Form 1099 vs Form W-2: Is your Worker an Employee or a Contractor?

form 1099 vs form w-2

The tax season is in its full glory.  Some might be feeling light-headed after filing all their forms, but there are some who are yet to understand how Form 1099 vs Form W-2 stands.

The Form 1099 and Form W-2 has confused many employers when it comes to telling the employees and independent contractors apart. In these economic times, many businesses are trying to cut back the expenses by hiring independent contractors instead of getting full-time employees. As a result, it often gets difficult for these businesses to categorize employees and contractors apart.

But the main problem is that there are some significant differences between an employee and an independent contractor in terms of their work and in the eyes of IRS.

If you are finding it difficult to differentiate between the two designations, then this article will give you a better understanding of the nuances between the two.

Breaking down the Differences

In simple words, the Form 1099 and the Form W-2 are two separate tax forms for two different types of workers.

If you are an employee, then taxes will be taken out. You’ll receive an IRS Form W-2 in January. On the other hand, if you are an independent contractor then you will receive an IRS Form 1099 if your total pay was $600 dollar or more in that tax year.

For a Form W-2 employee, the payroll taxes are automatically deducted from the paycheck and paid to the govt. through the employer. In contrast, independent contractors get full pay without any deduction. The independent contractors are liable for their own taxes. They have to calculate and submit their payroll taxes to the govt. on a quarterly basis.

Another issue that occurs is that some employers try to pose their workers as contractors. The IRS has been tracking down these types of businesses and has collected $9.5 million as back wages since 2011.

Same is the case with the employees posing as independent contractors in lieu of getting a bigger check. What they don’t get is that this way they will actually owe the govt. higher taxes.

An independent contractor owes income tax as well as the self-employment tax. On any income with value $113,700 or less the rate is 15.3% and beyond this value is 2.9%. But if you are an employee, the social security tax gets half i.e. 7.65%!

How to Determine the Correct Job Status?

When it comes to classifying the workers correctly, the key factor should be the “Control”. By control, it means who holds the power over the work done by the worker.

Compared to the employees, the contractors have more control on their work. But the employees get more stability and benefits such as healthcare.

If you have a worker as an employee, then the employee should:

  • Have only one
  • Have assigned hours or a particular set of schedule.
  • Get trained by the company in a certain way.
  • Should complete any and all the work assigned to them.
  • Should be provided the tools and materials necessary to finish the assigned work.

If your worker is an independent contractor, then they should:

  • Have more than one
  • Have a set of own schedule.
  • Use their own personal method to finish the assignments.
  • Have a supply of own tools.
  • Have the freedom to accept and turn down offers.

For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

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The Important 2015 Form W-2 and Form 1099 Changes

2015 was the year of changes — first the law changes and now the changes in Form 1099s and Form W-2.

We have tracked the changes that recently took place in these forms and have listed them down for you.

The Form W-2 Changes

Medicaid Waiver Payments

Certain Medicaid waiver payments have been termed as excludable from the income for federal income tax purposes as a difficulty for care payments.

Virtual Currency

The market value of virtual currency such as Bitcoin being paid as wages is now a subject to federal income tax withholding, FICA tax, and Federal Unemployment Tax Act (FUTA) tax. It is mandatory for employees to report it on Form W-2.

(For more see: Beware: IRS considers Bitcoin as “property” NOT “currency”! (Hint: Have a TIN Matching API))

Form W-2G

The Form W-2G reports income and withholdings related to gambling. In 2013 and 2014, the text in the PAYER’S name and address block was condensed to fit in one print row. For 2015, the form will match the IRS version and expand the text to fit in two print rows.

The Form 1099 Changes

Form 1099-B

Form 1099-B is issued by a broker or barter exchange that summarizes the proceeds of transactions.

Changes:

Now, for a sale of debt instrument that is a wash sale and has accrued market discount, enter the code “W” in the box 1f and the amount of wash sale loss disallowed in the box 1g.

Form 1099-K

The Form 1099-K is given to those merchants who accept payment card transactions or third party network transactions.

