I think what they meant to say is the legal entity, rather than identity; a LLC or other business formation should suffice for most reporting requirements. There may be some exceptions in some areas, but I've contracted with with thousands of entities and never once had to verify the identity of their employees unless it was for individual access (passes/badges, etc.).

If you are located outside of the USA then they are not required to gather this info.

However if they believe you are a USA citizen or reside in the USA while doing the work, then they are supposed to.