income tax notice 2014–11, page 880. - internal … kaercher, or kamela nelan at (202) 317-6942...

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

REG–130967–13, page 884.Sections 1471 through 1474 of the Internal Revenue Code,commonly known as FATCA, generally require a U.S. withhold-ing agent to withhold tax on certain payments to a foreignfinancial institution (FFI) that has not agreed to provide the IRSwith certain information regarding its United States accounts.Under FATCA, a U.S. withholding agent must also withhold taxon certain payments to a nonfinancial foreign entity (NFFE) thathas not provided the withholding agent with information aboutthe NFFE’s substantial United States owners. Temporary reg-ulations in TD 9657 revise and refine final FATCA regulations,TD 9610, and provide guidance to persons making certain U.S.related payments to FFIs and NFFEs, and payments by FFIs toother persons. The text of the temporary regulations alsoserves as the text of these proposed regulations.

REG–134361–12, page 895.Payors of payments of certain U.S. source income to foreignpersons are subject to comprehensive payee documentation,information reporting, and tax withholding requirements undersections 1441, 1442, and 1443 (contained in chapter 3 ofsubtitle A of the Internal Revenue Code). These payments mayalso be subject to comprehensive payee due diligence anddocumentation, information reporting, and tax withholdingrules under chapter 4 (sections 1471–1474), Chapter 61, andsection 3406. Temporary regulations in TD 9658 provideguidance coordinating and conforming the due diligence, infor-mation reporting, and tax withholding rules under chapter 3and 61 and section 3406 with the requirements under chapter4. The text of the temporary regulations also serves as the textof these proposed regulations.

Notice 2014–11, page 880.This notice provides the maximum vehicles values for use withthe special valuation rules under regulation section 1.61–21(d)and (e) for 2014. These values are adjusted annually for inflationby reference to the Consumer Price Index.

Notice 2014–14, page 881.This notice announces the intention of Treasury and the IRS tomodify the rule relating to specified ELIs when finalizing theproposed regulations published in the Federal Register at 78FR 73128 (2013) on December 5, 2013. Specifically, finalregulations will provide that the rules relating to specifiedequity-linked instruments issued on or after 90 days of the dateof publication of final regulations.

Rev. Proc. 2014–24, page 879.Consolidated returns; failure to properly includesubsidiary. This revenue procedure provides a determinationby the Commissioner under § 1.1502–75(b) that if an affiliatedgroup satisfies the conditions described in the revenue proce-dure, a subsidiary that actually failed to file a Form 1122 istreated as if it filed such form and thus joined in the making ofa consolidated return by the affiliated group.

Notice 2014–17, page 881.The notice, as interim guidance, provides a general rule thatper capita distributions to members of Indian tribes made fromfunds held in trust by the Secretary of the Interior (“TrustAccount”) are excluded from the gross income of the membersof the tribe receiving the per capita distributions. It also pro-vides an exception where distributions to tribal members froma Trust Account will not be excluded from gross income under26 U.S.C. § 61 to the members of the tribe receiving thedistributions if the Trust Account is used to mischaracterizetaxable income as nontaxable per capita distributions.

(Continued on the next page)

Finding Lists begin on page ii.Index for July through March begins on page iv.

Bulletin No. 2014–13March 24, 2014

T.D. 9657, page 687.Section 1471 through 1474 of the Internal Revenue code,commonly known as FATCA, generally require a U.S. withhold-ing agent to withhold tax on certain payments to a foreignfinancial institution (FFI) that has not agreed to provide the IRSwith certain information regarding its United States accounts.Under FATCA, a U.S. withholding agent must also withhold taxon certain payments to a nonfinancial foreign entity (NFFE) thathas not provided the withholding agent with information aboutthe NFFE’s substantial United States owners. These regulationsrevise and refine final FATCA regulations, TD 9610, and pro-vide guidance to person making certain U.S. related paymentsto FFIs and NFFEs, and payments by FFIs to other persons. TD9657. Published: March 6, 2014.

T.D. 9658, page 748.Payors of payments of certain U.S. source income to foreignperson are subject to comprehensive payee documentation,information reporting, and tax withholding requirements undersections 1441, 1442, and 1443 (contained in chapter 3 ofsubtitle A of the Internal Revenue Code). These payments mayalso be subject to comprehensive payee due diligence anddocumentation, information reporting, and tax withholdingrules under chapter 4 (section 1471–1474), chapter 61, andsection 3406. These regulations provide guidance coordinat-ing and conforming the due diligence, information reporting,and tax withholding rules under chapters 3 and 61 and section3406 with the requirements under chapter 4.

T.D. 9660, page 842.Final regulations provide rules under section 6055 of the Code,enacted by section 1502 of the Affordable Care Act, relating toinformation reporting by persons that provide minimum essen-tial coverage to individuals.

EXCISE TAX

T.D. 9661, page 855.Section 6056 was added to the Code by the Patient Protectionand Affordable Care Act. Section 6056 requires applicablelarge employers, as defined in section 4980H, to report to theIRS information about the health care coverage, if any, theyoffered to full-time employees, in order to administer the em-ployer shared responsibility provisions of section 4980H of theCode. Section 6056 also requires applicable large employersto furnish related statements to employees that employeesmay use to determine whether, for each month of the calendaryear, they may claim on their individual tax returns a premiumtax credit under section 36B. These final regulations providefor a general reporting method and alternative reporting meth-ods designed to simplify and reduce the cost of reporting for

employers subject to the information reporting requirementsunder section 6056.

ADMINISTRATIVE

Notice 2014–11, page 880.This notice provides the maximum vehicles values for use withthe special valuation rules under regulation section 1.61–21(d)and (e) for 2014. These values are adjusted fro inflation andmust be adjusted annually be reference to the Consumer PriceIndex.

Rev. Proc. 2014–24, page 879.Consolidated returns; failure to properly includesubsidiary. This revenue procedure provides a determinationby the Commissioner under § 1.1502–75(b) that if an affiliatedgroup satisfies the conditions described in the revenue proce-dure, a subsidiary that actually failed to file a Form 1122 istreated as if it filed such form and thus joined in the making ofa consolidated return by the affiliated group.

T.D. 9660, page 842.Final regulations provide rules under section 6055 of the Code,enacted by section 1502 of the Affordable Care Act, relating toinformation reporting by persons that provide minimum essen-tial coverage to individuals.

The IRS MissionProvide America’s taxpayers top-quality service by helpingthem understand and meet their tax responsibilities and en-force the law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly.

It is the policy of the Service to publish in the Bulletin allsubstantive rulings necessary to promote a uniform applicationof the tax laws, including all rulings that supersede, revoke,modify, or amend any of those previously published in theBulletin. All published rulings apply retroactively unless other-wise indicated. Procedures relating solely to matters of internalmanagement are not published; however, statements of inter-nal practices and procedures that affect the rights and dutiesof taxpayers are published.

Revenue rulings represent the conclusions of the Service onthe application of the law to the pivotal facts stated in therevenue ruling. In those based on positions taken in rulings totaxpayers or technical advice to Service field offices, identify-ing details and information of a confidential nature are deletedto prevent unwarranted invasions of privacy and to comply withstatutory requirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,court decisions, rulings, and procedures must be considered,and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unlessthe facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.This part includes rulings and decisions based on provisions ofthe Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A, TaxConventions and Other Related Items, and Subpart B, Legisla-tion and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Sec-retary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index forthe matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

March 24, 2014 Bulletin No. 2014–13

Part I. Rulings and Decisions Under the Internal Revenue Codeof 198626 CFR 1471: Regulations Relating to InformationReporting by Foreign Financial Institutions andWithholding on Certain Payments to Foreign Finan-cial Institutions and Other Foreign Entities

T.D. 9657

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Part 1

Regulations Relating toInformation Reporting byForeign FinancialInstitutions and Withholdingon Certain Payments toForeign FinancialInstitutions and OtherForeign Entities

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Final and temporary regulations.

SUMMARY: This document contains fi-nal and temporary regulations under chap-ter 4 of Subtitle A (sections 1471 through1474) of the Internal Revenue Code of1986 (Code) regarding information re-porting by foreign financial institutions(FFIs) with respect to U.S. accounts andwithholding on certain payments to FFIsand other foreign entities. These regula-tions affect persons making certain U.S.-related payments to FFIs and other foreignentities and payments by FFIs to otherpersons. The text of the temporary regu-lations also serves as the text of the pro-posed regulations set forth in a cross-reference notice of proposed rulemaking(REG–130967–13) published in the Pro-posed Rules section in this issue of theBulletin.

DATES: Effective date. These regulationsare effective on March 6, 2014.

FOR FURTHER INFORMATIONCONTACT: Tara Ferris, Nancy Lee, Mi-chael Kaercher, or Kamela Nelan at (202)317-6942 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

I. In General

This document contains amendmentsto the Income Tax Regulations (CFR part1) under sections 1471 through 1474 ofthe Code (commonly known as the For-eign Account Tax Compliance Act, orFATCA). On March 18, 2010, the HiringIncentives to Restore Employment Act of2010, Pub. L. 111–147 (the HIRE Act),added chapter 4 of Subtitle A (chapter 4),comprised of sections 1471 through 1474,to the Code. Chapter 4 generally requiresU.S. withholding agents to withhold taxon certain payments to foreign financialinstitutions (FFIs) that do not agree toreport certain information to the InternalRevenue Service (IRS) regarding theirU.S. accounts, and on certain payments tocertain nonfinancial foreign entities(NFFEs) that do not provide informationon their substantial United States owners(substantial U.S. owners) to withholdingagents. On January 28, 2013, final regula-tions (TD 9610) under chapter 4 werepublished in the Federal Register (78 FR5874) and, on September 10, 2013, a cor-rection to the final regulations was pub-lished in the Federal Register (78 FR55202) (final regulations). The TreasuryDepartment and the IRS received numer-ous comments in response to the finalregulations.

Following publication of the final reg-ulations, the Treasury Department and theIRS also issued additional guidance underchapter 4. Notice 2013–43 (2013–31I.R.B. 113) previews the revised timelinesfor implementation of the FATCA re-quirements (which are adopted by thesetemporary regulations) and provides addi-tional guidance concerning the treatmentof FFIs located in jurisdictions that havesigned intergovernmental agreements forthe implementation of FATCA (IGAs) buthave not yet brought those IGAs intoforce. In particular, Notice 2013–43 clar-ifies that a jurisdiction is treated as havingin effect an IGA if the jurisdiction is listedon the Treasury website as a jurisdiction

that is treated as having an IGA in effect.In general, the Treasury Department andthe IRS intend to include on this list ju-risdictions that have signed but have notyet brought into force an IGA. The list ofjurisdictions that are treated as having anIGA in effect is available at the followingaddress:

http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx. Notice 2013–69 (2013–46 I.R.B.503) further previews some of the changesthat the Treasury Department and IRS in-tend to make to the final regulations andpublishes a draft of the agreement that anFFI may enter into with the IRS in order tosatisfy its obligations under section 1471(b)of the Code and be treated as a participatingFFI (FFI agreement). Revenue Procedure2014–13 (2014–3 I.R.B. 419) provides thefinal FFI agreement.

II. Regulatory Approach toImplementing Chapter 4

Chapter 4 grants the Secretary of theTreasury broad regulatory authority toprescribe rules and procedures relating tothe diligence, reporting and withholdingobligations under FATCA. The TreasuryDepartment and the IRS exercised thisauthority by publishing final regulationsthat provide specific operational guide-lines for implementing FATCA in a man-ner consistent with its policy objectives.As described in the preamble to the finalregulations, the final regulations implementthe statute based on a risk-based approachthat is intended to address policy consider-ations, eliminate unnecessary burdens, andto the extent possible, build on existingpractices and obligations.

Following publication of the final reg-ulations, the Treasury Department and theIRS received unsolicited comments sug-gesting changes to or requesting clarifica-tion of certain rules in the final regula-tions. As a result of these comments, theTreasury Department and the IRS havecontinued to work with affected parties todevelop rules that achieve an appropriatebalance between fulfilling the importantpolicy objectives of chapter 4 and mini-

Bulletin No. 2014–13 March 24, 2014687

mizing the burdens imposed on stakehold-ers. As part of this process, the TreasuryDepartment and the IRS have carefullyconsidered comments received in re-sponse to the final regulations and havemet with stakeholders. While many ofthese comments reiterate comments thatwere received and considered prior to thepublication of the final regulations or sug-gest changes to the final regulations thatare outside the scope of these temporaryregulations, a number of comments pro-posed changes to the final regulations thatthe Treasury Department and the IRS be-lieve warrant inclusion in these temporaryregulations. The Treasury Department andthe IRS will accept comments and engagewith interested stakeholders in connectionwith finalizing these temporary regula-tions.

Explanation of Provisions

I. In General

In response to comments and after fur-ther consideration, these temporary regu-lations revise and further clarify the finalregulations. To this end, these temporaryregulations take into account helpful com-ments received and provide additional de-tail and certainty regarding the scope ofobligations imposed under chapter 4. Inaddition, these temporary regulations re-flect changes made to the final regulationsto coordinate the chapter 4 regulationswith the temporary regulations publishedunder chapters 3 and 61 and section 3406of the Code. Additionally, these tempo-rary regulations contain modifications tothe final regulations to further harmonizethem with the IGAs. Several of thechanges made by these temporary regula-tions were previewed in Notice 2013–69,the draft FFI agreement, and certain of thedraft IRS forms released throughout 2013.

The following sections provide a dis-cussion of the additions and modificationsmade by the temporary regulations to thefinal regulations. To facilitate this discus-sion, the defined terms set forth in thetemporary regulations are used through-out.

II. Comments and Changes to § 1.1471–1—Scope of Chapter 4 and Definitions

To address comments received and toprovide further clarification, these tempo-rary regulations modify certain definitionscontained in the final regulations.

A. Direct reporting NFFE, sponsoreddirect reporting NFFE, and sponsoringentity

Comments requested an election pro-viding NFFEs with the ability to reportinformation about their substantial U.S.owners directly to the IRS rather than towithholding agents. In response to thesecomments and as previewed in Notice2013–69, these temporary regulationsprovide certain NFFEs with elections tobe treated as direct reporting NFFEs orsponsored direct reporting NFFEs. ANFFE that is treated as a direct reportingNFFE or sponsored direct reporting NFFEshall be treated as an excepted NFFE.Accordingly, definitions have been addedfor a direct reporting NFFE and a spon-sored direct reporting NFFE, and the def-inition of a sponsoring entity has beenmodified. Conforming changes have alsobeen made throughout these temporaryregulations to implement these changes.

B. Excepted NFFE

These temporary regulations modifythe definition of excepted NFFE such thatexcepted NFFEs include, among otherthings, a direct reporting NFFE and asponsored direct reporting NFFE. In addi-tion, to correct an oversight, the definitionof excepted NFFE under these temporaryregulations is further expanded to includea NFFE that is a qualified intermediary(QI), withholding foreign partnership(WP) or withholding foreign trust (WT).

C. Offshore obligation and offshoreaccount

In response to comments stating thatthe definition of offshore obligation in thefinal regulations is unclear, and in order toharmonize chapters 4 and 61, these tem-porary regulations define offshore obliga-tion by cross-reference to § 1.6049–5(c)(1) (which now uses the term offshoreobligation instead of offshore account).

These temporary regulations also removethe definition of offshore account becauseit is included in the definition of offshoreobligation under § 1.6049–5(c)(1).

