1099-NEC filing season: a firm’s W-9 collection plan

What changed for 1099-NEC filing on 2026 payments?

The biggest change is the threshold. The IRS instructions for Forms 1099-MISC and 1099-NEC now tell payers to report nonemployee compensation of at least $2,000, up from the $600 figure that had stood for decades. The new figure applies to payments made after December 31, 2025, so it governs the forms your clients file in early 2027.

For a bookkeeping or tax firm, that sounds like less work. In practice it creates a new kind of error. Staff who copy last year’s vendor list will send forms to contractors who no longer need one, and clients who assume “the rules got looser” may stop collecting W-9s altogether. A contractor paid $1,900 in 2026 and $2,400 in 2027 still needs a W-9 on file, ideally before the first payment.

The other rules are unchanged. Forms still go to both the recipient and the IRS by the same date, the electronic filing threshold is still 10 returns, and backup withholding still applies when a payee will not give a taxpayer identification number.

The instructions also say the threshold may be adjusted for inflation beginning in calendar year 2027, so treat $2,000 as this year’s number rather than a permanent one. Build your vendor reports around a threshold you can change in one place, and recheck the instructions each autumn before the list goes to clients. That small habit stops last year’s figure quietly carrying into next year’s workpapers.

Which payments need a Form 1099-NEC?

Use one test for every vendor: was the payment for services, made in the course of the client’s trade or business, to someone who is not an employee, and did the year’s total reach $2,000? If all four answers are yes, check the payee type before deciding.

The legal services row catches firms out every year. The instructions say plainly that the exemption for payments to corporations does not cover payments for legal services, so a client’s outside counsel belongs on the list whatever its entity type. Where a payment straddles a rule, such as rent paid through a property manager, check the instructions or ask a colleague before treating it as exempt.

When is the 1099-NEC deadline for 2026 payments?

The rule is January 31, for both the copy you furnish to the recipient and the copy you file with the IRS, whether you file on paper or electronically. In 2027, January 31 is a Sunday, and IRS due dates that fall on a weekend move to the next business day, which makes the working deadline Monday, February 1, 2027.

Do not plan to use that extra day. The last week of January is when W-2s, the fourth-quarter Form 941 and the first wave of individual returns all arrive. A sensible internal timetable puts the deadline two weeks earlier:

• By November 30: vendor list for each client drafted from the general ledger.
• By December 15: missing W-9s requested and the first reminder sent.
• By January 8: December payments posted and totals rerun.
• By January 15: client approves the final list of recipients and amounts.
• By January 22: forms filed and recipient copies sent, leaving a week for corrections.

Penalties start the day after the deadline. For returns due in 2027, the IRS information return penalty table lists $60 per form if you correct within 30 days, $130 if later but by August 1, and $340 after August 1 or if you never file. Intentional disregard is $690 per form with no annual cap.

How should a firm build each client’s 1099 list in November?

Start from the books, not from last year’s forms. Run a vendor payment report for January 1 to the latest closed month and export it with the vendor’s name, total paid, payment method and any tax ID already stored. Then work through four filters in order.

1. Remove non-cash methods. Strip out card and payment-app transactions, which are generally reported by the processor.
2. Remove goods-only vendors. Office supplies, inventory and software subscriptions rarely belong on a 1099-NEC.
3. Flag the $1,500 to $1,999 band. These vendors may cross $2,000 with a December payment. Keep them on a watch list rather than deleting them.
4. Check the W-9 file. For every vendor over or near the threshold, confirm there is a signed W-9 with a legal name, tax classification and TIN.

What you have left is two short lists per client: vendors who need a form and already have a W-9, and vendors who need a form but are missing one. The second list is your real 1099 workload, and it is the one to send to the client with a clear request. A month-end close that codes vendors correctly makes this step much faster; our guide to recurring invoices for bookkeeping clients covers pricing that extra January work into the monthly fee.

Worked example: sizing the 1099 workload for 40 clients

Here is an illustrative firm with 40 monthly bookkeeping clients. The figures are invented but typical of a small practice.

