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Reason to Know

Generally, 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.

Financial Institutions

Financial institutions (including a regulated investment company) are treated as having reason to know that documentation is unreliable or incorrect for payments on marketable securities only in the circumstances discussed under Direct Account Holders or Indirect Account Holders. If the documentation is considered unreliable or incorrect, you must obtain new documentation. However, you may rely on the original documentation if you receive the additional statements and/or documentation discussed in each of the areas below.

Non-Financial Institutions

The circumstances discussed under Direct Account Holders or Indirect Account Holders also apply to a withholding agent that is not a financial institution or making a payment on marketable securities. However, these withholding agents are not limited to these circumstances in determining if they have reason to know that documentation is unreliable or incorrect. Non-Financial Institutions cannot base their determination solely on the receipt of additional statements or documents. They need to obtain new documentation.

References/Related Topics

Page Last Reviewed or Updated: 16-Dec-2014