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#1412493 - 07/07/10 05:49 PM W8BEN Question
SunnyFL, CRCM Offline
100 Club
Joined: Sep 2004
Posts: 205
FL
A recent audit revealed that several W8BENs on file had a US address listed on Line 4 as a "permanent residence address". It was the opinion of the auditor that this must be a foreign address (outside the US)to qualify for non-resident alien status. Many times it is but there are some situations where it is not.

In our particular location we have Canadians who reside here in the winter and go back to Canada for the summer. Most will list their Canadian address as the permanent address and their address here in Florida as the mailing. On the other hand we are also in a very agricultural area and have a large migrant population (6 months of the year) that travel to where ever the work takes them throughout the US - many have given up their Mexican homesteads but are not yet resident aliens or U.S. citizens.

The IRS instructions state "If you are an individual who does not have a tax residence in any country, your permanent residence is where you normally reside."

Many of these folks have had accounts for several years and now the re-certs show a U.S. address - it doesn't ask for the country they are from.

Is the auditor being unreasonable? Would you refuse to open an interest bearing account if they did not have an address outside of the US? How should we handle the existing customers who have interest bearing accounts?

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Operations Compliance
#1412554 - 07/07/10 07:23 PM Re: W8BEN Question SunnyFL, CRCM
Georgia Plum
Unregistered

[quote=SunnyFL]The IRS instructions state "If you are an individual who does not have a tax residence in any country, your permanent residence is where you normally reside."


Well, there's your answer.

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#1412689 - 07/07/10 11:26 PM Re: W8BEN Question
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,315
Galveston, TX
You cannot have a permanent residence in the US if you are a non-resident alien. These people most likely pass the "substantial presence test" (see the W-8BEN instructions) and need to complete a W-9. This has nothing to do with their legal immigration status and we can guess what that probably might be.
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#1412768 - 07/08/10 01:49 PM Re: W8BEN Question rlcarey
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Ditto. If they claim to reside in the U.S. then they eventually become resident aliens by operation of law and they cannot execute a W8-BEN. The previous set of W8-BEN instructions was more explanatory, but, in essence, SunnyFl's auditor is correct.
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#1412916 - 07/08/10 05:34 PM Re: W8BEN Question Elwood P. Dowd
SunnyFL, CRCM Offline
100 Club
Joined: Sep 2004
Posts: 205
FL
Thanks guys. Seminars I have attended in the past have always advised staying away from the "substantial presence test" discussion but I can see where it definately comes into play in this situation. Our CIP says we don't open accounts without a taxpayer ID number unless they are a non-resident alien so I can see some changes coming. Can't really sign the W-8 cert either if they don't have a number. I appreciate the feedback.

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#1413188 - 07/09/10 01:42 AM Re: W8BEN Question SunnyFL, CRCM
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,315
Galveston, TX
Of course, if you open a non-interest bearing account there is no need for a W-8BEN smile
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