Highlights
- Use Form W-9 for U.S. payees and the appropriate W-8 for foreign payees. Request the form before the first payment. Without valid documentation, default withholding or presumption rules may apply
- Most W-9 and W-8 errors are preventable at intake
- The IRS draft Form W-9 (Rev. June 2026) adds a digital asset broker certification checkbox and new exempt payee Code 14. Any substitute W-9 requires updating once the final form is published
- CARF (Crypto-Asset Reporting Framework) requires documentation W-8 forms do not currently capture
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Obtain the right form before the first payment
W-8 series: which form applies
Review and validate data when the form arrives
U.S. indicia and conflicting documentation
Keep forms and records up to date
Upcoming changes to Form W-9 and W-8 series
How ONESOURCE Tax Information Reporting can help
Obtain the right form before the first payment
One question determines which form you need: is this payee a U.S. person or a foreign person?
For U.S. Payees, Form W-9. Collect name, TIN, and tax classification. Required for any U.S. person or business. Drives 1099 reporting.
For foreign payees, the W-8 series. Confirms foreign status, tax treaty benefits, and beneficial ownership. Used for 1042-S reporting. Which version applies depends on the payee type and payment kind.
Individual nonimmigrant payee may alternate between being a U.S. person (W-9) and a foreign person (W-8BEN) for federal tax purposes from year to year, meaning that a W-8 may be required one year, while a W-9 may be appropriate the next year, or vice versa. Many nonimmigrants (and their payers) are unaware of the impact that U.S. presence, or lack thereof, for a certain period of time can have on an individual’s U.S. tax residency. To ensure accurate documentation and proper tax treatment, it is crucial for payers to be aware of this subtlety and design business practices accordingly.
Request the appropriate form before releasing the first payment. Without documentation on file, default withholding may apply: 24% on undocumented or improperly documented U.S payees under backup withholding rules, 30% on undocumented foreign payees on FDAP (Fixed, Determinable, Annual, Periodical) income such as interest, dividends, rents, royalties and certain compensations for services performed in the U.S.
W-8 series: which form applies
The W-8 series covers every foreign payee scenario. Each form serves a specific payee type and income situation.
- Form W-8BEN for foreign individuals. Common scenario: a non-U.S. individual receiving U.S. source income such as dividends, royalties, or service payments. Also used to claim a reduced withholding rate under a tax treaty on non-compensatory income.
- Form W-8BEN-E for foreign entities. Common scenario: a foreign corporation, partnership, or Limited Liability Company (LLC) receiving U.S. source income. Includes Foreign Account Tax Compliance Act (FATCA) status documentation. The most used W-8 form for foreign business payees.
- Form W-8ECI for foreign individuals or entities. Common scenario: a foreign person whose U.S. source income is effectively connected with a U.S. trade or business. The payee files a U.S. income tax return and must include a U.S. TIN on this form.
- Form W-8EXP for foreign governments and tax-exempt organizations. Common scenario: a foreign government, international organization, foreign central bank, or foreign tax-exempt organization claiming a withholding exemption under a specific Internal Revenue Code (IRC) provision.
- Form W-8IMY for foreign intermediaries and flow-through entities. Common scenario: a foreign entity acting as an intermediary, nominee, or agent on behalf of others, or a foreign partnership or trust passing income through to its partners or beneficiaries.
Most foreign individual payees use W-8BEN. Most foreign entity payees use W-8BEN-E. If a foreign payee conducts business activity in the U.S., confirm whether W-8ECI applies before accepting W-8BEN-E. Income effectively connected with a U.S. trade or business, including services performed physically in the U.S., disqualifies a payee from using W-8BEN-E for that income type. Form W-8ECI generally may not be used by an individual to claim exemption from withholding on compensation for personal services. Separate rules and documentation requirements apply to personal services income.
The W-8ECI also is generally not appropriate for personal holding company income.
