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The P 1 form is a document known as the Reasonable Cause Affidavit by Payor for Not Obtaining Payee’s Identifying Number. It allows employers or payors to explain why they could not collect a taxpayer identification number from an employee or payee who declined to provide it. Completing this form can help avoid penalties under specific IRS regulations.

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Structure

The P-1 form serves a crucial role in the landscape of tax compliance, particularly for employers and payors who encounter challenges in obtaining identifying numbers from their employees or payees. This affidavit, known formally as the Reasonable Cause Affidavit by Payor for Not Obtaining Payee’s Identifying Number, provides a mechanism for employers to assert that they have made a diligent effort to collect the necessary taxpayer identification information. When a payee declines to provide their Social Security number or other identifying number, the employer can file this form to avoid potential penalties under 26 U.S.C. §6724(a). The form requires specific details, including the names and addresses of both the employer and payee, as well as a certification of the circumstances surrounding the request for the identifying number. By documenting the employer's attempts to comply with tax regulations, the P-1 form not only demonstrates good faith but also protects against the imposition of a $50 penalty for failure to obtain the required information. It is essential for employers to understand the significance of this form and the legal standards that govern its use, as it can help mitigate financial repercussions while maintaining compliance with IRS regulations.

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Form P-1

Reasonable Cause Affidavit by Payor

For Not Obtaining Payee’s Identifying Number

uRelease From Penalty—26 U.S.C. §6724(a)

Employer’s/Payor’s name and address

Employer identification number

Employer/Payor statement:

I _______________________________, being an officer of _____________________________________,

hereby state that I have asked for the identifying number of the employee/payee,

_____________________________________ who has declined to provide an identifying number. I am filing

this affidavit in accordance with 26 USC 6724, waiver of penalty (26 USC 6724(a)) assessed under the code upon a showing of reasonable cause, and Treasury Regulation 301.6109-1(c).

I certify that the information stated here is correct and that I asked the employee/payee for a taxpayer ID number (Social security number) and that the employee/payee declined to provide such number.

Employer/Payor signature

u	Date u

Employee/Payee information

Type or print employee/payee first name and initial

Last name

Social security number (write “None” if you do not have a SSN or “Declined” if you do not wish to provide a SSN)

Home address (number and street or rural route)

City or town, State and ZIP code

Employee/payee statement:

I ____________________________________ have

declined to provide an identifying number to my employer/payor, __________________________.

I certify that the information stated here is correct and the employer/payor did ask me for a taxpayer ID number (social security number) and that I declined to provide such number.

Employee/payee signature

Date u

26 USC §6724, waiver of penalty (26 USC §6724(a)) assessed under the code upon a showing of reasonable cause, and Treasury Regulation 301.6109-1(c) Treasury Regulation 301.6109-1(c) provides: .... When the person filing the return statement, or other document

does not know the SSN of the other person, and has complied with the request provision of this paragraph, he shall sign an affidavit on the transmittal document forwarding such returns, statements, or other documents to the Internal Revenue Service so stating. A payor is required to request the identifying number of the payee. If after such request has been made, the payee does not furnish the payor with an identifying number, the penalty ($50.00) will not be assessed against the payor, if it is shown that such failure is due to reasonable cause and not willful neglect. [See also 26 USC §6724, waiver of penalty (26 USC §6724(a)) assessed under the code upon a showing of reasonable cause.]

Public Domain—Privacy Form P-1 (02) 1999

➤ PDF File

Document Data

Fact Name	Description
Purpose	The P-1 form is used by employers or payors to declare reasonable cause for not obtaining a payee's identifying number, such as a Social Security Number.
Governing Law	This form is governed by 26 U.S.C. §6724(a), which allows for a waiver of penalties when reasonable cause is shown.
Affidavit Requirement	The form requires an affidavit from the employer/payor, affirming that they requested the identifying number from the payee.
Employee/Payee Statement	The payee must also provide a statement confirming their refusal to provide an identifying number.
Penalty Waiver	If the payee declines to provide their identifying number, the employer may avoid a $50 penalty by demonstrating reasonable cause.
Signature Requirement	Both the employer/payor and the employee/payee must sign the form to validate their statements.
Regulatory Reference	Treasury Regulation 301.6109-1(c) outlines the conditions under which the affidavit must be filed.
Public Domain Status	The P-1 form is considered a public domain document, which means it can be accessed and used by anyone.

