IRS Notice 2011-71 simplifies payee documentation rules for payments from an offshore payer settled to an offshore account and permits substitute forms in lieu of Form W-8BEN.
Background of Section 6050W
Section 6050W — added to the Code by the Housing Assistance Tax Act of 2008 (Pub. L. No. 110-289) — requires annual information returns by merchant-acquiring entities and third-party settlement organisations reporting payments made in settlement of payment card transactions and third-party network transactions during a calendar year. The Section 6050W information return requirement is effective for returns for calendar years beginning after December 31, 2010.
W-8BEN Substitute Form Requirements
The regulations now state that, in order for a participating payee to certify non-U.S. status (foreign status), a substitute form can now be used containing the following mandatory information in lieu of a Form W-8BEN:
- Name of Payee
- Country of Incorporation (when applicable, for non-individuals)
- Type of Entity
- Residence and Mailing Address (mailing address should be supplied if different from the residence address)
- The certification of the payee’s non-U.S. status made under penalties of perjury, and
- In the case of a participating payee that is an entity, the capacity of the individual providing the certification of behalf of the payee
The certification statement for a substitute Form W-8BEN for Section 6050W purposes may consist of the following wording in lieu of the certification and penalties-of-perjury statement contained on the Form W-8BEN:
Under penalties of perjury, I declare that the payee providing this certification is not a United States person (i.e., a citizen or resident of the United States as determined for U.S. federal tax purposes, a corporation or partnership created or organized in the United States or under the law of the United States or of any State, any estate that would be subject to U.S. federal income tax on income from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, or any trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust), that the income to which this certification relates is not effectively connected with the conduct of a trade or business in the United States, and that the undersigned has examined the information on this form and to the best of my knowledge and belief it is true, correct, and complete. Furthermore, I authorize this form to be provided to any person that has control, receipt, or custody of the payment to which I am entitled or any person that can disburse or make the payments to which I am entitled.
To access Notice 2011-71, please go to http://www.irs.gov/pub/irs-utl/notice_2011-71.pdf.