W9 Form – The Complete Guide

American citizen with a financial account in Israel? W9 form signing obligation and implications

You’ve probably already noticed, that when you do one of the following: opening an account at a financial institution, consolidating accounts, opening an investment portfolio, applying for a mortgage, or in short – in any meaningful activity at the bank or any other financial institution, you will be asked if you are an American citizen or resident of the United States for tax purposes.

If you are an American citizen or resident of the United States, you will be asked by the bank to fill out a W9 form. Unfortunately, most Americans in Israel are not aware of the significance of the W9 form. Therefore, in this article, we will go over the form sections and their meaning.

We’ll start by saying that the banks and financial institutions in Israel do not volunteer to sign you on the W9 form, but the IRS requires them to sign every American citizen (or American entity) within the framework of the FATCA laws.

We will not refer here to American entities because of their lesser relevance.
For non-American companies or persons, the W9 form will be replaced by the W-8 BEN\W-8 BEN-E form.

Signing the W9 Form

For an American citizen or resident, signing the W9 form has several meanings:

Verify the US identification number of the person filling the W9 form (usually SSN).
Verify that the person who fills out the same W9 form is not obligated to tax withholding to the IRS from income in the Israeli bank account, or
Claims to exempt the person filling the form from withholding tax to the IRS from income in the Israeli bank account (in some cases).
Validates FATCA codes (if entered) that are exempt in some cases from FATCA reports.

Perhaps the most significant meaning not detailed in the instructions part of the W9 form is the classification of the person filling it as a “US person” (citizen and/or resident of the United States, including a green card holder) in the bank (or another financial entity) and his entry into the bank’s database as a “US person”.
Israeli financial entities transfer information about the accounts of their American clients to the Israeli Tax Authority, which transfers the information to the Internal Revenue Service (IRS).

The above is how most of the enforcement of the IRS on American citizens and residents in Israel is carried out. Refusal to sign the W9 form will often lead to the bank freezing the accounts, which will only be unfrozen after signing and providing proof to the bank of reporting and filing any tax return and FBAR report obligation.

• The above is how most
• FBAR report obligation.
• freezing the accounts

1. freezing the accounts
2. The above is how most
3. FBAR report obligation

Sometimes, the banks ask for proof of submission or filing even if the citizen/resident signed the W9 form and may freeze the accounts until proof is provided.

The number of American citizens who had their bank accounts frozen is substantial. This often occurs during an activity such as taking out a mortgage, consolidating bank accounts after a wedding, etc. The lack of awareness of the filing and reporting obligations leaves people with a financial problem that lands on them out of nowhere, people who mostly were not liable for taxes to the US but only had the filing obligation.

Would signing the W9 Form exempt me from any other filing obligations?

It is important to emphasize that filling out the W9 form does not exempt you from any tax return or FBAR filing obligation. So, those who fill out the W9 form must still file tax returns and FBAR reports if they exceed the reporting threshold. If the tax return & FBAR have been filed, it will usually be necessary to file thru the streamlined foreign offshore procedures to get on track with the IRS & FinCEN.

To download the W9 form – click here.

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