Completing IRS Form W-9 for Resident Aliens Requesting Tax Treaty Exemption

Purpose

This document describes when IRS Form W-9 “Request for Taxpayer Identification Number and Certification" is required and provides step by step instructions for completing the form when a resident alien for tax purposes requests income tax exemption under a tax treaty.

Background

The IRS Form W-9 is traditionally used to formally solicit a U.S. citizen, permanent resident, or resident alien’s name, address and tax identification number (TIN). Refer to the procedure "Taxpayer Identification (TIN) Overview" for more information.

The form is also used when a non U.S. citizen employee becomes a resident alien for tax purposes and continues to claims income tax treaty exemption as a “resident alien” as allowed in some income tax treaties. Resident alien means that the non U.S. citizen becomes a permanent resident (Green Card) or a resident alien (meets the Substantial Presence Test). Refer to "Using Income Tax Treaties and Quick Reference Tables" for more information on tax treaty exemptions.

Within tax treaties there is a "saving clause" for certain employee income, which ensures the income tax exemption is not extended to U.S. citizens, permanent residents, or resident aliens. Some income tax treaties have an exception to the saving clause. If the exception to the savings clause exists a “resident alien” employee can continue to claim income tax treaty exemption.

When IRS Form W-9 is Required for Tax Treaty Exemption

IRS Form W-9, "Request for Taxpayer Identification Number and Certification" is required when a non U.S. citizen has become a “resident alien” for tax purposes and is claiming exemption from income taxes under the exception to the “saving clause” within the income tax treaty (this is limited to certain types of income and certain countries income tax treaties). A supporting statement must be submitted with the form. Refer to the section of this document, "Providing a Supporting Statement," for more information on what to include.

Obtaining IRS Form W-9

IRS Form W-9, "Request for Taxpayer Identification Number and Certification," is available on the IRS Web site as a “fill-in” PDF form. The form can be completed online and printed for original signature.

The form is also available in the document, "Tax Forms and Publications - Federal and State (Internal Revenue Service, Social Security, and New York State."

Ensure that you obtain the form from one of these locations whenever you need it, so you can be sure you are using the most current version.

Completing IRS Form W-9

The table below provides guidance on the information to enter for each line of the form.

Sample completed forms for tax treaty exemption requests for non U.S. citizen employee payments are available:

Providing a Supporting Statement

Employees must provide a "supporting statement" with IRS Form W-9. The statement must include information as outlined in the instructions on IRS Form W-9. This is generally the same information that was provided in the supporting information from IRS Publication 519 that is submitted with IRS Form 8233.

Refer to the sample completed IRS Form W-9 and a sample supporting statement provided on the RF Web site for more information.

Reviewing IRS Form W-9

After the employee completes and signs the form, he or she must submit it to the operating location office that handles payroll/personnel matters or delegate for review and approval. The reviewer must review the forms to ensure they are complete and accurate. The reviewer must make a reasonable review and will not be held liable if an error was not clear from the face of the form or other information contained in the files and documents. However, the institution is generally presumed to have knowledge of all records and documents that it may have in its possession as a whole, not simply within a particular office or department.

If the reviewer finds that the form is not complete or knows or has any reason to believe the information is not correct, the income tax treaty exemption is not valid and the employee must designate tax status on IRS Form W-4.

Period of Validity for Form W-9

Start Date

Once the tax treaty exemption is approved and all documentation is in place, the form is valid for the payment period associated with the date IRS Form W-9 was signed and dated. Therefore, if the date IRS Form W-9 is signed by the employee and approved by the operation locations falls in the middle of biweekly pay period,the treaty exemption is valid for the entire pay period. The tax exemption is NOT retro active to prior payment periods for the individual and therefore tax refunds will not be granted. Any tax withholdings prior to receipt and review of IRS Form W-9 and supporting documentation are valid tax withholdings and must be reported on year end tax statements.

Calendar Year

The IRS Form W-9 is valid for the current calendar year. Therefore, at year end December 31, if the employee wants to claim income tax treaty exemption for the next calendar year, a new form and supporting statement for the new calendar year must be completed, submitted, and reviewed. If a new form and supporting statement is not received by the first payment period of the next calendar year, the payment is taxable until a new form is filed.

Changes in Eligibility

If, after filing the forms, the person claiming the benefits becomes ineligible, he or she must notify the office in charge of RF payroll / personnel matters.

Form Retention

Completed and signed forms must be retained in the employee's file for four years after the last applicable year.

Input to the RF Business System

Taxation and exemption must be correctly coded in the RF business system. Refer to the procedure, "Processing Taxation and Exemption of Employee Payments to Nonresident Aliens" for detailed information on system input.

State and Federal Tax Exemption

If the employee is exempt, the exemption must be recorded on the Federal Tax Rules form and/or the State Tax Rules form in the RF business system.

Special Information Types (SITs)

Special Information Types (SITs) are added to a non U.S. citizen employee assignment in the payroll module to record residency and tax status data. The Non Citizen Residency Information SIT and Non Citizen Reporting Information SIT must be initially completed and then updated when residency or tax status changes.

Change History

 

 

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