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When to Collect W9 Forms from Affiliates...

by CyberAlien
4 replies
A friend of mine was testing out an affiliate program and asked me a question about it that I wasn't sure about. So, I just wanted to get you guys opinion on it.

He's made about $300 from the affiliate program so far and he went to request a payout for that which is supposed to be sent via PayPal. The affiliate team responded back saying that they needed a W9 or W8 form sent to them before they could send the money. Note: they also mention this in their affiliate terms of service.

Here's my concern though: I thought that affiliate programs were supposed to request that information upfront, not just wait until you request a payout and then tell you. For example, with HostGator and BlueHost they tell you as soon as you login to their affiliate control panel.

My second concern is that they only accept the form to be sent via mail, not fax or email. Can affiliate programs do that because every one that I've used has at least accepted it via fax?

Bottom line: it seems to me like they are recruiting affiliates to do a lot of marketing for them and then looking for a way to not have to pay them out when they request a withdrawal. Or at least making it difficult for them...

To sum it up, here's my two questions:

1. When do affiliate programs have to inform you that a tax form is required to be submitted? Can they wait until you request a withdrawal and then just withhold your earnings until you send it?

2. Can they require you to send it via mail and decline it via fax or email?

Thanks in advance everyone!
#affiliates #collect #forms
  • Profile picture of the author Steve Solem
    I'm guessing that many people signup as affiliates with a company and then never do anything with it, so maybe their asking for it once commissions have been earned is a way to avoid doing unnecessary paperwork?

    I'm just guessing here too, but sending your personal info and tax information via mail is probably the most secure way of submitting that, so maybe they're just looking to safeguard your info and not weasel out of paying commissions?

    I would never send that kind of personal info to someone via email, and sending via fax..well that could be read by anyone with access to the fax machine there. Mail seems to me to be the most secure of those three methods.
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    • Profile picture of the author kindsvater
      My understanding is a W9 is only required if $600 or more is paid out, and the form needs to be obtained before the annual federal tax return is filed.

      Anything beyond that, such as requiring a form for all affiliate signups, requiring the form be sent by mail, or email, or before an affiliate can earn commissions, etc., are merchant imposed contractual terms to be an affiliate, and not legal requirements. Often, you see terms like that to make life easier on the merchant and to make sure their paperwork will be in order at tax time.

      If an affiliate earns $300 they are owed $300, unless the affiliate contract says sending in the W9 is a prerequisite to getting paid.

      If an affiliate earns $300, the contract silent about a W9 and the merchant never requested one, the merchant is not in a position to suddenly refuse payment by belatedly making a tax form demand. The merchant should pay the $300 and request a W9. If the affiliate then does not complete the W9 the tax penalty is on the affiliate, not the merchant.

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      • Profile picture of the author AverageGuy
        Originally Posted by kindsvater View Post

        My understanding is a W9 is only required if $600 or more is paid out, and the form needs to be obtained before the annual federal tax return is filed.
        I'm no sure this. if it is >= $600, W9 is MUST by law. if it is < $600, W9 is not MUST, but they can request since you still have to pay tax even it is < $600.

        But, I'm not a tax person, so...
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  • Profile picture of the author Mogly
    Yeah its totally in their power to do that, its a fairly normal practice.
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