IRS Form W-9 Revision Adds New Reporting Line on Foreign Partners and Beneficiaries
The IRS in March released a final 2024 revision of Form W-9, “Request for Taxpayer Identification Number and Certification,” as well as accompanying final instructions. The updated form, which was last revised in 2018, includes a new reporting line for some flowthrough entities like partnerships.
Individuals or entities that are required to file certain information returns with the IRS use Form W-9 to request the taxpayer identification number (TIN) from U.S. persons and resident aliens for the required reporting. Taxpayers that do not reply to W-9 requests with their correct TIN may be subject to backup withholding.
The revised form adopts changes introduced in a draft revision released in July 2023 that added a new line 3b checkbox relating to flowthrough entities. Line 3 of the previous form asked respondents to check a box to indicate their federal tax classification as an individual, C corporation, S corporation partnership, trust/estate, or limited liability company (LLC).
The revised 2024 form breaks off a new line 3b, adding an additional checkbox for entities that indicate in line 3a (former line 3) that they are a partnership, trust/estate, or LLC classified as a partnership for U.S. federal tax purposes. The form instructs these entities that are providing the Form W-9 to a partnership, trust, or estate in which they have an ownership interest to check the box in line 3b if they have any foreign partners, owners, or beneficiaries.
The IRS has explained that the change is intended to give these flowthrough entities information regarding indirect foreign partners, owners, or beneficiaries for purposes of complying with relevant reporting requirements. This includes requirements for partnerships with indirect foreign partners to complete Form 1065 Schedules K-2 and K-3.
BDO Insight
Unlike for the W-8 series forms that individuals or entities outside the U.S. complete to claim an exemption from U.S. tax withholding for income earned in the U.S., the IRS is silent on whether a withholding agent or payor can continue to accept the prior version of Form W-9 for a sunset period. Generally, the rules for W-8 forms state that a withholding agent or payor may accept the prior version of the tax form for the later of six months after the revision date or the end of the calendar year the updated form is issued.
Typically, brokers and custodians do not necessarily need to request an updated Form W-9 since line 3b is not relevant for their account holders. On the other hand, flowthrough entities required to obtain Form W-9 from their partners, owner, or beneficiaries (e.g., investments funds) should consider incorporating the new revision as soon as possible.
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