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Markit and CTI Seeking to Establish Agreement with IRS for Sharing of US Tax Forms

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Markit is coordinating an industry-wide initiative, in partnership with Compliance Technologies International (CTI), to help ease the administrative workload associated with sharing US tax forms. As part of this initiative, Markit and CTI propose to seek a memorandum of understanding with the Internal Revenue Service (IRS) which will enable financial institutions to share US withholding tax forms submitted electronically by beneficial owners and intermediaries. All investors need to provide these forms, known as W-8 and W-9 tax forms, when investing in the US to prove their withholding tax status.

The new service would be available via Markit Document Exchange and the tax validation tools provided by CTI, including its electronic W-8 application, will be integrated within Markit Document Exchange, allowing financial institutions to submit, store, review and exchange electronic W-8 tax forms with multiple counterparties using a single platform.

The initiative is backed by the following financial institutions: Bank of America Merrill Lynch, Citi, Deutsche Bank, JPMorgan, Loomis Sayles, Pimco and Royal Bank of Scotland.

Penny Davenport, managing director and head of Markit Document Exchange at Markit, says: “As cross border tax issues remain at the forefront of governments’ priorities, we expect the administrative burden associated with collecting and evaluating withholding tax forms to grow dramatically over the next few years. We are delighted to help financial institutions fulfil their tax requirements in a way that is efficient from an operational point of view.”

Dan Burt, executive director and co-founder of CTI, says: “Integrating CTI’s E-W8 application into the Markit Document Exchange brings two industry standards under one comprehensive offering for the financial services community. Given the overlap of our clients and the complementary nature of our product offerings, the synergies created by our relationship will be very beneficial for the financial services industry.”

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