U.S. Taxpayer Identification Number Requirement
As the withholding agent, you must generally request that the payee provide you with its U.S. taxpayer identification number (TIN). You must include the payee's TIN on forms, statements, and other tax documents. The payee's TIN may be any of the following.
- An individual may have a social security number (SSN). If the individual does not have, and is eligible for, an SSN, he or she must use Form SS-5 (PDF) to get an SSN. The Social Security Administration will tell the individual if he or she is eligible to get an SSN.
- An individual may have an IRS individual taxpayer identification number (ITIN). If the individual does not have, and is not eligible for, an SSN, he or she must apply for an ITIN by using Form W–7 (PDF).
- Any person other than an individual, and any individual who is an employer or who is engaged in a U.S. trade or business as a sole proprietor, must have an Employer Identification Number (EIN).
A TIN must be on a withholding certificate if the beneficial owner is claiming any of the following.
- Tax treaty benefits (see Exceptions to TIN requirement, later).
- Exemption for effectively connected income.
- Exemption for certain annuities (see Pensions, Annuities, and Alimony (Income Code 14) in Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).
- Exemption based on exempt organization or private foundation status.
In addition, a TIN must be on a withholding certificate from a person claiming to be any of the following.
- Qualified intermediary.
- Withholding foreign partnership.
- Withholding foreign trust.
- Foreign grantor trust with no more than 5 grantors unless the grantor trust is an account holder of a qualified intermediary. See Notice 2001–4.
- Exempt organization.
- U.S. branch of a foreign person treated as a U.S. person (see section 1.1441–1(b) (2)(iv) of the regulations).
- U.S. person.
Exceptions to TIN Requirement
A foreign person does not have to provide a U.S. TIN to claim a reduced rate of withholding under a tax treaty if the requirements for the following exceptions are met.
- Income from marketable securities (see below).
- Unexpected payment to an individual (see below).
A Form W-8BEN provided to claim treaty benefits does not need a U.S. TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. For this purpose, income from a marketable security consists of the following items.
Dividends and interest from stocks and debt obligations that are actively traded on an established securities market.
Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund).
Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933.
Income related to loans of any of the above securities.
Unexpected Payment to an Individual
A Form W–8BEN or a Form 8233 provided by a nonresident alien to get treaty benefits does not need a U.S. TIN if you, the withholding agent, meet all the following requirements.
- You are an acceptance agent.
- You can request an ITIN for a payee on an expedited basis.
- You are required to make an unexpected payment to the nonresident alien.
- You cannot get the ITIN because the IRS is not issuing ITINs at the time you make the payment or at any earlier time after you know you have to make the payment.
- You cannot reasonably delay making the unexpected payment.
- You submit a completed Form W–7 for the payee, with a certification that you have reviewed the required documentation and have no actual knowledge or reason to know that the documentation is not complete or accurate, to the IRS during the first business day after you made the payment.
An acceptance agent is a person who, under a written agreement with the IRS, is authorized to assist alien individuals get ITINs. For information on the application procedures for becoming an acceptance agent, see How to Become an Acceptance Agent for IRS ITIN Numbers.
A payment is unexpected if you or the beneficial owner could not have reasonably anticipated the payment during a time when an ITIN could be obtained. This could be due to the nature of the payment or the circumstances in which the payment is made. A payment is not considered unexpected solely because the amount of the payment is not fixed.
Mary, a citizen and resident of Ireland, visits the United States and wins $5,000 playing a slot machine in a casino. Under the treaty with Ireland, the winnings are not subject to U.S. tax. Mary claims the treaty benefits by providing a Form W-8BEN to the casino upon winning at the slot machine. However, she does not have an ITIN. The casino is an acceptance agent that can request an ITIN on an expedited basis.
Situation 1. Assume that Mary won the money on Sunday. Since the IRS does not issue ITINs on Sunday, the casino can pay $5,000 to Mary without withholding U.S. tax. The casino must, on the following Monday, fax a completed Form W-7 for Mary, including the required certification, to the IRS for an expedited ITIN.
Situation 2. Assume that Mary won the money on Monday. To pay the winnings without withholding U.S. tax, the casino must apply for and get an ITIN for Mary because an expedited ITIN is available from the IRS at the time of the payment.
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.