Why do I have to fill out a W-9 for a property damage payment?

[mialyssa]

I live in an apartment and the resident above me move out. She was renting a washer and when the employee of the rental company came to disconnect the washer he neglected to tighten the hoses. This results in water damage to my property. I have been going back and forth with this company for about two months. Finally, via email they sent me a General release form and a letter that stated: "I have received all the necessary paperwork to conclude the process of the submitted claim. Upon response, ____________will issue a check for the amount of $__ for the damages incurred." That's what I did. Two weeks later I receive another email stating "Please complete and return the attached W-9 neessary to process your check."

When I questioned the rep that is handling my claim why I need to fill out a W-9 her response was "We are required by law to report any income (earned or unearned income) to the IRS."

I asked that she cite the law that she is refering to. I advised her that punitive damages were taxable. Her comment to me was "The General Release does state this department has the necessary paperwork to process this claim but our accounting department is requesting this W-9; without the completed W-9, xxxxxxx will withhold 28% of this settlement."

She is avoiding my question. If I compare this to a car accident and I receive a settlement, I don't have to fill out a W-9 to repair my car.

I'm considering take this to small claims court. I'm I correct in what I saying or is she correct?

 

[achyllesheal]

W 9 for Damage Payments

I have a similar question so I thought I'd append to your initial thread.

I work for a construction company who insists on issuing a W 9 form for checks that are written to compensate for for damages personal property (most often pick up trucks).

Is this required? If so, why?

It's been my limited experience with insurance companies that they pay on estimates (usually the lowest of 2 or 3) and do not issue W 9 forms.

Our company recently damaged a personal vehicle. This vehicle, however, is still usable. The owner wants to complete the last few weeks of his work duration on the job and then have the repairs done when he has more downtime at when he is laid off. The repairs are expected to take 3 days. This inspector obtained a quote to have the work done and would like to receive a check for the estimated amount of the repair but feels it's unfair of us to issue a W 9 along with the check.

I agree.

I understand the need to issue a W 9 and 1099 for payments made to subcontractors and vendors, service providers and people or businesses we rent property from.

The W 9 for payment of damages to compensate for the reduction in asset value or repair of an asset seems like taking an instruction to issue W 9's to an unreasonable extreme.

 

[mialyssa]

UPDATE: I worked my way up to the VP of Finance and her response was:

"You are quite correct in your assessment of the situation regarding our payment to you for the damage claim. We will not require a W-9 from you and will send your check immediately."


So 3 months later I was right!!