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Frequently Asked Questions

Form W-9 From Everyone: Necessity or Overkill?

This is an excerpt from e-AP News, September 29, 2009, distributed by Mary Schaeffer, a national expert if Accounts Payable best practices and internal controls:

 ยท  W-9s From Everyone: Necessity or Overkill?

A reader wrote yesterday to ask what I thought about getting a W-9 from every new vendor. His organization was converting to a new system and he thought it would be a good idea to start getting W-9s. You will not be surprised to learn there was some pushback.

If it were up to me, I'd insist on getting one before any POs were issued. Here are just a few of the reasons it is considered a best practice to get a W-9 from every vendor.

1) To ensure what they told you is accurate. Don't assume that an Inc. after the name means they are incorporated. Usually it does. But is that the legal name? If they should have gotten a 1099 and didn't because you made an incorrect assessment of their status and it turns out you should have withheld taxes and didn't, your organization would have to pay a penalty and the taxes that should have been withheld. If you can prove to the IRS that you were doing what you were supposed to do, you would be off the hook--- but if you never got a W-9, you might be in a rough spot.

2) Getting a W-9 and running them through the IRS TIN Matching Program will help you uncover errors early and identify fraudulent vendors.

3) Most experts believe corporate reporting is just around the corner. Then you'll need a W-9 from every vendor---so why not get ahead of the game instead of dealing with an administrative nightmare when it happens.

  • C Bonnes

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