SECTION 5. DOCUMENTATION REQUIREMENTS

Sec. 5.01. Documentation Required For Withholding Rate Reduction. QI shall not reduce the rate of withholding, or instruct a withholding agent to reduce the rate of withholding, that applies under the presumption rules to a payment of a reportable amount unless QI can reliably associate the payment, within the meaning of Treas. Reg. §1.1441–1(b)(2)(vii), with valid documentation described in this section 5. QI shall obtain, review, and maintain documentation in accordance with this section 5 and, for documentary evidence, in accordance with the laws and procedures set forth in the Attachments to this Agreement. QI shall make Forms W8, Forms W-9, and documentary evidence (together with any attachments to those documents) available upon request for inspection by the external auditor designated in Appendix B of this Agreement. See section 5.13 of this Agreement if documentation for an account holder is lacking or unreliable.

Sec. 5.02. Reliance on Forms W-8 or W-9. Subject to the due diligence procedures described in section 5.11 of this Agreement, QI may rely upon a valid Form W-8 or Form W-9 furnished by an account holder to determine whether the account holder is a foreign or U.S. person, and, if appropriate, whether the account holder is entitled to a reduced rate of withholding.

Sec. 5.03. Documentary Evidence. In lieu of relying on a Form W-8, QI may determine whether an account holder that is a beneficial owner is a foreign person on the basis of documentary evidence of the type described in the Attachments to this Agreement. QI may not, however, rely on documentary evidence for those persons described in sections 5.06, 5.07, 5.08, and 5.09 of this Agreement. Reliance on documentary evidence is subject to the due diligence requirements of section 5.11 of this Agreement. Documentary evidence may also form the basis for a foreign beneficial owner’s claim to a reduced rate of withholding under an income tax treaty, provided that the documentation is supplemented with a statement described in section 5.04 of this Agreement, and provided that a taxpayer identification number is obtained when required pursuant to section 5.05 of this Agreement. Documentary evidence need not be obtained under penalties of perjury. QI shall notify the IRS of any changes (whether or not material) in the laws and procedures set forth in the Attachments to this Agreement. QI may also rely upon documentary evidence to determine if an account holder is a U.S. exempt recipient. Nothing in this section 5.03, however, shall relieve QI of the responsibility for obtaining Form W9 from account holders that are U.S. non-exempt recipients.

Sec. 5.04. Limitation on Benefits and Section 894 Representations. If an account holder that is a beneficial owner (other than an individual) claims, based on documentary evidence, entitlement to a reduced rate of withholding under an income tax treaty, QI must obtain a statement that the account holder meets the Limitation on Benefits article, if any, contained in the applicable income tax treaty. In addition, the account holder must state that it derives the income within the meaning of Treas. Reg. §1.894-1T(d) for which it claims a treaty benefit as a resident of the applicable treaty country, it is the beneficial owner of that payment, and that it meets all other applicable requirements for the benefits claimed. The statements need not be made under penalties of perjury and may be made as part of an account opening statement.

Sec. 5.05. TIN Requirement. Notwithstanding Treas. Reg. §1.1441–6(b)(1), providing that a withholding agent must require a taxpayer identification number before reducing the rate of withholding on certain payments, QI shall require a taxpayer identification number only for those account holders who meet the criteria for disclosure as set forth in section 10.02(D) of this Agreement.

Sec. 5.06. Documentation for International Organizations. QI shall treat an account holder as an international organization (as defined under section 7701(a)(18) of the Code), exempt from taxation under section 892 of the Code only if it obtains a Form W8EXP or if the account holder’s name is one that is designated as an international organization by executive order pursuant to 22 United States Code 288 through 288(f) and other facts surrounding the transaction reasonably indicate that the international organization is the beneficial owner of the payment.

Sec. 5.07. Documentation for Foreign Governments. QI shall treat an account holder as a foreign government or foreign central bank of issue exempt from taxation under section 892 or 895 of the Code, only if it has obtained a Form W-8EXP from the account holder.

1999–5 I.R.B. 39 February 1, 1999

Sec. 5.08. Documentation for Foreign Tax-Exempt Organizations. QI shall treat an account holder as a foreign organization exempt from tax under section 501(c) of the Code or, if a foreign private foundation, subject to withholding at a 4 percent rate under section 1443(b) of the Code, only if QI obtains a Form W-8EXP from the account holder. Further, QI shall treat a foreign organization as tax-exempt pursuant to a treaty only if QI obtains a Form W-8BEN from the organization.

Sec. 5.09. Documentation From Intermediaries. QI shall obtain the following documentation from any person that is an intermediary or foreign partnership:

(A) Nonqualified Intermediaries and Foreign Partnerships (Other Than Withholding Foreign Partnerships). If the account holder is a nonqualified intermediary or a foreign partnership (other than a withholding foreign partnership), QI shall obtain from the nonqualified intermediary or foreign partnership a Form W-8IMY (as required under Treas. Reg. § 1.1441–1(e)(3)(iii)). QI may rely on the Form W-8IMY, and the attachments to that form, received from the nonqualified intermediary or foreign partnership as the basis for the information that QI furnishes to a withholding agent under section 7 of this Agreement.

