Understanding the New Draft W‑9 (2026): A Practical Guide for Small Businesses
The IRS has released a new draft of Form W‑9 — and while it’s not final yet, the changes signal where taxpayer documentation is headed in 2026 and beyond. If you request or provide W‑9s as part of your business operations, it’s worth understanding what’s coming.
Here’s a clear breakdown of what’s new, why it matters, and how to prepare.
Why the IRS Issued a New Draft
The draft Form W‑9 (Rev. January 2026) reflects the IRS’s ongoing effort to modernize information reporting. Much of this update is driven by two trends:
The rise of digital asset transactions, which now fall under expanded broker reporting rules.
The need to clarify TIN requirements for sole proprietors and disregarded entities, an area that has historically caused confusion.
According to tax industry analyses, the IRS is seeking public comments before finalizing the form.
Key Changes in the Draft W‑9
1. New Certification for U.S. Digital Asset Brokers
A major addition appears in Part II of the form:
A new checkbox allows a payee to certify that they are a U.S. digital asset broker exempt from information reporting.
This aligns the W‑9 with the final regulations under Reg. §1.6045‑1 governing digital asset broker reporting.
Who this affects:
Crypto exchanges
Certain fintech platforms
Businesses facilitating digital asset sales
Brokers dealing with tokenized assets
If your business interacts with digital asset intermediaries, expect to see this box checked more often.
2. Clarification for Sole Proprietors & Disregarded Entities
The draft form clarifies that single‑member LLCs, sole proprietorships, and disregarded entities should provide the individual’s social security number instead of the EIN.
This clarification aims to reduce mismatches between IRS records and information returns — a common cause of CP2100 “B‑Notices.”
3. No Structural Overhaul — Just Targeted Updates
Unlike the major revision in March 2024, the 2026 draft does not redesign the form. Instead, it adds targeted updates to keep pace with regulatory changes, especially around digital assets.
What Businesses Should Do Now
Even though the form is still in draft status, businesses can prepare by:
⭐ Reviewing vendor onboarding procedures
Make sure your W‑9 collection process can accommodate the new digital asset broker certification.
⭐ Updating internal documentation
If you maintain SOPs or checklists for AP, payroll, or contractor onboarding, note that a new revision is coming.
⭐ Educating staff
Teams handling vendor setup, 1099 reporting, or compliance should understand the new checkbox and TIN clarifications.
⭐ Watching for the final release
The IRS typically finalizes forms after a comment period. Once the final version is published, businesses should begin using it immediately for new payees.
Why This Matters for Small Businesses
For many small businesses, the W‑9 is one of the most frequently used IRS forms. These updates help:
Reduce reporting errors
Improve clarity for sole proprietors
Align documentation with the growing digital asset economy
If your business issues 1099s, works with contractors, or handles payments to brokers, these changes will affect your compliance workflow.
Final Thoughts
The draft Form W‑9 (Rev. January 2026) is a focused update — but an important one. It reflects the IRS’s push toward clearer reporting rules and better alignment with digital asset regulations. As always, once the final form is released, Sharp Tax & Accounting LLC will be ready to help clients transition smoothly.