D. Pre-FATCA Form W–8

These temporary regulations make aclarifying change to the definition of pre-FATCA Form W–8. The final regulationsdefine pre-FATCA Form W–8 as certainForms W–8 that do not contain chapter 4statuses. However, the chapter 4 status ofa non-U.S. individual filing a Form W–8is the same as his or her chapter 3 status.Therefore, the definition in the final regu-lations could be interpreted to mean thatany Form W–8 previously submitted by anon-U.S. individual could not be treatedas a pre-FATCA Form W–8. These tem-porary regulations modify the definitionof pre-FATCA Form W–8 to avoid thisresult.

E. Standardized industry coding system

The final regulations define the termstandardized industry code to mean acode that is part of a coding system that isused to classify account holders by busi-ness type for purposes other than tax pur-poses and that is implemented by thewithholding agent by the later of January1, 2012, or six months after the date thewithholding agent is formed or organized.In response to comments, these temporaryregulations remove the term standardizedindustry code and replace it with the termstandardized industry coding system. Theterm standardized industry coding systemin these temporary regulations is substan-tially similar to the term standardized in-dustry code in the final regulations, exceptthat it focuses on a coding system used bythe withholding agent to classify accountholders, rather than a specific code that ispart of such a coding system. Addition-ally, and in response to comments, withrespect to a preexisting obligation of anentity, the preexisting obligation docu-mentary evidence rules have been liberal-ized by eliminating the requirement thatthe classification of the payee’s status berecorded by the withholding agent by thelater of January 1, 2012, or six monthsafter the date the withholding agent isformed or organized.


F. Certain foreign insurance companiestreated as U.S. persons

The final regulations treat a foreigninsurance company that is not licensed todo business in any State and makes anelection under section 953(d) as a foreignperson. Comments requested that a for-eign insurance company that has made anelection under section 953(d) be treated asa U.S. person. A foreign insurance com-pany that has made an election under sec-tion 953(d) is required to report on its U.S.income tax return the U.S. persons thatown a direct or indirect interest in it. Aspreviewed in Notice 2013–69, and in lightof the existing reporting requirements ap-plicable to these entities, the temporaryregulations modify the definition of U.S.person to include a foreign insurancecompany that has made an election undersection 953(d) and that either is not aspecified insurance company or is a spec-ified insurance company that is licensed todo business in any State. In such cases, theforeign insurance company will be re-quired to continue to report on its ownersin accordance with its election under sec-tion 953(d). A foreign insurance companythat has made an election under section953(d) and that is a specified insurancecompany that is not licensed to do busi-ness in any State will continue to betreated as a foreign person for purposes ofchapter 4.

G. Coordination of definitions

In response to comments requestingclarification and in order to coordinate thedefinitions in the final regulations withthe definitions in chapters 3 and 61 andthe FFI agreement, these temporary regu-lations add definitions of backup with-holding, branch, chapter 4 withholdingrate pool, exempt recipient, IGA, non-exempt recipient, reportable payment, andreporting Model 2 FFI and modify thedefinition of a U.S. branch treated as aU.S. person. In addition, the definitions offinancial institution, limited branch, lim-ited FFI, and substantial U.S. owner aremodified to ensure coordination betweenthe FFI agreement and these temporaryregulations.

H. Harmonization with IGAs

These temporary regulations modifythe definition of nonreporting IGA FFI toinclude (in addition to an FFI that is iden-tified or treated as a nonreporting financialinstitution pursuant to a Model 1 or Model2 IGA that is not a registered deemed-compliant FFI) an FFI that is a resident of,located in, or established in a Model 1 orModel 2 IGA jurisdiction, as the contextrequires, and that meets the requirementsfor certified deemed-compliant FFI statusunder the temporary regulations. Certaindefinitions (including the definition of re-tirement plan under § 1.1471–6(f)) arealso modified to further harmonize thesetemporary regulations and the IGAs.

III. Comments and Changes to§ 1.1471–2—Requirement to Deduct andWithhold Tax on Withholdable Paymentsto Certain FFIs

A. Grandfathered obligations—definitions—material modification

Comments indicated that outstandinglife insurance contracts often contain aprovision permitting the substitution of aninsured and, as a result, cannot be a grand-fathered obligation under the final regula-tions. Because such provisions are preva-lent in existing life insurance contracts,the Treasury Department and the IRShave determined that life insurance con-tracts that have such a provision shouldbe eligible for grandfathered status untilthe provision is invoked, but that anychange or substitution of the insured un-der the contract should be treated as amaterial modification such that grandfa-thered status would no longer apply.These temporary regulations modify thefinal regulations accordingly.

B. Grandfatheredobligations—determination bywithholding agent of grandfatheredtreatment

The final regulations provide that awithholding agent is required to treat amodification of an obligation as materialif the withholding agent knows or hasreason to know that a material modifica-tion has occurred. The Treasury Depart-ment and the IRS received comments stat-

ing that it is difficult for a withholdingagent to determine whether there has beena material modification of a grandfatheredobligation absent a disclosure from theissuer of the obligation, and therefore thatthe receipt of such a disclosure should bethe only instance in which a withholdingagent is required to treat a modification ofan obligation as material. In response tothese comments, the temporary regula-tions modify the final regulations to pro-vide that a withholding agent, other thanthe issuer of the obligation (or an agent ofthe issuer), is required to treat a modifi-cation of an obligation as material only ifthe withholding agent has actual knowl-edge that a material modification has oc-curred. One example of an event that willcause a withholding agent to have actualknowledge of a material modification is ifthe withholding agent receives a disclosureindicating that there has been or will be amaterial modification to the obligation.

IV. Comments and Changes to§ 1.1471–3—Identification of Payee

A. Payee defined

1. Exceptions—U.S. Intermediary orAgent of a Foreign Person

Comments requested that, in cases inwhich a withholding agent makes a with-holdable payment to a U.S. insurance bro-ker that is acting as an intermediary for oragent of a foreign insurer, the withholdingagent be allowed to treat the U.S. insur-ance broker as the payee unless the with-holding agent has reason to know that theU.S. insurance broker will not satisfy itswithholding obligations. These temporaryregulations modify the final regulations toadopt this comment.

2. Exceptions—U.S. Branch of CertainForeign Banks or Foreign Insurance Com-panies

A payment made to a U.S. branch of aparticipating FFI or a registered deemed-compliant FFI may be treated as a paymentmade to a U.S. person if the branch istreated as a U.S. person for purposes ofwithholding under chapter 4. The final reg-ulations inadvertently omit a cross-referenceto the regulations containing the require-ments of U.S. branches to report informa-tion regarding certain U.S. owners ofowner-documented FFIs and passive


NFFEs. These temporary regulationsadd a cross-reference to § 1.1474–1(i)(1)and (2).

B. Determination of payee’s status—determination of whether the payment ismade to a QI, WP, or WT

In order to harmonize the rules in chap-ter 4 with those in chapters 3 and 61, thesetemporary regulations clarify that, withrespect to a withholding agent’s determi-nation of whether a payment is made to aQI, WP, or WT, a Form W–8IMY, “Cer-tificate of Foreign Intermediary, ForeignFlow-Through Entity, or Certain U.S.Branches for United States Tax Withhold-ing,” provided by such entity must containthe entity’s QI-EIN, WP-EIN, or WT-EIN(as applicable). In addition, QIs, WPs, andWTs that have a GIIN must provide botha QI-EIN, QP-EIN, or WT-EIN and theGIIN to a withholding agent on the FormW–8IMY.

C. Rules for reliably associating apayment with a withholding certificateor other appropriate documentation

1. Requirements for Validity ofCertificates—Withholding Certificate ofan Intermediary, Flow-Through Entity,or U.S. Branch (Form W–8IMY)—InGeneral

These temporary regulations clarifythat, when a participating FFI or a regis-tered deemed-compliant FFI has a branch(including a disregarded entity of the FFI)that both acts as an intermediary and islocated outside of the FFI’s country ofresidence, the GIIN of the branch (or dis-regarded entity) must be disclosed on thewithholding certificate. This change pro-vides more detail on the use of GIINsissued to branches or disregarded entitiesof an FFI and that are used, in part, toidentify an FFI to withholding agents.

2. Requirements for Validity ofCertificates—Withholding Certificate ofan Intermediary, Flow-Through Entity,or U.S. Branch (Form W–8IMY)—Withholding Statement—SpecialRequirements for an FFI WithholdingStatement

Comments requested additional clarifi-cation to the final regulations concerning

the requirements of an FFI withholdingstatement, specifically with regard to theuse of a chapter 4 withholding rate poolidentified on an FFI withholding state-ment to allocate a withholdable payment(or portion of a withholdable payment) topersons included within the chapter 4withholding rate pool. Some of these clar-ifications have already been previewed inthe draft FFI agreement, published inNotice 2013– 69, and the final FFIagreement, published in Rev. Proc.2014 –13. These temporary regulationsprovide further clarification of FFI with-holding statement requirements, includ-ing rules on when a chapter 4 withhold-ing rate pool may be used by an FFI toallocate withholdable payments to aclass of persons within a particular typeof chapter 4 withholding rate pool. Forexample, if a participating FFI (includ-ing a reporting Model 2 FFI) that is anon-U.S. payor receives a withholdablepayment on behalf of an account holderof a U.S. account, the participating FFImay include the account holder in achapter 4 withholding rate pool of U.S.payees provided on an FFI withholdingstatement to the withholding agent to allo-cate the payment (or portion thereof) to theU.S. payee pool when the participating FFIreports the account holder under § 1.1471–4(d)(3) (Form 8966, “FATCA Report,” re-porting) or § 1.1471–4(d)(5) (election toreport on Form 1099). As a result, the par-ticipating FFI need not provide payee spe-cific information to the withholding agentwith respect to the account holder, even ifsuch information would typically be re-quired under chapter 61, because it will bereported to the IRS under chapter 4.

Additionally, reporting Model 1 FFIsand reporting Model 2 FFIs (without re-gard to whether such FFIs are U.S. ornon-U.S. payors) may include certain re-calcitrant account holders in a chapter 4withholding rate pool of U.S. payeeswhen such payments are not subject towithholding under chapters 3 or 4 or tobackup withholding under section 3406(for example, presumed U.S. non-exemptrecipients). This rule was added to providecoordination between the various report-ing regimes. For example, a reportingModel 2 FFI may include an accountholder of a non-consenting U.S. accountin a chapter 4 withholding rate pool of

U.S. payees with respect to a withholdablepayment that is not subject to withholdingunder chapters 3 or 4 or to backup with-holding under section 3406 when the FFIreports the account holder as described in§ 1.1471–4(d)(6) for the year in which thepayment is made.

Finally, in order to clarify potentialambiguities, and as previewed in the draftand final FFI agreement, these temporaryregulations provide that an FFI withhold-ing statement should indicate the portionof the payment allocated to a pool ofrecalcitrant account holders that hold dor-mant accounts for which the FFI (and notthe withholding agent) will withhold inescrow under the procedures describedin § 1.1471– 4(b)(6). Additionally, aparticipating FFI that elects to applybackup withholding under § 1.1471–4(b)(3)(iii) to a withholdable paymentthat is also a reportable payment (asdescribed under chapter 61) must alsoindicate the portion of the payment al-located to each recalcitrant accountholder subject to backup withholdingunder section 3406 and report such pay-ment to the IRS on Form 1099. A par-ticipating FFI will not be able to makethe election to backup withhold under§ 1.1471– 4(b)(3)(iii) unless it is able toreport on the payment and tax withheldconsistent with the rules under chapter61 and section 3406.

3. Requirements for Validity ofCertificates—Withholding Certificate ofan Intermediary, Flow-Through Entity,or U.S. Branch (Form W–8IMY)—Withholding Statement—SpecialRequirements for a Chapter 4Withholding Statement and ExemptBeneficial Owner Withholding Statement

An intermediary providing a withhold-ing certificate for a withholdable paymentunder chapter 4 may also need to provideinformation under chapter 3 or chapter 61if those chapters also apply to the paymentthe intermediary receives. These tempo-rary regulations modify the final regula-tions to coordinate with chapters 3 and 61by providing cross-references to the reg-ulations under those chapters to clarify theinformation required to be included on awithholding statement when a withhold-able payment is also reportable underchapters 3 or 61.


4. Applicable Rules for WithholdingCertificates, Written Statements, andDocumentary Evidence—Period ofValidity

Under chapter 4, withholding certifi-cates are valid for three years, unless anexception permits indefinite validity (untila change in circumstances occurs). Bene-ficial owner withholding certificates pro-vided by certain entities qualify for indef-inite validity if the certificate is furnishedwith documentary evidence establishingthe entity’s foreign status. Comments re-quested that section 501(c) entities be ex-cluded from the requirement to furnishdocumentary evidence of foreign status asit is an undue burden on such entities. TheTreasury Department and the IRS agree thatit is appropriate to exclude these entitiesfrom the requirement to furnish documen-tary evidence of foreign status. In responseto these comments and to coordinate withthe rules under chapter 3, these temporaryregulations cross-reference the rules for in-definite validity of withholding certificatesfor section 501(c) entities in § 1.1441–1(e)(4)(ii)(B).

5. Applicable Rules for WithholdingCertificates, Written Statements, andDocumentary Evidence—ElectronicTransmission of Withholding Certificate,Written Statement, and DocumentaryEvidence

The final regulations provide that awithholding agent may accept withholdingcertificates, written statements, and docu-mentary evidence supporting a payee’sclaim of chapter 4 status electronically ifthe agent is able to verify the identity ofthe sender as the person named on theform. Comments requested that the veri-fication rules be modified or eliminated toreduce the burden on the withholdingagent. The Treasury Department and theIRS agree with the comments, but havedetermined that the electronic transmis-sion requirements under chapter 4 shouldmatch those to be revised under chapter 3in consideration of these comments.Therefore, these temporary regulationsmodify the final regulations by cross-referencing the electronic submissionrules in § 1.1441–1(e)(4)(iv)(C) whichhave been modified to adopt the change ina separate regulations package. These

temporary regulations also make similarconforming changes to the final regula-tions with respect to requirements for anintermediary to electronically submit awithholding statement with a withholdingcertificate to a withholding agent.

6. Applicable Rules for WithholdingCertificates, Written Statements, andDocumentary Evidence—AcceptableSubstitute Withholding Certificate—Non-IRS Form for Individuals

In general, a withholding agent maysubstitute its own form for an officialForm W–8 if the substitute form containsprovisions that are substantially similar tothe official form. The final regulationsprovide that if a substitute form is used inplace of a W–8BEN for individuals, theform must contain, among other things,the individual’s city and country of birth.The Treasury Department and the IRS re-ceived comments indicating that the inclu-sion of city of birth on this form wouldimpose an undue burden on withholdingagents. In response to comments, thesetemporary regulations remove the city ofbirth requirement. After further consider-ation, however, the temporary regulationsrequire that the substitute form must con-tain the individual’s date of birth, withoutregard to whether a foreign tax identifica-tion number is provided.

