2021 W8 Series Updates: New forms bring new questions

By Rasheed Khan
22.02.2022
Read Time: 2 minutes
TAINA 2021 W8 Tax Form Updates Raise New Questions

New W8 Tax Forms Bring New Questions

The Internal Revenue Service (IRS) in the US has made a diligent effort to release new W-8 series forms in light of the upcoming effective date for the new rules under 1446(f) governing the transfer of ownership in Partnerships. While we do appreciate that, the IRS has made a diligent effort to help investors manage the new rules, the new forms do create some questions for the financial institutions servicing these instruments and applying the new W8 forms. Let us dive deeper into questions that are being raised about the new W8 forms, specifically forms W-8IMY, W-8BEN and W-8BEN-E and how this may impact the updating of procedures and withholding and reporting processes.

Form W-8IMY

For the W-8IMY, the IRS has added elections to the Territory FI, Certain US Branches and Nonwithholding Foreign Partnership, Simple or Grantor Trust sections of the form. These new boxes provide elections under Section 1.1446-4(b)(3) and 1.1446(f)-4(a)(2). Both relate to the treatment of the Intermediary as a Nominee for a third party owner. What is not clear is what action to take, where an election is made and submitted to a custodian, broker or agent. Questions that the industry has raised include:

  • Does this require additional details on the Withholding Statement?

  • Does the institution now need to collect an exemption certificate for each owner or will a consolidated statement from the intermediary suffice?
  • Will procedures need to be updated to address the execution of these elections?

Form W-8BEN and W-8BEN-E

These two forms now have an additional statement under the certification section providing declarations for income subject to withholding under sections 1.1446(f). These elections do not appear to have a material effect on the withholding or additional attestations that would need to be collected for transfer of partnership interest that may be exempted under 1.1446(f). What is interesting is that the instructions for these forms make them reliable for distributions from Publicly Traded Partnership (PTP) under section 1.1446(a) but the physically signed form does not include this section within the certificate and this must be inferred from the overall 1.1446(f) statement.

Updating your Withholding Tax Process

All of the items above drive the withholding process and need clarity to ensure the proper withholding and reporting is executed. We are working towards gaining clarity to ensure the best possible withholding solutions are implemented and lead to proper information reporting.

If you have any questions about the W-8 form updates or final 1446(f) regulations and would like to have a chat about them please reach out to us.

If you would like to see how the TAINA FATCA, CRS and QI Compliance Platform can add value to your business, request a demo today.

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