In response to the new requirements imposed by the Foreign Account Taxpayer Compliance Act (FATCA) and the proposed regulations promulgated thereunder, the IRS has prepared two new withholding certificates:
Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (Individual).
Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding (Entities).
While the withholding forms provide a first look at the actual new reporting requirements that FATCA ultimately will impose on virtually all non-US persons receiving passive income from US sources, the IRS has not yet published draft instructions for the new certificates. As a result, certain important implementation issues raised under the Proposed Regulations and FATCA generally remain unanswered.
For now . . .
Until the new withholding forms are released in final form by the IRS in December, you should continue to use the existing Form W-8BEN where required under current law.
The new withholding certificates effectively divide the information reporting requirements between two classes of payees: nonresident alien individuals and all foreign entities other than individuals.
New W-8BEN will simplify the declarations required to be made by foreign individuals. It will only require basic identifying information, declarations with respect to treaty status (as relevant), and a general certification as to foreign status.
New W-8BEN-E will require each foreign entity to make two distinct declarations:
The foreign entity’s status for purposes of the US outbound withholding tax regime (e.g., the 30 percent withholding tax generally imposed on US-source dividends paid to non-US persons unless reduced by an applicable income tax treaty). This will be the same as the declaration required in the current IRS Form W-8BEN, as last revised in 2006.
The FATCA-related declaration, which will require an entity to provide substantial detail by declaring its overall status for FATCA purposes from among twenty-four different categories (all described in detail in the Proposed Regulations).
In addition, new W-8BEN-E will require a foreign entity to provide its Foreign Financial Institution Employer Identification Number and FATCA ID, as applicable (both are discussed in the Proposed Regulations).
Full Article: http://www.accountingweb.com/article/irs-posts-draft-revised-withholding-forms-conforming-fatca/219273