LeGaye Law Comments on the Treasury Regulations Implemented to Address FATCA Impact Broker-Dealers and Investment Advisers
The Woodlands, TX (PRWEB) September 30, 2014 -- To address the certification, reporting and withholding requirements, the Internal Revenue Service has split the Form-8BEN into two separate forms, and expanded the Form W-8IMY. For a brief summary of Treasury Regulations and the Form W-8BEN, Form 8BEN-E and the Form W-8IMY as well as access to the full article published by The LeGaye Law Firm, PC, please (Click Here).
To assist in your analysis of the utilization of the forms discussed in the article, the following briefly sets out a number of customer account ownership scenarios and a brief discussion of action items that will assist in achieving compliance with the new Treasury Regulations.
Customer Scenarios for Broker-Dealers and Investment Advisers
Foreign Entity – Single Foreign Individual Owner. If the account is owned by a Foreign Entity that is, owned by one Foreign Individual, the account will be deemed to be owned by a Foreign Individual if a Form W-8BEN-E is provided for the Foreign Entity and a Form W-8BEN is provided by the individual owner.
Foreign Entity – Single Foreign Entity Owner. If the account is owned by a Foreign Entity that is owned by one foreign entity (“Owner Entity”), the account will be deemed to be owned by a Foreign Individual if a Form W-8BEN-E is provided for both the Foreign Entity and the Owner Entity and a Form W-8BEN is provided by all individual beneficial owners of the Owner Entity.
Foreign Entity – Multiple Foreign Individual Owners. If the account is jointly owned by more than one Foreign Individual, the account will be deemed to be owned by a Foreign Individual if a Form W-8BEN-E is provided for the Foreign Entity and Form W-8BEN is provided by every Foreign Individual owner of the account, and to the extent an entity is the owner, a Form W-8BEN-E for the entity and a Form W-8BEN for the individual beneficial owners of that entity.
Foreign Entity – Multiple Owner Entity & Foreign Individual Owners. If the account is jointly owned by more than one Foreign Individual and or an Owner Entity, the account will be deemed to be owned by a Foreign Individual if a Form W-8BEN-E is provided for the Foreign Entity and all Owner Entities and a Form W-8BEN is provided by every Foreign Individual owner of the account and every beneficial owner of the Owner Entity, and to the extent an entity is the owner of the Owner Entity, a Form W-8BEN-E for that entity and a Form W-8BEN for the individual beneficial owners of that entity.
Foreign pass through with foreign entity owner. If an account is not receiving withholdable payments or reportable amounts to document its status as an account holder, the entity may instead provide Form W-8BEN-E and W-8BEN on all beneficial owners; however, to the extent it is receiving withholdable payments or reportable amounts to document its status, it would provide a Form W-8IMY.
Foreign Financial Institution – Non-Intermediary. An FFI that is not an intermediary would provide Form-8BEN-E.
Foreign Financial Institution – Acting as Intermediary. An FFI that acts as an intermediary would provide Form-8IMY.
Action Items
In order to be in compliance with the Treasury Regulations and new and updated Form W-8s, both broker-dealers and investment advisers that have foreign individuals and or foreign entities as clients, should consider the following:
Contact your clearing firm and or custodian to determine if they will require any additional documentation related to the Form W-8s during the on-boarding process and when they will require you transition to the Form W-8BEN-E for foreign entities.
Procedures related to the on-boarding of new foreign clients should be reviewed and revised to address the utilization of the Form W-8BEN, Form W-8BEN-E and the Form W-8IMY.
The foreign entities that are currently clients should review documentary evidence related to their beneficial ownership. To the extent it is unclear as to the ultimate beneficial ownership of the foreign entity, the accounts should be repapered with current Form W-8s to assure compliance with FATCA and the Treasury Regulations.
Staff should be trained with respect to the impact on customer on-boarding process and on the repapering process with respect to the Form W-8BEN-E.
This information has been provided to you courtesy of The LeGaye Law Firm, P.C., 2002 Timberloch Drive, Suite 200, The Woodlands, Texas 77380. Visit our web site at http://www.legayelaw.com. Should you have any additional questions, please feel free to contact Daniel E. LeGaye or Michael Schaps by e-mail or phone, at 281-367-2454, or consult with your legal counsel or compliance consultant. The information contained herein is not, nor is it intended to be legal advice or establish or further an attorney-client relationship. All facts and matters reflected in this information should be independently verified and should not be taken as a substitute for individualized legal advice. You should consult an attorney for individual advice regarding your own situation. Not Board Certified by Texas Board of Legal Specialization.
Daniel E. LeGaye, The LeGaye Law Firm PC, http://www.legayelaw.com, +1 281-367-2454, [email protected]
Share this article