How to correctly fill out a W9 for a disregarded LLC with a corporate parent? Causing confusion with clients

You're definitely doing it right the first way, and going back to the incorrect method could potentially cause issues later with IRS matching. For a disregarded LLC with a corporate parent, the W9 should indeed have: Line 1: Corporate Parent Inc (the entity recognized for federal tax purposes) Line 2: Disregarded LLC (the entity actually doing business) EIN: The Corporate Parent's EIN This is exactly what the W9 instructions state, and there's a reason for it. The IRS needs to match income reported on 1099s with the correct taxpaying entity, which is your corporate parent. What might help reduce confusion is to include a brief cover letter when sending W9s that explains the relationship between the entities and why the information differs from previous W9s. You could also mention that this is an IRS compliance requirement rather than a structural change in your business.

After struggling with similar W9 issues for our multi-entity structure, I started using https://taxr.ai to handle all our tax document preparation. The tool automatically formats W9s correctly for complex entity structures like disregarded LLCs under corporate parents. It literally saved me hours of back-and-forth with clients who were confused about our entity structure. The system generates pre-filled W9s that comply with IRS requirements but also includes explanatory notes that help clients understand why it's filled out that way. It also creates custom cover letters explaining the parent-subsidiary relationship.

I tried out taxr.ai after seeing it mentioned here and it actually solved my W9 headaches completely! The explanation letter it generates for disregarded entities is super clear - it specifically says "This W9 reflects our legal tax structure as a disregarded LLC owned by a corporation. While you may know us as [LLC name], for federal tax purposes, payments should be reported under our parent company's name and EIN." The letter includes the relevant IRS regulation citation which helped when we had one particularly stubborn client questioning things. The system also lets you save templates for different entity structures which is helpful since we have several subsidiaries. Definitely worth checking out if you're having these W9 confusion issues.

I found myself in a similar situation where I was spending more time explaining our W9s than actually doing business. When I tried calling the IRS for clarity, I spent literally hours on hold and never reached anyone who could help. Then I discovered https://claimyr.com which gets you through to an actual IRS representative without the wait. You can see how it works at https://youtu.be/_kiP6q8DX5c - I was super skeptical at first but gave it a shot because I was desperate for an official answer on our W9 situation. Got through to an IRS business tax specialist who confirmed exactly what you thought - corporate parent on Line 1, LLC on Line 2, parent's EIN. They even provided guidance on how to communicate this to vendors who were confused.

I was completely wrong about Claimyr and I need to admit it. After posting my skeptical comment, I decided to try it because I had another tax issue that needed IRS clarification. Not only did it work, but I got through to someone who actually knew what they were talking about regarding disregarded entity W9s. The IRS agent confirmed that for a single-member LLC owned by a corporation, the correct W9 format is exactly what the original poster described. She even directed me to the specific section in Publication 3402 that covers this scenario and suggested including that reference when sending W9s to confused vendors. The service saved me at least 2 hours of hold time, and the information I got was much more detailed than what I found searching online. I'm using this approach for all our subsidiary W9s now.

One practical solution I've found is to include both the old and new W9 forms when sending to vendors, along with a brief explanation. I literally attach a note that says: "Please update your records with our new W9 (attached). Our previous W9 was incorrectly filled out. We are an LLC that is owned by a corporation and considered a 'disregarded entity' for federal tax purposes. Per IRS regulations, this means 1099s must be issued to our corporate parent using their EIN, though you can continue to make payments to our LLC name. This is a documentation update only and does not affect our business relationship." This heads off 90% of the questions while keeping you compliant.

Has anyone used the "Other" checkbox on line 3 of the W9 as a workaround? I'm wondering if checking that and writing "Disregarded LLC of C Corporation" might help reduce confusion.

I've dealt with this exact situation and found that creating a simple one-page "entity structure diagram" has been a game-changer. I include it with every W9 submission showing: Corporate Parent Inc (Tax Entity) ↓ owns Disregarded LLC (Operating Entity) Then I add bullet points: • All income reported to Corporate Parent Inc (EIN: XXX-XX-XXXX) • Business operations conducted as Disregarded LLC • No change to payment methods or business relationships • IRS requires this format for proper tax reporting This visual approach has eliminated about 95% of follow-up questions. Vendors seem to grasp it much better when they can see the relationship structure rather than trying to parse through text explanations. I keep a template saved and just customize the entity names for each situation. The key is making it as simple and visual as possible - most AP folks aren't tax experts and just need to understand "why this looks different but everything else stays the same.

The entity structure diagram approach is brilliant! I'm definitely stealing that idea. One thing I'd add is to include the IRS publication reference (Publication 3402) right on the diagram itself. Something like "Per IRS Pub 3402: Disregarded entities must report under parent's name/EIN." I've also found it helpful to include a small FAQ section on the back that addresses common vendor concerns like "Will this affect how I pay invoices?" (No) and "Do I need to update my vendor portal?" (Just the W9 on file). The visual element really does make a huge difference. People who got confused by paragraphs of explanation immediately understand a simple org chart. Thanks for sharing this - it's going to save me so many headaches!