LEGAL DISCLAIMER
I am not a Tax Lawyer, Nor do I play Dan Evans on the internet.
I am not a Certified Public Accountant, Nor do I play Paul Thomas on the internet.
I am not an Enrolled Agent, Nor do I play Richard Macdonald on the internet.
DO NOT TAKE MY WORD FOR ANYTHING ON THIS PAGE.
Go look it up for yourself.

Withholding

This page exists, in part, because of this post:

I sold someone a web hosting account for $100 but they are asking me for a W9 form to request for TIN even though I am a corp. Do I have to legally give one to him? Out of the 5000+ customers, I have nobody ever asked me to send one.

And the "advice" from an anonymous poster using the moniker Shyster1040 that followed:

He's just being very careful (but legal). Since he's paying you for (presumably) services, he is a withholding agent for purposes of the withholding tax on payments to foreigners and must do withholding unless he can reliably associate the payment with paperwork showing that you (your company, actually) are not a foreigner. That is where the W-9 comes in, it can be used for these purposes. (The instructions for the form are available on the IRS website and explain in better detail).

You don't have to give him a W-9, but if you don't he's entitled to withhold on your payment at the rate of either 28% or 30%. So, unless you want to get only $70 - $72 bucks for what you sold, you should give him a W-9. If your company doesn't have a TIN (the EIN for corporations), then you should probably get one.

Emphasis is mine.

CITE

26 USC 7701(a)(16)

Sec. 7701. Definitions

-STATUTE-
(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof -
(16) Withholding agent
The term ''withholding agent'' means any person required to deduct and withhold any tax under the provisions of section 1441, 1442, 1443, or 1461.

26 CFR 1.1441-7(a)

Sec. 1.1441-7 General provisions relating to withholding agents.

(a) Withholding agent defined--

(1) In general.

For purposes of chapter 3 of the Internal Revenue Code and the regulations under such chapter, the term withholding agent means any person, U.S. or foreign, that has the control, receipt, custody, disposal, or payment of an item of income of a foreign person subject to withholding, including (but not limited to) a foreign intermediary described in Sec. 1.1441-1(e)(3)(i), a foreign partnership, or a U.S. branch describedin Sec. 1.1441-1(b)(2)(iv)(A) or (E).

26 USC 1441

Sec. 1441. Withholding of tax on nonresident aliens

-STATUTE-
(a) General rule
Except as otherwise provided in subsection (c), all persons, in whatever capacity acting (including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States) having the control, receipt, custody, disposal, or payment of any of the items of income specified in subsection (b) (to the extent that any of such items constitutes gross income from sources within the United States), of any nonresident alien individual or of any foreign partnership shall (except as otherwise provided in regulations prescribed by the Secretary under section 874) deduct and withhold from such items a tax equal to 30 percent thereof, except that in the case of any item of income specified in the second sentence of subsection (b), the tax shall be equal to 14 percent of such item.

(b) Income items
The items of income referred to in subsection (a) are interest (other than original issue discount as defined in section 1273), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, gains described in section 631(b) or (c), amounts subject to tax under section 871(a)(1)(C), gains subject to tax under section 871(a)(1)(D), and gains on transfers described in section 1235 made on or before October 4, 1966.

1441 & 1.1441-7 Abridged

Let me abridge that so it is readable.

(a) General rule
all persons... having the control... or payment of any of the items of income specified... of any nonresident alien individual... shall... deduct and withhold... a tax equal to 30 percent thereof...

And I shouldn't forget to abridge the prior stated regulation for readability either.

withholding agent means any person... that has the control... or payment of an item of income of a foreign person subject to withholding,

26 USC 1442

Sec. 1442. Withholding of tax on foreign corporations

-STATUTE-
(a) General rule
In the case of foreign corporations subject to taxation under this subtitle, there shall be deducted and withheld at the source in the same manner and on the same items of income as is provided in section 1441 a tax equal to 30 percent thereof.

26 USC 1443

Sec. 1443. Foreign tax-exempt organizations

-STATUTE-
(a) Income subject to section 511 In the case of income of a foreign organization subject to the tax imposed by section 511, this chapter shall apply to income includible under section 512 in computing its unrelated business taxable income, but only to the extent and subject to such conditions as may be provided under regulations prescribed by the Secretary.

26 USC 1461

Sec. 1461. Liability for withheld tax

-STATUTE-
Every person required to deduct and withhold any tax under this chapter is hereby made liable for such tax and is hereby indemnified against the claims and demands of any person for the amount of any payments made in accordance with the provisions of this chapter.

