Presenting a live 110-minute teleconference with interactive Q&A Form W-8IMY: Preparing for Expanded Reporting of U.S. Withholding WEDNESDAY, NOVEMBER 7, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Kelli Wooten, Of Counsel, Burt Staples & Maner , Boston, MA Gretchen Wyatt, International Senior Tax Manager, Alpern Rosenthal , Pittsburgh Jacqueline Bak, Director, PricewaterhouseCoopers , Washington, D.C. For this program, attendees must listen to the audio over the telephone. Please refer to the instructions emailed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Form W-8IMY: Preparing for Expanded Reporting of U.S. Withholding Seminar Nov. 7, 2012 Kelli Wooten, Burt Staples & Maner Gretchen Wyatt, Alpern Rosenthal kwooten@bsmlegal.com gwyatt@alpern.com Jacqueline Bak, PricewaterhouseCoopers jacqueline.bak@us.pwc.com
Today’s Program Introduction To Changes In Forms W-8 Under FATCA Slide 8 – Slide 13 [Kelli Wooten] Slide 14 – Slide 41 Form W-8IMY , In Detail [Gretchen Wyatt] Forms W-8BEN-E, W-8ECI And W-8EXP , In Detail Slide 42 – Slide 53 [Jacqueline Bak] Compliance Challenges And Best Practices Slide 54 – Slide 59 [Kelli Wooten]
Notice ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY THE SPEAKERS’ FIRMS TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation, the tax treatment or tax structure, or both, of any transaction described in the associated materials we provide to you, including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those materials. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser. 7
Kelli Wooten, Burt, Staples & Maner INTRODUCTION TO CHANGES IN FORMS W-8 UNDER FATCA
New Forms W-8 The IRS has recently released new draft Forms W-8 incorporating the • requisite data/details needed for FATCA compliance. ― Form W-8BEN: Foreign individual beneficial owner ― Form W-8BEN-E: Foreign entity beneficial owner ― Form W-8IMY: Foreign intermediary ― Form W-8ECI: Income effectively connected with a U.S. trade or business ― Form W-8EXP: Foreign government and other tax-exempt organizations • Final versions and corresponding instructions are scheduled for release in December 2012. • A new Form W-9 is expected prior to the end of the year. It will include boxes to identify “specified U.S. persons” under Chap. 4. 9
Key Changes The complexity of the FATCA provisions requires significant • changes vs. existing form versions. Forms will be used for both Chapter 3 (NRA reporting and • withholding) and Chapter 4 (FATCA) purposes. • Certain FATCA classifications – specifically, PFFIs and certified deemed compliant FFIs – will require additional documentation such as validation of FFI-EIN or submission of organization chart, financial statements or other documentation in order to be considered valid. 10
Other Key Changes The most notable change is that the new Form W-8BEN is now • two separate forms: Form W-8BEN for use by individuals only, and Form W-8BEN-E for use by entities only (significantly expanded to six pages). The new Form W-8IMY generally adopts the format of the new Form W-8BEN-E (significantly expanded to seven pages). • The draft forms rely heavily on instructions, but the IRS has not yet released draft instructions. It is difficult to fully appreciate the due diligence requirements without instructions. • The capacity field has been a consistent challenge for withholding agents. New forms include a checkbox for capacity, as opposed to requiring the signor to list his/her capacity. 11
Sunset Period FATCA implements a six-month sunset period for new tax forms; • withholding agents have six months following the issuance of a new form to transition to the new form. A withholding agent cannot accept a previous version of a form more than six months after a new form is issued. 12
Administrative Matters The FATCA proposed regulations ease the administrative burden • by allowing for faxed Forms W-8, if the withholding agent confirms the person furnishing the withholding certificates is the person named on the form. Affidavits of unchanged status may be used for forms provided • after payment is made. However, additional documentary evidence is required in addition to the form and affidavit, if the form is submitted to the withholding more than one year after payment is made. Forms received within 15 days of payment will not require an affidavit. 13
Gretchen Wyatt, Alpern Rosenthal FORM W-8IMY, IN DETAIL
New Form IMY Major changes to draft forms • ― Form significantly expanded to account for new FATCA certifications (now seven pages vs. two pages) ― Forms will be used for both Chap. 3 and Chap. 4 purposes. ― Form instructions will provide validation requirements. Draft instructions have not yet been released by the IRS. 15
New Form W-8IMY (Cont.) 16
New Form W-8IMY (Cont.) Line 2: Country of incorporation or organization • ― Country names cannot be abbreviated. Abbreviating (e.g., U.K. instead of United Kingdom) will invalidate the form. Line 3: Chap. 3 status • ― Intermediary will have to select Chap. 3 status. ― Only one box can be selected. 17
New Form W-8IMY (Cont.) Line 4: Chap. 4 status • ― Other status is supposed to be a placeholder for any additional statuses that may be announced as part of final regulations. ― Chap. 3 and Chap. 4 statuses must be consistent – e.g., an NQI for Chap. 3 cannot be an owner-documented FFI for Chap. 4, as owner- documented FFIs cannot be intermediaries. 18
New Form W-8IMY (Cont.) Line 5: Permanent residence address • ― Country names cannot be abbreviated. • Line 6: Mailing address ― Country names cannot be abbreviated. • Line 7: U.S. taxpayer identification number ― Now includes FFI-EIN, WP or WT EIN Line 8: Foreign tax identifying number • ― Will likely be a required field ― Instructions will be required to determine what, if any, due diligence requirements will apply for validating foreign tax ID number. 19
New Form W-8IMY (Cont.) Part II through Part VI • ― Provide additional information re: Chap. 3 status. • Note additional language “has provided or will provide a withholding statement, as required, for purposes of Chapter 3 and 4 of the Code that is subject to the certifications made on this form;” which makes it clear withholding statements are held to the same standards as the Form W-8IMY itself. References to documentary evidence on previous form have • been replaced by references to documentation, in order to encompass a broader range of documentation that may accompany the form on an ongoing basis. 20
New Form W-8IMY (Cont.) Part VII through Part XXIII • ― Provide additional information re: Chap. 4 status. Part XXIV: Certification • ― New language explicitly requires the entity to provide a new form, if there is a change in circumstance. ― Income reference on existing form is changed to amounts such that it includes gross proceeds that would not necessarily be considered income. 21
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