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August 7, 2013: IRS Releases Instructions for the Requestor of Form W-9

Foreign Account Tax Compliance Act (FATCA)


New instructions highlight the changes in draft Form W-9

The IRS has released draft instructions for the requestor of Form W-9. The new instructions highlight the changes in the previously released draft Form W-9 that include the following:

  • Two new exempt entity fields, one to indicate that an entity is exempt from back-up withholding and another to indicate that the entity is exempt from FATCA withholding;
  • Updated lists of payees exempt from back-up withholding (consistent with the new Form W-9, the instructions for the requestor remove international organization and foreign central bank of issue from the list);
  • A list of the payees and account holders exempt from FATCA reporting;
  • Changes to incorporate updates required by Section 6050W which governs payments made to settle payment card or third party network transactions (corporations are not exempt from backup withholding for such payments);
  • Added “Gross proceeds paid to an attorney [even if a corporation]” to the list of payments that are not exempt from backup withholding if reportable on the Form 1099-MISC; and
  • An updated certification that any FATCA exemption code entered on the form is correct.

The instructions note that since FATCA reporting with respect to U.S. persons (i.e., Form 8966 reporting) will generally only apply to foreign financial institutions (“FFIs”), U.S. financial institutions
maintaining an account in the U.S. will generally not need to collect an exemption code. There is some limited Form 8966 reporting for U.S. withholding agents making payments to certain passive NFFEs or owner documented FFIs. However, such reporting will generally be for individuals and individuals would not be exempt from FATCA reporting.

As with the prior version of the instructions for the requestor of Form W-9, this version includes requirements for using a substitute version of the Form W-9 in lieu of the official form. The instructions continue to state that the substitute Form W-9 must be “substantially similar” to the official IRS form meaning that substitute forms must incorporate the new exemption codes for backup withholding and FATCA reporting (even though it will not apply to most U.S. financial institutions as noted above). The updated instructions also add the new FATCA certification language with respect to the FATCA exemption codes entered on the form. However, the wording in the instructions states that the certification “must” read as follows “The payee is exempt from FATCA reporting.” That is an odd statement given that the payee may not be exempt and may not have entered an exemption code on the form (which is likely the case for a payee of a U.S. financial institution). This is probably an oversight given that the draft Form W-9 states that the certification is only “if” an exemption code was provided on the form. Hopefully the final instructions will clarify this issue.

More importantly, the updated substitute Form W-9 requirement means that withholding agents who currently rely on such certification language in custom account opening forms (both digital and paper) will need to update their systems and/or account opening/investor onboarding documents to comply with the new Form W-9 certification requirements. This may require system updates that will likely need to be in place within 6 months after the Form W-9 is finalized (to meet the new FATCA compliance deadlines, this likely means by July 1, 2014). Impacted withholding agents, particularly those using substitute Form W-9, should review the changes and begin preparing updates to procedures and systems (as required) to comply with the new requirements.

The full article and draft instructions for the request of Form W-9 are available for download. The previous May 17, 2013: New Draft Form W-9 publication includes the original summary of the draft Form W-9 and the annotated and original versions of draft From W-9.

For more information please contact a Deloitte FATCA Leader or click here.

As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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