Filing Forms W-2 and 1042-S Without Payee TINs


Withholding agents sometimes find it necessary to file information returns such as Forms W-2, 1099, 1042-S, and 8805, etc. without having secured the Taxpayer Identification Number (TIN) of the payee. In such situations the withholding agent may follow the procedures below.

Treasury Regulation 301.6109-1(c)

(c) Requirement to furnish another's number. Every person required under this title to make a return, statement, or other document must furnish such taxpayer identifying numbers of other U.S. persons and foreign persons that are described in paragraph (b)(2)(i), (ii), (iii), (vi), (vii), or (viii) of this section as required by the forms and the accompanying instructions. The taxpayer identifying number of any person furnishing a withholding certificate referred to in paragraph (b)(2)(vi) or (viii) of this section shall also be furnished if it is actually known to the person making a return, statement, or other document described in this paragraph (c). If the person making the return, statement, or other document does not know the taxpayer identifying number of the other person, and such other person is one that is described in paragraph (b)(2)(i), (ii), (iii), (vi), (vii), or (viii) of this section, such person must request the other person's number. The request should state that the identifying number is required to be furnished under authority of law. When the person making the return, statement, or other document does not know the number of the other person, and has complied with the request provision of this paragraph (c), such person must sign an affidavit on the transmittal document forwarding such returns, statements, or other documents to the Internal Revenue Service, so stating. A person required to file a taxpayer identifying number shall correct any errors in such filing when such person's attention has been drawn to them.

The above regulation allows a withholding agent who has solicited the Taxpayer Identification Number (TIN) of an alien, and such alien has neglected or refused to provide such TIN, to avoid the penalty for failing to provide a payee TIN on an information return or on a payee statement (e.g., Forms W-2, 1099, 1042-S, 8805, etc.) by attaching an affidavit to the Forms W-2, 1099, 1042-S, 8805, etc., when filed (on paper or disk) which lists the names of all aliens from whom the withholding agent solicited TIN's and was not able to secure such TIN's. To be valid, a TIN must be on a Withholding Certificate if the beneficial owner is claiming any of the following: tax treaty benefits (other than for income from marketable securities), exemption for effectively connected income, exemption for certain annuities, or an exemption based on exempt organization or private foundation. In addition, a TIN must be on a Withholding Certificate from a person claiming to be any of the following: a qualified intermediary, withholding partnership, withholding trust or a grantor trust with 5 or fewer grantors, exempt organization, or a U.S. branch of a foreign person treated as a U.S. person.

If a certificate provided by a foreign person in these cases has no TIN, it is not a valid certificate. The withholding agent must follow presumption rules which preclude granting favorable withholding rates. If the withholding agent follows the presumption rules, no affidavit is required regarding the withholding agent’s attempts to procure a TIN from the foreign person.

Currently, the IRS has not provided a procedure for a withholding agent who files his Forms W-2, 1042-S, 1099, etc., magnetically or electronically to file the affidavit mentioned above. As an alternative, the withholding agent should prepare the affidavit mentioned above, keep the affidavit in its files, and submit it to the IRS only in response to a proposed penalty on the withholding agent for failure to report payee TINs on any Forms W-2, 1099, 1042-S, 8805, etc. As an additional precaution, a withholding agent may attach a copy of the affidavit to his Form 941, Form 943, Form 945, Form 1042, Form 8804, etc., if the withholding agent files those returns by paper.

There is no federal law which prevents a withholding agent from legally making a payment to a payee for the sole reason that the payee does not have a TIN. Though, as previously mentioned, the withholding agent should follow presumption rules when a TIN is missing. However, sections 6721, 6722, and 6723 of the Internal Revenue Code allow the IRS to impose penalties on withholding agents who withhold too little when they have failed to report a payee TIN on certain information returns and payee statements (Forms W-2, 1099, 1042-S, 8805, etc.) which report payments made to payees. However, Treasury Regulations found at 301.6724-1 contain "reasonable cause" criteria which a withholding agent can use to establish acceptable reasons for not providing a payee TIN when it is required on an information return or a payee statement. For more information on IRS penalties relating to information returns and payee statements, please refer to Publication 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINsPDF.

References/Related Topics

Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.