[Code of Federal Regulations]
[Title 26 Volume 12, Parts 1 (1.1401 to end)]
[Revised as of April 1, 2000]
>From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 63-220]
 
                       TITLE 26--INTERNAL REVENUE
 
                  CHAPTER I--INTERNAL REVENUE SERVICE,
 
TAX ON SELF-EMPLOYMENT INCOME--Table of Contents
 
Withholding of Tax on Nonresident Aliens and Foreign Corporations and Tax-Free Covenant Bonds

               NONRESIDENT ALIENS AND FOREIGN CORPORATIONS

Sec. 1.1441-0  Outline of regulation provisions for section 1441.

    This section lists captions contained in Secs. 1.1441-1 through 
1.1441-9.

Sec. 1.1441-1  Requirement for the deduction and withholding of tax on 
                      payments to foreign persons.

(a) Purpose and scope.
(b) General rules of withholding.
(1) Requirement to withhold on payments to foreign persons.
(2) Determination of payee and payee's status.
(i) In general.
(ii) Payments to a U.S. agent of a foreign person.
(iii) Payments to wholly-owned entities.
(A) Foreign-owned domestic entity.
(B) Foreign entity.
(iv) Payments to a U.S. branch of certain foreign banks or foreign 
          insurance companies.
(A) U.S. branch treated as a U.S. person in certain cases.
(B) Consequences to the withholding agent.
(C) Consequences to the U.S. branch.
(D) Definition of payment to a U.S. branch.
(E) Payments to other U.S. branches.
(v) Payments to a foreign intermediary.
(A) Payments treated as made to persons for whom the intermediary 
          collects the payment.
(B) Payments treated as made to foreign intermediary.
(vi) Other payees.
(vii) Rules for reliably associating a payment with documentation.
(3) Presumptions regarding payee's status in the absence of 
          documentation.
(i) General rules.
(ii) Presumptions of status as individual, corporation, partnership, 
          etc.
(iii) Presumption of U.S. or foreign status.
(A) Payments to exempt recipients.
(B) Scholarships and grants.
(C) Pensions, annuities, etc.
(D) Certain payments to offshore accounts.
(iv) Grace period in the case of indicia of a foreign payee.

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(v) Special rules applicable to payments to foreign intermediaries.
(A) Reliance on claim of status as foreign intermediary.
(B) Beneficial owner documentation is lacking or unreliable.
(C) Information regarding allocation of payment is lacking or 
          unreliable.
(D) Certification that the foreign intermediary has furnished 
          documentation for all of the persons to whom the intermediary 
          certificate relates is lacking or unreliable.
(vi) U.S. branches and foreign flow-through entities.
(vii) Joint payees.
(viii) Rebuttal of presumptions.
(ix) Effect of reliance on presumptions and of actual knowledge or 
          reason to know otherwise.
(A) General rule.
(B) Actual knowledge or reason to know that amount of withholding is 
          greater than is required under the presumptions or that 
          reporting of the payment is required.
(x) Examples.
(4) List of exemptions from, or reduced rates of, withholding under 
          chapter 3 of the Code.
(5) Establishing foreign status under applicable provisions of chapter 
          61 of the Code.
(6) Rules of withholding for payments by a foreign intermediary or 
          certain U.S. branches.
(7) Liability for failure to obtain documentation timely or to act in 
          accordance with applicable presumptions.
(i) General rule.
(ii) Proof that tax liability has been satisfied.
(iii) Liability for interest and penalties.
(iv) Special effective date.
(v) Examples.
(8) Adjustments, refunds, or credits of overwithheld amounts.
(9) Payments to joint owners.
(c) Definitions.
(1) Withholding.
(2) Foreign and U.S. person.
(3) Individual.
(i) Alien individual.
(ii) Nonresident alien individual.
(4) Certain foreign corporations.
(5) Financial institution and foreign financial institution.
(6) Beneficial owner.
(i) General rule.
(ii) Special rules for flow-through entities and arrangements.
(A) General rule.
(B) Trusts and estates.
(C) Definition of a flow-through entity or arrangement.
(7) Withholding agent.
(8) Person.
(9) Source of income.
(10) Chapter 3 of the Code.
(11) Reduced rate.
(d) Beneficial owner's or payee's claim of U.S. status.
(1) In general.
(2) Payments for which a Form W-9 is otherwise required.
(3) Payments for which a Form W-9 is not otherwise required.
(4) Other payments.
(e) Beneficial owner's claim of foreign status.
(1) Withholding agent's reliance.
(i) In general.
(ii) Payments that a withholding agent may treat as made to a foreign 
          person that is a beneficial owner.
(A) General rule.
(B) Additional requirements.
(2) Beneficial owner withholding certificate.
(i) In general.
(ii) Requirements for validity of certificate.
(3) Intermediary, flow-through, or U.S. branch withholding certificate.
(i) In general.
(ii) Intermediary withholding certificate from a qualified intermediary.
(iii) Intermediary withholding certificate from an intermediary that is 
          not a qualified intermediary.
(iv) Information to the withholding agent regarding assets owned by 
          beneficial owners, etc.
(A) General rule.
(B) Updating the information.
(C) Examples.
(v) Withholding certificate from certain U.S. branches.
(vi) Reportable amounts.
(4) Applicable rules.
(i) Who may sign the certificate.
(ii) Period of validity.
(A) Three-year period.
(B) Indefinite validity period.
(C) Withholding certificate for effectively connected income.
(D) Change in circumstances.
(iii) Retention of withholding certificate.
(iv) Electronic transmission of information.
(v) Electronic confirmation of taxpayer identifying number on 
          withholding certificate.
(vi) Acceptable substitute form.
(vii) Requirement of taxpayer identifying number.
(viii) Reliance rules.
(A) Classification.
(B) Status of payee as an intermediary or as a person acting for its own 
          account.
(ix) Certificates to be furnished for each account unless exception 
          applies.
(A) Coordinated account information system in effect.
(B) Family of mutual funds.
(C) Special rule for brokers.
(5) Qualified intermediaries.
(i) General rule.
(ii) Definition of qualified intermediary.

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(iii) Withholding agreement.
(A) In general.
(B) Terms of the withholding agreement.
(iv) Assignment of primary withholding responsibility.
(v) Information to withholding agent regarding applicable withholding 
          rates.
(A) General rule.
(B) Categories of assets.
(C) Updating the information.
(f) Effective date.
(1) In general.
(2) Transition rules.
(i) Special rules for existing documentation.
(ii) Lack of documentation for past years.

             Sec. 1.1441-2  Amounts subject to withholding.

(a) In general.
(b) Fixed or determinable annual or periodical income.
(1) In general.
(i) Definition.
(ii) Manner of payment.
(iii) Determinability of amount.
(2) Exceptions.
(3) Original issue discount.
(i) General rule.
(ii) Amounts actually known to the withholding agent.
(iii) Amounts for which certain documentation is not furnished.
(iv) Exceptions to withholding.
(4) Securities lending transactions and equivalent transactions.
(c) Other income subject to withholding.
(d) Exceptions to withholding where no money or property is paid or lack 
          of knowledge.
(1) General rule.
(2) Cancellation of debt.
(3) Satisfaction of liability following underwithholding by withholding 
          agent.
(e) Payment.
(1) General rule.
(2) Income allocated under section 482.
(3) Blocked income.
(4) Special rules for dividends.
(5) Certain interest accrued by a foreign corporation.
(6) Payments other than in U.S. dollars.
(f) Effective date.

         Sec. 1.1441-3  Determination of amounts to be withheld.

(a) Withholding on gross amount.
(b) Withholding on payments on certain obligations.
(1) Withholding at time of payment of interest.
(2) No withholding between interest payment dates.
(i) In general.
(ii) Anti-abuse rule.
(c) Corporate distributions.
(1) General rule.
(2) Exception to withholding on distributions.
(i) In general.
(ii) Reasonable estimate of accumulated and current earnings and profits 
          on the date of payment.
(A) General rule.
(B) Procedures in case of underwithholding.
(C) Reliance by intermediary on reasonable estimate.
(D) Example.
(3) Special rules in the case of distributions from a regulated 
          investment company.
(i) General rule
(ii) Reliance by intermediary on reasonable estimate.
(4) Coordination with withholding under section 1445.
(i) In general.
(A) Withholding under section 1441.
(B) Withholding under both sections 1441 and 1445.
(C) Coordination with REIT withholding.
(ii) Intermediary reliance rule.
(d) Withholding on payments that include an undetermined amount of 
          income.
(1) In general.
(2) Withholding on certain gains.
(e) Payments other than in U.S. dollars.
(1) In general.
(2) Payments in foreign currency.
(f) Tax liability of beneficial owner satisfied by withholding agent.
(1) General rule.
(2) Example.
(g) Conduit financing arrangements
(h) Effective date.

   Sec. 1.1441-4  Exemptions from withholding for certain effectively 
                   connected income and other amounts.

(a) Certain income connected with a U.S. trade or business.
(1) In general.
(2) Withholding agent's reliance on a claim of effectively connected 
          income.
(i) In general.
(ii) Special rules for U.S. branches of foreign persons.
(A) U.S. branches of certain foreign banks or foreign insurance 
          companies.
(B) Other U.S. branches.
(3) Income on notional principal contracts.
(i) General rule.
(ii) Exception for certain payments.
(b) Compensation for personal services of an individual.
(1) Exemption from withholding.
(2) Manner of obtaining withholding exemption under tax treaty.
(i) In general.
(ii) Withholding certificate claiming withholding exemption.
(iii) Review by withholding agent.
(iv) Acceptance by withholding agent.
(v) Copies of Form 8233.
(3) Withholding agreements.
(4) Final payments exemption.
(i) General rule.

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(ii) Final payment of compensation for personal services.
(iii) Manner of applying for final payment exemption.
(iv) Letter to withholding agent.
(5) Requirement of return.
(6) Personal exemption.
(i) In general.
(ii) Multiple exemptions.
(iii) Special rule where both certain scholarship and compensation 
          income are received.
(c) Special rules for scholarship and fellowship income.
(1) In general.
(2) Alternate withholding election.
(d) Annuities received under qualified plans.
(e) Per diem of certain alien trainees.
(f) Failure to receive withholding certificates timely or to act in 
          accordance with applicable presumptions.
(g) Effective date.
(1) General rule.
(2) Transition rules.

  Sec. 1.1441-5  Withholding on payments to partnerships, trusts, and 
                                estates.

(a) Rules of withholding applicable to payments to partnerships.
(b) Domestic partnerships.
(1) Exemption from withholding on payment to domestic partnerships.
(2) Withholding by a domestic partnership.
(i) In general.
(ii) Determination by the domestic partnership of partners' status.
(iii) Reliance on a partner's claim for reduced withholding.
(iv) Rules for reliably associating a payment with documentation.
(v) Coordination with chapter 61 of the Internal Revenue Code and 
          section 3406.
(c) Foreign partnerships.
(1) Determination of payee.
(i) Payments treated as made to partners.
(ii) Payments treated as made to the partnership.
(iii) Rules for reliably associating a payment with documentation.
(iv) Example.
(2) Withholding foreign partnerships.
(i) Reliance on claim of withholding foreign partnership status.
(ii) Withholding agreement.
(A) In general.
(B) Terms of withholding agreement.
(iii) Withholding responsibility.
(iv) Withholding certificate from a withholding foreign partnership.
(3) Other foreign partnerships.
(i) Reliance on claim of foreign partnership status.
(ii) Reliance on claim of reduced withholding by a partnership for its 
          partners.
(iii) Withholding certificate from a foreign partnership that is not a 
          withholding foreign partnership.
(iv) Information to withholding agent regarding each partner's 
          distributive share.
(v) Withholding by a foreign partnership.
(d) Presumptions regarding payee's status in the absence of 
          documentation.
(1) In general.
(2) Determination of partnership's status as domestic or foreign in the 
          absence of documentation.
(3) Determination of partners' status in the absence of certain 
          documentation.
(i) Documentation regarding the status of a partner is lacking or 
          unreliable.
(ii) Information regarding the allocation of payment is lacking or 
          unreliable.
(iii) Certification that the foreign partnership has furnished 
          documentation for all of the persons to whom the intermediary 
          certificate relates is lacking or unreliable.
(iv) Determination by a withholding foreign partnership of the status of 
          its partners.
(4) Examples.
(e) Trusts and estates. [Reserved]
(f) Failure to receive withholding certificate timely or to act in 
          accordance with applicable presumptions.
(g) Effective date.
(1) General rule.
(2) Transition rules.

 Sec. 1.1441-6  Claim of reduced withholding under an income tax treaty.

(a) In general.
(b) Reliance on claim of reduced withholding under an income tax treaty.
(1) In general.
(2) Exemption from requirement to furnish a taxpayer identifying number 
          and special documentary evidence rules for certain income.
(i) General rule.
(ii) Income to which special rules apply.
(3) Competent authority agreements.
(4) Eligibility for reduced withholding under an income tax treaty in 
          the case of a payment to a person other than an individual.
(i) General rule.
(ii) Withholding certificates.
(A) In general.
(B) Certification by qualified intermediary.
(iii) Multiple claims of treaty benefits.
(iv) Examples.
(5) Claim of benefits under an income tax treaty by a U.S. person.
(c) Proof of tax residence in a treaty country and certification of 
          entitlement to treaty benefits. (1) In general.
(2) Certification of taxpayer identifying number.
(i) In general.
(ii) IRS-certified TIN.
(iii) Special rules for qualified intermediaries.
(3) Certificate of residence.

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(4) Documentary evidence establishing residence in the treaty country.
(i) Individuals.
(ii) Persons other than individuals.
(5) Certifications regarding entitlement to treaty benefits.
(i) Certification regarding conditions under a Limitation on Benefits 
          Article.
(ii) Certification regarding whether the taxpayer is deriving the 
          income.
(d) Joint owners.
(e) Related party dividends under U.S.-Denmark income tax treaty.
(f) Failure to receive withholding certificate timely.
(g) Effective date.
(1) General rule.
(2) Transition rules.

