The IRS has published a revised version of Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Although the IRS designated the update for the 2015 tax year, the change includes some information that is relevant to the 2014 tax year. The agency noted the delayed revision resulted from steps to provide more guidance for withholding agents.
In addition to incorporating new definitions, the latest edition of the publication includes seven other changes. The first two are in regard to Chapter 3 and Chapter 4 requirements of the Foreign Account Tax Compliance Act (FATCA), which are now noted in the guidance. This includes the regulation stating the IRS has required withholding agents to withhold 30 percent of applicable payments since July 1, 2014.
Another change relating to Chapters 3 and 4 was in regard to qualified intermediary (QI), withholding foreign partnership (WP) and withholding foreign trust (WT) agreements. The IRS revised these agreements June 30 to note regulations under those chapters, and references to QI, WP and WT agreements in the latest version of Publication 515 reflect those revisions.
Breaking down updates to W-8 series
Under FATCA regulations, the IRS made noticeable revisions to forms in the W-8 series, which includes Forms W-8BEN, W-8IMY, W-8EXP and W-8ECI. Form W-8IMY, for example, expanded from two to seven pages to note Chapter 4 status and other information.
In addition to revising existing forms in the series, the IRS created a new form, Form W-8BEN-E. The agency last updated this form in April 2014 to include more designations related to the international tax legislation.
The updated Publication 515 details these changes and information about the forms in this series.
Getting ahead of upcoming 2015 requirements
The fact that the IRS is still releasing new guidance about FATCA indicates that organizations that must comply with the law need to take steps to understand their obligations as soon as possible. The legislation has a gradual implementation period, and some new requirements are coming in 2015, according to The C Suite.
By March 31, foreign financial institutions (FFIs) must have made their first reports on relevant U.S. accounts to the IRS if their jurisdictions have a Model 2 intergovernmental agreement (IGA) with the U.S. Treasury Department or if their countries don’t have an IGA. The deadline pushes back to May 31 or June 31 for FFIs in jurisdictions with a Model 1 IGA, according to the source.
