Expatriation – Tax Reporting – Form W-8CE

IRS Notice 2009-85, confirms that a covered expatriate who has:

1. A deferred compensation item;
2. A specific tax-deferred account;
3. A beneficial interest in a non-grantor trust, must file IRS Form W-8CE with the relevant payor on or before the earlier of: the day prior to the first distribution on or after the individual’s expatriation date, or 30 days after the expatriation date.

Form W-8CE provides notice to the payor that the covered expatriate has waived any treaty benefits.

Regarding Form W-8CE specific issues:

1. Non-Grantor Trust: If the covered expatriate indicates on Form W-8CE that he will request a letter ruling from the IRS as to the value of his trust beneficiary’s interest, on the day before his expatriation date, the trustee is required to furnish the individual information necessary to calculate such value.

2. Ineligible Deferred Compensation. Form W-8CE is notice to the payor that the individual is a covered expatriate who is treated as receiving an amount equal to the present value of his accrued benefit on the day before his expatriation.

Form W-8CE is notice to the payor that adjustments may have to be made to future distributions to account for the tax required to be paid by the expatriate as a result of his expatriation.

3. Specific Tax-Deferred Account: Form W-8CE is a notice to a payor that the individual is a covered expatriate for which adjustment may be required on future distributions from the account. Within 60 days of receiving Form W-8CE, the payor is required to provide a statement to the covered expatriate of the account balance on the day before the expatriation date.

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