IRS Releases Finalized Version of Form W-9
The IRS has released a finalized version of Form W-9 and the related instructions (dated 29 August 2013). There have been no changes to the form and no significant changes to the instructions since the 17 May 2013, draft. For additional information regarding the draft, see e-Alert 2013-14.
Exempt Payee Box
The final Form W-9 adopts the modifications made to the exempt payee box in the prior draft to accommodate use of Form W-9 by foreign financial institutions documenting U.S. account holders under Internal Revenue Code sections 1471-1474 (commonly known as FATCA). Rather than merely checking a box to indicate a payee’s exempt status, the new Form W-9 requires an exempt payee to provide a code designating the category of exemption for which it qualifies and whether it is exempt from domestic (Form 1099) reporting and/or FATCA (Form 8966) reporting.
KPMG Observation: Many financial institutions have expressed concern over whether they will be required to modify their systems to record the exempt payee codes designated on the Form W-9. Neither the new Form W-9 nor the recently issued FATCA guidance requires a payor to record the exempt payee codes in its system. As the IRS does not require reporting of these codes, there may be little practical reason for a foreign financial institution to document the specific exemption codes for FATCA purposes. On the other hand, since chapter 61 of the Internal Revenue Code provides for differing exempt recipient categories depending on the type of income paid, it may be advantageous for a U.S. payor to record the specific exempt recipient codes that pertain to domestic reporting so that the U.S. payor can determine the payee’s exempt status when multiple types of payments are made.
For Your Reference
Please follow this link to access the final Form W-9.
IRS Releases Updated Version of Draft Form W-8IMY
The IRS has released an updated version of draft Form W-8IMY (draft date 26 August 2013) that modifies the previous draft (for additional information on the previous draft, see e-Alert 2012-07). No instructions have been released with the form but are anticipated once it is finalized. Highlights of changes are discussed below.
Changes made between the 13 August 2012, draft and the 26 August 2013 draft
Instructions have been added to the top of the form indicating that persons documenting themselves for payment cards under section 6050W should not use Form W-8IMY (Form W-8BEN, W-8BEN-E, or W-8ECI should be used instead).
Part I, Identification of Entity
- Line 3, Disregarded Entity: A name line has been added for a disregarded entity
- Line 5, Chapter 4 Status:
- The following chapter 4 statuses have been added to line 5:
- Reporting Model 1 FFI
- Reporting Model 2 FFI
- Sponsored FFI that has not obtained a GIIN (other than a certified deemed-compliant sponsored, closely held investment vehicle)
- Certified deemed-compliant sponsored, closely held investment vehicle
- Certified deemed-compliant limited life debt investment company
- Foreign government, Government of a U.S. possession, or foreign central bank of issue
- Nonreporting IGA FFI
- Exempt retirement funds
- Excepted nonfinancial group entity
- Publicly traded NFFE or NFFE affiliated of a publicly traded corporation
- The following chapter 4 statuses have been removed:
- Nonparticipating FFI with exempt beneficial owners
- Certified deemed compliant retirement plan
- Certified deemed compliant non-profit organization
- Entity wholly owned by exempt beneficial owners
- Excepted nonfinancial holding company
- Excepted hedging/financing center of nonfinancial group
- QI branch of a U.S. financial institution
- The box that read “Excepted Territory NFFE” in the prior draft has been changed to read “Excepted territory NFFE or affiliate”
KPMG Observation: This appears to be a drafting error as the final regulations do not provide an excepted category for an affiliate of an excepted territory NFFE.
- Line 6, Permanent Resident Address: The instructions providing that a permanent residence address does not include an in-care-of address have been removed. The prior draft Form W-8IMY had added the instructions prohibiting the use of an in-care-of address as a permanent residence address.
- Lines 8 and 9, U.S. Tax Identification Number: The box for “FFI-EIN” has been deleted from line 8 and has replaced the foreign tax identifying number in line 9 with an FFI’s GIIN.
Part II, Disregarded Entity or Branch Receiving Payment
A new Part II has been added to capture the chapter 4 status, address, and GIIN for a branch or disregarded entity of an FFI if the branch or disregarded entity is located in a different country than the FFI’s country of residence.
Parts III and IV, Qualified Intermediary (QI) and Nonqualified Intermediary (NQI) Certifications
New certifications have been added for:
- A QI to make when it elects to assume primary Form 1099 reporting responsibility for payments to U.S. non-exempt recipients
- A QI or NQI to indicate that it is either: reporting on payments made to U.S. non-exempt recipients as part of its obligation as a participating FFI, registered deemed-compliant FFI, Reporting Model 1 FFI, or Reporting Model 2 FFI, or is passing up Forms W-9 of the U.S. non-exempt recipients to the withholding agent along with the Form W-8IMY
- A Qualified Securities Lender that is a QI or NQI
- An NQI that is a registered deemed-compliant local FFI or a restricted fund stating that the NQI has satisfied all reporting requirements for any specified U.S. person for which it supplies pooled information.
KPMG Observation: The new certifications for qualified intermediaries indicate that there may still be a residual Form 1099 reporting obligation for FFIs in IGA jurisdictions in cases where the payment is not already being reported on a Form 8966. On the other hand, where a payment is being reported on a Form 8966, the form seems to absolve both the withholding agent and the QI from any further obligation to report the payment on a Form 1099.
Part V, Territory Financial Institution
The certification for a territory financial institution provides that the category now applies to financial institutions incorporated or organized in a possession other than an investment entity. The prior draft of the form indicated that the territory financial institution category applied to entities incorporated or organized in a possession that were depository institutions, custodian institutions, or insurance companies.
KPMG Observation: The change in the certification to Part V of the form relating to territory financial institutions now appears to apply only to FFIs that are depository institutions, custodial institutions, insurance companies, and holding companies or treasury centers but does not apply to such entities if they also qualify as investment entities. Since the excepted territory NFFE category continues to apply only to entities that are solely investment entities, there no longer appears to be a territory classification for an FFI that is both an investment entity and another type of FFI. This appears to be a drafting mistake as it contradicts the definition of a territory financial institution as provided in the final FATCA regulations.
Parts IX through XXVI, Chapter 4 Status Certifications
- Parts IX through XXVI were modified to add certifications for the new chapter 4 statuses that were added to the form and to remove chapter 4 statuses that were deleted from the form.
- The certification language in Parts IX through XXVI was also modified to comply with the changes to the definitions provided in the final FATCA regulations.
- The prior certification for a participating FFI or registered deemed-compliant FFI was removed from the new draft form and replaced by the GIIN field in Part I of the form.
- Part XI of the draft form reduces the documentation requirements for an owner documented FFI to only require owner documentation for all individuals and specified U.S. persons that own a direct or indirect interest in the entity but not, as previously required, the documentation from any other entities through which the individuals and specified U.S. persons hold their indirect interests in the owner documented FFI.
Part XXVII, Certification
The catch-all provision includes a new sentence requiring the person completing the revised form W-8IMY to certify that a new form will be submitted within 30 days of when the form “becomes incorrect.”
For Your Reference
The revised draft Form W-8IMY (fw8imy--dft.pdf) can be accessed by following this link.
For further information, please do not hesitate to contact us.
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