Nonprofit Law/W-9 and 1099

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Question
I run a very small nonprofit organization and last year we hired a small firm to provide marketing and planning assistance.  I am uncertain whether I should have had them fill out a W-9 or if I can merely use that as an expense on my budget.  We are a small organization with no employees but frequently contract work and services with artists and business.  Please advise me if I should have them fill out the W-9 and if I need to provide them a 1099.

Thanks much.
Susan Boecher
Director
OverExposure

Answer
The W-9 form with instructions is at:
www.irs.gov/pub/irs-pdf/fw9.pdf
and, on the right column of page 1 you see that, for certain purposes, the taxpayer (merchant) may require a payee's EIN (Employer Identification Number, also known as the taxpayer
identification number). That is on page one in the first column under the heading
"Purpose of Form":
--- Start of Excerpt ---
A person who is required to file an information return with the IRS
must obtain your correct taxpayer identification number (TIN) to
report, for example, income paid to you, real estate transactions,
mortgage interest you paid, acquisition or abandonment of secured
property, cancellation of debt, or contributions you made to an
IRA.
---End of Excerpt---

First you would want to find out if that small firm is a corporation. See  http://www.irs.gov/pub/irs-pdf/i1099msc.pdf which is the IRS'
instructions for form 1099-Misc. on the right column of page 1:
--- Start of Excerpt ---
Exceptions.  Some payments do not have to be reported
on Form 1099-MISC, although they may be taxable to the
recipient. Payments for which a Form 1099-MISC is not
required include all of the following.
Generally, payments to a corporation.
---End of Excerpt---

If you do not need to file a Form 1099-Misc, for example, if the payee is a corporation, then you would not need to file any information return, unless you paid in a large amount of cash ($10,000, even if structured).  If you do not need to file an information return, then you would not need the payee's EIN and, therefore, you would not need to request them to complete a W-9 for you.

Harvvey Mechanic, Attorney at Law -
Harveyy108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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