Accounting Best Practices, Fifth Edition

3–30. Automate the W-9 Form

One of the more painfully manual processes in the accounting department is sending a W-9 form (Request for Taxpayer Identification Number and Certification) to suppliers, as well as tracking forms that have been completed and received from suppliers. The traditional approach is to mail a blank form to each new supplier, along with a cover letter asking that it be completed, and then store all returned forms alphabetically.

The IRS provides the following guidance in regard to the automation of W-9 forms: “Requesters may establish a system for payees and payees’ agents to submit Forms W-9 electronically...” The requester must make reasonably certain that the person accessing the system and submitting the form is the person identified on the W-9. Also, the IRS requires an electronic signature by the payee that authenticates and verifies the submission.

In ascending order of automation, here are some alternatives for automating the W-9 process:

1. Include in credit application. The W-9 can be integrated into a credit application package, as long as the form clearly states that the W-9 signatory is not also approving of other demands listed elsewhere in the credit application. This tends to increase the W-9 response rate, but is still an entirely manual solution to the problem.

2. Fax transmission. This is the approach used by nearly everyone—fax the form and cover letter to the supplier, and hope it is faxed back. This approach eliminates the mail float associated ...