    Sec. 1.1441-7  General provisions relating to withholding agents.

(a) Withholding agent defined.
(b) Standards of knowledge.
(1) In general.
(2) Reason to know.
(i) In general.
(ii) Limits on reason to know in certain cases.
(3) Coordinated account information systems.
(c) Authorized agent.
(1) In general.
(2) Authorized foreign agent.
(3) Notification.
(4) Liability of U.S. withholding agent.
(5) Filing of returns.
(d) United States obligations.
(e) Assumed obligations.
(f) Conduit financing arrangements.
(g) Effective date.

   Sec. 1.1441-8  Exemption from withholding for payments to foreign 
   governments, international organizations, foreign central banks of 
           issue, and the Bank for International Settlements.

(a) Foreign governments.
(b) Reliance on claim of exemption by foreign government.
(c) Income of a foreign central bank of issue or the Bank for 
          International
Settlements.
(1) Certain interest income.
(2) Bankers' acceptances.
(d) Exemption for payments to international organizations.
(e) Failure to receive withholding certificate timely and other 
          applicable procedures.
(f) Effective date.
(1) In general.
(2) Transition rules.

Sec. 1.1441-9  Exemption from withholding on exempt income of a foreign 
     tax-exempt organization, including foreign private foundations.

(a) Exemption from withholding for exempt income.
(b) Reliance on foreign organization's claim of exemption from 
          withholding.
(1) General rule.
(2) Withholding certificate.
(3) Presumptions in the absence of documentation.
(4) Reason to know.
(c) Failure to receive withholding certificate timely and other 
          applicable procedures.
(d) Effective date.
(1) In general.
(2) Transition rules.

[T.D. 8734, 62 FR 53421, Oct. 14, 1997]

    Effective Date Note: By T.D. 8734, 62 FR 53421, Oct. 14, 1997, 
Sec. 1.1441-0 was added, effective Jan. 1, 1999. By T.D. 8804, 63 FR 
72183, Dec. 31, 1998, the effective date of Sec. 1.1441-0 was delayed 
until Jan. 1, 2000. By T.D. 8856, 64 FR 73408, Dec. 30, 1999, the 
effective date of Sec. 1.1441-0 was delayed until Jan. 1, 2001.

Sec. 1.1441-1  Requirement for the deduction and withholding of tax on 
          payments to foreign persons.

    (a) Purpose and scope. This section, Secs. 1.1441-2 through 1.1441-
9, and 1.1443-1 provide rules for withholding under sections 1441, 1442, 
and 1443 when a payment is made to a foreign person. This section 
provides definitions of terms used in chapter 3 of the Internal Revenue 
Code (Code) and regulations thereunder. It prescribes procedures to 
determine whether an amount must be withheld under chapter 3 of the Code 
and documentation that a withholding agent may rely upon to determine 
the status of a payee or a beneficial owner as a U.S. person or as a 
foreign person and other relevant characteristics of the payee that may 
affect a withholding agent's obligation to withhold under chapter 3 of 
the Code and the regulations thereunder. Special procedures regarding 
payments to foreign persons that act as intermediaries are also 
provided. Section 1.1441-2 defines the income subject to withholding 
under section 1441, 1442, and 1443 and the regulations under these 
sections. Section 1.1441-3 provides rules regarding the amount subject 
to withholding. Section 1.1441-4 provides exemptions from withholding 
for, among other things, certain income effectively connected with the 
conduct of a trade or business in the United States, including certain 
compensation for the personal services of an individual. Section 1.1441-
5 provides rules for withholding

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on payments made to flow-through entities and other similar 
arrangements. Section 1.1441-6 provides rules for claiming a reduced 
rate of withholding under an income tax treaty. Section 1.1441-7 defines 
the term withholding agent and provides due diligence rules governing a 
withholding agent's obligation to withhold. Section 1.1441-8 provides 
rules for relying on claims of exemption from withholding for payments 
to a foreign government, an international organization, a foreign 
central bank of issue, or the Bank for International Settlements. 
Sections 1.1441-9 and 1.1443-1 provide rules for relying on claims of 
exemption from withholding for payments to foreign tax exempt 
organizations and foreign private foundations.
    (b) General rules of withholding--(1) Requirement to withhold on 
payments to foreign persons. A withholding agent must withhold 30-
percent of any payment of an amount subject to withholding made to a 
payee that is a foreign person unless it can reliably associate the 
payment with documentation upon which it can rely to treat the payment 
as made to a beneficial owner that is a U.S. person or as made to a 
beneficial owner that is a foreign person entitled to a reduced rate of 
withholding. However, a withholding agent making a payment to a foreign 
person need not withhold where the foreign person assumes responsibility 
for withholding on the payment under chapter 3 of the Code and the 
regulations thereunder as a qualified intermediary (see paragraph (e)(5) 
of this section), as a U.S. branch of a foreign person (see paragraph 
(b)(2)(iv) of this section), as a withholding foreign partnership (see 
Sec. 1.1441-5(c)(2)(i)), or as an authorized foreign agent (see 
Sec. 1.1441-7(c)(1)). This section (dealing with general rules of 
withholding and claims of foreign or U.S. status by a payee or a 
beneficial owner), and Secs. 1.1441-4, 1.1441-5, 1.1441-6, 1.1441-8, 
1.1441-9, and 1.1443-1 provide rules for determining whether 
documentation is required as a condition for reducing the rate of 
withholding on a payment to a foreign beneficial owner or to a U.S. 
payee and if so, the nature of the documentation upon which a 
withholding agent may rely in order to reduce such rate. Paragraph 
(b)(2) of this section prescribes the rules for determining who the 
payee is, the extent to which a payment is treated as made to a foreign 
payee, and reliable association of a payment with documentation. 
Paragraph (b)(3) of this section describes the applicable presumptions 
for determining the payee's status as U.S. or foreign and the payee's 
other characteristics (i.e., as an owner or intermediary, as an 
individual, partnership, corporation, etc.). Paragraph (b)(4) of this 
section lists the types of payments for which the 30-percent withholding 
rate may be reduced. Because the treatment of a payee as a U.S. or a 
foreign person also has consequences for purposes of making an 
information return under the provisions of chapter 61 of the Code and 
for withholding under other provisions of the Code, such as sections 
3402, 3405 or 3406, paragraph (b)(5) of this section lists applicable 
provisions outside chapter 3 of the Code that require certain payees to 
establish their foreign status (e.g., in order to be exempt from 
information reporting). Paragraph (b)(6) of this section describes the 
withholding obligations of a foreign person making a payment that it has 
received in its capacity as an intermediary. Paragraph (b)(7) of this 
section describes the liability of a withholding agent that fails to 
withhold at the required 30-percent rate in the absence of 
documentation. Paragraph (b)(8) of this section deals with adjustments 
and refunds in the case of overwithholding. Paragraph (b)(9) of this 
section deals with determining the status of the payee when the payment 
is jointly owned. See paragraph (c)(6) of this section for a definition 
of beneficial owner. See Sec. 1.1441-7(a) for a definition of 
withholding agent. See Sec. 1.1441-2(a) for the determination of an 
amount subject to withholding. See Sec. 1.1441-2(e) for the definition 
of a payment and when it is considered made. Except as otherwise 
provided, the provisions of this section apply only for purposes of 
determining a withholding agent's obligation to withhold under chapter 3 
of the Code and the regulations thereunder.
    (2) Determination of payee and payee's status--(i) In general. 
Except as otherwise provided in this paragraph (b)(2), a

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payee is the person to whom a payment is made, regardless of whether 
such person is the beneficial owner of the amount (as defined in 
paragraph (c)(6) of this section). A foreign payee is a payee who is a 
foreign person. A U.S. payee is a payee who is a U.S. person. Generally, 
the determination by a withholding agent of the U.S. or foreign status 
of a payee and of its other relevant characteristics (e.g., as a 
beneficial owner or intermediary, or as an individual, corporation, or 
flow-through entity) is made on the basis of a withholding certificate 
that is a Form W-8 or a Form 8233 (indicating foreign status of the 
payee or beneficial owner) or a Form W-9 (indicating U.S. status of the 
payee). The provisions of this paragraph (b)(2), paragraph (b)(3) of 
this section, and Sec. 1.1441-5 (c), (d), and (e) dealing with 
determinations of payee and applicable presumptions in the absence of 
documentation, apply only to payments of amounts subject to withholding 
under chapter 3 of the Code (within the meaning of Sec. 1.1441-2(a)). 
Similar payee and presumption provisions are set forth under 
Sec. 1.6049-5(d) for payments of amounts that are not subject to 
withholding under chapter 3 of the Code (or the regulations thereunder) 
but that may be reportable under provisions of chapter 61 of the Code 
(and the regulations thereunder). See paragraph (d) of this section for 
documentation upon which the withholding agent may rely in order to 
treat the payee or beneficial owner as a U.S. person. See paragraph (e) 
of this section for documentation upon which the withholding agent may 
rely in order to treat the payee or beneficial owner as a foreign 
person. For applicable presumptions of status in the absence of 
documentation, see paragraph (b)(3) of this section and Sec. 1.1441-
5(d). For definitions of a foreign person and U.S. person, see paragraph 
(c)(2) of this section.
    (ii) Payments to a U.S. agent of a foreign person. A withholding 
agent making a payment to a U.S. person (other than to a U.S. branch 
that is treated as a U.S. person pursuant to paragraph (b)(2)(iv) of 
this section) and who has actual knowledge that the U.S. person receives 
the payment as an agent of a foreign person must treat the payment as 
made to the foreign person. However, the withholding agent may treat the 
payment as made to the U.S. person if the U.S. person is a financial 
institution and the withholding agent has no reason to believe that the 
financial institution will not comply with its obligation to withhold. 
See paragraph (c)(5) of this section for the definition of a financial 
institution.
    (iii) Payments to wholly-owned entities--(A) Foreign-owned domestic 
entity. A payment to a wholly-owned domestic entity that is disregarded 
for federal tax purposes under Sec. 301.7701-2(c)(2) of this chapter as 
an entity separate from its owner and whose single owner is a foreign 
person shall be treated as a payment to the owner of the entity, subject 
to the provisions of paragraph (b)(2)(iv) of this section. For purposes 
of this paragraph (b)(2)(iii)(A), a domestic entity means a person that 
would be treated as a U.S. person if it had an election in effect under 
Sec. 301.7701-3(c)(1)(i) of this chapter to be treated as a corporation. 
For example, a limited liability company, A, organized under the laws of 
the State of Delaware, opens an account at a U.S. bank. Upon opening of 
the account, the bank requests A to furnish a Form W-9 as required under 
section 6049(a) and the regulations under that section. A does not have 
an election in effect under Sec. 301.7701-3(c)(1)(i) of this chapter 
and, therefore, is not treated as an organization taxable as a 
corporation, including for purposes of the exempt recipient provisions 
in Sec. 1.6049-4(c)(1). If A has a single owner and the owner is a 
foreign person (as defined in paragraph (c)(2) of this section), then A 
may not furnish a Form W-9 because it may not represent that it is a 
U.S. person for purposes of the provisions of chapters 3 and 61 of the 
Code, and section 3406. Therefore, A must furnish a Form W-8 with the 
name, address, and taxpayer identifying number (TIN) (if required) of 
the foreign person who is the single owner in the same manner as if the 
account were opened directly by the foreign single owner. See 
Secs. 1.894-1T(d) and 1.1441-6(b)(4) for special rules where the 
entity's owner is claiming a reduced rate of withholding under an income 
tax treaty.

