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Publication 515
taxmap/pubs/p515-002.htm#en_us_publink1000224819

Documentation

rule
taxmap/pubs/p515-002.htm#en_us_publink100015354

Documentation for Chapter 3

rule
For purposes of chapter 3, in most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following.
If withholding is applied under chapter 4 on a payment, no withholding will be required on such payment under chapter 3.
taxmap/pubs/p515-002.htm#en_us_publink100015355

Documentation for Chapter 4

rule
If you make a withholdable payment, you must determine the chapter 4 status of payees, beneficial owners, and intermediaries and flow-through entities receiving the payment to the extent required for chapter 4 purposes. You must also determine the chapter 4 status of persons that own an interest in an entity receiving a withholdable payment that you treat as an owner-documented FFI, provided you are either a U.S. financial institution, participating FFI, or reporting Model 1 FFI. To establish a chapter 4 status, you generally must obtain a valid withholding certificate or documentary evidence that you can reliably associate with the payment. If you make a payment to a passive NFFE, you must obtain either a certification that the NFFE does not have any substantial U.S. owners, or the name, address, and TIN of each substantial U.S. owner of the NFFE (or, under an applicable IGA, each controlling person that is a specified U.S. person).
You can reliably associate a payment with a Form W-8 for purposes of establishing a payee’s chapter 4 status in most cases if, prior to the payment, you obtain a valid form that contains the information required for chapter 4 purposes, you can reliably determine how much of the payment relates to the form, and you have no actual knowledge or reason to know that any of the information, certifications, or statements in, or associated with, the form is unreliable or incorrect for chapter 4 purposes. See Standards of Knowledge for Chapter 4, later, for the reason to know standards that apply for chapter 4 purposes. For the requirements for documenting specific chapter 4 statuses of persons receiving withholdable payments, see Treasury regulations section 1.1471-3(d). See also Treasury regulations section 1.1471-3(d) for the extent to which a withholding agent may rely on documentary evidence (other than a Form W-8) to establish the chapter 4 status of an entity payee, including the forms of documentary evidence permitted for each specific chapter 4 status. For the requirements for documentary evidence, see Treasury regulations section 1.1471-3(c)(5). If you make a withholdable payment to an entity payee and cannot reliably associate the payment with a valid withholding certificate or valid documentary evidence, you must apply the chapter 4 presumption rules described in Presumption Rules for Chapter 4, later.
You may rely on the same documentation for purposes of both chapters 3 and 4 provided the documentation is sufficient to meet the requirements of each chapter. For example, you may use a W-8BEN-E to obtain both the chapter 3 and chapter 4 statuses of an entity providing the form.
If you make a withholdable payment prior to July 1, 2016, with respect to a preexisting obligation and you do not have documentation indicating the payee’s status as a nonparticipating FFI, you are not required to withhold unless the payee is a prima facie FFI. A preexisting obligation includes an account outstanding on June 30, 2014. However, you may treat an account opened on or after July 1, 2014, and before January 1, 2015, as a preexisting obligation, if the account is held by an entity. For more information, see Notice 2014-33, 2014-21 I.R.B. 1033. In the case of a reporting Model 1 FFI or a reporting Model 2 FFI, see the requirements of the applicable IGA for the documentation requirements that apply to preexisting accounts maintained by such an FFI.
taxmap/pubs/p515-002.htm#en_us_publink100019582

Additional Documentation
Rules Applicable to
Chapters 3 and 4

rule
In most cases, you must reliably associate the payment with valid documentation to apply reduced withholding and must get the documentation before you make the payment. The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. See Standards of Knowledge, later.
If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later to determine the rate of withholding. For example, if you do not have documentation or you cannot determine the part of a payment that is allocable to specific documentation, you must use the presumption rules of section 1441.
The specific types of documentation are discussed in this section. However, see Withholding on Specific Income, later, as well as the instructions to the particular forms. As the withholding agent, you also may want to see the Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY.
taxmap/pubs/p515-002.htm#en_us_publink100019494

Section 1446 withholding.

rule
Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. In most cases, a partnership determines if a partner is a foreign partner and the partner's tax classification based on the withholding certificate provided by the partner. This is the same documentation that is filed for chapter 3 withholding, but may require additional information as discussed under each of the forms in this section.
taxmap/pubs/p515-002.htm#en_us_publink100019495

Documentation rule for joint payees.

rule
If you make a payment to joint payees (such as holders of a joint account), you need to get documentation from each payee. If you make a payment to joint payees and cannot reliably associate the payment with documentation from all of the payees, you generally must presume the payment is made to an unidentified U.S. person. If the payment is a withholdable payment and any of the payees does not appear, by name or other information in the account file, to be an individual, you must treat the entire amount as a payment made to an undocumented foreign person. However, if one of the joint payees has provided you with a Form W-9, you must treat the payment as made to that payee.
taxmap/pubs/p515-002.htm#en_us_publink100019496

Form W-9.

rule
In most cases, you can treat the payee as a U.S. person if the payee gives you a Form W-9. The Form W-9 can be used only by a U.S. person and must contain the payee's taxpayer identification number (TIN). If there is more than one owner, you may treat the total amount as paid to a U.S. person if any one of the owners gives you a Form W-9. See U.S. Taxpayer Identification Numbers, later. U.S. persons are not subject to chapter 3 withholding, but may be subject to:
taxmap/pubs/p515-002.htm#en_us_publink100019498

Forms W-8.

rule
In most cases, a foreign payee of the income should give you a form in the Form W-8 series.
If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. You can rely on documentary evidence in lieu of a Form W-8 for an amount paid outside the United States with respect to an offshore obligation. Refer to Offshore obligations, later, to determine whether a payment qualifies as such a payment.
taxmap/pubs/p515-002.htm#en_us_publink100019500

Other documentation.

rule
Other documentation may be required to claim an exemption from, or a reduced rate of, chapter 3 withholding on pay for personal services. The nonresident alien individual may have to give you a Form W-4 or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income.
taxmap/pubs/p515-002.htm#en_us_publink1000224825

Beneficial Owners

rule
If all the appropriate requirements have been established on a Form W-8BEN, W-8BEN-E, W-8ECI, W-8EXP or, if applicable, on documentary evidence, you can treat the payee as a foreign beneficial owner.
taxmap/pubs/p515-002.htm#en_us_publink1000224827

Claiming treaty benefits for purposes of chapter 3.

rule
You may apply a reduced rate of chapter 3 withholding to a foreign person that provides a Form W-8 claiming a reduced rate of withholding under an income tax treaty only if the person provides a U.S. or foreign TIN and certifies that:
If the payment you make is a withholdable payment to an entity, a requirement to withhold under chapter 4 may apply based on the chapter 4 status of the payee regardless of whether a claim of treaty benefits may apply to such payee or other person receiving the income.
If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner also must certify on a Form W-8 that it will file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), if the amount subject to chapter 3 withholding received during a calendar year exceeds, in the aggregate, $500,000.
An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. See Fiscally transparent entity discussed earlier under Flow-Through Entities.
Limitations on benefits provisions in income tax treaties generally prohibit third country residents from obtaining treaty benefits. For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country.
The exemptions from, or reduced rates of, U.S. tax vary under each treaty. You must check the provisions of the tax treaty that apply. Tables at the end of this publication show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied.
If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know, that the statements were incorrect. Certain withholding agents, such as financial institutions, have limited reason to know requirements for this purpose. See Treasury regulations section 1.1441-7(b) for these requirements.
taxmap/pubs/p515-002.htm#en_us_publink1000224828
Exceptions to TIN requirement.
A foreign person does not have to provide a U.S. or foreign TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met.The allowance to provide a foreign TIN (rather than a U.S. TIN) does not apply to a payment to compensate an individual for personal services.
taxmap/pubs/p515-002.htm#en_us_publink1000224829
Marketable securities.
A Form W-8 provided to claim treaty benefits does not need a U.S. or foreign TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. For this purpose, income from a marketable security consists of the following items.
taxmap/pubs/p515-002.htm#en_us_publink1000224830
Offshore obligations.
If a payment is made outside the United States with respect to an offshore obligation, a payee may give you documentary evidence, rather than a Form W-8, to establish that the payee is a foreign person. See Treasury regulations section 1.6049-5(c)(1) for the requirements for documentary evidence for offshore obligations. For accounts opened on or after July 1, 2014, through December 31, 2014, you may use the rules regarding the use of documentary evidence under Treasury regulations sections 1.6049-5(c)(1) and (c)(4) as in effect prior to the issuance of the temporary regulations.
A payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. However, an amount paid by a bank or other financial institution on a deposit or account usually will be treated as paid at the branch or office where the amount is credited unless the other requirements of Treasury regulations section 1.6049-5(e)(2) are met with respect to the branch or office, unless the amount is collected by the financial institution as an agent of the payee. An offshore obligation is an account maintained at an office or branch of a bank or other financial institution located outside the United States or an obligation, contract, or other instrument with respect to which the payor of the payment is either engaged in business as a broker or dealer in securities or a financial institution that engages in significant activities at an office or branch located outside the United States.
You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. In most cases, the nonqualified intermediary or flow-through entity that gives you documentary evidence also will have to give you a withholding statement, discussed later.
taxmap/pubs/p515-002.htm#en_us_publink1000224831
Documentary evidence.
You may apply a reduced rate of withholding to income from marketable securities (discussed earlier) paid outside the United States with respect to an offshore obligation if the beneficial owner gives you documentary evidence in place of a Form W-8. To claim treaty benefits, the documentary evidence must be one of the following:
  1. A certificate of residence that:
    1. Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident,
    2. States that the person has filed its most recent income tax return as a resident of that country, and
    3. Is issued within 3 years prior to being presented to you.
  2. Documentation for an individual that:
    1. Includes the individual's name, address, and photograph,
    2. Is an official document issued by an authorized governmental body, and
    3. Is issued no more than 3 years prior to being presented to you.
  3. Documentation for an entity that:
    1. Includes the name of the entity,
    2. Includes the address of its principal office in the treaty country, and
    3. Is an official document issued by an authorized governmental body.
In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty. In the case of a withholdable payment made to an entity, you must also obtain the applicable documentation to establish that withholding does not apply under chapter 4.
taxmap/pubs/p515-002.htm#en_us_publink10001140

Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).

rule
This form is used by a foreign individual to:
Note. Form W-8BEN is now used exclusively by individuals. Entities documenting their status as a foreign person and beneficial owner for chapter 3 purposes, their chapter 4 status as a payee for chapter 4 purposes, or eligibility for making a claim of treaty benefits (if applicable) should use Form W-8BEN-E.
A withholding agent in some cases may substitute its own form for a Form W-8BEN for individuals. Solely for purposes of chapter 3, a Form W-8BEN with a revision date February 2006 provided to you by an entity before January 1, 2015 will remain valid until the form’s validity expires under the applicable chapter 3 regulations. For purposes of chapter 4, a Form W-8BEN with a revision date February 2006 provided to you by an entity before such date is and will remain valid to the extent permitted under chapter 4.
Form W-8BEN also may be used to claim that the foreign individual is exempt from Form 1099 reporting and backup withholding for income that is not subject to chapter 3 withholding and is not a withholdable payment. For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding.
taxmap/pubs/p515-002.htm#en_us_publink10001142

Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).

rule
This form is used by a foreign entity to:
Form W-8BEN-E also may be used to claim that the foreign entity is exempt from Form 1099 reporting and backup withholding for income that is not subject to chapter 3 withholding and is not a withholdable payment. For example, a foreign entity may provide a Form W-8BEN-E to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding.
An entity payee also may provide a Form W-8BEN-E to establish that certain income from notional principal contracts is not effectively connected with the conduct of a U.S. trade or business. In addition, a foreign reverse hybrid entity claiming treaty benefits on its own behalf should provide you with a Form W-8BEN-E with respect to the income for which treaty benefits are being claimed. In certain cases, a similar agreed form may be associated with the payment instead of a Form W-8BEN-E.
taxmap/pubs/p515-002.htm#en_us_publink1000224832

Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States.

rule
This form is used by a foreign person to:
Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to chapter 3 withholding or withholding under chapter 4.
If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U.S. trade or business is subject to withholding under section 1446. If the partner has made, or will make, an election under section 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form.
EIC
If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under section 871(d) or 882(d), the partner should provide Form W-8BEN or W-8BEN-E to the partnership.
For purposes of chapter 3, a Form W-8ECI with a revision date February 2006 provided to you before January 1, 2015, will remain valid until the form’s validity expires under the applicable chapter 3 regulations.
taxmap/pubs/p515-002.htm#en_us_publink1000224834

Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding and Reporting.

rule
This form is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U.S. possession to:
If the government or organization named on the form is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under section 1446.
For purposes of chapter 3, a Form W-8EXP with a revision date February 2006 provided to you before January 1, 2015, will remain valid until the form’s validity expires under the applicable chapter 3 regulations. For purposes of chapter 4, a Form W-8EXP with a revision date of February 2006 that is provided to you before January 1, 2015, is and will remain valid to the extent permitted under chapter 4.
See also Foreign Governments and Certain Other Foreign Organizations, later.
taxmap/pubs/p515-002.htm#en_us_publink1000224835

Foreign Intermediaries
and Foreign
Flow-Through Entities

rule
Payments made to a foreign intermediary or foreign flow-through entity that is not a QI that assumes primary chapters 3 and 4 withholding responsibility, a WP, a WT, or a branch treated as a U.S. person (see U.S. branches of foreign banks and foreign insurance companies, earlier) are treated as made to the payees on whose behalf the intermediary or entity acts except when the intermediary or flow-through entity is subject to chapter 4 withholding. See Flow-through Entities and Foreign intermediaries, earlier. The Form W-8IMY provided by a foreign intermediary or flow-through entity must be accompanied by additional information for you to be able to reliably associate the payment with a payee. The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes.
taxmap/pubs/p515-002.htm#en_us_publink1000224836

Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting.

rule
This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U.S. branches, to:
For purposes of chapter 4, an intermediary or flow-through entity that is a participating FFI or registered deemed-compliant FFI receiving a withholdable payment may, in lieu of providing documentation for each payee, provide pooled allocation information as described under FFI withholding statement, later.
taxmap/pubs/p515-002.htm#en_us_publink100015357
FFI withholding statement.
An FFI withholding statement must be provided by a participating FFI or registered deemed-compliant FFI (including a U.S. branch of a participating FFI that is not treated as a U.S. person) that is a nonqualified intermediary, nonwithholding foreign partnership, nonwithholding foreign trust, or a QI that makes an election to be withheld on for chapter 4 purposes (i.e., a QI that does not assume chapter 3 or 4 withholding responsibility), as described later under Qualified Intermediaries.
An FFI withholding statement may include either payee-specific information or pooled information. If the withholding statement includes pooled information, the withholding statement must indicate the portion of the payment allocable to:
If the withholding statement includes payee-specific information, it must indicate both the portion of the payment allocated to each payee and each payee’s chapter 4 status.
Any withholding statement provided by an FFI other than an FFI acting as a WP, WT, or QI with respect to the account must also identify each intermediary or flow-through entity that receives the payment and such entity’s chapter 4 status and GIIN, when applicable.
For additional information on the requirements for FFI withholding statements, see Treasury regulations section 1.1471-3(c)(3)(iii)(B)(2).
taxmap/pubs/p515-002.htm#en_us_publink100015484
Chapter 4 withholding statement.
A chapter 4 withholding statement must be provided by the following:
A chapter 4 withholding statement must contain the following.
A chapter 4 withholding statement is permitted to provide pooled allocation information with respect to payees that are treated as nonparticipating FFIs.
taxmap/pubs/p515-002.htm#en_us_publink1000224837

Qualified Intermediaries

rule
In most cases, a QI is any foreign intermediary that has entered into a QI agreement (discussed earlier) with the IRS. A foreign intermediary that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI. The intermediary can claim that it is a QI until the IRS revokes its QI-EIN.
A QI can be either an FFI or an NFFE. An FFI (other than a retirement fund) that is a QI must be a participating FFI (including a reporting Model 2 FFI), a registered deemed-compliant FFI (including a reporting Model 1 FFI and a nonreporting Model 2 FFI treated as registered deemed-compliant), or an FFI treated as a deemed-compliant FFI under an applicable Model 1 IGA that is subject to similar due diligence and reporting requirements with respect to its U.S. accounts as those applicable to a registered deemed-compliant FFI (including the requirement to register with the IRS) (defined in the QI agreement as a "registered deemed- compliant Model 1 IGA FFI"), or, for a transitional period, a limited FFI. Thus, you must identify the chapter 4 status of an FFI certifying its status as a QI as one of the chapter 4 statuses referenced in the preceding sentence on a Form W-8IMY when a chapter 4 status is required for chapter 4 purposes.
taxmap/pubs/p515-002.htm#en_us_publink100015485

Responsibilities and documentation.

rule
Payments made to a QI that does not assume primary chapters 3 and 4 withholding responsibilities are treated as paid to its account holders. However, a QI is not required to provide you with documentation it obtains from its foreign account holders or from U.S. exempt recipients (U.S. persons exempt from Form 1099 reporting). Instead, it provides you with a withholding statement that contains either chapter 3 or chapter 4 withholding rate pool information. A chapter 4 withholding rate pool is a payment of a single type of income that is a withholdable payment that is allocated to payees that are nonparticipating FFIs or recalcitrant account holders (in a single pool). A chapter 4 withholding rate pool also means a payment of a single type of income that is allocated to U.S. payees when the QI provides the certification required on Form W-8IMY for allocating payments to this pool and a withholding statement. A QI may include in its chapter 4 withholding rate pools its direct account holders as well as account holders of another QI or a participating FFI or registered deemed-compliant FFI. With respect to a payment to a foreign person for which no chapter 4 withholding is required, a chapter 3 withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding and that is reported on Form 1042-S under a single chapter 4 exemption code. Payments made to U.S. exempt recipients may also be included in a chapter 3 withholding rate pool to which withholding does not apply.
A QI is required to provide you with information regarding U.S. non-exempt recipients (U.S. persons subject to Form 1099 information reporting) and to provide you withholding rate pool information separately for each such U.S. person unless it has assumed primary Form 1099 reporting and backup withholding responsibility and meets the requirements to include these recipients in a U.S. payee pool. For the alternative procedure for providing withholding rate pool information for U.S. non-exempt persons not included in a chapter 4 withholding rate pool of U.S. payees, see the Form W-8IMY instructions.
The withholding statement must:
  1. Designate those accounts for which it acts as a qualified intermediary,
  2. Designate those accounts for which it assumes primary chapters 3 and 4 withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility,
  3. If applicable, designate the accounts for which it acts as a qualified securities lender with respect to any U.S. source substitute dividend payments,
  4. Provide sufficient information for you to allocate the payment, as applicable, to chapter 3 withholding rate pools and, for payments that are withholdable payments, chapter 4 withholding rate pools of nonparticipating FFIs and recalcitrant account holders when the QI has not assumed primary chapter 3 or 4 withholding responsibility, and
  5. Provide sufficient information for you to allocate payments to each U.S. non-exempt recipient or to a pool of U.S. payees to the extent described earlier under this heading.
The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI.
If a QI that is permitted to do so by the QI agreement obtains documentary evidence under the "know-your-customer" rules that apply to the QI under local law, and the documentary evidence is of a type specified in an attachment to the QI agreement, the documentary evidence remains valid until there is a change in circumstances or the QI knows the information is incorrect. A QI may rely on a Form W-8 until its validity expires under Treasury regulations section 1.1441-1(e)(4)(ii) and may rely on documentary evidence not obtained pursuant to "know-your-customer" rules until its validity expires under Treasury regulations section 1.6049-5(c).
taxmap/pubs/p515-002.htm#en_us_publink100015486
Primary chapters 3 and 4 withholding responsibilities not assumed.
If a QI does not assume primary chapters 3 and 4 withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for the payment, you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to each withholding rate pool for foreign and U.S. payees. Unless the alternative procedure applies and the QI is permitted to include U.S. non-exempt recipients in a chapter 4 withholding rate pool of U.S. payees, the QI must provide you with a separate withholding rate pool for each U.S. non-exempt recipient that must be reported on Form 1099. If you and the QI agree, the QI may apply the alternative procedures for U.S. non-exempt recipients by establishing a single withholding rate pool (not subject to backup withholding) for all U.S. non-exempt recipient account holders for whom the QI is required to report on Form 1099 and has provided you with Forms W-9 prior to you making the reportable payment, or, if applicable, designated broker proceeds to which backup withholding does not apply. The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for each U.S. non-exempt recipient.
taxmap/pubs/p515-002.htm#en_us_publink100015487
Primary chapters 3 and 4 withholding responsibilities assumed.
If you make a payment to a QI that assumes primary chapters 3 and 4 withholding responsibilities (but not primary Form 1099 reporting and backup withholding responsibility), you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to the chapter 4 withholding rate pools and chapter 3 withholding rate pools, as applicable, and the part of the payment attributable to withholding rate pools for each U.S. non-exempt recipient, unless the alternative procedure applies for Form 1099 reporting and/or backup withholding purposes. The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person.
taxmap/pubs/p515-002.htm#en_us_publink100015488
Primary chapters 3 and 4 withholding responsibilities and Form 1099 reporting and backup withholding responsibilities assumed.
If you make a payment to a QI that assumes primary chapters 3 and 4 withholding responsibilities and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate the payment with valid documentation provided that you receive a valid Form W-8IMY. It is not necessary to associate the payment with any chapter 3 or chapter 4 withholding rate pools.
taxmap/pubs/p515-002.htm#en_us_publink1000224842

