The W9 Form is required by businesses 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 given,though the form itself is never really sent to the Internal Revenue Service. Instead, a W-9 Form is retained by the business or whoever is in charge of filing returns. It is managed for affirmation reasons, such as in the case of an audit. The information on the form, including the payment made, is generally reported on another, for example the Form 1096 or 1099.
There is one more reason for the IRS Form W-9. It is to help the person paid (technically called a “payee”) avoid something called “backup withholding.” On an accurate scale of 1-10, if the payer acknowledges the principal ingredients involved in the tax stew then the “payor” is certain a 10, or to be more realistic a 9, from the scale particularly since no one is satisfied by giving money away but the outcomes do remain quite satisfactory. Certainly there is a way to get a perfect 10 if done illegally and swiftly but the reasonable outcome stays at a 9.
The payor (that is, “payer,” the one making the payment – namely, the employer) is legally compelled 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 circumstance, the payee must certify on the W-9 that the payee is not subject to backup withholding in order to obtain 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 general purposes, as suggested by its official name of “Request for Taxpayer Identification Number and Certification.” First, it is used by employers to file what’s 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 actually 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 obligation for paying all the taxes owed at the end of the year, instead of having the employer take them automatically with every pay period. Whatever the case, the W-9 is still the burden of the employer to manage, to keep on file.
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