IRS Form 1099 Needed for Supplying Goods?
Q.I am a small business sole proprietor and sell a product to a large company on a very infrequent basis. I do not work for them in any way. They want me to fill out a W-9 form so they can determine if they need to file a 1099 at year's end. Is this necessary in this type of case? My tax preparer wasn't sure. I thought a 1099 was for independent contractors. Any suggestions ?
A.In theory: a 1099 should be issued to every unincorporated vendor to whom you pay at least $600 per year. IMRHO: If you are "a small business sole proprietor and sell a product to a large company on a very infrequent basis", do NOT fill out any forms; simply request they send you a 1099. The 1099 will wash out on your Schedule C anyway. You are right and they are wrong but you'll have to decide how much energy you want to put into arguing with them. Governmental agencies do this too. They're all afraid that somehow they won't do what the IRS requires but they don't try to figure out what that is. In the case described above (sale of goods), which form 1099 should be issued and in which box should the amount of the payment be entered? I'm no expert but for the sale of most types of "products" you would not have to send them a W-9. Perhaps if your "product" is an interest-bearing or dividend-bearing financial instrument then they need a W-9. But a typical sole propritor selling goods or services would not need to supply a W-9 to his customers. But they need to file a 1099 regardless (within very broad circumstances).
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IRS Form 1099 Needed for Supplying Goods?
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