Can you send us a W-9?

first_img ShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr continue reading » This week, NAFCU heard from many credit unions who received a letter from Progressive Insurance asking the credit union to fill out and return an IRS Form W-9. Many credit unions have asked us why this letter was being sent, if the credit union needs to do this, and similar concerns. While tax law is quite technical and complex, so somewhat outside the scope of our expertise, Progressive’s letter indicates their request is driven by a January 1, 2019 requirement under the U.S. Foreign Account Tax Compliance Act (FATCA).As background, FATCA was passed into law in March 2010 and requires backup withholding for certain kinds of payments. FATCA has a large impact on foreign financial institutions and nonfinancial foreign entities. Many credit unions are familiar with the W8-BEN form and other FACTA-related requirements. For example, FATCA also requires U.S. institutions to withhold tax on certain payments to foreign financial institutions (FFIs) that do not report information to the IRS regarding their U.S. accounts. U.S. withholding agents must also withhold tax on certain payments to nonfinancial foreign entities (NFFE) that do not provide information on their substantial U.S. owners. So what does this have to do with Progressive’s letter?As far as upcoming deadlines, from what we can gather, effective January 1, 2019, a 30% withholding tax will apply to “gross proceeds from the sale or other disposition” of any property that produces certain covered income. This applies to certain individuals when payments are made to some non-US financial institutions – generally for non-US financial institutions who are not from a country with an “intergovernmental agreement.”last_img

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