Standards of Knowledge for Purposes

You must withhold in accordance with the presumption rules (discussed later) if you know or have reason to know that a withholding certificate or documentary evidence provided by a payee is unreliable or incorrect to establish the payee’s status for chapter 3 purposes. If you rely on an agent to obtain documentation, you are considered to know, or have reason to know, the facts that are within the knowledge of your agent for this purpose. If you receive notification from the IRS that a payee’s claim of status for chapter 3 purposes is incorrect or unreliable, you may not rely upon the claim except to the extent indicated by the IRS.

Reason To Know

In general, you are considered to have reason to know that a claim of U.S. status or of a reduced rate of withholding is incorrect if statements contained in the withholding certificate or other documentation, or other relevant facts of which you have knowledge, would cause a reasonably prudent person in your position to question the claims made.

For an obligation that is not a preexisting obligation (that is, an obligation, including an account, held by an individual that is outstanding on June 30, 2014, or an obligation, including an account, held by an entity that is opened, executed, or issued before January 1, 2015), you have reason to know that an account holder’s chapter 3 claim is unreliable or incorrect if any information contained in your account opening files or other account information conflicts with the account holder’s claim. For an obligation other than a preexisting obligation, you will not be considered to have reason to know that a person’s chapter 3 claim is unreliable or incorrect based on documentation collected for anti-money laundering (AML) purposes until 30 days after the obligation is executed, or 30 days after the account is opened for such person, whichever is applicable.

FIs, insurance companies, or brokers or dealers in securities have reason to know that documentation provided by a direct account holder is unreliable or incorrect only in the circumstances discussed next. If the documentation is considered unreliable or incorrect, you must get new documentation to support the payee’s claimed status or may rely on the original documentation if you receive the additional statements and/or documentation discussed later and are a withholding agent described above with respect to a direct account holder (defined in Regulations section 1.1441-7(b)(3)(i)). Such documentation is described in Regulations section 1.1471-3(c)(5)(i).

The circumstances, discussed next, also apply to other withholding agents. However, these withholding agents are not limited to these circumstances in determining if they have reason to know that documentation is unreliable or incorrect. These withholding agents cannot base their determination on the receipt of additional statements or documents. They need to get new documentation.

Withholding Certificates

You have reason to know that a Form W-8 provided by a direct account holder that is a foreign person is unreliable or incorrect if:

The Form W-8 is incomplete with respect to any item on the form that is relevant to the claims made by the account holder;
The Form W-8 contains any information that is inconsistent with the account holder’s claim;
The Form W-8 lacks information necessary to establish entitlement to a reduced rate of withholding, if a reduced rate is claimed; or

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You have information not contained on the form that is inconsistent with the claims made on the form.

The rules below apply to withholding agents that are FIs, insurance companies, or brokers or dealers in securities.

Limits on reason to know for preexisting obligations. With respect to a preexisting obligation (that is, an obligation, including an account, held by an individual that is outstanding on June 30, 2014, or an obligation, including an account, held by an entity that is opened, executed, or issued before January 1, 2015), if you have documented the foreign status of an account holder for purposes of chapter 3 or 61 prior to July 1, 2014, you may continue to rely on that documentation. In addition, if you make a payment to a new entity account holder that you treat as a preexisting entity account under Notice 2014-33, 2014-21 I.R.B. 1006, available at IRS.gov/irb/ 2014-21_IRB#NOT-2014-33, you may apply the standards of knowledge in Regulations sections 1.1441-7(b)(5) and (b)(8) that were applicable prior to the issuance of the temporary regulations. See Notice 2014-59, 2014-44 I.R.B. 747, available at IRS.gov/irb/ 2014-44_IRB#NOT-2014-59 . However, if you review documentation for an individual account holder claiming foreign status that contains a U.S. place of birth or if you are notified of a change in circumstances, the obligation will be treated as having a change in circumstances as of the date you review the documentation or receive the notification, and you will then have reason to know that the documentation is unreliable or incorrect. However, if you are reviewing documentation provided by an entity before January 1, 2015, you will not be required to treat the additional U.S. indicia added to Regulations section 1.1441-7(b) by the temporary regulations as a change in circumstances. See Notice 2014-59 for more information.