Example.

You make a payment of U.S. source dividends to a QI. It has five customers: two are foreign persons who have provided documentation entitling them to a 15% rate of withholding on dividends; two are foreign persons subject to a 30% rate of withholding on dividends; and one is a U.S. individual who provides it with a Form W-9. Each customer is entitled to 20% of the dividend payment. The QI does not assume any primary withholding responsibility. The QI gives you a Form W-8IMY with which it associates the Form W-9 and a withholding statement that allocates 40% of the dividend to a 15% withholding rate pool, 40% to a 30% withholding rate pool, and 20% to the U.S. individual. You should report on Forms 1042-S 40% of the payment as made to a 15% rate dividend pool and 40% of the payment as made to a 30% rate dividend pool. The part of the payment allocable to the U.S. individual (20%) is reportable on Form 1099-DIV.
taxmap/pubs/p515-002.htm#en_us_publink1000224843

Joint account treatment.

rule
A QI may apply joint account treatment to a partnership or trust if the partnership or trust meets the following conditions.
For information on these rules, see section 4.05 of the QI agreement in Revenue Procedure 2014-39, 2014-29 I.R.B. 151 (as updated).
taxmap/pubs/p515-002.htm#en_us_publink1000224844

Agency option.

rule
A QI may apply the agency option to a partnership or trust under which the partnership or trust agrees to act as an agent of the QI and to apply the provisions of the QI agreement to its partners, beneficiaries, or owners. A QI and a partnership or trust may only apply the agency option if the partnership or trust meets the following conditions. For information on these rules, see section 4.06 of the QI agreement in Revenue Procedure 2014-39, 2014-29 I.R.B. 151 (as updated).
taxmap/pubs/p515-002.htm#en_us_publink100015489

Form 1042-S reporting.

rule
A QI is generally permitted to report payments made to its foreign account holders on a pooled basis rather than reporting payments to each account holder specifically. Pooled basis reporting is not available for payments to certain account holders, such as nonqualified intermediaries, flow-through entities (discussed earlier) and certain of their account holders and owners, private arrangement intermediaries, partnerships or trusts to which the QI applies the joint account or agency option (discussed later), and, in certain circumstances, qualified intermediaries, withholding foreign partnerships, and withholding foreign trusts. Notwithstanding these requirements, separate Forms 1042-S are not issued to account holders that the QI is permitted to include in a chapter 4 withholding rate pool.
taxmap/pubs/p515-002.htm#en_us_publink100015490

Collective refund procedures.

rule
A QI may seek a refund of tax withheld under chapters 3 and 4 on behalf of its account holders when the QI has not issued a Form 1042-S to the account holders that received the payment that was subject to overwithholding. The account holders, therefore, are not required to file claims for refund with the IRS to obtain refunds, but rather may obtain them from the QI. A QI may obtain a refund of tax withheld under chapter 4, however, to the extent permitted under the QI agreement.
taxmap/pubs/p515-002.htm#en_us_publink1000224845

Nonqualified Intermediaries

rule
If you are making a payment to an NQI or U.S. branch that is using Form W-8IMY to transmit information about the branch's account holders or customers, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, prior to making the payment:
taxmap/pubs/p515-002.htm#en_us_publink1000224846

Withholding statement.

rule
The NQI or U.S. branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. A withholding statement must be updated to keep the information accurate prior to each payment.
taxmap/pubs/p515-002.htm#en_us_publink100015491
For chapter 4 purposes.
An NQI receiving a withholdable payment must provide a withholding statement which satisfies the requirements of an FFI withholding statement or, if the NQI is not a participating FFI or registered deemed-compliant FFI, a chapter 4 withholding statement.
An FFI withholding statement may allocate the payment to chapter 4 reporting rate pools (as appropriate), including a chapter 4 withholding rate pool for nonparticipating FFIs, recalcitrant account holders (in each class of account holders as described in the chapter 4 regulations), and, for an NQI that is a participating FFI (including a reporting Model 2 FFI) or a registered deemed-compliant FFI (including a reporting Model 1 FFI), U.S. payees. However, an NQI may allocate a payment of a reportable amount (regardless of whether the payment is a withholdable payment) to a chapter 4 withholding rate pool of U.S. payees when the NQI satisfies the requirements for providing such a pool, including the requirement to certify to its status as a participating FFI, including a reporting Model 2 FFI, or registered deemed-compliant FFI, including a reporting Model 1 FFI. If the FFI withholding statement instead includes payee specific information for purposes of chapter 4, it must indicate both the portion of the payment allocated to each payee and each payee’s chapter 4 status. The withholding statement must also identify each intermediary or flow-through entity that is receiving a payment (excluding any intermediary or flow-through entity that is an account holder or interest holder in another QI, WP, or WT), each such entity’s chapter 4 status and GIIN (if applicable) when required for chapter 4 purposes, and the chapter 4 withholding rate pools associated with each such entity.
A chapter 4 withholding statement must contain the name, address, TIN (if any), entity type, chapter 4 status of each payee, the amount allocated to each payee, and a valid withholding certificate or other documentation sufficient to establish each payee’s chapter 4 status for payees that are not included in a chapter 4 withholding rate pool of nonparticipating FFIs. The withholding statement must also identify each intermediary or flow-through entity that is receiving a payment (excluding any intermediary or flow-through entity that is an account holder or interest holder in another QI, WP, or WT), each such entity’s chapter 4 status and GIIN (if applicable), and the chapter 4 withholding rate pools associated with each such entity.
taxmap/pubs/p515-002.htm#en_us_publink100015492
For chapter 3 purposes.
The withholding statement should allocate for chapter 3 purposes only the portion of the payment that was not allocated to a chapter 4 withholding rate pool or to a payee identified on a withholding statement to whom withholding was applied under chapter 4. For chapter 3 purposes, a withholding statement must include the information described below for a reportable amount.
  1. The name, address, and TIN (if any, or if required) of each person for whom documentation is provided.
  2. The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided, and, for a withholdable payment, that the documentation establishes the payee’s chapter 4 status to the extent required for chapter 4 purposes.
  3. The status of the person for whom the documentation has been provided, such as whether the person is a U.S. exempt recipient, U.S. non-exempt recipient, or a foreign person. For a foreign person, the statement must indicate whether the person is the beneficial owner or a foreign intermediary, flow-through entity, or a U.S. branch that is not included in a chapter 4 withholding rate pool or in a pool of payees under the alternative procedures (see Alternative Procedure, later).
  4. The type of recipient the person is, based on the recipient codes used on Form 1042-S.
  5. Information allocating each payment, by income type, to each payee (including U.S. exempt and non-exempt recipients) for whom documentation has been provided that is not included in a chapter 4 withholding rate pool or in a pool of payees under the alternative procedures (see Alternative Procedure, later).
  6. The rate of withholding that applies to each foreign person to whom a payment is allocated.
  7. A foreign payee's country of residence.
  8. If a reduced rate of withholding is claimed under chapter 3, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc.).
  9. In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made.
  10. The name, address, and TIN (if any) and, for a withholdable payment, the chapter 4 status (if required) and GIIN (if applicable) of any other NQI, flow-through entity, or U.S. branch from which the payee will directly receive a payment.
  11. Any other information a withholding agent requests to fulfill its reporting and withholding obligations.
taxmap/pubs/p515-002.htm#en_us_publink1000224847

Alternative procedure.