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    (B) Foreign entity. A payment to a wholly-owned foreign entity that 
is disregarded under Sec. 301.7701-2(c)(2) of this chapter as an entity 
separate from its owner shall be treated as a payment to the single 
owner of the entity, subject to the provisions of paragraph (b)(2)(iv) 
of this section if the foreign entity has a U.S. branch in the United 
States. For purposes of this paragraph (b)(2)(iii)(B), a foreign entity 
means a person that would be treated as a foreign person if it had an 
election in effect under Sec. 301.7701-3(c)(1)(i) of this chapter to be 
treated as a corporation. See Secs. 1.894-1T(d) and 1.1441-6(b)(4) for 
special rules where the foreign entity or its owner is claiming a 
reduced rate of withholding under an income tax treaty. Thus, for 
example, if the foreign entity's single owner is a U.S. person, the 
payment shall be treated as a payment to a U.S. person. Therefore, based 
on the saving clause in U.S. income tax treaties, such an entity may not 
claim benefits under an income tax treaty even if the entity is 
organized in a country with which the United States has an income tax 
treaty in effect and treats the entity as a non-fiscally transparent 
entity. See Sec. 1.894-1T(d)(6), Example 10. Unless it has actual 
knowledge or reason to know that the foreign entity to whom the payment 
is made is disregarded under Sec. 301.7701-2(c)(2) of this chapter, a 
withholding agent may treat a foreign entity as an entity separate from 
its owner unless it can reliably associate the payment with a 
withholding certificate from the entity's owner.
    (iv) Payments to a U.S. branch of certain foreign banks or foreign 
insurance companies--(A) U.S. branch treated as a U.S. person in certain 
cases. A payment to the U.S. branch of a foreign person is a payment to 
the foreign person. However, a U.S. branch described in this paragraph 
(b)(2)(iv)(A) and a withholding agent (including another U.S. branch 
described in this paragraph (b)(2)(iv)(A)) may agree to treat the branch 
as a U.S. person for purposes of withholding on specified payments to 
the U.S. branch. Such agreement must be evidenced by a U.S. branch 
withholding certificate described in paragraph (e)(3)(v) of this section 
furnished by the U.S. branch to the withholding agent. A U.S. branch 
described in this paragraph (b)(2)(iv)(A) is any U.S. branch of a 
foreign bank subject to regulatory supervision by the Federal Reserve 
Board or a U.S. branch of a foreign insurance company required to file 
an annual statement on a form approved by the National Association of 
Insurance Commissioner with the Insurance Department of a State, a 
Territory, or the District of Columbia. The Internal Revenue Service 
(IRS) may approve a list of U.S. branches that may qualify for treatment 
as a U.S. person under this paragraph (b)(2)(iv)(A) (see 
Sec. 601.601(d)(2) of this chapter).
    (B) Consequences to the withholding agent. Any person that is 
otherwise a withholding agent regarding a payment to a U.S. branch 
described in paragraph (b)(2)(iv)(A) of this section shall treat the 
payment in one of the following ways--
    (1) As a payment to a U.S. person, in which case the withholding 
agent is not responsible for withholding on such payment to the extent 
it can reliably associate the payment with a withholding certificate 
described in paragraph (e)(3)(v) of this section that has been furnished 
by the U.S. branch under its agreement with the withholding agent to be 
treated as a U.S. person;
    (2) As a payment directly to the persons whose names are on 
withholding certificates or other appropriate documentation forwarded by 
the U.S. branch to the withholding agent when no agreement is in effect 
to treat the U.S. branch as a U.S. person for such payment, to the 
extent the withholding agent can reliably associate the payment with 
such certificates or documentation; or
    (3) As a payment to a foreign person of income that is effectively 
connected with the conduct by that foreign person of a trade or business 
in the United States if the withholding agent cannot reliably associate 
the payment with a certificate from the U.S. branch or any other 
certificate or other appropriate documentation from another person.
    (C) Consequences to the U.S. branch. A U.S. branch that is treated 
as a U.S. person under paragraph (b)(2)(iv)(A) of this section shall be 
treated as a person

[[Page 71]]

for purposes of section 1441(a) and all other provisions of chapter 3 of 
the Code and the regulations thereunder for any payment that it receives 
as such. Thus, the U.S. branch shall be responsible for withholding on 
the payment in accordance with the provisions under chapter 3 of the 
Code and the regulations thereunder and other applicable withholding 
provisions of the Code. For this purpose, it shall obtain and retain 
documentation from payees or beneficial owners of the payments that it 
receives as a U.S. person in the same manner as if it were a separate 
entity. For example, if a U.S. branch receives a payment on behalf of 
its home office and the home office is a qualified intermediary, the 
U.S. branch must obtain a withholding certificate described in paragraph 
(e)(3)(ii) of this section from its home office. In addition, a U.S. 
branch that has not provided documentation to the withholding agent for 
a payment that is, in fact, not effectively connected income is a 
withholding agent with respect to that payment. See paragraph (b)(6) of 
this section.
    (D) Definition of payment to a U.S. branch. A payment is treated as 
a payment to a U.S. branch of a foreign bank or foreign insurance 
company if the payment is credited to an account maintained in the 
United States in the name of a U.S. branch of the foreign person, or the 
payment is made to an address in the United States where the U.S. branch 
is located and the name of the U.S. branch appears on documents (in 
written or electronic form) associated with the payment (e.g., the check 
mailed or a letter addressed to the branch).
    (E) Payments to other U.S. branches. Similar withholding procedures 
may apply to payments to U.S. branches that are not described in 
paragraph (b)(2)(iv)(A) of this section to the extent permitted by the 
district director or the Assistant Commissioner (International). Any 
such branch must establish that its situation is analogous to that of a 
U.S. branch described in paragraph (b)(2)(iv)(A) of this section 
regarding its registration with, and regulation by, a U.S. governmental 
institution, the type and amounts of assets it is required to, or 
actually maintains in the United States, and the personnel who carry out 
the activities of the branch in the United States. In the alternative, 
the branch must establish that the withholding and reporting 
requirements under chapter 3 of the Code and the regulations thereunder 
impose an undue administrative burden and that the collection of the tax 
imposed by section 871(a) or 881(a) on the foreign person (or its 
members in the case of a foreign partnership) will not be jeopardized by 
the exemption from withholding. Generally, an undue administrative 
burden will be found to exist in a case where the person entitled to the 
income, such as a foreign insurance company, receives from the 
withholding agent income on securities issued by a single corporation, 
some of which is, and some of which is not, effectively connected with 
conduct of a trade or business within the United States and the criteria 
for determining the effective connection are unduly difficult to apply 
because of the circumstances under which such securities are held. No 
exemption from withholding shall be granted under this paragraph 
(b)(2)(iv)(E) unless the person entitled to the income complies with 
such other requirements as may be imposed by the district director or 
the Assistant Commissioner (International) and unless the district 
director or the Assistant Commissioner (International) is satisfied that 
the collection of the tax on the income involved will not be jeopardized 
by the exemption from withholding. The IRS may prescribe such procedures 
as are necessary to make these determinations (see Sec. 601.601(d)(2) of 
this chapter).
    (v) Payments to a foreign intermediary--(A) Payments treated as made 
to persons for whom the intermediary collects the payment. Except as 
otherwise provided in paragraph (b)(2)(v)(B) of this section, a payment 
to a person that the withholding agent may treat as a foreign 
intermediary in accordance with the provisions of paragraph (b)(3)(v)(A) 
of this section is treated as a payment made directly to the person or 
persons for whom the intermediary collects the payment. Thus, for 
example, a payment that the withholding agent can reliably associate 
with a

[[Page 72]]

withholding certificate from a qualified intermediary (defined in 
paragraph (e)(5)(ii) of this section) and that is allocable to the 
category of assets described in paragraph (e)(5)(v)(B)(3) of this 
section (i.e., assets allocable to persons for whom the foreign 
qualified intermediary does not hold documentation as specified under 
its agreement with the IRS) is treated as a payment to the persons 
holding assets in that category. See paragraph (b)(3)(v)(B) of this 
section for applicable presumptions in such a case. For similar rules 
for payments to flow-through entities, see Sec. 1.1441-5 (c)(1)(i) and 
(e).
    (B) Payments treated as made to foreign intermediary. A payment to a 
person that the withholding agent can reliably associate with a 
withholding certificate described in paragraph (e)(3)(ii) of this 
section from a qualified intermediary that has elected to assume primary 
withholding responsibility in accordance with paragraph (e)(5)(iv) of 
this section is treated as a payment to the qualified intermediary, 
except to the extent of the portion of the payment that the withholding 
agent can reliably associate with Forms W-9. See paragraphs (b)(1) and 
(e)(5)(iv) of this section for consequences to the withholding agent.
    (vi) Other payees. A payment to a person described in Sec. 1.6049-
4(c)(1)(ii) that the withholding agent would treat as a payment to a 
foreign person without obtaining documentation for purposes of 
information reporting under section 6049 (if the payment were interest) 
is treated as a payment to a foreign payee for purposes of chapter 3 of 
the Code and the regulations thereunder (or to a foreign beneficial 
owner to the extent provided in paragraph (e)(1)(ii)(A) (6) or (7) of 
this section). Further, payments that the withholding agent can reliably 
associate with documentary evidence described in Sec. 1.6049-5(c)(4) 
relating to the payee is treated as a payment to a foreign payee. A 
payment that the withholding agent may treat as a payment to an 
authorized foreign agent (as defined in Sec. 1.1441-7(c)(2)) is treated 
as a payment to the agent and not to the persons for whom the agent 
collects the payment. See Sec. 1.1441-5 (b)(1) and (c)(1) for payee 
determinations for payments to partnerships. See Sec. 1.1441-5(e) for 
payee determinations for payments to foreign trusts or foreign estates.
    (vii) Rules for reliably associating a payment with documentation. 
Generally, a withholding agent can reliably associate a payment with 
documentation if, for that payment, it holds valid documentation to 
which the payment relates, it can reliably determine how much of the 
payment relates to the valid documentation (e.g., based on information 
furnished in accordance with paragraph (e)(3)(iv) or (5)(v) of this 
section in the case of a payment to a foreign intermediary or in 
accordance with Sec. 1.1441-5(c)(3)(iv) in the case of a payment to a 
foreign partnership), and it has no actual knowledge or reason to know 
that any of the information or certifications stated in the 
documentation are incorrect. The documentation referred to in this 
paragraph (b)(2)(vii) is documentation described in paragraph (d) or (e) 
of this section upon which a withholding agent may rely in order to 
treat the payment as a payment made to a payee or beneficial owner that 
is a U.S. or a foreign person, and to ascertain the characteristics of 
the payee or beneficial owner, as may be relevant to withholding or 
reporting under chapter 3 of the Code and the regulations thereunder 
(e.g., beneficial owner or intermediary, corporation or partnership). 
For purposes of this paragraph (b)(2)(vii), documentation also includes 
a withholding certificate described in paragraph (e)(3)(ii) of this 
section from a person representing to be a qualified intermediary that 
has assumed primary withholding responsibility, a withholding 
certificate described in paragraph (e)(3)(v) of this section from a 
person representing to be a U.S. branch described in paragraph 
(b)(2)(iv)(A) of this section, a withholding certificate described in 
Sec. 1.1441-5(c)(2)(iv) from a person representing to be a withholding 
foreign partnership, and the agreement that the withholding agent has in 
effect with an authorized foreign agent in accordance with Sec. 1.1441-
7(c)(2)(i). A withholding agent that is not required to obtain 
documentation with respect to a payment is considered to lack 
documentation for purposes of this paragraph (b)(2)(vii). For

[[Page 73]]

example, a withholding agent paying U.S. source interest to a person 
that is an exempt recipient, as defined in Sec. 1.6049-4(c)(1)(ii), is 
not required to obtain documentation from that person in order to 
determine whether an amount paid to that person is reportable under an 
applicable information reporting provision under chapter 61 of the Code. 
Therefore, the withholding agent may rely on the provisions of paragraph 
(b)(3)(iii)(A) of this section to determine whether the person is 
presumed to be a U.S. person (in which case, no withholding is required 
under this section), or whether the person is presumed to be a foreign 
person (in which case 30-percent withholding is required under this 
section). See paragraph (b)(3)(v)(A) of this section for special 
reliance rules in the case of a payment to a foreign intermediary and 
Sec. 1.1441-5(d)(3) for special reliance rules in the case of a payment 
to a foreign partnership.
    (3) Presumptions regarding payee's status in the absence of 
documentation--(i) General rules. A withholding agent that cannot 
reliably associate a payment with documentation may rely on the 
presumptions of this paragraph (b)(3) in order to determine the status 
of the payee as a U.S. or a foreign person and the payee's other 
relevant characteristics (e.g., as an owner or intermediary, as an 
individual, trust, partnership, or corporation). The determination of 
withholding and reporting requirements applicable to payments to a 
person presumed to be a foreign person is governed only by the 
provisions of chapter 3 of the Code and the regulations thereunder. For 
the determination of withholding and reporting requirements applicable 
to payments to a person presumed to be a U.S. person, see chapter 61 of 
the Code, section 3402, 3405, or 3406, and the regulations under these 
provisions. A presumption that a payee is a foreign payee is not a 
presumption that the payee is a foreign beneficial owner. Therefore, the 
provisions of this paragraph (b)(3) have no effect for purposes of 
reducing the withholding rate if associating the payment with 
documentation of foreign beneficial ownership is required as a condition 
for such rate reduction. See paragraph (b)(3)(ix) of this section for 
consequences to a withholding agent that fails to withhold in accordance 
with the presumptions set forth in this paragraph (b)(3) or if the 
withholding agent has actual knowledge or reason to know of facts that 
are contrary to the presumptions set forth in this paragraph (b)(3). See 
paragraph (b)(2)(vii) of this section for rules regarding the extent 
which a withholding agent can reliably associate a payment with 
documentation.
    (ii) Presumptions of status as individual, corporation, partnership, 
etc. A withholding agent that cannot reliably associate a payment with 
documentation must presume that the payee is an individual, a trust, or 
an estate, if the payee appears to be such person (i.e., based on the 
payee's name or other indications). In the absence of reliable 
indications that the payee is an individual, estate, or trust, the 
withholding agent must presume that the payee is a corporation or one of 
the persons enumerated under Sec. 1.6049-4(c)(1)(ii) (B) through (Q) if 
it can be so treated under Sec. 1.6049-4(c)(1)(ii)(A)(1) or any one of 
the paragraphs under Sec. 1.6049-4(c)(1)(ii) (B) through (Q) without the 
need to furnish documentation. If the withholding agent cannot treat a 
payee as a person described in Sec. 1.6049-4(c)(1)(ii) (A)(1) through 
(Q), then the payee shall be presumed to be a partnership. The fact that 
a payee is presumed to have a certain status under the provisions of 
this paragraph (b)(3)(ii) does not mean that it is excused from 
furnishing documentation, if documentation is otherwise required in 
order to obtain a reduced rate of withholding under this section. For 
example, if, for purposes of this paragraph (b)(3)(ii), a payee is 
presumed to be a tax-exempt organization based on Sec. 1.6049-
4(c)(1)(ii)(B), the withholding agent cannot rely on this presumption to 
reduce the rate of withholding on payments to such person (if such 
person is also presumed to be a foreign person under paragraph 
(b)(3)(iii)(A) of this section) because a reduction in the rate of 
withholding for payments to a foreign tax-exempt organization generally 
requires that a valid Form W-8 described in Sec. 1.1441-9(b)(2) be 
furnished to the withholding agent.