Establishment of foreign status by certain withhold- ing agents. You have reason to know that a Form W-8BEN or W-8BEN-E is unreliable or incorrect to establish a direct account holder’s status as a foreign person if:

The Form W-8 has a current permanent residence address in the United States,
The Form W-8 has a current mailing address in the United States,
You have a current residence or current mailing address as part of your account information that is an address in the United States,
The account holder notifies you of a new residence or mailing address in the United States,
You have classified the account holder as a U.S. person in your account information, or
You have a current telephone number for the account holder in the United States and no telephone number for the account holder outside the United States (only to the extent described in Regulations section 1.1441-7(b)(5)).

You may, however, rely on a Form W-8 as establishing the account holder’s foreign status if any of the following apply.

You receive the Form W-8BEN from an individual and:

a. You possess or obtain documentary evidence

(that does not contain a U.S. address) that supports the claim of foreign status, and the individual provides you with a reasonable explanation, in writing, supporting the claim of foreign status;

b. If you make a payment outside the United States

with respect to an offshore obligation and you possess or obtain documentary evidence establishing foreign status that does not contain a U.S. address;

c. With respect to an offshore obligation, if you clas sify the individual as a resident of the country where the obligation is maintained and you are required to report payments to the individual annually to the tax authority of the country where the obligation is maintained and that country has a tax treaty or information exchange agreement in effect with the United States; or

d. You have classified the account holder as a U.S

person in your account information and you possess or obtain documentary evidence evidencing citizenship in a country other than the United States.

You receive the Form W-8BEN-E from an entity that is not a flow-through entity and:

a. You have in your possession or obtain documenta tion establishing foreign status that substantiates that the entity is organized or created under foreign law; or

b. With respect to an offshore obligation, if you clas sify the entity as a resident of the country where the obligation is maintained and you are required to report payments to the entity annually to the tax authority of the country where the obligation is maintained and that country has a tax treaty or information exchange agreement in effect with the United States.

The account holder (whether an individual or an entity) has provided standing instructions to make payments with respect to an offshore obligation to an address in, or an account maintained in, the United States, unless the account holder provides a reasonable explanation, in writing, that supports its foreign status or provides documentary evidence supporting its foreign status.
If an individual account holder provides a Form W-8BEN to establish the individual’s foreign status, and you have, either as an accompanying documentation or as part of your account information, an unambiguous indication of a place of birth for the individual in the United States, you may not rely on the Form W-8BEN unless you possess or obtain documentary

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evidence evidencing citizenship in a country other than the United States, and either (i) a copy of the individual’s Certificate of Loss of Nationality of the United States, or (ii) a reasonable written explanation for the individual’s renunciation of U.S. citizenship (or, under an applicable IGA, the reason the individual does not have a Certificate of Loss of Nationality of the United States despite relinquishing its U.S. citizenship), or the reason the individual did not obtain U.S. citizenship at birth.

Claim of reduced rate of withholding under treaty by certain withholding agents. You have reason to know that a Form W-8BEN or W-8BEN-E provided by a direct account holder to claim a reduced rate of withholding under a treaty is unreliable or incorrect for purposes of establishing the account holder’s residency in a treaty country if:

The permanent residence address on the Form W-8 is not in the treaty country or the beneficial owner notifies you of a new permanent residence address that is not in the treaty country,
The permanent residence address on the Form W-8 is in the treaty country but the withholding certificate (or your account information) contains a mailing address that is not in the treaty country,
You have a current mailing address in your account information outside the treaty country, or
The account holder has standing instructions for you to pay amounts from its account to an address or an account not in the treaty country.

You may, however, rely on a Form W-8 as establishing an account holder’s claim of a reduced rate of withholding under a treaty if any of the following apply.

The permanent residence address is not in the treaty country and:

a. The account holder provides a reasonable explan ation for the permanent residence address outside the treaty country, or

b. You possess or obtain documentary evidence de scribed in Regulations section 1.1471-3(c)(5)(i) that establishes residency in a treaty country.

The mailing address is not in the treaty country and:

a. You possess or obtain documentary evidence de scribed in Regulations section 1.1471-3(c)(5)(i) (that does not contain an address outside the treaty country) supporting the beneficial owner’s claim of residence in the treaty country,

b. You possess or obtain documentation that estab lishes that the beneficial owner is an entity organized in a treaty country,

c. You know that the address outside the treaty coun try is a branch of the account holder that is a resident of the treaty country, or

You have instructions to pay amounts outside the treaty country and the account holder gives you a reasonable explanation, in writing, establishing residence in the applicable treaty country or you possess or obtain documentary evidence described in Regulations section 1.1471-3(c)(5)(i) establishing the account holder’s residence in the treaty country.

