When you hire independent contractors, collecting a completed Form W-9 (Request for Taxpayer Identification Number and Certification) is one of the most important steps in your onboarding process. But what happens if a contractor hesitates or refuses to provide it?
This situation is more common than you might think. The good news: with the right approach, you can address their concerns, stay IRS compliant, and keep your contractor relationship on track.
Why a W-9 Is Required
The IRS requires businesses to file Form 1099-NEC or 1099-MISC for most contractor payments. To do this accurately, you need the contractor’s Taxpayer Identification Number (TIN), which is provided on the W-9.
Without it, your business could face:
- IRS penalties for incorrect reporting
- 24% backup withholding obligations, where you must send part of their payment to the IRS
- Delays and disputes with your contractor at tax season
Why Contractors Sometimes Resist
Contractors may push back on providing a W-9 for a variety of reasons:
- Privacy concerns about sharing their Social Security Number
- Confusion about whether a W-9 makes them an “employee”
- Fear of misclassification or additional taxes
- Inexperience if they’re new to freelancing or self-employment
How to Respond Professionally
1. Clarify Compliance
Explain that the W-9 is a legal requirement, not a company preference.
“The IRS requires us to collect a W-9 for all contractors. This doesn’t change your independent status—it simply allows us to report payments correctly.”
2. Offer Privacy Alternatives
Suggest that they apply for an EIN (Employer Identification Number), which they can use instead of an SSN. This protects their personal information while still meeting IRS rules.
3. Explain the Consequences
Remind them that without a W-9, you are required by law to withhold 24% of payments and remit it to the IRS.
“We want you to receive your full payment. Providing a W-9 ensures you get the full amount without unnecessary withholdings.”
4. Put It in Writing
Provide a short, polite email or policy document explaining:
- Why the W-9 is needed
- The deadline for submission
- What happens if it isn’t provided
What to Do if They Still Refuse
If a contractor continues to withhold their W-9, you should:
- Begin backup withholding on payments (24%).
- Report payments to the IRS using Form 1099-NEC, even with incomplete information.
- Document all communications to show you made a good-faith effort.
Best Practices Moving Forward
- Collect W-9s before issuing the first payment
- Store forms securely (encrypted files or locked storage)
- Set clear expectations upfront in your contractor agreements
- Remind contractors that using an EIN instead of an SSN is a safe option
Final Thoughts
Handling pushback on Form W-9 doesn’t have to be a conflict. By explaining the IRS requirements, offering privacy solutions, and setting firm but fair boundaries, you protect your business while maintaining positive contractor relationships.
If you want to streamline compliance, consider adding W-9 collection to your contractor onboarding checklist or using secure e-signature and form collection tools. That way, you’ll stay IRS-ready and avoid year-end headaches.
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