7. Documentation Furnished onAccount-by-Account Basis unlessException Provided for SharingDocumentation within ExpandedAffiliated Group—Preexisting Account

The Treasury Department and the IRSreceived comments requesting that, forpreexisting accounts, a withholding agentbe allowed to rely on documentation heldat a branch of the withholding agent or abranch of another expanded affiliatedgroup member even if the withholdingagent does not treat the accounts as con-solidated obligations. The comments indi-cated that, in certain cases, the require-ment to treat the accounts as consolidatedobligations in order to share documenta-tion is too burdensome. These temporaryregulations modify the final regulations toallow a withholding agent, with respect toa preexisting account that it maintains, torely on documentation furnished by a

payee for a preexisting account held atanother branch of the withholding agentor a branch of another expanded affiliatedgroup member solely to determine thechapter 4 status of the account holder if:(i) the withholding agent obtains and re-views copies of such documentation sup-porting the chapter 4 status of the payeeand (ii) the withholding agent has no rea-son to know that, when the documentationis obtained by the withholding agent, thedocumentation is unreliable or incorrect.

D. Documentation requirements toestablish payee’s chapter 4 status

1. Reliance on Pre-FATCA Form W–8

The final regulations generally allowthe withholding agent to rely on a pre-FATCA Form W–8 for international or-ganizations. In order to clarify a potentialambiguity and to conform with chapter 3,these temporary regulations provide thatreliance on a pre-FATCA Form W–8 islimited to international organizations asdefined under chapter 3 and under section7701(a)(18).

2. Identification of U.S. Persons—InGeneral

Under chapter 4, a withholding agentmust treat certain payees as U.S. persons.In order to clarify a potential ambiguity,these temporary regulations provide thatforeign branches of U.S. persons and FFIsthat have elected to be treated as U.S.persons under section 953(d) (despite thefact that such FFIs may not be U.S. per-sons for other purposes of chapter 4)should be treated as U.S. persons by awithholding agent if the withholdingagent has a valid Form W–9, “Request forTaxpayer Identification Number and Cer-tification,” from the payee or is required topresume that the payee is a U.S. person.This reduces burden because FFIs thathave elected to be treated as U.S. personsunder section 953(d) are generally treatedas U.S. persons under chapter 3 and wouldneed to provide a Form W–9 in connec-tion with payments subject to chapter 3withholding and reporting.


3. Identification of U.S.Persons—Preexisting Obligations

The final regulations provide that awithholding agent (other than a participat-ing FFI or registered deemed-compliantFFI) that makes a payment with respect toa preexisting obligation may treat a payeeas a U.S. person if it previously revieweda Form W–9 or other documentation thatestablished that the payee is a U.S. personand established that the payee is an ex-empt recipient for purposes of chapter 61.Comments from U.S. withholding agentsindicated that the burden of documentingsuch payees that have previously beenclassified as U.S. persons is both signifi-cant and disproportionate to the benefitsof obtaining documentation of U.S. status.In response to these comments, these tem-porary regulations modify the final regu-lations to allow withholding agents (otherthan a participating FFI or registereddeemed-compliant FFI) to treat the payeeof a payment with respect to a preexistingobligation as a U.S. person if the with-holding agent has previously classified thepayee as a U.S. person for purposes ofchapters 3 or 61 and established (throughdocumentation or the application of therules in § 1.6049–4(c)(1)(ii)) that thepayee is an exempt recipient for purposesof chapter 61.

4. Identification of Participating FFIsand Registered Deemed-Compliant FFIs

The final regulations generally providethat a withholding agent may only treat apayee as a participating FFI or registereddeemed-compliant FFI if the withholdingagent receives an appropriate withholdingcertificate and a GIIN. The final regula-tions also provide a transitional rule forwhen withholding agents may treat pay-ments made prior to January 1, 2017, withrespect to a preexisting obligation, asmade to a payee that is a participating FFIor registered deemed-compliant FFI. Un-der this rule the payee only needs to pro-vide the withholding agent with its GIIN(which the withholding agent must verify)and indicate whether the FFI is a partici-pating FFI or a registered deemed-compliant FFI. After further considerationand to coordinate with the rules underchapters 3 and 61, these temporary regu-

lations modify the final regulations to pro-vide that in such cases the payee must alsohave provided the withholding agent witha pre-FATCA Form W–8, as payees thatreceive U.S. source FDAP income wouldhave already been required to provide awithholding certificate to a withholdingagent. These temporary regulations fur-ther clarify the final regulations such that,when a participating FFI or a registereddeemed-compliant FFI has a branch (in-cluding a disregarded entity of the FFI)that is located outside of the FFI’s countryof residence and receives the payment, theGIIN of the branch (or disregarded entity)must be disclosed on the withholding cer-tificate.

5. Identification of Excepted NFFEs—Identifying a Direct Reporting NFFE,Identifying a Sponsored DirectReporting NFFE, and Identification ofan Excepted Inter-Affiliate FFI

These temporary regulations providethat direct reporting NFFEs and sponsoreddirect reporting NFFEs qualify as ex-cepted NFFEs. Consistent with thischange, these temporary regulations addto the final regulations identification ruleswith respect to direct reporting NFFEsand sponsored direct reporting NFFEs.Additionally, under the final regulations, afinancial institution does not include cer-tain foreign entities that are consideredexcepted inter-affiliate FFIs. One of therequirements for such an entity is that itdoes not receive payments from, or holdan account with, a withholding agent otherthan a member of its expanded affiliatedgroup. Comments requested that such en-tities be permitted to hold bank accountswith certain non-U.S. persons outside ofthe expanded affiliated group. The tempo-rary regulations modify the final regula-tions with respect to an excepted inter-affiliate FFI to allow such FFIs to holddepository accounts to pay for expenses inthe country in which the FFI is operatingand that are maintained within the samecountry. Accordingly, conforming changeshave also been made by these temporaryregulations to add identification rules withrespect to an excepted inter-affiliate FFI.An identification rule was not necessaryunder the final regulations because an ex-cepted inter-affiliate FFI was not allowed

to hold an account with a withholdingagent other than a member of its expandedaffiliated group.

E. Standards of knowledge

1. GIIN Verification

The final regulations provide that, un-der certain circumstances, a withholdingagent has reason to know that a payee isnot a financial institution. To clarify apotential ambiguity, these temporary reg-ulations provide that a withholding agenthas reason to know that a withholdablepayment is being made to a limited branchof a participating or registered deemed-compliant FFI when it is directed to makepayment to an address of the FFI in ajurisdiction other than the address of theparticipating FFI or registered deemed-compliant FFI (or branch of such FFI) thatis identified as the FFI (or branch of suchFFI) that is supposed to receive the pay-ment. These temporary regulations fur-ther provide special rules regarding adirect reporting NFFE and a sponsoreddirect reporting NFFE’s claim of chap-ter 4 status.

2. Reason to Know

Under chapter 4, a withholding agentmay not rely on an FFI’s claim of chapter4 status if the withholding agent has rea-son to know that such claim is unreliableor incorrect. Under the final regulations,the withholding agent is required to re-view information used to satisfy AML duediligence requirements in determiningwhether a claim of chapter 4 status wasunreliable or incorrect. In response tocomments, these temporary regulationsmodify the final regulations such thatwhen a withholding agent has classified aperson by business type for AML duediligence or another regulatory purpose(other than for a tax purpose) that requiresthe withholding agent to periodicallymonitor or update the classification, thewithholding agent will have reason toknow that information contained in its ac-count files conflicts with the person’sclaim of chapter 4 status only if the clas-sification recorded by the withholdingagent is inconsistent with the chapter 4status claimed. Comments also requested


additional time to review the informationcollected for AML due diligence becauseit is typically gathered and stored by adifferent department or division of thewithholding agent and is not linked to thecustomers’ account files. These temporaryregulations adopt this comment and allow30 days to review information collectedfor AML due diligence for new accounts.

The final regulations also provide duediligence requirements with respect toU.S. indicia of account holders for pay-ments made with respect to preexistingobligations. After further consideration,the temporary regulations modify theseprovisions such that the U.S. indicia-based due diligence requirements gener-ally do not apply to a withholding agentthat has previously documented an ac-count for purposes of chapter 3 or chapter61. However, under the temporary regu-lations, a withholding agent that appliesthe limits on reason to know described inchapter 3 or chapter 61 must review forU.S. indicia any additional documentationupon which the withholding agent is rely-ing to determine the chapter 4 status of theperson. A cross-reference in § 1.1471–3(e)(4)(viii)(A)(4) has also been cor-rected.

F. Presumptions regarding chapter 4status of the person receiving thepayment in the absence ofdocumentation

The Treasury Department and the IRSintend for the chapter 4 presumption rulesfor determining the status of a person asan individual or an entity and as U.S. orforeign to be identical to the presumptionrules in chapters 3 and 61. To ensurecoordination of these rules, these tempo-rary regulations modify the final regula-tions by cross-referencing the presump-tion rules under chapter 3, rather thanrestating the rules in detail. This changeensures coordination between the pre-sumption rules in chapter 3 and chapter 4in the event that the chapter 3 presumptionrules are modified.

V. Comments and Changes to § 1.1471–4—FFI Agreement

A. Withholding requirements

1. Satisfaction of WithholdingRequirements—Election to Withholdunder Section 3406

As announced in Notice 2013–69,these temporary regulations modify thefinal regulations to coordinate withhold-ing under chapter 4 and backup withhold-ing under section 3406. Under § 1.1474–6(f), a participating FFI that makes awithholdable payment that is also a re-portable payment to a recalcitrant accountholder is not required to apply backupwithholding under section 3406 if it with-holds on the payment under chapter 4. Areportable payment that is not subject towithholding under chapter 4 remainssubject to backup withholding under sec-tion 3406. Additionally, these temporaryregulations provide under § 1.1471–4(b)(3)(iii) that a participating FFI maysatisfy its chapter 4 withholding obliga-tions for a withholdable payment that is areportable payment made to a recalcitrantaccount holder that is a U.S. non-exemptrecipient subject to backup withholding ifthe participating FFI elects for backupwithholding under section 3406 to apply(rather than withholding under chapter 4with regard to such payees). A participat-ing FFI will not be able to make the elec-tion to backup withhold under § 1.1471–4(b)(3)(iii) unless it is able to report on thepayment and tax withheld consistent withthe rules under chapter 61 and section3406.

2. Special Rule for Dormant Accounts

With respect to dormant accounts ofrecalcitrant account holders, the final reg-ulations permit a participating FFI to es-crow amounts withheld under chapter 4rather than deposit such amounts with theIRS. To coordinate with the chapter 3 and61 regulations which would have requiredsuch amounts to be withheld upon, thetemporary regulations limit this allowanceto amounts not otherwise subject to with-holding under chapter 3 or backup with-holding under section 3406. In addition, aparticipating FFI may not delegate its re-sponsibility to escrow the withheld tax to

the withholding agent from which it re-ceives the payment. These modificationsare intended to harmonize the treatment ofsuch escrowed amounts under chapters 3and 4 and are consistent with the provi-sions of the FFI agreement.

B. Due diligence for the identificationand documentation of account holdersand payees

1. Identification and DocumentationProcedure for Preexisting IndividualAccounts—Specific Identification andDocumentation Procedures forPreexisting Individual Accounts—U.S.Indicia and Relevant DocumentationRules—Documentation to be Retainedupon Identifying U.S. Indicia—StandingInstructions to Pay Amounts

The final regulations provide a cure forstanding instructions to pay amounts to anaccount maintained in the United Statesfor an account holder that differs fromthe cure provided under chapter 3.These temporary regulations modify thefinal regulations to provide an option tofollow the chapter 3 rules by adding across-reference to § 1.1441–7(b)(12).

2. Identification and DocumentationProcedure for Preexisting IndividualAccounts—Specific Identification andDocumentation Procedures forPreexisting IndividualAccounts—Exception for PreexistingIndividual Accounts PreviouslyDocumented as Held by ForeignIndividuals

The final regulations provide that aparticipating FFI that has previously es-tablished an account holder’s status as for-eign in order to fulfill its reporting obli-gations as a U.S. payor under chapter 61 isnot required to perform an electronicsearch or enhanced review. Comments re-quested that this exception be extended tothe identification and documentation per-formed by an agent of a participating FFIthat is a U.S. payor. To address thesecomments and to further coordinate be-tween the IGAs and the regulations, thesetemporary regulations modify the finalregulations to adopt this comment.


C. Account reporting

1. Reporting Requirements In General—Financial Institution Required to Reportan Account—Special Reporting ofAccount Holders of Territory FinancialInstitutions

Section 1.1471–4(d)(2)(ii)(B) providesa special reporting rule for participatingFFIs that maintain an account held by aterritory financial institution acting as anintermediary. If such territory financial in-stitution agrees to be treated as a U.S.person, the participating FFI is not re-quired to report under § 1.1471–4 withrespect to the account holders of the ter-ritory financial institution because suchentities will report directly to the IRS.However, if the territory financial institu-tion does not agree to be treated as a U.S.person, the final regulations require theparticipating FFI to report under§ 1.1471–4 with respect to each accountholder of the territory financial institutionthat receives a withholdable payment (orportion thereof) and that is a specifiedU.S. person or substantial U.S. owner of aforeign entity (indirect account holders).The final regulations are ambiguous abouthow a participating FFI could report onthese indirect account holders. To providemore clarity with respect to the reportingrequirements and to provide additionalflexibility, the temporary regulations giveparticipating FFIs the option of reportingon these indirect account holders on eitherForm 8966 or Form 1099. Additionally,these temporary regulations clarify thescope of information that must be reportedby a participating FFI on Form 8966 orForm 1099 with respect to account hold-ers of a territory financial institution thathas not elected to be treated as a U.S.person.

2. Reporting Requirements In General—Financial Institution Required to Reportan Account—Requirement to Identifythe GIIN of a Branch that Maintains anAccount

The final regulations provide that aparticipating FFI may elect to complywith its obligation to report under§ 1.1471–4(d)(3) or § 1.1471–4(d)(5) ona branch-by-branch basis. After furtherconsideration, the temporary regulations

provide that a participating FFI may re-port under § 1.1471–4(d)(3) or § 1.1471–4(d)(5) with respect to all of the participat-ing FFI’s U.S. accounts and recalcitrantaccounts, or separately with respect to anyclearly identified group of accounts (such asby line of business or the location of wherethe account is maintained). Consistentwith the final regulations, a participatingFFI must include the GIIN assigned tothe participating FFI or its branch (in-cluding a disregarded entity of the FFI),as applicable, to identify the jurisdictionof the FFI or branch (or disregardedentity) that maintains the accounts sub-ject to reporting.

3. Reporting Requirements In General—Financial Institution Required to Reportan Account—Reporting by ParticipatingFFIs and Registered Deemed-CompliantFFIs (including QIs, WPs, WTs, andCertain U.S. Branches Not Treated asU.S. Persons) for Accounts ofNonparticipating FFIs (Transitional)

The final regulations provide transitionalreporting requirements for a participatingFFI or registered deemed-compliant FFImaking a payment of a foreign reportableamount to a nonparticipating FFI. Under§ 1.1474–1(d)(4)(iii)(C) of the final regula-tions, a participating FFI is required toreport the aggregate amount of foreignreportable amounts paid to each payeethat is a nonparticipating FFI, even whensuch payments are not associated with afinancial account. The final regulationsdefine foreign reportable amount as a pay-ment of FDAP income that would be awithholdable payment if paid by a U.S.person. Comments requested changes andclarification with respect to the transi-tional rule because it was unclear regard-ing the scope of payments subject to re-porting and because of the cost ofmodifying systems to comply with thisreporting rule. These temporary regula-tions continue to provide transitional re-porting rules, but, consistent with Notice2013–69, modify it to address these com-ments. First, the temporary regulationsclarify that reporting will be required onlywith respect to nonparticipating FFIs thatmaintain an account with the participatingFFI. Second, these temporary regulationsmodify the definition of foreign reportableamount to mean foreign source payments

as described in § 1.1471–4(d)(4)(iv) paidto or with respect to each such account.Third, the temporary regulations providethat instead of reporting only foreign re-portable amounts paid to such nonpartic-ipating FFIs, a participating FFI mayreport all payments made with respect tothe account (not only foreign reportableamounts). Fourth, the temporary regula-tions provide that, when a participatingFFI is prohibited under domestic law fromreporting on a specific payee basis withoutconsent from the nonparticipating FFI andthe participating FFI has been unable toobtain such consent, it may report theaggregate number of accounts held by allsuch non-consenting nonparticipatingFFIs and the aggregate amount of foreignreportable amounts paid with respect tosuch accounts. These temporary regula-tions also modify the final regulations toprovide that the information required un-der the transitional reporting rule will beprovided on Form 8966, not Form1042–S, “Foreign Person’s U.S. SourceIncome Subject to Withholding,” and ac-cordingly move the transitional rule to§ 1.1471–4(d)(2)(ii)(F) and delete a resid-ual paragraph in § 1.1474–1(d)(3)(iii) andrenumber (d)(3)(iv) through (d)(3)(x).These changes were previously announcedin Notice 2013–69 and are also included inthe final FFI agreement. Finally, thetemporary regulations require partici-pating FFIs to retain account statementsfor accounts maintained for such non-participating FFIs.