[[Page 74]]

    (iii) Presumption of U.S. or foreign status. A payment that the 
withholding agent cannot reliably associate with documentation is 
presumed to be made to a U.S. person, except as otherwise provided in 
this paragraph (b)(3)(iii), in paragraphs (b)(3) (iv) and (v) of this 
section, or in Sec. 1.1441-5 (d) or (e).
    (A) Payments to exempt recipients. If a withholding agent cannot 
reliably associate a payment with documentation from the payee and the 
payee is an exempt recipient (as determined under the provisions of 
Sec. 1.6049-4(c)(1)(ii) in the case of interest, or under similar 
provisions under chapter 61 of the Code applicable to the type of 
payment involved, but not including a payee that the withholding agent 
may treat as a foreign intermediary in accordance with paragraph 
(b)(3)(v) of this section), the payee is presumed to be a foreign person 
and not a U.S. person--
    (1) If the withholding agent has actual knowledge of the payee's 
employer identification number and that number begins with the two 
digits ``98'';
    (2) If the withholding agent's communications with the payee are 
mailed to an address in a foreign country;
    (3) If the name of the payee indicates that the entity is the type 
of entity that is on the per se list of foreign corporations contained 
in Sec. 301.7701-2(b)(8)(i) of this chapter; or
    (4) If the payment is made outside the United States (as defined in 
Sec. 1.6049-5(e)).
    (B) Scholarships and grants. A payment representing taxable 
scholarship or fellowship grant income that does not represent 
compensation for services (but is not excluded from tax under section 
117) and that a withholding agent cannot reliably associate with 
documentation is presumed to be made to a foreign person if the 
withholding agent has a record that the payee has a U.S. visa that is 
not an immigrant visa. See section 871(c) and Sec. 1.1441-4(c) for 
applicable tax rate and withholding rules.
    (C) Pensions, annuities, etc. A payment from a trust described in 
section 401(a), an annuity plan described in section 401(a), an annuity 
plan described in section 403(a), or a payment with respect to any 
annuity, custodial account, or retirement income account described in 
section 403(b) that a withholding agent cannot reliably associate with 
documentation is presumed to be made to a U.S. person only if the 
withholding agent has a record of a Social Security number for the payee 
and relies on a mailing address described in the following sentence. A 
mailing address is an address used for purposes of information reporting 
or otherwise communicating with the payee that is an address in the 
United States or in a foreign country with which the United States has 
an income tax treaty in effect that provides that the payee, if an 
individual resident in that country, would be entitled to an exemption 
from U.S. tax on amounts described in this paragraph (b)(3)(iii)(C). Any 
payment described in this paragraph (b)(3)(iii)(C) that is not presumed 
made to a U.S. person is presumed to be made to a foreign person. A 
withholding agent making a payment to a person presumed to be a foreign 
person may not reduce the 30-percent amount of withholding required on 
such payment unless it receives a withholding certificate described in 
paragraph (e)(2)(i) of this section furnished by the beneficial owner. 
For basis of reduction in the 30-percent rate, see Sec. 1.1441-4(d) or 
Sec. 1.1441-6(b).
    (D) Certain payments to offshore accounts. A payment that would be 
subject to withholding under section 1441, 1442, or 1443 if made to a 
foreign person and is exempt from backup withholding under section 3406 
by reason of Sec. 31.3406(g)-1(e) of this chapter (relating to exemption 
from backup withholding under section 3406 for certain payments to 
offshore accounts) is presumed to be made to a foreign payee.
    (iv) Grace period in the case of indicia of a foreign payee. A 
withholding agent may choose, in its discretion, to apply the provisions 
of Sec. 1.6049-5(d)(2)(ii) regarding a 90-day grace period for purposes 
of this paragraph (b)(3) (by substituting the term withholding agent for 
the term payor) to amounts described in Sec. 1.1441-6(b)(2)(ii) and to 
amounts covered by a Form 8233 described in Sec. 1.1441-4(b)(2)(ii). 
Thus, for these amounts, a withholding agent may, in its discretion, 
choose to treat an account holder as a foreign person and withhold under 
chapter 3 of the Code

[[Page 75]]

(and the regulations thereunder) while awaiting documentation. For 
purposes of determining the rate of withholding under this section, the 
withholding agent must withhold at the unreduced 30-percent rate at the 
time that the amounts are credited to the account. However, a 
withholding agent who can reliably associate the payment with a 
withholding certificate that is otherwise valid within the meaning of 
the applicable provisions except for the fact that it is transmitted by 
facsimile may rely on that facsimile form for purposes of withholding at 
the claimed reduced rate. For reporting of amounts credited both before 
and after the grace period, see Sec. 1.1461-1(c)(7). The following 
adjustments shall be made at the expiration of the grace period:
    (A) If, at the end of the grace period, the documentation is not 
furnished in the manner required under this section and the account 
holder is presumed to be a U.S. person who is not an exempt recipient, 
then backup withholding applies to amounts credited to the account after 
the expiration of the grace period only. Amounts credited to the account 
during the grace period shall be treated as owned by a foreign payee and 
adjustments must be made to correct any underwithholding on such amounts 
in the manner described in Sec. 1.1461-2.
    (B) If, at the end of the grace period, the documentation is not 
furnished in the manner required under this section and the account 
holder is presumed to be a foreign person, or if documentation is 
furnished that does not support the claimed rate reduction, then 
adjustments must be made to correct the underwithholding on amounts 
credited to the account during the grace period, based on adjustment 
procedures described in Sec. 1.1461-2.
    (v) Special rules applicable to payments to foreign intermediaries--
(A) Reliance on claim of status as foreign intermediary. A withholding 
agent that can reliably associate a payment with a withholding 
certificate described in paragraph (e)(3) (ii) or (iii) of this section 
may treat the payment as made to a foreign intermediary, as represented 
in the certificate. For this purpose, a U.S. person's foreign branch 
that is a qualified intermediary defined in paragraph (e)(5)(ii) of this 
section shall be treated as a foreign intermediary. For purposes of this 
section, a payment that the withholding agent can reliably associate 
with a withholding certificate described in paragraph (e)(3) (ii) or 
(iii) of this section that would be valid except for the fact that some 
or all of the withholding certificates or other appropriate 
documentation required to be attached are lacking or are unreliable or 
that information for allocating the payment among the various persons 
for whom the intermediary is acting is lacking or is unreliable shall 
nevertheless be treated as a payment to a foreign intermediary and the 
rules of this paragraph (b)(3)(v) shall apply accordingly. A payee that 
the withholding agent may not reliably treat as a foreign intermediary 
under this paragraph (b)(3)(v)(A) is presumed to be an owner whose 
status as an individual, trust, estate, etc., must be determined in 
accordance with paragraph (b)(3)(ii) of this section, to the extent 
relevant. In addition, such payee is presumed to be a U.S. or a foreign 
payee based upon the presumptions described in paragraph (b)(3)(iii) of 
this section. The provisions of paragraphs (b)(3)(v) (B), (C), and (D) 
of this section are not relevant to a withholding agent that can 
reliably associate a payment with a withholding certificate from a 
person representing to be a qualified intermediary that has assumed 
primary withholding responsibility in accordance with paragraph 
(e)(5)(iv) of this section.
    (B) Beneficial owner documentation is lacking or unreliable. Any 
portion of a payment that the withholding agent may treat as made to a 
foreign intermediary in accordance with paragraph (b)(3)(v)(A) of this 
section but cannot reliably associate with a beneficial owner due to the 
lack of a withholding certificate or other appropriate documentation for 
that beneficial owner is presumed to be made to a foreign payee for whom 
the foreign intermediary collects the payment (see paragraph (b)(2)(v) 
of this section). For purposes of this paragraph (b)(2)(v)(B), any 
payment that a foreign qualified intermediary represents to be allocable 
to the category of assets described in paragraph (e)(5)(v)(B)(3) of this 
section

[[Page 76]]

(i.e., assets allocable to persons for whom the qualified intermediary 
does not hold documentation as specified under its agreement with the 
IRS) is treated as a payment that the withholding agent cannot reliably 
associate with beneficial owners. As a result, any payment allocable to 
such category of assets is presumed to be made to an unidentified 
foreign payee. Under paragraph (b)(1) of this section, a payment to a 
foreign payee is subject to withholding at a 30-percent rate.
    (C) Information regarding allocation of payment is lacking or 
unreliable. If a withholding agent can reliably associate a payment with 
a group of beneficial owners or payees but lacks reliable information to 
determine how much of the payment is allocable to one or more of the 
beneficial owners or payees in the group (because, for example, the 
statement described in paragraph (e)(3)(iv) of this section has not been 
furnished), the payment, to the extent it cannot reliably be allocated, 
is presumed to be allocable entirely to the beneficial owner or payee in 
the group with the highest applicable withholding rate or, if the rates 
are equal, to the beneficial owner or payee in the group with the 
highest U.S. tax liability, as the withholding agent shall estimate, 
based on its knowledge and available information. If a withholding 
certificate attached to an intermediary certificate is another 
intermediary certificate or a certificate from a foreign partnership 
described in Sec. 1.1441-5(c)(3)(iii), the rules of this paragraph 
(b)(3)(v)(C) apply by treating the share of the payment allocable to the 
other intermediary or to the foreign partnership as if the payment were 
made directly to the other intermediary or to the foreign partnership.
    (D) Certification that the foreign intermediary has furnished 
documentation for all of the persons to whom the intermediary 
certificate relates is lacking or unreliable. If the certification 
required under paragraph (e)(3)(iii)(D) of this section (that the 
attached withholding certificates and other appropriate documentation 
represent all of the persons to whom the intermediary withholding 
certificate relates) is lacking or is unreliable and, as a result, the 
withholding agent cannot reliably determine how much of the payment is 
allocable to each of the persons or group of persons for which the 
withholding agent holds a withholding certificate or other appropriate 
documentation, then none of the payment can reliably be associated with 
any one person and the entire payment is presumed to be made to an 
unidentified foreign payee for whom the intermediary collects the 
payment and from which a 30-percent amount must be withheld in 
accordance with paragraph (b)(1) of this section.
    (vi) U.S. branches and foreign flow-through entities. The rules of 
paragraphs (b)(3)(v) (B), (C), and (D) of this section shall apply to 
payments to a U.S. branch described in paragraph (b)(2)(iv)(A) of this 
section that has agreed to assume withholding responsibility in the same 
manner that they apply to payments to a foreign intermediary. See 
Sec. 1.1441-5(d) for similar rules in the case of payments to foreign 
partnerships. See Sec. 1.1441-5(e) for similar rules in the case of 
payments to foreign trusts or foreign estates.
    (vii) Joint payees. A payment made to joint payees for whom the 
withholding agent cannot reliably associate documentation for all joint 
payees or can reliably associate the payment with a Form W-9 furnished 
in accordance with the procedures described in Secs. 31.3406(d)-1 
through 31.3406(d)-5 of this chapter from one of the joint payees is 
presumed to be made to U.S. persons. For purposes of applying this 
paragraph (b)(3), the grace period rules in paragraph (b)(3)(iv) of this 
section shall apply only if each payee qualifies for the conditions 
described in paragraph (b)(3)(iv) of this section. However, as provided 
in paragraph (b)(3)(iii)(D) of this section, a payment of an amount that 
would be subject to withholding under section 1441, 1442, or 1443 if 
paid to a foreign person and is exempt from the application of the 
provisions of section 3406 by reason of Sec. 31.3406(g)-1(e) of this 
chapter (relating to exemption from backup withholding under section 
3406 of the Code for certain payments made with respect to offshore 
accounts), is presumed to be made to foreign persons.
    (viii) Rebuttal of presumptions. A payee or beneficial owner may 
rebut

[[Page 77]]

the presumptions described in this paragraph (b)(3) by providing 
reliable documentation to the withholding agent or, if applicable, to 
the IRS.
    (ix) Effect of reliance on presumptions and of actual knowledge or 
reason to know otherwise--(A) General rule. Except as otherwise provided 
in paragraph (b)(3)(ix)(B) of this section, a withholding agent that 
withholds on a payment under section 3402, 3405 or 3406 in accordance 
with the presumptions set forth in this paragraph (b)(3) shall not be 
liable for withholding under this section even it is later established 
that the beneficial owner of the payment is, in fact, a foreign person. 
Similarly, a withholding agent that withholds on a payment under this 
section in accordance with the presumptions set forth in this paragraph 
(b)(3) shall not be liable for withholding under section 3402 or 3405 or 
for backup withholding under section 3406 even if it is later 
established that the payee or beneficial owner is, in fact, a U.S. 
person. A withholding agent that, instead of relying on the presumptions 
described in this paragraph (b)(3), relies on its own actual knowledge 
to withhold a lesser amount, not withhold, or not report a payment, even 
though reporting of the payment or withholding a greater amount would be 
required if the withholding agent relied on the presumptions described 
in this paragraph (b)(3) shall be liable for tax, interest, and 
penalties to the extent provided under section 1461 and the regulations 
under that section. See paragraph (b)(7) of this section for provisions 
regarding such liability if the withholding agent fails to withhold in 
accordance with the presumptions described in this paragraph (b)(3).
    (B) Actual knowledge or reason to know that amount of withholding is 
greater than is required under the presumptions or that reporting of the 
payment is required. Notwithstanding the provisions of paragraph 
(b)(3)(ix)(A) of this section, a withholding agent may not rely on the 
presumptions described in this paragraph (b)(3) to the extent it has 
actual knowledge or reason to know that the status or characteristics of 
the payee or of the beneficial owner are other than what is presumed 
under this paragraph (b)(3) and, if based on such knowledge or reason to 
know, it should withhold (under this section or another withholding 
provision of the Code) an amount greater than would be the case if it 
relied on the presumptions described in this paragraph (b)(3) or it 
should report (under this section or under another provision of the 
Code) an amount that would not otherwise be reportable if it relied on 
the presumptions described in this paragraph (b)(3). In such a case, the 
withholding agent must rely on its actual knowledge or reason to know 
rather than on the presumptions set forth in this paragraph (b)(3). 
Failure to do so and, as a result, failure to withhold the higher amount 
or to report the payment, shall result in liability for tax, interest, 
and penalties to the extent provided under sections 1461 and 1463 and 
the regulations under those sections.
    (x) Examples. The provisions of this paragraph (b)(3) are 
illustrated by the following examples:

