What Is the Purpose of a W-9 Form?
The W-9 form is a sheet generated by the Internal Revenue Service to obtain a legal and accurate tax identification number from an individual or corporation required to file an information return to the IRS. The IRS requires citizens and businesses to file certain financial information, which is used to determine the amount of taxes owed and to gain other information, such as income accrued and real estate transactions.
For individual citizens, the W-9 form is used to verify the tax identification number issued by the federal government. Businesses are also issued taxpayer identification numbers, which are called federal employer identification numbers. Corporate tax numbers serve the same purpose as individual tax numbers, which helps to correctly identify the type of taxpayer and ensure that citizens and companies are taxed according to their income. W-9 forms are commonly given to new employees by their employers at the time of hire. Companies must report the incomes of all employees regardless of position within the company and socioeconomic status. W-9 forms are also used to track financial transactions that take place between businesses or between businesses and their clients. These transactions may include miscellaneous payments or financial gifts from donors as well as grants or other money received.