Tuesday 2 November 2010

The BEN Form 2nd November 2010.

Yesterday I said, depends on what comes up and bites me. Guess what? It was the bloody IRS! And we’re not even an American company nor are we American citizens! I ask you! Aaarrgghhh!
One of our major retail customers just sent us their payment for quarter 3. When I received the notification one thing was blindingly obvious. The amount was around about 70% of the total expected.

With a sinking heart, I immediately recognised the problem. The dreaded American IRS had struck again. If your company is based outside of the US and you are trading with a commercial partner inside the US then they are expected to withhold a massive 30% of the payment in order replicate the tax revenue they would expect to take if we were American.

The fact that 30% is way over the top is in itself annoying.

This can be avoided by registering the company with the American IRS and getting g an EIN number. I know, I know, but they’re not my acronyms! Then with each trading partner you need to fill out what is referred to as a W8BEN form – the eponymous form from the title above.
A separate from has to be filled in for each trading partner, and must be sent in paper from, the IRS have not yet joined the 30th Century let alone the 21st! You cannot fax or e-mail a scanned from. It has to be paper!

Of course the paperwork has transit time, and then has to be processed at the other end. In the mean time we’ve had to refund the partial payment in order to get the full payment later.
Luckily we’ve already been through this process with another retailer so we already have our EIN number.

The IRS hasn’t caught up with all our retailers yet, just some of them, so we have no way of knowing when the dreaded Ben form will be required.

Pity these guys didn’t ask up front for it, isn’t it?

Aaarrgghh!

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