Here is an excerpt from the IRS discussion. It would appear that if there is a treaty you should use the Form W-Ben:
"If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, withholding for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim the benefits of the treaty. Generally, you do this by filing Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (PDF) with the withholding agent.
A reduced rate of withholding applies to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the foreign person provides a U.S. Taxpayer Identification Number (TIN) (except for certain marketable securities) and certifies that:
It is a resident of a treaty country.
It is the beneficial owner of the income.
If it is an entity, it derives the income within the meaning of Section 894 of the Internal Revenue Code (it is not fiscally transparent).
It meets any limitation on benefits provision contained in the treaty, if applicable.
Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country.
If a nonresident alien individual has made an election with his or her U.S. citizen or resident spouse to be treated as a U.S. resident for income tax purposes, the nonresident alien may not claim to be a foreign resident to obtain the benefits of a reduced rate of, or exemption from, U.S. income tax under an income tax treaty. However, the exceptions to the saving clause in some treaties allow a resident of the United States to claim a tax treaty exemption on U.S. source income.
If the payor knows, or has reason to know, that an owner of income is not eligible for treaty benefits claimed, he must not apply the treaty rate. He is not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which he did not have actual knowledge, or reason to know that the statements were incorrect.
Beginning January 1, 2001, the payor of dividends will no longer rely on your address of record as the basis for allowing you the benefit of the treaty. Give Form W-8BEN to the withholding agent to claim a reduced rate of withholding.
Here is the link: http://www.irs.gov/businesses/small/international/article/0,,id=96438,00.html for the above quote. This will allow you to check for your other questions as the IRS website.
Hope this helps. Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is
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