CUNA Comment Letter
Request for Taxpayer Identification Number and Certification, IRS Form W-9
January 8, 2000
Mr. Stuart L. Brown, Esq.
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Dear Mr. Brown:
This letter follows up the letter that the president of the Credit Union National Association, Daniel Mica, wrote to the commissioner last week, requesting that the Internal Revenue Service postpone the effective date of the new form W-9, "Request for Taxpayer Identification Number and Certification." The IRS issued the new W-9 form on or about December 15, 2000 with an effective date of January 1, 2001. (We have never found a press release or other notification to alert financial institutions about the new certification language requirement.)
The pre-2001 W-9 form required the account owner to certify that the Taxpayer Identification Number (TIN) is correct and that the account owner is not subject to backup withholding. The 2001 W-9 form requires an additional certification -- that the account owner is a U.S. person, which includes resident aliens. Many credit unions have, since TIN certification was mandated in 1983, incorporated the required certification language into their membership account agreements, as permitted under the substitute W-9 rules. The December change is operationally impossible to implement within the two-week period allowed by the Service.
In May 2000, revisions to regulations relating to withholding of tax on certain U.S. source income paid to foreign persons and revisions to information reporting regulations were published in the Federal Register (May 22, 2000 at page 32152). Under paragraph 7, "Withholding Certificates," it states that §1.1441-1(d)(2) "has been amended to state that furnishing a Form W- 9 serves as a statement that the person providing the form is a U.S. person." Furthermore, the Register announcement stated that "[t]he instructions to Form W-9 will also be modified to make clear that providing a Form W-9 is a declaration of U.S. status" (emphasis added). No where in the May release does it state that the W-9 form would be modified. Moreover, when the Service announced a public comment period on a number of IRS forms in September, the W-9 form was not on the list.
The IRS December pronouncement leaves credit unions with a choice between several impracticable, costly and unreasonable options:
- Discard all existing forms used to open accounts and purchase new account cards, which is not only a costly option but also a logistically challenging option since revised forms do not yet even exist.
- Print separate W-9 forms using the official form released by the IRS in mid-December, and somehow figure out how to cross-reference, store and retrieve these forms that have never been used by many, if not most, credit unions.
- Create stickers or rubber stamps to add the certification language to the existing stock of new account forms, or even hand-write the language on existing new account forms with procedures for the person to initial the addendum.
All of these alternatives are operationally unreasonable to expect of thousands of financial institutions subject to the IRS information reporting rules. Therefore, CUNA urges the IRS to act immediately to postpone the effective date of this change to no earlier than July 1, 2001.
My colleague, Lilliane Butzky, and I look forward to working with you and your staff to resolve this compliance problem as quickly as possible.
Kathleen O. Thompson
Senior Vice President for Compliance