Latest W-9 Draft Released in May
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The IRS on Monday released another draft of a new W-9, and this draft has removed the prohibition on an individual/sole proprietor from using an EIN.
In this latest draft, the only thing listed under “What’s New” is a new backup withholding exemption code that applies to brokers and Form 1099-DA. The language about no EIN for those checking individual/sole proprietor is gone.
Unwieldy
In the prior drafts, the IRS wanted to require anyone checking “individual/sole proprietor” to give an SSN, not an EIN. We have previously covered why the IRS wanted to make this change — it involves tax compliance and 1099s being issued under an LLC’s EIN when the income from the 1099 is actually taxable to the individual owner of the LLC.
The proposed change would have introduced complexities for issuers of 1099s, such as needing to resolicit a W-9 from any individual who had given an EIN. This would have been a large project for many AP departments.
TIN Language Changed
The latest rendition of the W-9 draft does contain some changes to the wording relating to TINs, adding the following sentence to the TIN area of the form: “Do not enter the employer identification number (EIN) of a disregarded entity.”
What this means is, people checking individual/sole proprietor can still give an EIN, as long as the EIN was issued to them in their name personally. This is how it’s always been, but it has never been clearly stated on the form. This latest draft would clarify the wording.
Still Just a Draft
While most AP departments likely welcome this news, it’s important to remember that this is simply another draft and has not been released for real yet. This draft says “June 2026” on it, but that doesn’t necessarily mean it will be released next month. The form to continue using is the one that says “March 2024” in the upper-left.