Ask Sam: Why does my landlord want me to fill out a W9 tax form?

Question:

Why would a landlord ask a renter who's lived in apartment for several years to fill out a W9 form at lease renewal, or when taking a roommate off the lease? Are they allowed to do this?

Answer:

The W9 is a standard tax form landlords need in order to properly deal with your security deposit, though many of them don't bother with it, says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations.

"New York law requires that the security deposit be put into a segregated trust account, with any interest designated as going towards the tenant," Himmelstein explains. "And banks generally won't allow you to open an account where the interest is paid to another person without that person filling out a W9, which includes giving them your social security number."

However, notes Himmelstein, while all landlords are technically supposed to open a separate account like this for your security deposit, "Many don't follow the law at all." (Hence, that you weren't asked to fill out one of these forms when you first moved in.) "I often find that sometimes if a landlord asks for a W9 out of the blue, it's not because they want to follow the letter of the law, but rather to have access to your social security number to investigate you in some way," he says. However, if they're asking for a W9 because you're changing the names on the lease, they may legitimately want to check into the new tenants' finances. It's also possible that they're switching the bank account for the security deposit, and the new one requires a W9.

In any case, the potential interest to be gained here is negligible. "The reality is that these days, the interest rate on a deposit is virtually nonexistent," Himmelstein says. And if you decline to fill out this new W9, he adds, "I generally tell clients that whatever you decide, I've never heard of a tenant getting in trouble for skipping the W9. The only thing you won't get is the nonexistent interest on your security deposit."

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Sam Himmelstein, Esq., represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.