The Internal Revenue Service has released the final Form W-9 after releasing a draft version this past May. The final Form W-9 and instructions contain no substantive changes and are largely the same as the previously released draft. This may come as a disappointment to many in the industry that sought clarifications and changes to the updated form.

More significantly, the finalization of Form W-9 triggers the six-month grace period (absent additional guidance) found in the FATCA regulations to begin using the new form. This is particularly important for withholding agents currently using substitute Form W-9s (including embedded Form W-9s on paper or electronic forms). Updates may be necessary because the IRS generally requires substitute forms to be substantially similar to the official form, particularly when it comes to the required certifications. The final Form W-9 has added a new certification with respect to FATCA; thus, creating the potential need to update substitute forms within the six month grace period. It is unclear whether the certification is needed if a FATCA exemption does not apply (or never will for the particular withholding agent), so additional guidance from the IRS will be needed to clarify.

The Form W-9 (Rev. August 2013) adds two new fields; one to indicate the type of entity that is exempt from back-up withholding and the other to indicate the type of entity that is exempt from FATCA withholding. The instructions include an updated list of exempt payees for back-up withholding with a corresponding code to be entered into the new field, if applicable. The list removes the international organization and foreign central bank of issue payee types that are included in the current version of the form (Rev. 12-2011). The instructions to the exempt payee section also incorporate section 6050W changes related to payments made to settle payment card or third party network transactions. The instructions on page 3 make it clear that corporations are not exempt from backup withholding for such payments.

Similar to the exempt payee list, the instructions include a list of FATCA exempt payees with corresponding codes. The list includes publicly traded corporations and affiliates, the U.S. and any of its agencies or instrumentalities, security dealers, REITS, brokers, banks, and others. To go along with the new FATCA exemption code, the certification section has been updated with a new line to certify under penalties of perjury that any FATCA exemption code entered on the form is correct.

Withholding agents, both U.S. and non U.S., should review the new Form W-9 and prepare any required changes to their documentation and due diligence processes, procedures, and systems, with particular attention to the six-month grace period.

In accordance with Circular 230 Disclosure