4. Reporting Requirements In General—Special U.S. Account Reporting Rulesfor U.S. Payors—Special Reporting Rulefor U.S. Payors Other Than U.S.Branches

The final regulations provide that aparticipating FFI that is a U.S. payor(other than a U.S. branch) is treated assatisfying its chapter 4 reporting obliga-tions with respect to accounts that it isrequired to treat as U.S. accounts or ac-counts held by owner-documented FFIs ifit reports the information required underchapter 61 and the information describedunder § 1.1471–4(d)(5)(ii) (requiring ad-ditional information on accounts held byspecified U.S. persons, U.S. owned for-eign entities that are NFFEs, and owner-


documented FFIs). In response to com-ments, the temporary regulations modifythe final regulations to allow a participat-ing FFI that is a U.S. payor to satisfy itschapter 4 reporting obligations with re-spect to its U.S. accounts or accounts heldby owner-documented FFIs either by re-porting the information described in chap-ter 61 and § 1.1471–4(d)(5)(ii) or (iii) (theinformation reporting would be made onForm 1099 for U.S. accounts that are notU.S. owned NFFEs), as provided in thefinal regulations, or by reporting theinformation described in § 1.1471–4(d)(3)(ii), (d)(3)(iii) or (d)(3)(iv) (theinformation reporting would be made onForm 8966). A participating FFI that reportsthe information described in § 1.1471–4(d)(3)(ii), (d)(3)(iii) or (d)(3)(iv) and that isrequired to report payments under chapter61 is not relieved of that obligation.

5. Reporting Requirements in General—Special U.S. Account Reporting Rulesfor U.S. Payors—Special ReportingRules for U.S. Branches Not Treated asU.S. Persons

The final regulations do not include arule for reporting by a U.S. branch of aregistered deemed-compliant FFI or lim-ited FFI that is not treated as a U.S. per-son. To correct this oversight, these tem-porary regulations add new § 1.1471–4(d)(2)(iii)(C) to provide that such a U.S.branch is treated as having satisfied itsreporting requirements under chapter 4if it reports the information required un-der chapter 61 with respect to accountholders of accounts that the U.S. branchis required to treat as U.S. accounts oraccounts held by owner-documentedFFIs.

6. Reporting on Recalcitrant AccountHolders—Extensions in Filing

In response to comments, the tempo-rary regulations modify the final regula-tions to provide an automatic 90-day ex-tension of time in which to file Form 8966with respect to recalcitrant account hold-ers. An additional 90-day hardship exten-sion may be provided in certain circum-stances. These revisions are consistentwith the extensions of time already per-mitted for filing Form 8966 with respectto U.S. accounts.

7. Treatment of a Disregarded Entity

In response to comments and in orderto address a potential ambiguity in thefinal regulations about whether a disre-garded entity that is owned by an FFI istreated as a branch of an FFI, these tem-porary regulations clarify that the termbranch with respect to an FFI includes anentity that is disregarded as an entity sep-arate from the FFI. This clarification waspreviewed in the draft FFI agreementwhich was published in Notice 2013–69.These temporary regulations make addi-tional changes throughout the final regu-lations to further clarify the treatment of adisregarded entity when such an entity istreated as a branch of an FFI. For exam-ple, the GIIN verification procedures thatapply with respect to a branch of an FFIalso apply with respect to a disregardedentity that is owned by an FFI. Addition-ally, a disregarded entity that is owned byan FFI may be treated as a limited branchif the disregarded entity is unable to com-ply with the terms of an FFI agreementwith respect to accounts that it maintains,and the reason to know standards thatapply to withholdable payments made to abranch of a participating or registereddeemed-compliant FFI also apply to with-holdable payments made to a disregardedentity that is owned by such an FFI.

D. Expanded affiliated grouprequirements

The final regulations require that, ingeneral, each FFI within an expanded af-filiated group must be either a participat-ing FFI or a registered deemed-compliantFFI. Comments noted that some FFIswithin an expanded affiliated group willhave the status of an exempt beneficialowner and requested that the regulationsbe modified to allow for such FFIs to beexcluded from this requirement. The tem-porary regulations modify the final regu-lations to adopt this comment.

E. Verification—IRS review ofcompliance

The final regulations allow the IRS torequest additional information in its re-view of Form 8966. The temporary regu-lations further allow the IRS to request

additional information to determine anFFI’s compliance with the applicable FFIagreement and to assist the IRS with itsreview of account holder compliance withtax reporting requirements.

F. Event of default

The final regulations define events ofdefault under an FFI agreement. This def-inition includes the failure to significantlyreduce, over a period of time, the numberof recalcitrant account holders and payeesthat are nonparticipating FFIs. Commentswere made that this language was ambig-uous and could imply an event of default,for example, even in circumstances inwhich an FFI consistently complies withthe regulatory due diligence procedures.Accordingly, in response to the com-ments, these temporary regulations mod-ify the final regulations to provide that thisevent of default consists of a failure tosignificantly reduce, over a period of time,the number of account holders or payeesthat the participating FFI is required totreat as recalcitrant account holders ornonparticipating FFIs as a result of theparticipating FFI failing to comply withthe due diligence procedures for the iden-tification and documentation of accountholders and payees.

VI. Comments and Changes to§ 1.1471–5—Definitions Applicable toSection 1471

A. U.S. accounts—account holder—ingeneral; grantor trust

The definition of account holder in thefinal regulations does not treat a grantortrust as an account holder to the extentthat the grantor is treated as owning thetrust or all the assets in the trust undersections 671 through 679, regardless ofwhether the grantor is a U.S. or foreignperson. If such grantor is a foreign personand the beneficiary of the trust is a U.S.person, the grantor is treated as the ac-count holder and consequently, the ac-count is a non-U.S. account and no bene-ficiary that is a specified U.S. person istreated as having an interest in the portionof the trust owned by the grantor. There-fore, the specified U.S. person is not anaccount holder and would not be reportedeven though such U.S. person might be a


substantial U.S. owner of the foreigngrantor trust. Further, for purposes of de-termining whether a foreign grantor trusthas a substantial U.S. owner (and is a U.S.account), the final regulations provide thata substantial U.S. owner is any specifiedU.S. person treated as owning any portionof the grantor trust under sections 671through 679, and a trust owned only byU.S. grantors is not treated as having abeneficiary that is a specified U.S. person.Thus, in contrast to the account holderrule, the test for determining a substantialU.S. owner of a trust is made withoutregard to the treatment of the settlor of thetrust as a foreign grantor under sections671 through 679. In response to requestsfor further clarification, these temporaryregulations remove the grantor trust rulein the definition of account holder in thefinal regulations so that the general rulefor treating an entity as an account holderwill apply to treat a grantor trust as theaccount holder. Accordingly, a grantortrust that holds an account must providedocumentation of its chapter 4 status as aFFI or NFFE. This change harmonizes thetreatment of a grantor trust as an accountholder for purposes of the chapter 4 with-holding provisions with the provisions inchapters 3 and 61, which treat a grantortrust, rather than the grantor, as the payee.

B. Financial accounts—value of interestdetermined, directly or indirectly,primarily by reference to assets that giverise (or could give rise) to withholdablepayments, and return earned on theinterest (including upon a sale,exchange, or redemption) determined,directly or indirectly, primarily byreference to one or more investmententities or passive NFFEs

While financial accounts generally in-clude equity or debt interests (other thanregularly traded interests) in investmententities, financial accounts include onlycertain enumerated categories of interestsin holding companies, treasury centers,and other financial institutions. Amongthe enumerated categories are certain eq-uity and debt interests whose return orvalue is determined, directly or indirectly,primarily by reference to assets that giverise (or could give rise) to withholdablepayments. The final regulations providethat a debt interest is considered to have a

value determined primarily by referenceto such assets if the debt interest is se-cured by the assets of a U.S. person. Thefinal regulations provide that an equityinterest is considered to have a value de-termined primarily by reference to suchassets if the amount payable upon re-demption of the equity interest is securedprimarily by assets that give rise (or couldgive rise) to withholdable payments. Asimilar provision under another enumer-ated category treating certain interests inholding companies and treasury centersas financial accounts (see §§ 1.1471–5(b)(1)(iii)(B)(2) and (3)) also applies to adebt interest secured by the assets of oneor more investment entities described in§§ 1.1471–5(e)(4)(i)(B) or (C) or one ormore passive NFFEs that are members ofthe entity’s expanded affiliated group(collectively, the secured equity and debtprovisions).

Comments have suggested that theseprovisions are overbroad because it isquestionable whether the value of, or re-turn earned on, a debt or equity interest isdetermined primarily by reference to as-sets of a U.S. person solely because thedebt or equity interest is secured by suchassets. In response to these comments,these temporary regulations modify thefinal regulations by eliminating the se-cured equity or debt provisions. The factsand circumstances may nonetheless leadto a conclusion that the value of a securedequity or debt interest is determined, di-rectly or indirectly, primarily by referenceto assets giving rise to withholdable pay-ments (for example, when the amountpayable as interest on, or upon redemptionor retirement of, a debt interest is deter-mined primarily by reference to the assetssecuring the debt interest).

In addition, the final regulations pro-vide that a debt interest is considered tohave a value determined, directly or indi-rectly, primarily by reference to assets thatgive rise to withholdable payments ifamounts payable as interest on, or uponredemption or retirement of, the debt aredetermined primarily by reference to theprofits or assets of a U.S. person. Thisprovision inadvertently did not addresswhether debt interests with amounts pay-able by reference to equity interests in aU.S. person are debt interests whose re-turn or value is determined primarily by

reference to assets that give rise (or couldgive rise) to withholdable payments. Tocorrect this omission, the temporary reg-ulations modify the final regulations toinclude a reference to equity interests in,as well as profits and assets of, a U.S.person.

C. Definition of financial institution

1. In General

The final regulations provide that thedefinition of financial institution includesa holding company or treasury center thatis part of an expanded affiliated group thatincludes a depository institution, custodialinstitution, insurance company, or invest-ment entity. Comments noted that the def-inition, with respect to an insurance com-pany, should be limited to a specifiedinsurance company which is itself a finan-cial institution. These temporary regula-tions correct the final regulations to treat aholding company or treasury center as afinancial institution if it is part of an ex-panded affiliated group that includes aspecified insurance company.

2. Holding Financial Assets for Othersas a Substantial Portion of itsBusiness—Income Attributable toHolding Financial Assets and RelatedFinancial Services

The final regulations provide that anentity is a custodial institution if at least20 percent of the entity’s gross income isattributable to holding financial assets forothers and related financial services. Thefinal regulations define income attribut-able to holding financial assets to include,among other things, fees for providingfinancial advice. As a result, an entitycould qualify as a custodial institution un-der the final regulations even if the entity’ssole business is to provide financial adviceto clients and it does not conduct anyactivities as a custodian or broker. Com-ments indicated that this definition isoverly broad and could cause entities thatdo not hold financial assets and thereforehave no financial accounts to be treated ascustodial institutions. In response, thesetemporary regulations modify the finalregulations to define income attributableto holding financial assets to include feesfor providing financial advice with respect


to financial assets held in (or to be held in)custody by the entity.

3. Investment Entity—Examples

The final regulations generally providethat an investment entity includes anentity whose gross income is primarilyattributable to investing, reinvesting, ortrading in financial assets and that is man-aged by another entity that primarily con-ducts as a business certain investment-related activities. Examples 7 and 8 in§ 1.1471–5(e)(4)(v) are clarified such thata foreign introducing broker does notmanage an entity if it does not have dis-cretionary authority to manage its clients’assets. However, even though these factshave been added to Examples 7 and 8, theresults in Examples 7 and 8 remain thesame. In Example 7, even when the intro-ducing broker has discretionary authorityto act unilaterally on its client’s behalfwith respect to its client’s investments,because the introducing broker is an indi-vidual, the entity that she manages wouldnot be treated as an investment entity un-der § 1.1471–5(e)(4)(i)(B). By compari-son, because the introducing broker in Ex-ample 8 is an entity that primarilyconducts as a business certain investmentrelated activities, the entity managed bythe introducing broker would be treated asan investment entity under § 1.1471–5(e)(4)(i)(B).

4. Exclusions—Excepted NonfinancialGroup Entities—In General

The final regulations provide that aholding company, treasury center, or cap-tive finance company will not qualify asan excepted nonfinancial group entity if,among other things, it is formed in con-nection with or availed of certain arrange-ments or investment vehicles. Commentsrequested additional guidance on what itmeans to be “formed in connection withor availed of.” The temporary regulationsmodify the final regulations such that anyentity that existed at least six months priorto its acquisition by an arrangement orinvestment vehicle and which, prior to theacquisition, regularly conducted activitiesin the ordinary course of business will notbe considered to be formed in connectionwith or availed of such an arrangement or

investment vehicle, in the absence of otherfacts suggesting the existence of an in-vestment strategy.

5. Exclusions—Excepted NonfinancialGroup Entities—Nonfinancial Group

For purposes of determining whetheran expanded affiliated group is a nonfi-nancial group, the final regulations pro-vide an income test for the three-year pe-riod preceding the year for which thedetermination is made. Comments re-quested: (i) that this exclusion also beapplicable if the expanded affiliated grouphas been in existence for less than threeyears and (ii) that a group would qualify ifit meets the income test over an average ofthree years (rather than having to meet thetest in each of the three preceding years).The Treasury Department and the IRShave determined that the exclusion shouldbe available to expanded affiliated groupsthat have been in existence for less thanthree years, and these temporary regula-tions modify the final regulations accord-ingly. The Treasury Department and theIRS continue to believe, however, thatonly expanded affiliated groups that meetthe income test in each year of the testingperiod should qualify for the exclusion.

In order to provide further clarificationwhen determining the percentage of in-come or assets of the group that produceor are held for the production of passiveincome, these temporary regulations alsomodify the final regulations by excludingtransactions between members of the ex-panded affiliated group. In addition, thesetemporary regulations provide guidanceon measuring the value of such assets.

