1 See Institute Memorandum to Operations Members No. 14-94, Tax Members No. 17-94 and Transfer Agent Advisory Committee No. 17-94, dated April 28, 1994.
February 23, 1996
TO: TAX MEMBERS No. 7-96
OPERATIONS MEMBERS No. 7-96
TRANSFER AGENT ADVISORY COMMITTEE No. 7-96
RE: IRS CLARIFIES CERTIFICATION REQUIREMENTS FOR SUBSTITUTE
FORM W-9
______________________________________________________________________________
As we previously informed you,1 in 1994 the Internal Revenue Service ("IRS") revised
the instructions for IRS Form W-9, Request for Taxpayer Identification Number and
Certification which permit payors to take the certifications required by Form W-9 on
"substitute" forms, such as those included in account application documents to prohibit payors
from taking these certifications on substitute Forms W-9 that "require the payee, by signing, to
agree to provisions unrelated to [taxpayer identification number ("TIN")] certification." The
Institute urged the IRS to clarify its position on substitute Forms W-9 to remove any implication
that a customer might need to sign an account application twice, once to agree to the standard
terms for opening an account and a second time to certify his or her TIN.
We are pleased to inform you that the attached IRS revenue procedure (Rev. Proc. 96-26)
specifically permits a single signature for Form W-9 certifications and account-related
provisions, so long as the following requirements are met. First, the language of the required
Form W-9 certifications must be "highlighted, boxed, printed in bold-face type, or presented in
some other manner that distinguishes and causes the language to stand out from all other
information contained on the substitute Form W-9." Second, the substitute form must include
the following statement immediately above the signature line for the Form W-9 certifications
and with the same emphasis (e.g., type face) as the required certifications: "The Internal
Revenue Service does not require your consent to any provision of this document other than
the certifications required to avoid backup withholding." These two requirements will apply to
substitute Forms W-9 completed by payees after December 31, 1996.
The revenue procedure also provides that payors may be subject to civil or criminal
penalties for making an "impermissible use" of Form W-9 certifications if they (1) require a
payee to agree to provisions included on a substitute Form W-9 other than the required
certifications in order to avoid backup withholding or (2) threaten backup withholding to
secure a payees acceptance of provisions included on a substitute Form W-9 that are unrelated
to the required certifications. These penalties apply to violations occurring after March 31, 1995.
We will keep you informed of developments.
Keith D. Lawson
Associate Counsel - Tax
Attachment
Note: Not all recipients of this memo will receive an attachment. If you wish to obtain a copy
of the attachment referred to in this memo, please call the Institute’s Information Resource
Center at (202)326-8304, and ask for this memo’s attachment number: 7651.