The IRS has updated form W-8BEN, a form commonly used by U.S. businesses to obtain information about their customers, contractors, and freelancers. Read on to learn about the subtle but important changes that could affect how you do business with individuals outside of the United States.
The New "Not Legally Required" Checkbox
The most significant change is the addition of lines 6a and 6b. Line 6b, "FTIN not legally required," has been added for individuals to indicate that they are not legally required to obtain a tax identification number in their residence.
The instructions on the old form used to recommend writing "not legally required" in the field where your tax ID number would go, so the new checkbox adds some clarity and brings attention to the fact that residents of certain countries are not required to provide their FTIN. It also possibly increases the chances that individuals will incorrectly check the box (either because they are confused by the box, or they are trying to pull a fast one).
The IRS publishes a helpful list of countries where an FTIN is confirmed to be not legally required. Check out their list, which you may want to reference when you receive forms you that have the new “not legally required” box checked.
Other Key Changes
The old W-8BEN included a space to indicate the “Capacity in which acting” for instances where the form was not signed directly by the beneficial owner. This space has been replaced with a checkbox above the signature line that simply says “I certify that I have the capacity to sign for the person identified on line 1 of this form.”
The instructions have been updated to include additional guidance on the use of electronic signatures. Electronic signatures are allowed as long as they indicate that the form was electronically signed by a person authorized to do so (for example, with a time and date stamp and statement that the form has been electronically signed). Nextform attaches this information to its electronic signatures, and maintains a complete audit trail of the form session and signer information to satisfy electronic signature requirements.
If you collect a lot of form W-8BENs, you have probably found that verifying the information on the form and keeping track of who has provided one (and when) can be kind of a pain. Nextform simplifies collection, tracking, and record retention for Form W-8BEN. See for yourself with a free account.