If you are NOT a person required to deduct and withhold any tax under this chapter, then you are NOT indemnified for such withholding. And you are NOT a person required if your payee is NOT a foreign person.

26 CFR 1.1441-1(a)

Sec. 1.1441-1 Requirement for the deduction and withholding of tax on payments to foreign persons.

(a) Purpose and scope.
This section, [1.1441-1] Secs. 1.1441-2 through 1.1441-9, and 1.1443-1 provide rules for withholding under sections 1441, 1442, and 1443 when a payment is made to a foreign person.
1.1441-1(a)

This section [1.1441-1] provides definitions of terms used in chapter 3 of the Internal Revenue Code (Code) and regulations thereunder.
1.1441-1(a)

It prescribes procedures to determine whether an amount must be withheld under chapter 3 of the Code and documentation that a withholding agent may rely upon to determine the status of a payee or a beneficial owner as a U.S. person or as a foreign person and other relevant characteristics of the payee that may affect a withholding agent's obligation to withhold under chapter 3 of the Code and the regulations thereunder.
1.1441-1(a)

Section 1.1441-2 defines the income subject to withholding under section 1441, 1442, and 1443 and the regulations under these sections.
1.1441-1(a)
.
.
.
Section 1.1441-7 defines the term withholding agent and provides due diligence rules governing a withholding agent's obligation to withhold.
1.1441-1(a)
.
.
.

26 CFR 1.1441-1(b)

(b) General rules of withholding--
(1) Requirement to withhold on payments to foreign persons.

A withholding agent must withhold 30-percent of any payment of an amount subject to withholding made to a payee that is a foreign person unless it can reliably associate the payment with documentation upon which it can rely to treat the payment as made to a payee that is a U.S. person or as made to a beneficial owner that is a foreign person entitled to a reduced rate of withholding.
1.1441-1(b)(1)

This section [1.1441-1] (dealing with general rules of withholding and claims of foreign or U.S. status by a payee or a beneficial owner), and Secs. 1.1441-4, 1.1441-5, 1.1441-6, 1.1441-8, 1.1441-9, and 1.1443-1 provide rules for determining whether documentation is required as a condition for reducing the rate of withholding on a payment to a foreign beneficial owner or to a U.S. payee and if so, the nature of the documentation upon which a withholding agent may rely in order to reduce such rate.
1.1441-1(b)(1)

Paragraph (b)(2) of this section prescribes the rules for determining who the payee is, the extent to which a payment is treated as made to a foreign payee, and reliable association of a payment with documentation.
1.1441-1(b)(1)

(2) Determination of payee and payee's status--
(i) In general.

Except as otherwise provided in this paragraph (b)(2) and Sec. 1.1441-5(c)(1)[] and (e)(3), a payee is the person to whom a payment is made, regardless of whether such person is the beneficial owner of the amount (as defined in paragraph (c)(6) of this section).
1.1441-1(b)(2)

Note:
[1.4441-5(c) Foreign partnerships--]
[1.4441-5(e) Foreign trusts and estates--]

A foreign payee is a payee who is a foreign person.
1.1441-1(b)(2)

A U.S. payee is a payee who is a U.S. person.
1.1441-1(b)(2)

Generally, the determination by a withholding agent of the U.S. or foreign status of a payee and of its other relevant characteristics (e.g., as a beneficial owner or intermediary, or as an individual, corporation, or flow-through entity) is made on the basis of a withholding certificate that is a Form W-8 or a Form 8233 (indicating foreign status of the payee or beneficial owner) or a Form W-9 (indicating U.S. status of the payee).
1.1441-1(b)(2)

Economy Plumbing and Heating Co. v. United States

"The revenue laws are a code or system in regulation of tax assessment and collection. They relate to taxpayers, and not to nontaxpayers. The latter are without their scope. No procedure is prescribed for nontaxpayers, and no attempt is made to annul any of their rights and remedies in due course of law. With them [nontaxpayers] Congress does not assume to deal, and they are neither of the subject nor of the object of the revenue laws". [emphasis added]
Economy Plumbing and Heating Co. v. United States, 470 F. 2d 585 (1972)

Remember "withholding agent" means "means any person required to deduct and withhold any tax under the provisions of section 1441, 1442, 1443, or 1461." Also, the only time a "withholding agent" withholds, according to section 1441 is "when a payment is made to a foreign person."

And the stated purpose and scope of section 1441, 1442, 1443 as stated in 1.1441-1

Sec. 1.1441-1(a) Purpose and scope. This section, Secs. 1.1441-2 through 1.1441-9, and 1.1443-1 provide rules for withholding under sections 1441, 1442, and 1443 when a payment is made to a foreign person.

