Page 24 - Withholding Taxes for Foreign Entities

10:50 - 14-Feb-2020
Page 22 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.
Branches and disregarded entities. If you records, such as through the use of a standar- Payee Documentation
make a withholdable payment to a branch of, or dized industry coding system, you have reason From Intermediaries
an entity that is disregarded as an entity sepa- to know that the Chapter 4 status claimed by or Flow-Through Entities
rate from, a participating FFI or registered the entity is unreliable or incorrect only if the en-
deemed-compliant FFI located outside of the tity’s claim conflicts with the withholding agent’s In general. If you receive documentation for a
FFI's country of residence or organization, the classification of the entity’s business type. payee of a withholdable payment through one
GIIN you must verify is the GIIN of the branch or or more intermediaries or flow-through entities,
disregarded entity receiving the payment. You Withholding Certificates you must, in addition to determining each such
must identify a GIIN associated with a disregar- entity’s Chapter 4 status when required for
ded entity to the extent provided in the instruc- In general, you have reason to know that a with- Chapter 4 purposes, review all documentation
tions to Form W-8BEN-E or the Instructions for holding certificate from a person is unreliable or obtained with respect to the payee. Under cer-
Form W-8IMY. incorrect with respect to claim of Chapter 4 sta- tain circumstances, you may rely on a withhold-
You will have reason to know that a with- tus if: ing certificate with an electronic signature provi-
holdable payment is made to a branch (includ- • The withholding certificate is incomplete ded by an account holder that is an NQI, when
ing a disregarded entity) of a participating FFI or with respect to any item on the certificate you are permitted to do so under Regulations
registered deemed-compliant FFI that is not it- that is relevant to the claim made by the section 1.1441-1(e)(4)(i)(B). When withholding
self a participating FFI or registered person; under Chapter 4 is not applied based on the
deemed-compliant FFI when you are directed • The withholding certificate contains any in- Chapter 4 status of an intermediary or
to make the payment to an address in a jurisdic- formation that is inconsistent with the per- flow-through entity, you are not required to ob-
tion other than that of the participating FFI or son’s claim; tain documentation for a payee through an in-
registered deemed-compliant FFI (or branch of, • You have other account information that is termediary or flow-through entity that is a QI,
or disregarded entity wholly owned by, such inconsistent with the person’s claim; WP, or WT or a payee that is included in a
FFI) that is identified as the FFI (or branch of, or • The withholding certificate lacks informa- Chapter 4 withholding rate pool of U.S. payees.
disregarded entity wholly owned by, such FFI) tion necessary to establish entitlement to
that is supposed to receive the payment and for an exemption from withholding for Chap- Withholding statement. You must review
which the FFI's GIIN is not confirmed as descri- ter 4 purposes; or the withholding statement provided and may
bed in the preceding paragraphs. • With respect to an alternative certification not rely on information in the statement to the
The preceding sentence does not apply to under an applicable IGA included with a extent the information does not support the
an FFI that is an investment entity. If an FFI withholding certificate, if you know or have claims made regarding the Chapter 4 status of
(other than an investment entity) directs you to reason to know the certification is incor- the payee. You may not treat a person as a for-
eign person if a U.S. address is provided, un-
make the payment to an account held by the rect.
FFI and maintained by another financial institu- less the withholding statement is accompanied
by a valid withholding certificate and documen-
tion, the FFI must provide to you a statement in If you obtain a withholding certificate associ-
writing that the FFI is not directing the payment ated with a withholdable payment to a partici- tary evidence establishing foreign status.
to any branch of such FFI that is not a partici- pating FFI, a registered deemed-compliant FFI, Withholding certificate. You must review
pating FFI or a registered deemed-compliant a sponsoring entity, or a sponsored FFI, you do each withholding certificate, written statement
FFI. not need to apply the standards of knowledge (as permitted for Chapter 4 purposes with re-
described earlier with respect to an account spect to certain payments to entities), or docu-
Sponsored, closely held investment vehi- holder’s claim of foreign status if you have con- mentary evidence, and must verify that the in-
cles. If you make a withholdable payment to a firmed the FFI’s GIIN on the current published formation is consistent with the information on
certified deemed-compliant FFI that is a spon- IRS FFI list within 90 days of receipt of the with- the withholding statement. If there is a discrep-
sored, closely held investment vehicle, you holding certificate. ancy, you may rely on the documentation provi-
must obtain a GIIN for the sponsoring entity and ded such documentation is valid and the inter-
verify it against the published IRS FFI list. A withholding certificate used for Chap- mediary or flow-through entity does not indicate
! ter 4 purposes also must include the in- that the documentation is unreliable or incor-
formation required for Chapter 3 purpo-
Reason To Know ses (that is, the entity’s tax classification) with rect, or, alternatively, you may apply the pre-
CAUTION
regard to a payment that is a reportable amount sumption rules. If you choose to rely on the doc-
In general, you have reason to know that a under Regulations section 1.1441-1(e)(3)(vi). umentation, you must instruct the intermediary
claim of Chapter 4 status is unreliable or incor- or flow-through entity to correct the withholding
rect if your knowledge of relevant facts or state- statement and confirm that the intermediary or
ments contained in the withholding certificate or Documentary Evidence flow-through entity does not know or have rea-
other documentation is such that a reasonably son to know that the documentation is unrelia-
prudent person would question the claim being You have reason to know that documentary evi- ble or incorrect. See Regulations section
made. For an obligation other than a preexisting dence provided by a person is unreliable or in- 1.1471-3(d) for when a written statement is per-
obligation (that is, an obligation other than an correct with respect to a claim of Chapter 4 sta- mitted for Chapter 4 purposes.
obligation, including an account, held by an in- tus if:
dividual that is outstanding on June 30, 2014, or • The documentary evidence does not rea- Documentation from participating FFIs and
an obligation, including an account, held by an sonably establish the identity of the person registered deemed-compliant FFIs. If you
entity that is opened, executed, or issued be- presenting the documentary evidence, receive documentation for a payee of a with-
fore January 1, 2015), you have reason to know • The documentary evidence contains infor- holdable payment through a participating FFI or
that a claim of Chapter 4 status is unreliable or mation that is inconsistent with the per- registered deemed-compliant FFI that is an in-
incorrect if any information contained in the ac- son’s claim as to its Chapter 4 status, termediary or flow-through entity receiving the
count opening files or other customer account • You have other account information that is payment, you may rely on the Chapter 4 status
files, including documentation collected for AML inconsistent with the person’s Chapter 4 provided in the withholding statement, including
due diligence purposes, conflicts with the status, or a Chapter 4 status determined under the re-
Chapter 4 status being claimed. You will not • The documentary evidence lacks informa- quirements of (and documentation or informa-
have reason to know that a claim of Chapter 4 tion necessary to establish the person’s tion that is publicly available that determines the
status is unreliable or incorrect based on docu- Chapter 4 status. Chapter 4 status of the payee permitted under)
mentation collected for AML due diligence pur- an applicable IGA, provided that you have the
poses until the date that is 30 days after the ob- For standards of knowledge applicable to information necessary to report on Form
ligation is created. specific types of documentary evidence, see 1042-S, unless you have information that con-
Regulations section 1.1471-3. flicts with the Chapter 4 status provided. If un-
If you have classified an entity as engaged derlying documentation is provided for the
in a particular type of business based on your payee and information in the documentation or
Page 22 Publication 515 (2020)