W-9/1099-MISC/1099-NEC

1099-NEC and W-9

From time to time, a church or business will ask us to fill out a W9 so that they can issue a 1099-NEC at the end of the tax year.

The IRS rules require these forms for any vendor a business is paying more than $600 in a given year.

The exact wording from the IRS website as of 5/2024 is as follows:

Specific Instructions for Form 1099-NEC

File Form 1099-NEC, Nonemployee Compensation, for each person in the course of your business to whom you have paid the following during the year.

At least $600 in:

Services performed by someone who is not your employee (including parts and materials) (box 1); or
Payments to an attorney (box 1). (See Payments to attorneys , later.)

The following specifications limit this requirement:

Any purchase made with payment by credit card, Paypal or another third-party payment processor will not require these forms. The third-party payment processor will issue the proper 1099-K at the end of the year.

So the W9/1099-NEC requirement is still pertinent for check payments from churches/businesses.

But see the next point.

The requirement does not apply to purchase of merchandise, regardless of the vendor or corporation or payment method. What we sell to churches and businesses are physical products and some downloads – *merchandise*.

When professional services are rendered, the requirement is still pertinent. But not services for personal use.
We do not currently offer any service of any kind (personal or professional).
If I came to your location and mentored your teachers or catechists, this would be a business service for which the W9 forms would be properly provided.

The IRS website as of 5/2024 also states as exceptions:

Exceptions.

Some payments do not have to be reported on Form 1099-NEC, although they may be taxable to the recipient. Payments for which a Form 1099-NEC is not required include all of the following.

Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However, see Reportable payments to corporations, later.
Payments for merchandise, telegrams, telephone, freight, storage, and similar items.

Thus The Sheep Gate not required to fill out or provide a W9, nor is any business we sell to required to provide us with a 1099-NEC, regardless of the amount of the order. If the business pays by Paypal (our only credit card processor), we will receive the proper forms from them (rather than have the same income double-reported to the IRS**); if payment is made via check or cash, this is duly and honestly reported to the IRS in the appropriate section of our Schedule C.

Beyond "not required", requesting information for a W9 for the purchase of merchandise and later providing a 1099-NEC is outside the tax code altogether.

In short, we do not provide W9, EIN or other tax information to our customers. The tax code does not require it; there is no law that requires it. If your organization requires it, there may need to be some correcting of policies and practices.

I hope this clears up the various questions and concerns that schools and churches have.

Please see IRS.gov/Form1099MISC and IRS.gov/Form1099NEC for more information

**If I receive payment via 3rd party processor (credit/debit card transactions) that reports that transaction as income to the IRS and I also have a 1099 issued by a church being reported to the IRS, now a portion of my income has been double-reported to the IRS.