• Vendors paid more than $600 across all clients in 2026: 310.
• Of those, vendors paid $2,000 or more: 190. That is 120 forms the firm no longer prepares.
• Corporations among the 190, excluding three law firms: 55, leaving 135 reportable vendors.
• Reportable vendors with no usable W-9 on file: 38.
• Watch-list vendors paid $1,500 to $1,999 by November: 22.

If each missing W-9 takes about 15 minutes of staff time across requests, reminders and checking, the 38 gaps cost roughly 9.5 hours. Preparing and reviewing 135 forms at around 5 minutes each adds another 11 hours. Call it 21 hours of January capacity, before any corrections.

Two decisions follow. First, chase the 38 now, while the firm is quiet and the contractors are still being paid; a vendor waiting on a December invoice answers faster than one who was paid in July. Second, quote the work. At an illustrative $25 per form plus $40 per missing W-9 chased, this firm would bill about $4,900, which clients accept more readily when the fee is agreed in November.

What happens when a contractor won’t send a W-9?

Most delays are not refusals. They are contractors who never open the email, or who send a photo of a business card instead of the form. Make the request easy: send the official Form W-9, explain in one line why it is needed, and give a date.

When a payee genuinely will not provide a TIN, the client’s obligation does not go away. Under the IRS backup withholding rules, a payer who does not have a correct TIN may have to withhold 24 percent from future reportable payments and deposit it with the IRS. Tell the client this in writing before the next payment, because the client, not the firm, makes the payment and carries the liability.

A short, firm escalation works well:

1. Day 0: request with the form attached and a one-line reason.
2. Day 7: reminder from the client’s own email or phone, not the firm’s.
3. Day 14: notice that future payments may be subject to backup withholding.
4. Day 21: client decides whether to hold payment or begin withholding.

Record every step. If the IRS later asks why a form was filed without a TIN, a dated request trail supports a reasonable cause argument.

How do you file the forms and send recipient copies?

Once the client has approved the list, filing is mostly mechanics, but two rules shape the method. The electronic filing threshold is 10 returns, counted across all information return types the client files, so a client with six 1099-NECs and four W-2s must e-file. Most firms already file everything electronically through the IRS’s Information Returns Intake System or their tax software.

Recipient copies can go by mail or, with the recipient’s consent, electronically. Keep proof of the date each copy went out. Then close the job properly:

• Save the filed forms, the IRS acknowledgement and the client’s signed approval in the client’s file.
• Mark which watch-list vendors crossed $2,000 so next year’s list starts in the right place.
• Note any corrections and the reason, which feeds next November’s checklist.
• Bill the agreed 1099 fee as soon as the forms are filed.

If a correction is needed after filing, fix it inside 30 days where you can. The penalty difference between $60 and $130 per form is worth a priority slot in a busy February.

How Zaquil handles 1099-NEC data collection

In Zaquil, 1099 season runs as a recurring job on each bookkeeping client, created from a template with the checklist above: vendor list drafted, W-9s requested, December totals rerun, client approval, forms filed, copies sent. The kanban board shows every client’s stage, so a manager can see in one view which 12 clients are still waiting on W-9s in mid-December.

The client sees a request in the secure client portal: a short questionnaire to confirm new contractors, and an upload slot for each missing W-9. When a contractor sends the form to the client, the client drops it straight into the portal instead of forwarding an email attachment. The firm sees each upload against the right request.

Automations do the chasing. When a W-9 request has been open for seven days, Zaquil sends the client a reminder and creates a follow-up task for the bookkeeper on day 14. Deadlines track the firm’s internal January 15 approval date and the February 1 filing date on every job.

When the list is final, the firm sends it for approval and e-signature in the portal, and the signed PDF certificate is kept with the job. The agreed 1099 fee goes out as an invoice the client can pay online. Every message about the job, whether email, SMS or a call, lands in the same inbox and on the client’s record.

You can see the full setup on the accounting and tax solution page and compare plans on the pricing page.