Withholding agent doesn't know the tax residency. In general, if a withholding agent cannot reliably associate a payment with valid documentation (e.g. Form.The Tax Department is streamlining withholding tax and wage reporting forms and Web File applications. If you have any doubt about the requirement to withhold, go ahead and do it and use a Form 1042. Otherwise, you could be subject to IRS penalties like steep fines and interest. Instructions for Form 926).