Changes:

Completion of box 1b, Card Not Present transactions, is now mandatory for 2015 as it was optional on the 2014 form.

Form 1099-R

The Form 1099-R is used to show distribution from retirement accounts like IRAs.

Changes:

Beginning in 2014, an FFI with a chapter 4 requirement to report a cash value insurance contract or annuity contract that is a U.S. account held by a specified U.S. person with the FFI may satisfy this requirement by electing to report the account on Form 1099-R.

Form 1099-INT

Form 1099-INT is used to report interest income from banks and other financial institutions.

Changes:

The Box 13 has been added to report bond premium on tax-exempt bonds. All later boxes were renumbered.

A new checkbox is also added to this form to identify a foreign financial institution filing this form to satisfy its chapter 4 reporting requirement.

Form 1099-DIV

Form 1099-DIV is issued to those who have received dividends from stocks or partnerships.

Changes:

A new checkbox has been added to this form  to identify a foreign financial institution (FFI) to satisfy its chapter 4 reporting requirements.

Form 1099-MISC

The Form 1099-MISC, the most important of the Forms 1099, is used to report the total paid to a single person or an entity during a tax year for the services provided.

Changes:

A new checkbox was added to the Form 1099-MISC to identify a foreign financial institution (FFI) filing this form to satisfy its chapter 4 reporting requirement.

Certain Medicaid Waiver Payments may be excludable from the income as a difficulty for care payments.

Form 1099-OID

The Form 1099-OID is issued on the purchase of a bond or note for an amount that is less than face value. An OID (Original Issue Discount) is the excess of a bond or note’s stated redemption price over its issue price.

Changes:

A new checkbox was added to Form 1099-OID to identify a foreign financial institution (FFI) filing this form to satisfy its chapter 4 reporting requirement.


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

To check out our APIs, feel free to go to developer.realsearch.com

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Breaking News: IRS Penalties for incorrect W-2, Form 1099 fines just doubled

irs form 1099 fines doubledHappy New Year from Liberty Data Realsearch & Feinsearch – the Nations Largest EIN & TIN Validation portal. We’re super excited to show you what we’ve been working on in 2015.

Breaking News: IRS Penalties for incorrect W-2, Form 1099s just doubled

It’s True – Google it – the IRS just doubled penalties for Form 1099 Non Compliance. 2016 IRS 1099’s are due in just a few days. IRS Law requires every EIN & SSN is validated. Relax. We have your Solution. Tax Season headaches just got easier.

Why it matters

Noncompliance just got more expensive. A provision of the Trade Preferences Extension Act signed into law by President Barack Obama in late June increased the penalties under the Internal Revenue Code Sections 6721 and 6722 for returns and statements filed after December 31, 2015. The penalty provisions for Forms W-2 and 1099 jumped 150 percent: from $100 for a single incorrect return to $250, with the annual cap also Why it matters

Non-compliance just got more expensive. A provision of the Trade Preferences Extension Act signed into law by President Barack Obama in late June increased the penalties under the Internal Revenue Code Sections 6721 and 6722 for returns and statements filed after December 31, 2015. The penalty provisions for Forms W-2 and 1099 jumped 150 percent: from $100 for a single incorrect return to $250, with the annual cap also doubled to $3 million from $1.5 million. For intentionally failing to file a return, the amount rose from $250 to $500. Of course, because there are two filing requirements for employers—returns must be filed with the Internal Revenue Service pursuant to Section 6721 while Section 6722 applies to returns that must be provided to employees—the actual cost of a single incorrect form will cost an employer $500. Employers should ensure that their filings are on time and accurate or face a steep price.

Fines have been doubled to $3 million from $1.5 million. For intentionally failing to file a return, the amount rose from $250 to $500. Of course, because there are two filing requirements for employers—returns must be filed with the Internal Revenue Service pursuant to Section 6721 while Section 6722 applies to returns that must be provided to employees—the actual cost of a single incorrect form will cost an employer $500. Employers should ensure that their filings are on time and accurate or face a steep price.

