Question

If an employer wires an employee payments via their personal account instead of from a business account, but during tax season they come back to ask the employee to finally fill out a W-9, is that legal? What is the purpose? And will the employee get a W-9 in time?

Answer 1

1. First, let us know the Purpose of the W-9 form in simple words.

The W-9 form is generally used by Payers to get the information of Payees like Name, Address and mainly for the Tax identification number & certification from a payee, in all the cases of where payment is exceeded 600$.

The information, which is received in the above form is used by the Payer to decide whether to withhold tax or not and also to use in Form-1099, where the Payer needs to report all his payment transactions to IRS.

2. The above Form is mainly used in Business transactions/arrangements like Business-Contractor arrangement and Financial institution-customer arrangement.

So, in the case of Employer and Employee payments, there is no use or requirement of W-9 as the employer only required to get W-4 form(Employees withholding allowance certificate). W-4 is an alternative of W-9 in the case of Employer and Employee arrangement.

As per the above explanations, it can be decided that it is not Legal/mandatory to ask the employee to fill out such Form even the Employer made salary payment from personal account instead of Business account.

For such misplaced payments, the employer should pass adjustment entries in his business books.

3. And coming to the timings of filing of Form W-9 - Generally Certified public accountants prefer to get filed before the payment occurs otherwise it attracts a penalty in some cases.