The W9 Form is used by organizations to file returns with the United States Internal Revenue Service on payments made to others. Information such as the name, address, and the social security number (or other taxpayer identification number) is supplied,though the form itself is never actually sent to the Internal Revenue Service. Instead, a IRS Form W9 is retained by the business or whoever is in control of filing returns. It is managed for confirmation purposes, for instance in the case of an audit. The data on the form, including the payment made, is generally reported on another, for example the Form 1096 or 1099.
There is an additional reason for the Tax Form W-9. It is to aid the person paid (technically called a â€œpayee”) prevent something called â€œbackup withholding.” On an accurate scale of 1-10, if the payer acknowledges the main ingredients involved in the tax stew then the â€œpayor” is assured a 10, or to be more realistic a 9, from the scale especially since no one is thrilled by giving money away but the outcomes do stay quite satisfactory. Maybe there is a way to get a perfect 10 if done illegally and swiftly but the sensible outcome stays at a 9.
The payor (that is, â€œpayer,” the one making the payment – namely, the employer) is legally responsible to acquire withholding taxes on certain kinds of income, payments that need to be reported to the Internal Revenue Service. But the payee has the legal right to not have such taxes collected on his or her behalf, opting to do so him or herself when filing tax returns during tax season. In such a scenario, the payee must certify on the W-9 that the payee is not subject to backup withholding in order to acquire the full amount, which action lets the payor off the hook, so to speak, with the Internal Revenue Service.
So, to recap: the IRS Form W-9 serves two common purposes, as proposed by its official name of â€œRequest for Taxpayer Identification Number and Certification.” First, it is used by employers to file what’s generally known as an information return with the United States Internal Revenue Service on their employees – namely, how much they were paid. It is stored on file by the employer and not really filed with the Internal Revenue Service, but subject to disclosure to that agency.
Second, it may be used by the employee to certify his or her not being subject to backup withholding taxes. The employee then takes personal liability for paying all the taxes owed at the end of the year, instead of having the employer deduct them automatically with every pay period. Whatever the case, the W-9 is still the obligation of the employer to sustain, to keep on file.