Realsearch & Feinsearch have developed a unique approach to 1099 Compliance & Validation of EIN & SSN numbers – and you can now access both searches on 1 super awesome must-have Search Box. Introducing TIN MATCH & EIN Search Combined !

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The Must Know 2015 Year End Tax Changes regarding Form 1099

The Must Know 2015 Year End Tax Changes regarding Form 1099

The last month’s tax agreements — the Protecting Americans from the Hikes Act (PATH 2015) and the Bipartisan Budget Act of 2015 — are permanently going to impact the taxation procedure.

The PATH Act gives the employers the payroll tax provisions that will benefit them whereas the BBA Act states that family members who receive capital gifts are partners. The new laws also impact REITs, partnerships, non-compliance penalties, tax filing etc.

So, before filing the Form 1099 for this tax year, do read the following changes that have taken part in the year 2015.

New Partnership Audit Rules (The Budget Act)

The Budget Act has changed the partnership audit rules, which will impact almost all the partners in a partnership.

For taxations, LLCs with more than own owner are treated like partnerships. It is necessary for every LLC, big or small, to file the Form 1099-MISC to report payments of $600 or more to partnerships.

The Budget Act of 2015 has replaced the rules of 1982’s TEFRA legislation with rules that require the tax item assessment at the entity level. It has extended the government’s debt ceiling through March 15, 2017.

Experts suggest that these new entity level assessment rules will help partnerships in determining which partner(s) will be required to pay any such taxes.

The partnerships with fewer or 100 partners are given an irrevocable option to elect out of this new practice.

The changes will be effective after December 31, 2017, partnerships can opt into this new regime for any tax year beginning after the Budget Act on November 2, 2015.

The Extenders (The PATH Act)

REITs

Real estate investment trusts or REITs allowed small investors to have access to large income-producing real estate assets. The REITs gave a special tax designation, which cut their corporate taxes on the built-in capital gains.

The shareholders would receive the Form 1099-DIV. Form 1099 broke the dividend distribution into three categories: ordinary income, capital gains, and the return of capital and each distribution are taxed at a different rate.

On December 7, 2015, the new Tax Act has specifically restricted the ability of non-REIT corporations to show their real estate assets as an REIT in the transactions that were treated as tax-free under Section 355. The new act states that if a corporation was involved in a Section 355 transaction, it can’t make an REIT election for 10 years.

The law also modifies the dividend designation and preferential dividend exclusion of the previous law.

Excluding Gain on Qualified Small Business Stock

The 100% exclusions on the Qualified Small Business Stock are filed on Form 1099-DIV under the section 1223 of the new Tax Act.

The Tax Act has permanently removed 100% of an individual’s gain on the Qualified small business stock. It has also removed these gains from an individual’s Alternative Minimum Tax calculation.

A qualified small business stock is stock acquired upon its issue from a corporation, conditioned:

  1. It is not an S corporation.
  2. It has all-time gross assets not exceeding $50,000,000.
  3. It uses more than 80% of its assets in the active conduct of a trade or business.

Information Returns

The Tax Act has provided another provision that is related to the penalties concerning the Form 1099. This new law provides a penalty shield against de minimis errors like failing to furnish correct information returns and payee statements in Forms 1099.

The party issuing the information return will not be subjected to a penalty, if the error is $100 or less or $25 or less if the error involves tax withholding. The issuers are not required to file a corrected return too.

However, a taxpayer can request a corrected payee statement but the new rules do not apply to the errors on the correct payee statement.

Reporting Compensation

The new law has mandated that employers now have to file information return Forms W-2, W-3, and the Form 1099-MISC on or before January 31 of the year following the calendar year.

Under the Tax Act’s provisions, these forms are no longer eligible for the “Section 6071(b) – Extended filing date” for electronic returns. The filing deadline is now the deadline for furnishing employee or payee statements.

The Section 6051(a)(2) has also been amended to require that an “identifying number”, other than the Social Security Number, should be included on each Form 1099 and Form W-2. It will allow the Treasury to circulate the regulations that permit or requires a shortened Social Security Number on either of the forms.

