If you have independent contractors or vendors working for your company and you need to fill out a W-9 form for each, you may wonder how often one needs to be filled out by the payee. Luckily, the answer isn’t as complex as you may think.

Organizations may choose to fill out new W-9 forms annually or simply whenever new information is provided by the vendor. However, what you choose will depend on your own employment situation and tax requirements. 

Below, we will provide you with all the information you need on W-9 forms and whether you need a new one each year. 

What is a W-9 form?

If you’re a company with people who work for you but aren’t considered ‘permanent employees’ of your organization, you may need to use W-9 forms. One of these documents is used to collect relevant information from independent contractors so you can ensure everything is in line with IRS guidelines.

Simply put, the primary purpose of a W-9 form is to collect a contractor’s Taxpayer Identification Number (TIN) which may be a Social Security Number (SSN) or an Employer Identification Number (EIN). This information is then used to report payments made to them to the IRS. If any information needs to be updated, you cannot modify the original W-9 form; instead, a new one must be submitted.

To ensure the TIN on record is accurate, you can use EINsearch’s TIN matching tool to verify that the information on the W-9 form matches IRS records before submitting it.

How often should a W-9 be updated?

How often you update a contractor’s W-9 form is up to your own preferences. For tax compliance purposes and to prevent IRS B and P notices, it is best to validate vendor TINs annually. Checking TINs against IRS records with EINsearch.com’s real-time TIN Match and EIN Lookup platform is an excellent practice to ensure compliance and avoid IRS B and P notices. 

Any changes that need to be updated might include your contractor’s name, address, TIN, or withholding requirements. 

Why is it important to keep W-9 forms up to date?

The main reason W-9 forms need to be filled out in the first place is so organizations are staying in line with IRS regulations. It helps to ensure you have the correct tax information on your vendor. When a company pays a vendor or non-employee more than $600 per year, the company must file an information return. The information provided on a W-9 is used to file a 1099 form. The W-9 form will tell the IRS everything it needs to know for compliance and ensure you aren’t met with any B and P-Notice penalties. 

To prevent mismatches when updating a contractor’s TIN, consider using EINsearch’s TIN Matching tool. This real-time platform checks the vendor’s TIN against the IRS database to ensure the information is accurate, helping you avoid potential IRS B penalties.

When to update W-9 forms outside of the annual cycle?

If you decide to update your W-9 forms for each independent contractor annually, you may need to stay aware of other scenarios when it is crucial to change information:

New business structure

Sometimes, you’ve shuffled your business structure by introducing a new entity or merging with another organization. If this ever happens, you must update all your W-9 forms simultaneously. This is because business structure changes can impact your tax reporting requirements from the IRS. You will avoid penalties and remain compliant by making these amendments. 

Introduction of new owner

If you’ve recently acquired a new business, sold your company, transferred shares, or brought on a new partner, you must also update your W-9 forms. W-9 forms require accurate information and guarantee proper tax reporting. Avoid any penalties by ensuring that no information is outdated whenever a new owner is brought on. 

When you bring on new owners or change your business structure, your organization might face changes in your tax classification. If this ever happens, for whatever reason, you must report it on your W-9 forms. This is because different tax classifications have unique reporting requirements and tax obligations. Updating the tax information will ensure the IRS has the most accurate and latest information for your tax returns. 

Changes in business name or address

Businesses constantly undergo changes and rebrandings, so if you ever decide to change your organization’s name or move from your primary address, you must update your W-9 forms, too. Without accurate company information, the IRS might not be able to reach you, and therefore, your tax returns won’t be processed appropriately.

Request from the paying entity

At times, a paying organization might ask you to provide an updated W-9 form, even if your business details haven’t changed. This is often part of their internal audits or updated reporting requirements. Responding promptly helps maintain a positive working relationship and ensures your business stays aligned with their compliance processes.

How to update W-9 forms

It’s not difficult to update any W-9 form. You may choose to request a new form from each independent contractor on a specific date annually. This ensures all information remains accurate. You are also taking a lot of the work out of your own company and allowing the workers to stay up to date on tax requirements. 

Consider using EINsearch’s TIN Matching tool in your W-9 management process. This tool helps ensure you have the correct information, reducing the chance of errors when updating or collecting new W-9 forms.

Validate your business information with EINsearch

Do you want to ensure the TINs you report on W-9 forms are correct? Let EINsearch help you. Our seamless online tool allows you to validate critical tax requirements such as TINs, ensuring you’re not reporting outdated or incorrect information to the IRS. Simply visit our website and use our tool today.