For the Commissioner: Invoices as Substitute Forms W-9

Each December, my office receives a flurry of requests from clients by facsimile, electronic mail, and conventional mail. In and of itself, each request is simple: A request that we supply a current Form W-9 certifying our Employer Identification Number (EIN) or Social Security Number.[1] This despite the fact that our billhead clearly includes our Employer Identification Number on the masthead. We keep an electronic copy of a completed Form W-9 in Adobe's Portable Document Format (PDF) to simplify responding to these requests.

Thankfully, we have a modest number of clients, and while the requests are extra, unnecessary paperwork, they are not unmanageably burdensome. If we were a retail business, dealing with many different clients each day, this would not be the case. Dealing annually with hundreds of requests for Forms W-9 would require a dedicated administrative staffer.

Recently, the Patient Protection and Affordable Care Act (Public Law 111-148) dramatically expanded the scope of reportable transactions. Beginning January  Forms 1099-MISC are due on all aggregate business transactions for goods and services in excess of $ 600.00/year. Previously, payments to corporations were exempt from reporting, as were purchases of goods. This is no longer so.

In a previous posting, I noted that a variety of previously unconsidered complexities arise with implementing this dramatic increase in reporting. One aspect of this problem is a dramatic increase in requests for certification of information for payers reporting payments to the Internal Revenue Service.

In drafting the Internal Revenue Code regulations implementing the expanded reporting enacted in the Patient Protection and Affordable Care Act, the Commissioner has the power, at a stroke of a pen, to dramatically reduce the adverse impact of the administration of this mandate.

Businesses already produce receipts for their transactions with customers. These receipts typically already contain the name and address of the merchant. It is not complex to add the one data element required to permit the customer to properly file a Form 1099-MISC: The Employer Identification Number. Many firms already include their EIN on their invoices and billheads. In Canada and other countries, receipts invariably include the Goods and Services Tax Identification Number.

My proposal is a simple matter of regulatory discretion. The Commissioner can include in the implementing regulations as follows:

“A merchant's transactional receipt, invoice, or statement may serve as a substitute Form W-9 if it contains information contained in a Form W-9, to wit: merchant name, address, and Employer Identification Number.”

Although redundant, the regulation could require the receipt include the additional legend:

“This [invoice|receipt|statement|document] is a substitute IRS Form W-9”.

There are already regulations permitting substitute Forms W-9. However, the current rules require signatures and certifications that would not be feasible in the formats. The IRS notes the case of bank signature cards. Cash register receipts and invoices are smaller and more ordinary, and require even more abbreviated treatment limited to the data items actually required for the the required reporting.

Given enough advance notice, most merchants can implement this change in due course when various business forms are otherwise reprinted, or when electronic cash registers are updated. The impact of this modification to business forms and register receipts is far less than the requirement that each customer obtain a Form W-9. Additionally, the presence of the Employer Identification Number on receipts will facilitate more cost-effective compliance with these regulations.


[1] For privacy reasons, I obtained an Employer Identification Number over 30 years ago, and have used it religiously for all business purposes; a practice that I highly recommend in these days of identity theft.

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