6. Exclusions—Excepted NonfinancialGroup Entities—Holding Company

Comments requested that, for purposesof determining if a holding company ispart of an excepted nonfinancial group, atrust or partnership that owns all the stockof a common parent corporation of anexpanded affiliated group be eligible fortreatment as a holding company and mem-ber of an excepted nonfinancial group.Otherwise, such entities are not treated aspart of the expanded affiliated group andcannot qualify for such exception. Thesetemporary regulations modify the final

regulations to allow a partnership or othernon-corporate entity to be treated as aholding company (and therefore as a po-tential member of an excepted nonfinan-cial group) if substantially all the activi-ties of such partnership (or other entity)consist of holding more than 50 percent ofthe voting power and value of the stock ofone or more common parent corpora-tion(s) of one or more expanded affiliatedgroup(s). If a partnership or other non-corporate entity owns more than 50 per-cent of the voting power and value of thestock of two or more corporations andeach such corporation has its own subsid-iaries such that it is the common parentcorporation of an expanded affiliatedgroup, each common parent corporation’sexpanded affiliated group will be treatedas a separate such group for purposes ofapplying the rules of this section unlessthe non-corporate entity is treated as thecommon parent entity of the entire ex-panded affiliated group in accordancewith § 1.1471–5(i)(10).

7. Exclusions—Excepted NonfinancialGroup Entities—Treasury Center

Comments were received that the def-inition of a treasury center in the finalregulations is too narrow in that an entitythat manages working capital but does nototherwise invest or trade may not satisfythis definition. For example, a group’scash pooling entity may be in a net deficitposition and therefore may not be consid-ered to be investing or trading in financialassets. In addition, with respect to thefinancing activities of such a vehicle, thefinal regulations could be read to limitsituations in which an entity that is itselfequity funded can qualify as a treasurycenter. In response to these comments, thetemporary regulations modify the finalregulations to clarify that an entity thatmanages the working capital of an ex-panded affiliated group (or any memberthereof) will not cease to qualify as atreasury center solely because it has noinvestments and does not trade in financialassets. Further, the temporary regulationsclarify that equity-funded affiliates mayqualify as treasury centers.


8. Exclusions—Excepted Inter-AffiliateFFI

Under the final regulations, a financialinstitution does not include certain foreignentities that are considered excepted inter-affiliate FFIs. One of the requirements forsuch an entity is that it does not receivepayments from, or hold an account with, awithholding agent other than a member ofits expanded affiliated group. Commentsrequested that such entities be permittedto hold bank accounts with certain non-U.S. persons outside of the expanded af-filiated group. The temporary regulationsmodify the final regulations to allow suchentities to hold depository accounts main-tained in the country in which the entity isoperating to pay for expenses in that samecountry.

D. Deemed-compliant FFIs

1. Registered Deemed-Compliant FFIs—Restricted Funds

Under chapter 4, interests in a re-stricted fund that are not issued directly bythe fund can only be sold through distrib-utors that are participating FFIs, registereddeemed-compliant FFIs, nonregisteringlocal banks, or restricted distributors. Inresponse to comments, even though thesetemporary regulations do not eliminate therequirement of the restricted fund to ter-minate its agreement with any distributorthat has a change in status that causes it tono longer qualify to be a distributor andredeem or transfer all debt and equity in-terests of the FFI issued through that dis-tributor, these temporary regulations doremove the requirement that the restrictedfund certify to the IRS.

2. Registered Deemed-Compliant FFIs—Qualified Credit Card Issuers andServicers

Comments were received that an FFIthat issues credit cards may form a sepa-rate entity that services the credit cards.Under the final regulations, such an entitycould be an FFI, but would not be treatedas a registered deemed-compliant FFI be-cause it is not an issuer of credit cards,even though such FFI would otherwisequalify for registered deemed-compliantFFI status. Pursuant to these comments,

the temporary regulations expand the reg-istered deemed-compliant FFI category toinclude qualified credit card servicers.

3. Registered Deemed-Compliant FFIs—Sponsored Investment Entities andControlled Foreign Corporations

Under the final regulations, an FFI re-mains liable for its withholding and re-porting obligations under chapter 4 even ifa sponsoring entity performs these respon-sibilities on behalf of such FFI. In re-sponse to comments, these temporary reg-ulations modify the final regulations toclarify that a sponsoring entity will not bejointly and severally liable for the spon-sored FFI’s obligations unless the spon-soring entity is also a withholding agentthat is separately liable for such obliga-tions.

4. Certified Deemed-Compliant FFIs—Nonregistering Local Bank

The final regulations provide that, inorder to be treated as a nonregisteringlocal bank, an FFI’s business must consistprimarily of receiving deposits from andmaking loans to unrelated retail custom-ers. Comments noted that the final regu-lations do not provide a definition of un-related for this and other purposes. Inaddition, it may be unclear how the finalregulations would apply to a member-owner of a credit union or similar coop-erative credit organization. In order to ad-dress these concerns, and consistent withthe IGAs, these temporary regulationsmodify the final regulations such that acredit union or similar cooperative creditorganization will be eligible for treatmentas a nonregistering local bank if its busi-ness consists primarily of receiving de-posits from and making loans to members,provided that no such member has agreater than five percent interest in suchcredit union or cooperative credit organi-zation. For purposes of determining whatunrelated means for retail customers of abank, as well as for purposes of aggregat-ing the interests of related members of acredit union or cooperative credit organi-zation under the five percent test, the tem-porary regulations provide that the rulesof section 267(b) apply.

5. Certified Deemed-Compliant FFIs—Limited Life Debt Investment Entities(Transitional)

Comments were received stating thatmost securitization investment vehiclescould not meet the requirements in thefinal regulations for a limited life debtinvestment entity (LLDIE) to be treated ascertified deemed-compliant FFIs. To ac-commodate industry practices and expandthe types of securitization vehicles thatwill qualify as a LLDIE, these temporaryregulations make a number of significantchanges to the definition of LLDIE in thefinal regulations. These changes include:(i) removing the requirement that a LL-DIE’s organizational documents cannotbe amended without the consent of all ofits investors; (ii) clarifying that a LLDIEissues debt or equity interests under a trustindenture or similar agreement; (iii) ex-tending the category so that it applies to aLLDIE that issued all of its interests on orbefore January 17, 2013 (for example, thedate that the final regulations were filed);(iv) allowing a LLDIE to be treated as acertified deemed-compliant FFI until theLLDIE liquidates or terminates; (v) re-moving the requirement that investors beunrelated to each other; and (vi) expand-ing the types of assets that the entity canhold and still qualify as a LLDIE.

6. Certified Deemed-Compliant FFIs—Investment Advisors and InvestmentManagers

In response to comments, and to coor-dinate with the IGAs, these temporaryregulations add certain investment advi-sors and investment managers that do notmaintain financial accounts as entities el-igible for treatment as certified deemed-compliant FFIs. Accordingly, these tem-porary regulations also add identificationrules with respect to such investment ad-visors and investment managers.

7. Related Persons

Certain provisions in the final regula-tions (such as §§ 1.1471–3(c)(9)(ii)(B);1.1471–5(f)(2)(i)(B); 1,1471–5(f)(4)(i);and 1.1471–5(i)(6)(i)) use the term relatedor unrelated to describe a relationship be-tween parties. Comments noted that thefinal regulations do not define what is


meant by related. These temporary regu-lations generally amend the relevant para-graphs of the final regulations to providethat parties are related for purposes of therelevant paragraph when such parties havea relationship described in section 267(b).

E. Expanded affiliated group

Comments requested that a LLDIE notbe considered a member of an expandedaffiliated group as a result of any memberof such expanded affiliated group owninginterests in such entity. These commentsindicated that because interests in theseentities are generally held through a clear-ing organization, these entities oftenwould not be able to determine the iden-tity of their investors. In addition, com-ments noted the burden of monitoringownership changes for the purpose of de-termining when to include or exclude aLLDIE as a member of an expanded af-filiated group, and the potential adverseconsequences to the rest of the group inthe event that any such entity is not prop-erly included. Comments also stated thatthe definition of expanded affiliated groupin the final regulations presents challengeswith respect to non-corporate entities thatare within a chain of commonly controlledcorporations. For example, the final regu-lations do not clearly indicate whetherconstructive ownership rules apply to de-termine whether a non-corporate entity iscontrolled by a member of the group. Inresponse to these comments, these tempo-rary regulations modify the definition ofexpanded affiliated group to exclude fromthe group pre-existing LLDIEs (for exam-ple, a LLDIE that issued all of its inter-ests, and was in existence, on or beforeJanuary 17, 2013) and clarify the owner-ship rules applicable to corporate and non-corporate members of the group. Thesetemporary regulations also permit (but donot require) a non-corporate entity to betreated as the common parent entity of theexpanded affiliated group.

VII. Comments and Changes to Section1.1471–6—Payments BeneficiallyOwned by Exempt Beneficial Owners—Foreign Central Bank of Issue

Comments were received stating thatthe functions of a foreign central bank of

issue may be performed by an institutionother than a bank. In response to thesecomments and in order to coordinate theregulations with the IGAs, these tempo-rary regulations modify the final regula-tions to include an institution performingsuch functions within the definition of aforeign central bank of issue. In addition,comments stated that a foreign centralbank of issue may earn income from cashas well as securities. Accordingly, thetemporary regulations allow a foreigncentral bank of issue to be a beneficialowner with respect to income earned oncash.

Comments also stated that some for-eign central banks maintain depository ac-counts solely for their employees. Thesecomments requested that such employee-only accounts not be treated as accountsheld in connection with commercial activ-ities. The Treasury Department and theIRS believe there is a low risk of taxevasion with respect to such employeeaccounts, and that the burden on centralbanks to register as an FFI for these ac-tivities and provide documentation as in-termediaries would be disproportionatelyhigh. Therefore, the temporary regulationsmodify the final regulations to excludemaintaining such accounts from the defi-nition of commercial activities.

VIII. Comments and Changes to Section1.1472–1—Withholding on NFFEs

A. Exceptions—payments to anexcepted NFFE—active NFFEs

Comments noted that fiscal year finan-cial statements may not be used in deter-mining whether an entity is an activeNFFE. These comments noted that prepar-ing calendar year financial statements forentities using non-calendar fiscal yearswould cause significant burdens withoutcommensurate benefits. Therefore, thesecomments suggested that an entity be ableto use either its calendar or fiscal year inanalyzing whether the entity meets theactive NFFE test. Comments further sug-gested that an entity be allowed to usefinancial statements based on foreign ac-counting principles. These commentshave been adopted and these temporaryregulations modify the final regulationsaccordingly.

B. Exceptions—payments made to anexcepted NFFE

After further consideration, these tem-porary regulations provide that QIs, WPs,and WTs are treated as excepted NFFEs.

C. Exceptions—payments to an exceptedNFFE—direct reporting NFFEs andsponsored direct reporting NFFEs

These temporary regulations providethat excepted NFFE includes a NFFE thatis a direct reporting NFFE or sponsoreddirect reporting NFFE. A direct reportingNFFE is a NFFE that elects to report onForm 8966 directly to the IRS certain in-formation about its direct or indirect sub-stantial U.S. owners (or it may be requiredto certify on Form 8966, or in such othermanner as the IRS may prescribe, that itdoes not have any such substantial U.S.owners) in lieu of providing such infor-mation to withholding agents or partici-pating FFIs with which the NFFE holds afinancial account. A direct reportingNFFE is required to register with the IRSto obtain a GIIN and to agree to complywith the provisions in the regulations re-garding reporting information about itssubstantial U.S. owners. In general, with-holding agents and participating FFIs willidentify and document a direct reportingNFFE in a manner similar to how with-holding agents and participating FFIs willdocument a participating FFI, includingby verifying that the GIIN of the directreporting NFFE is listed on the IRS FFIList. Notwithstanding that a direct report-ing NFFE will document itself to with-holding agents and participating FFIs in amanner similar to a participating FFI, itwill not be treated as a participating FFIand will not enter into an FFI agreement.Therefore, since the definition of exceptedNFFE includes a direct reporting NFFE,an account held by a direct reportingNFFE will not be treated as a U.S. accountand will not be reported to the IRS by aparticipating FFI with which the directreporting NFFE has a financial account.

In addition, these temporary regula-tions modify the final regulations suchthat an entity may act as a sponsor for oneor more direct reporting NFFEs. A spon-soring entity will report on Form 8966directly to the IRS (on the sponsored di-


rect reporting NFFE’s behalf) informationabout each sponsored direct reportingNFFE’s direct or indirect substantial U.S.owners. These changes were previouslyannounced in Notice 2013–69 and weremade in response to comments.

IX. Changes and Comments to§ 1.1473–1—Section 1473 Definitions

A. Definition of withholdable payment—U.S. source FDAP income defined—special rule for sales of interest bearingdebt obligations; gross proceedsdefined—payment of gross proceeds—amount of gross proceeds

Under the final regulations, incomethat is otherwise described as U.S. sourceFDAP income does not include interestaccrued on the date of a sale or exchangeof an interest bearing debt obligation if thesale occurs between two interest paymentdates. In order to harmonize this rule withthe rules in chapter 3, these temporaryregulations provide that this type of inter-est is not excluded from U.S. sourceFDAP income or gross proceeds if thesale or exchange is part of a plan de-scribed in the anti-abuse rule under§ 1.1441–3(b)(2)(ii).

B. Definition of withholdable payment—payments not treated as withholdablepayments—offshore payments of U.S.source FDAP income prior to 2017(transitional)

1. In General

The final regulations provide an exclu-sion from the definition of withholdablepayments for certain non-intermediatedoffshore payments of U.S. source FDAPincome prior to 2017. The Treasury De-partment and the IRS intended to providethat the exclusion does not apply to debtor equity issued by a U.S. person in orderto prevent U.S. persons from exploitingthis exception by issuing debt or equityinterests through a foreign branch. Toclarify the issue, these temporary regula-tions modify the final regulations suchthat the exclusion does not apply to pay-ments made with respect to debt or equityissued by a U.S. person (excluding a de-posit account maintained by a foreignbranch of a U.S. financial institution).

Comments indicated that because thedefined term payments with respect to anoffshore obligation is not used in the finalregulations, it is unclear whether, in orderfor this exception to apply, all paymentsmust be made outside the U.S. To clarify,these temporary regulations modify thefinal regulations to use the defined term.

2. Insurance Brokers

Because the final regulations treat in-surance brokers as intermediaries, thetransitional rule for offshore payments ofU.S. source FDAP income under the finalregulations does not apply to insuranceand reinsurance premiums paid to foreigninsurance companies by non-U.S. insur-ance brokers. Comments were receivedstating that the transitional rule shouldapply to such premiums, because it ap-plies to insurance premiums paid directlyby the insured. These temporary regula-tions provide a transitional rule such that,for purposes of the exception for offshorepayments, an intermediary does not in-clude a person acting as an insurance bro-ker with respect to premiums.

C. Definition of withholdable payment—payments not treated as withholdablepayments—collateral arrangementsprior to 2017 (transitional)

Comments requested relief from with-holding on payments made by a securedparty with respect to collateral securingone or more transactions under a collateralarrangement between the secured partyand the counterparty. Comments indicatedthat general industry practice is to com-mingle collateral from all counterpartiesin a single account held by the securedparty and that this practice does not permitthe identification of collateral to a partic-ular counterparty. As a result, a securedparty is currently unable to determinewhether it is acting as an intermediary ora principal with respect to some or all ofthe payments made to the counterpartybased upon the secured party’s right undera collateral arrangement to sell or loan thecollateral to a third party. To allow theindustry time to develop the systems nec-essary to make this determination, thesetemporary regulations add a transitionalrule so that withholding on such payments

will begin on January 1, 2017, providedthat only a commercially reasonableamount of collateral is held by the securedparty as part of the collateral arrangement.