(B) Qualified Intermediaries and Withholding Foreign Partnerships. If the account holder is a qualified intermediary or withholding foreign partnership, QI shall obtain from the qualified intermediary or withholding foreign partnership a Form W-8-IMY (as required under Treas. Reg. §1.1441–1(e)(3)(ii) or §1.1441–5(c)(2)(iv)). QI may rely upon the Form W-8IMY, and the attachments to that form, received from the qualified intermediary or withholding foreign partnership as the basis for the information that QI furnishes to a withholding agent under section 7 of this Agreement. QI is not required to obtain documentation from the qualified intermediary or withholding foreign partnership’s account holders.

(C) Private Arrangement Intermediaries. If QI has an agreement with a PAI, the PAI shall furnish QI a Form W-8IMY completed as if it were a qualified intermediary, with the exception that the PAI must not provide a QI-EIN on the Form W-8IMY. Further, the PAI must attach to its Form W-8IMY a statement that provides the information required under section 10 rather than section 7 of this Agreement. QI may rely on the Form W-8IMY, and the attachments to that form, received from the PAI as the basis for the information that QI furnishes to a withholding agent under section 7 of this Agreement. QI is not required to obtain documentation from the PAI’s account holders.

Sec. 5.10. Documentation Validity Period. QI may rely on a Form W-8 until its validity expires under Treas. Reg. §1.14411(e)(4)(ii). QI may rely on a Form W-9 as long as it may reasonably rely on the form under the rules of Treas. Reg. §31.3406(h)3(e). QI may rely on documentary evidence obtained in accordance with this section 5 for as long as the documentary evidence remains valid under the laws and procedures set forth in the Attachments to this Agreement, or until QI knows, or has reason to know, that the information contained in the documentary evidence is incorrect.

Sec. 5.11. Due Diligence Requirements. (A) In General. QI may rely on documentation provided to it by an account holder unless and until QI has actual knowledge or reason to know that the information or statements contained in the documentation are unreliable or incorrect. If QI discovers that information contained in documentation is unreliable or incorrect, or if QI discovers it has not conveyed information contained in documentation accurately to a withholding agent, QI must provide the corrected information to the withholding agent, to the extent necessary for the withholding agent to make any changes to QI’s classes of assets, within 30 days after QI discovers that the information or statement is unreliable or incorrect. See section 8.01 of this Agreement for QI’s responsibility to withhold on amounts for which QI knows, or has reason to know, that the withholding agent underwithheld. If QI receives notification from the IRS that claim of U.S. or foreign status, or, if applicable, a reduced rate of withholding, is incorrect, QI is treated as having actual knowledge on the date that is 30 calendar days after the date it receives the notice.

(B) Reason to know. QI shall be considered to have reason to know that relevant facts or statements contained in documentation are unreliable or incorrect if a reasonably prudent person in the position of a withholding agent would question the claims made.

(C) Limitation on Reason to Know. For payments described in this section 5.11(C), QI has reason to know that documentation is not reliable only if any one or more of the circumstances described in Treas. Reg. §1.1441–7(b)(2)(ii) exist. QI may rely upon the documentation, however, if additional documentation is provided that supports the account holder’s claims. This paragraph (C) applies to the following types payments:

• Dividends and interest from stocks and debt obligations that are actively traded within the meaning of section 1092(d) of the Code;

• Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (15 United States Code 80a-1);

• Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the Securities and Exchange Commission under the Securities Act of 1933 (15 United States Code 77a); and

• Amounts paid with respect to loans of the securities described above.

February 1, 1999 40 1999–5 I.R.B.

Sec. 5.12. Maintenance, and Retention of Documentation.

(A) Maintaining Documentation. QI shall maintain documentation by retaining the original, certified copy, photocopy, or microfiche or similar means of record retention of the documentation and noting in its records the date on which, and by whom, the document was received and reviewed.

(B) Retention Period. QI shall retain an account holder’s documentation obtained under this section 5 (other than Form W-9) until the expiration of the statute of limitations for the assessment of tax under section 6501 of the Code has expired for the Form 1042 that includes a payment made to that account holder. QI shall retain an account holder’s Form W-9 for the period specified in Treas. Reg. §31.3406(h)–3(g).

Sec. 5.13. Application of Presumption Rules. QI shall apply the presumption rules of Treas. Reg. §§ 1.1441-1(b)(3), 1.1441-4(a), 1.1441–5(d) and (e), 1.1441–9(b)(3) and 1.6049–5(d) to payments made to an account holder for whom it holds no documentation or holds documentation on which it can not rely.