I wish to put a simple question in your mind at this time. Does this "withholding tax" look like it applies to the average U.S. citizen? With that stated, I return you to the examination of regulations under 26 USC 1441.

Author's Comments

Regulation 1.1441-1 all by itself contains 31,630 words, most of which simply DOES NOT APPLY to a U.S. citizen. I leave it to the reader to download and study the truth of this assertion as homework. The reader will find much the same as the above, only it will have even LESS connection to a "U.S. person", and much less to a U.S. flesh and blood human.

Continuing with the motif of "withholding agent", I need to backtrack for a moment before striking out in a slightly different direction that still deals with withholding from the perspective of a "withholding agent" viewing the payees as either U.S. persons or foreign persons. The segue for this is the previously quoted sentence in 1.1441-1(a) which stated:

Section 1.1441-7 defines the term withholding agent and provides due diligence rules governing a withholding agent's obligation to withhold.
1.1441-1(a)

So with that little pointer, let us take another look at 1.1441-7 and the "due diligence rules".

26 CFR 1.1441-7(b)

At this point, I am going to slip in the regulation outline quoted from the index regulation, 1.1441-0 just to give you a clue as to what I am skipping. I leave it to the reader to download regulation 1.1441-7 and read section (b) to confirm for themselves that those skipped sections do not apply to a resident flesh and blood citizen.

Sec. 1.1441-7 General provisions relating to withholding agents.
(b) Standards of knowledge.
(1) In general.
(2) Reason to know.
(3) Financial institutions--limits on reason to know.
(4) Rules applicable to withholding certificates.
(5) Withholding certificate--establishment of foreign status.
(6) Withholding certificate--claim of reduced rate of withholding under treaty.
(7) Documentary evidence.
(8) Documentary evidence--establishment of foreign status.
(9) Documentary evidence--claim of reduced rate of withholding under treaty.
(10) Limits on reason to know--indirect account holders.
(11) Additional guidance.
1.1441-0

Sec. 1.1441-7 General provisions relating to withholding agents.
(b) Standards of knowledge--
(1) In general.

A withholding agent must withhold at the full 30-percent rate under section 1441, 1442, or 1443(a) or at the full 4-percent rate under section 1443(b) if it has actual knowledge or reason to know that a claim of U.S. status or of a reduced rate of withholding under section 1441, 1442, or 1443 is unreliable or incorrect.
1.1441-7(b)(1)

For purposes of the regulations under sections 1441, 1442, and 1443, a withholding agent may rely on information or certifications contained in, or associated with, a withholding certificate or other documentation furnished by or for a beneficial owner or payee unless the withholding agent has actual knowledge or reason to know that the information or certifications are incorrect or unreliable and, if based on such knowledge or reason to know, it should withhold (under chapter 3 of the Code or another withholding provision of the Code) an amount greater than would be the case if it relied on the information or certifications, or it should report (under chapter 3 of the Code or under another provision of the Code) an amount that would not otherwise be reportable if it relied on the information or certifications.
1.1441-7(b)(1)

See Sec. 1.1441-1(e)(4)(viii) for applicable reliance rules.
1.1441-7(b)(1)

We'll be returning to those applicable reliance rules shortly.

A withholding agent that has received notification by the Internal Revenue Service (IRS) that a claim of U.S. status or of a reduced rate is incorrect has actual knowledge beginning on the date that is 30 calendar days after the date the notice is received.
1.1441-7(b)(1)

You gotta love regulatory law. If the IRS tells you I do not have "U.S. status" after you have actually looked at my birth certificate and seen the certified location of my birth within the U.S.....

1.1441-7(b)(1) Reason to know.

A withholding agent shall be considered to have reason to know if its knowledge of relevant facts or of statements contained in the withholding certificates or other documentation is such that a reasonably prudent person in the position of the withholding agent would question the claims made.
1.1441-7(b)(1)

(b) Standards of knowledge--
(7) Documentary evidence.

A withholding agent shall not treat documentary evidence provided by a direct account holder as valid if the documentary evidence does not reasonably establish the identity of the person presenting the documentary evidence.
1.1441-7(b)(7)

For example, documentary evidence is not valid if it is provided in person by a direct account holder that is a natural person and the photograph or signature on the documentary evidence, if any, does not match the appearance or signature of the person presenting the document.
1.1441-7(b)(7)

Remember, the only time a "withholding agent" withholds, according to section 1441 is "when a payment is made to a foreign person." That is the issue, "who is a foreign person".

