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Why do I need to get a W-9 from a corporation? I thought all corporations were exempt from getting a 1099 form.

Although corporations are exempt from receiving a 1099-MISC on most payments, it is a best practice to get a W-9 for several reasons.

1.   Some payments to corporations are reportable.

    • Medical and health care payments
    • Fish purchases you make for cash
    • Attorney’s fees
    • Gross proceeds paid to an attorney
    • Substitute payments you make to a vendor in lieu of dividends or tax-exempt interest
    • Payments by a federal executive agency for services (this only applies to you if you are a federal executive agency.

2.   Many LLCs think they are a corporation. You could incur substantial liability if you exempt an LLC when they are actually reportable.  If you don’t backup withhold 24% of all the payments to a vendor when required your company could be responsible for paying the full 24%.

3.   It can help you identify foreign corporations. Payments to foreign corporations could be subject to FATCA regulation or 1042 reporting.