Review and validate data when the form arrives
When you receive a W-8 or W-9, consider checking the following:
- Name and TIN alignment with the Internal Revenue Service (IRS). A mismatch generates a CP2100/2100A (B-Notice) after filing, opening a correction cycle that includes contacting the payee and potentially applying backup withholding. For audit purposes, keep records of all forms received and reviewed, not just the ones you file.
- Required fields are complete. A missing address, certifications, or signatures makes the form invalid even if the payee filled in everything else.
The IRS TIN Matching program allows payers and/or their authorized agents to verify name-TIN pairs before submission. Running that check before filing catches mismatches before a B-Notice arrives.
U.S. indicia and conflicting documentation
A W-8 establishes foreign status, but certain information on the form or in your records can compromise that claim. Under Regulations section 1.1441-7(b), a withholding agent who knows or has reason to know that a W-8 is unreliable or incorrect cannot rely on it.
U.S. indicia are signals that a payee claiming foreign status may be a U.S. person. Under Regulations section 1.1441-7(b)(5), the IRS identifies these as U.S. indicia:
- U.S. permanent residence or mailing address,
- U.S. place of birth, a U.S. phone number as the only number on file,
- Evidence of U.S. citizenship, such as a U.S. passport reflected in account records.
- Notification by the payee of a new U.S. address.
The same applies to W-9s. If a payee submits a W-9 claiming U.S. status, but your records show a foreign address, or the payee previously submitted a W-8, you have conflicting information and cannot rely on the W-9 without resolving it. The indicia check applies to digital asset accounts under the same rules.
In most cases, a payee should not have both a valid Form W-9 and a Form W-8 covering the same payment stream during the same period. However, individuals whose U.S. tax residency status changes during the year may legitimately transition between Forms W-8 and W-9, provided the documentation accurately reflects their status at the time payments are made.
Conflicting indicia do not automatically invalidate a W-8 or W-9, but you must request additional documentation before relying on either form.
Common W-9 and W8 errors
Certain errors appear consistently. Knowing them helps you build intake checks that catch problems before they reach filing.
W-9
- Wrong federal tax classification checked for the entity type
- Single-member LLC enters the LLC’s EIN instead of the owner’s TIN
- Name on the form does not match the IRS-registered name for that TIN
- Backup withholding certification left unchecked or crossed out
- Missing signature or dates
- Substitute W-9 missing certifications from the current IRS revision
W-8 Series
- Wrong form type submitted
- Treaty benefit claimed without the required U.S. TIN
- Incorrect or missing identification details
- Missing or invalid Global Intermediary Identification Number (GIIN)
- FATCA chapter 4 status box left blank or incorrectly selected on W-8BEN-E
- Form submitted after the three-year expiration without renewal
- Payee fails to notify the withholding agent when circumstances change (tax status, address…)
Keep forms and records up to date
The January 2026 draft W-9 issued in September of 2025 would have eliminated the long-standing ability of sole proprietors to provide an EIN on Form W-9, effectively requiring an SSN or ITIN instead. The June 2026 draft reversed that change and restored the prior rule allowing sole proprietors to provide either an SSN/ITIN or an EIN. The June draft did not change the existing rule that a disregarded single-member LLC must provide the owner’s TIN rather than the disregarded entity’s EIN.
Both draft versions include a certification checkbox for digital asset brokers and new exempt payee Code 14. A substitute W-9 missing required certifications is not valid, regardless of whether the payee completed it.
Forms W-8BEN and W-8BEN-E are generally valid for three years from the date they are signed, unless the payee’s circumstances change before that. Track expiration dates at collection, not at year-end.
Payee records also change for reasons unrelated to expiration. A payee may reorganize, update their legal name, change their TIN after a business restructure, or shift from foreign to U.S. status. A new address, a new business name, or a change in payment type is a signal to request updated documentation. Keep form history for audit purposes.
Upcoming changes to Form W-9 and W-8 series
The IRS released a draft Form W-9 (Rev. June 2026). It is not yet final. Any substitute form requires updating to include the new digital asset broker certification, regardless of whether your payees hold digital assets.