    Example 1. A withholding agent, W, makes a payment of U.S. source 
dividends to person X, Inc. at an address outside the United States. W 
cannot reliably associate the payment to X with documentation. Under 
Secs. 1.6042-3(b)(1)(vii) and 1.6049-4(c)(1)(ii)(A)(1), W may treat X as 
a corporation. Thus, under the presumptions described in paragraph 
(b)(3)(iii) of this section, W must presume that X is a foreign person 
(because the payment is made outside the United States). However, W 
knows that X is a U.S. person who is an exempt recipient. W may not rely 
on its actual knowledge to not withhold under this section. If W's 
knowledge is, in fact, incorrect, W would be liable for tax, interest, 
and, if applicable, penalties, under section 1461. W would be permitted 
to reduce or eliminate its liability for the tax by establishing, in 
accordance with paragraph (b)(7) of this section, that the tax is not 
due or has been satisfied. If W's actual knowledge is, in fact, correct, 
W may nevertheless be liable for tax, interest, or penalties under 
section 1461 for the amount that W should have withheld based upon the 
presumptions. W would be permitted to reduce or eliminate its liability 
for the tax by establishing, in accordance with paragraph (b)(7) of this 
section, that its actual knowledge was, in fact, correct and that no tax 
or a lesser amount of tax was due.
    Example 2. A withholding agent, W, makes a payment of U.S. source 
dividends to Y who does not qualify as an exempt recipient under 
Secs. 1.6042-3(b)(1)(vii) and 1.6049-4(c)(1)(ii). W cannot reliably 
associate the payment to Y with documentation. Under

[[Page 78]]

the presumptions described in paragraph (b)(3)(iii) of this section, W 
must presume that Y is a U.S. person who is not an exempt recipient for 
purposes of section 6042. However, W knows that Y is a foreign person. W 
may not rely on its actual knowledge to withhold under this section 
rather than backup withhold under section 3406. If W's knowledge is, in 
fact, incorrect, W would be liable for tax, interest, and, if 
applicable, penalties, under section 3403. If W's actual knowledge is, 
in fact, correct, W may nevertheless be liable for tax, interest, or 
penalties under section 3403 for the amount that W should have withheld 
based upon the presumptions. Paragraph (b)(7) of this section does not 
apply to provide relief from liability under section 3403.
    Example 3. A withholding agent, W, makes a payment of U.S. source 
dividends to X, Inc. W cannot reliably associate the payment to X, Inc. 
with documentation. X, Inc. presents none of the indicia of foreign 
status described in paragraph (b)(3)(iii)(A) of this section, but W has 
actual knowledge that X, Inc. is a foreign corporation. W may treat X, 
Inc. as an exempt recipient under Sec. 1.6042-3(b)(1)(vii). Because 
there are no indicia of foreign status, W would, absent actual knowledge 
or reason to know otherwise, be permitted to treat X, Inc. as a domestic 
corporation in accordance with the presumptions of paragraph (b)(3)(iii) 
of this section. However, under paragraph (b)(3)(ix)(B) of this section, 
W may not rely on the presumption of U.S. status since reliance on its 
actual knowledge requires that it withhold an amount greater than would 
be the case under the presumptions.
    Example 4. A withholding agent, W, is a plan administrator who makes 
pension payments to person X with a mailing address in a foreign country 
with which the United States has an income tax treaty in effect. Under 
that treaty, the type of pension income paid to X is taxable solely in 
the country of residence. The plan administrator has a record of X's 
U.S. social security number. W has no actual knowledge or reason to know 
that X is a foreign person. W may rely on the presumption of paragraph 
(b)(3)(iii)(C) of this section in order to treat X as a U.S. person. 
Therefore, any withholding and reporting requirements for the payment 
are governed by the provisions of section 3405 and the regulations under 
that section.

    (4) List of exemptions from, or reduced rates of, withholding under 
chapter 3 of the Code. A withholding agent that has determined that the 
payee is a foreign person for purposes of paragraph (b)(1) of this 
section must determine whether the payee is entitled to a reduced rate 
of withholding under section 1441, 1442, or 1443. This paragraph (b)(4) 
identifies items for which a reduction in the rate of withholding may 
apply and whether the rate reduction is conditioned upon documentation 
being furnished to the withholding agent. Documentation required under 
this paragraph (b)(4) is documentation that a withholding agent must be 
able to associate with a payment upon which it can rely to treat the 
payment as made to a foreign person that is the beneficial owner of the 
payment in accordance with paragraph (e)(1)(ii) of this section. This 
paragraph (b)(4) also cross-references other sections of the Code and 
applicable regulations in which some of these exceptions, exemptions, or 
reductions are further explained. See, for example, paragraph 
(b)(4)(viii) of this section, dealing with effectively connected income, 
that cross-references Sec. 1.1441-4(a); see paragraph (b)(4)(xv) of this 
section, dealing with exemptions from, or reductions of, withholding 
under an income tax treaty, that cross-references Sec. 1.1441-6. This 
paragraph (b)(4) is not an exclusive list of items to which a reduction 
of the rate of withholding may apply and, thus, does not preclude an 
exemption from, or reduction in, the rate of withholding that may 
otherwise be allowed under the regulations under the provisions of 
chapter 3 of the Code for a particular item of income identified in this 
paragraph (b)(4).
    (i) Portfolio interest described in section 871(h) or 881(c) and 
substitute interest payments described in Sec. 1.871-7(b)(2) or 1.881-
2(b)(2) are exempt from withholding under section 1441(a). See 
Sec. 1.871-14 for regulations regarding portfolio interest and section 
1441(c)(9) for exemption from withholding. Documentation establishing 
foreign status is required for interest on an obligation in registered 
form to qualify as portfolio interest. See section 871(h)(2)(B)(ii) and 
Sec. 1.871-14(c)(1)(ii)(C). For special documentation rules regarding 
foreign-targeted registered obligations described in Sec. 1.871-
14(e)(2), see Sec. 1.871-14(e) (3) and (4) and, in particular, 
Sec. 1.871-14(e)(4)(i)(A) and (ii)(A) regarding the time when the 
withholding agent must receive the documentation. The documentation 
furnished for purposes of qualifying interest as portfolio interest 
serves as the basis for the withholding exemption for

[[Page 79]]

purposes of this section and for purposes of establishing foreign status 
for purposes of section 6049. See Sec. 1.6049-5(b)(8). Documentation 
establishing foreign status is not required for qualifying interest on 
an obligation in bearer form described in Sec. 1.871-14(b)(1) as 
portfolio interest. However, in certain cases, documentation for 
portfolio interest on a bearer obligation may have to be furnished in 
order to establish foreign status for purposes of the information 
reporting provisions of section 6049 and backup withholding under 
section 3406. See Sec. 1.6049-5(b)(7).
    (ii) Bank deposit interest and similar types of deposit interest 
(including original issue discount) described in section 871(i)(2)(A) or 
881(d) that are from sources within the United States are exempt from 
withholding under section 1441(a). See section 1441(c)(10). 
Documentation establishing foreign status is not required for purposes 
of this withholding exemption but may have to be furnished for purposes 
of the information reporting provisions of section 6049 and backup 
withholding under section 3406. See Sec. 1.6049-5(d)(3)(iii) for 
exceptions to the foreign payee and exempt recipient rules regarding 
this type of income. See also Sec. 1.6049-5(b)(11) for applicable 
documentation exemptions for certain bank deposit interest paid on 
obligations in bearer form.
    (iii) Bank deposit interest (including original issue discount) 
described in section 861(a)(1)(B) is exempt from withholding under 
sections 1441(a) as income that is not from U.S. sources. Documentation 
establishing foreign status is not required for purposes of this 
withholding exemption but may have to be furnished for purposes of the 
information reporting provisions of section 6049 and backup withholding 
under section 3406. Reporting requirements for payments of such interest 
are governed by section 6049 and the regulations under that section. See 
Sec. 1.6049-5(b)(12) and alternative documentation rules under 
Sec. 1.6049-5(c)(4).
    (iv) Interest or original issue discount from sources within the 
United States on certain short-term obligations described in section 
871(g)(1)(B) or 881(a)(3) is exempt from withholding under sections 
1441(a). Documentation establishing foreign status is not required for 
purposes of this withholding exemption but may have to be furnished for 
purposes of the information reporting provisions of section 6049 and 
backup withholding under section 3406. See Sec. 1.6049-5(b)(12) for 
applicable documentation for establishing foreign status and 
Sec. 1.6049-5(d)(3)(iii) for exceptions to the foreign payee and exempt 
recipient rules regarding this type of income. See also Sec. 1.6049-
5(b)(10) for applicable documentation exemptions for certain obligations 
in bearer form.
    (v) Income from sources without the United States is exempt from 
withholding under sections 1441(a). Documentation establishing foreign 
status is not required for purposes of this withholding exemption but 
may have to be furnished for purposes of the information reporting 
provisions of section 6049 or other applicable provisions of chapter 61 
of the Code and backup withholding under section 3406. See, for example, 
Sec. 1.6049-5(b) (6) and (12) and alternative documentation rules under 
Sec. 1.6049-5(c)(4). See also paragraph (b)(5) of this section for cross 
references to other applicable provisions of the regulations under 
chapter 61 of the Code.
    (vi) Distributions from certain domestic corporations described in 
section 871(i)(2)(B) or 881(d) are exempt from withholding under section 
1441(a). See section 1441(c)(10). Documentation establishing foreign 
status is not required for purposes of this withholding exemption but 
may have to be furnished for purposes of the information reporting 
provisions of section 6042 and backup withholding under section 3406. 
See Sec. 1.6042-3(b)(1) (iii) through (vi).
    (vii) Dividends paid by certain foreign corporations that are 
treated as income from sources within the United States by reason of 
section 861(a)(2)(B) are exempt from withholding under section 884(e)(3) 
to the extent that the distributions are paid out of earnings and 
profits in any taxable year that the corporation was subject to branch 
profits tax for that year. Documentation establishing foreign status is 
not required for purposes of this withholding exemption but may have to 
be furnished for purposes of the information reporting provisions of 
section

[[Page 80]]

6042 and backup withholding under section 3406. See Sec. 1.6042-3(b)(1) 
(iii) through (vii).
    (viii) Certain income that is effectively connected with the conduct 
of a U.S. trade or business is exempt from withholding under section 
1441(a). See section 1441(c)(1). Documentation establishing foreign 
status and status of the income as effectively connected must be 
furnished for purposes of this withholding exemption to the extent 
required under the provisions of Sec. 1.1441-4(a). Documentation 
furnished for this purpose also serves as documentation establishing 
foreign status for purposes of applicable information reporting 
provisions under chapter 61 of the Code and for backup withholding under 
section 3406. See, for example, Sec. 1.6041-4(a)(1).
    (ix) Certain income with respect to compensation for personal 
services of an individual that are performed in the United States is 
exempt from withholding under section 1441(a). See section 1441(c)(4) 
and Sec. 1.1441-4(b). However, such income may be subject to withholding 
as wages under section 3402. Documentation establishing foreign status 
must be furnished for purposes of any withholding exemption or reduction 
to the extent required under Sec. 1.1441-4(b) or 31.3401(a)(6)-1 (e) and 
(f) of this chapter. Documentation furnished for this purpose also 
serves as documentation establishing foreign status for purposes of 
information reporting under section 6041. See Sec. 1.6041-4(a)(1).
    (x) Amounts described in section 871(f) that are received as 
annuities from certain qualified plans are exempt from withholding under 
section 1441(a). See section 1441(c)(7). Documentation establishing 
foreign status must be furnished for purposes of the withholding 
exemption as required under Sec. 1.1441-4(d). Documentation furnished 
for this purpose also serves as documentation establishing foreign 
status for purposes of information reporting under section 6041. See 
Sec. 1.6041-4(a)(1).
    (xi) Payments to a foreign government (including a foreign central 
bank of issue) that are excludable from gross income under section 
892(a) are exempt from withholding under section 1442. See Sec. 1.1441-
8(b). Documentation establishing status as a foreign government is 
required for purposes of this withholding exemption. Payments to a 
foreign government are exempt from information reporting under chapter 
61 of the Code (see Sec. 1.6049-4(c)(1)(ii)(F)).
    (xii) Payments of certain interest income to a foreign central bank 
of issue or the Bank for International Settlements that are exempt from 
tax under section 895 are exempt from withholding under section 1442. 
Documentation establishing eligibility for such exemption is required to 
the extent provided in Sec. 1.1441-8(c)(1). Payments to a foreign 
central bank of issue or to the Bank for International Settlements are 
exempt from information reporting under chapter 61 of the Code (see 
Sec. 1.6049-4(c)(1)(ii) (H) and (M)).
    (xiii) Amounts derived by a foreign central bank of issue from 
bankers' acceptances described in section 871(i)(2)(C) or 881(d) are 
exempt from tax and, therefore, from withholding. See section 
1441(c)(10). Documentation establishing foreign status is not required 
for purposes of this withholding exemption if the name of the payee and 
other facts surrounding the payment reasonably indicate that the 
beneficial owner of the payment is a foreign central bank of issue as 
defined in Sec. 1.861-2(b)(4). See Sec. 1.1441-8(c)(2) for withholding 
procedures. See also Secs. 1.6049-4(c)(1)(ii)(H) and 1.6041-3(q)(8) for 
a similar exemption from information reporting.
    (xiv) Payments to an international organization from investments in 
the United States of stocks, bonds, or other domestic securities or from 
interest on deposits in banks in the United States of funds belonging to 
such international organization are exempt from tax under section 892(b) 
and, thus, from withholding. Documentation establishing status as an 
international organization is not required if the name of the payee and 
other facts surrounding the payment reasonably indicate that the 
beneficial owner of the payment is an international organization within 
the meaning of section 7701(a)(18). See Sec. 1.1441-8(d). Payments to an 
international organization are exempt from information reporting under 
chapter 61 of the Code (see Sec. 1.6049-4(c)(1)(ii)(G)).

