Can a business issue Form 1099-NEC to a worker without an ITIN?
Yes — a business can still issue Form 1099-NEC to a worker who does NOT have an ITIN, but there are some very important compliance steps you must follow.
✅ 1. You are STILL required to file the 1099-NEC
If you paid a contractor $600 or more, the filing requirement does not disappear just because the worker didn’t provide:
- SSN
- ITIN
- EIN
The IRS regulations state that if the payer does not know the taxpayer identification number, they must:
Request the other person’s number
So the obligation becomes:
✔ Request it
✔ Document your request
✔ File anyway if they refuse
⚠️ 2. If the worker refuses to provide an ITIN
Now this is where many tax pros mess up:
If the contractor fails or refuses to provide a TIN (SSN/ITIN) after you request a Form W-9, you must:
👉 Start Backup Withholding (MANDATORY)
You are required to:
- Withhold 24% from future payments
- Send that to the IRS
- Report it on Form 945
Backup withholding applies when there is:
Failure to provide the TIN in the required manner
📝 3. How do you file the 1099-NEC without an ITIN?
You should:
- Request a W-9 (keep proof — email, letter, etc.)
- If they refuse:
- File the 1099-NEC anyway
- Leave the TIN blank or document refusal
- Maintain records showing:
- You acted responsibly
- You attempted to obtain the number
The IRS may impose a penalty for missing TINs, but:
Penalty will not apply if you acted responsibly and took steps to request it
🚨 4. VERY IMPORTANT (Foreign Workers)
If the worker is actually a nonresident alien and does not have an ITIN:
➡️ You generally should NOT issue a 1099-NEC at all
Instead, the correct form is:
- Form 1042-S
Because:
If the independent contractor is a nonresident alien… use Form 1042-S
This is a huge audit issue if done wrong.
📌 Pro Tip for Your Tax Office
Best practice for your clients:
- Never pay a contractor until a W-9 is received
- If no W-9 → withhold 24%
- If foreign → request W-8BEN, not W-9
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