W-9s & 1099s: How do I pay contractors "under the table"?

[Carlo Michelotti]

I've have guys doing rehab work without a contract, and I pay them with checks out of a business account. They're licensed, but this is "side-work" for them. They do good work and don't charge a lot, so I thought everything was good.

But then I read @BrandonHall 's "Accounting Hack" article which says that I should be sending them 1099's and asking them for their Tax ID number.

So I asked some of them to fill out a W-9, which asks them for their SSN or EIN. But they don't want to give it to me, because they don't want to pay taxes! It turns out they were charging me a lower price because they like getting paid "under the table".

They money's gone, the year's almost over, and THE TAX MAN COMETH. Am I in trouble?