[[Page 81]]

    (xv) Amounts may be exempt from, or subject to a reduced rate of, 
withholding under an income tax treaty. Documentation establishing 
eligibility for benefits under an income tax treaty is required for this 
purpose as provided under Secs. 1.1441-6. Documentation furnished for 
this purpose also serves as documentation establishing foreign status 
for purposes of applicable information reporting provisions under 
chapter 61 of the Code and for backup withholding under section 3406. 
See, for example, Sec. 1.6041-4(a)(1).
    (xvi) Amounts of scholarships and grants paid to certain exchange or 
training program participants that do not represent compensation for 
services but are not excluded from tax under section 117 are subject to 
a reduced rate of withholding of 14-percent under section 1441(b). 
Documentation establishing foreign status is required for purposes of 
this reduction in rate as provided under Sec. 1.1441-4(c). This income 
is not subject to information reporting under chapter 61 of the Code nor 
to backup withholding under section 3406. The compensatory portion of a 
scholarship or grant is reportable as wage income. See Sec. 1.6041-3(o).
    (xvii) Amounts paid to a foreign organization described in section 
501(c) are exempt from withholding under section 1441 to the extent that 
the amounts are not income includible under section 512 in computing the 
organization's unrelated business taxable income and are not subject to 
the tax imposed by section 4948(a). Documentation establishing status as 
a tax-exempt organization is required for purposes of this exemption to 
the extent provided in Sec. 1.1441-9. Amounts includible under section 
512 in computing the organization's unrelated business taxable income 
are subject to withholding to the extent provided in section 1443(a) and 
Sec. 1.1443-1(a). Gross investment income (as defined in section 
4940(c)(2)) of a private foundation is subject to withholding at a 4-
percent rate to the extent provided in section 1443(b) and Sec. 1.1443-
1(b). Payments to a tax-exempt organization are exempt from information 
reporting under chapter 61 of the Code and the regulations thereunder 
(see Sec. 1.6049-4(c)(1)(ii)(B)(1)).
    (xviii) Per diem amounts for subsistence paid by the U.S. government 
to a nonresident alien individual who is engaged in any program of 
training in the United States under the Mutual Security Act of 1954 are 
exempt from withholding under section 1441(a). See section 1441(c)(6). 
Documentation of foreign status is required under Sec. 1.1441-4(e) for 
purposes of establishing eligibility for this exemption. See 
Sec. 1.6041-3(p).
    (xix) Interest with respect to tax-free covenant bonds issued prior 
to 1934 is subject to special withholding procedures set forth in 
Sec. 1.1461-1 in effect prior to January 1, 2001 (see Sec. 1.1461-1 as 
contained in 26 CFR part 1, revised April 1, 1999).
    (xx) Income from certain gambling winnings of a nonresident alien 
individual is exempt from tax under section 871(j) and from withholding 
under section 1441(a). See section 1441(c)(11). Documentation 
establishing foreign status is not required for purposes of this 
exemption but may have to be furnished for purposes of the information 
reporting provisions of section 6041 and backup withholding under 
section 3406. See Secs. 1.6041-1 and 1.6041-4(a)(1).
    (xxi) Any payments not otherwise mentioned in this paragraph (b)(4) 
shall be subject to withholding at the rate of 30-percent if it is an 
amount subject to withholding (as defined in Sec. 1.1441-2(a)) unless 
and to the extent the IRS may otherwise prescribe in published guidance 
(see Sec. 601.601(d)(2) of this chapter) or unless otherwise provided in 
regulations under chapter 3 of the Code.
    (5) Establishing foreign status under applicable provisions of 
chapter 61 of the Code. This paragraph (b)(5) identifies relevant 
provisions of the regulations under chapter 61 of the Code that exempt 
payments from information reporting, and therefore, from backup 
withholding under section 3406, based on the payee's status as a foreign 
person. Many of these exemptions require that the payee's foreign status 
be established in order for the exemption to apply. The regulations 
under applicable provisions of chapter 61 of the Code generally provide 
that the documentation described in this section may be relied upon for 
purposes of determining foreign status.

[[Page 82]]

    (i) Payments to a foreign person that are governed by section 6041 
(dealing with certain trade or business income) are exempt from 
information reporting under Sec. 1.6041-4(a).
    (ii) Payments to a foreign person that are governed by section 6041A 
(dealing with remuneration for services and certain sales) are exempt 
from information reporting under Sec. 1.6041A-1(d)(3).
    (iii) Payments to a foreign person that are governed by section 6042 
(dealing with dividends) are exempt from information reporting under 
Sec. 1.6042-3(b)(1) (iii) through (vi).
    (iv) Payments to a foreign person that are governed by section 6044 
(dealing with patronage dividends) are exempt from information reporting 
under Sec. 1.6044-3(c)(1).
    (v) Payments to a foreign person that are governed by section 6045 
(dealing with broker proceeds) are exempt from information reporting 
under Sec. 1.6045-1(g).
    (vi) Payments to a foreign person that are governed by section 6049 
(dealing with interest) to a foreign person are exempt from information 
reporting under Sec. 1.6049-5(b) (6) through (15).
    (vii) Payments to a foreign person that are governed by section 
6050N (dealing with royalties) are exempt from information reporting 
under Sec. 1.6050N-1(c).
    (viii) Payments to a foreign person that are governed by section 
6050P (dealing with income from cancellation of debt) are exempt from 
information reporting under section 6050P or the regulations under that 
section except to the extent provided in Notice 96-61 (1996-2 C.B. 227); 
see also Sec. 601.601(b)(2) of this chapter.
    (6) Rules of withholding for payments by a foreign intermediary or 
certain U.S. branches. A foreign intermediary described in paragraph 
(e)(3)(i) of this section or a U.S. branch described in paragraph 
(b)(2)(iv) of this section that receives an amount subject to 
withholding (as defined in Sec. 1.1441-2(a)) shall be deemed to have 
satisfied any obligation it has under chapter 3 of the Code and the 
regulations thereunder to withhold and report the amount when it, in 
turn, pays such amount to another person (whether or not the beneficial 
owner) to the extent that the payment is associated with a valid 
withholding certificate described in paragraph (e)(3) (ii), (iii), or 
(v) of this section that it has furnished to another withholding agent 
and the intermediary does not know and has no reason to know that the 
correct amount has not been withheld under chapter 3 of the Code and the 
regulations thereunder. See Sec. 1.1441-5(c)(3)(v) for a similar rule 
for payments by certain foreign partnerships.
    (7) Liability for failure to obtain documentation timely or to act 
in accordance with applicable presumptions--(i) General rule. A 
withholding agent that cannot reliably associate a payment with 
documentation on the date of payment and that does not withhold under 
this section, or withholds at less than the 30-percent rate prescribed 
under section 1441(a) and paragraph (b)(1) of this section, is liable 
under section 1461 for the tax required to be withheld under chapter 3 
of the Code and the regulations thereunder, without the benefit of a 
reduced rate unless--
    (A) The withholding agent has appropriately relied on the 
presumptions described in paragraph (b)(3) of this section (including 
the grace period described in paragraph (b)(3)(iv) of this section) in 
order to treat the payee as a U.S. person or, if applicable, on the 
presumptions described in Sec. 1.1441-4(a) (2)(i) or (3) to treat the 
payment as effectively connected income; or
    (B) The withholding agent can demonstrate to the satisfaction of the 
district director or the Assistant Commissioner (International) that the 
proper amount of tax, if any, was in fact paid to the IRS; or
    (C) No documentation is required under section 1441 or this section 
in order for a reduced rate of withholding to apply.
    (ii) Proof that tax liability has been satisfied. Proof of payment 
of tax may be established for purposes of paragraph (b)(7)(i)(B) of this 
section on the basis of a Form 4669 (or such other form as the IRS may 
prescribe in published guidance (see Sec. 601.601(d)(2) of this 
chapter)), establishing the amount of tax, if any, actually paid by or 
for the beneficial owner on the income. Proof that a reduced rate of 
withholding was, in

[[Page 83]]

fact, appropriate under the provisions of chapter 3 of the Code and the 
regulations thereunder may also be established after the date of payment 
by the withholding agent on the basis of a valid withholding certificate 
or other appropriate documentation furnished after that date. However, 
in the case of a withholding certificate or other appropriate 
documentation received after the date of payment (or after the grace 
period specified in paragraph (b)(3)(iv) of this section), the district 
director or the Assistant Commissioner (International) may require 
additional proof if it is determined that the delays in obtaining the 
withholding certificate affect its reliability.
    (iii) Liability for interest and penalties. A withholding agent that 
has failed to withhold other than based on appropriate reliance on the 
presumptions described in paragraph (b)(3) of this section or in 
Sec. 1.1441-4(a) (2)(i) or (3) is not relieved from liability for 
interest under section 6601. Such liability exists even if there is no 
underlying tax liability due. The interest on the amount that should 
have been withheld shall be imposed as prescribed under section 6601 
beginning on the last date for paying the tax due under section 1461 
(which, under section 6601, is the due date for filing the withholding 
agent's return of tax). The interest shall stop accruing on the earlier 
of the date that the required withholding certificate or other 
documentation is provided to the withholding agent and to the extent of 
the amount of tax that is determined not to be due based on 
documentation provided, or the date, and to the extent, that the unpaid 
tax liability under section 871, 881 or under section 1461 is satisfied. 
Further, in the event that a tax liability is assessed against the 
beneficial owner under section 871, 881, or 882 and interest under 
section 6601(a) is assessed against, and collected from, the beneficial 
owner, the interest charge imposed on the withholding agent shall be 
abated to that extent so as to avoid the imposition of a double interest 
charge. However, the withholding agent is not relieved of any applicable 
penalties. See section 1464.
    (iv) Special effective date. See paragraph (f)(2)(ii) of this 
section for the special effective date applicable to this paragraph 
(b)(7).
    (v) Examples. The provisions of paragraph (b)(7) of this section are 
illustrated by the following examples:

    Example 1. On June 15, 2001, a withholding agent pays U.S. source 
interest on an obligation in registered form (issued after July 18, 
1984) to a foreign corporation that it cannot reliably associate with a 
Form W-8 or other appropriate documentation upon which to rely to treat 
the beneficial owner as a foreign person. The withholding agent does not 
withhold from the payment. On September 30, 2003, the withholding agent 
receives from the foreign corporation a valid Form W-8 described in 
paragraph (e)(2)(ii) of this section. Thus, the interest qualifies as 
portfolio interest retroactively to June 15, 2001 (the date of payment). 
See Sec. 1.871-14(c)(3). The foreign corporation does not file a U.S. 
federal income tax return and does not pay the tax owed. The withholding 
agent is not liable under section 1461 for the 30-percent tax on the 
interest income because the receipt of the Form W-8 exempts the interest 
from tax for purposes of sections 881(a) and 1461. The withholding 
agent, however, is liable for interest on the amount of withholding that 
should have been deducted from the payment on June 15, 2001 and 
deposited. Under paragraph (b)(7)(iii) of this section, the period 
during which interest may be assessed against the withholding agent runs 
from March 15, 2002 (the due date for the Form 1042 relating to the 
payment) until September 30, 2003 (i.e., the date that appropriate 
documentation is furnished to the withholding agent).
    Example 2. On June 15, 2001, a withholding agent pays U.S. source 
dividends to a foreign corporation that it cannot reliably associate 
with a Form W-8 or other appropriate documentation upon which to rely to 
treat the beneficial owner as a foreign person. The withholding agent 
does not withhold from the payment. On September 30, 2003, the 
withholding agent receives from the foreign corporation a valid Form W-8 
described in paragraph (e)(2)(ii) of this section claiming a reduced 15-
percent rate of withholding under a U.S. income tax treaty. The dividend 
qualifies for the reduced treaty rate retroactively to June 15, 2001 
(the date of payment). The foreign corporation does not file a U.S. 
federal income tax return and does not pay the tax owed. Under section 
1461, the withholding agent is liable only for a 15-percent tax on the 
dividend income because the receipt of the Form W-8 allows the tax rate 
to be reduced for purposes of sections 881(a) and 1461 from 30 percent 
to 15 percent. The withholding agent, however, is liable for interest on 
the full 30-percent amount that should have been deducted and withheld 
from the

[[Page 84]]

payment on June 15, 2001, and deposited, over a period running from 
March 15, 2002 (the due date for the Form 1042 relating to the payment) 
until September 30, 2003 (the date that the appropriate documentation is 
furnished to the withholding agent supporting a reduction in rate under 
a tax treaty). Additional interest may be assessed relating to the 
outstanding 15-percent tax liability (i.e., the portion of the 30-
percent total tax liability that is not reduced under the treaty). Such 
additional interest runs from March 15, 2002, until such date as that 
15-percent tax liability is satisfied by the withholding agent or the 
taxpayer (subject to abatement in order to avoid a double interest 
charge).

