Do Nonprofits Require a W-9?
The Internal Revenue Service requires specific forms for taxpayers to fill out so that the agency can determine what wages, salaries, and tips workers earned during a quarter or during a calendar year, and what portion of those earnings is taxable. Individual workers typically send a W-2 form to the IRS to comply with tax regulations, and independent contractors must send Form 1099. Under certain circumstances, the IRS will also require nonprofit organizations to complete a W-9 form despite their tax-exempt status.
Form W-9 is a document that is usually completed by self-employed workers, independent contractors, and consultants. It is known as the Request for Taxpayer Identification Number and Certification form, and it a required document whenever a contractor provides services to another business. The company that requests the Form W-9 will use the information in this document to complete a Form 1099-MISC, which details the amount of money that was paid to the independent contractor.
A nonprofit organization would be required to complete a W-9 if it provided any type of business services to another company during the year. For example, if you run an animal rescue nonprofit and you groomed and cleaned dogs at a pet store for its pet adoption drive, that store would send you a request to complete a W-9.
When you fill out the W-9, you are required to enter the legal name of your nonprofit, the tax-exempt code under which your corporation operates, which is usually a 501(c)(3), your organization’s business address, and your Taxpayer Identification Number. The TIN is one of the most important pieces of information on the W-9 because is the number the IRS issued under your business name for tax purposes. Make sure you sign the W-9, and enter the date, and keep in mind that your signature confirms that your organization is not subject to backup withholding, based on your exempt status.
Many tax information transactions are handled through computers, so find out if the company that requested the W-9 would like you to send the completed form back to them as an attachment to an email. Make sure that you encrypt the email so that the document is secure. This is the quickest way for them to receive the information, but the company may also request that you fax the W-9, or send it through the postal service. If you do send the W-9 by using the post office, select a tracking option to ensure that you can prove you sent the document if something goes wrong.