Page 23 - Withholding Taxes for Foreign Entities

10:50 - 14-Feb-2020
Page 21 of 55
Fileid: … tions/P515/2020/A/XML/Cycle10/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
under a treaty is unreliable or incorrect for pur- treaty if the address for the person is outside GIIN Verification
poses of establishing the account holder's resi- the treaty country.
dency in a treaty country if: You may, however, treat a payee as a for- If you have received a Form W-8BEN-E or Form
• You have a mailing or residence address eign person and may treat a foreign person as a W-8IMY from an entity payee that is claiming
for the account holder that is outside the resident of a treaty country if the withholding certain Chapter 4 statuses, you must obtain and
applicable treaty country, statement is accompanied by a valid withhold- verify the entity’s GIIN against the published
• You have no permanent residence for the ing certificate and documentary evidence or a IRS FFI list. The IRS FFI list can be found at
account holder, or reasonable explanation is provided, by the NQI, IRS.gov/Businesses/Corporations/FFI-List-
• The account holder has standing instruc- flow-through entity, or U.S. branch supporting Resources-Page. You must obtain and verify
tions for you to pay amounts from its ac- the payee’s foreign status or residency in a against the published IRS FFI list a GIIN for the
count to an address or account not in the treaty country. following Chapter 4 statuses.
treaty country. • Participating FFIs (including reporting
You may, however, rely on documentary evi- Withholding certificate. If you receive a Form Model 2 FFIs).
dence as establishing an account holder's claim W-8 for a payee in association with a Form • Registered deemed-compliant FFIs (in-
of a reduced rate of withholding under a treaty if W-8IMY, you must review each Form W-8 and cluding reporting Model 1 FFIs).
any of the following apply. verify that the information is consistent with the • Sponsored FFIs.
• Direct reporting NFFEs.
information on the withholding statement. If
1. The mailing or residence address is out- there is a discrepancy, you may rely on the • Sponsored direct reporting NFFEs.
side the treaty country and: Form W-8, if valid, and instruct the NQI, • Certain nonreporting IGA FFIs (as descri-
a. You possess or obtain additional flow-through entity, or U.S. branch to correct bed below).
documentary evidence supporting the the withholding statement, or, alternatively, you
account holder's claim of residence in may apply the presumption rules, discussed If you receive a Form W-8BEN-E or Form
the treaty country (and the documen- later in Presumption Rules, to the payee. W-8IMY from a nonreporting IGA FFI that is a
tary evidence does not contain an ad- If you choose to rely on the withholding cer- trustee-documented trust with a foreign trustee,
dress outside the treaty country, a tificate, you must, in addition to instructing the you must obtain the GIIN of a foreign trustee,
P.O. box, an in-care-of address, or NQI, flow-through entity, or U.S. branch to cor- but you are not required to verify the GIIN. The
the address of a financial institution), rect the withholding statement, instruct the NQI, GIIN that the trustee must provide is the GIIN
b. You possess or obtain documentary flow-through entity, or U.S. branch to confirm that it received when it registered as a partici-
that it does not know or have reason to know
pating FFI or reporting Model 1 FFI, not the
evidence that establishes that the ac- that the withholding certificate is unreliable or GIIN that it received when it registered as a
count holder is an entity organized in inaccurate. trustee of a trustee-documented trust.
a treaty country, or
c. You obtain a valid Form W-8 that con- Documentary evidence. If you receive docu- If you receive a Form W-8BEN-E or Form
tains a permanent residence address mentary evidence for a payee in association W-8IMY from a nonreporting IGA FFI that
and a mailing address in the applica- with a Form W-8IMY, you must review the checks Model 2 IGA in Part XII of Form
ble treaty country. documentary evidence provided by the NQI, W-8BEN-E or Part XIX of Form W-8IMY (as ap-
flow-through entity, or U.S. branch to determine
2. You have instructions to pay amounts out- that there is no obvious indication that the plicable) and identifies a category of entity that
side the treaty country and the account payee is a U.S. person subject to Form 1099 re- is a registered deemed-compliant FFI under An-
holder gives you a reasonable explana- porting or that the documentary evidence does nex II of an applicable Model 2 IGA, you must
tion, in writing, establishing residence in not establish the identity of the person who pro- obtain and verify the GIIN of the nonreporting
the applicable treaty country or a valid vided the documentation (for example, the IGA FFI. Additionally, if you receive a Form
beneficial owner withholding certificate documentary evidence does not appear to be W-8BEN-E or Form W-8IMY from a nonreport-
that contains a permanent residence ad- an identification document). ing IGA FFI that provides a citation to a section
dress and a mailing address in the appli- of the regulations for its registered
cable treaty country. Standards of Knowledge deemed-compliant status in Part XII of Form
W-8BEN-E or Part XIX of Form W-8IMY (as ap-
Indirect Account for Purposes of Chapter 4 plicable), you must obtain and verify the GIIN of
the nonreporting IGA FFI. You will have reason
Holders' Chapter 3 Status If you make a withholdable payment, you must to know that such payee is not such a financial
A withholding agent that receives documenta- withhold in accordance with the presumption institution if the payee's name (including a
name reasonably similar to the name the with-
tion from a payee through an NQI, a rules (discussed later) if you know or have rea- holding agent has on file for the payee) and
flow-through entity, or a U.S. branch of a foreign son to know that a withholding certificate or GIIN do not appear on the most recently pub-
bank or insurance company subject to U.S. or documentary evidence provided by the payee is lished IRS FFI list within 90 days of the date that
state regulatory supervision or a territory finan- unreliable or incorrect to establish a payee’s the claim is made.
cial institution (other than a U.S. branch treated Chapter 4 status. If you rely on an agent to ob-
as a U.S. person) has reason to know that the tain documentation, you are considered to If you receive a Form W-8BEN-E or Form
documentary evidence is unreliable or incorrect know, or have reason to know, the facts that are
for purposes of a claim of foreign status or a within the knowledge of your agent for this pur- W-8IMY from an entity payee and the form con-
tains “Applied for” in the box for the GIIN, the
treaty claim if a reasonably prudent person in pose.
the withholding agent's position would question payee must provide you its GIIN within 90 days
of providing the form. A Form W-8BEN-E or
the claims made. This standard requires, but is Notification by the IRS
not limited to, compliance with the following Form W-8IMY from such payee that does not
include a GIIN, or includes a GIIN that does not
rules. If you receive notification from the IRS that a
claim of status as a U.S. person, a participating appear on the published IRS FFI list, will be in-
Withholding statement. You must review the FFI, a deemed-compliant FFI, or other entity en- valid for Chapter 4 purposes 90 days after the
withholding statement provided with Form titled to a reduced rate of withholding under date the form is provided.
W-8IMY and may not rely on information in the Chapter 4 is incorrect, you are considered to
statement to the extent the information does not have knowledge that such a claim is incorrect The GIIN that you must confirm is the GIIN
support the claims made for a payee. You may beginning 30 days after you receive the notice. assigned to the FFI identifying its country of res-
not treat a payee as a foreign person if a U.S. idence for tax purposes (or place of organiza-
address is provided for the payee. You may not tion if the FFI has no country of residence), ex-
treat a person as a resident of a country with cept as otherwise provided.
which the United States has an income tax
Publication 515 (2020) Page 21