    (8) Adjustments, refunds, or credits of overwithheld amounts. If the 
amount withheld under section 1441, 1442, or 1443 is greater than the 
tax due by the withholding agent or the taxpayer, adjustments may be 
made in accordance with the procedures described in Sec. 1.1461-2(a). 
Alternatively, refunds or credits may be claimed in accordance with the 
procedures described in Sec. 1.1464-1, relating to refunds or credits 
claimed by the beneficial owner, or Sec. 1.6414-1, relating to refunds 
or credits claimed by the withholding agent. If an amount was withheld 
under section 3406 or is subsequently determined to have been paid to a 
foreign person, see paragraph (b)(3)(vii) of this section and 
Sec. 31.6413(a)-3(a)(1) of this chapter.
    (9) Payments to joint owners. A payment to joint owners that 
requires documentation in order to reduce the rate of withholding under 
chapter 3 of the Code and the regulations thereunder does not qualify 
for such reduced rate unless the withholding agent can reliably 
associate the payment with documentation from each owner. 
Notwithstanding the preceding sentence, a payment to joint owners 
qualifies as a payment exempt from withholding under this section if any 
one of the owners provides a certificate of U.S. status on a Form W-9 in 
accordance with paragraph (d) (2) or (3) of this section or the 
withholding agent can associate the payment with a withholding 
certificate upon which it can rely to treat the payment as made to a 
U.S. beneficial owner under paragraph (d)(4) of this section. See 
Sec. 31.3406(h)-2(a)(3)(i)(B) of this chapter.
    (c) Definitions--(1) Withholding. The term withholding means the 
deduction and withholding of tax at the applicable rate from the 
payment.
    (2) Foreign and U.S. person. The term foreign person means a 
nonresident alien individual, a foreign corporation, a foreign 
partnership, a foreign trust, a foreign estate, and any other person 
that is not a U.S. person described in the next sentence. For purposes 
of the regulations under chapter 3 of the Code, the term foreign person 
also means, with respect to a payment by a withholding agent, a foreign 
branch of a U.S. person that furnishes an intermediary withholding 
certificate described in paragraph (e)(3)(ii) of this section. A U.S. 
person is a person described in section 7701(a)(30), the U.S. government 
(including an agency or instrumentality thereof), a State (including an 
agency or instrumentality thereof), or the District of Columbia 
(including an agency or instrumentality thereof).
    (3) Individual--(i) Alien individual. The term alien individual 
means an individual who is not a citizen or a national of the United 
States. See Sec. 1.1-1(c).
    (ii) Nonresident alien individual. The term nonresident alien 
individual means a person described in section 7701(b)(1)(B), an alien 
individual who is a resident of a foreign country under the residence 
article of an income tax treaty and Sec. 301.7701(b)-7(a)(1) of this 
chapter, or an alien individual who is a resident of Puerto Rico, Guam, 
the Commonwealth of Northern Mariana Islands, the U.S. Virgin Islands, 
or American Samoa as determined under Sec. 301.7701(b)-1(d) of this 
chapter. An alien individual who has made an election under section 6013 
(g) or (h) to be treated as a resident of the United States is 
nevertheless treated as a nonresident alien individual for purposes of 
withholding under chapter 3 of the Code and the regulations thereunder.
    (4) Certain foreign corporations. For purposes of this section, a 
corporation created or organized in Guam, the Commonwealth of Northern 
Mariana Islands, the U.S. Virgin Islands, and American Samoa, is not 
treated as a foreign corporation if the requirements of sections 
881(b)(1) (A), (B), and (C) are met for such corporation. Further, a 
payment made to a foreign government

[[Page 85]]

or an international organization shall be treated as a payment made to a 
foreign corporation for purposes of withholding under chapter 3 of the 
Code and the regulations thereunder.
    (5) Financial institution and foreign financial institution. For 
purposes of the regulations under chapter 3 of the Code, the term 
financial institution means a person described in Sec. 1.165-
12(c)(1)(iv) (not including a person providing pension or other similar 
benefits or a regulated investment company or other mutual fund, unless 
otherwise indicated) and the term foreign financial institution means a 
financial institution that is a foreign person, as defined in paragraph 
(c)(2) of this section.
    (6) Beneficial owner--(i) General rule. In the case of a payment of 
income, the term beneficial owner means the person who is the owner of 
the income for tax purposes and who beneficially owns that income. A 
person shall be treated as the owner of the income to the extent that it 
is required under U.S. tax principles to include the amount paid in 
gross income under section 61 (determined without regard to an exclusion 
or exemption from gross income under the Code). Beneficial ownership of 
income is determined under the provisions of section 7701(l) and the 
regulations under that section and any other applicable general U.S. tax 
principles, including principles governing the determination of whether 
a transaction is a conduit transaction. Thus, a person receiving income 
in a capacity as a nominee, agent, custodian for another person is not 
the beneficial owner of the income. In the case of a scholarship, the 
student receiving the scholarship is the beneficial owner of that 
scholarship. In the case of a payment of an amount that is not income, 
the beneficial owner determination shall be made under this paragraph 
(c)(6) as if the amount was income.
    (ii) Special rules for flow-through entities and arrangements--(A) 
General rule. The beneficial owners of income paid to a partnership or 
other flow-through arrangements described in paragraph (c)(6)(ii)(C) of 
this section are those persons who, under U.S. tax principles, are the 
owners of the income for tax purposes in their separate or individual 
capacities and who beneficially own that income. For example, a 
partnership (first tier) that is a partner in another partnership 
(second tier) is not the beneficial owner of income paid to the second 
tier partnership since the first tier partnership is not the owner of 
the income under U.S. tax principles. Rather, the partners of the first 
tier partnership are the beneficial owners (to the extent they are not 
themselves partnerships and are not conduits within the meaning of 
section 7701(l) and the regulations under that section). See 
Sec. 1.1441-5(b) for applicable withholding procedures for payments to a 
domestic partnership. See also Sec. 1.1441-5(c)(3)(ii) for applicable 
withholding procedures for payments to a foreign partnership where one 
of the partners (at any level in the chain of tiers) is a domestic 
partnership. See Sec. 1.1441-6(b)(4) for rules governing the eligibility 
of a payment to an entity or other arrangement for a reduced rate of 
withholding under an income tax treaty.
    (B) Trusts and estates. The provisions of paragraphs (c)(6)(i) and 
(ii)(A) of this section shall not apply to a trust or an estate, whether 
domestic or foreign. The beneficial owner of income paid to a trust or 
to an estate shall be determined under the provisions of Sec. 1.1441-
3(f) and (g) in effect prior to January 1, 2001 (see Sec. 1.1441-3(f) 
and (g) as contained in 26 CFR part 1, revised April 1, 1999).
    (C) Definition of a flow-through entity or arrangement. For purposes 
of this paragraph (c)(6)(ii), a flow-through entity means a partnership, 
estate, or trust. A flow-though arrangement is a contractual arrangement 
that does not involve an entity and is treated as a partnership for U.S. 
tax purposes or is a wholly-owned entity that is disregarded for federal 
tax purposes under Sec. 301.7701-2(c)(2) of this chapter as an entity 
separate from its owner. The term partnership means any entity or 
arrangement (as defined in Sec. 301.7701-2(c)(1) of this chapter) whose 
tax regime is governed by subchapter K of chapter 1 of the Code.
    (7) Withholding agent. For a definition of the term withholding 
agent and applicable rules, see Sec. 1.1441-7.
    (8) Person. For purposes of the regulations under chapter 3 of the 
Code, the

[[Page 86]]

term person shall mean a person described in section 7701(a)(1) and the 
regulations under that section and a U.S. branch to the extent treated 
as a U.S. person under paragraph (b)(2)(iv) of this section. For 
purposes of the regulations under chapter 3 of the Code, the term person 
does not include a wholly-owned entity that is disregarded for federal 
tax purposes under Sec. 301.7701-2(c)(2) of this chapter as an entity 
separate from its owner. See paragraph (b)(2)(iii) of this section for 
procedures applicable to payments to such entities.
    (9) Source of income. The source of income is determined under the 
provisions of part I (section 861 and following) , subchapter N, chapter 
1 of the Code and the regulations under those provisions.
    (10) Chapter 3 of the Code. For purposes of the regulations under 
sections 1441, 1442, and 1443, any reference to chapter 3 of the Code 
shall not include references to sections 1445 and 1446, unless the 
context indicates otherwise.
    (11) Reduced rate. For purposes of regulations under chapter 3 of 
the Code, and other withholding provisions of the Code, the term reduced 
rate, when used in regulations under chapter 3 of the Code, shall 
include an exemption from tax.
    (d) Beneficial owner's or payee's claim of U.S. status--(1) In 
general. Under paragraph (b)(1) of this section, a withholding agent is 
not required to withhold under chapter 3 of the Code on payments to a 
U.S. payee, to a person presumed to be a U.S. payee in accordance with 
the provisions of paragraph (b)(3) of this section, or to a person that 
the withholding agent may treat as a U.S. beneficial owner of the 
payment. Absent actual knowledge or reason to know otherwise, a 
withholding agent may rely on the provisions of this paragraph (d) in 
order to determine whether to treat a payee or beneficial owner as a 
U.S. person.
    (2) Payments for which a Form W-9 is otherwise required. A 
withholding agent may treat as a U.S. person a payee who is required to 
furnish a Form W-9 and who furnishes it in accordance with the 
procedures described in Secs. 31.3406(d)-1 through 31.3406(d)-5 of this 
chapter (including the requirement that the payee furnish its taxpayer 
identifying number (TIN)) if the withholding agent meets all the 
requirements described in Sec. 31.3406(h)-3(e) of this chapter regarding 
reliance by a payor on a Form W-9.
    (3) Payments for which a Form W-9 is not otherwise required. In the 
case of a payee who is not required to furnish a Form W-9 under section 
3406, the withholding agent may rely on a certificate of U.S. status 
described in this paragraph (d)(3). A certificate of U.S. status is a 
certificate described in Sec. 31.3406(h)-3(c)(2) of this chapter 
(relating to forms for exempt recipients) or a Form W-9 (or a substitute 
form or such other form as the IRS may prescribe) that is signed under 
penalties of perjury by the payee and contains the name, permanent 
residence address, and TIN of the payee. The procedures described in 
Sec. 31.3406(h)-2(a) of this chapter shall apply to payments to joint 
payees. A withholding agent that receives a Form W-9 in order to satisfy 
this paragraph (d)(3) must retain the form in accordance with the 
provisions of Sec. 31.3406(h)-3(g) of this chapter, if applicable, or of 
paragraph (e)(4)(iii) of this section (relating to the retention of 
withholding certificates) if Sec. 31.3406(h)-3(g) of this chapter does 
not apply. The rules of this paragraph (d)(3) are only intended to 
provide a method by which a withholding agent may determine that a payee 
is not a foreign person and do not otherwise impose a requirement that 
documentation be furnished by a person who is otherwise treated as an 
exempt recipient for purposes of the applicable information reporting 
provisions under chapter 61 of the Code (e.g., Sec. 1.6049-4(c)(1)(ii) 
for payments of interest).
    (4) Other payments. This paragraph (d)(4) describes the 
documentation upon which a withholding agent may rely in order to treat 
a payment as made to a U.S. person that is a beneficial owner for 
purposes of paragraph (b)(1) of this section. The withholding agent may 
treat the payment as made to a U.S. beneficial owner only if it can 
reliably associate the payment with documentation prior to the payment, 
if

[[Page 87]]

it complies with the electronic confirmation procedures described in 
paragraph (e)(4)(v) of this section, if required, and if it has not been 
notified by the IRS that any of the information on the withholding 
certificate or other documentation is incorrect or unreliable. In the 
case of a Form W-9 that is required to be furnished for a reportable 
payment that may be subject to backup withholding, the payor may be 
notified in accordance with section 3406(a)(1)(B) and the regulations 
under that section. See applicable procedures under that section and the 
regulations under that section for payors who have been notified with 
regard to such a Form W-9. Payors who have been notified in relation to 
other Forms W-9, including under section 6724(b) pursuant to section 
6721, may rely on the withholding certificate or other documentation 
only to the extent provided under procedures as prescribed by the IRS 
(see Sec. 601.601(d)(2) of this chapter). A withholding agent may treat 
a payment as made to a U.S. beneficial owner--
    (i) To the extent the withholding agent can reliably associate the 
payment with a Form W-9 described in paragraph (d) (2) or (3) of this 
section attached to a valid intermediary, flow-through, or U.S. branch 
withholding certificate described in paragraph (e)(3)(i) of this 
section;
    (ii) To the extent the withholding agent can reliably associate a 
payment to a qualified intermediary with the category of assets 
described in paragraph (e)(5)(v)(B)(2) of this section that the 
qualified intermediary has represented, in accordance with paragraphs 
(e) (3)(ii)(E) and (5)(v) of this section as being allocable to U.S. 
persons based on the Forms W-9 that they have furnished; or
    (iii) To the extent the withholding agent can reliably associate the 
payment with a Form W-8 from a U.S. branch described in paragraph 
(e)(3)(v) of this section that evidences an agreement between the U.S. 
branch and the withholding agent to treat the U.S. branch as U.S. 
person.
    (e) Beneficial owner's claim of foreign status--(1) Withholding 
agent's reliance--(i) In general. Absent actual knowledge or reason to 
know otherwise, a withholding agent may treat a payment as made to a 
foreign beneficial owner in accordance with the provisions of paragraph 
(e)(1)(ii) of this section. See paragraph (e)(4)(viii) of this section 
for applicable reliance rules. See paragraph (b)(4) of this section for 
a description of payments for which a claim of foreign status is 
relevant for purposes of claiming a reduced rate of withholding for 
purposes of section 1441, 1442, or 1443. See paragraph (b)(5) of this 
section for a list of payments for which a claim of foreign status is 
relevant for other purposes, such as claiming an exemption from 
information reporting under chapter 61 of the Code.
    (ii) Payments that a withholding agent may treat as made to a 
foreign person that is a beneficial owner--(A) General rule. The 
withholding agent may treat a payment as made to a foreign person that 
is a beneficial owner if it complies with the requirements described in 
paragraph (e)(1)(ii)(B) of this section and, then, only to the extent--
    (1) That the withholding agent can reliably associate the payment 
with a beneficial owner withholding certificate described in paragraph 
(e)(2) of this section furnished by the person whose name is on the 
certificate or attached to a valid foreign intermediary, flow-through 
entity, or U.S. branch withholding certificate described in paragraph 
(e)(3)(v) of this section;
    (2) That the payment is made outside the United States (within the 
meaning of Sec. 1.6049-5(e)) with respect to an offshore account (within 
the meaning of Sec. 1.6049-5(c)(1)) and the withholding agent can 
reliably associate the payment with documentary evidence described in 
Secs. 1.1441-6(c)(3) or (4), or 1.6049-5(c)(1) relating to the 
beneficial owner;
    (3) That the withholding agent can reliably associate the payment 
with the category of assets described in paragraph (e)(5)(v)(B)(1) of 
this section that the qualified intermediary has represented, in 
accordance with paragraphs (e) (3)(ii)(E) and (5)(v) of this section as 
being allocable to foreign persons for whom the qualified intermediary 
is holding valid documentation;

