I've been trying to find an answer to this and keep coming up with different answers. So wanted to pose it to the forum:

Our signature cards ask for tax classifications for LLCs and Corporations. For LLCs it wants us to choose C Corp, S Corp, or partnership and for Corporations we need to choose C Corp or S Corp.

I'm wondering if this is even needed on a bank signature card. It seems to be very confusing for our CSRs, even though I have always said "the customer should be able to tell us this". Well, No, they can't. A majority of the time, the customer doesn't even know.

Is this something we really need to worry about asking or is simply marking LLC or Corporation enough? Does anyone else have this issue?

Thanks.

It's not a CIP requirement so I'd be asking your forms vendor if there is a reason they included it.

Thank you Brian.

Ok...just to touch base on this topic once again. I did ask our forms vendor why the tax classification was included on the signature card and this was their response (from their compliance department): (sorry for the long post)

The language regarding tax classification, with regards to LLCs, comes directly from the IRS Form W-9. A substitute W-9 must be substantially similar to Form W-9, and data collection throughout the signature card is part of the substitute W-9 functionality of the signature cards.
An LLC is a Limited Liability Company (or corporation, in some states), with limited liability, management by members or managers, and limits on transfer of ownership. LLCs are either taxed as a partnership, a C-corp or an S-corp. Generally, the main significance of an S-corp is that the income is taxed to the shareholders at their regular income tax rate, no corporate income tax is paid and corporate losses can be claimed by the shareholders. If eligible to be an S-corp, the corporation elects its status, which is for tax purposes only. For purposes of completing a W-9 or substitute W-9, a corporation will have to tell a financial institution if it is an S-corp or C-corp.
Form W-9 asks for the tax status of an LLC. The substitute W-9 (contained on our signature cards) must be substantially similar to Form W-9 and we include the tax status of an LLC to our signature cards. The LLC will have to tell the bank its tax status.
Financial institutions do have the option of collecting this information either on the separate W-9 or on the substitute W-9 contained on our signature cards. Best practice would be to ensure that the information collected is consistent.


A C-Corporation is a regular corporation subject to Subchapter C of the Internal Revenue Code.
An S-Corporation is governed by Subchapter S of the Internal Revenue Code. It is a small business corporation and the Code limits the number of shareholders. Generally, the main significance of an S-corp is that the income is taxed to the shareholders at their regular income tax rate, no corporate income tax is paid and corporate losses can be claimed by the shareholders.
If eligible to be an S-corp, the corporation elects its status, which is for tax purposes only. For purposes of completing a W-9 or substitute W-9, a corporation will have to tell a financial institution if it is an S-corp or C-corp.
An LLC is a Limited Liability Company (or corporation, in some states), with limited liability, management by members or managers, and limits on transfer of ownership. LLCs are either taxed as a partnership, a C-corp or an S-corp.
Form W-9 asks for the tax status of an LLC. The substitute W-9 (contained on our signature cards) must be substantially similar to Form W-9 and we have added the tax status of an LLC to our signature cards. The LLC will have to tell the bank its tax status. Tax status and organization structure are distinct things and picking a partnership tax status does not convert the LLC into an LLP or any other kind of partnership it is an LLC.


I'm still confused as to why we need to know this when opening an account. And it's crazy how many business customers don't know what tax classification they are, which makes it really hard to complete opening an account when we can't completely fill in the signature card at the time of opening.

So, I guess I come back to, IS it really necessary for us to collect this at account opening? Are other banks collecting this information and if so, do you have issues with getting a straight answer from your customers? If there is no good answer to this question and I just need to once again stress to my new account reps that the customer needs to provide this information, thank you for letting me vent a little bit about this! I just feel like new account reps are expected to know and understand so much that is outside their job duties anymore! If the customer can't answer.....than neither can the account rep!

Thanks again!

If the account is interest bearing, then you must have them complete one of these : https://www.irs.gov/pub/irs-pdf/fw9.pdf.
If your signature cards serve as a substitute W-9, you still need to collect that information. You still must provide the W-9 instructions on request.

Thank you Randy. Yes...our signature card serves as a substitute W-9, so we will continue to try to get the correct information from the customer.