Tax News
W-8 and W-9 electronically signed print-outs, valid?
June 10, 2015
Here is the kind of 21st Century issue that often makes investment fund compliance uncertain and complex. The issue was raised recently by the Association of Global Custodians which requested an update of the FATCA FAQ clarifying that electronically signed print-outs of W-8s and W-9s should be treated as valid documentation for withholding purposes. What’s the problem here? FATCA regulations allow investment funds to maintain electronic portals whereby they can collect various withholding forms electronically. Some funds have them some don’t. For the funds that do, instead of filling in the forms manually, signing them and sending them to the fund, the investor can just log in the portal and electronically fill-in and sign the form. This has a significant advantage since it could minimize cost and reduce errors.

Here is the rub, however. Foreign passthrough funds that are not withholding partnerships have to supply copies of these W8/W9s to U.S. withholding agents along with the fund’s W-8IMY. Well, to do that, the fund will either have to print out or pdf to the withholding agent these electronically signed forms. Now, electronic signatures come in different forms and shapes. As the  1.1441-1(e)(4)(iv)(B)(ii) regs stipulate, the signature may be in any form as long as it is under penalty of perjury, it authenticates the submission, and is effected by the person whose name is on the electronic form. Conceivably, you could have: a handwritten signature input on an electronic signature pad; a digital image of a handwritten signature that is attached to the form; a typed name (e.g., typed at the end of the website form by the investor);  a PIN code used by the investor to sign the form and so on. You would imagine that in some circumstances this would present a logistic and legal predicament. If the form is completed by an electronic signature such as a PIN or a typed name and is printed out, it is not self-evident that the form was actually signed by an individual, or to go further, by the appropriate individual. While there is no absolute guarantee with handwritten originals or copies thereof, which could also be forged, the handwritten signature affords somewhat of a greater assurance.  As it may be, the Association of Global Custodians is asking the IRS to clarify that an upstream withholding agent should be able to accept electronically signed, printed or PDF-ed W-8 and W-9 forms (assuming the forms were produced through a system maintained in compliance with 1.1441-1(e)(4)(iv) by a downstream withholding agent). The comment could be found here
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Tags: FATCA and funds, FATCA and private equity, FATCA compliance