June 16, 2021

By Joshua Ashman, CPA & Nathan Mintz, Esq.

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The Significance of Form W-9 for US Expats

If you are a U.S. citizen living abroad, the chances are that you’ve been asked by your foreign bank to sign a Form W-9, Request for Taxpayer Identification Number and Certification.

In this blog, we discuss the significance of Form W-9 for U.S. expats, so you can better understand the purpose of the form and its ramifications.

What is the Form W-9 and Why Has My Bank Asked Me to Sign it?

The Form W-9 is a short one-page form that asks for your name, address, and IRS tax identification number (SSN or ITIN in the case of an individual).

The Form W-9 certifies that you are in fact a U.S. person, which in turn means that your bank may have its own IRS reporting requirements with respect to your account.

Who Signs the Form W-9?

Individuals who are U.S. citizens, green card holders, and individuals who are treated as residents for U.S. tax purposes sign the Form W-9, if requested.

In addition, U.S. entities, such as corporations, LLCs, estates and trusts, sign the form with a U.S. employer identification number (EIN), if requested.

What is the difference between a Form W-9 and Form W-8?

While Form W-9 applies to U.S. persons, as described above, Form W-8 applies to non-US persons (non-US individuals sign the Form W8-BEN, while non-US entities sign the Form W8-BEN-E or, in certain cases, other versions of the Form W-8).

The Form W-8 serves a number of purposes that center around a non-US person’s businesses, investments, or other activities that produce U.S. source income. The form is given, for instance, by a non-US person to a U.S. payor or withholding agent, in order to certify that the non-US person qualifies by treaty or otherwise for a lower rate of U.S. tax withholding.

Foreign Bank Obligations Triggered by Form W-9

Foreign bank reporting obligations stem from FATCA, a U.S. law enacted in 2010 that is designed to combat offshore tax evasion by requiring U.S. taxpayers and foreign financial institutions (“FFIs”), including banks, to report overseas bank and asset information to the IRS.

To this end, the U.S. government has signed a number of so-called intergovernmental agreements (“IGAs”) with partner countries that have agreed to exchange information using digital exchange programs. Information is reported to the IRS either directly or through the government of the jurisdiction in which the FFI resides.

Many of the FATCA partner countries and their FFIs have made substantial efforts to become FATCA compliant, knowing that otherwise they and their account holders may become subject to a severe 30% withholding tax on US-source payments such as interest and dividends.

What happens if I do not sign the Form W-9?

As explained above, your bank very likely has reporting requirements related to FATCA, which is the reason they’ve asked you to sign the Form W-9.

Therefore, not signing a Form W-9 means that the bank will not be able to comply with FATCA, which may lead the bank to close your account and not keep you as a customer.

Should I Change Anything After Signing a Form W-9?

If you are up-to-date with respect to your filings, Form W-9 should not worry you as it is simply an informational form for your bank.

If, however, you are a U.S. person who hasn’t been filing tax returns and all required international forms, including FATCA form 8938 and the FBAR, signing the Form W-9 means it’s imperative that you get caught up with your filings as soon as possible.

There are several IRS amnesty programs available to help you get caught up, with the most popular being the Streamlined Procedures program, which allows non-willful late filers to get caught up with no penalties.

With increased communication between FATCA partner countries and an increased focus by the IRS on international taxpayers, it’s more important than ever for expats stay on top of U.S. tax compliance.


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