mam98031 wrote:
What am I missing here?
Mam, when an entity pays you money that YOU may have to report as income, they report that to the Federal government via a 1099. The entity would use the W-9 to prepare a 1099.
"Form W-9—Request for Taxpayer Identification Number and Certification—is a commonly used IRS form. If you’ve ever been a contractor for a company, you’ve probably completed a Form W-9. True to its name, individuals and entities use the form to provide their taxpayer identification number to entities that will pay them income during the tax year. Companies use your W-9 for accounting purposes but doesn't send the form to the IRS. The information is used to prepare 1099-MISC forms at the end of the year. If you have your own business or work as an independent contractor, a client may request that you provide a W-9 so they can accurately report the payments they make to you."
I didn't say these refunds were issued to residents of my state (which, in the case of my agency, they weren't). Getting money that could be considered "income" from a state government--even in the form of a refund--is no different from getting "income" from any other source. There's a potential tax liability at both the federal and state level, if applicable.
Here are a couple of really good, comprehensive articles on the purpose of a W-9 form.
https://www.investopedia.com/articles/personal-finance/082714/purpose-w9-form.asp
OK, so if I spend over $600 at Walmart in a calendar year, do I need to request a W9 from them so I can issue them a 1099?
These are retail sales. It isn't like the buyer hired us to procure stuff for them directly.
I do understand the purpose of a W9 and I appreciate all the information you have offered here. I think it is very helpful. But I can't think of ANY reason that a buyer on Ebay would need to issue a seller a 1099 for anything. And I can't think of any good reason for a buyer to have access to my SSN.
I've been selling here a very long time and this has never come up before from any buyer of mine or on any thread that I've seen [certainly not that I've seen them all].
A seller has the responsibility to report their income to their state and to the IRS as is mandated by the laws in place. But that doesn't mean that sellers have to start going to buyers that they have sold over a certain $$ value and start asking them to issue them 1099s.
I do understand what you are saying. I just don't think it has anything to do with a buyer / seller relationship on Ebay or any other retail site.
Your first link, the very first words are "businesses use".
In the second article it starts talking about how someone may hire you as a sub contractor. Which sellers on Ebay are not sub contractors to any buyer.
They just don't apply for retail sales.
@lacemaker3 wrote:
@trophykits wrote:A buyer is requesting a W-9. Has anyone else had this requested & how did you handle it? Did you send them one? If not, what reason did you give for not supplying one? (I have been researching this, but have not found anything helpful.)
I don't think your buyers would have to issue you a 1099, so you would not need to give them a W-9 to allow them to do that. But you need to consider the circumstances of this particular sale. Is this for a particularly large sale? Is this a buyer a business, purchasing items for their business? Have they asked for special services, like customizing a large number of trophies?
If not, then I would ask the buyer why they are requesting the information. Say that you want to be sure that you give them the correct information, so would they please explain why they are asking for the information. I would not assume that they are trying to find out if you are legitimately collecting sales tax, although that is possible. Ask, and see what they say.
It appears that 1099s, and therefore W-9s, are only required in a business-to-business situation where they are paying you money. That doesn't apply in a retail situation, which eBay sales would fall under. Even in a business-to-business sale of goods, a 1099 and W-9 is only necessary for sales over $5,000 according to this website. It looks like you are selling goods, not services, from looking at your listings.
https://due.com/blog/w-9-for-payments/...
A W-9 form is not required for all business transactions. For example, if you go into a store and spend money, you don’t need to get a W-9 from the store to ensure they are paying their taxes. In general, W-9s are required only for business-to-business relationships where more than $600 is paid in the calendar year. The $600 rule applies to labor and services. For direct sales, a W-9 is required for total purchases over $5,000.
...
All sellers here are acting as Retailers, NOT sub contractor or contract labor for any buyer that may come here. It doesn't matter if it is a buyer that has or is a business purchasing from a seller here. It still does not constitute a sub contractor or contract labor.
Consider if a business goes and buys a new car for their business. Does the business that bought the car now need to issue a 1099 to the car dealership just because they are a business? No. They purchased the car from a retailer and no sub contractor's agreement or contract labor agreement was created.
Same thing if a business buys a house or condo. There is NO reason that a buyer could come up with that would constitute a transaction on Ebay created a Sub Contractor's agreement or contract labor.
1099's are NOT required for a business to business transaction. One or the other or both do not need to be a business. That isn't the criteria for a 1099. There are links earlier on this thread that are very good at explaining what it is for.
@Anonymous wrote:
I have gotten that request a few times over the years mostly on items that sold for a few thousand dollars, now, for the most part, I only sell industrial repair parts to large companies so I was not too concerned. Then after I researched the request and talked to them in person it all seemed to be on the up&up, so I did furnish the requested W9 form but also transposed a few numbers so they did not have my actual number. The last request was almost 10 years ago and nothing ever came from it or I would have pleaded dyslexia. They mostly do it for the ease of accounting on a larger purchase they do not have a vendor agreement on file with.
@Anonymous
So did they ever issue you a 1099?
It is likely it went nowhere because once their accountant got a hold of it they wondered why they got it in the first place as it was not needed.
@Anonymous wrote:
Just to be clear this was for parts only and not as a contractor supplying labor. When I researched it 10 years ago the stipulation was a W9 was only needed when labor exceeded $600 or if supplying parts only when it exceeded $5000. It may have changed since then so best to double-check.
It is only for sub contractors or contract labor.
For example: A manufacturing company that purchases auto parts from you [no matter the value] do not have to issue a 1099 for the inventory they purchased from you throughout the year.
That is because you are not a Sub Contractor nor are you Contract Labor.
Now if you are a house builder that hires sub contractors and/or Labor not being ran through payroll to do certain aspects of building the home. That builder will need to issue 1099s for those companies and people. So they do need the W9 for those purposes.
