Due diligence standards refer to the process for reviewing or analyzing withholding certificates and other forms of documentary evidence to determine whether the information in the documents is consistent with the claims made on those forms. Generally, a payee or withholding agent making payments of amounts subject to NRA withholding or FATCA withholding must collect a withholding certificate (FORM W-8/W-9/Self certification) from the payee or income recipient (LINK).
The Treasury regulations outline due diligence standards for reviewing these forms. A withholding agent may rely on the information and certifications stated on withholding certificates or other documentation without having to question or verify the information or certification, unless it has actual knowledge or reason to know that the information or certification is incorrect.
When reviewing a Form W-8BEN, the payor notices a US mailing address. The payor must collect additional documentation from the person who provided the Form W-8BEN to support or prove that he or she is a non-US person.