(Use our TIN matching API for Form 1099 verification.)


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

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Answers Small Business Owners Should Know about the Form 1099

Answers Small Business Owners Should Know about the Form 1099

The IRS is not known for making things easy. For small business owners especially, tax time is generally filled with frustration, uncertainty, and probably a few extra hours at your kickboxing class.

Here are the answers to 4 of the most common questions that many small businesses have when it comes to 1099 forms.

# 1 Which Form 1099 should I need?

There are 17 different types of Form 1099 that are issued by the IRS. For small business owners, the most important one is the 1099-MISC. It is used to report the payments made to contractors and independent service providers.

However, one must review the other sixteen Form 1099s to see if they need to file any of those too.

#2 How to know if a worker is an employee or a contractor?

The IRS has issued these three guidelines to differentiate:

The perception of the partnership – It is okay with the IRS if you and your contractor view your work relationship as an employer-employee relationship.

Financial control – A contractor can actually be an employee if you have any say in how they manage their business and its finances.

Behavioral control – A contractor is considered an employee when they have to follow your company’s procedures while on the job.

#3 What kind of payments need to be reported?

The most important type of payment to be reported is the one you pay to independent workers such as contractors. However, there are a few other things to be reported through the Form 1099-MISC, like:

  • Payments made to unincorporated businesses that provided a service to your business.
  • The payments made as rent for office space, warehouses or any space related to the business.
  • If you have awarded more than $600 to someone.
  • Healthcare and medical expenses paid to independent workers.

#4 What are the deadlines to file Form 1099?

All the Form 1099s – whether filed electronically or on paper — need to be provided to all the contractors by January 31. The only exception to this rule is that if January 31 happens to be a weekend, the forms have to be delivered by the next business day.

When it comes to filing the forms, there are two deadlines:

  • Paper-filed Form 1099s should be submitted by February 28.
  • Electronically filed Form 1099s can be submitted by March 31.

If the Form 1099 isn’t filed on time, the IRS will still penalize you. This penalty is based on the February 28th deadline, and it ranges between $30 and $100 per form (up to a maximum of $500,000) depending on how late you file.


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

To check out our APIs, feel free to go to developer.realsearch.com

Check our pricing and plans, and subscribe for our services.

10 Reporting Myths about Form 1099, Form W-2, and Form 1095

10 Reporting Myths About Form 1099

It is the year end, which means the IRS form season is upon us. Form 1099, Form W-2, and the new Form 1095 are here for all the business owners to fill out.

The Forms 1099 and W-2 might be familiar to you, but the new addition to the Form family, Form 1095 is a tricky and complicated one.

This said, there are many myths around these forms, which can bring businesses on the wrong side of the law. We have put together 10 reporting myths and the corresponding realities around the Form 1095, Form 1099, and Form W-2 to help business owners avoid problems with the IRS.

Myth #1

As Form 1095 will be implemented from 2016, there is no need to report and file this form for the reporting year 2015.

Reality

The Affordable Care Act has made the reporting and filing of the Form 1095 mandatory in the year 2015, along with the IRS Form 1099 and Form W-2.

Myth #2

If there is no state tax withholding, the state Form 1099 is not required.

Reality

Not necessary. Many states like Alabama, California require the Form 1099-MISC and its associates to be filed, even if there is no state tax withheld.

To be sure, first check your state’s Form 1099 filing requirements. You can also follow this chart to be clearer.

Myth #3

The copy of Form 1099-A can be printed in the black ink and filed to the IRS.

Reality

Copy A of the Form 1099 must be printed in the red drop-out ink in order to be properly processed by the IRS.

Myth #4

If your business has 50 or more full-time employees, you must file the Form 1095.

Reality

You must file Form 1095 if your business employs 50 or more full-time equivalent employees. Keep the following in mind:

  • Many companies tend to underestimate their true full-time count by ignoring their non-full-time staff.