rule
Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U.S. exempt recipient or chapter 4 withholding rate pool by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. To take advantage of this procedure, the NQI must: (a) inform you, on its withholding statement, that it is using the alternative procedure; and (b) obtain your consent. You must receive the withholding statement with all the required information (other than item 5) prior to making the payment.
EIC
The alternative procedure cannot however be used for payments to U.S. non-exempt recipients other than those recipients included in a chapter 4 withholding rate pool of U.S. payees. See Chapter 4, later. Therefore, an NQI must provide you with allocation information for any U.S. non-exempt recipients not included in a chapter 4 withholding rate pool of U.S. payees prior to a payment being made.
taxmap/pubs/p515-002.htm#en_us_publink1000224849
Pooled withholding information.
If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as opposed to individual allocation information, prior to the payment of a reportable amount. The NQI must provide you with the payee specific allocation information (information allocating each payment to each payee) by January 31 following the calendar year of payment except as otherwise permitted for chapter 4 purposes when using this procedure.
taxmap/pubs/p515-002.htm#en_us_publink100015493

Chapter 4.

rule
In the case of a reportable amount that is also a withholdable payment, an NQI may include amounts allocable to a chapter 4 withholding rate pool (other than a chapter 4 withholding rate pool of U.S. payees) and payees subject to chapter 4 withholding for whom the NQI will provide payee specific information in a 30-percent rate pool together with payees subject to chapter 3 withholding at the 30-percent rate. For the amount of the payment allocable to a chapter 4 withholding rate pool of U.S. payees, an NQI may include amounts allocable to the pool with other amounts exempt from withholding (and an NQI may allocate payments to this pool regardless of whether the payment is a withholdable payment) and may not otherwise apply these provisions for payments made to U.S. non-exempt recipients. The NQI must identify prior to the payment each chapter 4 withholding rate pool to be allocated a portion of the payment, in addition to each payee to be allocated the payments that is not included in such a pool. The NQI must then also allocate, by January 31 following the calendar year of the payment, the portion of the payment to each such pool in addition to allocating the payment to each payee that is not included in the pool.
taxmap/pubs/p515-002.htm#en_us_publink1000224850
Failure to provide allocation information.
If an NQI fails to provide you with the payee specific allocation information for a withholding rate pool or chapter 4 withholding rate pool by January 31, you must not apply the alternative procedure to any of the NQI's withholding rate pools from that date forward. You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules. An NQI is deemed to have failed to provide specific allocation information if it does not give you such information for more than 10% of any one withholding rate pool.
However, if you receive such information by February 14, you may make the appropriate adjustments to repay any excess withholding incurred between February 1 and on or before February 14.
If the NQI fails to allocate more than 10% of the payment to a withholding rate pool by February 14 following the calendar year of payment, you must file a Form 1042-S for each account holder in the pool on a pro-rata basis (treating a chapter 4 withholding rate pool as an account holder for this purpose and excluding U.S. exempt recipients). For example, if there are four account holders in a withholding rate pool that receives a $100 payment and the NQI fails to allocate more than $10 of the payment, you must file four Forms 1042-S, one for each account holder in the pool, showing $25 of income to each. You must also check the "Pro-rata Basis Reporting" box at the top of each form. If, however, the nonqualified intermediary provides allocation information for 90% or more of the payment to a withholding rate pool, the pro-rata reporting method is not required. Instead, you must file a Form 1042-S for each account holder for whom you have allocation information and report the unallocated part of the payment on a Form 1042-S issued to "unknown recipient."
taxmap/pubs/p515-002.htm#en_us_publink1000224851

Withholding Foreign Partnerships

rule
If you are making payments to a WP, you do not have to withhold if the WP is acting in that capacity. The WP must assume primary chapters 3 and 4 withholding responsibility for amounts that are distributed to, or included in the distributive share of, any direct partner and may assume chapters 3 and 4 withholding responsibilities for certain of its indirect partners. The WP must withhold the amount required to be withheld. A WP must provide you with a Form W-8IMY that certifies that the WP is acting in that capacity and provides all other information and certifications required by the form. The Form W-8IMY must contain the WP-EIN and GIIN (if applicable).
A WP can be either an FFI or an NFFE. An FFI (other than a retirement fund) that is a WP must be a participating FFI, a registered deemed-compliant FFI, or an FFI treated as a deemed-compliant FFI under an applicable Model 1 IGA that is subject to similar due diligence and reporting requirements with respect to its U.S. accounts as those applicable to a registered deemed-compliant FFI under Treasury regulations section 1.1471-5(f)(1) (including the requirement to register with the IRS) (defined in the WP agreement as a "registered deemed-compliant Model 1 IGA FFI"). Thus, an FFI certifying its status as a WP must provide you a Form W-8IMY that certifies to one of the chapter 4 statuses referenced in the preceding sentence when a chapter 4 status is required.
taxmap/pubs/p515-002.htm#en_us_publink1000224852

Responsibilities of WP.

rule
The WP must withhold under chapter 3 or 4 on the date it makes a distribution of a withholdable payment or an amount subject to chapter 3 withholding to a direct foreign partner based on the Forms W-8 or W-9 it receives from its partners. If the partner's distributive share has not been distributed, the WP must withhold on the partner's distributive share on the earlier of the date that the partnership must mail or otherwise provide to the partner a Schedule K-1 (Form 1065) or the due date for furnishing the statement (whether or not the WP is required to furnish the statement).
The WP may determine the amount of withholding based on a reasonable estimate of the partner's distributive share of income subject to withholding for the year. The WP must correct the estimated withholding to reflect the actual distributive share on the earlier of the dates mentioned in the preceding paragraph. If that date is after the due date (including extensions) for filing the WP's Forms 1042 and 1042-S for the calendar year, the WP may withhold and report any adjustments in the following calendar year.
taxmap/pubs/p515-002.htm#en_us_publink1000224853
Form 1042 filing.
The WP must file Form 1042 even if no amount was withheld. In addition to the information that is required for the Form 1042, the WP must attach a statement showing the amounts of any over- or under-withholding adjustments and an explanation of those adjustments.
taxmap/pubs/p515-002.htm#en_us_publink1000224854
Form 1042-S reporting.
The WP can elect to report payments made to its foreign direct partners on a pooled basis for chapter 3 purposes rather than reporting payments to each direct partner in addition to reporting payments in a chapter 4 withholding rate pool to the extent the WP is permitted to do so based on its chapter 4 status. A WP can treat as its direct partners those indirect partners of the WP for which it applies joint account treatment or the agency option (described later). A WP must otherwise issue a Form 1042-S to each partner to the extent it is required to do so under the WP agreement. You may issue a single Form 1042-S for all payments you make to a WP other than payments for which the entity does not act as a WP. You may, however, have Form 1099 requirements for certain indirect partners of a WP that are U.S. non-exempt recipients.
taxmap/pubs/p515-002.htm#en_us_publink100015494
Collective refund procedures.
A WP may seek a refund of tax withheld under chapters 3 and 4 on behalf of its partners when the WP has not issued a Form 1042-S to the partners that received the payment that was subject to overwithholding. The partners, therefore, are not required to file claims for refund with the IRS to obtain refunds, but rather may obtain them from the WP. A WP may obtain a refund of tax withheld under chapter 4 to the extent permitted under the WP agreement.
taxmap/pubs/p515-002.htm#en_us_publink100015495
Reporting of U.S. partners.
A WP must report its U.S. partners on Schedule K-1 to the extent required under the WP agreement. If the WP is an FFI, it is also required to report each of its U.S. accounts (or U.S. reportable accounts if a reporting Model 1 FFI) on Form 8966 consistent with its chapter 4 requirements or the requirements of an IGA. If the WP is an NFFE, WP must file Form 8966 to report any partner that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) if the NFFE is the beneficial owner of a withholdable payment received by the WP. The WP must also file a Form 8966 to report withholdable payments made to a passthrough partner for which the WP acts under the WP agreement that provides information on an account holder (or interest holder) that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) and that is the beneficial owner of the withholdable payment received by WP, unless the passthrough partner certifies to the WP that it is reporting on the account holder (or interest holder) pursuant to its U.S. account reporting requirements. The preceding sentence applies with respect to a passthrough partner to which WP applies the agency option or which has partners, beneficiaries, or owners that are indirect partners of WP.
taxmap/pubs/p515-002.htm#en_us_publink1000224855

Joint account treatment.

rule
Under special procedures provided in the WP agreement, a WP may apply joint account treatment to a partnership or trust that is a direct partner of the WP. A WP that applies the joint account option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WP distributes to, or includes in the distributive share of, a foreign direct partner. These rules only apply to a partnership or trust that meets the following conditions.For more information on applying these rules, see section 9.01 of the WP agreement in Revenue Procedure 2014-47, 2014-35 I.R.B. 393 (as may be amended).
taxmap/pubs/p515-002.htm#en_us_publink100015496

Agency option.

rule
A WP may apply the agency option to a partnership or trust under which the partnership or trust agrees to act as an agent of the WP and to apply the provisions of the WP agreement to its partners, beneficiaries, or owners. A WP that applies the agency option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WP distributes to, or includes in the distributive share of, a foreign direct partner. A WP and a partnership or trust may only apply the agency option if the partnership or trust meets the following conditions:For more information on applying these rules, see section 9.02 of the WP agreement in Revenue Procedure 2014-47, 2014-35 I.R.B. 393 (as may be amended).
taxmap/pubs/p515-002.htm#en_us_publink100015497

WP acting for indirect partners.

