Buyer asking for W9?

[RGkiiing]

Sold a domain a few months ago, and now the buyer is asking me to "send a W9 for our tax records". Never had this before has anyone requested this from you?

 

[DanBingham]

No, seems like a bit of a strange request?

 

[D Haynes]

https://www.investopedia.com/articles/personal-finance/082714/purpose-w9-form.asp

Not sure if that helps. My guess would be they just want an invoice. You can download free invoice forms online.

 

[xynames]

Legally, it is a requirement, yes, for example you must submit one with some of the resellers such as Afternic before listing with them.

 

[offthehandle]

At end the end of January each year, you will also get a 1099. I used to get stacks of 1099's.
You simply fill it out and submit the W9 to the buyer, and they report your SS or TIN to the IRS, then you declare the income on 1040.

https://www.irs.gov/pub/irs-pdf/fw9.pdf

 

[nothere]

was it a company? Maybe they want an official receipt.

 

[xynames]

At end the end of January each year, you will also get a 1099. I used to get stacks of 1099's.
You simply fill it out and submit the W9 to the buyer, and they report your SS or TIN to the IRS, then you declare the income on 1040.

https://www.irs.gov/pub/irs-pdf/fw9.pdf

Not every entity that requests the W-9 reports gross proceeds to the Dept. of Treasury, but yes you should be reporting your income and filing tax returns, of course.

 

[Argentum]

...

 

[offthehandle]

Not every entity that requests the W-9 reports gross proceeds to the Dept. of Treasury, but yes you should be reporting your income and filing tax returns, of course.

I did not always get a 1099 after sending in the W9. From my understanding explained to me by an accountant, those corporations who have been audited were more inclined to send them. Proper numbered invoices should be issued regardless of your business size.

 

[bmugford]

A W9 is normally used to prepare a 1099 (or other tax documents).

Companies like GoDaddy/Afternic require a W9 because of things like parking revenue.
1099 also applies to things like contracting work, consulting, and other freelance services.

You are not working for the company. You are not an independent contractor for the company.
Selling a product, such as a domain, is not the same thing and should not require a 1099.

Brad

 

[forge]

Incidentally, Namesilo required this of me when I set up a marketplace account.

 

[offthehandle]

Selling a product, such as a domain, is not the same thing and should not require a 1099.

In theory absolutely you are 100% correct Brad, its not independent contract labor. In practice, If you are dba and not a TIN I think triggers something. I have 100’s of 1099’s from physical product sales shipped based on a PO from my warehouse and never seeing the customer or performing any services, its something that the bean counters insisted on sending. Strange but true.

 

[RGkiiing]

also add i sold the name through the sedo escrow if that makes a difference. He didnt buy through sedo market, just did escrow, and sent an invoice during the escrow

 

[forge]

In theory absolutely you are 100% correct Brad, its not independent contract labor. In practice, If you are dba and not a TIN I think triggers something. I have 100’s of 1099’s from physical product sales shipped based on a PO from my warehouse and never seeing the customer or performing any services, its something that the bean counters insisted on sending.

Right. Years ago I had a company insist that I supply one for a domain purchase. I reluctantly complied.

 

[xynames]

1099 is not just for services rendered, it is for any miscellaneous payments. The rules are not as easy to comprehend as all that. For example, let's say that your company is renting a space from an individual, in such a case you are supposed to issue a 1099 to the individual for all rents paid over $600. However, if the two entities are corporation to corporation, a corporation renting space from another corporation, there would be no 1099. Same, LLC to LLC, no 1099. This is one advantage of being a U.S. corporation selling domains - there is no need for anyone to issue you a 1099.

As a corporation, I have received seven figure payments (not in the domain business, but in my other businesses) and no 1099 from other corporations. The rules for corp to corp if the corp is a C corp, are basically, "no need for 1099" with some exceptions (form A for securities in some circumstances, B for barter, C in some circumstances, MISC for certain transactions, or K). For an S corp., it gets a little more complicated, sometimes yes, sometimes no, depending on which form of 1099 applies (A, B , K, etc.).

There are also rules for merchant accounts, which in the U.S. if you process over $20K per year representing 200 or more transactions, the processor must issue you a 1099-K. Some processors issue you a 1099-K for any amount, even if well under the $20K threshold. This $20K/200 rule by the way, is part of why peoples' PayPals get limited (closed for verification), when they open a PayPal in the U.S. that has no tax ID attached to it.

Unless you really know taxation laws, consult with an accountant, and don't listen hard and fast to anyone other than a professional telling you that you do or not need to issue a 1099, or that you will or will not receive one.

One thing that you/your company must do is declare at least the amount of gross receipts that are noted on any 1099 you receive, when filing taxes. Declare any less, and you will be audited.

Part of the reason a W-9 is requested is to determine what kind of entity you are, C Corp, S Corp, LLC (and what KIND of LLC), single member LLC, sole proprietorship, individual, partnership, trust/estate, etc. The payor then applies the tax rules to determine if a 1099 is required for your type of entity for that type of transaction, and what kind of 1099.

I am not an accountant just I know a lot about tax laws, because it often becomes an issue in my practice, and businesses.

 

[offthehandle]

One thing that you/your company must do is declare at least the amount of gross receipts that are noted on any 1099 you receive, when filing taxes. Declare any less, and you will be audited.

Unless you really know taxation laws, consult with an accountant, and don't listen hard and fast to anyone other than a professional telling you that you do or not need to issue a 1099, or that you will or will not receive one.

Exactly. "Don't mess with the Eagle" : Don Lancaster