IRS release New draft Form W8-EXP

IRS release draft W8-EXP Form

On June 28, 2023 the Internal Revenue Service (IRS) released a draft version of the new W8-EXP form. The IRS are developing a new W8-EXP form to align with updates to the W8BEN-E and W8ECI. The industry are expecting this could be a sizeable update to the format, and additional data points of chapter 3 and chapter 4 statuses, therefore any Financial Institutions with 1042S reporting obligations will be affected.

Summary of proposed W8-EXP Form Changes

Changes from revision of 2017 W8-EXP to the Draft W8-EXP of 2023 include:

• New Chapter 3 status of “Withholding qualified holder under section 1445”
• Part II - boxes 10d and 10e added
• Part II - new 15a and 15b to reflect elections of new Chapter 3 status code
• Part III - every item has a new number due to new Chapter 3 status code in Part II
• Certification:
  • Language has been updated.
  • Check box has been moved above the signature line.

How will the new W8-EXP form impact financial institutions?

Financial institutions servicing these instruments and applying the new W8-EXP forms will have questions around the impact of the revisions and what it will mean for updating  procedures and withholding and reporting processes. Organizations should start to plan for any changes, including collecting and validating the new Form W-8EXP.

The revision effective date is listed as October 2023 (Form W-8EXP (Rev. October 2023) (irs.gov)). Once marked Final, the validation of prior versions of the W8-EXP form will be allowed for up to 6 months before only the 2023 version is acceptable.The earliest to take effect would be October 2023 with a 6 month window to accept the 2017 version of the form, meaning latest date to adopt would be May 1, 2024. Draft instructions have not been released at this time. (Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY (Rev. June 2022) (irs.gov))

If you have any questions about the W8-EXP updates and would like to have a chat about them please reach out to us.

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