1099-misc question

[shortwizard]

What is the name of your state (only U.S. law)? NC

This is rather complicated - we are members of a board of directors for a local 501(c)(3) and acted on their behalf, in a volunteer capacity, in the renovation of a new rented space for them. We hired carpenters, etc. and having no experience with tax laws we did not require the workers to submit W9s - we didn't know anything about that. No one in the organization ever mentioned it, until now. We paid the workers out of our pocket and are asking for reimbursement from the non-profit, and now they want W9s from all of the workers. We may be able to obtain those but what are our options if we cannot. Are they still required to reimburse us and they be responsible for obtaining the W9s? Can they legally withhold 30% of our reimbursement if no W9s are submitted?What is the name of your state (only U.S. law)?

[FlyingRon]

Eh? Withhold on what grounds? If you are talking about backup withholding on the 1099-MISC issued to you, then no. That only happens if YOU don't provide tax information on yourself indicating you are not subject to the withholding. if you mean they won't pay the money for the undocumented employees that's something you'll have to work out with them.

[shortwizard]

Originally Posted by FlyingRon

Eh? Withhold on what grounds? If you are talking about backup withholding on the 1099-MISC issued to you, then no. That only happens if YOU don't provide tax information on yourself indicating you are not subject to the withholding. if you mean they won't pay the money for the undocumented employees that's something you'll have to work out with them.

There is no reason for them to issue a 1099-misc to us, they are simply reimbursing us for monies paid on their behalf. We have already paid the carpenters, with our money, expecting to be reimbursed. The workers were independent contractors and no one told us we needed to obtain W9s from them prior to paying them - this was a volunteer effort and we had no idea about any of the tax issues.

[tranquility]

No, you should not be liable to receive the 1099. However, if you truly acted as an agent of the corp, you created a legal mess for them which could subject them to substantial penalties. You will be responsible for those in a later lawsuit if it ever comes to that, so I'd help them get the info they need. The reimbursement question is harder as withholding needed to occur. You didn't do it. The corp is supposed to do it. If I were them, I'd do the same thing. Pay over the money to the government, and not give it to you. I'd make you sue the corp for the withholding money and then countersue for the penalty.