If the foreign vendor refuses to provide a W-8 BEN or Form 8233 and we process payment with the 30% withholding, will other documentation be needed from the vendor?
You are required to have a valid form W-8 from your foreign vendors. However, if the vendor fails to provide one, the IRS allows you to use presumption rules outlined in Treasury Regulation 1.1441-1 to determine the payees status as either a foreign individual, trust, estate, partnership, corporation, etc. Once you have made that determination, you should withhold on payments accordingly. So, if after following the presumption rules, you presume that the payee is a foreign individual then you would withhold 30 percent. If you receive no documentation from the vendor, then following the presumption rules is all the IRS requires of you to avoid taxes and penalties . While following the presumption rules keeps you on the right side of tax law, be sure not to apply reduced withholding rates to payees that do not provide documentation. For example, if you know the payee is from a country that has a tax treaty with the United States, you cannot apply the reduced withholding rate if you do no