[[Page 88]]

    (4) That the withholding agent can reliably associate the payment 
with a withholding certificate described in Sec. 1.1441-5(c)(3)(iii) 
from a foreign partnership claiming that the payment is effectively 
connected income;
    (5) That the withholding agent identifies the payee as a U.S. branch 
described in paragraph (b)(2)(iv) of this section, the payment to which 
it treats as effectively connected income in accordance with 
Sec. 1.1441-4(a) (2)(ii) or (3);
    (6) That the withholding agent identifies the payee as an 
international organization (or any wholly-owned agency or 
instrumentality thereof) as defined in section 7701(a)(18) that has been 
designated as such by executive order (pursuant to 22 U.S.C. 288 through 
288(f)); or
    (7) That the withholding agent pays interest from bankers' 
acceptances and identifies the payee as a foreign central bank of issue 
(as defined in Sec. 1.861-2(b)(4)).
    (B) Additional requirements. In order for a payment described in 
paragraph (e)(1)(ii)(A) of this section to be treated as made to a 
foreign beneficial owner, the withholding agent must hold the 
documentation (if required) prior to the payment, comply with the 
electronic confirmation procedures described in paragraph (e)(4)(v) of 
this section (if required), and must not have been notified by the IRS 
that any of the information on the withholding certificate or other 
documentation is incorrect or unreliable. If the withholding agent has 
been so notified, it may rely on the withholding certificate or other 
documentation only to the extent provided under procedures prescribed by 
the IRS (see Sec. 601.601(d)(2) of this chapter). See paragraph 
(b)(2)(vii) of this section for rules regarding reliable association of 
a payment with a withholding certificate or other appropriate 
documentation.
    (2) Beneficial owner withholding certificate--(i) In general. A 
beneficial owner withholding certificate is a statement by which the 
beneficial owner of the payment represents that it is a foreign person 
and, if applicable, claims a reduced rate of withholding under section 
1441. A separate withholding certificate must be submitted to each 
withholding agent. If the beneficial owner receives more than one type 
of payment from a single withholding agent, the beneficial owner may 
have to submit more than one withholding certificate to the single 
withholding agent for the different types of payments as may be required 
by the applicable forms and instructions, or as the withholding agent 
may require (such as to facilitate the withholding agent's compliance 
with its obligations to determine withholding under this section or the 
reporting of the amounts under Sec. 1.1461-1 (b) and (c)). For example, 
if a beneficial owner claims that some but not all of the income it 
receives is effectively connected with the conduct of a trade or 
business in the United States, it may be required to submit two separate 
withholding certificates, one for income that is not effectively 
connected and one for income that is so connected. See Sec. 1.1441-
6(b)(4)(ii) for special rules for determining who must furnish a 
beneficial owner withholding certificate when a benefit is claimed under 
an income tax treaty. See paragraph (e)(4)(ix) of this section for 
reliance rules in the case of certificates held by another person or at 
a different branch location of the same person.
    (ii) Requirements for validity of certificate. A beneficial owner 
withholding certificate is valid only if it is provided on a Form W-8, 
or a Form 8233 in the case of personal services income described in 
Sec. 1.1441-4(b) or certain scholarship or grant amounts described in 
Sec. 1.1441-4(c) (or a substitute form described in paragraph (e)(4)(vi) 
of this section, or such other form as the IRS may prescribe). A Form W-
8 is valid only if its validity period has not expired, it is signed 
under penalties of perjury by the beneficial owner, and it contains all 
of the information required on the form. The required information is the 
beneficial owner's name, permanent residence address, and TIN (if 
required), the country under the laws of which the beneficial owner is 
created, incorporated, or governed (if a person other than an 
individual), the classification of the entity, and such other 
information as may be required by the regulations under section 1441 or 
by the form or accompanying instructions in addition to, or in lieu of, 
the

[[Page 89]]

information described in this paragraph (e)(2)(ii). A person's permanent 
residence address is an address in the country where the person claims 
to be a resident for purposes of that country's income tax. In the case 
of a certificate furnished in order to claim a reduced rate of 
withholding under an income tax treaty, the residence must be determined 
in the manner prescribed under the applicable treaty. See Sec. 1.1441-
6(b)(4)(i). The address of a financial institution with which the 
beneficial owner maintains an account, a post office box, or an address 
used solely for mailing purposes is not a residence address for this 
purpose. If the beneficial owner is an individual who does not have a 
tax residence in any country, the permanent residence address is the 
place at which the beneficial owner normally resides. If the beneficial 
owner is not an individual and does not have a tax residence in any 
country, then the permanent residence address is the place at which the 
person maintains its principal office. See paragraph (e)(4)(vii) of this 
section for circumstances in which a TIN is required on a beneficial 
owner withholding certificate. See paragraph (f)(2)(i) of this section 
for continued validity of certificates during a transition period.
    (3) Intermediary, flow-through, or U.S. branch withholding 
certificate--(i) In general. An intermediary withholding certificate is 
a Form W-8 by which a payee represents that it is a foreign person and 
that it is an intermediary with respect to a payment and not the 
beneficial owner. A flow-through withholding certificate is a Form W-8 
furnished by a flow-through entity under Sec. 1.1441-5(c)(2) or (3) for 
a partnership or under Sec. 1.1441-5(e) for a foreign estate or trust. 
See paragraph (c)(6)(ii)(C) of this section for a definition of a flow-
through entity. A U.S. branch certificate is a Form W-8 by which the 
payee represents that it is a U.S. branch described in paragraph 
(b)(2)(iv) (A) or (E) of this section and that the payment is not 
effectively connected with the conduct of its trade or business in the 
United States. An intermediary withholding certificate is used by an 
intermediary either to make representations regarding the status of 
beneficial owners of the amount paid or to transmit appropriate 
documentation to the withholding agent. A flow-through certificate is 
used by a flow-through entity to establish its status as a foreign 
person or the status of its partners or beneficiaries, if required, and, 
if applicable, to claim a reduced rate of withholding. An intermediary 
means, with respect to a payment that it receives, a person that, for 
that payment, acts as a custodian, broker, nominee, or otherwise as an 
agent for another person, regardless of whether such other person is the 
beneficial owner of the amount paid, a flow-through entity, or another 
intermediary. See paragraph (e)(4)(viii) of this section for applicable 
reliance rules.
    (ii) Intermediary withholding certificate from a qualified 
intermediary. An intermediary withholding certificate from a person 
representing to be a qualified intermediary (described in paragraph 
(e)(5)(ii) of this section) is valid only if it is furnished on a Form 
W-8 (or an acceptable substitute form or such other form as the IRS may 
prescribe), it is signed under penalties of perjury by an officer of the 
qualified intermediary with authority to sign for the intermediary, its 
validity has not expired, and it contains the following information, 
statement, and certifications:
    (A) The name, permanent residence address (as described in paragraph 
(e)(2)(ii) of this section), and the employer identification number of 
the intermediary, and the country under the laws of which the 
intermediary is created, incorporated, or governed.
    (B) A certification that the person whose name is on the Form W-8 is 
not acting for its own account and is acting as a qualified intermediary 
within the meaning of paragraph (e)(5)(ii) of this section.
    (C) A certification that the intermediary has obtained the 
appropriate certificates (such as Forms W-8 or W-9) or other appropriate 
documentation in the manner required in its withholding agreement with 
the IRS for those account holders that are covered by the certificate 
and whose assets are identified as being allocable to the categories 
described in paragraph (e)(5)(v)(B) (1) or (2) (in accordance with 
paragraph (e)(5)(v) of this section or otherwise).

[[Page 90]]

    (D) A certification whether the qualified intermediary is assuming 
primary withholding responsibility for the amounts to which the 
certificate relates.
    (E) A statement attached to the certificate that provides such 
information as may be required by the form and accompanying 
instructions, including sufficient information for the withholding agent 
to determine the amount required to be withheld from amounts paid to the 
intermediary and reported to the IRS. See paragraph (e)(5)(v) of this 
section for requirement of a statement and rules applicable thereto.
    (F) Any other information or certification as may be required by the 
form or accompanying instructions in addition to, or in lieu of, the 
information and certifications described in this paragraph (e)(3)(ii).
    (iii) Intermediary withholding certificate from an intermediary that 
is not a qualified intermediary. An intermediary withholding certificate 
from a person that does not represent to be a qualified intermediary 
within the meaning of paragraph (e)(5)(ii) of this section is valid only 
if it is furnished on a Form W-8 (or an acceptable substitute form, or 
such other form as the IRS may prescribe), it is signed under penalties 
of perjury by a person authorized to sign for the intermediary, it 
contains the information, statement, and certifications described in 
this paragraph (e)(3)(iii), its validity has not expired, and the 
withholding certificates and other appropriate documentation for all the 
persons to whom the certificate relates are attached to the certificate. 
Appropriate documentation consists of beneficial owner withholding 
certificates described in paragraph (e)(2)(i) of this section, 
intermediary withholding certificates described in paragraph (e)(3)(i) 
of this section, flow-through certificates described in Sec. 1.1441-
5(c)(2)(iv), (3)(iii), and (e), documentary evidence described in 
Sec. 1.1441-6(b)(2)(i) or in Sec. 1.6049-5(c)(1) related to the 
beneficial owner (or documentary evidence described in Sec. 1.6049-
5(c)(4) for purposes of information reporting under chapter 61 of the 
Code), and other documentation or certificate applicable under other 
provisions of the Code or regulations that certify or establish the 
status of the payee or beneficial owner as a U.S. or a foreign person. 
If the intermediary is acting on behalf of another intermediary that is 
not a qualified intermediary or on behalf of a partnership that is not a 
withholding foreign partnership described in Sec. 1.1441-5(c)(2)(i), 
then the intermediary must attach to its own withholding certificate the 
intermediary withholding certificate or the partnership withholding 
certificate to which all the withholding certificates and other 
appropriate documentation required to be attached under this paragraph 
(e)(3)(iii) or in Sec. 1.1441-5(c)(3)(iii) or (e) are also attached. 
Nothing in this paragraph (e)(3)(iii) shall require an intermediary to 
furnish original documentation. Copies of certificates or documentary 
evidence may be passed up to the U.S. withholding agent, in which case 
the intermediary must retain the original documentation for the same 
time period that the copy is required to be retained by the withholding 
agent under paragraph (e)(4)(iii) of this section and must provide it to 
the withholding agent upon request. For purposes of this paragraph 
(e)(3)(iii), a valid intermediary withholding certificate also includes 
a statement described in Sec. 1.871-14(c)(2)(v) furnished in order for 
interest to qualify as portfolio interest for purposes of sections 
871(h) and 881(c) or in order for amounts described in Sec. 1.1441-
6(b)(2)(ii) to qualify as amounts paid to a foreign person. The 
information and certification required on a Form W-8 described in this 
paragraph (e)(3)(iii) (or on an acceptable substitute form or such other 
form as the IRS may prescribe) are as follows:
    (A) The name and permanent resident address (as described in 
paragraph (e)(2)(ii) of this section) of the intermediary, and the 
country under the laws of which the intermediary is created, 
incorporated, or governed.
    (B) A certification that the person whose name is on the Form W-8 is 
not acting for its own account and is using the certificate as a form to 
transmit withholding certificates and other appropriate documentation 
for the payment to which the form relates.

[[Page 91]]

    (C) If furnishing an intermediary certificate to transmit 
withholding certificates or other appropriate documentation for more 
than one person, a statement attached to the Form W-8 that provides such 
information as may be required by the form and accompanying 
instructions, including sufficient information for the withholding agent 
to determine the amount required to be withheld from amounts paid to the 
intermediary. See paragraph (e)(3)(iv) of this section for rules 
applicable to such a statement.
    (D) A certification either that the attached withholding 
certificates and other appropriate documentation represent all of the 
persons to whom the intermediary withholding certificate relates or that 
the amounts allocable to persons covered by the intermediary withholding 
certificate and for whom withholding certificates or other appropriate 
documentation are lacking or unreliable are separately identified.
    (E) Any other information or certification as may be required by the 
form or accompanying instructions in addition to, or in lieu of, the 
information and certification described in this paragraph (e)(3)(iii).
    (iv) Information to the withholding agent regarding assets owned by 
beneficial owners, etc.--(A) General rule. An intermediary that has not 
represented that it is acting as a qualified intermediary within the 
meaning of paragraph (e)(5)(ii) of this section must provide information 
sufficient for the withholding agent to determine the proportion of each 
payment of reportable amounts (as described in paragraph (e)(3)(vi) of 
this section) that is allocable to each person to whom the intermediary 
withholding certificate relates, including persons for whom the 
intermediary has not attached a withholding certificate or other 
appropriate documentation. The withholding agent may rely on such 
information in order to determine the amount of withholding on the 
payment and how to r