IRS W-9 for customer who will purchase my products from my re-seller

Question

A U.S. based company, who wants to purchase my software products through my reseller wrote me that a IRS W-9 needs to be filled out.

They will buy the product license from my re-seller (who handles all payment and tax processing parts of the transactions), should they contact the payment processing company for filling out the W-9 form?

I have read also that the W-9 typically is used for independent contractory / freelancers. So I am not sure if they mistake me for a freelancer.

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I asked the reseller and their U.S. branch sent me a W-9 as PDF, filled out and signed. Can I safely assume that this is a normal business practice? As I do not give any personal information with this form, I not see a 'scam'. But from the comment

In no instance should anyone require a W9 if they are purchasing products.

requesting a W-9 seems unusual.

I want to avoid any misinformation, which I could pass unknowingly to the potential customer by forwarding the W-9.

My business has a contract / business relationship with the local branch here in Europe only, and as they are responsible for tax payment, I assumed that they transfer it directly without involving the U.S. branch.

So I guess it is safer to let the customer contact the payment processing company.

The question basically has two parts:

1. is a W-9 required for a software license sale from a non-U.S. corporation to a corporation in the U.S.?
2. if the W-9 is not required, are there good (rational) reasons to ask for it?

Answer 1

The IRS site ( https://www.irs.gov/uac/About-Form-W9 ) has info on the W-9 form. It is used for a US person to determine whether a 1099 is required for payments made to "freelance workers" or "independent contractors", among other things. The referenced web site has a link to a PDF of the W-9 Form.

Quoted from the W-9 form:

Definition of a U.S. person. For federal tax purposes, you are considered a U.S. person if you are:

• An individual who is a U.S. citizen or U.S. resident alien;
• A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States;
• An estate (other than a foreign estate); or
• A domestic trust (as defined in Regulations section 301.7701-7).

As a non-US corporate entity, do you even have a US taxpayer ID? I don't think a non-US entity is bound by IRS rules anyway, are they? Your customer may just be concerned and want back-up justification for the expense they're going to claim for the purchase of your product license. They should be able to get that from your re-seller's web site, or your web site. That's how we internally justify expenses for "foreign" software or licenses we purchase.

Years ago, a US client requested a W-9 from us (we're a US sub-s corporation) to clarify they did not need to issue a 1099 to us. We provided our corporate tax ID on the form, and have had no issues.

You may want to complete the form for the customer's file, but I can't see how you're required to. The W-9 form is not submitted to the IRS, only the 1099 is. Or maybe just an e-mail stating you're a "foreign" corporation with your business address, or point them to that portion of your own or your re-seller's web site? Or just ignore the request, but the potential customer may not buy.