rule
A WP may act as a WP with respect to an indirect partner of the WP that is not a U.S. non-exempt recipient. However, a WP may act as a WP for an indirect partner that is a U.S. non-exempt recipient if the indirect partner is included in a passthrough partner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees. A WP acting as a WP for an indirect partner is not required to forward to its withholding agent the documentation and the withholding statement of the passthrough partner and indirect partner that the WP would have otherwise been required to provide under the requirements of a nonwithholding foreign partnership. See Not acting as WP, later. However, a WP must provide the withholding agent with documentation and any other information from any passthrough partner whose direct or indirect partner, beneficiary, or owner is a U.S. non-exempt recipient unless the recipient is included in the passthrough partner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees. If WP is making a payment that is a withholdable payment, the passthrough partner’s withholding statement must meet the requirements of Treasury regulations section 1.1471-3(c)(3)(iii)(B). The passthrough partner’s withholding statement must include the account holders or interest holders of the passthrough partner in chapter 4 withholding rate pools (to the extent permitted), and, for an amount subject to chapter 3 withholding that is not a withholdable payment or is a withholdable payment for which chapter 4 withholding is not required, valid documentation provided by the account holders or interest holders of the passthrough partner that are not themselves qualified intermediaries or flow-through entities.
For more information on applying these rules, see section 9.03 of the WP agreement in Revenue Procedure 2014-47, 2014-35 I.R.B. 393 (as may be amended).
taxmap/pubs/p515-002.htm#en_us_publink1000224857

Not acting as WP.

rule
A foreign partnership that is not acting as a WP is a nonwithholding foreign partnership. This occurs if a WP is not acting in that capacity for some or all of the amounts it receives from you.
You must treat payments made to a nonwithholding foreign partnership as made to the partners of the partnership. The partnership must provide you with a Form W-8IMY (with Part VIII completed), a withholding statement identifying the amounts, the withholding certificates or documentary evidence of the partners, and the information shown earlier under Withholding statement under Nonqualified Intermediaries.
taxmap/pubs/p515-002.htm#en_us_publink1000224858

Withholding Foreign Trusts

rule
If you are making payments to a WT, you do not have to withhold if the WT is acting in that capacity. The WT must assume primary chapters 3 and 4 withholding responsibility for amounts that are distributed to, or included in the distributive share of, any direct beneficiary or owner and may assume primary chapters 3 and 4 withholding responsibility for certain of its indirect beneficiaries or owners. The WT must withhold the amount required to be withheld. A WT must provide you with a Form W-8IMY that certifies that the WT is acting in that capacity and provides all other information and certifications required by the form. The Form W-8IMY must contain the WT-EIN and GIIN (if applicable).
A WT can be either an FFI or an NFFE. An FFI (other than a retirement fund) that is a WT must be a participating FFI, a registered deemed-compliant FFI, or an FFI treated as a deemed-compliant FFI under an applicable Model 1 IGA that is subject to similar due diligence and reporting requirements with respect to its U.S. accounts as those applicable to a registered deemed-compliant FFI under Treasury regulations section 1.1471-5(f)(1) (including the requirement to register with the IRS) (defined in the WT agreement as a "registered deemed-compliant Model 1 IGA FFI"). Thus, you must identify the chapter 4 status of an FFI certifying its status as a WT as one of the chapter 4 statuses referenced in the preceding sentence on a Form W-8IMY when a chapter 4 status is required for chapter 4 purposes.
taxmap/pubs/p515-002.htm#en_us_publink1000224859

Responsibilities of WT.

rule
The WT must withhold on the date it makes a distribution of a withholdable payment or an amount subject to chapter 3 withholding to a direct foreign beneficiary or owner. If the beneficiary's or owner's distributive share has not been distributed, the WT must withhold on the beneficiary's or owner's distributive share on the earlier of the date that the trust must mail or otherwise provide to the beneficiary or owner the statement required under section 6048(b) or the due date for furnishing the statement (whether or not the WT is required to furnish the statement).
The WT may determine the amount of withholding based on a reasonable estimate of the beneficiary's or owner's distributive share of income subject to withholding for the year. The WT must correct the estimated withholding to reflect the actual distributive share on the earlier of the dates mentioned in the preceding paragraph. If that date is after the due date (including extensions) for filing the WT's Forms 1042 and 1042-S for the calendar year, the WT may withhold and report any adjustments in the following calendar year.
taxmap/pubs/p515-002.htm#en_us_publink1000224860
Form 1042 filing.
The WT must file Form 1042 even if no amount was withheld. In addition to the information that is required for the Form 1042, the WT must attach a statement showing the amounts of any over- or under-withholding adjustments and an explanation of those adjustments.
taxmap/pubs/p515-002.htm#en_us_publink1000224861
Form 1042-S reporting.
The WT can elect to report payments made to its foreign direct beneficiaries or owners on a pooled basis for chapter 3 purposes rather than reporting payments made to each foreign direct beneficiary or owner in addition to reporting payments in a chapter 4 withholding rate pool to the extent the WT is permitted to do so based on its chapter 4 status. A WT can treat as its direct beneficiaries or owners those indirect beneficiaries or owners of the WT for which it applies joint account treatment or the agency option (described later). A WT must otherwise issue a Form 1042-S to each beneficiary or owner to the extent it is required to do so under the WT agreement. You may issue a single Form 1042-S for all payments you make to a WT other than payments for which the entity does not act as a WT. You may, however, have Form 1099 requirements for certain indirect beneficiaries or owners of a WT that are U.S. non-exempt recipients.
taxmap/pubs/p515-002.htm#en_us_publink100015498
Collective refund procedures.
A WT may seek a refund of tax withheld under chapters 3 and 4 on behalf of its beneficiaries or owners when the WT has not issued a Form 1042-S to the beneficiaries or owners that received the payment that was subject to overwithholding. The beneficiaries or owners, therefore, are not required to file claims for refund with the IRS to obtain refunds, but rather may obtain them from the WT. A WT may obtain a refund of tax withheld under chapter 4 to the extent permitted under the WT agreement.
taxmap/pubs/p515-002.htm#en_us_publink100015499
Reporting of U.S. beneficiaries or owners.
If the WT is a grantor trust with U.S. owners, the WT is required to file Form 3520-A, Annual Information Return of a Foreign Trust with a U.S. Owner, and to provide statements to a U.S. owner, as well as each U.S. beneficiary who is not an owner and receives a distribution. If the WT is an FFI, it is required to report each of its U.S. accounts (or U.S. reportable accounts if a reporting Model 1 FFI) on Form 8966 consistent with its FATCA requirements or the requirements of an IGA. If the WT is an NFFE, WT must file Form 8966 to report any beneficiary or owner that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) if the NFFE is the beneficial owner of a withholdable payment received by the WT. The WT must also file a Form 8966 to report withholdable payments made to a passthrough beneficiary or owner for which the WT acts under the WT agreement that provides information on an account holder (or interest holder) that is an NFFE (other than an excepted NFFE) with one or more substantial U.S. owners (or, under an applicable IGA, controlling persons that are specified U.S. persons) and that is the beneficial owner of the withholdable payment received by WT, unless the passthrough beneficiary or owner certifies to the WT that it is reporting on the account holder (or interest holder) pursuant to its U.S. account reporting requirements. The preceding sentence applies with respect to a passthrough beneficiary or owner to which WT applies the agency option or which has partners, beneficiaries, or owners that are indirect beneficiaries or owners of WT. In addition, if the WT is not a participating FFI, a registered deemed-compliant FFI, or a registered deemed-compliant Model 1 IGA FFI and is not required to report with respect to a U.S. beneficiary of WT on Form 3520-A, then the WT must report with respect to such beneficiary on Form 8966 as required in the WT agreement. A beneficiary for this purpose means a beneficiary that receives a distribution from the WT during the year or that is required to include an amount in gross income under sections 652(a) or 662(a) with respect to the WT.
taxmap/pubs/p515-002.htm#en_us_publink1000224862

Joint account treatment.

rule
Under special procedures provided in the WT agreement, a WT may apply joint account treatment to a partnership or trust that is a direct beneficiary or owner of the WT. A WT that applies the joint account option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WT distributes to, or includes in the distributive share of, a foreign direct beneficiary or owner. These rules only apply to a partnership or trust that meets the following conditions:For more information on applying these rules, see section 9.01 of the WT agreement found in Revenue Procedure 2014-47, 2014-35 I.R.B. 393 (as may be amended).
taxmap/pubs/p515-002.htm#en_us_publink100015500

Agency option.

rule
A WT may apply the agency option to a partnership or trust under which the partnership or trust agrees to act as an agent of the WT and to apply the provisions of the WT agreement to its partners, beneficiaries, or owners. A WT that applies the agency option must elect to perform pool reporting for amounts subject to chapter 3 withholding that either are not withholdable payments or are withholdable payments for which no chapter 4 withholding is required and that the WT distributes to, or includes in the distributive share of, a foreign direct beneficiary or owner. A WT and a partnership or trust may only apply the agency option if the partnership or trust meets the following conditions:For more information on applying these rules, see section 9.02 of the WT agreement in Revenue Procedure 2014-47, 2014-35 I.R.B. 393 (as may be amended).
taxmap/pubs/p515-002.htm#en_us_publink100015501

WT acting for indirect beneficiaries or owners.

rule
A WT may act as a WT with respect to an indirect beneficiary or owner of the WT that is not a U.S. non-exempt recipient. However, a WT may act as a WT for an indirect beneficiary or owner that is a U.S. non-exempt recipient if the indirect beneficiary or owner is included in a passthrough beneficiary’s or owner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees. A WT acting as a WT for an indirect beneficiary or owner is not required to forward to its withholding agent the documentation and the withholding statement of the passthrough beneficiary or owner and indirect beneficiary or owner that the WT would have otherwise been required to provide under the requirements of a nonwithholding foreign trust. See Not acting as WT, later. However, a WT must provide the withholding agent with documentation and any other information from any passthrough beneficiary or owner whose direct or indirect partner, beneficiary, or owner is a U.S. non-exempt recipient unless the recipient is included in the passthrough beneficiary’s or owner’s chapter 4 withholding rate pool of recalcitrant account holders or U.S. payees. If WT is making a payment that is a withholdable payment, the passthrough beneficiary’s or owner’s withholding statement must meet the requirements of Treasury regulations section 1.1471-3(c)(3)(iii)(B). The passthrough beneficiary’s or owner’s withholding statement must include the account holders or interest holders of the passthrough beneficiary or owner in chapter 4 withholding rate pools (to the extent permitted), and, for an amount subject to chapter 3 withholding that is not a withholdable payment or is a withholdable payment for which chapter 4 withholding is not required, valid documentation provided by the account holders or interest holders of the passthrough beneficiary or owner that are not themselves qualified intermediaries or flow-through entities.
For more information on applying these rules, see section 9.03 of the WT agreement in Revenue Procedure 2014-47, 2014-35 I.R.B. 393 (as may be amended).
taxmap/pubs/p515-002.htm#en_us_publink1000224864

