January 23, 2017

IRS Issues Revised Form W-8BEN-E and Instructions

By Douglas Nakajima, Director, Tax & Business

Douglas Nakajima, Director, Tax & Business

IRS Issues Revised Form W-8BEN-E and Instructions Tax & Business

On April 16, 2016, the IRS released an updated version of Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities), along with Instructions.

Generally, foreign persons are subject to U.S. tax at a 30% rate on income received from U.S. sources, which is collected by the payer or withholding agent.  Foreign entities utilize Form W-8BEN-E to make certain certifications relevant to U.S. withholding tax and information reporting. For example, the reporting entity may claim beneficial ownership of income received or may be entitled to a reduced tax rate or exemption due to an income tax treaty.

A withholding agent could have continued to accept the prior version of Form W-8BEN-E until January 1, 2017; however, after this date, the prior version may not be accepted.  (Generally, the validity period for Form W-8BEN-E starts on the date the form is signed, and it ends on the last day of the third succeeding calendar year).

One substantial update on the revised form is included within Part III, Claim of Treaty Benefits.  A taxpayer who is claiming treaty benefits will be required to check the relevant box associated with the limitation on benefits (LOB) test it meets.  The checkboxes for the LOB test are new and were not on the prior version of the form.

Should you have any questions about this new form or how it may apply to your business, contact your Marcum International Tax Services Group advisor.

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