Conditions
A withholding certificate may be issued under the following conditions:
- A determination by the IRS that reduced withholding is appropriate because either:
-The amount that must be withheld would be more than the transferor’s maximum tax liability, or
-Withholding of the reduced amount would not jeopardize collection of the tax,
-
The exemption from U.S. tax of all gain realized by the transferor, or
-
An agreement for the payment of tax providing security for the tax liability, entered into by the transferee or transferor.
Categories
Withholding certificates are issued under the following categories:
- Applications based on a claim that the transfer is entitled to nonrecognition treatment or is exempt from tax,
- Applications based solely on a calculation of the transferor’s maximum tax liability,
- Applications under special installment sale rules,
- Applications based on an agreement for the payment of tax with conforming security,
- Applications for blanket withholding certificates, and
- Applications on any other basis.