Not acting as WT.

rule
A foreign trust that is not acting as a WT is a nonwithholding foreign trust. This occurs if a WT is not acting in that capacity for some or all of the amounts it receives from you.
In most cases, you must treat payments made to a nonwithholding foreign trust as made to the beneficiaries of a simple trust or the owners of a grantor trust. The trust must provide you with a Form W-8IMY (with Part VIII completed), a withholding statement identifying the amounts, the withholding certificates or documentary evidence of the beneficiaries or owners, and the information shown earlier under Withholding statement under Nonqualified Intermediaries.
taxmap/pubs/p515-002.htm#en_us_publink1000224865

Standards of Knowledge
for Purposes of Chapter 3

rule
You must withhold in accordance with the presumption rules (discussed later) if you know or have reason to know that a withholding certificate or documentary evidence provided by a payee is unreliable or incorrect to establish the payee's status for chapter 3 purposes. If you rely on an agent to obtain documentation, you are considered to know, or have reason to know, the facts that are within the knowledge of your agent for this purpose.
taxmap/pubs/p515-002.htm#en_us_publink1000224866

Reason To Know

rule
In general, you are considered to have reason to know that a claim of foreign status or of a reduced rate of withholding is incorrect if statements contained in the withholding certificate or other documentation, or other relevant facts of which you have knowledge, would cause a reasonably prudent person in your position to question the claims made.
For an obligation that is not a preexisting obligation (i.e., an obligation, including an account, held by an individual that is outstanding on June 30, 2014, or an obligation, including an account, held by an entity that is opened, executed, or issued before January 1, 2015), you have reason to know that an account holder’s chapter 3 claim is unreliable or incorrect if any information contained in your account opening files or other account information conflicts with the account holder’s claim. For an obligation other than a preexisting obligation, you will not be considered to have reason to know that a person’s chapter 3 claim is unreliable or incorrect based on documentation collected for AML purposes until 30 days after the obligation is executed, or 30 days after the account is opened for such person, whichever is applicable.
Financial institutions, insurance companies, or brokers or dealers in securities have reason to know that documentation provided by a direct account holder is unreliable or incorrect only in the circumstances discussed next. If the documentation is considered unreliable or incorrect, you must get new documentation to support the payee’s claimed status or may rely on the original documentation if you receive the additional statements and/or documentation discussed later and are a withholding agent described above with respect to a direct account holder (defined in Treasury regulations section 1.1441-7(b)(3)(i)). Such documentation is described in Treasury regulations section 1.1471-3(c)(5)(i).
The circumstances, discussed next, also apply to other withholding agents. However, these withholding agents are not limited to these circumstances in determining if they have reason to know that documentation is unreliable or incorrect. These withholding agents cannot base their determination on the receipt of additional statements or documents. They need to get new documentation.
taxmap/pubs/p515-002.htm#en_us_publink1000224867

Withholding Certificates

rule
You have reason to know that a Form W-8 provided by a direct account holder that is a foreign person is unreliable or incorrect if:
The rules below apply to withholding agents that are financial institutions, insurance companies, or brokers or dealers in securities.
taxmap/pubs/p515-002.htm#en_us_publink100015502

Limits on reason to know for preexisting obligations.

rule
With respect to a preexisting obligation (i.e., an obligation, including an account, held by an individual that is outstanding on June 30, 2014, or an obligation, including an account, held by an entity that is opened, executed, or issued before January 1, 2015), if you have documented the foreign status of an account holder for purposes of chapter 3 or 61 prior to July 1, 2014, you may continue to rely on that documentation. In addition, if you make a payment to a new entity account holder that you treat as a preexisting entity account under Notice 2014-33, you may apply the standards of knowledge in Treasury Regulations sections 1.1441-7(b)(5) and (b)(8) that were applicable prior to the issuance of the temporary regulations. See Notice 2014-59, 2014-44 I.R.B. 747. However, if you review documentation for an individual account holder claiming foreign status that contains a U.S. place of birth or if you are notified of a change in circumstances, the obligation will be treated as having a change in circumstances as of the date you review the documentation or receive the notification, and you will then have reason to know that the documentation is unreliable or incorrect. However, if you are reviewing documentation provided by an entity before January 1, 2015, you will not be required to treat the additional U.S. indicia added to Treasury Regulations section 1.1441-7(b) by the temporary regulations as a change in circumstances. See Notice 2014-59, 2014-44 I.R.B. 747.
taxmap/pubs/p515-002.htm#en_us_publink1000224868

Establishment of foreign status by certain withholding agents.

rule
You have reason to know that a Form W-8BEN or W-8BEN-E is unreliable or incorrect to establish a direct account holder's status as a foreign person if:
  1. The Form W-8 has a current permanent residence address in the United States;
  2. The Form W-8 has a current mailing address in the United States;
  3. You have a current residence or current mailing address as part of your account information that is an address in the United States;
  4. The account holder notifies you of a new residence or mailing address in the United States;
  5. You have classified the account holder as a U.S. person in your account information; or
  6. You have a current telephone number for the account holder in the United States and no telephone number for the account holder outside the United States (only to the extent described in Regulations section 1.1441-7(b)(5).
You may, however, rely on a Form W-8 as establishing the account holder's foreign status if any of the following apply:
  1. You receive the Form W-8BEN from an individual and:
    1. You possess or obtain documentary evidence (that does not contain a U.S. address) that supports the claim of foreign status, and the individual provides you with a reasonable explanation in writing supporting the claim of foreign status;
    2. If you make a payment outside the U.S. with respect to an offshore obligation and you possess or obtain documentary evidence establishing foreign status that does not contain a U.S. address;
    3. With respect to an offshore obligation, if you classify the individual as a resident of the country where the obligation is maintained and you are required to report payments to the individual annually to the tax authority of the country where the obligation is maintained and that country has a tax treaty or information exchange agreement in effect with the United States; or
    4. You have classified the account holder as a U.S person in your account information and you possess or obtain documentary evidence evidencing citizenship in a country other than the United States.
  2. You receive the Form W-8BEN-E from an entity that is not a flow-through entity and:
    1. You have in your possession or obtain documentation establishing foreign status that substantiates that the entity is organized or created under foreign law, or
    2. With respect to an offshore obligation, if you classify the entity as a resident of the country where the obligation is maintained and you are required to report payments to the entity annually to the tax authority of the country where the obligation is maintained and that country has a tax treaty or information exchange agreement in effect with the United States.
  3. The account holder (whether an individual or an entity) has provided standing instructions to make payments with respect to an offshore obligation to an address in, or an account maintained in, the United States, unless the account holder provides a reasonable explanation in writing that supports its foreign status or provides documentary evidence supporting its foreign status.
  4. If an individual account holder provides a Form W-8BEN to establish the individual’s foreign status, and you have, either on accompanying documentation or as part of your account information, an unambiguous indication of a place of birth for the individual in the United States, you may not rely on the Form W-8BEN unless you possess or obtain documentary evidence evidencing citizenship in a country other than the United States and either (i) a copy of the individual’s Certificate of Loss of Nationality of the United States or (ii) a reasonable written explanation for the individual’s renunciation of U.S. citizenship (or, under an applicable IGA, the reason the individual does not have a Certificate of Loss of Nationality of the United States despite relinquishing its U.S. citizenship), or the reason the individual did not obtain U.S. citizenship at birth.
taxmap/pubs/p515-002.htm#en_us_publink1000224870

Claim of reduced rate of withholding under treaty by certain withholding agents.

rule
You have reason to know that a Form W-8BEN or W-8BEN-E provided by a direct account holder to claim a reduced rate of withholding under a treaty is unreliable or incorrect for purposes of establishing the account holder's residency in a treaty country if:
You may, however, rely on a Form W-8 as establishing an account holder's claim of a reduced rate of withholding under a treaty if any of the following apply.
  1. The permanent residence address is not in the treaty country and:
    1. The account holder provides a reasonable explanation for the permanent residence address outside the treaty country, or
    2. You possess or obtain documentary evidence described in Treasury regulations section 1.1471-3(c)(5)(i) that establishes residency in a treaty country.
  2. The mailing address is not in the treaty country and:
    1. You possess or obtain documentary evidence described in Treasury regulations section 1.1471-3(c)(5)(i) (that does not contain an address outside the treaty country) supporting the beneficial owner's claim of residence in the treaty country,
    2. You possess or obtain documentation that establishes that the beneficial owner is an entity organized in a treaty country,
    3. You know that the address outside the treaty country is a branch of the account holder that is a resident of the treaty country, or
    4. You obtain a written statement from the beneficial owner that reasonably establishes its entitlement to treaty benefits.
  3. You have instructions to pay amounts outside the treaty country and the account holder gives you a reasonable explanation, in writing, establishing residence in the applicable treaty country or you possess or obtain documentary evidence described in Treasury regulations section 1.1471-3(c)(5)(i) establishing the account holder’s residence in the treaty country.
taxmap/pubs/p515-002.htm#en_us_publink1000224871

Documentary Evidence

rule
You have reason to know that documentary evidence provided by a direct account holder to support a claim of foreign status is unreliable or incorrect if:
taxmap/pubs/p515-002.htm#en_us_publink1000224872

Establishment of foreign status.

