Obama's new tax law regarding W-9's

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dstack
dstack's picture

My employer sent us this message:
Obama has a new tax law that requires EVERY person or Company that gets paid for a services has to fill out a W-9 form.  With that said guys I need you to get me the W-9 from ALL your vendors we have bought stuff from:  DVD Burner, DVD and DV tapes, Ink,  anything.   

I wrote the following to the person who advised my employer on this:
It is my understanding that this was standard practice prior to Obama. Is that right?  Also, I have been told that companies that want tax breaks have to prove they are doing business with other companies, hence a W9.  Many companies were falsifying documents saying they were doing business with another business when, in fact, they did not, yet still getting tax rebates.  

And her response:
Corporations were formerly excluded from having to provide W-9’s. Individuals and businesses that were not incorporated did have to provide W-9’s. Now, it is everyone regardless if we are dealing with a corporation or not.

Is this accurate?

 

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Jasper
Jasper's picture
The law doesn't apply till

The law doesn't apply till 2012.  It's going to get repealed, with broad support in both parties.  No one supports this, although it might marginally reduce tax evasion. 

But in the remote chance the provision isn't repealed, it will require every business that purchases $600 or more in goods or services from a single provder to report those purchases on a 1099.  This applies whether you bought the goods or services from an individual or Walmart ( or any corporation).  

Under old/current law, businesses purchasing goods don't report those purchases on a 1099 issued to the provider, ever.  If a business bought services from an individual or partnership of $600 or more during the year, they had to supply the person or business with a 1099 specifying the amount.  If purchased from a corporation, no 1099 was required.

It will get repealed.  Tell your employer not to worry....