Grant agreement W-9 clause and donor TIN letters

Template from tincompliance.com. Three documents for exempt organizations: a W-9 clause for grant and contractor agreements, a grantee TIN request letter, and the donor TIN request with refusal record for Forms 1098-C and 8282. Nothing in the Code or regulations prevents a payer from requiring the TIN before making a reportable payment (CCA 200040034), and the penalty waiver for a missing donor TIN is won by proving the request and the refusal (CCA 200101031). Not legal advice; counsel reviews the clause before it goes into an agreement.

Part 1. Grant and contractor agreement clause

Taxpayer identification and information reporting

[Grantee / Contractor] shall deliver to [Organization] a completed and signed IRS Form W-9 (or, if [Grantee] is not a United States person, the applicable Form W-8) before the first payment under this Agreement. [Organization] has no obligation to make any payment until the form is received. If the Form W-9 does not include a taxpayer identification number, or the Internal Revenue Service notifies [Organization] that the name and number do not match its records and the mismatch is not resolved within the period the notice allows, [Organization] will withhold federal income tax from reportable payments at the backup withholding rate (currently 24 percent) as required by Internal Revenue Code section 3406, and the amount withheld will be treated as paid to [Grantee] and credited to [Grantee] on its federal return. [Grantee] shall notify [Organization] within 30 days of any change in its legal name, entity type or taxpayer identification number. [Grantee] acknowledges that a payee who fails to furnish a taxpayer identification number is subject to a $50 penalty under section 6723 for each failure.

Use the organization’s legal name. For grants to individuals that are not qualified scholarships, the payment is a 1099-MISC box 3 item at the threshold; for services, 1099-NEC. A grant to a public charity or governmental unit is not a reportable payment, but the clause still gets the W-9 that proves exempt status and the correct legal name.

Part 2. Grantee TIN request letter

[Organization legal name]

[Address]

[Date]

[Grantee legal name]

[Address]

Re: Form W-9 required before payment under [grant or agreement name], dated [date]

Dear [name]:

Before we can release the first payment under the [grant / agreement] approved on [date], we need a completed and signed IRS Form W-9 from [Grantee]. A Form W-9 is enclosed, with instructions for which name goes on line 1. If [Grantee] is not a United States person, please complete the enclosed Form W-8BEN or W-8BEN-E instead.

Federal law requires us to report certain payments to the IRS under the payee’s name and taxpayer identification number, and to withhold federal income tax at 24 percent from reportable payments to a payee who has not furnished a number. A payee who fails to furnish a number is also subject to a $50 penalty per failure under Internal Revenue Code section 6723.

Please return the form in the enclosed envelope or by [secure upload link] by [date]. Payment will be scheduled when it arrives. Questions: [name], [phone], [email].

Sincerely,

[Name], [Title]

Enclosures: Form W-9; W-9 instructions insert; return envelope

Part 3. Donor TIN request for Forms 1098-C and 8282

[Organization legal name]

[Address]

[Date]

[Donor name]

[Address]

Re: Your taxpayer identification number for IRS Form [1098-C / 8282]; gift of [description] received [date]

Dear [name]:

Thank you for your gift of [vehicle / boat / aircraft / property] on [date]. The IRS requires us to file Form [1098-C, Contributions of Motor Vehicles, Boats, and Airplanes / 8282, Donee Information Return] for this gift, and the form must show your taxpayer identification number (your Social Security number, or the employer identification number of the entity that made the gift). Please write the number on the enclosed Form W-9, sign it, and return it in the enclosed envelope by [date]. We will use the number only for the IRS form and the copy we are required to give you.

If we do not receive the number, we must still file the form without it, and the IRS may contact you directly. Questions: [name], [phone], [email].

Sincerely,

[Name], [Title]

Solicitation and refusal record (kept with the return)

A Form 1098-C or 8282 filed without the donor’s TIN draws an automatic penalty notice; the waiver is granted on a showing that the organization requested the number as the regulations require and the donor did not provide it (CCA 200101031). This record is that showing.