The January 2026 revision incorporates digital asset compliance for US brokers into the existing tax form, and provides clarity around the collection of TINs for sole proprietors and other disregarded entities.
Earlier this week, the IRS published a new draft of Form W-9, which includes several impactful – and curious – changes.
Filers of Forms 1099 will need to consider the impact of this revision, and whether they need to collect updated Forms W-9 when the final version is released. The update is particularly relevant for DA brokers who are actively implementing W-9 collection into their onboarding process.
Here’s what’s changing…
New Digital Asset Broker Certification
A new checkbox was added to Part II, with certification language specific to DA brokers providing Forms W-9. This optional box enables such brokers to indicate that they are exempt from Form 1099 reporting.
All entities collecting Forms W-9 electronically must consider updating their onboarding for this new certification language, even if the nature of their business doesn’t involve payments of digital assets.
New Exemption Code
A new exempt payee code (code 14) was added for payees to claim exemption from backup withholding for a transaction involving digital assets through calendar year 2026.
It’s a curious addition, given IRS Notice 2025-33 indicated that back-up withholding would not apply for the entirety of this period. It also creates a need to remove the exemption code in the future.
Updated TIN Collection Rules for Sole Proprietors
The language in Part I was updated to indicate that sole proprietors must provide an SSN – it is no longer acceptable for a sole prop to provide an EIN. This aligns with the treatment of DREs, where the TIN of the regarded owner is required to be collected.
Entities must review Forms W-9 currently on file to identify any remediation required for sole proprietors they previously allowed to provide an EIN.
How Taxbit Can Help
Note that this updated revision comes less than two years after the 2024 revision, which was aimed toward certain flow-through entities.
The frequency of these updates highlights the importance of working with a trusted provider like Taxbit – who is consistently monitoring IRS drafts, and identifying whether any updates are required to our existing solutions to ensure you are compliant with the latest guidance.
If you’d like to learn more about the updated draft or how Taxbit can support your needs, reach out to our team to schedule a call or demo.
