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Regis Quirin Director of Finance

If you have payments going to a foreign payee, have you asked for a Form W-8BEN-E to be completed?

Asked on April 23, 2014

Background - Effective July 1, under the Foreign Account Tax Compliance Act ("FATCA"), payments made to foreign entities may be subject to a 30% withholding. While there are exclusions, the place to start is to obtain a completed Form W-8BEN-E from the foreign payee. Has anyone broached the subject with its foreign payees? How was the request received? The Form W-8BEN-E is eight pages and exhaustive. I would expect some reluctance.

Answers

Wayne Spivak President & CFO • April 23, 2014

I have, for the last 10 years, had vendors fill out a W-8BEN-E, if they did work in the US.

Remember, non-US taxpayers who work for your company, but don't do ANY work in the US or its possessions do not have a tax liability to the US. In fact, odds are you have no duty to report the payments to the foreign government as well.

The issue with this form is that is asks for documentation from their country stating that the vendor is resident in that country. Many times it is not in English. Sometimes it is really cheesy looking.

If in doubt, the IRS rules allow you to still withhold the 30% (which I've done on occasion).

In the end, just more paperwork for you, another payment (or not) made to the IRS and maybe more paperwork for the vendor (filing both US and State(s) tax forms.

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