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What an Expired W-8BEN Means to the Bank

Question: 
We are needing to know what an expired W-8BEN means to the bank, is it a big deal? If so what should the time frame be to get a current W-8BEN from the customer and what should the consequence be if the bank does not receive one?
Answer: 

by Brian Crow:

If the customer does not provide an updated W8-BEN, then the bank is required to start back-up withholding for any interest payments to the account.

Answer: 

by Ken Golliher:

It's the customer's responsibility to make certain you have a "current' W8-BEN, not the bank's responsibility to get one. As indicated, your sole compliance responsibility is to impose backup withholding when it expires. That's not a big deal. If you send a letter 30 days prior to expiration telling the customer what you need and when you need it, you been more than just compliant, you have been courteous.

I have never understood why banks put in elaborate follow-up mechanisms for expiring W8-BENs. The compliance responsibilities for interest bearing accounts held by non resident aliens are burdensome enough as they are without attempting to hold hands.

First published on 05/20/2018

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