It’s imperative you engage in this process of obtaining an updated W-9 from your vendors/individuals per Section 3406 of the Internal Revenue Code because it will be a focus of the IRS for 2019 and going forward.
A W-9 is needed to ensure that a company paying an individual or business for services of $600 or more has the correct name and Taxpayer Identification Number (TIN) (either a Social Security Number or an Employer Identification Number) to prepare the 1099 at year end. 1099s are “information returns” for the IRS to track taxpayer income and substantiate expenses paid to these individuals/businesses for your business filing.
A W-9 should be requested by you PRIOR to doing business with the individual or business much like a W-4 is required immediately when employing an individual. This is because it sets the expectation of the agreed upon relationship. If a vendor is not willing to give you a W-9, it may not be in your best interest to do business with them. Their lack of adhering to the law may be an indicator to how they will perform and deliver your services requested.
If a combination of a correct name and TIN is not provided by the payee, the payee may be subject to backup withholding of 24% of federal taxes per Section 3406 of the Internal Revenue Code.
We hope you find this helpful, but as always feel free to call or email with any questions or concerns.