W-9

Form W-9 is the standard IRS form that U.S. persons use to provide their taxpayer identification number and confirm their tax status. Hedge funds and other investment entities require this form to ensure proper tax reporting and determine whether backup withholding applies to an investor.

Form W-9 works as the domestic version of the W-8 forms that non-U.S. persons must complete. Non-U.S. investors use various W-8 forms to document their foreign status for tax purposes. These forms help determine withholding tax treatment, particularly for and other U.S. source income rules.

U.S. investors, by contrast, complete Form W-9 to verify their U.S. person status. Both (which operate within the U.S.) and (which operate outside the U.S. but accept U.S. investors) require W-9 forms from their American investors for tax certification and reporting purposes.

Domestic funds typically do not accept non-U.S. investors. They primarily serve U.S. taxable investors (such as individuals and corporations) and tax-exempt investors (such as and ). For these funds, W-9 forms are the main tax certification documents required.

Offshore funds serve both U.S. and non-U.S. investors. These funds must collect W-9 forms from their U.S. investors and appropriate W-8 forms from their non-U.S. investors. This dual collection system helps them comply with various withholding and reporting requirements that apply to different types of investors.

Form W-9 requires U.S. investors to provide their correct taxpayer identification number. This is either their Social Security Number (for individuals) or Employer Identification Number (for entities). Investors must certify under penalty of perjury that they are not subject to backup withholding.

The form also requires investors to confirm that they qualify as a U.S. person. This includes U.S. citizens, U.S. residents, partnerships, corporations, companies, or associations created or organized in the United States.

Hedge funds typically collect Form W-9 as part of their investor onboarding process. This happens alongside and other documentation. The form helps funds comply with tax regulations and maintain proper records.

Investors must update their Form W-9 if their taxpayer identification number changes or if their backup withholding status changes. Hedge funds must keep these forms as part of their tax compliance records.

One of Form W-9's main purposes is to prevent backup withholding, which currently occurs at a rate of 24%. Backup withholding is a tax that the IRS requires payors to withhold from certain payments when investors fail to provide correct tax identification information or meet other requirements.

When a U.S. person provides a correct taxpayer identification number and certifies they are not subject to backup withholding, the payor generally does not need to withhold taxes. This applies to payments such as interest, dividends, or proceeds from sales of securities.