In general, if a payment is subject to withholding a withholding agent must withhold 30% of the payment unless it can reliably associate the payment with documentation which shows that the payee or beneficial owner is entitled to a reduced rate of withholding. Documentation can include Forms W-8BEN, W-ECI, W-8EXP, W-8IMY, W-8CE, Form 8233 and other documentary evidence.
A withholding agent may rely on documentation without having to inquire about the truthfulness of the documentation unless it has actual knowledge or reason to know that the information contained in the document is untrue. Where there is no valid documentation provided a withholding agent may rely on the presumption rules to determine whether a payee is a U.S. or foreign person and the payee’s other relevant characteristics such as whether the payee is an owner, intermediary, individual, trust, partnership, or corporation. See Page 8, 9