On March 6, 2024, the IRS published an updated version of the Form W-9 ("Request for Taxpayer Identification Number and Certification"). Accompanying instructions were released several days later. This is the final version of the draft "Form W-9 (Rev. October 2023)" which was released in July and expected to become final in October 2023. The last time the IRS issued a newly revised Form W-9 was in 2018.

What’s new on the updated Form W-9, and what do these changes mean?

The new Form W-9 contains two changes:

• New note within Line 3a: The Form W-9 now includes a clarifying note on how to properly complete the form for a limited liability company (LLC). For an LLC that is not a disregarded entity, line 3a has a single box to check and available entry space for the LLC to note the proper tax classification as corporation, S corporation or partnership (C, S or P). For an LLC that is a disregarded entity, the owner’s name should appear on Line 1, the disregarded entity’s name should appear on Line 2 and the appropriate box for the owner’s tax classification should be checked on Line 3a; the LLC box should not be checked in this case unless the Owner on Line 1 is another LLC that is not a disregarded entity.
• Observation: This clarification addresses how to properly complete the form for LLCs. It distinguishes between LLCs that are disregarded entities and those that are not. The addition of this note does not change the process of completing the form but serves to emphasize the distinction for LLCs, enhancing clarity for filers.
• New Line 3b: U.S. flow-through entities (partnerships, trusts, estates and LLCs classified as partnerships) (FTEs) that have direct or indirect foreign partners, owners or beneficiaries and are providing Form W-9 to another FTE in which the W-9 filer has an ownership interest, should check this new box. The Instructions to Form W-9 explain that U.S. FTEs must check the box on line 3b if they receive a Form W-8 (or documentary evidence) from any partner, owner or beneficiary establishing foreign status or if they receive a Form W-9 from any partner, owner or beneficiary that has checked the box on Line 3b.
• Observation for U.S. FTEs completing the Form W-9: FTEs completing the Form W-9: This addition is significant for U.S. FTEs with direct or indirect foreign partners, owners or beneficiaries. The new checkbox on Line 3b requires entities to indicate if they have foreign partners, owners or beneficiaries and are providing Form W-9 to another FTE in which they have an ownership interest. This introduces complexity, as entities need to review all Forms W-8 and W-9 they've received to identify foreign entities or individuals. Additionally, it necessitates updating the form whenever there are changes in ownership status regarding foreign partners.
• Observation for FTEs requesting the Form W-9 For recipients of the Form W-9, checking Line 3b may indicate the need to complete Schedules K-2 and K-3 with their Form 1065.

When should the new Form W-9 be used?

The new Form W-9 is immediately effective upon publication in its final form. There is no transitional period like with Form W-8, so counterparties should discontinue accepting the previous version (Rev. October 2018) and start requiring the updated form. Previously collected Forms W-9 remain valid unless otherwise indicated by the IRS.

Overall, the changes discussed above aim to improve clarity and compliance in tax reporting, particularly regarding the identification and handling of foreign ownership interests in FTEs.

Questions Regarding Form W-9?

Should you have any questions regarding the updated Form W-9 or require assistance in preparing the revised form, please reach out to Meghan Anderson or Heather Brown, or connect with your CBIZ Financial Services Advisor.