Industry Standard Withholding Statements

TAINA Industry Standard Withholding Statements

Industry cooperation and support is more important now than ever before. In 2019 and 2020, TAINA hosted the 2 Part Global Industry Forums on Withholding Statements. The Forums brought together over 50 top industry leaders representing the world’s largest financial institutions and two of the Big 4. The Forums tackled a key issue affecting the industry, Withholding Statement Standardisation.

The mission of the Global Withholding Statements Industry Forum was to create a common standard for Withholding Statements, that could be utilized by intermediaries allowing for a simplified format for providing pass through beneficial owner details. The goals were to improve operational efficiency and aid with determination of tax withholding and reporting under the FATCA, Chapter 3 and Chapter 4 regulations.

Withholding Statement Standardisation

The industry has dealt with challenges caused by the sending and receiving of different withholding statement formats. The non-standardization of withholding statement formats has created more work and inefficient processes for withholding agents and tax operatives responsible for creating, updating, validating and processing these statements.

Additionally, there can be further challenges caused by withholding statement updates and changes, often caused by a fund’s change in circumstances, ownership allocation changes, or IRS updates made to the form W-8IMY.

As a working group, we aimed to help the industry address these challenges by creating standard withholding statement templates. These will not only make the documentation/withholding process easier, but also allow for the digitization and consumption of withholding statements through automated systems saving teams time, reducing compliance risk, and minimizing data quality errors.

Global Withholding Statements Industry Forum Goals

Following the First Forum, an Industry Working Group was formed with 3 key goals:

1. Establish a data dictionary of withholding statement elements and definitions; 
2. Create templates as guideline for withholding statements; and 
3. Create formats that would allow for easy digitization of information. 

Thanks to all the valuable input, consideration, and feedback from the Withholding Statements Global Industry Forum participants, we as a working group were successful in accomplishing these goals.

Industry Standard Withholding Statements 

The TAINA Validation Platform supports the Industry Standard Withholding Statements. There are four types of statement template:

• Detailed

• Simple
• Alternative
• Pooled

You can access and download the latest agreed standard template from link below.

Latest Templates

By making these industry standard withholding statement templates available, we look forward to seeing the adoption of the format and data dictionary plus the integration and use of the uniform format industry wide. In time, it is the working groups hope that existing withholding statements will be phased out, reducing the operational burden of non-conforming statements.

Multi Tier Manager

In addition to updating the withholding statement templates, TAINA also created a user interface within the Validation platform for easier management of withholding statements. Within this tool, a withholding agent is able to create, edit, and version withholding statements in the same Industry standard format. This improves the review time by allowing for minor changes to be edited rather than completely re-reviewed.

Keeping our Industry Standard Withholding Statements Up to Date

At TAINA we ensure that our Industry Standard Withholding Statements stay up to date and current to ensure it stays useful and relevant to the industry. The IRS send out yearly instructions and updates to reporting which require updates to the values in the data dictionary. TAINA makes sure to update our industry withholding statements with all updates made to the 1042-S codes.

TAINA has recently also updated the Industry Withholding Statements to include:

• Effective To date: This function allows users to version withholding statements by entering “effective to” dates both via the Industry Standard Withholding Statement templates and via Multi-tier Manager (MTM) UI onto the current Digital WHS.
• Accounting Method: to accommodate different ownership allocations by payment period.
• Hybrid Status: Identify when intermediary’s IMY form requires the withholding statement.

For more information on TAINA’s Standard Withholding Statements can add value to your business, get in touch or download the templates here.