How to Use P 1

Filling out Form P-1 is an important step for employers or payors who have requested but not received an identifying number from an employee or payee. This affidavit helps demonstrate reasonable cause for not obtaining the required information and can assist in avoiding penalties.

Obtain the form: Download or print Form P-1 from the appropriate source.
Fill in your information: In the section for the employer’s/payor’s name and address, write your complete name and address.
Employer identification number: Enter your employer identification number (EIN) in the designated space.
Complete the affidavit: In the statement section, fill in your name and the name of the employee/payee who declined to provide their identifying number.
Certify the information: Confirm that you have asked the employee/payee for their taxpayer ID number and that they declined to provide it.
Sign and date: As the employer/payor, sign and date the form in the specified areas.
Employee/payee information: Type or print the employee/payee's first name, middle initial, and last name.
Social security number: Indicate the employee/payee's social security number, writing “None” or “Declined” if applicable.
Home address: Fill in the employee/payee's home address, including city, state, and ZIP code.
Employee/payee statement: The employee/payee should write their name, confirming that they declined to provide an identifying number.
Employee/payee signature: The employee/payee must sign and date the form where indicated.

Key Facts about P 1

What is the purpose of the P 1 form?

The P 1 form serves as a Reasonable Cause Affidavit by a payor for not obtaining the identifying number of a payee. It is specifically designed to help employers or payors avoid penalties when a payee declines to provide their taxpayer identification number, such as a Social Security Number. By filing this form, the payor can demonstrate that they have made a good faith effort to obtain the necessary information but were unable to do so due to the payee's refusal.

Who needs to fill out the P 1 form?

Employers or payors who have requested a taxpayer identification number from an employee or payee, but have not received it due to the payee's refusal, are required to fill out the P 1 form. This includes any individual or entity that makes payments to another party and is obligated to report those payments to the Internal Revenue Service (IRS).

What information is required on the P 1 form?

The P 1 form requires several key pieces of information. This includes the employer's or payor's name and address, their employer identification number, and the name of the payee who declined to provide their identifying number. Additionally, the form must include the payee's home address, and the payor must provide a statement affirming that they requested the identifying number and that the payee declined to provide it.

What happens if the P 1 form is not filed?

If the P 1 form is not filed when a payee declines to provide their identifying number, the payor may face a penalty. Under the IRS regulations, a payor can be assessed a penalty of $50 for each instance of failing to report a payee's taxpayer identification number. However, if the payor can demonstrate reasonable cause, as outlined in the P 1 form, they may avoid this penalty.

How does the P 1 form relate to IRS regulations?

The P 1 form is directly tied to IRS regulations, specifically 26 U.S.C. §6724(a) and Treasury Regulation 301.6109-1(c). These regulations outline the requirements for obtaining taxpayer identification numbers and the conditions under which penalties can be waived. By submitting the P 1 form, payors comply with these regulations and provide evidence of their efforts to obtain the necessary information.

Is there a deadline for submitting the P 1 form?

While there is no specific deadline for submitting the P 1 form itself, it is advisable to file it as soon as the payee declines to provide their identifying number. Timely submission can help ensure that the payor avoids penalties and demonstrates compliance with IRS regulations. It is also important to keep a copy of the form for record-keeping purposes.

What should be done if the payee later provides their identifying number?

If the payee eventually provides their identifying number after the P 1 form has been submitted, the payor should update their records accordingly. It is important to accurately report the payee's identifying number in any future tax filings. The P 1 form remains a record of the payor's reasonable cause for not having the number at the time of filing.

