NRA withholding applies only to payments made to a payee that is a foreign person. It does not apply to payments made to U.S. persons.
Usually, you determine the payee's status as a U.S. or foreign person based on the documentation that person provides. However, if you have received no documentation or you cannot reliably associate all or a portion of a payment with documentation, then you must apply certain presumption rules.
The “Identifying the Payee” section in Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, has a longer discussion of how to handle payments in these situations:
- When the payee is not the person you pay
- U.S. agent of a foreign person
- Disregarded entities
- Special Chapter 4 rules
- Flow-Through Entities
- Chapter 3 payees
- Chapter 4 payees
- Foreign partnerships
- Foreign simple and grantor trusts
- Fiscally transparent entities claiming treaty benefits
- Foreign Intermediaries
- Special rule for chapter 4
- Nonqualified intermediaries (NQI)
- Qualified intermediaries (QI)
- Qualified derivatives dealers (QDDs)
- Branches of financial institutions
- QI agreement
- Documentation requirements
- Reporting requirements
- U.S. branches of foreign banks and foreign insurance companies
- Withholding foreign partnership and withholding foreign trust
- WP agreement and WT agreement
- Documentation