D. Substantial U.S. owner—indirectownership of foreign entities—interestsowned or held by a related person

The final regulations define a substan-tial U.S. owner to include a specified U.S.person that owns, directly or indirectly,more than 10 percent of a foreign corpo-ration, partnership, or trust. Ownership isdetermined by aggregating interests heldby related persons, applying certain pro-visions of the regulations under section267 to determine whether such personsare related. These temporary regulationsclarify that a person must have direct orindirect ownership in the entity before theaggregation rules apply, such that a sub-stantial U.S. owner does not include anindividual with no ownership interestother than an interest attributed to himfrom a related person.

X. Changes and Comments to § 1.1474–1—Liability for Withheld Tax andWithholding Agent Reporting

A. Information returns for paymentreporting—filing requirement—ingeneral

The final regulations provide a generalstatement that a withholding agent needsto file a Form 1042–S to report a chapter4 reportable amount, even though thereare exceptions to this rule, such as theexception applicable to a participating FFIthat provides its withholding agent withsufficient information for it to do the re-porting. The final regulations have beenmodified to qualify this language.

The final regulations also provide thata recipient copy of the Form 1042–S mayinclude more than one type of income,which would thus display information dif-ferently than the copy filed with the IRS.For refund purposes, it is important forthe IRS to match the recipient copy of theForm 1042–S to the copy filed with theIRS. As previewed in the draft Form1042–S instructions released on Novem-ber 1, 2013, and to coordinate with theregulations under chapter 3, these tempo-rary regulations remove the allowance for


withholding agents to include more thanone type of income or other payment onthe copy of the Form 1042–S furnished tothe recipient.

However, to allow sufficient time forwithholding agents to adapt to this changeto the final regulations, a withholdingagent will be permitted to include morethan one type of income or other paymenton the recipient copy of the Form 1042–Sfor calendar year 2014. Starting with cal-endar year 2015, the Form 1042–S andaccompanying instructions will require aseparate Form 1042–S for each type ofincome or other payment.

B. Information returns for paymentreporting—filing requirement—recipient—defined; persons that arenot recipients

For Form 1042–S reporting, the finalregulations provide that an exceptedNFFE that is not acting as an agent orintermediary with respect to the paymentis the recipient of the payment in question.However, if such entity is a flow-throughentity, it is not treated as a recipient on theForm 1042–S for chapter 3 purposes. Inorder to have a consistent definition ofrecipient for chapters 3 and 4 reportingpurposes (because reporting for bothchapters is performed on a single Form1042–S), these temporary regulationsmodify the final regulations by providingthat an excepted or passive NFFE that is aflow-through entity is not treated as a re-cipient. Also, the final regulations havebeen modified to remove the provisionindicating that a participating FFI or reg-istered deemed-compliant FFI is not a re-cipient when it fails to provide informa-tion to the withholding agent regarding itsreporting pools, which is reflected onForm 1042–S. These temporary regula-tions further remove the references to aparticipating FFI, registered deemed-compliant FFI, and U.S. branch that is nottreated as a U.S. person from the defini-tion of persons that are not recipients.

C. Information returns for paymentreporting—amounts subject toreporting—in general

These temporary regulations make acorrection to the definition of the termchapter 4 reportable amount in § 1.1474–

1(d)(2) to add that this amount must alsobe a withholdable payment.

D. Information returns for paymentreporting—method of reporting—payments by U.S. withholding agents torecipients—payments to participatingFFIs, deemed-compliant FFIs, andcertain QIs

Consistent with changes made by thesetemporary regulations to clarify the chap-ter 4 withholding rate pools, the final reg-ulations are modified to clarify that awithholding agent that receives an FFIwithholding statement from a participat-ing FFI or registered deemed-compliantFFI [must report with respect to each suchpool identified on the FFI withholdingstatement] on a separate Form 1042–Sissued to the participating FFI, registereddeemed-compliant FFI, or QI (as applica-ble) as the recipient with respect to eachsuch pool identified on an FFI withhold-ing statement.

XI. Comments and Changes to§ 1.1474–6—Coordination of Chapter 4with Other Withholding Provisions

These temporary regulations add a co-ordination rule for instances in which aparticipating FFI withholds under chapter4 on a payment made to a recalcitrantaccount holder that is a U.S. non-exemptrecipient, and such payment is also a re-portable amount subject to backup with-holding. The rule is applicable to cases inwhich the participating FFI does not electto withhold on the payment under section3406.

XII. Future Guidance

A. Verification requirements ofsponsoring entities

Regulations describing the verificationrequirements of sponsoring entities willbe proposed and issued separately fromthese temporary regulations. Under theproposed regulations, a sponsoring entitywill be required to make two separatecompliance certifications: one on behalfof its sponsored FFI or sponsored directreporting NFFE with respect to the spon-sored FFI’s compliance with the require-ments of an FFI agreement or the spon-

sored direct reporting NFFE’s election tobe treated as a direct reporting NFFE (asapplicable), and a second certification onthe sponsoring entity’s own behalf withrespect to its compliance with the require-ments of its status as a sponsoring entity.In addition, the verification requirementsin the proposed regulations will allow theIRS to request additional informationfrom a sponsoring entity, such as regard-ing the information reported on the formsfiled with the IRS with respect to a spon-sored FFI or sponsored direct reportingNFFE in order to review such entities’compliance with the requirements formaintaining their status as a sponsoredFFI or sponsored direct reporting NFFE,and to assist the IRS with its review ofaccount holder or substantial U.S. ownercompliance with tax reporting require-ments.

B. FFI agreement

Several changes made by these tempo-rary regulations are not reflected in andmay be inconsistent with certain provi-sions in the FFI agreement. As a result,the Treasury Department and the IRS in-tend to publish a revenue procedure revis-ing the FFI agreement to conform to theseregulations. For instance, the rules regard-ing an optional escrow by a participatingFFI of tax withheld on withholdable pay-ments to dormant accounts held by recal-citrant account holders are modified inthese temporary regulations. The FFIagreement will be revised to reflect thatthe tax withheld in escrow becomes due90 days after the date that the accountceases to be a dormant account, ratherthan the date that is the earlier of 90 daysor the end of the calendar year followingthe date that the account ceases to be adormant account.

In addition, cross references to the tem-porary regulations under chapters 3, 4,and 61 will be updated to reflect changesto the numbering of various sections ofthose temporary regulations after the dateof publication of the revenue procedurecontaining the FFI agreement. For exam-ple, cross references in the FFI agreementto terms defined in the chapter 4 tempo-rary regulations will be modified to reflectthe addition of the term reporting Model 2FFI and the renumbering of subsequent


sections in § 1.1471–1(b). In addition, anincorrect citation to § 1.6049–4(b)(6) willbe removed.

The FFI agreement will also be revisedto reflect a change to the reporting re-quirements by participating FFIs that electto backup withhold under section 3406rather than to withhold under chapter 4 ona withholdable payment that is a report-able payment made to a recalcitrant ac-count holder that is a U.S. non-exemptrecipient subject to backup withholding.These temporary regulations clarify that aparticipating FFI may make the election toapply backup withholding under section3406 with respect to an account holderonly if it complies with the informationreporting rules under chapter 61 and sec-tion 3406. Accordingly, various sectionsof the FFI agreement will be modified toreflect this change.

Special Analyses

It has been determined that this Trea-sury decision is not a significant regula-tory action as defined in Executive Order12866, as supplemented by Executive Or-der 13653. Therefore, a regulatory assess-ment is not required. It also has beendetermined that section 553(b) of the Ad-ministrative Procedure Act (5 U.S.C.Chapter 5) does not apply to these regu-lations.

The collection of information in these tem-porary regulations is contained in a number ofprovisions including §§ 1.1471–3, 1.1471–4,1.1472–1, 1.1474–1, and 1.1474–6. In addi-tion, these temporary regulations amend anumber of collections of information setout in TD 9610. The IRS intends that theinformation collection requirements ofthese temporary regulations will be satis-fied by filing Forms 8957, 8966, the W–8series of forms, W–9, 1042, 1042–S, the1099 series of forms, as well as incometax returns (for example, Forms 1040 and1120F) and Form 843 relating to refunds.As a result, for purposes of the PaperworkReduction Act (44 U.S.C. 3507), the re-porting burden associated with the collec-tion of information in these temporaryregulations will be reflected in the infor-mation collection burden and OMB con-trol number of the appropriate IRS form.

An agency may not conduct or spon-sor, and a person is not required to re-spond to, a collection of information un-

less the collection of information displaysa valid control number.

Books and records relating to a collec-tion of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

Section 202 of the Unfunded MandatesReform Act of 1995, Public Law 104–4,requires that an agency prepare a costsand benefits analysis and a budgetary im-pact statement before promulgating a rulethat may result in the expenditure byState, local, and tribal governments, in theaggregate, or by the private sector, of$100 million or more in any one year. If abudgetary impact statement is required,section 205 of the Unfunded MandatesReform Act requires an agency to identifyand consider a reasonable number of reg-ulatory alternatives before promulgating arule. The Treasury Department and theIRS have determined that there is no fed-eral mandate imposed by this rulemakingthat may result in the expenditure byState, local, and tribal governments, in theaggregate, or by the private sector, of$100 million or more in any one year.

For the applicability of the RegulatoryFlexibility Act (5 U.S.C. chapter 6),please refer to the Special Analyses sec-tion of the preamble to the cross-referenced notice of proposed rulemakingpublished in the Proposed Rules section inthis issue of the Bulletin. Pursuant to sec-tion 7805(f) of the Code, these regulationshave been submitted to the Chief Counselfor Advocacy of the Small Business Ad-ministration for comment on their impacton small business.

Drafting Information

The principal authors of these regula-tions are Tara Ferris, Nancy Lee, MichaelKaercher, and Kamela Nelan of the Officeof Associate Chief Counsel (Interna-tional). However, other personnel fromthe IRS and the Treasury Department par-ticipated in the development of these reg-ulations.

* * * * *

Amendments to the Regulations

Accordingly, 26 CFR part 1 isamended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Section 1.1471–1 is also issued under

26 U.S.C. 1471.Section 1.1471–2 is also issued under









26 U.S.C. 1474.Par. 2. Section 1.1471–1 is amended:1. By removing paragraph (b)(81).2. By redesignating paragraphs

(b)(115) through (b)(142) as (b)(124)through (b)(151), paragraphs (b)(108)through (b)(114) as (b)(116) through(b)(122), paragraph (b)(107) as (b)(114),paragraphs (b)(82) through (b)(106) as(b)(88) through (b)(112), paragraphs(b)(75) through (b)(80) as (b)(82) through(b)(87), paragraphs (b)(62) through(b)(74) as (b)(68) through (b)(80), para-graphs (b)(39) through (b)(61) as (b)(44)through (b)(66), paragraphs (b)(28)through (b)(38) as (b)(32) through (b)(42),paragraphs (b)(18) through (b)(27) as(b)(21) through (b)(30), paragraphs (b)(9)through (b)(17) as (b)(11) through (b)(19),and paragraphs (b)(7) and (b)(8) as (b)(8)and (b)(9).

3. By adding new paragraphs (b)(7),(b)(10), (b)(20), (b)(31), (b)(43), (b)(67),(b)(81), (b)(113), (b)(115), and (b)(123).

4. By revising newly-designated para-graphs (b)(23), (b)(35), (b)(41), (b)(48),(b)(50), (b)(76), (b)(77), (b)(83), (b)(88),(b)(91), (b)(98), (b)(100), (b)(104)(i),(b)(104)(ii)(A) through (C), (b)(105),


(b)(124), (b)(125), (b)(128), (b)(135), and(b)(141).

The revisions and additions read as fol-lows:

§ 1.1471–1 Scope of chapter 4 anddefinitions.

* * * * *(b) * * *(7) [Reserved]. For further guidance,

see § 1.1471–1T(b)(7).* * * * *(10) [Reserved]. For further guidance,











see § 1.1471–1T(b)(76).(77) [Reserved]. For further guidance,




see § 1.1471–1T(b)(88).* * * * *

(91) [Reserved]. For further guidance,see § 1.1471–1T(b)(91).

* * * * *(98) [Reserved]. For further guidance,


see § 1.1471–1T(b)(100).* * * * *(104) * * *(i) [Reserved]. For further guidance,

see § 1.1471–1T(b)(104)(i).(ii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–1T(b)(104)(ii)(A).(B) [Reserved]. For further guidance,

see § 1.1471–1T(b)(104)(ii)(B).(C) [Reserved]. For further guidance,

see § 1.1471–1T(b)(104)(ii)(C).(105) [Reserved]. For further guidance,









see § 1.1471–1T(b)(141).* * * * *Par. 3. Section 1.1471–1T is added to

read as follows:

§ 1.1471–1T Scope of chapter 4 anddefinitions (temporary).

(a) [Reserved]. For further guidance,see § 1.1471–1(a).

(b) [Reserved]. For further guidance,see § 1.1471–1(b).

(1) through (6) [Reserved]. For furtherguidance, see § 1.1471–1(b)(1) through (6).

(7) Backup withholding. The termbackup withholding means the withhold-ing required under section 3406.

(8) [Reserved]. For further guidance,see § 1.1471–1(b)(8).


(10) Branch. The term branch means abranch as defined in § 1.1471–4(e)(2)(ii).


(20) Chapter 4 withholding rate pool.The term chapter 4 withholding rate poolmeans a pool identified on a chapter 4withholding statement (as described in§ 1.1471–3(c)(3)) provided by an interme-diary or flow-through entity with respectto a withholdable payment and that is al-located to payees that are nonparticipatingFFIs. The term chapter 4 withholding ratepool also includes, with respect to a poolidentified on an FFI withholding state-ment provided by a participating FFI orregistered deemed-compliant FFI with re-spect to a withholdable payment that isallocated to a class of recalcitrant accountholders subject to withholding underchapter 4 as described in § 1.1471–4(d)(6)(i) (including a pool of accountholders to which the escrow proceduresfor dormant accounts apply and U.S. per-sons included in a U.S. payee pool to theextent allowed and as described in§ 1.1471–3(c)(3)(iii)(B)(2)(ii) and (iii)).


(23) Consolidated obligations. Theterm consolidated obligations means mul-tiple obligations that a withholding agent(including a withholding agent that is anFFI) has chosen to treat as a single obli-gation in order to treat the obligations aspreexisting obligations pursuant to para-graph (b)(104)(ii) of this section or inorder to share documentation betweenthe obligations pursuant to § 1.1471–3(c)(8). A withholding agent that hasopted to treat multiple obligations as con-solidated obligations pursuant to the pre-vious sentence must also treat the obliga-tions as a single obligation for purposes ofsatisfying the standards of knowledge re-quirements set forth in § § 1.1471–3(e) and 1.1471–4(c)(2)(ii), and for pur-poses of determining the balance or valueof any of the obligations when applying


any of the account thresholds applicableto due diligence or reporting as set forth in§§ 1.1471–3(c)(6)(ii), 1.1471–3(d), 1.1471–4(c), 1.1471–5(a)(4), and 1.1471–5(b)(3)(vii).For example, with respect to consolidatedobligations, if a withholding agent hasreason to know that the chapter 4 statusassigned to the account holder or payee ofone of the consolidated obligations is in-accurate, then it has reason to know thatthe chapter 4 status assigned for all otherconsolidated obligations of the accountholder or payee is inaccurate. Similarly, tothe extent that an account balance or valueis relevant for purposes of applying anyaccount threshold to one or more of theconsolidated obligations, the withholdingagent must aggregate the balance or valueof all such consolidated obligations.