In simple terms, to count the total number of full-time equivalent employees, you must consider the total number of full-time employees, plus the number of non-full-time equivalent employees.

  • Monthly full-time equivalent employees are calculated by:

Combine the number of hours of the service of all the non-full-time employees for the month, but don’t include more than 120 hours of service per employee. Now, divide the total by 120.

Myth #5

If a worker of yours is given freedom to act, then the worker should be considered as an independent contractor.

Reality

The general rule says that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what work will be done and how it will be done.

An individual is an employee if the employer can control what will be done and how it will be done, even if the employer gives the employee freedom of action.

Myth #6

All employers can file the paper Form 1095, regardless the size of the business.

Reality

A filer with 250 or more Form 1095 must file them electronically. For the filing-year 2015, the incorrect filings of the Form 1095 will not be penalized if the employers and insurers file it on time and make efforts to comply too.

Myth #7

The state e-file threshold for the Form W-2 and Form 1099 filing is the same as the federal e-file threshold.

Reality

Each state has the authority to set its own e-file threshold. To ensure that you are compliant, check your state’s requirements through this chart.

Myth #8

When filing on paper, one Form 1096 can be used for one the submission of the multiple Form 1099 types.

Reality

For each Form 1099 type, separate Form 1096 is required to be submitted to the IRs on the paper.

Myth #9

When filing the Form W-2s, Form 1099s, and Form 1095s on paper, it is mandatory to use the official forms supplied by the IRS.

Reality

The substitute Form W-2s, Form 1099s, and Form 1095s are accepted by the IRS for filing as long as they meet the specifications stated in the IRSX publications 11411179, and 5223, respectively.

Myth #10

The maximum penalty for small businesses failing to comply with the Form W-2 and Form 1099 reporting requirements is $500,000.

Reality

This year, the IRS has announced an increase in the penalties for the failure to file correct information returns and provide the correct payee statements for information returns filed after Dec 31, 2015. The maximum penalties laid on small businesses would increase from $5a00,000 to $1 million.


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

To check out our APIs, feel free to go to developer.realsearch.com

Check our pricing and plans, and subscribe for our services.

How Donee Reporting and TIN Matching API can be Two Great Friends

donee reporting and tin matching api

IRS is getting strict with every passing year. Throwing new compliances, acts, and forms in the way of citizens, companies, organizations and even non-citizens or oversea organizations is its new found hobby.

When everyone was hoping that 2015 is about to go without any new compliance, IRS has gone ahead and done it again! The end of year has brought Nonprofits under the IRS radar.

On September 16, 2015, the IRS has issued a proposed set of regulations, called “Donee Report”. These proposed regulations involve NGOs and NPOs and will allow these charitable organizations to file separate information return, in addition to the Form 990, with IRS by February 28 every year. In the next few sections, we explore how donee reporting and TIN Matching API go well together.

What is Donee Report?

The nonprofits are required to collect a donor’s, who have made a contribution of $250 or more, name, address, and Social Security number or other taxpayer identification number. The donor’s taxpayer identification number is required by IRS to properly associate a donor with the correct donation information.

Why does IRS need Donee Report?

IRS has stated the reason behind donee reporting is that some donors aren’t getting contemporaneous substantiation written acknowledgement of their charitable contribution by some Nonprofits.

The IRS has concluded that the Form 990 unsuitable and insufficient for reporting donations.  The donee report is supposed to be considered as the appropriate alternatives to amended Forms 990. It will provide IRS the required information related to the charitable contributions made by an individual.

The problem with Donee Reporting

Nonprofits are also required to provide a copy of the information to each donor listed. This has left many Nonprofits concerned about the new regulations.

The process would impose significant costs and burdens on these organizations. Further, it could create confusion in public and discourage the donors to support the nonprofits.

The donee reporting has also raised concerns about the potential risk for identity theft and fraud involved in it.

How TIN matching API can help?

If IRS implements these new regulations, the above mentioned potential risks can turn in big-time risks.

