Form W-9

Request for Taxpayer Identification Number and Certification

Companies will routinely request form W-9 as a matter of practice.  This is because companies who fail to obtain a proper tax ID number when it’s actually required can be subject to being fined by the IRS.

Many times when asked for a completed W-9, companies will state they are a corporation or exempt so there is no need to issue a Form 1099 for their services.  This may be accurate but  the Form W-9 provides the payer with the necessary information to make the determination and shows their due diligence for compliance in reporting to the IRS.  

The form W-9 serves two purposes.  It is used by businesses to file information returns with the IRS on reportable payments made to others.  The second purpose is to help the payee avoid backup withholding. 

Even though the form is never actually sent to the IRS, the business who files the information return must have it for verification purposes.  The information on the W-9 and the payment made are usually reported on a Form 1099.

In January for this year, the IRS released a new form W-9.  There are several important changes to the form and the instructions.

·         Two separate check boxes have been added to the form so that corporations can specify whether they are a C Corporation or an S Corporation.

·         A LLC must indicate whether it is a C Corp, S Corp, or Partnership.  A Disregarded Entity has been dropped from that line, so a single member LLC would check the box for an Individual/Sole Proprietor.