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EPS Article W9 Certification 900X330

Upcoming Changes to W-9 Certification

Monday, February 12, 2024

Important updates to this year’s Form W-9 requirements

In December 2023, the IRS published updates to Form W-9 for the first time in five years. This form is essential for reporting to the IRS and ensuring compliance with all tax regulations. The changes highlighted below will affect the 2024 tax season.

What is a W-9 Form?

  • The Form W-9 is a critical document used by financial institutions and other entities to request U.S. taxpayer identification information from their clients, such as individuals, partnerships, corporations, and others.
  • This form Is a request for Taxpayer Identification Number (TIN) and Certification.
  • It serves a crucial role in the tax reporting process, ensuring compliance with the IRS regulations.
  • All U.S. shareholders are required to submit a Form W-9 to certify their Tax Identification Number (TIN).
  • A “TIN” is either a Social Security Number (SSN) for individuals, or an Employer Identification Number (EIN) for entities.
  • EQ is required to impose backup withholding* (currently 24%) on payments to un-certified U.S. shareholders, and to deposit those tax amounts with the IRS, in a timely manner.

*EQ as a reporting/paying agent is required by the IRS to collect a W-9 or W-8 form from each shareholder.

Form Revisions Background

  • The last time the IRS revised Form W-9 was in October 2018.
  • The earliest to take effect would be October 2023, meaning latest date to adopt would be May 1, 2024.
  • The IRS published new instructions December 2023.

What’s New

  • Line 3a updated. Line 3a is not applicable for a disregarded entity. We added guidance that provides clarity for disregarded entities completing lines 1 and 2. For proper processing, information for disregarded entities is reported as the owner’s name on line 1, and the disregarded entity’s name is entered on line 2.
  • The notable change in the October 2023 revision of Form W-9 is the addition of a new line 3b. A new line has been added for partnerships (including limited liability companies (LLCs) classified as partnerships for U.S. federal tax purposes), trusts, or estates to indicate if they have foreign partners, owners, or beneficiaries when providing this form to a flow-through entity in which it owns an interest. This change provides the flow-through entity with information regarding the status of its indirect foreign partners, owners, or beneficiaries, so that it can satisfy any applicable reporting requirements.
  • The key updates to the draft W-9 form relate to a new tax classification election for flow-through entities to indicate that it has direct or indirect foreign partners, owners, or beneficiaries. The impacted regime would be the Foreign Account Tax Compliance Act (FATCA), therefore affecting Financial Institutions with 1099 reporting obligations.
  • Flow-through entities, which pass their income through to their owners or partners for tax purposes, are now required to complete this line if they have direct or indirect foreign partners, owners, or beneficiaries.

Contact your relationship manager or other EQ contact for any assistance or further information regarding these upcoming changes to W-9 Certification.

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