For what purpose is Form W-9 maintained by the payer?

Form W-9 is used by the payer to verify the payment information of the payee. Specifically, it collects essential information such as the payee’s name, address, and taxpayer identification number (TIN), which can be a Social Security number or an Employer Identification Number (EIN). This information is necessary for the payer to report payments made to the payee to the IRS, especially for income that may be subject to reporting on Forms 1099. By maintaining a current W-9, the payer ensures that they have accurate information to comply with tax reporting requirements and to avoid potential penalties for incorrect information.

Other options do not accurately describe the primary function of the Form W-9. For instance, it is not used to apply for tax deductions, which is a process typically handled during tax filing rather than information verification. While the form does reference Social Security numbers, it does not serve as an application form for obtaining one. Regarding the calculation of payroll taxes, Form W-9 is not used for payroll processing; rather, it is utilized more in the context of independent contractors and income reporting. Thus, the primary purpose of Form W-9 is to verify payment information for accurate tax reporting.