IBA Compliance Connection

Your go to source for compliance!

We recently received a letter from Progressive Insurance asking us to complete a W-9 form to comply with the Foreign Account Tax Compliance Act (FATCA) and “certify” that we are “a U.S. entity and thus not subject to FATCA withholding.” The letter states that if we do not provide a W-9 form, they will withhold 30% of any claim check that is payable to us due to a FATCA requirement that is “effective January 1, 2019.” Do you recommend that we respond?

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We do not believe it is necessary to provide a W-9 form to this insurance company, although providing the form should not harm your bank (other than requiring your bank to push some additional paper). Our understanding is that the FATCA withholding requirements that become effective on January 1, 2019, apply only to payments made to non-U.S. financial institutions.

If your bank happens to receive a large volume of payments from Progressive, then it may be prudent to respond by providing a W-9 form.

For resources related to our guidance, please see:

  • IRS, Summary of FATCA Timelines (January 1, 2019: “30% U.S. withholding tax will apply to any gross proceeds from the sale or other disposition after December 31, 2018 of any property of a type that can produce the U.S. source income described above [payments of certain U.S. source income (e.g., dividends, interest, insurance premiums) made to non-U.S. financial institutions (FFIs) . . .].”)