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The Story:

Two years ago two students from Germany went to U.S. to recieve a 4.5 months long "on the job" training at an international company. They each get a monthly allowance of 850$ via checks. They both deposit these checks in one U.S. bankaccount they opened toghether under both of their namens. During their stay they ask the local H.R. if they have to file taxes or do any paperwork regarding the financial situation and got a no as answer. They left within 6 months, having used nearly all of the allowance but keep the bankaccount open with a small sum (~15$).

Very recently they recieved a letter from the bank containing a W-8BEN form which let them to question the whole situation. Both have the intention to allways act within the law and want to return and maybe work in the U.S. in the future.

Edit:

  1. It was a B2 Visa
  2. No work was done. This would have been illegal. The company HQ is not in the US. I am unsure where excatly which part of the company is registered.
  3. They did not give any false impression to the bank.
  4. They thought keeping the account open would be nice so if they return they would not need to open one again.

The Questions (all connected):

  1. Was H.R. right and if no what would have been nessesary?
  2. Did they break any (tax) laws and if yes what would be the best course of action now?
  3. The W-8BEN contains several remarks about not having had income or compensation. Would be signing it breaking any laws or lead to futher trouble? If yes what should both do?

Thank you very much for taking the time. English is not my first language, please forgive me bad spelling or grammar.

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  1. Was H.R. right and if no what would have been nessesary?
  2. Did they break any (tax) laws and if yes what would be the best course of action now?

Probably yes and no but it depends on a number of things you didn't tell us, primarily:

  • what visa type (also called category) did they obtain and use to enter the US? Different visa types have different rules about what activities are permitted. Note: people from some countries, including Germany, can be admitted without a visa under the Visa Waiver Program (VWP) with the same restrictions as a type B-1 or B-2 visitor visa, but VWP entry can never be for more than 90 days and so cannot legally have applied to the situation you describe. In particular, many visa types (including B-1 and B-2) do not allow 'work', which for immigration and tax purposes mostly means 'employment' -- i.e. work done for pay or compensation -- which brings us to:

  • was this training activity 'work' or employment, and if so, for a US employer or a foreign one? Here, details about the 'international company' may make a difference; many international companies are not really one company, but a series of interrelated companies that are separate legal entities. Working for a company that is a US company may be different than working for a foreign company that is a subsidiary or parent of a US company.

I'm sure I have seen on our sibling site about travel and tourism/visiting foreign countries https://travel.stackexchange.com (several) questions about various activities, including job training, on (US) B-1/B-2 and VWP, but I can't find them now; perhaps your search luck will be better. I expect our other sibling site about longer-term living in foreign countries https://expatriates.stackexchange.com should have, or accept, Qs about other (US) visa types. The USCIS website lists 'Participation in short-term training' as a permissible purpose for a B-1 visa, but the linked page at the State department -- which actually makes the visa issuance decision -- does not.

In any case, $850/month is below the Federal minimum wage for full-time work, much less the higher minimums in some states or cities, and especially if stated to be an allowance for expenses probably was not wages, making it less likely these people 'worked' (though to my understanding not entirely impossible). If it was in fact almost consumed by expenses of being here, like housing (unless provided), transportation, food, entertainment, and incidentals, leaving only $15, that further supports this interpretation.

And this was organized by a large company who almost certainly had competent legal advice and structured this to be legal -- maybe to come close to the limit of what is permitted, but not to go over it. I wouldn't worry too much about it. Especially not for tax; ~$4000 is way under the filing threshold for income tax, and even if the students were employed and should have been subject to FICA taxes, the responsibility for collecting those is entirely on the employer not the employee (except for unreported tips, not applicable here).

  1. The W-8BEN contains several remarks about not having had income or compensation. Would be signing it breaking any laws or lead to futher trouble? If yes what should both do?

If the bank is using the standard form (not a substitute they combined with other forms that might be confusing you), I suspect you are looking at the following items at the top:

Do NOT use this form if:
...
You are a beneficial owner claiming that income is effectively connected with the conduct of trade or business within the U.S. (other than personal services)
You are a beneficial owner who is receiving compensation for personal services performed in the United States

Notice the key words "in the United States [or U.S.]". If you (that's the US-English 'you' meaning anyone, not necessarily the person hearing or reading) receive income from a US payer as a result of operating a trade or business in the US, or performing personal services in the US, then W-8BEN is the wrong form. Interest on a bank account (not that you'll actually get any on a $15 balance as long as the Fed stays loose) is definitely not for personal services, and is for a trade or business only if the bank account was funded by your US trade or business (one you own, not just work for or with), which it was not in the situation in this question. So yes, W-8BEN is the correct form in the described situation.

What surprises me is the bank is requesting this now. US banks (and other financial institutions) are normally required to get tax identification for customers when an account is first opened -- either W-9 for a US citizen, permanent resident or legal entity such as a corporation or trust, or an appropriate variant of W-8 for a foreign person or entity. If these students somehow gave the impression of being citizens or LPRs when opening the account and were thus allowed to use W-9, that was in fact wrong and a violation, though a minor one, and replacing it with the correct W-8BEN is definitely good. If at opening they actually filled out W-8BEN (which could have been a bank substitute that looked different from the official form, but contained the same legal elements), then the bank may now just want to make sure it has the current address and information.

That said, is there any real benefit to these students (or workers, if that is what they are now) in keeping this account open? As I said, there won't be any interest on that small a balance, and I wouldn't be surprised if the bank charges a fee for the (slight but non-zero) extra work for them of handling a foreign customer, which might well wipe out the balance. The people might be better of just closing the account, and not need to deal with this.

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