(31) Direct reporting NFFE. The termdirect reporting NFFE has the meaning setforth in § 1.1472–1(c)(3).


(35) Effective date of the FFI agree-ment. The term effective date of the FFIagreement with respect to an FFI or abranch of an FFI that is a participating FFImeans the date on which the IRS issues aGIIN to the FFI or branch. For participat-ing FFIs that receive a GIIN prior to June30, 2014, the effective date of the FFIagreement is June 30, 2014.


(41) Excepted NFFE. The term ex-cepted NFFE means a NFFE that is de-scribed in § 1.1472–1(c)(1).


(43) Exempt recipient. The term ex-empt recipient means a person describedin § 1.6049–4(c)(1)(ii) (for interest, divi-dends, and royalties), a person describedin § 1.6045–2(b)(2)(i) (for broker pro-ceeds), and a person described in§ 1.6041–3(q) (for rents, amounts paid onnotional principal contracts, and otherfixed or determinable income).


(48) FFI agreement. The term FFIagreement means an agreement that is de-scribed in § 1.1471–4(a). An FFI agree-ment includes a QI agreement, a WP

agreement, and a WT agreement that isentered into by an FFI (other than an FFIthat is a registered deemed-compliant FFI,including a reporting Model 1 FFI) andthat has an effective date or renewal dateon or after June 30, 2014. The term FFIagreement also includes a QI agreementthat is entered into by a foreign branch ofa U.S. financial institution (other than abranch that is a reporting Model 1 FFI)and that has an effective date or renewaldate on or after June 30, 2014.


(50) Financial institution. The term fi-nancial institution has the meaning setforth in § 1.1471–5(e) and includes a fi-nancial institution as defined in an appli-cable Model 1 or Model 2 IGA.


(67) Intergovernmental agreement(IGA). The term intergovernmental agree-ment or IGA means any applicable Model1 or Model 2 IGA.


(76) Limited branch. The term limitedbranch has the meaning set forth in§ 1.1471–4(e)(2)(iii). With respect to areporting Model 2 FFI, a limited branch isa branch of the reporting Model 2 FFI thatoperates in a jurisdiction that preventssuch branch from fulfilling the require-ments of a participating FFI or deemed-compliant FFI, or that cannot fulfill therequirements of a participating FFI ordeemed-compliant FFI due to the expira-tion of the transitional rule for limitedbranches under § 1.1471–4(e)(2)(v), andfor which the reporting Model 2 FFImeets the terms of the applicable Model 2IGA with respect to the branch.

(77) Limited FFI. The term limited FFIhas the meaning set forth in § 1.1471–4(e)(3)(ii). With respect to a reportingModel 2 FFI, a limited FFI is a relatedentity that operates in a jurisdiction thatprevents the entity from fulfilling the re-quirements of a participating FFI ordeemed-compliant FFI or that cannot ful-fill the requirements of a participating FFIor deemed-compliant FFI due to the expi-ration of the transitional rule for limitedFFIs under § 1.1471–4(e)(3)(iv), and forwhich the reporting Model 2 FFI meets

the requirements of the applicable Model2 IGA with respect to the entity.

(78) through (80) [Reserved]. For fur-ther guidance, see § 1.1471–1(b)(78)through (80).

(81) Non-exempt recipient. The termnon-exempt recipient means a person thatis not an exempt recipient.


(83) Nonreporting IGA FFI. The termnonreporting IGA FFI means an FFI thatis identified as a nonreporting financialinstitution pursuant to a Model 1 IGA orModel 2 IGA that is not a registereddeemed-compliant FFI, and an FFI that is aresident of, or located or established in, aModel 1 or Model 2 IGA jurisdiction, as thecontext requires, and that meets the require-ments for certified deemed-compliant FFIstatus under § 1.1471–5(f)(2).


(88) Offshore obligation. The term off-shore obligation means an offshore obli-gation defined in § 1.6049–5(c)(1) (bysubstituting the terms withholding agentor financial institution for the term payor).


(91) Participating FFI. The term par-ticipating FFI means an FFI that hasagreed to comply with the requirements ofan FFI agreement, including an FFI de-scribed in a Model 2 IGA that has agreedto comply with the requirements of an FFIagreement (a reporting Model 2 FFI). Theterm participating FFI also includes a QIbranch of a U.S. financial institution, un-less such branch is a reporting Model 1FFI.


(98) Payor. The term payor has themeaning set forth in §§ 31.3406(a)–2 and1.6049–1(a)(2) and generally includes awithholding agent.


(100) Person. The term person has themeaning set forth in section 7701(a)(1)and the regulations thereunder and in-cludes an entity or arrangement that is aninsurance company. The term person alsoincludes, with respect to a withholdablepayment, a QI branch of a U.S. financialinstitution.


(101) through (103) [Reserved]. Forfurther guidance, see § 1.1471–1(b)(101)through (103).


(i) The term preexisting obligationmeans any account, instrument, contract,debt, or equity interest maintained, exe-cuted, or issued by the withholding agentthat is outstanding on June 30, 2014. Withrespect to a withholding agent that is aparticipating FFI, the term preexisting ob-ligation means any account, instrument,or contract (including any debt or equityinterest) maintained, executed, or issuedby the FFI that is outstanding on the ef-fective date of the FFI agreement. Withrespect to a withholding agent that is aregistered deemed-compliant FFI, a pre-existing obligation means any account, in-strument, or contract (including any debtor equity interest) that is maintained, ex-ecuted, or issued by the FFI prior to thelater of the date that the FFI registers asa deemed-compliant FFI pursuant to§ 1.1471–5(f)(1) and receives a GIIN orthe date the FFI is required to implementits account opening procedures under§ 1.1471–5(f).

(ii) [Reserved]. For further guidance,see § 1.1471–1(b)(104)(ii).

(A) The account holder or payee alsoholds with the withholding agent (or amember of the withholding agent’s ex-panded affiliated group or sponsored FFIgroup) an account, instrument, contract, orequity interest that is a preexisting obliga-tion under paragraph (b)(104)(i) of thissection;

(B) The withholding agent (and, as ap-plicable, the member of the withholdingagent’s expanded affiliated group orsponsored FFI group) treats both of theaforementioned obligations, and anyother obligations of the payee or ac-count holder that are treated as preexist-ing obligations under this paragraph(b)(104)(ii), as consolidated obligations;and

(C) With respect to an obligation that issubject to AML due diligence, the with-holding agent is permitted to satisfy suchAML due diligence for the obligation byrelying upon the AML due diligence per-formed for the preexisting obligation de-scribed in paragraph (b)(104)(i) of thissection.

(105) Pre-FATCA Form W–8. Theterm pre-FATCA Form W–8 means a ver-sion of a Form W–8 that was issued bythe IRS prior to 2013 (including an ac-ceptable substitute form based on suchversion) and that does not contain chapter4 statuses but otherwise meets the require-ments of § 1.1441–1(e)(1)(ii) applicableto such certificate (or substitute form) andhas not expired, or a Form W–8 that wasissued prior to 2013 and furnished by anindividual to establish such individual’sforeign status but otherwise meets the re-quirements of § 1.1441–1(e)(1)(ii) appli-cable to such certificate and has not ex-pired.


(113) Reportable payment. The termreportable payment means a payment ofinterest or dividends (as defined in section3406(b)(2)) and other reportable pay-ments (as defined in section 3406(b)(3)).


(115) Reporting Model 2 FFI. Theterm reporting Model 2 FFI means a par-ticipating FFI that is described in§ 1.1471–1(b)(91).


(123) Sponsored direct reportingNFFE. The term sponsored direct report-ing NFFE has the meaning set forth in§ 1.1472–1(c)(5).

(124) Sponsoring entity. The termsponsoring entity means (i) an entity thatregisters with the IRS and agrees to per-form the due diligence, withholding, andreporting obligations of one or more FFIspursuant to § 1.1471–5(f)(1)(i)(F) or(f)(2)(iii); or (ii) an entity that registerswith the IRS and agrees to perform thedue diligence and reporting obligations ofone or more direct reporting NFFEs pur-suant to § 1.1472–1(c)(5).

(125) Standardized industry codingsystem. The term standardized industrycoding system means a coding systemused by the withholding agent or FFI toclassify account holders by business typefor purposes other than U.S. tax purposesand that was implemented by the with-holding agent by the later of January 1,2012, or six months after the date the

withholding agent was formed or orga-nized.


(128) Substantial U.S. owner. The termsubstantial U.S. owner or substantialUnited States owner has the meaning setforth in § 1.1473–1(b). In the case of areporting Model 2 FFI, in applying thissection with respect to a passive NFFE theterm substantial U.S. owner means a con-trolling person as defined in the applica-ble Model 2 IGA.


(135) U.S. branch treated as a U.S.person. The term U.S. branch treated as aU.S. person means a U.S. branch of aparticipating FFI, registered deemed-compliant FFI, or NFFE that is treated as aU.S. person under § 1.1441–1(b)(2)(iv)(A).


(141) U.S. person—(i) The term U.S.person or United States person means aperson described in section 7701(a)(30),the United States government (includingan agency or instrumentality thereof), aState (including an agency or instrumen-tality thereof), or the District of Columbia(including an agency or instrumentalitythereof). The term U.S. person or UnitedStates person also means a foreign insur-ance company that has made an electionunder section 953(d), provided that eitherthe foreign insurance company is not aspecified insurance company (as de-scribed in § 1.1471–5(e)(1)(iv)) and is notlicensed to do business in any State, or theforeign insurance company is a specifiedinsurance company and is licensed to dobusiness in any State.

(ii) The term U.S. person or UnitedStates person does not include a foreigninsurance company that has made an elec-tion under section 953(d) if it is a speci-fied insurance company and is not li-censed to do business in any State.


(c) [Reserved]. For further guidance,see § 1.1471–1(c).


(d) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 4. In § 1.1471–2,a. Revise paragraphs (a)(1), (a)(2)(i),

(a)(2)(ii) introductory text, (a)(2)(iii)(A),and (a)(2)(v).

b. Remove the heading of paragraph(a)(4)(ii), and add introductory text toparagraph (a)(4)(ii).

c. Revise paragraphs (a)(4)(ii)(A),(a)(4)(ii)(B), (b)(2)(i)(A)(1), (b)(2)(ii)(A)(4),(b)(2)(ii)(B)(2), (b)(2)(iv), and (b)(4)(ii).

The revisions read as follows:

§ 1.1471–2 Requirement to deduct andwithhold tax on withholdable paymentsto certain FFIs.

(a) * * *(1) [Reserved]. For further guidance,

see § 1.1471–2T(a)(1).(2) * * *(i) [Reserved]. For further guidance,

see § 1.1471–2T(a)(2)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–2T(a)(2)(ii).(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–2T(a)(2)(iii)(A).* * * * *(v) [Reserved]. For further guidance,

see § 1.1471–2T(a)(2)(v).* * * * *(4) * * *(ii) [Reserved]. For further guidance,

see § 1.1471–2T(a)(4)(ii).(A) [Reserved]. For further guidance,

see § 1.1471–2T(a)(4)(ii)(A).(B) [Reserved]. For further guidance,

see § 1.1471–2T(a)(4)(ii)(B).* * * * *(b) * * *(2) * * *(i) * * *(A) * * *(1) [Reserved]. For further guidance,

see § 1.1471–2T(b)(2)(i)(A)(1).* * * * *(ii) * * *(A) * * *(4) [Reserved]. For further guidance,

see § 1.1471–2T(b)(2)(ii)(A)(4).* * * * *(B) * * *

(2) [Reserved]. For further guidance,see § 1.1471–2T(b)(2)(ii)(B)(2).

* * * * *(iv) [Reserved]. For further guidance,

see § 1.1471–2T(b)(2)(iv).* * * * *(4) * * *(ii) [Reserved]. For further guidance,

see § 1.1471–2T(b)(4)(ii).* * * * *Par. 5. Section 1.1471–2T is added to

read as follows:

§ 1.1471–2T Requirement to deduct andwithhold tax on withholdable paymentsto certain FFIs (temporary).


(1) General rule of withholding. Undersection 1471(a), notwithstanding any ex-emption from withholding under anyother provision of the Code or regulations,a withholding agent must withhold 30 per-cent of any withholdable payment madeafter June 30, 2014, to a payee that is anFFI unless either the withholding agentcan reliably associate the payment withdocumentation upon which it is permit-ted to rely to treat the payment as ex-empt from withholding under paragraph(a)(4) of this section or the payment ismade under a grandfathered obligationthat is described in paragraph (b) of thissection or constitutes gross proceedsfrom the disposition of such an obliga-tion. A withholding agent that is makinga payment must determine who thepayee is under § 1.1471–3(a) with re-spect to that payment and the chapter 4status of such payee. See § 1.1471–3 forrequirements for determining the chap-ter 4 status of a payee, including addi-tional documentation requirements thatapply when a payment is made to anintermediary or flow-through entity thatis not the payee. Withholding under thissection applies without regard towhether the payee receives a withhold-able payment as a beneficial owner oras an intermediary. See paragraph(a)(2)(iv) of this section for a descrip-tion of the withholding requirements im-posed on territory financial institutionsas withholding agents under chapter 4.In the case of a withholdable payment toa NFFE, a withholding agent is required

to determine whether withholding ap-plies under section 1472 and § 1.1472–1. Except as otherwise provided in theregulations under chapter 4, a withhold-ing obligation arises on the date a pay-ment is made, as determined under§ 1.1473–1(a).

(2) [Reserved]. For further guidance,see § 1.1471–2(a)(2).

(i) Requirement to withhold on pay-ments of U.S. source FDAP income toparticipating FFIs and deemed-compliantFFIs that are NQIs, NWPs, or NWTs. Awithholding agent that, after June 30,2014, makes a payment of U.S. sourceFDAP income to a participating FFI ordeemed-compliant FFI that is an NQI re-ceiving the payment as an intermediary, ora NWP or NWT, must withhold 30 per-cent of the payment unless the withhold-ing is reduced under this paragraph(a)(2)(i). A withholding agent is not re-quired to withhold on a payment, or por-tion of a payment, that it can reliablyassociate, in the manner described in§ 1.1471–3(c)(2), with a valid interme-diary or flow-through withholding cer-tificate that meets the requirements of§ 1.1471–3(d)(4) and a withholdingstatement that meets the requirements of§ 1.1471–3(c)(3)(iii)(B) and that allo-cates the payment or portion of the pay-ment to payees for which no withhold-ing is required under chapter 4. Further,a withholding agent is not required towithhold on a payment that it canreliably associate with documentationindicating that the payee is a U.S.branch of a participating FFI that istreated as a U.S. person under § 1.1441–1(b)(2)(iv)(A).

(ii) Residual withholding responsibilityof intermediaries and flow-through enti-ties. An intermediary or flow-through en-tity that receives a withholdable paymentafter June 30, 2014, is required to with-hold on such payment to the extent re-quired under chapter 4. Notwithstandingthe previous sentence, an intermediary orflow-through entity is not required towithhold if another withholding agent haswithheld the full amount required. Fur-ther, an NQI, NWP, or NWT is not re-quired to withhold with respect to a with-holdable payment under chapter 4 if it hasprovided a valid intermediary withholdingcertificate or flow-through withholding


certificate and all of the information re-quired by § 1.1471–3(c)(3)(iii), and itdoes not know, and has no reason toknow, that another withholding agentfailed to withhold the correct amount. AQI’s, WP’s, or WT’s obligation to with-hold and report is determined in accor-dance with its QI withholding agreement,WP agreement, or WT agreement.