Common mistakes

Filling out the P-1 form can be a straightforward process, but several common mistakes often lead to complications. Understanding these pitfalls can help ensure that the form is completed accurately and efficiently.

One frequent error is failing to provide complete information in the employer/payor section. This includes not including the employer's name, address, or identification number. Each of these details is crucial for the Internal Revenue Service (IRS) to process the affidavit correctly. Omitting any of this information can lead to delays or even rejections of the form.

Another mistake involves the employee/payee's identification number. Some individuals mistakenly write "None" or "Declined" without fully understanding the implications. The form requires clarity on whether the employee truly does not have a Social Security Number (SSN) or if they simply refuse to provide it. Misstating this can create confusion and may lead to unnecessary penalties.

Inaccurate signatures are also a common issue. Both the employer/payor and the employee/payee must sign the form. If either party fails to sign, the affidavit may be considered incomplete. Additionally, signatures must be dated appropriately. An undated form can raise questions about its validity.

People often neglect to double-check the information they have entered. Errors in names, addresses, or numbers can seem minor but can have significant consequences. A simple typo can lead to miscommunication with the IRS, causing further complications down the line.

Moreover, some individuals do not follow the instructions regarding the submission of the affidavit. It is essential to understand how and where to send the completed form. Ignoring these guidelines can result in delays in processing and potential penalties.

Finally, a lack of awareness about the legal implications of the affidavit can lead to mistakes. Individuals may not fully grasp the importance of the statements they are making. Understanding that signing the form under false pretenses can lead to severe penalties is crucial. Being informed helps ensure that the affidavit is filled out with integrity and accuracy.

Documents used along the form

The P-1 form serves as a reasonable cause affidavit by a payor who has been unable to obtain the identifying number of a payee. In conjunction with this form, several other documents may be utilized to ensure compliance with IRS regulations and to provide necessary information. Below is a list of five such forms and documents commonly used alongside the P-1 form.

W-9 Form: The W-9 form is used by a payee to provide their taxpayer identification number (TIN) to the payor. This document ensures that the payor has the necessary information to report income to the IRS accurately.
1099 Form: The 1099 form is issued by the payor to report various types of income other than wages, salaries, and tips. It is crucial for reporting payments made to independent contractors or freelancers, and it requires the payee's TIN for accurate reporting.
Form 945: This form is used to report withheld federal income tax from nonpayroll payments. It is essential for payors who must report backup withholding when a payee fails to provide a TIN.
Form 1042-S: This form is utilized to report income and withholding for foreign persons. It is important for payors making payments to non-resident aliens or foreign entities, ensuring compliance with U.S. tax laws.
Affidavit of Non-Disclosure: This document may be used to affirm that a payee has chosen not to disclose their TIN. It serves as a formal acknowledgment of the payee's decision and can help protect the payor from penalties due to non-compliance.

Each of these documents plays a vital role in the overall process of ensuring compliance with IRS regulations while addressing the specific circumstances surrounding the inability to obtain a payee's identifying number. Properly utilizing these forms can help mitigate potential penalties and maintain accurate financial records.

Similar forms

Form W-9: This form is used by individuals and entities to provide their taxpayer identification number to the requester. Similar to the P-1, it involves the collection of identifying information, but it does not include a reasonable cause affidavit.
Form 1099: This document reports various types of income other than wages, salaries, and tips. Like the P-1, it requires accurate taxpayer identification numbers to avoid penalties, but it does not address the situation of a payee declining to provide such information.
Form 1042-S: This form is used to report income subject to withholding for foreign persons. Similar to the P-1, it requires information about payees, but it is specifically for non-resident aliens and foreign entities.
Form 8821: This form authorizes an individual to receive and inspect confidential tax information. While it does not serve the same purpose as the P-1, it involves the sharing of taxpayer identification and authorization.
Form 4506: This document allows taxpayers to request a copy of their tax return. It requires identification information but does not involve a reasonable cause affidavit like the P-1.
Form 8862: This form is used to claim the Earned Income Tax Credit after a prior disallowance. It requires taxpayer identification information but does not include a waiver of penalties due to reasonable cause.
Form 941: This is the Employer's Quarterly Federal Tax Return. It requires reporting of employee wages and taxes withheld, similar to the P-1 in its connection to employee identification, but it does not address the issue of declined identification numbers.
Form 1040: The individual income tax return form requires taxpayer identification numbers. While it is a comprehensive tax return, it does not provide a mechanism for addressing the non-provision of identifying numbers as the P-1 does.

