Resident Aliens, NonInterest Accounts, and W8BENs

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Question:

When a new customer is not a resident or is a resident alien opens an account, we normally require them to complete a W8BEN to claim foreign status and prevent us from reporting interest earned on the account. If they open an account that does not pay interest, are they still required to complete a W8BEN?

Answer:

In essence, certifications at the bottom of the W8BEN represent a claim that the NRA is not subject to information reporting or backup withholding on U.S. deposit interest, regardless of whether the NRA supplies a TIN. (Canadians are the only current exception.) You are not required to obtain W8BEN's on non interest bearing accounts they do not generate interest reporting and, thus, cannot generate backup withholding.

However, my recommendation has always been to obtain a W8 or W9 equivalent on every account you open:

the noninterest bearing status of the account can often be changed after it is opened,
the W8BEN contains information regarding the NRA's country of origin and, most compelling of all,
on some forms, its just easier to train people to always obtain them rather than try to get them to remember when they need it and when they do not.

A resident alien should execute a W9.

First published on BankersOnline.com 3/3/03