Business Software/collecting w-9 info. online
QUESTION: Is there any secure software that will collect W-9 forms online with the social security number, name, address, etc. all in different fields so that I can use them to verify the numbers/IDs with the IRS and then to file 1099-MISC forms?
If I tried to write such a program (or hire a friend) -- what kind of security services would you recommend that I buy to support it?
Thanks very much!
ANSWER: Hi BJ,
The Federal Government requirements for storing digital I-9 information is summarized below:
Storing Forms I-9 Electronically
Employers may use a paper system, an electronic system or a combination of paper and electronic systems to store Forms I-9. An electronic storage system must:
Include controls to ensure the integrity, accuracy and reliability of the electronic storage system.
Include controls to detect and prevent the unauthorized or accidental creation of, addition to, alteration of, deletion of or deterioration of an electronically stored Form I-9, including the electronic signature, if used.
Include controls to ensure an audit trail so that any alteration or change to the form since its creation is electronically stored and can be accessed by an appropriate government agency inspecting the forms.
Include an inspection and quality assurance program that regularly evaluates the electronic generation or storage system, and includes periodic checks of electronically stored Forms I-9, including the electronic signature, if used.
Include a detailed index of all data so that any particular record can be accessed immediately.
Produce a high degree of legibility and readability when displayed on a video display terminal or reproduced on paper.
I don't have any personal experience with software to perform this task, but one you may want to check out is: http://www.trackercorp.com/i9-compliance.php
Another one is: http://www.accuratebackground.com/products.php
I don't recommend creating your own system unless you run a large company, as meeting the regulations can be a challenge as technology changes and you need to meet all of the requirements or your organization will not be in compliance.
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Thanks so much for your response.
I don't need to fill out I-9 information, because I'll only be using independent contractors (really more like paid volunteers). So I just need to collect W-9s.
I have been doing some research and would like your feedback on how I'm thinking of approaching this.
As far as I can tell, the IRS will accept a "simple" e-signature that consists of just a box to be checked that says you are the person described in the document (perjury ect.) and a typed "signature".
It looks like Adobe FormsCentral can capture w-9 documents with this kind of simple e-signature, and then I can create reports though them in excel which will show each individual field for each document.
I think I can then use this program to load the excel files into a mysql database.
Then I can use the information in the mysql database to check to see if the tax numbers are good and then to file 1099 MISC forms.
Does that seem like a workable approach?
I would prefer to buy a software program instead of paying the monthly fees for FormsCentral. Can you suggest any that I might research?
Thank you again for your help.
ANSWER: Hi BJ,
Sorry I misunderstood the I-9 versus the W-9. The requirements are simliar:
Instructions for the
Requester of Form W-9 - Main Contents
Table of Contents
Use Form W-9 to request the taxpayer identification number (TIN) of a U.S. person (including a resident alien) and to request certain certifications and claims for exemption. (See Purpose of Form on Form W-9.) Withholding agents may require signed Forms W-9 from U.S. exempt recipients to overcome any presumptions of foreign status. For federal purposes, a U.S. person includes but is not limited to:
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,
Any estate (other than a foreign estate), or
A domestic trust (as defined in Regulations section 301.7701-7).
A partnership may require a signed Form W-9 from its U.S. partners to overcome any presumptions of foreign status and to avoid withholding on the partner's allocable share of the partnership's effectively connected income. For more information, see Regulations section 1.1446-1.
Advise foreign persons to use the appropriate
Form W-8. See Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for more information and a list of the W-8 forms.
Also, a nonresident alien individual may, under certain circumstances, claim treaty benefits on scholarships and fellowship grant income. See Pub. 515 or Pub. 519, U.S. Tax Guide for Aliens, for more information.
Electronic Submission of Forms W-9
Requesters may establish a system for payees and payees' agents to submit Forms W-9 electronically, including by fax. A requester is anyone required to file an information return. A payee is anyone required to provide a taxpayer identification number (TIN) to the requester.
Payee's agent. A payee's agent can be an investment advisor (corporation, partnership, or individual) or an introducing broker. An investment advisor must be registered with the Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. The introducing broker is a broker-dealer that is regulated by the SEC and the National Association of Securities Dealers, Inc., and that is not a payer. Except for a broker who acts as a payee's agent for “readily tradable instruments,” the advisor or broker must show in writing to the payer that the payee authorized the advisor or broker to transmit the Form W-9 to the payer.
Electronic system. Generally, the electronic system must:
Ensure the information received is the information sent, and document all occasions of user access that result in the submission;
Make reasonably certain that the person accessing the system and submitting the form is the person identified on Form W-9, the investment advisor, or the introducing broker;
Provide the same information as the paper Form W-9;
Be able to supply a hard copy of the electronic Form W-9 if the Internal Revenue Service requests it; and
Require as the final entry in the submission an electronic signature by the payee whose name is on Form W-9 that authenticates and verifies the submission. The electronic signature must be under penalties of perjury and the perjury statement must contain the language of the paper Form W-9.
For Forms W-9 that are not required to be signed, the electronic system need not provide for an electronic signature or a perjury statement.
For more details, see the following.
Announcement 98-27, which is on page 30 of Internal Revenue Bulletin 1998-15 at www.irs.gov/pub/irs-irbs/irb98-15.pdf.
Announcement 2001-91, which is on page 221 of Internal Revenue Bulletin 2001-36 at www.irs.gov/pub/irs-irbs/irb01-36.pdf.
The bottom line is that you can collect information in any way you want so long as you deploy a secure connection and can store the information without any unauthorized use.
If your database has this level of security, it appears that you can store .pdf files and load data from excel files as there is no specific objection to this method listed by the government.
The approach you outlined does appear that it will work, but you need to ensure you can safeguard the data when transmitting and storing it.
I am not aware of any "box" software that will work, as the information will be filled out online and be stored online.
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QUESTION: Thank you for your quick response.
One more question, if you don't mind. I'm looking at storing the data on a cloud server like Heroku. Would their security system be enough to ensure the data is safe? If someone hacked into a database on Heroku's server, would they be liable for the lost data or would I?
Any security suggestions would be very welcome!
I really appreciate your help!
You cannot rely on cloud server security for this type of information. Usually, you need a physical firewall along with antivirus software and intrusion detection software installed on the server.
In addition, it is a good idea to encrypt the data on the server so it is of little use to anyone who takes it.
The database would need to be designed to only allow authorized users with no potential to break through to the raw data tables.