(b) Standards of knowledge--
(11) Additional guidance.

The IRS may prescribe other circumstances for which a withholding certificate or documentary evidence is unreliable or incorrect in addition to the circumstances described in paragraph (b) of this section to establish an account holder's status as a foreign person or a beneficial owner entitled to a reduced rate of withholding in published guidance (see Sec. 601.601(d)(2) of this chapter).
1.1441-7(b)(11)

Objectives and standards for publication of Revenue Rulings and Revenue Procedures in the Internal Revenue Bulletin--(i)(a) A Revenue Ruling is an official interpretation by the Service that has been published in the Internal Revenue Bulletin. Revenue Rulings are issued only by the National Office and are published for the information and guidance of taxpayers, Internal Revenue Service officials, and others concerned.
601.601(d)(2)

Using the pointer from above in this section as a segue, we are now going to be going back to the previous regulation.

See Sec. 1.1441-1(e)(4)(viii) for applicable reliance rules.
1.1441-7(b)(1)

26 CFR 1.1441-1(e)

(e) Beneficial owner's claim of foreign status--
(e)(4) Applicable rules.

These provisions do not apply to Forms W-9 (or their substitutes).
1.1441-1(e)(4)

The provisions in this paragraph (e)(4) describe procedures applicable to withholding certificates on Form W-8 or Form 8233 (or a substitute form) or documentary evidence furnished to establish foreign status.
1.1441-1(e)(4)

For corresponding provisions regarding Form W-9 (or a substitute form), see section 3406 and the regulations under that section.
1.1441-1(e)(4)

Most indubitably we will certainly be examining section 3406.

(e)(4)(viii) Reliance rules.

A withholding agent may rely on the information and certifications stated on withholding certificates or other documentation without having to inquire into the truthfulness of this information or certification, unless it has actual knowledge or reason to know that the same is untrue.
1.1441-1(e)(4)(viii)

Oops. Look like this is also a dead end for U.S. Persons and the excuse for a "withholding agent" to withhold from a U.S. Person. Remember, the purpose and scope as explained in Sec. 1.1441-1(a):

This section, Secs. 1.1441-2 through 1.1441-9, and 1.1443-1 provide rules for withholding under sections 1441, 1442, and 1443 when a payment is made to a foreign person.

Let's scoot back to 1.1441-1(b)(2)(i) and see where else it points us. Here's the outline labels to give you a clue about where we are going back to.

(b) General rules of withholding.
(b)(2) Determination of payee and payee's status--
(b)(2)(i) In general.

26 CFR 1.1441-1(b)(2)(i)

The provisions of this paragraph (b)(2), paragraph (b)(3) of this section, and Sec. 1.1441-5 (c), (d), and (e) dealing with determinations of payee and applicable presumptions in the absence of documentation, apply only to payments of amounts subject to withholding under chapter 3 of the Code (within the meaning of Sec. 1.1441-2(a)).
1.1441-1(b)(2)(i)

Chapter 3 of the Code is titled, "Withholding of tax on nonresident aliens and foreign corporations". The first section under chapter 3 of the code is section 1441, which I am sure the reader recognizes from somewhere on this page. And remember, the only time a "withholding agent" withholds, according to section 1441 is "when a payment is made to a foreign person." Thus the "applicable presumptions" ONLY apply to "amounts subject to withholding under chapter 3" which, as you see in the prior sentence, means the "amounts subject to withholding under chapter 3" are ONLY the amounts "made to a foreign person."

Since it is the same deceptive legal writers that gave us the convolutions of section 861 and the regulations thereunder, you can bet that they've attempted to hide the truth in the same manner in this regulation. Thus, just for exposure of their deceptive games, I will be looking at this subterfuge of "presumptions" right after we take a quick look at the rest of the pointers in 1.1441-1(b)(2)(i)

See paragraph (d) of this section for documentation upon which the withholding agent may rely in order to treat the payee or beneficial owner as a U.S. person.
1.1441-1(b)(2)(i)

This pointer is where we will look right after we finish with the "presumptions" in the next section of this web page.

See paragraph (e) of this section for documentation upon which the withholding agent may rely in order to treat the payee or beneficial owner as a foreign person.
1.1441-1(b)(2)(i)

We have already looked at paragraph (e) in the section just above, when we were pointed there by section 1.1441-7(b)(1).

For applicable presumptions of status in the absence of documentation, see paragraph (b)(3) of this section and Sec. 1.1441-5(d).
1.1441-1(b)(2)(i)

Sec. 1.1441-5 Withholding on payments to partnerships, trusts, and estates.

