Every time you hire someone, or develop a business relationship with an independent contractor, or
even just make a payment to a vendor, you become responsible to Uncle Sam. To fulfill this responsibility, you must generate an IRS form W-9 to them, along with a request for their Taxpayer Identification Number and certification.
It is needed to be filled and signed by the employees and partners so that you know their Social Security number or TIN. These tax id numbers validate them as U.S. persons trying to work in the United States. It does not need to send to the IRS immediately. The records are needed at the time of generation of W-2s and 1099s.
When to use a Form W-9?
The Form W-9 is used when you have to collect the taxpayer ID number (SSN, EIN, ITIN) of any U.S. person you have started to engage in a business activity with.
Form W9 can’t be used for foreign individuals or people who became U.S. residents for tax purposes but aren’t eligible for an SSN. Use a Form W-8 for the former entity and a Form W-7 for the latter.
What happens if a W-9 is not filled out?
If you do not fill, or if you forget to fill out a W-9 requested by an employer or a partner, you will be penalized $50 per instance. An employer or a partner is duly entitled to information like TIN.
For filing a false statement about backup withholding is penalized. A statement which does not result in backup withholding, when the filler is not exempted from the backup withholding requirement will be subjected to a $500 penalty per instance.
Falsifying any other information in a W-9 form might also result in prosecution for criminal behavior and may even lead the ??ller to imprisonment.
The IRS might penalize the W-9 requesters, who fail to report an accurate TIN on their returns.
Additionally, if the W-9 requester or an employer or a partner misuses or disclose the information provided to them by a worker or vendor by the medium of a W-9 form, they might be subject to civil and criminal penalties.
The best way to do so is to use a TIN matching program. TIN matching software like ours allows those who request Form W-9 to verify the TINs they have been provided.
Use our TIN matching services when you are about to file an information return. We provide you from TIN matching to EIN verification to bankruptcy records to criminal records.
These will help you to be compliant with the requirements of the IRS W-9 form and will help you save thousands of dollars, which you might have to pay in the form of fines.