Hold mail instruction. An address that is provided subject to an instruction to hold all mail to that address is not a permanent residence address such that you may not rely upon the Form W-8. However, the address can be used as a permanent residence address if the person has provided you with the documentary evidence that is permitted under Regulations section 1.1441-1(c)(38)(ii). If, after a Form W-8 is provided, a person’s permanent residence address is subsequently subject to a hold mail instruction, this is a change in circumstances requiring the person to provide the documentary evidence described in the preceding sentence in order to use the address as a permanent residence address.

Documentary Evidence

You have reason to know that documentary evidence provided by a direct account holder to support a claim of foreign status is unreliable or incorrect if:

The documentary evidence does not reasonably establish the identity of the person presenting the documentary evidence;
The documentary evidence contains information that is inconsistent with the account holder’s claim of a reduced rate of withholding; or
You have account information that is inconsistent with the account holder’s claim of a reduced rate of withholding, or the documentary evidence lacks information necessary to establish a reduced rate of withholding. For example, the documentary evidence does not contain, or is not supplemented by, statements regarding the derivation of the income or compliance with LOB provisions in the case of an entity claiming treaty benefits.

Establishment of foreign status. You have reason to know that documentary evidence is unreliable or incorrect to establish a direct account holder’s status as a foreign person if any of the following apply.

For documentary evidence received prior to January 1, 2001, if you have actual knowledge that the account holder is a U.S. person or if you have a mailing or residence address for the account holder in the United States.
For documentary evidence received after December 31, 2000, if you do not have a permanent residence address for the account holder, if you have classified the account holder as a U.S. person in your account

d. You obtain a written statement from the beneficial

owner that reasonably establishes its entitlement to treaty benefits.

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information, if you have a current mailing or current permanent residence address (whether or not on the documentation) for the account holder in the United States, if the account holder notifies you of a new residence or mailing address in the United States, or if you have a current telephone number for the account holder in the United States and no telephone number for the account holder outside the United States.

If the account holder is an individual and you have, either on the documentary evidence or as part of your account information, an unambiguous place of birth for the individual in the United States.
With respect to an offshore obligation, the account holder has standing instructions directing you to pay amounts from the account to an address or account maintained in the United States.

You may, however, rely on documentary evidence as establishing an account holder’s foreign status if any of the following apply.

The mailing or residence address or sole telephone number is in the United States, you receive the documentary evidence from an individual, and:

a. You possess or obtain additional documentary evi dence (that does not contain a U.S. address) supporting the claim of foreign status and a reasonable explanation, in writing, supporting the account holder’s foreign status;

b. You obtain a Form W-8 that contains a permanent

residence address and mailing address outside the United States (or, if a mailing address is inside the United States, the account holder provides a reasonable explanation, in writing, supporting the account holder’s foreign status); or

c. For a payment made with respect to an offshore

obligation, if you classify the individual as a resident of the country where the obligation is maintained, you are required to report a payment made to the individual annually on a tax information statement filed with that country’s tax authority as part of the resident reporting requirements, and that country has a tax information exchange agreement or income tax treaty in effect with the United States.

The mailing or residence address or sole telephone number is in the United States, you receive the documentary evidence from an entity (other than a flow-through entity), and:

a. You possess or obtain documentation to substanti ate that the entity is actually organized or created under the laws of a foreign country;

b. You obtain a valid Form W-8 that contains a per manent residence address and mailing address outside the United States (or, if a mailing address is inside the United States, the account holder provides a reasonable explanation, in writing, supporting the account holder’s foreign status); or

You have instructions to pay amounts to an address or an account in the United States and the account holder provides you with a reasonable explanation, in writing, that supports the account holder’s foreign status or a valid beneficial owner withholding certificate claiming foreign status.
You have an unambiguous place of birth in the United States for an individual account holder and you possess or obtain documentary evidence demonstrating the individual’s citizenship in a country other than the United States and a copy of the individual’s Certificate of Loss of Nationality of the United States. Alternatively, you may treat such an individual as a foreign person if you obtain a valid beneficial owner withholding certificate that establishes the individual’s foreign status, documentary evidence evidencing citizenship in a country other than the United States, and a reasonable explanation, in writing, of the individual’s renunciation of U.S. citizenship (or, under an applicable IGA, the reason the individual does not have a Certificate of Loss of Nationality of the United States despite relinquishing U.S. citizenship) or the reason the individual did not obtain U.S. citizenship at birth.

