Landowners – you may be asking yourself – “Why do I have to provide all that information about myself to list my property on Our Tracts?” Specifically, you may wonder about the need for a form titled “W-9 – Request for Taxpayer Identification and Certification”.
In a few words – it’s the IRS!
When you are not an employee of a business and that business pays you $600 or more in a single calendar year, the IRS requires that the business (in this case Our Tracts, LLC) issue a 1099-MISC. We need your name, address and Social Security/tax id number from the W-9 to complete the 1099-MISC. On that 1099-MISC, in Box 7 – Non Employee Compensation, we’ll put the amount paid to you for your bookings.
If you aren’t paid $600 or more, you won’t get a 1099-MISC, but we still need a W-9 for our records.
The W-9 itself does not go to the IRS, but a copy of the 1099-MISC will. This is similar to other 1099s you may get – from your bank for interest (1099-INT) or if you own stock, you may get a 1099-DIV for dividends. Bottom line, the IRS wants a way to check and make sure everyone is accurately declaring their income on their tax return – and paying the appropriate taxes!
The W-9 asks for your name (or the legal entity that you own that owns the property and files the tax return), type of legal entity – most will be Individual/Sole Proprietorship/Single Member LLC but there are also the following: C Corporation, S Corporation, Partnership, Trust/Estate, Limited Liability Company or Other (the W-9 instructions explain what this means). The Social Security/tax identification number that is used on the entity’s tax return is also required. Finally, the person filling it out is asked to certify that he or she is exempt from backup withholding. More than likely you are exempt from backup withholdings (it is rare that you would not be), but if you aren’t, Our Tracts, LLC will have to withhold a flat tax at a rate of 28% and send it to the IRS.
Since you are giving us your Social Security number/tax identification number, know that we will guard it and keep it safe. It will not be input to the Our Tracts application or stored anywhere on our web site.
And remember – if we don’t pay you $600 or more in the year, you won’t get a 1099-MISC. But how great will it be to know your land has made $600+ in a year!