Documentation for Chapter 3

For purposes of chapter 3, in most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following.

• The payee is a U.S. person.

• The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding under the Internal Revenue Code, or an applicable income tax treaty.

For rules related to when a withholding agent may rely on an otherwise valid withholding certificate received electronically from a third-party repository, see Regulations section 1.1441-1(e)(4)(iv)(E).

If withholding is applied under chapter 4 on a payment, no withholding will be required on such payment under chapter 3.