September is when Chicago-area trucking, logistics, and livery owners finish extended entity returns and start thinking about next tax season. One job that should not wait until January is collecting a signed Form W-9 from every nonemployee you pay. Without that form, you are guessing on Form 1099-NEC, and guesses create penalties.
Who needs a Form W-9
Employees on Form W-2 are a different lane. Do not mix payroll and contractor files. If you are unsure whether a driver is an employee or a contractor, that classification question belongs with your CPA before you decide which form to send.
Why waiting until January hurts
Form 1099-NEC for calendar-year 2026 payments is generally due to the IRS and to the recipient by February 1, 2027. That sounds distant from early September. It is not. Payees change addresses. LLCs change tax classification. Drivers stop answering texts. A missing or wrong TIN is how you get a CP2100-style notice and a backup-withholding headache later.
What the penalty looks like in plain numbers
For information returns filed after the due date, or filed with missing or incorrect information, the IRS penalty under IRC §6721 generally starts in the low hundreds of dollars per form and can climb if you wait longer or if the IRS treats the failure as intentional disregard. A parallel recipient-copy penalty sits under IRC §6722. One missed contractor is annoying. Twenty missed repair vendors across a fleet is a real bill.
Reasonable cause still matters. “We were busy in peak season” is a weak story if you never asked for a W-9. A clean file of signed W-9s collected during the year is the practical defense.
What to put in the file this month
- A current Form W-9 from every nonemployee you expect to pay $2,000 or more in 2026
- Legal name matching the payee’s tax return, not only the DBA on the invoice
- Entity type checked correctly (individual/sole prop, LLC, corporation, partnership)
Example (illustration only, not your books): A Chicago livery company pays six independent chauffeurs through the year. Five return a W-9 in October. One ignores every email until late January. The company files five correct 1099-NECs on time and either omits the sixth payee or files with a guessed SSN. Either path can mean an information-return penalty under IRC §6721 or §6722, plus a follow-up when the IRS matches names and TINs.
If your business pays an independent contractor, owner-operator, repair shop, broker, or other nonemployee $2,000 or more in a calendar year (for payments made in 2026; it was $600 through 2025) for services in the course of your trade or business, you generally must issue Form 1099-NEC, Nonemployee Compensation. The form goes to the payee and to the IRS. Form W-9, Request for Taxpayer Identification Number and Certification, is how you collect the legal name, entity type, and taxpayer identification number before you cut the year-end form.
Published September 8, 2026. Last reviewed October 7, 2026. Tax rules and figures change, so call our office before acting on this for your own situation: 773-536-9272.
