If a contractor won’t provide a Social Security number for a 1099, you don’t get to walk away from the reporting; you follow a specific sequence the IRS expects from the payer. Request Form W-9 in writing and keep a record of the request, begin backup withholding at 24% on every payment until a taxpayer identification number arrives, file Form 1099-NEC with the TIN field blank, and deposit and report the withheld tax on Form 945. Do those four things and the contractor’s refusal becomes their problem instead of yours.
Ask With a Form W-9, in Writing
Form W-9 is the IRS’s standard tool for collecting a contractor’s TIN, legal name, and business type, and the best time to collect it is before the first payment goes out.1Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification The TIN can be a Social Security number, an individual taxpayer identification number, or an employer identification number, depending on how the contractor is organized.2Internal Revenue Service. Form W-9 (Rev. March 2024) Request for Taxpayer Identification Number and Certification
If a contractor says they’ve applied for a TIN but don’t have one yet, the W-9 instructions let them write “Applied For” in the TIN field, sign the form, and return it. The 60-day grace period that applies to interest and dividend accounts does not extend to nonemployee compensation, so backup withholding starts immediately on payments to that contractor until you receive the actual number.2Internal Revenue Service. Form W-9 (Rev. March 2024) Request for Taxpayer Identification Number and Certification
Document Every Request You Make
When the contractor refuses or goes quiet, your protection is a paper trail. The IRS will not waive penalties against you unless you can show you acted in a “responsible manner” trying to obtain the number, and Treasury regulations spell out what that means: an initial solicitation, plus annual follow-up solicitations if the TIN remains missing.3GovInfo. 26 CFR 301.6724-1 Reasonable Cause
The initial solicitation happens when the working relationship begins. If nothing comes back, make at least one annual solicitation before the end of that calendar year. Still no TIN? A second annual solicitation is required the following year. Each request should be in writing, dated, and kept in your files. Email works. A mailed letter, certified, is stronger evidence. These documented requests are what establish reasonable cause and shield you from information-return penalties later; without them, the IRS treats the missing TIN as your negligence, not the contractor’s refusal.
Start Withholding 24% Immediately
Once a payment goes out to a contractor who hasn’t furnished a TIN, federal law requires you to withhold 24% of every reportable payment.4Internal Revenue Service. Backup Withholding This isn’t optional. The statute applies withholding to every reportable payment made during the period the TIN is missing, meaning from the very first check if a TIN never arrived.5Office of the Law Revision Counsel. 26 U.S. Code 3406 – Backup Withholding
Withholding applies to the gross amount of the payment. If you owe a contractor $5,000, you pay them $3,800 and hold back $1,200 for the IRS. The rule covers nonemployee compensation reported on Form 1099-NEC as well as other payment types reported on various 1099 forms.4Internal Revenue Service. Backup Withholding
If you fail to withhold when you were required to, the IRS holds you directly liable for the tax you should have collected, plus interest and failure-to-deposit penalties. Ignoring the withholding rule doesn’t create a paperwork problem; it makes you personally responsible for the contractor’s tax bill.
When the Withholding Stops
Backup withholding continues until the contractor furnishes a valid TIN and certifies it under penalties of perjury on a new Form W-9. Once you receive the certified form, stop withholding on future payments and keep the W-9 in your records as proof that the obligation ended.4Internal Revenue Service. Backup Withholding
File the 1099-NEC Even With a Blank TIN
A missing TIN does not excuse the filing. You still owe the return and a copy to the contractor by January 31 of the year following payment.6Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) Leave the TIN field blank or enter all zeros as a placeholder. The IRS will accept the return and assess the situation based on your documentation.
Report any backup withholding you collected in Box 4 (Federal Income Tax Withheld) on the 1099-NEC.6Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) The contractor needs that figure to claim credit on their own return for taxes already paid on their behalf. Even if the relationship ended badly, send them their copy.
