Sales Tax - and - W-9/1099-MISC/1099-NEC

Sales Tax Exemption:

If you are a tax-exempt organization in Indiana, you may register your account as tax-exempt. E-mail us when you have established your account so we can approve it.

**IF YOU ARE OUTSIDE OF INDIANA, you will not be charged sales tax anyway. Please do not register for the tax-exempt account.

1099-Misc/1099-NEC and W-9

From time to time, a church or business will ask us to fill out a W9 so that they can issue a 1099-MISC/1099-NEC at the end of the tax year. (NB In 2020, the 1099-MISC was redesigned and the 1099-NEC introduced.)

The IRS rules require these forms for any vendor a business is paying more than $600 in a given year.

The exact wording from the IRS website as of 5/2024 is as follows:

Specific Instructions for Form 1099-NEC

File Form 1099-NEC, Nonemployee Compensation, for each person in the course of your business to whom you have paid the following during the year.

At least $600 in:

Services performed by someone who is not your employee (including parts and materials) (box 1); or
Payments to an attorney (box 1). (See Payments to attorneys , later.)

The following specifications limit this requirement:

Any payment by credit card, Paypal or another third-party payment processor will not require these forms. The third-party payment processor will issue the proper 1099-K at the end of the year.

So the W9/1099-NEC requirement is still pertinent for check payments from churches/businesses.

But see the next point.

The requirement does not apply to purchase of merchandise, regardless of the vendor or corporation or payment method. What we sell to churches and businesses are physical products and some downloads – *merchandise*.

When services are rendered, the requirement is still pertinent. But not services for personal use.
The only non-merchandise services we offer are for homeschool use (mentoring via Keys of the World and Keys of the Universe), therefore our services are only for personal use.
If I came to your location and mentored your teachers or catechists, this would be a business service for which the W9 forms would be properly provided.

The IRS website as of 5/2024 states as exceptions:

Exceptions.

Some payments do not have to be reported on Form 1099-NEC, although they may be taxable to the recipient. Payments for which a Form 1099-NEC is not required include all of the following.

Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However, see Reportable payments to corporations, later.
Payments for merchandise, telegrams, telephone, freight, storage, and similar items.

Thus Garden of Francis, The Shepherd and the Vine, Keys of the World and Keys of the Universe are not required to fill out W9 nor is any business we sell to required to provide us with a 1099-NEC, regardless of the amount of the order. If the business pays by Paypal (our only credit card processor), we will receive the proper forms from them (rather than have the same income double-reported to the IRS**); if payment is made via check or cash, this is duly and honestly reported to the IRS in the appropriate section of our Schedule C.

Beyond "not required", requesting information for a W9 for the purchase of merchandise and later providing a 1099-NEC is outside the tax code altogether. If your organization has a policy or practice of requesting a W9 from a merchandise vendor, please visit the pertinent IRS links shared here and look to make the appropriate updates.

I hope this clears up the various questions and concerns that schools and churches have.

Please see IRS.gov/Form1099MISC and IRS.gov/Form1099NEC for more information

**If I receive payment via 3rd party processor (credit/debit card transactions) that reports that transaction as income to the IRS and I also have a 1099 issued by a church being reported to the IRS, now a portion of my income has been double-reported to the IRS.