Do Nonprofits Need a W-9? Filing, 1099 Triggers, and Penalties

Yes. Nonprofits do need to complete Form W-9 when a business, government agency, foundation, or other payer asks for one. Tax-exempt status does not remove the payer’s duty to collect a taxpayer identification number before making a payment, and refusing or delaying can trigger 24% backup withholding on every dollar sent to the organization.¹

Why a Payer Asks a Nonprofit for a W-9

Any time a payer sends money to a nonprofit for services, rent, or a grant, that payer may have to file an information return with the IRS, such as Form 1099-NEC or 1099-MISC. The W-9 gives the payer the organization’s correct legal name, Employer Identification Number, and tax classification so those returns are accurate, or so the payer can confirm that no return is required because the recipient is an exempt payee.²

If the nonprofit does not furnish its TIN, the payer must withhold 24% of the payment under Internal Revenue Code Section 3406 and send it to the IRS.¹ The 24% rate still applies for 2026.³ A properly completed W-9 with the right exempt payee code prevents that entirely, and the nonprofit receives the full payment.

How to Fill Out a W-9 as a Nonprofit

Pull the organization’s IRS determination letter before starting. It confirms the exact legal name and the section of the tax code the nonprofit is exempt under.⁴ Most of the form is standard, but a few lines behave differently for tax-exempt entities.

Line 1 (Name): the organization’s legal name, spelled exactly as it appears on the exemption application and determination letter.
Line 2 (Business name): any “doing business as” name. Otherwise leave it blank.⁵
Line 3a (Tax classification): check “Other” and write in the nonprofit type, for example “501(c)(3) nonprofit” or “501(c)(6) organization.”⁵
Line 4 (Exemptions): enter 1 in the exempt payee code field (organizations exempt under Section 501(a)) and A in the FATCA reporting code field.²
Lines 5 and 6 (Address): the current mailing address for correspondence.
Part I (TIN): the nonprofit’s nine-digit EIN, the number assigned when Form SS-4 was filed.⁶
Part II (Certification): signed and dated by an authorized officer, certifying under penalties of perjury that the TIN is correct and that the organization is exempt from backup withholding.⁵

Exempt payee code 1 tells the payer that most ordinary payments to the organization do not need to appear on a 1099. A few categories are still reportable, so the payer will keep the form on file either way.

Payments That Still Trigger a 1099

The exempt payee code does not cover everything. Two categories of payments must be reported on a 1099 even when the recipient is tax-exempt:

Attorney fees of $600 or more paid to any entity, including a nonprofit, go on Form 1099-NEC box 1. Gross proceeds paid in connection with legal services go on Form 1099-MISC box 10.⁷
Medical and health care payments of $600 or more to physicians or other providers are generally reportable on Form 1099-MISC box 6. Payments to tax-exempt hospitals, government-operated hospitals, and extended care facilities are excluded from this reporting.⁷

A nonprofit law firm or clinic should expect payers to insist on a W-9 for these payments even after seeing the exempt code.

If a Single-Member LLC Owned by the Nonprofit Is the Payee

Some nonprofits operate through a single-member LLC that the IRS treats as a disregarded entity. When the payer asks that LLC for a W-9, the form should point back to the parent nonprofit. Enter the nonprofit’s legal name on Line 1, the LLC’s name on Line 2, and check the tax classification that matches the nonprofit owner rather than the LLC. Use the nonprofit’s EIN in Part I.² That way the payer’s records tie to the tax-exempt entity that actually has a tax status.

When to Send an Updated W-9

Existing payers need a new W-9 when the information they have on file is no longer accurate. Two triggers require action:

A change to the legal name or the EIN, for example after a merger or a reorganization that produced a new EIN. Every payer holding the old form should receive an updated one.⁵
Loss of tax-exempt status, whether by IRS revocation or voluntary surrender. The organization must notify any payer to whom it claimed exempt payee status if it expects to receive future reportable payments from that payer.⁵

An address change alone does not legally require a new W-9, though sending one keeps 1099s from landing in the wrong mailbox.

What It Costs to Get the W-9 Wrong

The most immediate consequence is cash flow. Without a valid W-9, the payer withholds 24% and forwards it to the IRS. The nonprofit can recover the money later on its return, but the payment shrinks in the meantime.

Formal penalties can also apply on both sides. A payer that files an incorrect information return because it lacked a valid W-9 faces IRS penalties that scale with how quickly the error is fixed. For returns due in 2026, that is $60 per return if corrected within 30 days, $130 if corrected by August 1, and $340 if never corrected. Intentional disregard raises the penalty to $680 per return.⁸ A nonprofit that fails to furnish its correct TIN when required can be charged $50 per failure, capped at $100,000 in a calendar year.⁹

Foreign Nonprofits Do Not Use Form W-9

Form W-9 is only for U.S. persons and entities. A charity or nonprofit organized outside the United States uses a Form W-8 instead. Form W-8EXP applies when the foreign organization claims exemption from withholding based on its tax-exempt status, or a reduced 4% rate. Form W-8BEN-E applies when the organization claims a treaty-based exemption or when the payment relates to unrelated business taxable income.¹⁰ Without valid documentation, the payer generally must withhold 30% under the standard Chapter 3 rules,¹¹ a steeper rate than the 24% that applies to a U.S. nonprofit that skips its W-9.

1
Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding
2
IRS. Instructions for the Requester of Form W-9 (Rev. March 2024)
3
IRS. 2026 Publication 15
4
IRS. Exempt Organizations Rulings and Determinations Letters
5
Internal Revenue Service. Form W-9 (Rev. March 2024)
6
IRS. About Form SS-4, Application for Employer Identification Number (EIN)
7
IRS. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
8
IRS. Information Return Penalties
9
Office of the Law Revision Counsel. 26 USC 6723 – Failure to Comply With Other Information Reporting Requirements
10
IRS. Foreign Governments and Certain Other Foreign Organizations
11
IRS. Publication 515 (2025), Withholding of Tax on Nonresident Aliens and Foreign Entities