The new Tipalti offering streamlines the entire Form W-8 collection process with a web-based assistant that aids the supplier with form selection from over eight different tax forms including Forms W-9, W-8BEN, W-8BEN-E, W-8EXP, W-8IMY, W-8ECI, W-4 and Form 8233
. The solution then validates form data including SSN and EIN numbers against the IRS database, collects the chosen tax form and other ID information digitally, calculates payee withholding requirements based on the income types of payments made, and then generates a summary of withholding instructions for the payer.
* Nonresident alien students who perform personal services can use Form 8233 to claim exemption from withholding of tax on compensation for services that are exempt under a U.S.
A nonresident alien must submit Form 8233 to a withholding agent to obtain this withholding exemption under a tax treaty.
The withholding agent will generally use a withholding certificate (the Form W-8 series, Form 8233
, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, or Form W-9, Request for Taxpayer Identification Number and Certification) to ascertain the payee's status.
To determine a payee's status, a withholding agent must rely (absent actual knowledge or reason to know otherwise) on Form W-9, Request for Taxpayer Identification Number and Certification, Form W-8, Certificate of Foreign Status, or Form 8233
, Exception From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, that the payee provides.
The alien must attach to Form W-4 Form 8233
, Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual, and a statement indicating eligibility.(22)