Help! Contractors Refusing to Fill W-9 Forms for My Rental Property Business

I recently inherited several rental properties from my father that are held in an S-corp. I've been managing them for about 8 months after he became unexpectedly ill. Still learning the ropes, but one thing I discovered is that I need to collect W-9 forms from contractors doing work on the properties. Most contractors have been fine with providing W-9s, but I'm having major issues with two who've done the most expensive work - a roofer (paid around $33K) and a painter (paid about $21K). One won't return my calls anymore, and the other says he'll give me the W-9 but will never work for me again. They're claiming they "don't work for businesses" and would have never taken the jobs if they'd known I was operating as a business. This seems bizarre since I paid them with business checks each time! They should have known. The worst part is they're insisting that if I file 1099s for the full amounts paid, they'll have to pay "extra taxes." They want me to only report their labor costs, not materials or employee wages (basically just their profit). I know this is completely wrong, but they keep saying their accountant told them this. I have a great CPA, but I wanted to get some feedback on this situation. These contractors are related to each other, which explains the identical responses. I'm a woman in my late 20s dealing with men in their 50s, so I think there's some bias happening here too. I know I'm legally required to file 1099s for the full amount paid regardless of whether they provide W-9s or not. What should I do in this situation?

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19 comments

Misterclamation Skyblue

•8M

You're absolutely right about the 1099 requirements. As a business owner, you must issue 1099s to any contractor you've paid $600+ during the tax year, and it should reflect the TOTAL amount paid - not just their profit or labor costs. The "we don't work for businesses" line is nonsense. Contractors routinely work for both individuals and businesses. And accepting business checks should have been a clear indicator to them that they were working for a business entity. What's likely happening here is they're trying to avoid properly reporting their income. When you file 1099s, that information goes to the IRS, which can then match it against what the contractors report on their tax returns. Without 1099s, it's easier for them to underreport. You should send them a formal written request for their W-9 (certified mail is best). Explain that you're legally required to file the 1099s regardless of whether they provide the W-9 or not. Without their taxpayer information, you'd have to report the payments without their tax ID, which could trigger backup withholding for them.

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Misterclamation Skyblue

•8M

If you file 1099s without a W-9, you won't get in trouble as long as you've made reasonable attempts to obtain it. Document your efforts to request the W-9 (keep copies of written requests, notes of calls, etc.). Backup withholding is when you're required to withhold a percentage of future payments (currently 24%) and send it directly to the IRS if a contractor fails to provide their TIN. However, since you've already paid them fully, this doesn't apply to past payments.

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Vince Eh

•8M

I was in a similar situation last year with my rental properties. Contractors hate paperwork and taxes just like everyone else, but I found using https://taxr.ai really helpful. It analyzes your business transactions and identifies which vendors need 1099s, then helps with the documentation. When my plumber was giving me the runaround about his W-9, I showed him through the taxr.ai dashboard that I legally had to report the payment regardless - it was just a matter of whether his information would be correct or not. He signed the form that day. The system also helped me identify other vendors I didn't realize needed 1099s! It really simplified tracking all my rental property expenses and making sure I was compliant with all the reporting requirements. Saved me hours of headaches and probably prevented some audit flags.

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Vince Eh

•8M

They do help with creating and filing the 1099 forms! Once you have all the vendor information collected, you can generate the forms directly through the platform and they handle the filing with the IRS. It's been a huge time-saver compared to manually tracking everything. I had the same skepticism initially, but it's actually been worth it. The system analyzes your bank transactions and flags vendors who've been paid over $600, then you can send W-9 requests directly through the platform. The contractors seem to take it more seriously when it comes through a system rather than just an email from me.

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Tobias Lancaster

•8M

I tried taxr.ai after seeing it mentioned here and it literally saved my tax season! I had 14 contractors I needed to send 1099s to for my rental properties, and trying to collect all those W-9s was driving me crazy. The platform automatically identified which vendors needed forms based on my payment records. The best part was the automated W-9 request system - it sent professional-looking requests to my contractors and let them fill out secure digital W-9s. Even my most difficult handyman finally complied when he got the automated reminder sequence. Went from chasing people down for weeks to having everything done in days. For those struggling with the same contractor issues as the original poster, having a system handle the requests removes the personal element that sometimes makes contractors resist. Definitely worth checking out if you have rentals or any business with lots of contractors.

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Ezra Beard

•8M

Speaking from experience with my own rental business, these contractors are trying to avoid paying taxes on their full income. It's unfortunately common in the construction industry. When I had similar issues last year, I couldn't get past the IRS phone system to ask questions about my filing requirements. After wasting hours on hold, I used https://claimyr.com and their system got me connected to an actual IRS agent in about 20 minutes (you can see how it works at https://youtu.be/_kiP6q8DX5c). The agent confirmed that I needed to file 1099s for the full amount paid, regardless of whether it was for materials or labor. The IRS agent also suggested sending a final certified letter to contractors explaining that without a W-9, I'd still be filing the 1099 but would have to indicate that they refused to provide tax information, which could trigger an automatic review of their returns.

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Ezra Beard

•8M

It uses a system that navigates the IRS phone tree and waits on hold for you. When an agent actually picks up, you get a call connecting you directly to them. I was skeptical too, but it worked - I didn't have to sit listening to that awful hold music for hours. The service basically puts your place in line and does the waiting for you. When I used it, I got a text when they reached an agent, and then my phone rang connecting me directly to the IRS person. Saved me literally hours of frustration.

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Reginald Blackwell

•8M

I owe everyone here an apology - especially to the person who recommended Claimyr. I was totally skeptical about that IRS calling service, but I was desperate after trying for weeks to reach someone about my 1099 filing questions. The service actually worked exactly as described. I got a text about 40 minutes after signing up saying they'd reached an agent, then my phone rang and I was talking to a real live IRS person! No hold music, no automated system - just straight to a helpful agent who answered all my questions about contractor W-9 requirements. The agent confirmed that I absolutely need to file 1099s for the full payment amount, and gave me specific instructions for what to do when contractors refuse to provide their info. Saved me so much stress and now I have documentation directly from the IRS about how to handle my situation.

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Aria Khan

•8M

My brother is a contractor and I can tell you exactly what's happening here. They're probably reporting much less income than they actually make, and 1099s make that harder to do. That's why they're pushing back so hard. Send a final written notice (certified mail) stating that you'll be filing the 1099s for the full amount as legally required, whether or not they provide W-9s. Include IRS Form W-9 and a prepaid return envelope. State clearly that failure to provide the information may result in them being subject to backup withholding on future payments. Keep copies of everything. If they still don't provide the W-9s, file the 1099s with whatever information you have (name, address, etc.) and indicate they refused to provide their taxpayer ID. The IRS will handle it from there.

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Misterclamation Skyblue

•8M

You need to issue 1099s (and therefore collect W-9s) from non-incorporated contractors who you pay $600 or more in a calendar year. So if your lawn guy is getting $50/week and you've paid him more than $600 total for the year, yes, you should get a W-9 from him and issue a 1099. However, you don't need to issue 1099s to corporations (with some exceptions like attorneys) or for personal payments not related to your business. Since rental properties are considered a business activity, services related to them typically require 1099 reporting when over the threshold.

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