We have questions regarding W-8s:

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Q. (cont.)

  1. We had a vendor compete a substitute W-8BEN-E for non-FATCA payments. Is this OK? When are we required to get the 8-page W-8BEN-E if the payments are non-FATCA?
  2. If we are making non-FATCA payments to our vendors, do they have to check a box on line 4 (chapter 3 status) AND line 5 (chapter 4 status) on the W-8BEN-E? If so, why?
  3. When a foreign vendor is claiming a treaty and they provide a foreign TIN number on line 9b, how do we determine if this number is correct? I know the IRS has the U.S. TIN matching program, but are there programs out there that we can match foreign numbers?
  4. Why is a U.S. “mailing” address disallowed if they provide a permanent foreign address?

A.

  1. If the vendor payments are non-FATCA, then a substitute W-8BEN-E without all the extra pages is fine. In fact, tax Experts Cokala have suggested AP might want to develop a substitute form W-8BEN-E for use in exactly that situation. Instructions for substitute forms can be found in the “Instructions for the Requester of the Forms W-8.”
  2. According to the Instructions for the Requester of the Forms W-8, no, vendors receiving only non-FATCA payments (i.e., receiving typical vendor payment for services) do not have to check a box on line 5 (chapter 4 status). See page 7 of the Instructions.
  3. We don’t find a requirement for you to verify a vendor’s foreign tax ID number – the IRS does not hold you responsible to do that. Nor are we familiar with any TIN Match resources in other countries that would provide a service comparable to the IRS TIN Match program.
  4. Here is our understanding (we at IOFM are not tax attorneys!) – A U.S. address calls the entity’s foreign status into question; you may not rely on a W-8 that has a U.S. mailing address, unless you have other documentary evidence of the entity’s foreign status (foreign articles of incorporation, etc.) - see the Instructions, page 11. Entities have been known to try to “work” treaty claims to their advantage. The IRS is trying to ensure that an entity claiming foreign status and tax treaty is legitimate – the IRS expects a foreign entity making a treaty claim to actually reside in the country under which it is making that claim. A U.S. address may indicate resident alien status, meaning the entity is subject to the same U.S. taxation as a citizen.
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