On 14 August 2015, the IRS added a frequently asked question (“FAQ”) to the General Compliance section of the FATCA – FAQs General section of their website (Link) – see FAQ Q11. FAQ 11 addresses a method of transmitting a Form W-8 from a payee to withholding agent where the payee sends the withholding agent an email containing a link to a third party repository that allows the withholding agent to download an image or PDF of the Form W-8 that has been scanned and stored on the repository. The FAQ explains that the withholding agent may treat the Form W-8 as having been scanned and received electronically, provided that the withholding agent does not know that the email containing the link to the third-party repository has been transmitted by someone other than the payee or an agent of the payee. Additionally, the FAQ indicates that because the email is sent to the withholding agent by the payee the Form W-8 is treated as being provided by the payee.
The withholding agent is still required to determine whether the form is valid and may be relied upon for purposes of chapter 3 or 4 and whether a change in circumstances affects its continuing reliance on the form.
The ability to transmit and receive a Form W-8 via a third party repository in this manner is a significant development as the IRS modernizes its rules in reaction to emerging practices. This FAQ does not address the portion of the question related to “third party repository in a similar manner” directly. Instead, the FAQ focuses on whether a payee is considered to have emailed a form and concludes that the form is being presented by email and is considered provided by the payee directly. This FAQ does not specifically address or provide further guidance about whether a link to a “third party repository in a similar manner” directly is the proper way for a withholding agent to obtain a Form W-8. As such, this FAQ presents a trap for the unwary that may be relying on an agent or third party data provider to obtain Forms W-8.