Nonprofit finance, plainly

You paid contractors all year and never collected W-9s

It is November, and you just realized that the freelancers, consultants, and vendors you have paid since January never sent you a tax form. Maybe your bookkeeper mentioned it, or maybe you read about it and felt your stomach drop. You are not careless. Nobody told you this was your job, and nothing in your setup reminded you. It is very fixable, and you have time.

First, the honest version

Here is what is going on. When your nonprofit pays an independent contractor (someone who is not on your payroll) at or above a yearly amount set by federal tax law (that amount went up for payments made in 2026, so confirm the current figure with your CPA), you generally must report those payments after the year ends. The report is a Form 1099-NEC, which is a summary of what you paid that person. To fill it out, you need their legal name, address, and taxpayer identification number (TIN), which is a Social Security number or an Employer Identification Number. The standard way to collect all of that is a Form W-9, a one-page form the contractor fills out and sends back to you.

If you do not have a W-9, you cannot file an accurate 1099. That is the real problem, and it is a paperwork problem, not a crisis.

The risk, in order of likelihood:

First, penalties for filing late, incorrectly, or not at all. These are per form, they scale with how late the filing is, and they add up if several contractors are affected. Second, a contractor who refuses or fails to provide a TIN. In that case you may be required to do backup withholding, which means holding back a flat percentage of future payments and sending it to the IRS on the contractor’s behalf. Think of it as the government’s way of making sure tax gets collected from someone it cannot identify. It creates extra filings for you and an awkward conversation with the contractor. Third, the quiet cost: a scramble in January when everyone is busy and your contractors are slow to answer.

The IRS generally looks more kindly on organizations that can show a good-faith effort to collect the information. That is why starting now matters.

What to do this week

You can do most of this yourself, with a spreadsheet and some email.

1. Pull a list of everyone you paid this year who was not on payroll. Your bank or card statements and your accounting software’s vendor report will both work. Include the name, total paid so far, and what the payment was for.

2. Set aside who does not need a form. Payments to corporations are often exempt, though not always, and payments made by credit card are typically reported by the card processor instead. Reimbursements for expenses and payments for goods are treated differently. If you are unsure about a particular person, write it down and ask your CPA. Do not guess.

3. Send a W-9 request to everyone who remains. Attach the blank form (it is free on the IRS website) and keep your note short and friendly: “We are updating our records for year-end reporting. Could you complete and return the attached W-9 by mid-November?” Most people will respond quickly because they receive these all the time.

4. Keep a simple tracking sheet with three columns: requested, received, and follow-up date. Follow up once, then again with a firmer note. Keep copies of every request. That record is your evidence of good faith.

5. Store completed forms securely. A W-9 contains a Social Security number for many individuals, so do not leave them in a shared inbox or an open folder.

6. For anyone who does not respond, tell your CPA before December ends. They can advise whether backup withholding applies and how to handle it.

7. Do not wait for January to ask. A contractor you can reach in November is much easier to reach than one you are chasing after the holidays.

The structural fix

The cleanest solution is a rule with no exceptions: no W-9, no first payment. Contractors are asked for the form during onboarding, before an invoice is approved, and the person who pays invoices checks for it every time. This feels strict for about a week and then becomes routine, and it is far easier than collecting forms after the money is gone.

Well-built books support that rule. Every vendor has a record that shows whether a W-9 is on file, whether they are a 1099 vendor, and their year-to-date payments. Payments are coded consistently so that a report in December tells you exactly who needs a form. Your month-end routine includes a quick check for new vendors. By January, preparing 1099 information is a report you run, not a project you launch.

If you want a second set of eyes on how your own setup measures up, our Nonprofit Financial Health Check is a $500 fixed-fee assessment of ten operational areas. You receive a written report your board can read, and the full fee is credited toward your first month if you choose to work with us (/health-check). We also offer a free Month-End Close Checklist, which you can use on your own (/resources).

Millennial M&C Co. provides nonprofit accounting and operational support. We prepare and present; your CPA files. Nothing here is tax or legal advice for your specific situation.