Operational tax news - Qualified Intermediary regime update - 23 February 2011


Revised Form W-9 issued by the IRS

A revised Form W-9 (“Request for Taxpayer Identification Number and Certification”) has been issued by the IRS. Although this new updated form is almost identical to the 2007 version, brokers and disregarded entities should more specifically pay attention to the revised form. New specific boxes are to be checked for “C corporation”, “S corporation” and “Trust/Estate”. This revision is necessary according to the issuance of the “Cost Basis Reporting” regulations which requires brokers to perform Form 1099-B reporting for “S” corporation beginning January 1, 2012 for sales of covered securities.

Generally speaking, contrary to “C” corporations, “S” corporations are corporations having opted to be partially treated as tax transparent for US federal tax purposes. Indeed, certain flow though income and loss are directly reported by the shareholders on their personal tax returns, the latter being treated as partners for some benefits but not for others.

From a practical point of view, brokers subject to the “Cost Basis Reporting” rules should re-solicit new Forms W-9 to determine that Form 1099-B reporting is completed correctly. Absent actual knowledge that a corporate customer is taxed as a “C” corporation or is otherwise exempt, the broker must request a Form W-9 exemption certificate or report gross proceeds for the corporate account holder.

The instructions also include specific guidance with respect to disregarded entities. The IRS makes clear that the owner’s name of the disregarded entity must appear on the “Name” line and not the name of the entity. Furthermore, the instructions state that the box which is checked must correspond with the federal tax classification of the person whose name is entered on the “Name” line. New specific rules are also applicable to Grantor Trust.

The revised Form W-9 is effective immediately and can be download directly from the IRS’s website through the following link:


If you have any queries regarding the above, please do not hesitate to contact us.