Above is our second point to the "applicable presumptions" of 1.1441-1(b)(3). We will be looking there momentarily.

For definitions of a foreign person and U.S. person, see paragraph (c)(2) of this section.
1.1441-1(b)(2)(i)

And of course, we can not understand the subterfuge unless we look at a few of the definitions of paragraph (c)(2) which we will do after looking at the "applicable presumptions" and the documentation a "withholding agent may rely" upon, and the "Rules for reliably associating a payment with a withholding certificate or other appropriate documentation"

26 CFR 1.1441-1(b)(3)

Okay folks, what follows is somewhat tough reading. I could have made it easier, but I want you to see the shenanigans the dishonest and deceptive writers of the tax rules have used to attempt to muddy the waters. Remember, what we are trying to do is prove that we are a U.S. person, and thus are not to have any tax withheld under section 1441.

(b)(3) Presumptions regarding payee's status in the absence of documentation--
(b)(3)(i) General rules.

A withholding agent that cannot, prior to the payment, reliably associate (within the meaning of paragraph (b)(2)(vii) of this section) a payment of an amount subject to withholding (as described in Sec. 1.1441-2(a)) with valid documentation may rely on the presumptions of this paragraph (b)(3) to determine the status of the payee as a U.S. or a foreign person and the payee's other relevant characteristics (e.g., as an owner or intermediary, as an individual, trust, partnership, or corporation).
1.1441-1(b)(3)(i)

Associating payments with documentation is a moot point in view of what is following in this very section of this web page.

The determination of withholding and reporting requirements applicable to payments to a person presumed to be a foreign person is governed only by the provisions of chapter 3 of the Code and the regulations thereunder.
1.1441-1(b)(3)(i)

For the determination of withholding and reporting requirements applicable to payments to a person presumed to be a U.S. person, see chapter 61 of the Code, section 3402, 3405, or 3406, and the regulations under these provisions.
1.1441-1(b)(3)(i)

Yes, I intend to see chapter 61 of the code, because if they are being deceptive here, they will be deceptive there.

See paragraph (b)(2)(vii) of this section for rules regarding the extent which a withholding agent can reliably associate a payment with documentation.
1.1441-1(b)(3)(i)

Associating payments with documentation is a moot point in view of what is following in this very section of this web page.

(b)(3)(ii) Presumptions of classification as individual, corporation, partnership, etc.
(b)(3)(ii)(A) In general.

A withholding agent that cannot reliably associate a payment with a valid withholding certificate or that has received valid documentary evidence under Secs. 1.1441-1(e)(1)(ii)(2) and 1.6049-5(c)(1) or (4) but cannot determine a payee's classification from the documentary evidence must apply the rules of this paragraph (b)(3)(ii) to determine the payee's classification as an individual, trust, estate, corporation, or partnership.
1.1441-1(b)(3)(ii)

(b)(3)(ii)(B) No documentation provided.

If the withholding agent cannot reliably associate a payment with a valid withholding certificate or valid documentary evidence, it must presume that the payee is an individual, a trust, or an estate, if the payee appears to be such person (e.g., based on the payee's name or other indications).
1.1441-1(b)(3)(ii)(B)

Associating payments with documentation to determine if one is or is not an individual is a moot point in view of the rule just presented that says if you look like an individual, then the withholding agent is to presume that you are an individual. Associating payments with documentation in general is a moot point in view of what is following in this very section of this web page.

In the absence of reliable indications that the payee is an individual, trust, or an estate, the withholding agent must presume that the payee is a corporation or one of the persons enumerated under Sec. 1.6049-4(c)(1)(ii)(B) through (Q)...
1.1441-1(b)(3)(ii)(B)

(b)(3)(iii) Presumption of U.S. or foreign status.

A payment that the withholding agent cannot reliably associate with documentation is presumed to be made to a U.S. person, except as otherwise provided in this paragraph (b)(3)(iii), in paragraphs (b)(3) (iv) and (v) of this section, or in Sec. 1.1441-5 (d) or (e).
1.1441-1(b)(3)(iii)

Even though I know that the exceptions noted do not have any standing in regard to most U.S. persons, (flesh and blood individuals), I will address the points presented. I will address (b)(3)(iii), (b)(3)(v), and 1.1441-5 with the index outline shown in 1.1441-0.

(b) General rules of withholding.

(3) Presumptions regarding payee's status in the absence of documentation.

(iii) Presumption of U.S. or foreign status.

(A) Payments to exempt recipients.
(B) Scholarships and grants.
(C) Pensions, annuities, etc.
(D) Certain payments to offshore accounts.