One filing detail: if you file 10 or more information returns of any type in a year, they must be filed electronically.7Internal Revenue Service. E-file Information Returns
Deposit the Withheld Tax and File Form 945
The 24% you hold back doesn’t stay in your bank account. You deposit it with the IRS and report it annually on Form 945, the return for withheld federal income tax from nonpayroll payments.8Internal Revenue Service. Instructions for Form 945 (2025)
Your deposit schedule depends on the lookback period. If the total tax reported on your Form 945 two years earlier was $50,000 or less, you follow a monthly schedule; above $50,000, you deposit semiweekly.8Internal Revenue Service. Instructions for Form 945 (2025) Deposits must be made electronically through the Electronic Federal Tax Payment System, IRS Direct Pay, or your IRS business tax account.
Form 945 is generally due by January 31 of the following year, shifting to the next business day when January 31 falls on a weekend. If you deposited all taxes on time throughout the year, you get an extra 10 days to file.8Internal Revenue Service. Instructions for Form 945 (2025)
What It Costs If You Get It Wrong
Trouble arrives from two directions: penalties on the information return itself, and liability for the tax you failed to withhold.
For returns due in 2026, the tiered penalties under Section 6721 for each incorrect or late Form 1099-NEC are:9Internal Revenue Service. Information Return Penalties
- $60 per return if corrected within 30 days of the due date
- $130 per return if corrected after 30 days but by August 1
- $340 per return if filed after August 1 or not filed at all
- $680 per return for intentional disregard, with no maximum cap
Annual caps apply to every tier except intentional disregard, and small businesses (those averaging $5 million or less in gross receipts over the prior three years) get lower caps. For small businesses, the maximum penalty for returns not filed by August 1 is $1,366,000; for larger businesses, $4,098,500.9Internal Revenue Service. Information Return Penalties
Failing to withhold when required is more expensive. The IRS treats the missing 24% as your debt: you owe the amount you should have withheld, interest from the date deposits were due, and failure-to-deposit penalties on top. The IRS has been actively issuing penalty letters for backup withholding failures, and a reasonable cause defense is available only if you can produce evidence of your solicitation efforts.4Internal Revenue Service. Backup Withholding Many businesses get burned assuming a missing TIN is the contractor’s problem. It isn’t. The IRS comes after the payer first.
The Contractor Isn’t Off the Hook
A contractor who refuses to furnish a TIN faces their own $50 statutory penalty per failure.10eCFR. 26 CFR 301.6723-1 – Failure To Comply With Other Information Reporting Requirements Beyond the penalty, they lose control of their tax situation entirely: 24% of gross pay goes to the IRS with no deductions, and they can only recover any overpayment by filing a return and claiming the credit.
Sharing this with a reluctant contractor sometimes resolves the standoff. Once someone understands that a quarter of their pay will be withheld and they face their own IRS penalty, the W-9 usually gets signed.
If the Contractor Is Foreign, the Form Changes
Sometimes a contractor who “won’t provide an SSN” simply doesn’t have one. Foreign individuals and entities use Form W-8BEN (or W-8BEN-E for entities) instead of Form W-9 to certify foreign status and claim any applicable tax treaty benefits.
The default withholding rate for payments to foreign contractors is 30% of the gross payment, not 24%.11Internal Revenue Service. Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities A treaty may reduce or eliminate that withholding, but only if the contractor submits a properly completed W-8BEN. Without valid documentation, you withhold 30% under the chapter 3 presumption rules. These payments are reported on Form 1042-S, not Form 1099-NEC. If you don’t know whether the contractor is a U.S. person or a foreign national, ask before you pay.
The 2026 Threshold Matters Here
For payments made in 2026, the 1099-NEC reporting threshold rose from $600 to $2,000.12Internal Revenue Service. Form 1099 NEC and Independent Contractors If you pay a contractor less than $2,000 during the calendar year, you don’t have to file a 1099-NEC and the backup withholding rules tied to that form don’t apply. Below the threshold, the whole sequence above is moot.
The threshold runs per contractor, per calendar year. If total payments to someone will likely cross $2,000, ask for the W-9 early. Realizing in December that you need a TIN from someone you’ve been paying since March creates exactly the scramble the withholding rules are built to punish.