Claim of reduced rate of withholding under treaty. You have reason to know that documentary evidence provided by a direct account holder to claim a reduced rate of withholding under a treaty is unreliable or incorrect for purposes of establishing the account holder’s residency in a treaty country if:

You have a mailing or residence address for the account holder that is outside the applicable treaty country,
You have no permanent residence for the account holder, or
The account holder has standing instructions for you to pay amounts from its account to an address or account not in the treaty country.

You may, however, rely on documentary evidence as establishing an account holder’s claim of a reduced rate of withholding under a treaty if any of the following apply.

The mailing or residence address is outside the treaty country and:

a. You possess or obtain additional documentary evi dence supporting the account holder’s claim of residence in the treaty country (and the documentary evidence does not contain an address outside the treaty country, a P.O. box, an in-care-of address, or the address of an FI),

c. For a payment made with respect to an offshore

obligation, if you classify the entity as a resident of the country where the obligation is maintained and you are required to report a payment made to the entity annually on a tax information statement filed with that country’s tax authority as part of the resident reporting requirements, and that country has a tax information exchange agreement or income tax treaty in effect with the United States.

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b. You possess or obtain documentary evidence that

establishes that the account holder is an entity organized in a treaty country, or

c. You obtain a valid Form W-8 that contains a per manent residence address and a mailing address in the applicable treaty country.

You have instructions to pay amounts outside the treaty country and the account holder gives you a reasonable explanation, in writing, establishing residence in the applicable treaty country or a valid beneficial owner withholding certificate that contains a permanent residence address and a mailing address in the applicable treaty country.

Indirect Account Holders’ Chapter 3 Status

A withholding agent that receives documentation from a payee through an NQI, a flow-through entity, a 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 Commissioners with the Insurance Department of any U.S. state, a U.S. territory, or the District of Columbia, or a territory financial institution (other than a U.S. branch treated as a U.S. person) has reason to know that the documentary evidence is unreliable or incorrect for purposes of a claim of foreign status or a treaty claim if a reasonably prudent person in the withholding agent’s position would question the claims made. This standard requires, but is not limited to, compliance with the following rules.

Withholding statement. You must review the withholding statement provided with Form W-8IMY and may not rely on information in the statement to the extent the information does not support the claims made for a payee. You may not treat a payee as a foreign person if a U.S. address is provided for the payee. You may not treat a person as a resident of a country with which the United States has an income tax treaty if the address for the person is outside the treaty country.

You may, however, treat a payee as a foreign person and may treat a foreign person as a resident of a treaty country if the withholding statement is accompanied by a valid withholding certificate and documentary evidence or a reasonable explanation is provided, by the NQI, flow-through entity, or U.S. branch supporting the payee’s foreign status or residency in a treaty country.

Withholding certificate. If you receive a Form W-8 for a payee in association with a Form W-8IMY, you must review each Form W-8 and verify that the information is consistent with the information on the withholding statement. If there is a discrepancy, you may rely on the Form W-8, if valid, and instruct the NQI, flow-through entity, or U.S. branch to correct the withholding statement, or, alternatively, you may apply the presumption rules, discussed later in Presumption Rules , to the payee.

If you choose to rely on the withholding certificate, you must, in addition to instructing the NQI, flow-through entity, or U.S. branch to correct the withholding statement,

instruct the NQI, flow-through entity, or U.S. branch to confirm that it does not know or have reason to know that the withholding certificate is unreliable or inaccurate.

Documentary evidence. If you receive documentary evidence for a payee in association with a Form W-8IMY, you must review the documentary evidence provided by the NQI, flow-through entity, or U.S. branch to determine that there is no obvious indication that the payee is a U.S. person subject to Form 1099 reporting or that the documentary evidence does not establish the identity of the person who provided the documentation (for example, the documentary evidence does not appear to be an identification document).