Disclaimer: US-based merchants: We’re going to give you some light, unofficial guidelines here. But you should always consult a tax attorney for the official word! And if you are based outside the US, you should consult your country’s tax authority.
More often than not, affiliates, influencers, and ambassadors are considered 1099 (independent) contractors by the IRS.
Onboarding: You’ll first need to establish your affiliates’ tax status. You’ll do this by collecting a W9 form from US-based affiliates and a Form W8-BEN / Form W8-BEN-E from affiliates based outside the US. (The penalty for forms not filed is $270 each.)
End-of-Year: It’s up to you, the merchant, to furnish a 1099-NEC for US-based affiliates who earned $600 or more (or had any withholding) within the tax year. You’ll need to furnish a 1042-S to Affiliates based outside the US who earned any income (or had any withholding) from your program within the tax year.
You’ll need 3 copies of your forms: one for your records, one for each Affiliate, and one for the IRS.
Please note: Refersion does not furnish forms or store affiliate tax information on its own. However, US-based businesses can use Refersion Pay to help automate tax form collection for affiliates and 1099 distribution at the end of the year.
Busineses outside of the US may be able to leverage Refersion's integration with Trolley for tax form collection and payments. Read all about the Trolley integration here. If neither of these options are feasible, you'll have to collect and store tax information outside of Refersion.