Disclaimer: Bonsai is not a law firm, does not provide legal services or advice, and does not provide or participate in legal representation
Governments in different countries run on taxpayer’s money. Taxpayer’s money is used to provide better services, pay civil servants among other things. The case is no different in the United States. The Internal Revenue Services (IRS), is the official tax authority body that collects tax returns for the US government. Additionally, different states have a substitute to the official IRS W9 form, although the information required is pretty much the same. By law, businesses are required to request for the W9 requirements for vendors. This mostly applies if the said business will be paying you $600 or more in any given financial year. As a business, the W9 requirements for vendors is a filled form that furnishes you with the vendor’s taxpayer identification number (TIN), address and business type for the right tax classification.
In case the IRS chooses to audit you, the W9 requirements for vendors will help show proof of pay therefore ensuring you are in compliance with federal laws on tax. The W9 requirements for vendors form is only requested once. However, in the event a vendor changes their name or any other information that’s part of the requirements of W9 form, they will need to fill in a new W9 requirements for vendors, and issue the same to you. When filling out the W9 requirements for vendors form, you need to make sure that all the information given is correct and true to the best of your knowledge. Not filling out a request for a W9 form will see you get penalized and end up paying $50. On the other hand, giving any false information on the W9 requirements for vendors form will get you penalized $500 or in worst cases, jail time. As a vendor, be careful and sure of the business type bracket that you are supposed to select so as to not make a mistake and give the wrong information.
The W9 requirements for vendors can easily be downloaded from the IRS website. If you are not sure of any field that you need to fill on the form it is important to find an expert and consult to avoid filling in the wrong information. You will also be required to indicate on the form whether you are subject to backup withholding or you are exempted. In the event that you are subject to, the business will be required to withhold 28% of your pay and pay it on your behalf to the IRS as tax. Once a vendor has issued their W9 requirements for vendors form, the business will then need to file their tax return on the IRS form 1099-MISC. The business will then at the end of each financial year issue the IRS with once copy and issue you, the vendor, with a copy of your own.
Businesses will however not be required to send out a copy of form 1099 if a vendor is listed as a corporation. The best way a company can stay in compliance is by ensuring they file their returns and on time. A W9 requirements for vendors form needs to be kept safe by both the owner and the requester. These forms carry sensitive information, including an individuals’ Social Security Number (SSN). With such information, it’s possible to have cases of identity theft. In the event that you lose your wallet, it’s important to report to the authorities to ensure that your details don’t get used for fraud. Ensure that you note down the details of your requester so that you can be able to keep a record of the businesses or entities you have given your W9 requirements for vendors form to.