Three form-level changes in the June 2026 draft:
- The June 2026 draft reversed a more restrictive change imposed by the September 2025 draft, which would have required many sole proprietors to provide an SSN or ITIN only. The June 2026 draft again allows a sole proprietor with an EIN to provide either their SSN or EIN, and a single-member LLC treated as a disregarded entity continues to follow the long-standing rule: the owner’s TIN must be provided, not that of the disregarded entity.
- A new checkbox in Part II allows certain U.S. digital asset brokers to certify their exempt status under the multiple broker rule: only the broker who credits gross proceeds to the customer’s account files Form 1099-DA. This replaces the written-statement workaround under Notice 2024-56. Until the IRS publishes the final form, brokers may rely on a written statement from another broker certifying U.S. digital asset broker status. That written statement remains valid for one year from the end of the revision month shown on the final form.
- New exempt payee Code 14 covers digital asset transactions exempt from backup withholding under Notice 2025-33 through calendar year 2026.
IRS posted the June 2026 draft revision in May 2026. As of August 11, it had not yet been finalized. Two possible reasons for the delay might be:
- Unresolved implementation concerns raised by financial institutions (especially transition rules): In a comment letter submitted on June 8, 2026, the American Bankers’ Association stated that it still had significant concerns with the new draft instructions and urged the IRS to revise the treatment of form revisions and provide transition relief. The main concern was that the wording of the instructions implied that the new Form W-9 would have to be implemented immediately upon finalization, with no transition period; and
- Complexity arising from digital asset reporting and implementation of 1099-DA: Industry analysts note that the drafts introduce, among other things,
- New digital asset broker certifications
- A new exempt payee code
- References to 1099-DA reporting
- Backup withholding provisions tied to digital asset transactions,
all of which have likely generated concerns across the reporting industry in general.
The IRS has not released drafts for the W-8 series. Current forms and instructions remain valid until the IRS announces otherwise. However, tax experts have identified potential areas where revisions are expected, such as the mismatch between what CARF requires vs what current W-8 series collect and guidance on foreign digital assets brokers and Controlled Foreign Corporations (CFCs).
CARF requires entities to select a status classification like CRS (Common Reporting Standard), a category the current W-8BEN-E chapter 4 status list does not include for digital asset service providers. As the IRS brings W-8 documentation into alignment with CARF and Form 1099-DA requirements, those classifications will need to be updated.
CARF also requires passive entities and managed investment entities to disclose controlling persons, including date and place of birth for individuals, data the W-8BEN-E does not capture for non-financial accounts. Until the IRS updates the W-8 series, organizations in scope for both CARF and U.S. withholding must collect CARF self-certifications separately from W-8 documentation.
The IRS did not address foreign digital asset brokers or CFCs in the final TD 10000 regulations, intentionally setting those rules aside for future guidance coordinated with CARF. Proposed regulations reached the White House Office of Information and Regulatory Affairs on November 14, 2025, statutory changes are still required.
CARF: What is it
The Group of Twenty (G20) tasked the Organization for Economic Cooperation and Development (OECD) with addressing the crypto tax blind spot, designing CARF, the Crypto-Asset Reporting Framework. It requires Reporting Crypto-Asset Service Providers (RCASPs) to collect user identity data including TINs for all tax residencies and report transaction data to their domestic tax authority, which then shares it across participating countries. CARF covers cryptocurrencies, stablecoins, fungible tokens used for payment or investment, and certain NFTs.
As of May 2026, 48 jurisdictions committed to first CARF data exchanges by 2027, with 27 more by 2028. The EU activated CARF through DAC8 on January 1, 2026. The U.S. committed to first exchanges by 2029 but has not joined as a direct CARF participant. The IRS implemented Form 1099-DA to cover the same ground for domestic brokers in the meantime.
How ONESOURCE Tax Information Reporting can help
Most filing season problems trace back to intake. Collect the right form, review and validate the data, update records when payee information changes. ONESOURCE Tax Information Reporting supports the full documentation cycle, W-9 and W-8 collection, TIN validation against IRS records, withholding determinations, B-Notice processing, and form 1099, 1042-S, and 1099-DA filing from a single platform.
