Taxing Non Residents for Foreign Sourced Income

I was told that a brokerage account holder is NOT a US resident, that he does NOT pay any withholding tax on any kind of "foreign sourced income". Assuming that is true, I am looking to get details on some specific cases:

1) If the account holder asks the US broker to buy a stock on a foreign exchange and hold it in the US brokerage account, then all dividends in that stock are *not* subject to US withholding tax? Of course there will be a withholding tax in the foreign country where the stock was bought, but I am referring just to additional withholding taxes in the US. What are the chances that a US broker would incorrectly withhold 30% of the dividend on such stocks as they would for US based stocks? If such withholding is incorrectly charged to the holder, can it be refunded by filing a US tax return?

2) If the account holder buys a foreign stock as an ADR on a US exchange, would dividends in such a company also avoid the 30% withholding tax? Since the income is "foreign sourced" even though the stock trades on a US exchange, it's an interesting case. I'll bet many US brokers would withhold 30% of the dividend for such stocks, not taking the time to understand that the underlying business income of the entity is not US based. Is there any way to get the 30% withholding refunded by filing a US tax return?

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From IRS Form W-8BEN: ============================================================ Broker transactions or barter exchanges.

Income from transactions with a broker or a barter exchange is subject to reporting rules and backup withholding unless Form W-8BEN or a substitute form is filed to notify the broker or barter exchange that you are an exempt foreign person. You are an exempt foreign person for a calendar year in which: ? You are a nonresident alien individual or a foreign corporation, partnership, estate, or trust; ? You are an individual who has not been, and does not plan to be, present in the United States for a total of 183 days or more during the calendar year; and ? You are neither engaged, nor plan to be engaged during the year, in a U.S. trade or business that has effectively connected gains from transactions with a broker or barter exchange.

========================================================== You need to file the form to avoid withholding.

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