Answer: Non-US persons are subject to US tax at a flat 30% rate on certain kinds of income they receive from US sources. The tax is withheld at the source by the payor of the income. If a non-US person receives this type of income, he must provide the Form W-8BEN directly to the payor of the income, not to the IRS, to establish that he is not a US person and to claim that he is the beneficial owner of the income. When the payor of the income has the W-8BEN on file, the payor will undertake its withholding duties. When a regional center issues income, the investor needs to sign and return the Form W-8BEN to the regional center in order to claim himself as the beneficiary of the income from his investment. Regional center as the payor will undertake its withholding duties on behalf of investor upon received the signed Form W-8BEN. In the event withholding is required and the payor fails in its duties, the payer can be held personally liable for the tax.
(News and views from IBLF staff and attorneys)