M E M O R A N D U M
March 14, 2011
TO: Distribution
FROM: Burt, Staples, Maner, LLP
RE: Electronic Form W-8 Validation Takes Off
Electronic validation has grown exponentially in the past two years
and is becoming the popular tool for US withholding agents and qualified
intermediaries (“WAs”) to obtain Forms W-8 and W-9 quickly and
efficiently from clients and vendors without spending hours collecting,
validating and revalidating paper documentation. Compliance Technologies
International, LLP (“CTI”), a pioneer in the electronic validation
field, is leading the way to compliance with its Digital W8TM and E-W8
applications.
This past year, CTI has obtained IRS approvals on
behalf of its clients for an increasing number of Memorandums of
Understanding (“MOU”) for electronic W8 systems. The MOU, among other
advantages, provides WAs with audit protection for their systems and
limits the scope of future IRS audits while the MOU is in effect. To
date, CTI has designed and/or built electronic W8 solutions for more
than 50 entities for whom CTI has negotiated MOUs with the IRS. This
trend continues in 2011, with CTI helping dozens more clients seek and
secure an MOU from the IRS.
CTI’s Electronic W8
Offerings
The majority of these MOUs have been issued
for CTI’s Digital W8TM or E-W8 applications, showing CTI’s dominance in
the electronic W8 validation market. The Digital W8TM and the E-W8
applications electronically automate the solicitation, renewal, and
validation of Forms W-8 and W-9 and assist beneficial owners with the
completion of Forms W-8 or W-9 online. The E-W8 application is ideal for
financial institutions and online banking and brokerage firms that want
to reduce the ongoing burdens and costs of paper solicitation and
re-solicitation. Digital W8TM is the perfect choice for multi-national
corporations (“MNC”) and financial institutions looking for the same
benefits of the E-W8 application, which uses an on-line interview
process to assist domestic and non-US vendors receiving payments for
non-financial income such as personal services income, business profits,
and/or royalties to complete forms properly.
Expanding on CTI’s
existing form validation tools (MD3 and MD4), the E-W8 and Digital W8TM
applications use similar validation engines for the validation of Forms
W-8 and W-9. Additionally the E-W8 application integrates the document
collection process into a client’s existing portal and account
opening/maintenance process, while Digital W8TM is integrated into the
MNC’s portal and vendor management process. Since the MOU process now is
streamlined and requirements consistently established, more WAs
seriously consider utilizing electronic W-8 tools. Additionally the IRS
is hinting new Forms W-8s will be issued in advance of the effective
date of the Foreign Tax Compliance Act, another incentive for WAs to
improve their current validation processes.
To learn more about
CTI and its electronic validation tools, visit our
product section. If you have any questions,
please feel free to contact us by phone at (202) 783-1553 or by email at
cdaftary@bsmlegal.com.