Standards of Knowledge for Purposes

If you make a withholdable payment, 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 the payee is unreliable or incorrect to establish a payee’s chapter 4 status. 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.

Notification by the IRS

If you receive notification from the IRS that a claim of status as a U.S. person, a participating FFI, a deemed-compliant FFI, or other entity entitled to a reduced rate of withholding under chapter 4 is incorrect, you are considered to have knowledge that such a claim is incorrect beginning 30 days after you receive the notice.

GIIN Verification

If you have received a Form W-8BEN-E or Form W-8IMY from an entity payee that is claiming certain chapter 4 statuses, you must obtain and verify the entity’s GIIN against the published IRS FFI list. The IRS FFI list can be found at IRS.gov/FATCA-FFIList . You must obtain and verify against the published IRS FFI list a GIIN for the following chapter 4 statuses.

Participating FFIs (including reporting Model 2 FFIs).
Registered deemed-compliant FFIs (including reporting Model 1 FFIs).
Sponsored FFIs.
Direct reporting NFFEs.
Sponsored direct reporting NFFEs.
Certain nonreporting IGA FFIs (as described below).

If you receive a Form W-8BEN-E or Form W-8IMY from a nonreporting IGA FFI that is a trustee-documented trust with a foreign trustee, you must obtain the GIIN of a foreign trustee, but you are not required to verify the GIIN. The GIIN that the trustee must provide is the GIIN that it

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received when it registered as a participating FFI or reporting Model 1 FFI, not the GIIN that it received when it registered as a trustee of a trustee-documented trust.

If you receive a Form W-8BEN-E or Form W-8IMY from a nonreporting IGA FFI that checks Model 2 IGA in Part XII of Form W-8BEN-E or Part XIX of Form W-8IMY (as applicable) and identifies a category of entity that is a registered deemed-compliant FFI under Annex II of an applicable Model 2 IGA, you must obtain and verify the GIIN of the nonreporting IGA FFI. Additionally, if you receive a Form W-8BEN-E or Form W-8IMY from a nonreporting IGA FFI that provides a citation to a section of the regulations for its registered deemed-compliant status in Part XII of Form W-8BEN-E or Part XIX of Form W-8IMY (as applicable), you must obtain and verify the GIIN of the nonreporting IGA FFI. You will have reason to know that such payee is not such an FI if the payee’s name (including a name reasonably similar to the name the withholding agent has on file for the payee) and GIIN do not appear on the most recently published IRS FFI list within 90 days of the date that the claim is made.

If you receive a Form W-8BEN-E or Form W-8IMY from an entity payee and the form contains “Applied for” in the box for the GIIN, the payee must provide you its GIIN within 90 days of providing the form. A Form W-8BEN-E or Form W-8IMY from such payee that does not include a GIIN, or includes a GIIN that does not appear on the published IRS FFI list, will be invalid for chapter 4 purposes 90 days after the date the form is provided.

The GIIN that you must confirm is the GIIN assigned to the FFI identifying its country of residence for tax purposes (or place of organization if the FFI has no country of residence), except as otherwise provided.

Branches and disregarded entities. If you make a withholdable payment to a branch of, or an entity that is disregarded as an entity separate from, a participating FFI or registered deemed-compliant FFI located outside of the FFI’s country of residence or organization, the GIIN you must verify is the GIIN of the branch or disregarded entity receiving the payment. You must identify a GIIN associated with a disregarded entity to the extent provided in the Instructions for Form W-8BEN-E or the Instructions for Form W-8IMY.

You will have reason to know that a withholdable payment is made to a branch (including a disregarded entity) of a participating FFI or registered deemed-compliant FFI that is not itself a participating FFI or registered deemed-compliant FFI when you are directed to make the payment to an address in a jurisdiction other than that of the participating FFI or registered deemed-compliant FFI (or branch of, or disregarded entity wholly owned by, such FFI) that is identified as the FFI (or branch of, or disregarded entity wholly owned by, such FFI) that is supposed to receive the payment and for which the FFI’s GIIN is not confirmed, as described in the preceding paragraphs.

The preceding sentence does not apply to an FFI that is an investment entity. If an FFI (other than an investment entity) directs you to make the payment to an account held

by the FFI and maintained by another FI, the FFI must provide to you a statement, in writing, that the FFI is not directing the payment to any branch of such FFI that is not a participating FFI or a registered deemed-compliant FFI.

Sponsored, closely held investment vehicles. If you make a withholdable payment to a certified deemed-compliant FFI that is a sponsored, closely held investment vehicle, you must obtain a GIIN for the sponsoring entity and verify it against the published IRS FFI list.

Reason To Know

In general, you have reason to know that a claim of chapter 4 status is unreliable or incorrect if your knowledge of relevant facts or statements contained in the withholding certificate or other documentation is such that a reasonably prudent person would question the claim being made. For an obligation other than a preexisting obligation (that is, an obligation other than 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 a claim of chapter 4 status is unreliable or incorrect if any information contained in the account opening files or other customer account files, including documentation collected for AML due diligence purposes, conflicts with the chapter 4 status being claimed. You will not have reason to know that a claim of chapter 4 status is unreliable or incorrect based on documentation collected for AML due diligence purposes until the date that is 30 days after the obligation is created.

