Chapter 4 Code

Authority for Exemption

Explanation

13

Grandfathered payment 

If the withholding agent makes a payment under a grandfathered obligation.

14

Effectively connected income

If exemption code 14 corresponds to (effectively connected income), you must enter the recipient's U.S. TIN in box 13e if your reported income corresponds to a U.S. trade or business. 

15

Payee not subject to chapter 4 withholding

Use this code if a payment is withholdable but not withheld under chapter 4 due to the payee's status, or if the withholding agent applies the 90-day grace period after a change in circumstance.

16

Excluded nonfinancial payment

Used for payments described in Regulations section 1.1473-1(a)(4)(iii).

17

Foreign Entity that assumes primary withholding responsibility

Use if it pays to a QI that assumes primary withholding responsibility, a WP, or a WT.

18

U.S. payees of participating FFI or registered deemed-compliant FFI

Use this code when making a payment to a participating FFI or registered deemed-compliant FFI, but only if the FFI’s withholding statement with its Form W-8IMY shows the payment is allocated to a chapter 4 withholding rate pool of U.S. payees and the FFI certifies it meets the requirements to include the account holder in that pool.

19

Exempt from withholding under IGA

Use this code when exempt from withholding under Intergovernmental agreement (IGA).

20

Dormant account

When making a withholdable payment to a participating FFI or registered deemed-compliant FFI that has stated on its withholding statement with Form W-8IMY that the payment is allocated to a dormant account holder subject to the escrow procedure under Regulations section 1.1471-4(b)(6).

21

Other payment not subject to chapter 4 withholding

Use this code if the payment is exempt from chapter 4 withholding and no other exemption code applies. Also, exemption code 21 for income code 37 (return of capital) should be used when reporting nondividend payments.