Scenario is this....

Account was opened several years ago by an NRA. Now the customer wants to add the spouse, who is a US Citizen. Who signs backup withholding? Does the US Citizen become the primary account owner? Or can the NRA remain primary and sign backup withholding?

Thanks!

Information reporting always defaults to the U.S. Person. Who you consider primary is up to you.

Thank you so much.

Is that an IRS Rule? Can you direct me to it?

It is in the instructions for the W8-BEN:

Note. If you own the income or account jointly with one or
more other persons, the income or account will be treated
by the withholding agent as owned by a foreign person
that is a beneficial owner of a payment only if Forms
W-8BEN or W-8BEN-E are provided by all of the owners.
If the withholding agent or financial institution receives a
Form W-9 from any of the joint owners, however, the
payment must be treated as made to a U.S. person and
the account treated as a U.S. account.

thank you again! Very helpful.

Bringing this thread back for additional comment. This says "if" the bank receives a W-9 then you have to treat it as a US account. If we don't obtain a W-9 on the US joint account owners, can we then report under the foreign person's TIN? I suppose, however, that triggers the need to file 1042 tax forms.

If we don't obtain a W-9 on the US joint account owners

How would that happen? You don't know through your CIP process whether or not the joint owner is a US Person?

You need to be prepared to start writing your $50 checks for IRS reporting violations.

No, you would begin backup withholding immediately and report the interest and withholding in the U.S. person's name on a 1099INT; i.e. you treat the interest as belonging to the U.S. person either way. Analogize failing to get the W-9 or its equivalent to a compound fracture.