The W-8BEN-E is an Internal Revenue Service (IRS) form used by foreign organizations for doing business in the U.S. Only organizations and corporations need to file the W-8BEN-E form. Sole proprietors and individuals need to file the form. According to the University of Washington, the W-8BEN-E form is used to authenticate that a merchant is a foreign organization and must be filled before the merchant can be paid.
What Is the W-8BEN-E Form?
The W-8BEN-E is a form from the tax collection agency of the United State, the IRS (Internal Revenue Service). All non-U.S. (foreign) organizations that are getting payment from an American firm must fill out the W-8BEN-E form. The form is used to verify that the organization presenting the assistance is indeed a foreign entity. The W-8BEN-E is a new form that came regarding thanks to The FATCA (Foreign Account Tax Compliance Act).
According to Thomson Reuters, FATCA came in place in 2010 so that the Internal Revenue Service could learn more regarding the United States residents who are earning income or investing through non-U.S. sources, international. Also, its focus on cross-border tax acquiescence extends to foreign entities doing organizations with the United States clients.
Different Requirements For Different Merchants
There are different requirements for different merchants. The W-8BEN-E form is lengthy, and it has thirty sections. But, not all the fields of the form is to be filled by a foreign merchant to get paid by a United States organization. The requirements vary.
For example, The University of Washington only requires foreign merchants to fill out:
- Part I
- Part II
- Part XXIX
Individuals and sole proprietors must not fill out the form. Instead, individuals and sole proprietors are required to fill the W-8BEN form to receive payment from U.S. organizations.
Does the W-8BEN-E Form Expire?
The form W-8BEN-E can expire. It lasts until the end of the calendar year from the time it was signed and after that for the next three years. The form W-8BEN-E expires at the end of that term. For instance, a W-8BEN-E form signed in 2013 would be valid for the rest of 2013 along with 2014, 2015, and 2016. It would expire on 1st January 2017.
Once the form expires, a new form needs to be filled out by the foreign merchant and submitted to the American organization before any payments can be processed. Also, the W-8BEN-E form expires if any data on the form changes, like the address of the foreign merchant. According to the University of Washington, a new W-8BEN-E needs to be filled out and submitted.
To know more about the W-8BEN-E form, attend the Compliance Prime webinar.