(iv) Grace period.
(v) Special rules applicable to payments to foreign intermediaries.

Sec. 1.1441-5 Withholding on payments to partnerships, trusts, and estates.

The Punch Line

A payment that the withholding agent cannot reliably associate with documentation is presumed to be made to a U.S. person,
1.1441-1(b)(3)(iii)

       Why is this actually stated just like it is?

        No law, no duty attaches unless and until the law specifically reaches out and touches the "person" to which the law applies. And conversely, no "person" is touched by any law unless they do or don't do some action that the law requires. NONE of the rules and regulations of the Nuclear Regulatory Agency apply to me unless and until I start messing with radioactive substances. Likewise NONE of the rules of statute 1441 and the regulations thereunder touch ANY U.S. person (U.S. resident citizen).

        Without a doubt, the writers attempted to make the rules look like a U.S. person was required to fill out a form W-9 under the rules of 1441. The W-9 is not a document that has been approved by the OMB for use in collecting information under the rules of the 1974 paperwork reduction act. THAT subject is for a different page.

       It is now time to examine paragraph (d) of this section, 1.1441-1.

26 CFR 1.1441-1(d)

(d) Beneficial owner's or payee's claim of U.S. status--
(d)(1) In general.

Under paragraph (b)(1) of this section, a withholding agent is not required to withhold under chapter 3 of the Code on payments to a U.S. payee, to a person presumed to be a U.S. payee in accordance with the provisions of paragraph (b)(3) of this section, or to a person that the withholding agent may treat as a U.S. beneficial owner of the payment.
1.1441-1(d)(1)

Absent actual knowledge or reason to know otherwise, a withholding agent may rely on the provisions of this paragraph (d) in order to determine whether to treat a payee or beneficial owner as a U.S. person.
1.1441-1(d)(1)

Don't you just love deceptive legal writers? A withholding agent MAY rely on these rules. That means if you give the withholding agent any documentation, like a form W-9, the withholding agent gets your number which allows the withholding agent to send form 1099's to the IRS reporting your "income". Under the rules of 1441, you are NOT required to give this paperwork to the withholding agent. The withholding discussed in 1441 DOES NOT APPLY TO the resident U.S. citizen.

(d)(2) Payments for which a Form W-9 is otherwise required.

As you skim through the following, keep in mind that what you are reading IS regulation 1.1441-1, under statute 1441, which deals with rules for withholding when a payment is made to a foreign person.

A withholding agent may treat as a U.S. payee any person who is required to furnish a Form W-9 and who furnishes it in accordance with the procedures described in Secs. 31.3406(d)-1 through 31.3406(d)-5 of this chapter (including the requirement that the payee furnish its taxpayer identifying number (TIN)) if the withholding agent meets all the requirements described in Sec. 31.3406(h)-3(e) of this chapter regarding reliance by a payor on a Form W-9.
1.1441-1(d)(2)

Since this is a point to another section, it means there is additional information to be found in the 31.3406 rules. The attempt here is to muddy the water. If you do not read THIS section carefully, you may misunderstand what the above is saying. It refers to ANOTHER section that may, or may not apply to you as a U.S. person, a U.S. citizen. When I finally get to Code section 3406, and the regulations thereunder, I will show you how the deceptive writers pull the same stunts to make it appear that a resident U.S. citizen must give a W-9 to a withholding agent.

Providing a Form W-9 or valid substitute form shall serve as a statement that the person whose name is on the form is a U.S. person.
1.1441-1(d)(2)

So IF you are required under another section to submit a form W-9 to a withholding agent, the withholding agent shall be notified that you are a U.S. person, Something that 1.1441-1(b)(3)(iii) says the withholding agent must presume in the absence of ANY documentation.

A payment that the withholding agent cannot reliably associate with documentation is presumed to be made to a U.S. person,
1.1441-1(b)(3)(iii)

Therefore, a foreign person, including a U.S. branch treated as a U.S. person under paragraph (b)(2)(iv) of this section, shall not provide a Form W-9.
1.1441-1(d)(2)

A U.S. branch of a foreign person may establish its status as a foreign person exempt from reporting under chapter 61 and backup withholding under section 3406 by providing a withholding certificate on Form W-8.
1.1441-1(d)(2)

In paragraph (d)(2) just above, which is about "Payments for which a Form W-9 is otherwise required", we are pointed to some other section where we might or might not be required to submit a form W-9. Read carefully, what follows. Even though the following is about "Payments for which a Form W-9 is not otherwise required", you will see the writers giving rules about form W-9. Also, keep in mind that these rules apply mostly to the withholding agent.

