The Foreign Account Tax Compliance Act (FATCA) places significant tax filing requirements on startups with foreign assets, employees, and contractors, and that’s the reason for Form W-8. FATCA is an extremely complex piece of legislation that was designed to fight tax evasion by Americans with financial assets held outside the U.S. Enacted in 2010, FATCA requires all U.S. taxpayers, even those living abroad, to report foreign assets to the IRS if they exceed specific thresholds. In addition, foreign financial institutions (FFI) and non-financial foreign entities (NFFE) are required to report the assets of any American clients, or they’ll face a 30% withholding penalty on some payments from the U.S.