Dos and Don'ts

When filling out the P-1 form, it is crucial to follow specific guidelines to ensure accuracy and compliance. Here are five important dos and don'ts:

Do provide accurate information regarding the employer/payor's name and address.
Do clearly state the reason for not obtaining the payee's identifying number.
Do include the employee/payee's information, even if they have declined to provide a Social Security number.
Do ensure that all signatures are obtained and dated appropriately.
Do keep a copy of the completed form for your records.

Don't leave any sections of the form blank; incomplete forms may lead to penalties.
Don't provide false information; honesty is essential in this affidavit.
Don't forget to follow the instructions regarding the submission of the form to the IRS.
Don't neglect to review the form for any errors before submission.
Don't assume that verbal agreements are sufficient; written documentation is necessary.

Misconceptions

Understanding the P-1 form can be challenging, and several misconceptions often arise. Here are some common misunderstandings about the P-1 form, along with clarifications:

The P-1 form is only for employees. This form is applicable to any payee, which can include independent contractors or vendors, not just employees.
You can use the P-1 form to avoid all penalties. The P-1 form specifically addresses penalties related to not obtaining a payee’s identifying number, but it does not exempt payors from all types of penalties.
The form guarantees the waiver of penalties. While the form can help demonstrate reasonable cause, the IRS ultimately decides whether to waive the penalty based on the provided information.
Filing the P-1 form is optional. If a payor fails to obtain a payee’s identifying number, filing the P-1 form is necessary to avoid penalties, provided there is reasonable cause.
The payee must provide their identifying number. The P-1 form is used when the payee declines to provide their identifying number, highlighting that the payor made a request.
Once the P-1 form is filed, no further action is needed. Payors should keep records of their attempts to obtain the identifying number, as the IRS may request additional documentation.
The P-1 form is only relevant for federal taxes. While it is a federal form, state tax regulations may also have similar requirements, so it’s important to check local laws.
All payors must use the P-1 form. Only payors who have made a request for an identifying number and received a decline from the payee need to file this form.

By understanding these misconceptions, payors can navigate the requirements of the P-1 form more effectively and ensure compliance with IRS regulations.

Key takeaways

Understanding the P-1 form is crucial for employers and payors who encounter situations where a payee refuses to provide their identifying number. Here are some key takeaways to keep in mind:

Purpose of the P-1 Form: The P-1 form serves as a Reasonable Cause Affidavit, allowing payors to explain why they could not obtain the identifying number from a payee.
Legal Basis: This form is based on 26 U.S.C. §6724, which provides a waiver of penalties for payors who demonstrate reasonable cause for not having a payee's identifying number.
Signature Requirements: Both the employer/payor and the employee/payee must sign the form, affirming that the information provided is accurate and that the payee declined to provide their identifying number.
Filing Process: The completed P-1 form must accompany any tax returns or statements sent to the IRS, ensuring that the payor has fulfilled their obligation to request the identifying number.
Consequences of Non-Compliance: If a payor does not file the P-1 form when required, they may face a penalty of $50 for failing to obtain the necessary identifying number from the payee.
Information to Include: Payors should include their name, address, employer identification number, and the payee's information, including their name and address, on the form.
Declining to Provide an SSN: If the payee declines to provide their Social Security Number (SSN), they can indicate "None" or "Declined" on the form, which must be acknowledged by the payor.

By understanding these key points, payors can effectively navigate the complexities of tax reporting and avoid unnecessary penalties.