Collecting W-9s before year end

Form W-9 has one job, and the IRS states it in a sentence: use Form W-9 to provide your correct Taxpayer Identification Number to the person who is required to file an information return with the IRS. Your client is that person. You are the one who will be short a number at the end of January.

The current revision is March 2024. If your intake pack still carries an older one, replace it. The certification wording is what a payee is signing, and a version that has moved is a version worth matching.

What a missing TIN actually costs

A payee who has not furnished a TIN is subject to backup withholding on the payment. That obligation falls on the payer, not on the preparer and not on the payee, and once it applies the arithmetic changes in an unhelpful direction: a Form 1099-NEC is required for each person from whom you withheld any federal income tax under the backup withholding rules regardless of the amount.

So the payment that was under the reporting threshold and needed no form at all becomes a form. The client who had nine information returns and no e-file mandate can end up with eleven and one. And none of it was necessary, because the fix was a piece of paper in November.

Four things to get right on the form itself

• The name, split properly. The IRS derives a name control from the last name, and “Mary Jo Van Der Berg” gives BERG if a system takes the last word and VAN DER BERG if it takes the whole last name. A form that collects one free-text name field is guessing at the thing the IRS will match on.
• A mailing address. The IRS form does not strictly require one to give you a TIN; a 1099 does, because a recipient statement has to go somewhere. Collect it while the contractor is answering questions, not in February.
• The certification, where it is needed. Form W-9's own signature rules sort payees into five groups, and nonemployee compensation, rents, royalties, medical and health care payments and gross proceeds to attorneys are in the group that reads: you must give your correct TIN, but you don't have to sign the certification unless you have been notified that you have previously given an incorrect TIN.
• Whether item 2 was struck. The instructions under Part II tell a payee whom the IRS has notified to cross item 2 out. That is not a formality. It is the payee telling the payer they are subject to backup withholding, and IRC section 3406(a) then obliges the payer to withhold.

Checking the TIN, and what checking can and cannot do

The IRS does offer TIN Matching, through e-Services. It is a separate enrollment with its own lead time, and it is the only thing that can confirm a TIN belongs to a given recipient. This product does not perform it, and says so on every screen where the question arises rather than implying otherwise.

What is done instead is structural: local checks that can show a TIN could not have been issued, or that a name looks likely to derive the wrong name control. They cannot confirm that a TIN belongs to this recipient, and they never block a filing: they are advisory, and they are labeled as advisory.

That is worth doing anyway, because of when the failure surfaces. IRIS will accept a structurally valid record with the wrong name control. Nothing rejects at transmission time. The mismatch comes back as a CP2100 notice the following fall, landing on the payer (your client) at roughly the moment you are asking them to renew.

A November checklist

In the order that saves the most work:

1. 1Pull the payee list for each client from the books, not from last year's 1099 file. New vendors are where the missing W-9s live.
2. 2Compare against the W-9s you already hold, and check whether each is current. A payee's status or entity type may have changed since the last one.
3. 3Send requests for the gaps now. A link the contractor fills in themselves is answered far more often than a form attached to an email. A contractor who is still being paid answers; a contractor who finished in March does not.
4. 4Run the structural checks on what you have, and fix the obvious ones: a nine-digit number that could not have been issued, a name control that will not derive the way the IRS will derive it.
5. 5For any payee who has struck item 2, or who simply does not respond, tell the client that backup withholding is theirs to apply and that it will produce a filing obligation the payment size would otherwise not have triggered.
6. 6Only then decide the filing channel, because by now you know each filer's total count across every form type, and that count, not the 1099 count, is what the electronic mandate turns on.

Why this is the one thing worth doing early

Nothing else in the January workload can be moved. The deadlines are fixed, the transmission takes minutes, and the recipient statements go out when the data is right. The only variable that a firm genuinely controls is whether the data is right, and the only month in which that is cheap to fix is the one before the year ends.