Fraud and identity theft were always a major concern for many agencies and IRS itself. Problem of stolen identities isn’t just limited to individuals. They can cost businesses of all type, including non-profits time and money.

Not just this, frauds can also lead to non-compliance by the organisation, false exception claims, and can make you lose the associate people.

Nonprofits are advised to use technology involving data to overcome these issues. One such technical rescuer can be a TIN matching API. (Also read – 3 benefits that will make TIN matching API irresistible)

By simply integrating a TIN matching API like ours, you can check for identity theft. TIN matching can help non-profits make sure that the people they are accepting funds from are genuine and are operating with original identities.

It will also help them in detecting if a donor’s tax id is in records of Uncle Sam or not. This will help in finding out the fraudulent and if the so called donor is using someone else’s id or not.


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

To check out our APIs, feel free to go to developer.realsearch.com

Check our pricing and plans, and subscribe for our services.

Why Having a Fraud Risk Management Tool is Necessary for Online Retailers

fraud risk mangagement

Online retailers in the US are losing billions of dollars every year, thanks to the credit card frauds taking place.

Credit card frauds aren’t that harsh on the brick and mortar businesses. For offline retailers, usually the card issuers – Banks, VISA, and MasterCard – take the responsibility of covering the losses due to due to counterfeit cards.

But online retailers don’t come under the same umbrella. They are left on their own. it means that online retailers – whether big or small – have to reimburse their customer, whose credit card number was used to make the fraudulent purchase from their website. Moreover, online-only retailers like Amazon and EBay falls in the highest risk zone of something that is called “everything bought fraudulently”.

It has been observed that most of the credit card frauds are mobile-driven. Credit card frauds made using mobile devices cost merchants more than frauds made on websites. Mobile frauds cost merchants almost thrice the amount the victim customer has spent, specifically $3.34 for every dollars of fraudulent activity.

In the upcoming years, online fraud is expected to grow more, especially in the U.S. Our country might have introduced cards with microchips called EMVs this year, but these cards are better at preventing in-store frauds. They can’t prevent online fraud, where card numbers will still be used.

Consequences of Online Credit Card Frauds

In 2014, the overall online credit card frauds cost retailers $32 billion. This amount is 38% more than the losses suffered in 2013. Earlier in the year 2015, 42% of merchants with an online presence reported an increase in fraud.

But the “real” impact goes beyond the monetary losses.

Retailers spend loads of cash on systems that can manual flagging fraud. Manual flagging is done by real human beings, who go through suspicious purchases and make sure they’re legitimate. This process takes time, which can lead to a delay in the delivery of products to consumers.

Not only that, a customer experience with the retailer can also be harmed by these prevention methods. When a legitimate customer gets accused of fraud, there are going to be negative consequences on the retailer-customer relations.

Last but not the least, tackling credit card fraud takes a retailer’s precious time and energy, which could have been used in other areas of the business.

How to Combat Online Credit Card Frauds

Retailers are wasting their retailing on dealing with frauds. This hampers their growth and distract them from their core expertise.

The best solution to handle frauds is to introduce technology and data in the picture. Our web-FRAUDgate 2.0™ is one such example of a third-party solution that is helping retailers combat the credit card frauds.

Our web-FRAUDgate is a real-time scoring engine that evaluates the risk level of transaction data based on the retailer’s customized parameters, and also includes a consolidated review interface for further identification and analysis of transaction risk.

The API have comes with tools, which include high risk IPs, IP geo-location, collaborative networks and velocity checks. The solution provides merchants & retailers ultimate access to fraud score as well as ID validation risk analysis, both at the same time.


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

To check out our APIs, feel free to go to developer.realsearch.com

Check our pricing and plans, and subscribe for our services.

How TIN Matching is the Key to Avoid Errors in IRS Form W-9

tin matching software form w9

Every time you hire someone, or develop a business relationship with an independent contractor, or even just make a payment to a vendor, you become responsible to Uncle Sam.

To fulfill this responsibility, you must generate an IRS form W-9 to them, along with a request for their Taxpayer Identification Number and certification.

