What is a W-9 tax form in the US?

Form W-9, also known as a Request for Taxpayer Identification Number and Certification Form, is an IRS tax form used for confirming the payee’s information such as name, address, and TIN. As a business owner in the United States, you will request a W-9 if you file a 1099 for the payee and use their TIN in the 1099. The payee can be a U. S.Citizen or a resident alien.

When should you request a W-9 form?

You should request Form W-9 to get the payee's TIN if they’re a US citizen. This ensures you aren't considering them as a foreign person for withholding purposes and it helps you know their tax payer status for federal tax reasons when you file a 1099 with the IRS. If you are asking for a W-9 from individuals, you'll get their Social Security Number and not a EIN.

You can use a W-9 tax form to report other types of information such as real estate transactions, mortgage or debt cancellations, transfer of business partnerships, and any other IRA contributions since it contains personal identification information.

What are the differences between Form W-9 and Form W-4?

How to fill out a W-9 – instruction for payee

Form W-9 is a simple form requesting personal identification details. Fill in your name and business details in line 1 and 2. In line 3a, you will check one of the seven boxes to specify your federal tax classification. If you have any exempt codes, enter them in line 4. In line 5 and 6 you will add your address. Fill in your TIN in Part I and sign Part II. If you are looking for more detailed instructions, you can refer to the IRS  link here.

How to request a Form W-9 from Zoho Books?  

When you add a vendor and track 1099 payments in Zoho Books, you can attach the Form W-9 directly to the vendor’s profile. If your vendor doesn’t have a completed copy, you can request one directly from your Zoho Books account. The vendor can then either upload their completed Form W-9 or generate it using Zoho Books’ free W-9 generator and share it with you.

You can also invite your vendors to share their Form W-9 through the vendor portal. Once submitted, the form is automatically attached to their profile in Zoho Books. If your vendors haven’t shared their Form W-9 yet, Zoho Books allows you to select multiple vendors and send them email requests for the form in one go, saving time and effort.

Intuitive notifications within Zoho Books keep you informed about vendors who haven’t shared their Form W-9. These reminders appear in the vendor module and when you record an expense or bill for the contractor, along with the option to request the form from multiple vendors at once.

Instructions for the requestor

If you are about to request a W-9 from your payee, keep these in mind, or you could refer to the IRS website for full details.

Electronic submission of Form W-9

As a requestor, you can set up a facility for the provider to submit the W-9 form electronically, which includes fax. Here are some pointers that the IRS states as a criteria for an electronic system.

Criteria for electronic system

• It must receive accurate information sent and track the user access activity.
• Ensure the person accessing the information is the person mentioned in the W-9 form or the intermediary person.
• Make sure your payee includes the same information that they would use in the paper form.
• The electronic system must be able to produce a paper copy or hard copy based on IRS demands.
• The last step of submitting an electronic form is the electronic signature under penalties of perjury; ensure that this is not left out.

While getting the Individual Taxpayer Identification Number (ITIN), use a W-9 to get the correct name and TIN or ITIN from the payee.

Substitute Form W-9

The IRS allows you to use a substitute for Form W-9 if you include all the details that a regular W-9 contains and satisfy the certification needs. Yet you cannot do the following in your substitute W-9 forms:

• Make your payee agree to terms that are not related to the certifications.
• Suggest the payee will be subject to backup withholdings if they don’t agree to extra terms that are not a part of the required W-9 certifications.

The IRS makes it mandatory for you to add “The IRS does not require your consent to any provision of this document other than the certifications required to avoid backup withholding” in your substitute form.

What should you do if your payee has applied for TIN

If you are requesting a W-9 for certain readily tradeable payments, interest, or dividend payments, the payee can send you a fully completed and signed W-9 with "Applied For" TIN written in Part 1. This will be considered an Awaiting-TIN certificate. If you do not receive the payee's TIN within 60 days, then you should start withholding.

When submitting the forms to the IRS and to the payee, make sure to display the full name, keep your records up to date, and ensure the name that your payee gave you matches the name given on line 1a of your W-9 form.

What are the penalties for non-compliance with submitting a W-9?

The IRS will fine you $50 if you submit the wrong TIN, and $500 if you provide incorrect information to avoid backup withholding, falsify any certifications, or if the requester misuses the TIN information provided by the payee.

A word from Zoho Books

Tax compliance often means handling important documents such as Form W-9, a process that can be both time-consuming and tedious. Zoho Books simplifies this process by providing an easy way to request, collect, and securely store all W-9s in a single place.

With Zoho Books, you can be organized and find whatever you're looking for - lessening that pester of managing compliance. The streamlined system ensures that everything is accessible with a single click, reducing the problem at hand, so you could focus on what matters. Whatever it is, whether collecting important information from a supplier or managing your documents in order, Zoho Books makes it run smoothly and efficiently so that you can fit it seamlessly into your daily workflow.