Withholding on distributions to nonresident aliens

[Guest David G]

If W-8BEN is solicited and received in connection with a distribution from a state governmental qualified plan from a non resident alien who is residing in a foreign country, and the form as completed by the NRA states that there is a tax treaty provision that exempts withholding, can the plan administrator accept that statement at face value or is there some due diligence imposed upon the plan administrator to ascertain if there is a treaty,and if there is in fact an exception to withholding? If you can rely on the certification, what's to stop NRAs from putting whatever they want on the form. It appears abuses could develop. On the other hand as a plan adminstrator, I would like to be able to just accept the form and not become an international tax expert. Any thoughts?

David G.

[Carol V. Calhoun]

It appears that the W-8BEN is the form the IRS requires to assert treaty status, and it does not by its terms or in its instructions require an independent inquiry. Thus, I would be inclined to say that you can rely on it without other due diligence.

[Guest DLombardi]

IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations, includes a list of tax treaties and several other tables of tax treaty information.

[Carol V. Calhoun]

You can see a copy of Publication 515 by clicking here. You will need Adobe Acrobat to view or print this file. If you do not already have Adobe Acrobat--most people do--you can download it for free by clicking here.