It is needed to be filled and signed by the employees and partners so that you know their Social Security number or TIN. These tax id numbers validate them as U.S. persons trying to work in the United States.

It does not need to send to the IRS immediately. The records are needed at the time of generation of W-2s and 1099s.

When to use a Form W-9?

The Form W-9 is used when you have to collect the taxpayer ID number (SSN, EIN, ITIN) of any U.S. person you have started to engage in a business activity with.

Form W9 can’t be used for foreign individuals or people who became U.S. residents for tax purposes but aren’t eligible for an SSN. Use a Form W-8 for the former entity and a Form W-7 for the latter.

What happens if a W-9 is not filled out?

If you do not fill, or if you forget to fill out a W-9 requested by an employer or a partner, you will be penalized $50 per instance. An employer or a partner is duly entitled to information like TIN.

For filing a false statement about backup withholding is penalized. A statement which does not result in backup withholding, when the filler is not exempted from the backup withholding requirement will be subjected to a $500 penalty per instance.

Falsifying any other information in a W-9 form might also result in prosecution for criminal behavior and may even lead the filler to imprisonment.

The IRS might penalize the W-9 requesters, who fail to report an accurate TIN on their returns.

Additionally, if the W-9 requester or an employer or a partner misuses or disclose the information provided to them by a worker or vendor by the medium of a W-9 form, they might be subject to civil and criminal penalties.

But how to see if the TIN provided to you by the vendor or employee is correct?

TIN matching software

The best way to do so is to use a TIN matching program. TIN matching software like ours allows those who request Form W-9 to verify the TINs they have been provided.

Use our TIN matching services when you are about to file an information return. We provide you from TIN matching to EIN verification to bankruptcy records to criminal records.

These will help you to be compliant with the requirements of the IRS W-9 form and will help you save thousands of dollars, which you might have to pay in the form of fines.


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

To check out our APIs, feel free to go to developer.realsearch.com

Check our pricing and plans, and subscribe for our services.

Why Companies like PayPal need TIN Matching Software Right Now!

Companies like PayPal need TIN Matching Software

The Internal Revenue Code (IRC) has done it again!

With the addition of Section 6050W to IRS, the IRC has made it mandatory for all US payment settlement entities (PSE), including online payment processors, to provide information to the IRS about those of their customers who receive payments through them by selling goods or services.

Under the section, the PSE are required to report to the IRS the total payment volume received by the US account holders whose payments exceed these two parameters in a calendar year:

  • US$20,000 in gross payment volume from sales of goods or services in a single year
  • 200 separate payments for goods or services in the same year.

The account holders have to provide their respective payment processors with their tax ID number. In accordance with the given tax ID number (SSN, EIN, TIN), the PSE will send the affected sellers the form 1099-K to fill.

So, in a nutshell, all an e-payment processor has to do is ask for the seller’s tax id and provide them with the 1099-K form. Sounds simple, doesn’t it?

Well no. It may sound simple, but that’s not all the payment processors have to worry about. The biggest hurdle comes when the form filler makes mistakes, which in turn affect these PSE companies.

Even a single, little mistake done by the filler can land these credit card processors in the faulty list. The IRS will issue a summons to the “faulty” payment processor at audit and had to pay thousands of dollars in penalties.

So what to do now?

The best solution to overcome this issue is to get TIN matching software. A TIN matching API like ours will provide you with services like TIN matching, 1099 validation, business EIN credit reports, TIN batching, Due Diligence, B2B EIN verification, anti-fraud software too.

If you are an e-payment processor, then you must use an up-to-date, speedy and secure TIN matching system like our TIN matching API. Our service will make the e-payment processing companies more IRS compliant and will save them from penalties.

Nor this will help you in the present scenario; it will also come handy in the nearby future when IRS will throw another rule in your way.


For more information or if you would like to discuss how any of our APIs can help you with your business requirements please call 888-996-6253 or email robin@realsearch.com.

To check out our APIs, feel free to go to developer.realsearch.com

Check our pricing and plans, and subscribe for our services.