It’s “BEN-E” TimeJune 12, 2014 – Tax Alert
In this alert, we discuss new versions of IRS withholding certificates which incorporate the requirements of FATCA ("Foreign Account Tax Compliance Act," also known as the "Chapter 4" withholding rule, because FATCA is contained within Chapter 4 of the Internal Revenue Code).1
The old IRS Form W-8BEN has been succeeded by two new forms, a "new" W-8BEN (for warm bodies), and a new form called W-8BEN-E (with the "E" standing for "entities," for entities as well as nongrantor trusts and estates). The IRS has also issued a new version of Form W-8IMY ("IMY" standing for "intermediary").2
The forms contain new FATCA certification provisions, and require a "Global Intermediary Identification Number" ("GIIN"). While the old versions are still available for use with new accounts opened until the end of this year, it would be prudent to use the new forms now (subject to certain exceptions) in order to avoid having to conduct FATCA due diligence and obtain new certifications later.
The IRS has yet to issue the customary detailed instructions that will accompany these new tax forms, but has indicated that it will roll them out soon. The IRS has also indicated that it plans to publish instructions for requesters of the W-8 series forms to assist with their FATCA reporting and withholding obligations.
For existing accounts, a withholding agent has until January 1, 2017, to obtain new versions of the W-8 forms from foreign payees who previously provided older versions of the forms that are still valid. However, you will still have to collect GIIN and otherwise satisfy the FATCA due diligence.3 Even before January 1, 2017, foreign payees have to provide withholding agents with the new forms if the existing forms become obsolete.
1 FATCA is extremely complex and its rules and regulations are currently in the process of being finalized. This discussion is for informational purposes only, and does not address each and every specific point that forms part of FATCA.
2 The Form W-8IMY generally functions as something akin to a "cover-letter" or "routing form" from a partnership or other pass-through entity that transmits the W-8 of the beneficial owners to a withholding agent. This tax alert does not discuss changes affecting a "qualified intermediary."
3 As previously mentioned, a withholding agent is not required to collect a GIIN from a payee located in a Model 1 Inter-Governmental Agreement.
To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication, unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax related matter(s) addressed herein.
Copyright © 2014 Herrick, Feinstein LLP. This alert is published by Herrick, Feinstein LLP for information purposes only.
Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm.