Last week the IRS issued a new draft Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding. This is the third such draft form released (with the drafts of two new forms W-8BEN released earlier this summer).

Much like the brand new draft W-8BEN-E (again one of two new W-8BEN's whereas there used to be just one) this new W-8IMY is a long seven page form - meaning there will be mutiple key validation issues you will need to address as you review these forms - with each draft form essentially broken into two parts. The commonality in structure between several of the new forms is because the IRS is currently revamping the entire W-8 series as a result of the new information reporting rules and compliance tasks created by not only the new I.R.C. Chapter 4 (created by FATCA, the Foreign Account Tax Compliance Act), but also those posed by the long standing I.R.C. Chapter 3 (the Section 1441 nonresident alien withholding rules). 

Needless to say, one of the biggest issues facing AP & Tax departments actually goes beyond the difficult and time consuming task of identifying potential liability issues and validation hotpoints on the new draft forms in comparison to the existing forms. Perhaps the biggest initial problem is that these forms are just drafts, with final versions expected later this year, all while filing season is just around the corner. In particular if your team is integrating new staff there are a number of challenges created in large part because they will have to be trained on using the existing Forms W-8 plus quickly learn what is different in the new draft forms and how that will impact the upcoming reporting season. Of course, our tax attorney's can help you handle such difficult tasks, just as we are currently helping hundreds of your peers in AP who are already TIR Answer Center subscribers!