rule
You have reason to know that documentary evidence is unreliable or incorrect to establish a direct account holder's status as a foreign person if:
You may, however, rely on documentary evidence as establishing an account holder's foreign status if any of the following apply.
  1. The mailing or residence address or sole telephone number is in the United States, you receive the documentary evidence from an individual, and
    1. You possess or obtain additional documentary evidence (that does not contain a U.S. address) supporting the claim of foreign status and a reasonable explanation in writing supporting the account holder's foreign status,
    2. You obtain a Form W-8 that contains a permanent residence address and mailing address outside the United States (or, if a mailing address is inside the United States, the account holder provides a reasonable explanation in writing supporting the account holder’s foreign status), or
    3. For a payment made with respect to an offshore obligation, if you classify the individual as a resident of the country where the obligation is maintained, you are required to report a payment made to the individual annually on a tax information statement filed with that county’s tax authority as part of the resident reporting requirements, and that country has a tax information exchange agreement or income tax treaty in effect with the United States.
  2. The mailing or residence address or sole telephone number is in the United States, you receive the documentary evidence from an entity (other than a flow-through entity) and:
    1. You possess or obtain documentation to substantiate that the entity is actually organized or created under the laws of a foreign country,
    2. You obtain a valid Form W-8 that contains a permanent residence address and mailing address outside the United States (or, if a mailing address is inside the United States, the account holder provides a reasonable explanation in writing supporting the account holder’s foreign status), or
    3. For a payment made with respect to an offshore obligation, if you classify the entity as a resident of the country where the obligation is maintained and you are required to report a payment made to the entity annually on a tax information statement filed with that country’s tax authority as part of the resident reporting requirements, and that country has a tax information exchange agreement or income tax treaty in effect with the United States.
  3. You have instructions to pay amounts to an address or an account in the United States and the account holder provides you with a reasonable explanation, in writing, that supports the account holder's foreign status or a valid beneficial owner withholding certificate claiming foreign status.
  4. You have an unambiguous place of birth in the United States for an individual account holder and you possess or obtain documentary evidence demonstrating the individual’s citizenship in a country other than the United States and a copy of the individual’s Certificate of Loss of Nationality of the United States. Alternatively, you may treat such an individual as a foreign person if you obtain a valid beneficial owner withholding certificate that establishes the individual’s foreign status, documentary evidence evidencing citizenship in a country other than the United States, and a reasonable explanation in writing of the individual’s renunciation of U.S. citizenship (or, under an applicable IGA, the reason the individual does not have a Certificate of Loss of Nationality of the United States despite relinquishing U.S. citizenship) or the reason the individual did not obtain U.S. citizenship at birth.
taxmap/pubs/p515-002.htm#en_us_publink1000224873

Claim of reduced rate of withholding under treaty.

rule
You have reason to know that documentary evidence provided by a direct account holder to claim a reduced rate of withholding under a treaty is unreliable or incorrect for purposes of establishing the account holder's residency in a treaty country if:
You may, however, rely on documentary evidence as establishing an account holder's claim of a reduced rate of withholding under a treaty if any of the following apply.
  1. The mailing or residence address is outside the treaty country and:
    1. You possess or obtain additional documentary evidence supporting the account holder's claim of residence in the treaty country (and the documentary evidence does not contain an address outside the treaty country, a P.O. box, an in-care-of address, or the address of a financial institution),
    2. You possess or obtain documentary evidence that establishes that the account holder is an entity organized in a treaty country, or
    3. You obtain a valid Form W-8 that contains a permanent residence address and a mailing address in the applicable treaty country.
  2. You have instructions to pay amounts outside the treaty country and the account holder gives you a reasonable explanation, in writing, establishing residence in the applicable treaty country or a valid beneficial owner withholding certificate that contains a permanent residence address and a mailing address in the applicable treaty country.
taxmap/pubs/p515-002.htm#en_us_publink1000224874

Indirect Account
Holders' Chapter 3 Status

rule
A withholding agent that receives documentation from a payee through an NQI, a flow-through entity, or a U.S. branch of a foreign bank or insurance company subject to U.S. or state regulatory supervision or a territory financial institution (other than a U.S. branch treated as a U.S. person) has reason to know that the documentary evidence is unreliable or incorrect for purposes of a claim of foreign status or a treaty claim if a reasonably prudent person in the withholding agent's position would question the claims made. This standard requires, but is not limited to, compliance with the following rules.
taxmap/pubs/p515-002.htm#en_us_publink1000224875

Withholding statement.

rule
You must review the withholding statement provided with Form W-8IMY and may not rely on information in the statement to the extent the information does not support the claims made for a payee. You may not treat a payee as a foreign person if a U.S. address is provided for the payee. You may not treat a person as a resident of a country with which the United States has an income tax treaty if the address for the person is outside the treaty country.
You may, however, treat a payee as a foreign person and may treat a foreign person as a resident of a treaty country if the withholding statement is accompanied by a valid withholding certificate and documentary evidence or a reasonable explanation is provided, by the nonqualified intermediary, flow-through entity, or U.S. branch supporting the payee’s foreign status or residency in a treaty country.
taxmap/pubs/p515-002.htm#en_us_publink1000224876

Withholding certificate.

rule
If you receive a Form W-8 for a payee in association with a Form W-8IMY, you must review each Form W-8 and verify that the information is consistent with the information on the withholding statement. If there is a discrepancy, you may rely on the Form W-8, if valid, and instruct the NQI, flow-through entity, or U.S. branch to correct the withholding statement, or, alternatively, you may apply the presumption rules, discussed later in Presumption Rules, to the payee.
If you choose to rely on the withholding certificate, you must, in addition to instructing the NQI, flow-through entity, or U.S. branch to correct the withholding statement, instruct the NQI, flow-through entity, or U.S. branch to confirm that it does not know or have reason to know that the withholding certificate is unreliable or inaccurate.
taxmap/pubs/p515-002.htm#en_us_publink1000224877

Documentary evidence.

rule
If you receive documentary evidence for a payee in association with a Form W-8IMY, you must review the documentary evidence provided by the NQI, flow-through entity, or U.S. branch to determine that there is no obvious indication that the payee is a U.S. person subject to Form 1099 reporting or that the documentary evidence does not establish the identity of the person who provided the documentation (for example, the documentary evidence does not appear to be an identification document).
taxmap/pubs/p515-002.htm#en_us_publink100015503

Standards of Knowledge
for Purposes of Chapter 4

rule
If you make a withholdable payment, you must withhold in accordance with the presumption rules (discussed later) if you know or have reason to know that a withholding certificate or documentary evidence provided by the payee is unreliable or incorrect to establish a payee’s chapter 4 status. If you rely on an agent to obtain documentation, you are considered to know, or have reason to know, the facts that are within the knowledge of your agent for this purpose.
taxmap/pubs/p515-002.htm#en_us_publink100015504

Notification by the IRS

rule
If you receive notification from the IRS that a claim of status as a U.S. person, a participating FFI, a deemed-compliant FFI, or other entity entitled to a reduced rate of withholding under chapter 4 is incorrect, you are considered to have knowledge that such a claim is incorrect beginning 30 days after you receive the notice.
taxmap/pubs/p515-002.htm#en_us_publink100015505

GIIN Verification

rule
If you have received a Form W-8BEN-E from an entity payee that is claiming chapter 4 status as a participating FFI or registered deemed-compliant FFI, you must obtain and verify the entity’s GIIN against the published IRS FFI list. The IRS FFI list can be found at www.irs.gov/Businesses/Corporations/FFI-List-Resources-Page. You will have reason to know that such payee is not such a financial institution if the payee's name (including a name reasonably similar to the name the withholding agent has on file for the payee) and GIIN do not appear on the most recently published IRS FFI list within 90 days of the date that the claim is made.
If you receive a Form W-8BEN-E from an entity payee and the form contains “Applied for” in the box for the GIIN, the payee must provide you its GIIN within 90 days of providing the form. A Form W-8BEN-E from such payee that does not include a GIIN, or includes a GIIN that does not appear on the published IRS FFI list, will be invalid for chapter 4 purposes 90 days after the date the form is provided.
The GIIN that you must confirm is the GIIN assigned to the FFI identifying its country of residence for tax purposes (or place of organization if the FFI has no country of residence), except as otherwise provided.
taxmap/pubs/p515-002.htm#en_us_publink100015506

Branches and disregarded entities.

rule
If you make a withholdable payment to a branch of, or an entity that is disregarded as an entity separate from, a participating FFI or registered deemed-compliant FFI located outside of the FFI's country of residence or organization, the GIIN you must verify is the GIIN assigned to the FFI, identifying the country in which the branch or disregarded entity receiving the payment is located. You must identify a GIIN associated with a disregarded entity to the extent provided in the Instructions to Form W-8BEN-E.
taxmap/pubs/p515-002.htm#en_us_publink100015507

Limited branches.

rule
You will have reason to know that a withholdable payment is made to a limited branch (including a disregarded entity) of a participating FFI or registered deemed-compliant FFI when you are directed to make the payment to an address in a jurisdiction other than that of the participating FFI or registered deemed- compliant FFI (or branch of, or disregarded entity wholly owned by, such FFI) that is identified as the FFI (or branch of, or disregarded entity wholly owned by, such FFI) that is supposed to receive the payment and for which the FFI's GIIN is not confirmed as described in the preceding paragraphs.
taxmap/pubs/p515-002.htm#en_us_publink100015508

Reporting Model 1 FFIs.

rule
If you receive a Form W-8BEN-E from an entity payee that is claiming chapter 4 status as a reporting Model 1 FFI, you are not required to obtain the entity payee’s GIIN for withholdable payments made prior to January 1, 2015, associated with the form.
taxmap/pubs/p515-002.htm#en_us_publink100015509

Direct reporting NFFEs.

