Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

Why Did You Hold Back 30% of My Money?! The Importance of W9 Forms

19 Nov 2024 · 1 min

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Lynda Artesani explains why payers must withhold 30% of payments when you don't provide a W-9 form. It's a legal requirement tied to backup withholding rules the IRS enforces through CP-21 notices. Payment systems need automated code to enforce this correctly.

Lots of people get very angry when you short pay them the first time and say, why'd you hold back 30% of my money? And the answer is, well, you didn't give me your W-9 and I'm— and I don't have a tax ID for you, so I'm obliged to withhold.
That's a smart idea. Yeah, just thinking, do you have that code snippet we could have somewhere to go, here's the rules?
Well, there's that CP-21 notice or something. What's that?
CP-2100 and CP-2100A. I'm happy to talk about B notices too. That's what the— that's what we in this— we call those B notices.