Form W-9 is an IRS created form used by an individual or an entity, like a company, to request the taxpayer identification number (TIN) and other information from parties they have paid.u00a0 A TIN number is typically an individualu2019s social security number or a companyu2019s employer identification number.u00a0 The information collected on Form W-9 by the requester is used to complete an u201cinformation returnu201d.Information returnAn information return, like Form 1099-MISC, is used to communicate to the IRS reportable payments made to certain parties in the normal course of business.u00a0 A common reportable payment is one in excess of $600 paid to an independent contractor.u00a0 In this case the company would ask the independent contractor to complete and return a Form W-9.u00a0 Please note Form W-9 should only be used if you are a U.S. person (including a resident alien) or company.Federal tax classificationForm W-9 also asks for a partyu2019s federal tax classification.u00a0 This is helpful to the W-9 requester as certain types of payments made to specific entities do not need to be reported to the IRS on an information return.u00a0 In addition, the tax classification can be used along with the exempt payee code to determine that backup withholding is not required.Backup withholding if Form W-9 is not providedIf Form W-9 is not provided to the individual or entity that requests it, future payments can be subject to having part of the payment withheld (known as backup withholding) and remitted directly to the IRS.u00a0 This is similar to the way federal tax is withheld from an employee paycheck.u00a0 The current backup withholding rate is 28%.u00a0 In most cases, just remitting Form W-9 to the requester eliminates any requirement for backup withholding.IRS reviewThe IRS summarizes the total payments reported on information returns and compares the total amount to the income reported on the taxpayeru2019s income tax return.u00a0 If there are discrepancies the IRS may request further information from the taxpayer or initiate an audit.The following is listed under u201cPurpose of Formu201d in the IRS Form W-9 u201cGeneral Instructionsu201d section.An individual or entity (Form W-9 requester) who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) which may be your social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), to report on an information return the amount paid to you, or other amount reportable on an information return. Examples of information returns include, but are not limited to, the following:u2022 Form 1099-INT (interest earned or paid)u2022 Form 1099-DIV (dividends, including those from stocks or mutual funds)u2022 Form 1099-MISC (various types of income, prizes, awards, or gross proceeds)u2022 Form 1099-B (stock or mutual fund sales and certain other transactions by brokers)u2022 Form 1099-S (proceeds from real estate transactions)u2022 Form 1099-K (merchant card and third-party network transactions)u2022 Form 1098 (home mortgage interest), 1098-E (student loan interest) 1098-T (tuition)u2022 Form 1099-C (canceled debt)u2022 Form 1099-A (acquisition or abandonment of secured property)Use Form W-9 only if you are a U.S. person (including a resident alien), to pryour correct TIN. If you do not return Form W-9 to the requester with a TIN, you might be subject to backup withholding.For more information on Forms W-9 and 1099 see W9manager.com.Disclaimer u2022 Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.