Those who should fill out a W 9 are those who are working as independent contractors or freelancers, because the W-9 is the form used by the IRS to help gather information about such workers. The W-9 form is an informational reporting tax form, meaning that it provides information to the IRS about taxable entities.

What happens if I refuse to fill out a W9?

If you don’t fill out a W-9 duly requested by an employer, partner or other entity duly entitled to your taxpayer ID information, you may be penalized $50 for each instance. You may also be subject to backup withholding, which means the payor will withhold 28 percent of your check and forward the proceeds to the IRS.

What do you need to know about the W-9 form?

Collecting a Form W-9 is a convenient way to collect this information about your employees and contractors. Because of this, a company should have a completed Form W-9 on file for each employee and contractor.

When to request a W-9 from a vendor?

When you acquire a new contractor or vendor, enclose a Form W-9 with the initial contract. In a Form W-9 request letter, ask your vendor or contractor to complete and return the form as soon as possible.

What happens if I refuse to fill out a W-9 form?

If you refuse to fill in the W-9, your client is obliged to withhold taxes from your payment at a rate of 24%. Businesses in the United States are instructed by the IRS to request the W-9 be completed by any service provider they’re paying US$ 600 or more to during the tax year.

When to use Form 8233 and W-9?

IRS Tax Form W-9 and Form 8233 (Vendors Providing Personal Services Only) If the vendor (or beneficial owner of the compensation) for personal services is a resident alien for US tax purposes with an EIN, ITIN or SSN and can claim a tax treaty benefit under a saving clause exception, a W-9 is required to claim tax exemption or withholding.