After they are completed, your vendors', freelancers' and contractors' W-9 forms do not expire. However, the IRS requires them to be replaced when specific information is changed, including changes in names, type of business entity or a taxpayer ID number. Although not required by the IRS, your business can request updated W-9 forms for the purpose of maintaining accurate records of your service providers.
W-9 forms include important tax information about your business's service providers, and they do not expire. However, certain changes to information can result in a new W-9 being required.
The Purpose of a W-9
IRS W-9 forms are used by businesses to collect taxpayer information of non-employee service providers. Financial companies also use the W-9 form for reporting taxable interest and dividends paid to their clients. The information entered on the form is sent to the IRS to document payments the business has made to freelancers, independent contractors and vendors that were paid more than $600 for services performed over the course of a calendar year. The IRS requires individuals to complete the form with their name, address, tax ID number or Social Security number and a signature. Vendors and independent contractors are asked for the name of their business, the type of business entity, an employee identification number and a principal's signature. All service providers must state whether they are exempt or non-exempt from backup withholding.
When New W-9 Form Is Required
To ensure that income reported by a business matches the information submitted on its service providers' tax returns, the IRS requires the replacement of an existing W-9 form under a few circumstances. A new W-9 is needed if a person's name changes, such as after marriage; however, a change of address does not require a W-9 replacement. Another reason would be if a business changes from one type of legal entity to another. For example, if a sole proprietorship changes to an LLC, a new W-9 form is required. Similarly, a change from a taxpayer ID number to an employer identification number would require a replacement form.
Changes in Backup Withholding
The IRS can instruct a business to withhold a percentage of income paid to specific service providers. This is called backup withholding. Money is withheld by the business and sent to the IRS for reasons that can include insufficient tax payments, an incorrect tax ID number or failure to provide a tax ID number. The IRS requires a new W-9 form when a business is ordered to initiate backup withholding for a freelancer, independent contractor or vendor. The replacement form must indicate the change in backup withholding from exempt to non-exempt.