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Collecting a Form W9

Form W9 can be accessed on the IRS website.

The IRS requires businesses and organizations to collect a form W9 from vendors it pays to determine if a 1099 will need to be issued at the end of the year. The form contains the vendors legal business name, entity type, and identifying tax number – which is the information used to generate the form 1099 if required.

In short, the form 1099-NEC (most common) is sent to all vendors who:

  • Were paid $600 or more for services provided
  • AND were paid via cash, check, or ACH (credit card transactions are issued a 1099-K by the payment processor)
  • AND whose business structure is not a corporation

There are other types of the form 1099 as well, but only one W9 form to use.

Why do I have to collect a W9 before payment?

The IRS requires payers to withhold 25% of the payment from a vendor unless a W9 form is provided and submit it to the IRS. To ensure payments are disbursed properly, collect a W9 form BEFORE processing the payment to ensure nothing gets missed. This withholding will also incentivize vendors to provide a W9.

What if a vendor will not provide a W9?

If a vendor will not provide a correct W9, you should withhold 25% of the payment to send to the IRS. You must also still issue a form 1099 at year-end with the information you have at your disposal. You may not have a vendor’s EIN or SSN, but you can provide a 1099 without that information in the event you are not able to obtain a W9.

Three attempts should be made (and documented) to collect an accurate W9 and to potentially avoid penalties from the IRS that range from $50 to $530 per 1099. In the event you cannot obtain a W9, no further payments should be made without backup withholding to the vendor/contractor. Experiencing the difficult of a obtaining a W9 should also provide motivation to collect those up-front before any payments get issued to a new vendor.

It is rare for someone to not provide a W9, though, so we hope you don’t run into this issue. It is much more common for a W9 to be filled out incorrectly.

Please email with any questions.

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