Contractor Charging Extra Due to W-9?

[Jorge Esteban Vargas]

Hi everybody, 

I'm working on getting permits for a new investment property. My contractor recommended a guy who can get the plans for the house for $2,500. He got the plans completed in a timely manner and his work was vey professional and easy to work with. However, I just asked him for a W-9 form and he told me he didn't know this was a W9 project and that he would have to "add a $500 offset taxes and accounting overhead."

Is this legal at all? I asked him what the difference is between working with a regular homeowner or with an investor and prices should be the same no matter what.