The IRS has updated the Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY.
There are a number of changes from the previous revision of the Instructions:
- Chapter 3 Withholding Changes
- Withholding agents must also withhold under section 1443 on certain payments to foreign tax-exempt organizations that are unrelated business taxable income or subject to the 4% excise tax imposed by section 4948
- Withholding under chapter 3 is also not required if the payment is made to a U.S. branch of a foreign insurance company or foreign bank or a territory financial institution that agrees to be treated as a U.S. person under the requirements and provides a valid Form W-8IMY certifying to such status.
- Chapter 4 Withholding Changes
- If you are a withholding agent, you must withhold 30% of any payment that is a withholdable payment made to a nonparticipating FFI that is not an exempt beneficial owner or to a non-financial foreign entity (NFFE) that is not an excepted NFFE and does not disclose its substantial U.S. owners (or certify that it has no substantial U.S. owners).
- New sections introduced
- Section 1446 Responsibilities
- Other Uses of Form W-8
- Foreign TINs
- Final and temporary regulations under chapters 3 and 4 modified certain requirements with respect to the collection of Forms W-8, the contents of their forms, their validity periods, and the due diligence requirements of withholding agents
- If the presumption rules are applies to treat a person as a foreign person, the 30% withholding rate applied and cannot be reduced
- Presumption rules have also been updated
- Updated notes for validating W-8 forms
- If you receive a Form W-8EXP without a foreign TIN (or a reasonable explanation for why the account holder has not been issued a foreign TIN) on line 8b (or on a separate statement) when required, you must treat the form as invalid for payments of U.S. source income reportable on Form 1042-S (as determined before the application of this requirement).
- The rules for withholding and reporting certain payments made to qualified derivative dealers (QDDs) were modified.
- Specifically, certain amendments such as delaying withholding under chapters 3 and 4 on dividends paid to a QDD in its equity derivatives dealer capacity until 2019
- New revised guidance for certain withholding agents to obtain and report taxpayer identification numbers and dates of birth of their account holders
- New instructions for providing substitute W-8 Forms
To view the updated Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY, please click the link below here.