Churches and the Form W-9

It is always amazing how much you learn when you are teaching. Last year, I taught Taxation at Dakota Wesleyan University (a fantastic school with many excellent students). This last week while I was completing a W-9 for a church, I all of a sudden realized I have been filling this form our wrong for the last 20+ years!

On the W-9, there’s that section where you are supposed to check what type of entity are you: Individual/Sole Proprietor, C Corp, S Corp, Partnership, or Trust. I had always checked C Corp because the church is a corporation but not an S Corp. As I went to check C Corp, all of a sudden I remembered from Tax class this important fact: The IRS doesn’t care about your legal status…just your tax status.

The IRS plays by their own rules and definitions. C Corp means a corporation as defined by Subchapter C of the Internal Revenue Code. An S Corp means a corporation as defined by Subchapter S of the Internal Revenue Code.

So…what’s the correct answer? The correct answer is to check the Other box and write in Nonprofit Corporation under 501(c)(3).

Does it matter? Probably not. The IRS never sees the Form W-9 unless there is an audit. There is a statement above the signature box that says you may be subject to perjury if you lie about your Tax ID, FATCA code, and citizenship, but not if you are confused about what type of tax entity you are.

In the video, I go over how to complete the W-9 as an Independent Contractor or as a Church.

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