FATCA & CRS Alert 2017-10 QI Alert 2017-08 | KPMG | LU
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FATCA & CRS Alert 2017-10 QI Alert 2017-08

FATCA & CRS Alert 2017-10 QI Alert 2017-08

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2017 Final Version of Form W-9 and Form Instructions

The Internal Revenue Service (IRS) recently finalized the 2017 version of Form W-9 Request for Taxpayer Identification Number and Certification.

All changes reflected in the draft 2017 Form W-9 have been incorporated into the final version of the form; however, the IRS has not yet finalized the Instructions for the Requestor of Form W-9.

Below we have summarized the changes to the Form W-9 and the Instructions for the Requestor of Form W-9.


Purpose of the Form W-9.

Form W-9 is used by a payee to provide their taxpayer identification number to the person who is required to file an information return with the IRS for certain income paid to the payee.


Updates to the Face of the Form W-9

The only changes the IRS made to the face of the form are with regard to Line 3, which are summarized below.

- The 2017 version directs the individual or entity completing the Form W-9 to check the appropriate box for the federal tax classification of the person whose name is entered on line 1.

- In addition, the IRS clarified how a disregarded LLC should complete Line 3 under the following scenarios:

o If the LLC is classified as a single-member LLC that is disregarded from the owner it should not check the LLC box unless the owner of the LLC is another LLC that is not disregarded from the owner for U.S. federal tax purposes.

o Otherwise, a single member LLC that is disregarded from the owner should check the appropriate box for the tax classification of its owner.


Updates to the Form W-9 Specific Instructions

  1. The specific instructions now provide that if a U.S. person is providing Form W-9 to a foreign financial institution (FFI) to document a joint account, each holder of the account that is a U.S. person must provide their own Form W-9.
  2. The specific instructions to Line 3 of the form (federal tax classification) are similar to instructions contained on the 2014 version of the Form W-9 but are now presented in a more user friendly table format.
  3. Line 5 of the specific instructions now instructs the individual or entity to write “NEW” at the top of the Form W-9 if the address provided on line 5 differs from the one that the requester already has on file. The IRS further cautions that if a new address is provided, there is still a chance that the old address will be used until the payor updates its records for the new address
  4. The IRS changed the line in Part I “Taxpayer Identification Number (TIN)” of the specific instructions, which had stated that the IRS preferred a sole proprietor to use its SSN as opposed to its EIN. The instructions now state t0hat the sole proprietor may provide either its SSN or EIN.

    KPMG Comment
    In addition, depending on the facts, it may be permissible for a grantor trust to document itself with a Form W-9 in the name/SSN of the grantor. Pursuant to Treasury Regulation § 301.6109-1(a)(2)(i)(B) “a trust that is treated as owned by one grantor or one other person under sections 671 through 678 is not required to obtain a TIN, provided the trust reports pursuant to § 1.671 4(b)(2)(i)(A).” Treasury Regulation § 1.671-4(b)(2)(i)(A) further provides that the grantor must furnish “the name and TIN of the grantor or other person treated as the owner of the trust, and the address of the trust . . . .”

  5. The IRS updated the “What Name and Number to Give the Requestor” table to address the new requirement for joint account holders of an account maintained by an FFI. The table now provides that for this type of account, the name and SSN of each U.S. person of the jointly held account must be provided.

    KPMG Comment
    While the IRS has not formally addressed the mandatory use of a new Form W-9, its administrative practice has historically followed the 6 month rule. Given this, the 2017 version of the Form W-9 must be used to document new payees beginning June 1, 2018.


Changes to the Instructions for the Requestor of the Form W-9 *Not yet finalized*

The IRS added a notation to the individual taxpayer identification number (ITIN) section of the instructions warning that if an ITIN has not been included on an individual’s U.S. federal tax return at least once in the last three consecutive tax years, the ITIN will expire. Although an ITIN may expire, it can be still be used on the Form W-9, but must be renewed in order to prevent delays in processing an individual’s tax return.


For Your Reference

The final 2017 version of Form W-9 can be found here (PDF | 127KB).

The 2017 draft version of the Instructions for the Requestor of the Form W-9 can be found here (PDF | 224KB).
 

Any tax advice in this communication is not intended or written by KPMG 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.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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