W-9 for international vendors: who signs one, who gives you a W-8 instead

The rule in the W-9's own words

Form W-9 is a certification of U.S. status, so the first question is always whether the vendor is a U.S. person. The form lists who is: “An individual who is a U.S. citizen or U.S. resident alien”; “A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States”; an estate other than a foreign estate; and a domestic trust (Form W-9, Definition of a U.S. person).

Everyone else is a foreign person, and the form is direct about them: “If you are a nonresident alien or a foreign entity, give the requester the appropriate completed Form W-8 or Form 8233.” The requester instructions put it from your side: “A foreign person ... may not provide a Form W-9” (Requester instructions, Substitute Form W-9).

Which form, case by case

For anything not on the list, the W-8 form selector asks who the payee is and what the payment is for, and names the form, including the cases that need Form 8233 or a W-9 after all.

A foreign vendor sent you a W-9

It happens most with vendors who have a U.S. address, a U.S. bank account or a U.S. TIN, and with offshore contractors who were simply sent the wrong form. A W-9 from a foreign person is not a valid certificate, and the form tells the signer it is not theirs to sign. What to do:

1. Do not process it. Do not set the vendor up as a 1099 payee or submit the name and TIN to TIN matching.
2. Ask for the right W-8 (or Form 8233), using the table above to say which one. Hold payment of U.S.-source income until it arrives, or withhold as the chapter 3 rules require.
3. If the vendor insists it is a U.S. person, ask how: U.S. citizenship, U.S. residence, or U.S. organization. A W-9 that conflicts with what you know (a foreign address and no U.S. tie, a foreign incorporation) is worth one question before you pay.
4. Keep the exchange with the vendor file: the W-9 you received, your request and the W-8 that replaced it.

The signer takes a risk too. The W-9’s penalty section says: “If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.”

Why the wrong form costs you

• A foreign vendor on a W-9 becomes a 1099 payee. The 1099 goes in with a name and TIN that may not match IRS records, the vendor turns up on a CP2100, and you are sending B-Notices to someone who should never have had a 1099. A foreign payee never belongs on a 1099 or a CP2100.
• U.S.-source payments to a foreign person carry 30% withholding, not 24%. Payments of U.S.-source fixed or periodic income to a foreign person fall under chapter 3: 30% unless a treaty or exemption applies, reported on Form 1042-S. Treating the vendor as a U.S. person skips that analysis, and the withholding agent is liable for tax it should have withheld.
• Services performed abroad are usually the easy case. Pay for services is sourced where the work is done, so a contractor working entirely outside the U.S. has foreign-source income: no withholding and no 1042-S. Keep the W-8 anyway; it is the record that the vendor is foreign. The foreign vendor guide covers sourcing, withholding and the 1042-S in full.
• A W-8 expires; a W-9 does not. A W-8BEN or W-8BEN-E generally expires at the end of the third calendar year after it was signed. Diary the date with the W-8 validity calculator.

Asking for the W-8

Name the form in the request, say why, and give the link to the IRS form. A short version:

Because your business is organized outside the United States, we cannot accept a Form W-9. Please complete Form W-8BEN-E (individuals: Form W-8BEN), available at irs.gov/forms-pubs, and return it before your first invoice is paid.

The W-8 request and expiry emails template has full versions, including the renewal email for a form about to expire.

Questions people ask