If you’ve been making payments through Innago as a tenant, especially as a commercial tenant, you may think that you’ll need a w9 form from Innago for taxfiling purposes. The property manager or landlord is ultimately the one receiving funds however, so you’d want to contact them instead. Here’s a more detailed explanation of why you’d need the form from them instead of Innago below:
When a 1099 / W9 Would Be Required
Where an individual makes a payment on behalf of another, IRS regulations provide that that individual is the payor who must file a Form 1099, but only if under all the facts and circumstances, the person making the payment performs management or oversight functions in connection with the payment (i.e., something more than writing checks at another’s direction), or has a significant economic interest in the payment (i.e., an economic interest that would be compromised if the payment were not made, such as the creation of a lien, or loss of collateral). Reg. § 1.6041-1(e)(1).
How This Applies
Innago does not perform management or oversight function in connection to the payment. We are NOT the property manager, so we do not qualify under that guideline. Innago also does not have a significant economic interest in the payment. For these two reasons, we do not qualify under IRS regulations.
The Rental Agent Exception
Reg. § 1.6041-3(d) clarifies that payment of rent made to rental agents is not required to be reported as made by the tenant to the rental agent; however, the agent is required to report payments of rent to the landlord per Reg. § 1.6041-1(a)(1)(i)(B) and (2).
The term “rental agent” is not defined in the regulations, but they do provide various examples clarifying that it is some person or organization that actually manages the underlying property. See below.
Example 3: G is a rental agent who manages certain rental property on behalf of property owner H. G finds tenants, arranges leases, collects rent, responds to tenant inquiries regarding maintenance, and hires and makes payments to repairmen. G subtracts her commission and any maintenance payments from rental payments and remits the remainder to H. With respect to payments to repairmen, G is performing management or oversight functions and is subject to the information reporting requirements of §6041. With respect to the payment of rent to H, G is subject to the information reporting requirements of § 6041 regardless of whether she performs management or oversight functions or has a significant economic interest in the payment.
Innago is again not the manager of the property and therefore does not qualify under this exception.
Conclusions
Innago is not a “recipient” of the payment for which a payor (read: commercial tenant) is required to file a Form 1099-MISC with the IRS. Innago is classified as a “third-party settlement organization” under the Form 1099-K regulations. This is distinct from a Payment Processor. An example that may help better explain this would be Venmo. If you make a business payment over Venmo, you need to file a Form 1099-MISC to the recipient of the funds—not Venmo.