Electronic Tax Form Validator (eTFV)

In Financial services

EY’s innovative approach to tax form validation operates on a modern technology platform that provides client-side electronic form validation, operator-focused efficiency, and high-quality business logic based on expertise from industry experienced tax professionals.

The team

Photographic portrait of Shawn Smith
Shawn Smith
EY Americas Financial Services Industry Group Leader
Photographic portrait of David Jensen
David Jensen
Principal, Financial Services, Ernst & Young LLP
Photographic portrait of Anne Farrar
Anne Farrar
Partner, Financial Services Tax, Ernst & Young LLP
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What EY can do for you

In recent years, tax authorities have sought to boost revenues by focusing on the gap between anticipated tax revenues and the amounts actually collected. This has created new compliance challenges for US and non-US financial institutions, and for individuals or entities paying or earning income outside their country of residence.

The implementation of FATCA in 2014 made documentation requirements more difficult for US financial institutions, which have been required to document their foreign payees for over 20 years. The general rule is that whenever US-source income (including dividend income, interest or other passive income) is being paid to a non-US person, the intermediary US financial institution must collect an IRS Form W-8 that establishes a reduced rate or exemption from withholding under an Internal Revenue Code (IRC) provision or an income tax treaty.

Payors of US income have liability for any amounts they fail to withhold in accordance with claims made on a W-8. Customers may claim they’re eligible, but if the form is invalid and the IRS lacks jurisdiction (as with a non-US person), it will look to the financial institution.





Moreover, invalid forms are rather common, as approximately 25 percent of Form W-8 submissions from customers are invalid. Overwhelmingly, this is not due to fraud, but rather customers’ inability to manage the complexities of the tax forms and their instructions effectively.



 

How EY can help

Through this approach, US-based financial institutions, FFIs, and payors of US-source income will significantly improve data quality, operational efficiency, and customer satisfaction.

 

The electronic tax form validator’s efficient approach to ensuring data accuracy will handle most forms with straight-through processing, meaning that forms are always valid on their face and against available books and records data. When additional documentation is required (e.g., to cure US indicia), the eTFV provides easy and clear instructions to customers to enable them to understand those requirements. The result will be a significant reduction in the operational burden for financial institutions. At the same time, the eTFV makes it easier for individuals and business entities to transact internationally, contributing to their success and bolstering the reputation of the financial institution as a valuable business partner.

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    The team

    Shawn Smith

    EY Americas Financial Services Industry Group Leader
    Passionate about transformation, innovation and cultivating a strong workplace culture. Enjoys traveling and spending time with family.
    Charlotte, USA

    David Jensen

    Principal, Financial Services, Ernst & Young LLP
    Passionate about tax transformation and diversity. I enjoy watching sports and spending time with my family.
    Hoboken, USA

    Anne Farrar

    Partner, Financial Services Tax, Ernst & Young LLP
    Leader in Managed Services for Financial Services Tax, including TFO, CTORS and Indirect Tax. People Leader. Wife. Proud Mother and Daughter. Loves traveling and Kansas Jayhawk Basketball.
    Charlotte, USA
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    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.