Purpose of Form W-9
Business use IRS Form W-9 (Request for Taxpayer Identification Number and Certification) to get information from vendors who are hired as independent contractors. When a business makes a payment of $600 or more to the contractor during a tax year then it has to be reported to the IRS through Form 1099-Misc. The contractors provide their name, address, and the correct taxpayer identification number (TIN) which may be the social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), to complete the information return. Neither the Filer (Sender) nor the Recipient are required to send the W-9 copy to the IRS. Examples of information returns include, but are not limited to, the following:
- Form 1099-INT (interest earned or paid)
- Form 1099-DIV (dividends, including those from stocks or mutual funds)
- Form 1099-MISC (various types of income, prizes, awards, or gross proceeds)
- Form 1099-B (stock or mutual fund sales and certain other transactions by brokers)
- Form 1099-S (proceeds from real estate transactions)
- Form 1099-K (merchant card and third party network transactions)
- Form 1098 (home mortgage interest), 1098-E (student loan interest), 1098-T (tuition)
- Form 1099-C (canceled debt)
- Form 1099-A (acquisition or abandonment of secured property)
W-9 Management through Taxseer
Taxseer provides a very powerful and secure online W-9 management solution so that the Filers can make online requests for the TIN to the contractors. Contractor receives an email with instructions to click the link to access the online W-9 form and complete & submit without going through the tedious task of printing the paper form, filling and securely mailing the document to the requester. As soon as the contractor submits the online W-9 form, the requester’s system is updated with the TIN and the form is stored securely for future use. Taxseer maintains the audit trail of the complete W-9 request and the response process.
If W-9 management is not performed correctly then IRS may impose penalty for the following reasons:
- Failure to furnish TIN.If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.
- Civil penalty for false information with respect to withholding.If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.
- Criminal penalty for falsifying information.Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
- Misuse of TINs.If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties.
Taxseer (www.taxseer.com) is a leading IRS-authorized e-file service provider offering you the best cloud-based solutions to perform online filings of Form 1099 MISC, Other Form 1099 Series, W-2, ACA (1095-B & 1095-C), 2290, 8849, 8809, W-9 and many more. We provide Wizard-driven e-filing for guided and error-free submissions and extend the security, intelligence, availability, and agility of the tax solution on the cloud. SSL-encrypted connections are used for transferring sensitive information and to provide a very safe environment for clients. As part of our commitment to making e-filing easy and convenient, we are always available.