Good morning everyone!
I need help in understanding how to handle non-resident aliens and interest reporting requirements! How far does the the Bank have to go to "prove" a new customer's claim that they are exempt from reporting?
(I have been to the IRS web site for W-8 and I cannot find a definative answer.)
I have a customer, who is a non-resident alien and said she is exempt from interest reporting (she's a visiting Professor teaching for 2 years at the local University). She has a Passport and obtained a SSN because the University required her to have one.
She would not sign the W-9 certification but signed the W-8Ben.
Again, my question is...
1) If a person signs a W-8ben are they automatically exempt from interest reporting?
2) Or do we need to confirm her status by reviewing her Imigration/VISA papers? (I'm not even sure what we should be reviewing!?!)
3) What is the Bank's responsibility to verify this information? (Other than make sure we have a valid Passport)
Thanks, I appreciate your help!

This may be a little lengthy so bear with me.

It may be helpful to know the definition of a resident alien in order tohelp answer your question.

A resident alien is an individual that is not a U.S. Citizen or National of the U.S. and who either meets the green card test or the substantial presence test for the calendar year. The individual is a lawful permanent resident of the U.S. if at any time during the calendar year the alien held an immigrant visa ("green card") or The individual was physically present in the U.S. on at least: 1) 31 days during the calendar year; and 2) 183 days or more during the current year and the two preceding calendar years. If they meet these guidelines then the W-9 is required, otherwise the W-8BEN is required for each owner on the account.

For additional information reference IRS Publications 515 and 519.

I hope this helps.

It has been my understanding that the bank is not responsible for determining who is eligible to claim non-resident alien status. The customer is responsible for signing the W-8BEN to certify their tax status and indicate that they are not subject to backup withholding under penalty of perjury.

Opinions expressed are my own.

Thanks for your response! I have looked at both of those publications and still need to clarifications...this customer ends up being our customer since 1997 and was opening up an additional savings account when she refused to sign the W-9, signed the W-8 and said she is exempt from interest reporting.
Actually, I forgot about that portion of the Publication! and it appears that she should have been here the 183 days and would be considered a resident alien... but we didn't ask her that ... she told us she was exempt and would sign a W-8. We have always gone with ..."if they are a non-resident alien, then sign a W-8 and establish a tickler to get a new W-8 in 3 years (now 4 years?)

Is the bank required to investigate the status enough to determine if they should sign a W-9 versus a W-8?