If you run a business in the United States, you are familiar with the IRS Form W-9. Organizations use this form to collect a vendor’s Taxpayer Identification Number (TIN) to ensure accurate reporting on information returns to the Internal Revenue Service (IRS). Collecting a W-9 from vendors is essential to vendor onboarding and information management.
U.S. entities must obtain their vendors’ correct TIN to file Form 1099 payment information returns with the IRS. The W-9 is the best way to collect the information. But sometimes, there is good reason to reject a vendor’s W-9.
Overview of the W-9
The IRS Form W-9 is a legal document businesses use to collect a vendor’s TIN. The TIN could be the vendor’s Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), Adoption Taxpayer Identification Number (ATIN), or Employer Identification Number (EIN). The W-9 form includes basic information about the vendor: legal name, address, and tax classification. (If a vendor does not have a TIN, they may apply for one and enter “applied for” on the W-9.)
An IRS Form W-9 does not expire, but the vendor should submit a corrected form to you if any information on the original document has changed. It is a best practice to collect the W-9 from all U.S. vendors, regardless of their tax classification, to ensure compliance with IRS requirements and to verify that you are dealing with legitimate vendors.
When to Reject a Vendor’s W-9
When a vendor submits a W-9, you should run the vendor name and tax identification number through the IRS TIN matching program. (See Verifying Vendor TINs – The IRS TIN Matching Program.) If the vendor’s TIN and legal name on the W-9 do not match, reject the W-9 and request another W-9 from the vendor with the correct information.
Additional circumstances when you should reject a vendor’s W-9 include:
- When the vendor does not sign the W-9 when required by the IRS. (Corporations are not required to sign the W-9, nor are entities exempt from backup withholding—see Instructions for the Requestor of Form W-9 for more.)
- When the vendor provides a foreign TIN. The IRS Form W-9 only applies to U.S. entities. If the vendor submits a foreign TIN, reject the W-9 and request the appropriate form W-8.
- If a vendor provides an expired ITIN or an ATIN that is not valid.
Regarding Non-Official Guidance on W-9 Completion
The IRS provides instructions on how to complete the Form W-9. Vendors should consult the IRS instructions. It is the vendor’s responsibility to submit a complete and accurate W-9 form. They may seek guidance from their tax professional if necessary. Businesses should seek leadership, legal counsel, or tax professional advice when interpreting W-9 form requirements for reporting and backup withholding.
There are several reasons why you may reject a vendor’s W-9 form. These include submitting an outdated version of the form, providing a legal name and tax I.D. that do not match IRS records, failing to enter a tax I.D., entering an incorrect tax classification, and failing to sign the form when required.