Academy/Procurement, Bids & Contracts
W-9s
What the form actually does, and why skipping it can cost the association money
A Form W-9 gives the association a vendor's taxpayer identification number so the association can file the correct 1099 information return. It does not register the vendor with the IRS, and the IRS never sees the form itself. If a vendor won't provide one, the association may be required to withhold 24 percent from every payment it makes.
What a W-9 actually does
A vendor fills out a W-9 to hand the association its Taxpayer Identification Number, either a Social Security Number or an Employer Identification Number. The IRS describes the purpose plainly: the form provides the payer with the vendor's correct TIN because the payer is the one who has to file an information return, typically a 1099, at year end.
"your correct Taxpayer Identification Number (TIN) to the person who is required to file an information return with the IRS"
Source: About Form W-9, Internal Revenue Service
The association or its management company keeps the completed W-9 on file. It is not mailed or filed with the IRS on its own, only the 1099 built from it is.
What happens if a vendor won't provide one
A missing W-9 is not just a filing inconvenience. Without a valid TIN on file, the association can be required to start backup withholding on payments to that vendor.
"there are situations when the payer is required to withhold at the current rate of 24 percent"
Source: Backup withholding, Internal Revenue Service
That withholding applies on top of a vendor's own invoice amount, which is a bad surprise to discover the week a payment is due. It is one more reason to ask for the form before work starts rather than after.
Making it routine, not an afterthought
Treat the W-9 the same way you treat a certificate of insurance: collected before the first check goes out, not chased down after. Build it into whatever intake step the board already uses for a new vendor, alongside vendor due diligence checks like license and insurance status. A signed contract with no W-9 attached is an incomplete file, even if the work itself is fine.
How state tax reporting requirements layer on top of the federal 1099 process depends on where the association operates. Check with your management company or accountant.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
A landscaping vendor has ignored two requests for a W-9 but keeps sending invoices. What should the board expect?
A treasurer collects a completed W-9 from a new pool contractor. Where does that form actually go next?
A new painting contractor wants their first payment released before turning in a W-9. What should the board do?
Sources
- About Form W-9, Request for Taxpayer Identification Number and Certification, Internal Revenue Service
- Backup withholding, Internal Revenue Service
Related elsewhere in the Academy
Procurement, Bids & Contracts
Next, check what else your vendor intake list should cover before the first invoice: see vendor due diligence.
Federal W-9 and backup withholding rules apply the same nationwide, but state tax reporting requirements for vendor payments, and when your own board's policy requires collecting the form, vary.