(d)(3) Payments for which a Form W-9 is not otherwise required.

In the case of a payee who is not required to furnish a Form W-9 under section 3406 (e.g., a person exempt from reporting under chapter 61 of the Internal Revenue Code), the withholding agent may treat the payee as a U.S. payee if the payee provides the withholding agent with a Form W-9 or a substitute form described in Sec. 31.3406(h)-3(c)(2) of this chapter (relating to forms for exempt recipients) that contains the payee's name, address, and TIN.
1.1441-1(d)(3)

Take some time and re-read that.

Remember, "A payment that the withholding agent cannot reliably associate with documentation is presumed to be made to a U.S. person". 1.1441-1(a). Also remember:

This section, Secs. 1.1441-2 through 1.1441-9, and 1.1443-1 provide rules for withholding under sections 1441, 1442, and 1443 when a payment is made to a foreign person.
1.1441-1(a)

So what we have been told is this; You are presumed to be a U.S. person, unless you give a form to a withholding agent that you are not required to give to a withholding agent, in which case the withholding agent may treat you as a U.S. person.

The form must be signed under penalties of perjury by the payee if so required by the form or by Sec. 31.3406(h)-3 of this chapter.
1.1441-1(d)(3)

This is in regard to "Payments for which a Form W-9 is not otherwise required."

Providing a Form W-9 or valid substitute form shall serve as a statement that the person whose name is on the certificate is a U.S. person.
1.1441-1(d)(3)

This is in regard to "Payments for which a Form W-9 is not otherwise required."

A Form W-9 or valid substitute form shall not be provided by a foreign person, including any U.S. branch of a foreign person whether or not the branch is treated as a U.S. person under paragraph (b)(2)(iv) of this section.
1.1441-1(d)(3)

A withholding agent that receives a Form W-9 to satisfy this paragraph (d)(3) must retain the form in accordance with the provisions of Sec. 31.3406(h)-3(g) of this chapter, if applicable, or of paragraph (e)(4)(iii) of this section (relating to the retention of withholding certificates) if Sec. 31.3406(h)-3(g) of this chapter does not apply.
1.1441-1(d)(3)

The rules of this paragraph (d)(3) are only intended to provide a method by which a withholding agent may determine that a payee is a U.S. person and do not otherwise impose a requirement that documentation be furnished by a person who is otherwise treated as an exempt recipient for purposes of the applicable information reporting provisions under chapter 61 of the Internal Revenue Code (e.g., Sec. 1.6049-4(c)(1)(ii) for payments of interest).
1.1441-1(d)(3)

Oh what tangled webs they weave.

        "The rules of this paragraph (d)(3)", regarding "Payments for which a Form W-9 is not otherwise required", "are only intended to provide a method by which a withholding agent may determine that a payee is a U.S. person and do not otherwise impose a requirement that documentation be furnished by a person".

    Every word in law is to be given meaning. " The rules of... paragraph (d)(3) are... intended to provide A method by which a withholding agent may determine... a U.S. person". A method. Not THE method.

        "[D]o not otherwise impose". Oh the words of art. This is a phenomenal statement of misdirection. "Do not otherwise" is very suggestive of some imposition of a requirement to fill out a form W-9, only (d)(3) DOES NOT IMPOSE any requirement to fill out a form W-9.

(d)(3) Payments for which a Form W-9 is not otherwise required.

In the case of a payee who is not required to furnish a Form W-9 ... the withholding agent may treat the payee as a U.S. payee if the payee provides the withholding agent with a Form W-9 ...
1.1441-1(d)(3)

A payment that the withholding agent cannot reliably associate with documentation is presumed to be made to a U.S. person...
1.1441-1(b)(3)(iii)

Everybody clear on that now?

Next we will look at the "Rules for reliably associating a payment with a withholding certificate or other appropriate documentation" and the definitions that bring the true meanings to those rules.

26 CFR 1.1441-1(b)(2)(vii)(A)

(b)(2)(vii) Rules for reliably associating a payment with a withholding certificate or other appropriate documentation--
(b)(2)(vii)(A) Generally.

