Who Gets a W-9: Requesters, Exemptions, and Penalties

A W-9 goes to any U.S. person who is being paid in a way the payor must report to the IRS: independent contractors and freelancers, landlords collecting rent from a business, consultants, people earning royalties or prizes, account holders at banks and brokerages, sellers at a real estate closing, and borrowers whose lender needs to report mortgage interest or canceled debt. Who gets a W-9 is decided by the payor’s reporting obligation, not by the size of any single check. If a business or institution is required to file an information return about money it pays you, it needs your name, taxpayer identification number, and tax classification first, and Form W-9 is how it collects them.¹

The People and Entities Who Receive W-9 Requests

The W-9 always travels from the payee to the payor. If you’re the one being paid, expect a request in these situations:

You’re an independent contractor, freelancer, or consultant. A business that pays you $2,000 or more for services in a calendar year must file a Form 1099-NEC, and it needs your W-9 to do it. That threshold rose from the longstanding $600 under legislation signed in 2025 and applies to payments made in 2026.²
You open a bank or brokerage account. Financial institutions collect a W-9 up front so they can report interest and dividends on Forms 1099-INT and 1099-DIV.³
You sell real estate. The settlement agent or attorney handling the closing needs your W-9 to report the gross proceeds.¹
You have a mortgage. Your lender needs a W-9 to report the interest you’ve paid, which you then use as a deduction.¹
A creditor forgives your debt. Cancellation of $600 or more in debt gets reported on Form 1099-C, and the creditor needs your W-9 to file it.¹
You receive rent, royalties, or prizes from a business. Payments of $600 or more in these categories are reported on Form 1099-MISC ($10 for royalties), and the payor collects a W-9 first.⁴

The common thread is Section 6109 of the Internal Revenue Code, which requires the payor to obtain your correct taxpayer identification number before filing the information return.⁵

Employees Get a W-4, Not a W-9

This is the confusion that trips people up most. If you’re an employee, meaning you receive a regular paycheck with taxes withheld and get a W-2 at year end, your employer gives you Form W-4 to set your withholding. The W-9 is for non-employees who handle their own taxes. If a company hands you a W-9 instead of a W-4 when you start work, that is a signal the company is treating you as an independent contractor, and that classification carries real consequences for your tax obligations and your access to employment protections.

Exempt Payees Still Fill One Out

Some entities are exempt from backup withholding, but they still complete a W-9 and indicate their status with an exempt payee code. The IRS lists 13 categories; the most common are:

Corporations, both C and S. Most payments to corporations aren’t reported on a 1099 at all. The exceptions that do still require reporting are medical and health care payments, attorney fees, and payments for services by a federal executive agency.⁶
Organizations exempt under Section 501(a), including charities, religious organizations, and certain retirement accounts.⁶
Federal, state, and local government entities and their instrumentalities.
Banks, securities dealers, and futures commission merchants registered with the appropriate regulator.

Even when the payee is exempt, the payor often collects a W-9 to document the exemption and confirm identity.

Foreign Persons Use Form W-8BEN Instead

The W-9 is for U.S. persons only: citizens, resident aliens, and domestic entities. Nonresident aliens and foreign entities provide Form W-8BEN, and the withholding rules that follow are entirely different. Payments to foreign persons are generally subject to 30% withholding on U.S.-source income unless a tax treaty reduces or eliminates that rate.⁷ Green card holders are U.S. persons for tax purposes and give a W-9 even if they hold citizenship elsewhere, and the same goes for anyone who meets the substantial presence test.

What Happens If You Don’t Return the Form

Refusing or delaying a W-9 has a direct price. Under Section 3406 of the Internal Revenue Code, payors must withhold 24% of every reportable payment when the payee fails to provide a correct TIN, when the IRS notifies the payor the TIN is wrong, or when the IRS says the payee has underreported interest or dividends.³ The 24% goes straight to the IRS. You don’t see that money again until you file your return and claim it as a credit, and the withholding keeps running on every payment until you fix the underlying problem. On $50,000 of freelance income, that’s $12,000 out of your cash flow for the year.⁸

The IRS can also impose a $50 penalty on the payee for each failure to furnish a correct TIN when required, up to $100,000 per calendar year, on top of the withholding.⁹ Payors face steeper penalties for filing 1099s with missing or wrong TINs, which is why they push hard to collect the form.¹⁰

When to Send an Updated W-9

A W-9 doesn’t expire on a schedule, but certain changes require you to send a new one to every payor who has your old form:

You change your legal name, get a new EIN, or the account holder changes (for example, when the grantor of a trust dies).¹¹
Your tax classification changes, such as converting from a C corporation to an S corporation, or losing tax-exempt status.¹¹
You previously claimed exempt payee status but no longer qualify and expect reportable payments.¹¹

An address change alone isn’t legally required to trigger a new form, but it’s worth sending one so your 1099 arrives at the right place.

Spot a Fake W-9 Request Before You Answer It

Because a completed W-9 carries your name, address, and Social Security or EIN, it’s a favorite target for identity thieves. A few things to check before you send one:

The IRS itself never emails you a W-9 request. The IRS does not initiate contact by email and never asks for PINs, passwords, or financial account details electronically.¹¹
Requests from companies you’ve never done business with are almost always fraudulent. A real request comes from someone actually paying you.
Pressure to respond immediately, or threats of account closure, are phishing tactics, not how legitimate payors operate.

A completed W-9 goes to the requesting business, never to the IRS. Send it through an encrypted channel, a secure client portal, or by hand; avoid unencrypted email attachments. If you receive a suspicious email that claims to come from the IRS, forward it to phishing@irs.gov. If you’ve already shared your information and suspect identity theft, call the IRS Identity Theft Hotline at 800-908-4490 or file Form 14039.¹¹

1
Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification
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Internal Revenue Service. Form 1099-NEC and Independent Contractors
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Internal Revenue Service. Topic No. 307, Backup Withholding
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Internal Revenue Service. About Form 1099-MISC, Miscellaneous Information
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Office of the Law Revision Counsel. 26 U.S. Code 6109 – Identifying Numbers
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Internal Revenue Service. Instructions for the Requester of Form W-9
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Internal Revenue Service. Instructions for Form W-8BEN (10/2021)
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Internal Revenue Service. Backup Withholding
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Office of the Law Revision Counsel. 26 USC 6723 – Failure to Comply With Other Information Reporting Requirements
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Internal Revenue Service. Internal Revenue Bulletin 2024-45
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IRS. Form W-9