Hello, my wife lives in Indonesia and we want to submit a W-7 form. We were wondering if a scan of her passport would suffice as a supporting document?

Unfortunately, no.  You must either submit the original passport, a certified copy of the passport, or a certification form that you can obtain from a Certified Acceptance Agent (CAA).  

You can find a list of CAAs near you by clicking on this link: IRS Certified Acceptance Agents.

Note that a CAA may charge a fee for services.

Thank you. Does it matter who certifies the copy of the passport? Is there a specific person or agency that it needs to be certified by?

Susan gave you the answer above - the documents supporting the W-7 application must be approved by a Certified Acceptance Agent (CAA).

An alternative would be to mail your forms and original identity documents to the IRS, but few people would want to do that if there is a CAA nearby.

Note that CAAs are often (or even usually) associated with tax practices.

Ah okay, I am not sure what to do then because there isn't an agent in my wife's country so there wouldn't be a way for her to give the original passport to be copied.

Another option is to obtain a certified copy of the passport, with translation if necessary, from the issuing agency.

In the U.S. that is our Department of State.  Inside of Indonesia I believe this may be a task that can be completed by the Ministry of Foreign Affairs.

Perhaps a Community member will be able to chime in with information from their experience with this!