The 2021 W-8IMY Taking advantage of Alternate Statements

The 2021 Release of the Updated W-8IMY 

The release of the updated W-8IMY provides for changes specific to the new section 1446 requirements but in addition to these changes there are additional allowances that provide for the use of Alternative Withholding Statements by entities with a Chapter 3 election of partnership and trust similar to the allowances for Nonqualified Intermediaries. 

2021 W-8IMY Form Update Summary:

First let’s take a high level look at the changes in the form W-8IMY, moved lines should have validations updated with them:

• Line 9 changed to Line 9a

• Line 9b added for FTIN 

• Line 15b moved to 15f

• Line 15c moved to 15g

• Line 15d moved to 15h

• Line 15e moved to 15i

• Line 15f moved to 15d

• 15d added required Withholding statement

• Line 15g moved to 15e

• New line 15b when checked 0% withholding under Section 1446(f) applied to sale of partnership interest

• New line 15c when checked 0% withholding under Section 1446-4(b) applied to partnership distribution

• New line 17e when checked only allows for the use of the Alternate withholding statement

• New line 18d checked applies 0% withholding under 1446(f) applying treatment of income owned by a US person

• New line 18e checked applies 0% NRA withholding under 1441 applying treatment of income owned by a US person

• New line 18f checked application of withholding statement for 1446(f) applying beneficial owner withholding for partnership income

• New line 19d checked applies 0% withholding under 1446(f) applying treatment of income owned by a US person

• New line 19e checked applies 0% NRA withholding under 1441 applying treatment of income owned by a US person

• New line 19f checked application of withholding statement for 1446(f) applying beneficial owner withholding for partnership income

• New line 21c withholding statements provided to allocation for modification of amount realized in transfer

• New line 21d withholding statements provided to allocate for specific transfer of partnership interest withholding

• New line 21e foreign grantor trust providing withholding statement for 1446(f) partnership interest, valid only for chapter 3 status of Nonwithholding Grantor Trust, withholding statement and W forms

• New line 21f when checked only allows for the use of the Alternate withholding statement

The Use and Benefits of Alternative Withholding Statement 

Now that the changes have been outlined, let us move on to the main topic of discussion. The use and benefits of Alternative Withholding Statement (AWHS). These statements provide for quicker and easier updates to ownership however there are requirements and dependencies that must be met to ensure that the withholding statements can be accepted and relied upon. 

First and most obvious, does the W-8IMY elect for the use of the AWHS in conjunction with the certification process. Procedures do not require that the AWHS include information that is already on the withholding certificates (including name, address, TIN, chapter 4 status, and GIIN), and you are not required to provide the rate of withholding applicable to each beneficial owner. Secondly  account holders  may only use an AWHS if you are providing the withholding agent with withholding certificates (and not documentary evidence) from the beneficial owners. 

These allowances allow for simpler updates to the beneficial ownership of each entity. As long as the beneficial owners do not change then the withholding statement is all that is needed. This does require that the Withholding Agent ensure that they get beneficial owner forms replaced upon expiration to continue use of the AWHS. Procedures also require the upfront submission of Beneficial  Owners certificates for entities added to the statement. If you check the box for use of AWHS, you are not required to represent on each alternative withholding statement that the information on the withholding certificates provided with the alternative withholding statement is not inconsistent with any other account information you have for the beneficial owners for determining the appropriate rate of withholding. See Regulations section 1.1441-1(e)(3)(iv)(C)(3).

How Can TAINA help you? 

I hope this has been helpful for withholding agents that are contemplating the use of the Alternative Withholding Statement. TAINA has created advancements in managing all types of withholding statements. Our Multitier Manager provides simple methods for managing, adjusting and exporting beneficial ownership allocations. The process of adding and deleting owners are quick and easy plus we have interactive systems for calculating pro rata withholding rates for an intermediary.

TAINA’s fully-automated FATCA and CRS Validation Platform can help financial institutions of all types lighten their compliance FATCA, CRS and QI compliance burden whilst improving efficiency, reducing cost, mitigating risk and improving their overall customer and investor experience. Using our flexible and lightweight platform you can automate and streamline your FATCA and CRS validation and intermediary processes whilst ensuring you have good data that will result in clean tax reporting to tax authorities all year round.

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