If you have classified an entity as engaged in a particular type of business based on your records, such as through the use of a standardized industry coding system, you have reason to know that the chapter 4 status claimed by the entity is unreliable or incorrect only if the entity’s claim conflicts with the withholding agent’s classification of the entity’s business type.

Withholding Certificates

In general, you have reason to know that a withholding certificate from a person is unreliable or incorrect with respect to a claim of chapter 4 status if:

The withholding certificate is incomplete with respect to any item on the certificate that is relevant to the claim made by the person;
The withholding certificate contains any information that is inconsistent with the person’s claim;
You have other account information that is inconsistent with the person’s claim;
The withholding certificate lacks information necessary to establish entitlement to an exemption from withholding for chapter 4 purposes; or
With respect to an alternative certification under an applicable IGA included with a withholding certificate,

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if you know or have reason to know the certification is incorrect.

If you obtain a withholding certificate associated with a withholdable payment to a participating FFI, a registered deemed-compliant FFI, a sponsoring entity, or a sponsored FFI, you do not need to apply the standards of knowledge described earlier with respect to an account holder’s claim of foreign status if you have confirmed the FFI’s GIIN on the current published IRS FFI list within 90 days of receipt of the withholding certificate.

Caution: A withholding certificate used for chapter 4 purposes must also include the information required for chapter 3 purposes (that is, the entity’s tax classification) with regard to a payment that is a reportable amount under Regulations section 1.1441-1(e)(3)(vi).

Documentary Evidence

You have reason to know that documentary evidence provided by a person is unreliable or incorrect with respect to a claim of chapter 4 status 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 person’s claim as to its chapter 4 status,
You have other account information that is inconsistent with the person’s chapter 4 status, or
The documentary evidence lacks information necessary to establish the person’s chapter 4 status.

For standards of knowledge applicable to specific types of documentary evidence, see Regulations section 1.1471-3.

Payee Documentation From Intermediaries or Flow-Through Entities

In general. If you receive documentation for a payee of a withholdable payment through one or more intermediaries or flow-through entities, you must, in addition to determining each such entity’s chapter 4 status when required for chapter 4 purposes, review all documentation obtained with respect to the payee. Under certain circumstances, you may rely on a withholding certificate with an electronic signature provided by an account holder that is an NQI, when you are permitted to do so under Regulations section 1.1441-1(e)(4)(i)(B). When withholding under chapter 4 is not applied based on the chapter 4 status of an intermediary or flow-through entity, you are not required to obtain documentation for a payee through an intermediary or flow-through entity that is a QI, WP, or WT, or a payee that is included in a chapter 4 withholding rate pool of U.S. payees.

Withholding statement. You must review the withholding statement provided and may not rely on information in the statement to the extent the information

does not support the claims made regarding the chapter 4 status of the payee. You may not treat a person as a foreign person if a U.S. address is provided, unless the withholding statement is accompanied by a valid withholding certificate and documentary evidence establishing foreign status.

Withholding certificate. You must review each withholding certificate, written statement (as permitted for chapter 4 purposes with respect to certain payments to entities), or documentary evidence, and must verify that the information is consistent with the information on the withholding statement. If there is a discrepancy, you may rely on the documentation provided such documentation is valid and the intermediary or flow-through entity does not indicate that the documentation is unreliable or incorrect, or, alternatively, you may apply the presumption rules. If you choose to rely on the documentation, you must instruct the intermediary or flow-through entity to correct the withholding statement and confirm that the intermediary or flow-through entity does not know or have reason to know that the documentation is unreliable or incorrect. See Regulations section 1.1471-3(d) for when a written statement is permitted for chapter 4 purposes.

Documentation from participating FFIs and regis- tered deemed-compliant FFIs. If you receive documentation for a payee of a withholdable payment through a participating FFI or registered deemed-compliant FFI that is an intermediary or flow-through entity receiving the payment, you may rely on the chapter 4 status provided in the withholding statement, including a chapter 4 status determined under the requirements of (and documentation or information that is publicly available that determines the chapter 4 status of the payee permitted under) an applicable IGA, provided that you have the information necessary to report on Form 1042-S, unless you have information that conflicts with the chapter 4 status provided. If underlying documentation is provided for the payee and information in the documentation or in your records conflicts with the chapter 4 status claimed, you have reason to know that the chapter 4 status claimed is unreliable or incorrect. However, you are not required to verify the information contained in the documentation that is not factually incorrect, and you are generally not required to obtain supporting documentation for the payee. You may determine the recipient code of a payee for chapter 4 purposes (for filing Form 1042-S) that is not identified on a withholding statement when you are able to do so based on other information included on or with the withholding statement or in your records with respect to the payee.

Preexisting obligation of entities. If you make a withholdable payment with respect to a preexisting obligation to an entity, the scope of review is limited with respect to the time in which you must determine the entity’s chapter 4 status. For more information, see Regulations section 1.1471-3(e)(4)(vii) or, if you are a reporting Model 1 FFI or a reporting Model 2 FFI, the requirements of the applicable IGA.

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