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Banks may now accept electronic W-8s in certain circumstances

The Internal Revenue Service’s Office of Chief Counsel recently issued an Advice Memorandum addressing the circumstances in which a withholding agent (such as a bank) may rely upon a Form W-8 that has been signed with a handwritten signature, scanned into an electronic system (for example, as a .pdf or facsimile), and then transmitted to the withholding agent.

Although the memorandum concludes that a withholding agent can validly rely upon a Form W-8 that has been transmitted electronically, it is not an absolute rule. Rather, the memorandum states that reliance “will depend on the facts and circumstances.”

Citing Treasury Regulations §1.1441-1(e)(4)(iv), the memorandum notes that the withholding agent’s electronic system needs to:

(i)

ensure that the information received is the information sent, and

(ii)

that the system documents each instance of user access that results in the submission, renewal or modification of the form.

More importantly, the withholding agent’s electronic system must make it reasonably certain that the person furnishing the form is the person named on the form.

To do this, the withholding agent would need to either:

(i)

ensure that the email address of the sender, or the email correspondence accompanying the electronically transmitted form, indicates that the individual or entity sending the form is the individual or entity named on the form;

(ii)

match the email address of the sender to the email address that the withholding agent has on file for the individual or entity named on the form; or

(iii)

confirm with the person named on the form, either orally or in writing, that the form was furnished by such person and documenting the name of the individual receiving the confirmation and the date that such confirmation was received.

Assuming the systems are in place to verify that the person sending the W-8 is the person signing the form, bank customers may print a Form W-8, manually sign it and then scan the signed form and email it to the bank. The bank must then maintain the scanned copy of the Form W-8 in lieu of an original signed Form W-8.

If you have any questions with respect to accepting a Form W-8 that is transmitted electronically, please contact Gunster’s Banking & Financial Services practice attorneys.

This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.

Established in 1925, Gunster is one of Florida’s oldest and largest full-service law firms. The firm’s clients include international, national and local businesses, institutions, local governments and prominent individuals. Gunster maintains its presence in Florida with offices in Fort Lauderdale, Jacksonville, Miami, Palm Beach, Stuart, Tallahassee, Tampa, The Florida Keys, Vero Beach and its headquarters in West Palm Beach. Gunster is home to more than 165 attorneys and 200 committed support staff, providing counsel to clients through 18 practice groups including banking & financial services; business litigation; construction; corporate; environmental & land use; government affairs; health care; immigration; international; labor & employment; leisure & resorts; private wealth services; probate, trust & guardianship litigation; professional malpractice; real estate; securities and corporate governance; tax; and technology & entrepreneurial companies. Gunster is ranked among the National Law Journal’s list of the 250 largest law firms.

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