Request W-2 for Insurance Payment?

Hello,

Our HOA is currently shopping for earthquake insurance. Our property management company requires a W-9 from anyone we pay more than $600 to (presumable to issue 1099 to them later), but the insurance agencies I talked to said they do not provide W-9. One insurance agent explained to me something like "...paying an insurance bill is not considered 1099. It would be counted as a business expense. A 1099 usually resembles a contractor or employee or a company that will be doing services for you. This is an insurance bill. An insurance bill is the same as paying taxes, paying your water or your electric bill". What the insurance agent said also makes sense, so who is right? Do we need to request W-2 from the insurance agencies?

Thanks.

Thank you very much for the quick reply. I'm new to the HOA business and it seems like I've come to the right place!

Simply ask your management company to review the 1099-misc instructions.

Your association is not paying a salesperson for services rendered, but paying a premium for coverage. This is not considered "compensation" for 1099 purposes. It may reduce confusion if the association accountant talks to the management company and gives them a lesson on 1099s.

Sorry I made a stupid mistake. I meant to say W-9 form but instead I wrote W-2, even in the subject. Is there a way to edit the subject?

The instructions for a W-9 can be found at http://www.irs.gov/pub/irs-pdf/iw9.pdf

The form itself is at http://www.irs.gov/pub/irs-pdf/fw9.pdf

From my reading of the instructions it appears that the purpose of the W-9 is to determine whether the payor should withhold taxes. If the payee submits the W-9 claiming to be exempt from withholding, then the payor should not withhold taxes.

The instructions suggest that payments for insurance paid to a corporation would not be subject to withholding. Therefore, there is no need for a W-9 from the insurance company.

BTW, my experience in my own businesses has been that it is common practice to request W-9's and common practice to fill them out and return them to the requesting party. I don't know why the insurance agents are making such a big deal out of this.

An insurance agency, like any other business, should have an Employer's ID Number (EIN). The IRS issues these on request, even for individual proprietors. No one running any sort of business ought to be doing so under his own SSN.

That said, I am not sure why the OP would be paying the insurance agent instead of paying the insurance company directly.

A W-9 is a request for a tax ID number, which could either be an SSN or an EIN. Form 1099-MISC is used to report income over $600 (usually as non-employee compensation) to individuals and sole proprietorships. There are penalties for not filing a 1099 when required. The purpose of the W-9 is to obtain the taxpayer's ID on the 1099 when it is prepared and filed.

However, you are not required to file a 1099 when payments are made to a corporation, so no W-9 is required.

I don't know what your MC's hangup is. It could simply be a misunderstanding, an employee who is simply blindly following a set of instructions, or a new management company that has a lot to learn.

I think their concern was that my property management company may mistakenly report the insurance premium payment as their (i.e. the insurance agency's) income.

It should have been linking to this template of the form: https://fillable-form-w2.pdffiller.com/

Old OP.