rule
If you make a withholdable payment to a direct reporting NFFE, you must obtain and verify the direct reporting NFFE’s GIIN against the published IRS FFI list.
taxmap/pubs/p515-002.htm#en_us_publink100015510

Transitional rule for sponsoring entities.

rule
If you make a withholdable payment prior to January 1, 2016, to a registered deemed-compliant FFI that is a sponsored FFI or a NFFE that is a sponsored direct reporting NFFE, the sponsored FFI or sponsored direct reporting NFFE may provide to you the GIIN of the sponsoring entity if the sponsored FFI or sponsored direct reporting NFFE has not obtained its own GIIN.
taxmap/pubs/p515-002.htm#en_us_publink100015511

Sponsored, closely held investment vehicles.

rule
If you make a withholdable payment to a certified deemed-compliant FFI that is a sponsored, closely held investment vehicle, you must obtain a GIIN for the sponsoring entity and verify it against the published IRS FFI list.
taxmap/pubs/p515-002.htm#en_us_publink100015512

Reason To Know

rule
In general, you have reason to know that a claim of chapter 4 status is unreliable or incorrect if your knowledge of relevant facts or statements contained in the withholding certificate or other documentation is such that a reasonably prudent person would question the claim being made. For an obligation other than a preexisting obligation (i.e., an obligation other than an obligation, including an account, held by an individual that is outstanding on June 30, 2014, or an obligation, including an account, held by an entity that is opened, executed, or issued before January 1, 2015), you have reason to know that a claim of chapter 4 status is unreliable or incorrect if any information contained in the account opening files or other customer account files, including documentation collected for AML due diligence purposes, conflicts with the chapter 4 status being claimed. You will not have reason to know that a claim of chapter 4 status is unreliable or incorrect based on documentation collected for AML due diligence purposes until the date that is 30 days after the obligation is created.
If you have classified an entity as engaged in a particular type of business based on your records, such as through the use of a standardized industry coding system, you have reason to know that the chapter 4 status claimed by the entity is unreliable or incorrect if the entity’s claim conflicts with the withholding agent’s classification of the entity’s business type.
taxmap/pubs/p515-002.htm#en_us_publink100015513

Withholding Certificates

rule
In general, you have reason to know that a withholding certificate from a person is unreliable or incorrect with respect to claim of chapter 4 status if:
If you obtain a withholding certificate associated with a withholdable payment to a participating FFI, a registered deemed-compliant FFI, a sponsoring entity, or a sponsored FFI, you do not need to apply the standards of knowledge described earlier with respect to an account holder’s claim of foreign status if you have confirmed the FFI’s GIIN on the current published IRS FFI list within 90 days of receipt of the withholding certificate.
EIC
A withholding certificate used for chapter 4 purposes must also include the information required for chapter 3 purposes (i.e., the entity’s tax classification) with regard to a payment that is a reportable amount under Treasury regulations section 1.1441-1(e)(3)(vi).
taxmap/pubs/p515-002.htm#en_us_publink100019583

Documentary Evidence

rule
You have reason to know that documentary evidence provided by a person is unreliable or incorrect with respect to a claim of chapter 4 status if:For standards of knowledge applicable to specific types of documentary evidence, see Treasury regulations section 1.1471-3.
taxmap/pubs/p515-002.htm#en_us_publink100019506

Payee Documentation
from Intermediaries
or Flow-Through Entities

rule
taxmap/pubs/p515-002.htm#en_us_publink100019507

In general.

rule
If you receive documentation for a payee of a withholdable payment through one or more intermediaries or flow-through entities, you must, in addition to determining each such entity’s chapter 4 status when required for chapter 4 purposes, review all documentation obtained with respect to the payee. When withholding under chapter 4 is not applied based on the chapter 4 status of an intermediary or flow-through entity, you are not required to obtain documentation for a payee through an intermediary or flow-through entity that is a QI, WP, or WT or a payee that is included in a chapter 4 withholding rate pool of U.S. payees.
taxmap/pubs/p515-002.htm#en_us_publink100019508
Withholding statement.
You must review the withholding statement provided and may not rely on information in the statement to the extent the information does not support the claims made regarding the chapter 4 status of the payee. You may not treat a person as a foreign person if a U.S. address is provided, unless the withholding statement is accompanied by a valid withholding certificate and documentary evidence establishing foreign status.
taxmap/pubs/p515-002.htm#en_us_publink100019509
Withholding certificate.
You must review each withholding certificate, written statement (as permitted for chapter 4 purposes with respect to certain payments to entities), or documentary evidence, and must verify that the information is consistent with the information on the withholding statement. If there is a discrepancy, you may rely on the documentation provided such documentation is valid and the intermediary or flow-through entity does not indicate that the documentation is unreliable or incorrect, or, alternatively, you may apply the presumption rules. If you choose to rely on the documentation, you must instruct the intermediary or flow-through entity to correct the withholding statement and confirm that the intermediary or flow-through entity does not know or have reason to know that the documentation is unreliable or incorrect. See Treasury regulations section 1.1471-3(d) for when a written statement is permitted for chapter 4 purposes.
taxmap/pubs/p515-002.htm#en_us_publink100019510

Documentation from participating FFIs and registered deemed-compliant FFIs.

rule
If you receive documentation for a payee of a withholdable payment through a participating FFI or registered deemed-compliant FFI that is an intermediary or flow-through entity receiving the payment, you may rely on the chapter 4 status provided in the withholding statement unless you have information that conflicts with the chapter 4 status provided. If underlying documentation is provided for the payee and information in the documentation or in your records conflicts with the chapter 4 status claimed, you have reason to know that the chapter 4 status claimed is unreliable or incorrect. However, you are not required to verify the information contained in the documentation that is not facially incorrect, and you are generally not required to obtain supporting documentation for the payee.
taxmap/pubs/p515-002.htm#en_us_publink100019511
Preexisting obligation of entities.
If you make a withholdable payment with respect to a preexisting obligation to an entity, the scope of review is limited with respect to the time in which you must determine the entity’s chapter 4 status. For more information, see Treasury regulations section 1.1471-3(e)(4)(vii) or, if you are a reporting Model 1 FFI or a reporting Model 2 FFI, the requirements of the applicable IGA.
taxmap/pubs/p515-002.htm#en_us_publink1000224878

Presumption Rules

rule
If you cannot reliably associate a payment with valid documentation, you must apply certain presumption rules or you may be liable for tax, interest, and penalties. If you comply with the presumption rules, you are not liable for tax, interest, and penalties even if the rate of withholding that should have been applied based on the payee's actual status is different from that presumed.
The presumption rules apply to determine the status of the person you pay as a U.S. or foreign person and other relevant characteristics, such as whether the payee is a beneficial owner or intermediary, and whether the payee is an individual, corporation, partnership, or trust. In the case of a withholdable payment you make to an entity, you must apply the presumption rules for chapter 4 purposes to treat the entity as a nonparticipating FFI when you cannot reliably associate the payment with documentation permitted for chapter 4 purposes. You are not permitted to apply a reduced rate of chapter 3 withholding based on a payee's presumed status if documentation is required to establish a reduced rate of withholding. For example, if the payee of interest is presumed to be a foreign person, you may not apply the portfolio interest exception or a reduced rate of withholding under a tax treaty since both exceptions require documentation.
If you rely on your actual knowledge about a payee's status and withhold an amount less than that required under the presumption rules or do not report a payment that is subject to reporting under the presumption rules, you may be liable for tax, interest, and penalties. You should, however, rely on your actual knowledge if doing so results in withholding an amount greater than would apply under the presumption rules or in reporting an amount that would not be subject to reporting under the presumption rules.
In the case of a participating FFI or registered deemed-compliant FFI that cannot report with respect to an individual account holder, the FFI must classify the account holder under the requirements (as applicable) of the FFI agreement, Treasury regulations section 1.1471-5(f), or an applicable IGA. Whether withholding applies to payments made to such account holders classified as recalcitrant account holders (including payments to intermediaries or flow-through entities allocating payments to such account holders on an applicable withholding statement) differs under these requirements.
The presumption rules, in the absence of documentation, for the subject matter are discussed in the regulation section indicated on Chart A.

Chart A. Presumption Rules in the Absence of Documentation

For the presumption rules related to:See regulations section:
Payee's status1.1441-1(b)(3); 1.6049-5(d); 1.1471-3(f) (chapter 4 payees)
Effectively connected income1.1441-4(a)(2)
Partnership and its partners1.1441-5(d); 1.1446-1(c)(3)
Estate or trust and its beneficiaries or owner1.1441-5(e)(6)
Foreign tax-exempt organizations
(including private foundations)
1.1441-9(b)(3)
taxmap/pubs/p515-002.htm#en_us_publink100015522

Presumption Rules for Chapter 4

rule
If you determine that you are making a withholdable payment to an entity and cannot reliably associate the payment with a valid Form W-8 or other documentation that you are permitted to rely upon and that is sufficient to determine the chapter 4 status of the entity, you are required to treat the entity payee as a nonparticipating FFI such that withholding applies. For purposes of determining whether the payment is made to an individual or an entity, or to a U.S. person or a foreign person, if you cannot reliably associate a payment with a valid Form W-8 or other documentation that you are permitted to rely upon and from which you are able to determine the payee’s status as an individual or entity, or U.S. or foreign status, you must apply the presumption rules of Treasury regulations section 1.1441-1(b)(3)(ii) to determine the payee’s status as an individual or entity and Treasury regulations section 1.1441-1(b)(3)(iii) to determine the payee’s U.S. or foreign status.
If you are making a withholdable payment to joint payees and cannot reliably associate the payment with valid documentation from each payee and each of the payees appears to be an individual, the payment is presumed made to an unidentified U.S. person. If any of the joint payees does not appear, by its name or other information in its account file, to be an individual, then the entire payment is treated as made to a nonparticipating FFI. However, if you receive from one of the joint payees a Form W-9, the payment shall be treated as made to that payee.