(c) Definitions--
(16) Withholding certificate.
The term withholding certificate means a Form W-8 described in paragraph (e)(2)(i) of this section (relating to foreign beneficial owners), paragraph (e)(3)(i) of this section (relating to foreign intermediaries), Sec. 1.1441-5(c)(2)(iv), (c)(3)(iii), and (e)(3)(iv) (relating to flow-through entities), a Form 8233 described in Sec. 1.1441-4(b)(2), a Form W-9 as described in paragraph (d) of this section, a statement described in Sec. 1.871-14(c)(2)(v) (relating to portfolio interest), or any other certificates that under the Internal Revenue Code or regulations certifies or establishes the status of a payee or beneficial owner as a U.S. or a foreign person.
1.1441-1(c)(16)

(17) Documentary evidence; other appropriate documentation.
The terms documentary evidence or other appropriate documentation refer to documents other than a withholding certificate that may be provided for payments made outside the United States to offshore accounts or any other evidence that under the Internal Revenue Code or regulations certifies or establishes the status of a payee or beneficial owner as a U.S. or foreign person.
1.1441-1(c)(17)

The presumption rules of paragraph (b)(3) of this section and Secs. 1.1441-5(d) and (e)(6) and 1.6049-5(d) apply to any payment, or portion of a payment, that a withholding agent cannot reliably associate with valid documentation.
1.1441-1(b)(2)(vii)(A)

A payment that the withholding agent cannot reliably associate with documentation is presumed to be made to a U.S. person,
1.1441-1(b)(3)(iii)

Sec. 1.1441-5 Withholding on payments to partnerships, trusts, and estates.

1.6049-5(d) is about whether 1099's are required on certain forms of interest from things like bonds and other debt instruments, and it refers right back to the regulations referenced here. It is written just as deceptively as this section has been shown to be. It is of no account for the purposes of this page.

Generally, a withholding agent can reliably associate a payment with valid documentation if, prior to the payment, it holds valid documentation (either directly or through an agent), it can reliably determine how much of the payment relates to the valid documentation, and it has no actual knowledge or reason to know that any of the information, certifications, or statements in, or associated with, the documentation are incorrect.
1.1441-1(b)(2)(vii)(A)

The documentation referred to in this paragraph (b)(2)(vii) is documentation described in paragraphs (c)(16) and (17) of this section upon which a withholding agent may rely to treat the payment as a payment made to a payee or beneficial owner, and to ascertain the characteristics of the payee or beneficial owner that are relevant to withholding or reporting under chapter 3 of the Internal Revenue Code and the regulations thereunder.
1.1441-1(b)(2)(vii)(A)

A withholding agent that is not required to obtain documentation with respect to a payment is considered to lack documentation for purposes of this paragraph (b)(2)(vii).
1.1441-1(b)(2)(vii)(A)

I leave it to the reader to download and search 1.1441-1 to investigate for themselves that these statements produced the number of hits stated, and that in no case is documentation stated as being required to establish U.S. status. Documentation establishing foreign status is required... 2 times Documentation establishing foreign status is not required... 9 times

For example, a withholding agent paying U.S. source interest to a person that is an exempt recipient, as defined in Sec. 1.6049-4(c)(1)(ii), is not required to obtain documentation from that person in order to determine whether an amount paid to that person is reportable under an applicable information reporting provision under chapter 61 of the Internal Revenue Code.
1.1441-1(b)(2)(vii)(A)

The withholding agent must, however, treat the payment as made to an undocumented person for purposes of chapter 3 of the Internal Revenue Code.
1.1441-1(b)(2)(vii)(A)

Therefore, the presumption rules of paragraph (b)(3)(iii) of this section apply to determine whether the person is presumed to be a U.S. person (in which case, no withholding is required under this section), or whether the person is presumed to be a foreign person (in which case 30-percent withholding is required under this section).
1.1441-1(b)(2)(vii)(A)

A payment that the withholding agent cannot reliably associate with documentation is presumed to be made to a U.S. person,
1.1441-1(b)(3)(iii)

26 USC 7701(a)(16)

26 CFR 1.1441-7(a)

Sec. 1.1441-7 General provisions relating to withholding agents.

(a) Withholding agent defined--
(1) In general.

For purposes of chapter 3 of the Internal Revenue Code and the regulations under such chapter, the term withholding agent means any person, U.S. or foreign, that has the control, receipt, custody, disposal, or payment of an item of income of a foreign person subject to withholding, including (but not limited to) a foreign intermediary described in Sec. 1.1441-1(e)(3)(i), a foreign partnership, or a U.S. branch describedin Sec. 1.1441-1(b)(2)(iv)(A) or (E).
1.1441-7(a)(1)

Simple logic. If ANY person "has the control, receipt, custody, disposal, or payment of an item of income" that belongs to you, and you are NOT a foreign person, than that other person IS NOT a withholding agent. If that person IS NOT a withholding agent, then that person IS NOT "required to deduct and withhold any tax under the provisions of section 1441, 1442, 1443, or 1461."