If a customer is paying you for goods or services, you generally do not need a W-9 from them. The W-9 obligation runs in the opposite direction: the party writing the check collects the form from the party cashing it, because the payer is the one who may have to file a Form 1099 at year-end. So when your customer pays you $600 or more for services in the course of their trade or business, they should be asking you for a W-9, not the other way around.
The confusion is understandable. Both sides of a transaction have tax reporting to worry about, and “customer” and “vendor” get used loosely. But the IRS rule is about who is making the reportable payment. If money is flowing from them to you, they are the payer for W-9 purposes.
Why Your Customer May Be Asking You for a W-9
When a business pays a non-employee $600 or more in a calendar year for services, rent, royalties, or several other categories, that business is required to report the payment to the IRS on a Form 1099.1Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return To file that 1099, the payer needs your legal name, address, entity type, and taxpayer identification number. The W-9 is the form that collects those data points.
If your customer is a business and they are paying you for services, expect them to send you a blank W-9 to complete. Fill it out with either your Social Security Number (if you operate as an individual or single-member LLC) or your Employer Identification Number (if you operate as a partnership, corporation, or multi-member LLC).2Internal Revenue Service. Taxpayer Identification Numbers Returning it promptly is in your interest. If you don’t provide a valid TIN, the customer is required to begin backup withholding at 24% on every payment they make to you and remit that amount to the IRS.3Internal Revenue Service. Backup Withholding That’s real money coming out of what they owe you.
One nuance worth knowing: if you sell only goods and not services, your customer generally isn’t required to issue a 1099 to you, and therefore doesn’t strictly need a W-9. Many businesses collect one anyway as a matter of policy, because entity classification and payment mix can shift. Providing it is usually the path of least friction.
When the Roles Flip and You Do Need a W-9
You need to collect a W-9 whenever you become the payer for a reportable transaction. That most often happens with people you might not think of as vendors:
- Independent contractors you hire for services totaling $600 or more in the year.
- A landlord you pay rent to for business space.
- Anyone you pay royalties, prizes, or awards to.
- Attorneys you pay for legal services, regardless of whether the law firm is incorporated.
- Medical and health care providers you pay $600 or more, including professional medical corporations.
The $600 threshold covers any payment category other than goods purchased for resale.4Internal Revenue Service. Reporting Payments to Independent Contractors If you’re going to hit it, the safest move is to get the W-9 signed before the first check goes out. Chasing tax information from someone after the work is finished is one of the most predictable compliance headaches, and it gets worse as the year-end filing deadline approaches.
Payees You Don’t Need a W-9 From
Not every payment triggers the requirement. Payments to C-corporations and S-corporations for services are generally exempt from 1099 reporting, so you don’t need to collect a W-9 from them.5Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC – Reportable Payments to Corporations The same is true for tax-exempt organizations and government agencies.
Two exceptions cut through the corporate exemption. Payments for legal services must be reported regardless of the law firm’s entity type. Payments for medical and health care services made to corporations, including professional medical corporations, must also be reported on Form 1099-MISC regardless of entity type.6Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC – Medical and Health Care Payments For those two categories, corporate status doesn’t matter and a W-9 is still required.
When you’re unsure about a payee’s entity classification, collect the W-9 anyway. The form asks the payee to check a box identifying their tax status. If they mark C-corp or S-corp and the payment doesn’t fall into the legal or medical categories, you can file the W-9 away and skip the 1099. Better to hold a form you don’t need than to discover in January that you owe a 1099 and have no TIN on file.
Foreign Payees Use a W-8, Not a W-9
The W-9 is only for U.S. persons. If a contractor or vendor you’re paying is a foreign individual or entity, the correct form is one from the W-8 series. Foreign individuals typically provide Form W-8BEN to certify their non-U.S. status and claim any applicable tax treaty benefits.7Internal Revenue Service. About Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner Foreign businesses use Form W-8BEN-E.
The stakes are different from domestic payments. When a foreign person doesn’t provide valid W-8 documentation, the default withholding rate on their U.S.-source income is 30%, higher than the 24% backup withholding rate for domestic payees. If a contractor tells you they’re based outside the U.S., don’t send them a W-9. Send the appropriate W-8 and consult the IRS instructions for that form, because the withholding and reporting rules diverge from domestic 1099 filing.
What Happens if You Don’t Collect a W-9 You Should Have
If you’re the payer and a vendor won’t provide a TIN, you’re required to begin backup withholding at 24% on every payment and remit that to the IRS.3Internal Revenue Service. Backup Withholding Document every request you make for the form. Send the W-9 directly to the payee, follow up in writing, and tell them explicitly that you’ll withhold 24% until they provide a valid TIN. That paper trail matters if the IRS later sends a CP2100 notice about a missing TIN on your 1099 filing.
If you already paid a vendor in full without withholding, and they still won’t provide a TIN, you may be personally liable for the 24% you should have withheld. That comes out of your own pocket. It’s the single best reason to treat the W-9 as a condition of the first payment, not a task you clean up at year-end.
So the short version: if your customer is paying you, they’re the one who needs the W-9, and you should return it when asked. You only need to collect a W-9 yourself when you become the payer for a reportable payment of $600 or more.