[cd34]

DD,

the way it works is this.

US corporation pays people, some of these checks are more than $600, US Corp says, these are sales commisions. IRS says, hmm. IRS says, lets see the W9 filed for each of these, so US corp goes on a push to get W9's from those people in the USA because IRS doesn't care about the offshore guys.

Nafta (ha, remember Nafta) opens up the community, we have a war with terrorists, Up comes a new law (not really new, just newly in the spotlight) championed by the OECD to prevent we US citizens from having foreign bank accounts.

IRS says, hey, you have a lot of checks going out of the country, according to our new powers granted by OECD, we believe you might be trying to launder money.

US corp then has to request W8BEN's from everyone that did not formerly file a W9.

The penalty here for the US corporation varies. If I send money to a US resident without sending a 1099 at the end of the year, and the person doesn't claim the income, the corporation is then responsible for any tax due.

So, a US corporation that pays out to a webmaster that doesn't have a W9 or W8-BEN on file is liable for any taxes that might arise which can often times exceed 30%. In the case of affiliate programs, this becomes a pain to adminster because now you must have a W9 or W8 filed for EVERY webmaster.

The other option is that the US corporation withholds 30% of the checks due to you and sends it to the Government, at which point, you must claim it from the US Government.

So, if a US corporation asks you to fill out a W8-BEN, its usually in your best interest to do so -- or, the US Corp could withhold the 30%. Typcially the company requesting it is just trying to get their paperwork in order in case the IRS knocks on the door and questions the large percentage of 'affiliate' checks that are going out. The W8BEN form just tells the IRS that there is an entity that claims they are a non-US citizen and is not subject to withholding tax. The form is filed with the sponsor, not the IRS and is only used IF there is a question within the next 7 years.

I would suspect that the financial borders of the USA will get a bit more complex in the next 8 months.