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July 1, 2013: Updated Draft of Form W-8ECI for Income Effectively Connected with a U.S. Trade or Business

Foreign Account Tax Compliance Act (FATCA)


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Updated draft of form W-8ECI for income effectively connected with a U.S. trade or business

The IRS has released another draft of the Form W-8ECI for income effectively connected with a U.S. trade or business. Unlike the other recent Form W-8 releases, the Form W-8ECI has not undergone significant changes. Changes on the form include:

  • The addition of line 3 to enter the name of a disregarded entity that is receiving the payment (if applicable);
  • The addition of line 10 to enter the date of birth for an individual completing the form if the individual does not have a foreign tax identification number (this is in line with the update to the Form W-8BEN for individuals and helps with reciprocal reporting requirements of the U.S. under certain FATCA Intergovernmental Agreements);
  • The removal of gross proceeds language from line 11; and
  • The addition of the 30 day requirement for the beneficial owner to notify the withholding agent of a change of circumstance that makes any certifications on the form incorrect (this is in line with updates to other forms and requirements specified in the final regulations).
Instructions to the forms W-8, reporting forms, and other forms W-8

Instructions to accompany the newly released draft form were not released. The IRS has stated that it would not issue draft instructions and will instead publish final versions of the instructions along with the final versions of the Forms W-8 expected later this year. This leaves many open questions such as the foreign TIN validation requirements, GIIN collection requirements, and many more. Given the final version approach, it does not appear that industry will have an opportunity to comment on any new or missing items in the instructions.

Closing comments

The Form W-8ECI is the fifth updated withholding certificate published in draft form in the past few weeks, following the release of the Forms W-9, W-8BEN for individuals, W-8BEN-E for entities, and the Form W-8EXP for exempt beneficial owners. The last withholding certificate, the Form W-8IMY, should be released in a similar draft form soon and may generally follow the format laid out in the Form W-BEN-E.

Industry has been pushing for the new forms to be released given the short amount time left for FATCA to become effective and the amount of work necessary to update systems, processes, and procedures to accommodate the new forms. Hopefully the draft forms will help assist withholding agents jump start their compliance efforts despite the lack of final forms and instructions.

Full article and copy of the updated draft of Form W-8ECI along with the annotated version are available for download. 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 www.deloitte.com/us/about 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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