(iii) [Reserved]. For further guidance,see § 1.1471–2(a)(2)(iii).

(A) Election to be withheld upon forU.S. source FDAP income. A withholdingagent is required to withhold with respectto a payment, or portion of a payment, thatis U.S. source FDAP income subject towithholding that is made after June 30,2014, to a QI that has elected in accor-dance with this paragraph to be withheldupon, unless such withholding agentalso makes an election to be withheldupon under this paragraph (a)(2)(iii)(A)or is an FFI that may not accept primarywithholding responsibility for the pay-ment. In such case, the withholdingagent must withhold 30 percent of theportion of the payment that is allocable,pursuant to a withholding statement de-scribed in § 1.1471–3(c)(3)(iii)(B) pro-vided by the QI, to recalcitrant accountholders and nonparticipating FFIs. If nosuch allocation information is provided,the withholding agent must apply thepresumption rules of § 1.1471–3(f) todetermine the chapter 4 status of thepayee. A QI that is an FFI and thatmakes the election to be withheld uponwith respect to a payment of U.S. sourceFDAP income may not assume primarywithholding responsibility under chap-ter 3 for that payment. Conversely, a QIthat is an FFI and that does not make theelection to be withheld upon with re-spect to a payment of U.S. source FDAPincome is required to assume primarywithholding responsibility under chap-ter 3 for that payment. The election to bewithheld upon is only available withrespect to a payment of U.S. sourceFDAP income if—

(1) through (4) [Reserved]. For furtherguidance, see § 1.1471–2(a)(2)(iii)(A)(1)through (4).

(B) [Reserved]. For further guidance,see § 1.1471–2(a)(2)(iii)(B).

(iv) [Reserved]. For further guidance,see § 1.1471–2(a)(2)(iv).

(v) Withholding obligation of a foreignbranch of a U.S. financial institution.Generally, a foreign branch of a U.S. fi-nancial institution is a withholding agentand is not an FFI. However, a QI branchof a U.S. financial institution is both awithholding agent and either a participat-ing FFI or a registered deemed-compliantFFI. Accordingly, a QI branch of a U.S.financial institution must withhold in ac-cordance with this section and § 1.1472–1(b) in addition to meeting its obligationsunder either § 1.1471–4(b) and its FFIagreement or § 1.1471–5(f). Similarly, aforeign branch of a U.S. financial institu-tion that is also a reporting Model 1 FFI isboth a withholding agent and a registereddeemed-compliant FFI. Accordingly, aforeign branch of a U.S. financial institu-tion that is a reporting Model 1 FFI mustwithhold in accordance with this sectionand § 1.1472–1(b). A foreign branch of aU.S. financial institution that is not a QI isnot permitted to make an election to bewithheld upon.

(vi) [Reserved]. For further guidance,see § 1.1471–2(a)(2)(vi).



(i) through (i)(B) [Reserved]. For fur-ther guidance, see § 1.1471–2(a)(4)(i)through (a)(4)(i)(B).

(ii) Exception to withholding for cer-tain payments made prior to July 1, 2016(transitional).

(A) In general. For any withholdablepayment made prior to July 1, 2016, withrespect to a preexisting obligation forwhich a withholding agent does not havedocumentation indicating the payee’s sta-tus as a nonparticipating FFI, the with-holding agent is not required to withholdunder this section and section 1471(a) un-less the payee is a prima facie FFI.

(B) Prima facie FFIs. If the payee is aprima facie FFI, the withholding agentmust treat the payee as a nonparticipatingFFI beginning on January 1, 2015, untilthe date the withholding agent obtainsdocumentation sufficient to establish adifferent chapter 4 status of the payee. Aprima facie FFI means any payee if—

(1) through (2)(xviii) [Reserved]. For fur-ther guidance, see § 1.1471–2(a)(4)(ii)(B)(1)through (a)(4)(ii)(B)(2)(xviii).

(iii) through (viii) [Reserved]. For fur-ther guidance, see § 1.1471–2(a)(4)(iii)through (viii).

(5) through (5)(ii) [Reserved]. For fur-ther guidance, see § 1.1471–2(a)(5) through(a)(5)(ii).




(i) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(i).

(A) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(i)(A).

(1) Any obligation outstanding on July1, 2014;

(2) through (3) [Reserved]. For furtherguidance, see § 1.1471–2(b)(2)(i)(A)(2)through (3).

(B) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(i)(B).


(A) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(ii)(A).

(1) through (3) [Reserved]. For furtherguidance, see § 1.1471–2(b)(2)(ii)(A)(1)through (3).

(4) A life insurance contract underwhich the entire contract value is payableno later than upon the death of the indi-vidual(s) insured under the contract but, inthe case of a life insurance contract thatcontains a provision that permits the sub-stitution of a new individual as the insuredunder the contract, only until a substitu-tion occurs; and

(5) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(ii)(A)(5).

(B) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(ii)(B).

(1) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(ii)(B)(1).

(2) Lacks a stated expiration or term(for example, a savings deposit or demanddeposit, a deferred annuity contract, or anannuity contract that permits a substitu-tion of a new individual as the annuitantunder the contract);

(3) through (4) [Reserved]. For furtherguidance, see § 1.1471–2(b)(2)(ii)(B)(3)through (4).

(iii) [Reserved]. For further guidance,see § 1.1471–2(b)(2)(iii).


(iv) Material modification. In the caseof an obligation that constitutes indebted-ness for U.S. tax purposes, a materialmodification is any significant modifica-tion of the debt instrument as defined in§ 1.1001–3(e). For life insurance con-tracts, a material modification includesany substitution of the insured under thecontract. In all other cases, whether amodification of an obligation is material isdetermined based on the facts and circum-stances.

(3) through (3)(iii) [Reserved]. For fur-ther guidance, see § 1.1471–2(b)(3) through(b)(3)(iii).


(i) [Reserved]. For further guidance,see § 1.1471–2(b)(4)(i).

(ii) Determination of material modifi-cation. For purposes of paragraph(b)(2)(iv) of this section (defining materialmodification), a withholding agent, otherthan the issuer of the obligation (or anagent of the issuer), is required to treat amodification of the obligation as materialonly if the withholding agent has actualknowledge thereof, such as in the eventthe withholding agent receives a disclo-sure indicating that there has been or willbe a material modification to such obliga-tion. The issuer of the obligation (or anagent of the issuer) that is a withholdingagent is required to treat a modification ofthe obligation as material if the withhold-ing agent knows or has reason to knowthat a material modification has occurredwith respect to the obligation.




Par. 6. Section 1.1471–3 is amended:1. By adding paragraphs (c)(6)(ii)(B)(7),

(c)(8)(v), (d)(5)(iii), and (d)(11)(x) through(xii).

2. By revising paragraphs (a)(3)(iii),(a)(3)(v) through (vi), (b)(3), (c)(3)(ii)(C)through (D), (c)(3)(iii)(A) introductorytext, (c)(3)(iii)(A)(5), (c)(3)(iii)(B)(1)through (4), (c)(5)(ii)(B), (c)(6)(ii)(B)(3),(c)(6)(ii)(B)(5) through (6), (c)(6)(ii)(C)(3)through (5), (c)(6)(ii)(E)(3), (c)(6)(iv),(c)(6)(v)(A) through (B), (c)(9)(ii)(B),

(c)(9)(v), (d)(1), (d)(2)(i), (d)(2)(iii), (d)(4)(i)and (ii), (d)(4)(iii) introductory text,(d)(4)(iii)(A)(1), (d)(4)(iv)(A), (d)(4)(iv)(C)through (D), (d)(4)(v), (d)(5)(i) through (ii),(d)(6)(vii)(A)(1), (d)(11)(viii)(A) introduc-tory text, (d)(11)(viii)(C), (d)(12)(iii)(A)through (B), (e)(2) through (3), (e)(4) intro-ductory text, (e)(4)(i) through (iv), (e)(4)(v)introductory text, (e)(4)(v)(B)(1) through (2),(e)(4)(vi)(B), (e)(4)(vii)(B), (e)(4)(viii)(A)(4),and (f)(1) through (9).

The additions and revisions read as fol-lows:

§ 1.1471–3 Identification of payee.

(a) * * *(3) * * *(iii) [Reserved]. For further guidance,

see § 1.1471–3T(a)(3)(iii).* * * * *(v) [Reserved]. For further guidance,

see § 1.1471–3T(a)(3)(v).(vi) [Reserved]. For further guidance,

see § 1.1471–3T(a)(3)(vi).* * * * *(b) * * *(3) [Reserved]. For further guidance,

see § 1.1471–3T(b)(3).* * * * *(c) * * *(3) * * *(ii) * * *(C) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(ii)(C).(D) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(ii)(D).* * * * *(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(iii)(A).* * * * *(5) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(iii)(A)(5).* * * * *(B) * * *(1) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(iii)(B)(1).(2) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(iii)(B)(2).(i) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(iii)(B)(2)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(iii)(B)(2)(ii).(iii) [Reserved]. For further guidance,

see § 1.1471–3T(c)(3)(iii)(B)(2)(iii).

(3) [Reserved]. For further guidance,see § 1.1471–3T(c)(3)(iii)(B)(3).

(4) [Reserved]. For further guidance,see § 1.1471–3T(c)(3)(iii)(B)(4).

* * * * *(5) * * *(ii) * * *(B) [Reserved]. For further guidance,

see § 1.1471–3T(c)(5)(ii)(B).* * * * *(6) * * *(ii) * * *(B) * * *(3) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(B)(3).* * * * *(5) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(B)(5).(6) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(B)(6).(7) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(B)(7).(C) * * *(3) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(C)(3).(4) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(C)(4).(5) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(C)(5).* * * * *(E) * * *(3) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(ii)(E)(3).* * * * *(iv) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(iv).(v) * * *(A) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(v)(A).(B) [Reserved]. For further guidance,

see § 1.1471–3T(c)(6)(v)(B).* * * * *(8) * * *(v) [Reserved]. For further guidance,

see § 1.1471–3T(c)(8)(v).(9) * * *(ii) * * *(B) [Reserved]. For further guidance,

see § 1.1471–3T(c)(9)(ii)(B).* * * * *(v) [Reserved]. For further guidance,

see § 1.1471–3T(c)(9)(v).(d) * * *(1) [Reserved]. For further guidance,

see § 1.1471–3T(d)(1).(2) * * *


(i) [Reserved]. For further guidance,see § 1.1471–3T(d)(2)(i).

* * * * *(iii) [Reserved]. For further guidance,

see § 1.1471–3T(d)(2)(iii).* * * * *(4) * * *(i) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(ii).(iii) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(iii).(A) * * *(1) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(iii)(A)(1).* * * * *(iv) * * *(A) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(iv)(A).* * * * *(C) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(iv)(C).(D) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(iv)(D).(v) [Reserved]. For further guidance,

see § 1.1471–3T(d)(4)(v).(5) * * *(i) [Reserved]. For further guidance,

see § 1.1471–3T(d)(5)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–3T(d)(5)(ii) through(d)(5)(ii)(B).

(A) [Reserved]. For further guidance,see § 1.1471–3T(d)(5)(ii)(A).

(B) [Reserved]. For further guidance,see § 1.1471–3T(d)(5)(ii)(B).

(iii) [Reserved]. For further guidance, see§ 1.1471–3T(d)(5)(iii) through (d)(5)(iii)(B).

(6) * * *(vii) * * *(A) * * *(1) [Reserved]. For further guidance,

see § 1.1471–3T(d)(6)(vii)(A)(1).* * * * *(11) * * *(viii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–3T(d)(11)(viii)(A).* * * * *(C) [Reserved]. For further guidance,

see § 1.1471–3T(d)(11)(viii)(C).* * * * *(x) [Reserved]. For further guidance,

see § 1.1471–3T(d)(11)(x).(xi) [Reserved]. For further guidance,

see § 1.1471–3T(d)(11)(xi).

(xii) [Reserved]. For further guidance,see § 1.1471–3T(d)(11)(xii) through(d)(11)(xii)(C).

(12) * * *(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–3T(d)(12)(iii)(A).(B) [Reserved]. For further guidance,

see § 1.1471–3T(d)(12)(iii)(B).(e) * * *(2) [Reserved]. For further guidance,

see § 1.1471–3T(e)(2).(3) [Reserved]. For further guidance,

see § 1.1471–3T(e)(3).(i) [Reserved]. For further guidance,

see § 1.1471–3T(e)(3)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–3T(e)(3)(ii).(iii) [Reserved]. For further guidance,

see § 1.1471–3T(e)(3)(iii).(iv) [Reserved]. For further guidance,

see § 1.1471–3T(e)(3)(iv).(4) [Reserved]. For further guidance,


see § 1.1471–3T(e)(4)(i).(ii) [Reserved]. For further guidance, see

§ 1.1471–3T(e)(4)(ii) through (e)(4)(ii)(B).(A) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(ii)(A).(B) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(ii)(B).(iii) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(iii).(iv) [Reserved]. For further guidance, see

§ 1.1471–3T(e)(4)(iv through (e)(4)(iv)(B)(2).(v) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(v).* * * * *(B) * * *(1) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(v)(B)(1).(2) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(v)(B)(2).* * * * *(vi) * * *(B) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(vi)(B).(vii) * * *(B) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(vii)(B).* * * * *(viii) * * *(A) * * *(4) [Reserved]. For further guidance,

see § 1.1471–3T(e)(4)(viii)(A)(4).* * * * *

(f) * * *(1) [Reserved]. For further guidance,

see § 1.1471–3T(f)(1).(2) [Reserved]. For further guidance,






see § 1.1471–3T(f)(7) through (f)(7)(ii).(i) [Reserved]. For further guidance,

see § 1.1471–3T(f)(7)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–3T(f)(7)(ii).(8) [Reserved]. For further guidance,


see § 1.1471–3T(f)(9) through (f)(9)(ii).* * * * *Par. 7. Section 1.1471–3T is added to

read as follows:

§ 1.1471–3T Identification of payee(temporary).


(1) through (2) [Reserved]. For furtherguidance, see § 1.1471–3(a)(1) through (2).


(i) through (ii)(B) [Reserved]. For fur-ther guidance, see § 1.1471–3(a)(3)(i)through (a)(3)(ii)(B).

(iii) U.S. intermediary or agent of aforeign person. A withholding agent thatmakes a withholdable payment to a U.S.person and has actual knowledge that theperson receiving the payment is acting asan intermediary or agent of a foreign per-son with respect to the payment must treatsuch foreign person, and not the interme-diary or agent, as the payee of such pay-ment. Notwithstanding the previous sen-tence, a withholding agent that makes awithholdable payment to a U.S. financialinstitution or a U.S. insurance broker (tothe extent such withholdable payment is apayment of premiums) that is acting as anintermediary or agent with respect to thepayment on behalf of one or more foreignpersons may treat the U.S. financial insti-


tution or U.S. insurance broker as thepayee if the withholding agent does nothave reason to know that the U.S. finan-cial institution or U.S. insurance brokerwill not comply with its obligations towithhold under sections 1471 and 1472.


(v) Disregarded entity or limitedbranch. Except as otherwise provided inparagraph (a)(3)(v) through (vii) of thissection, a withholding agent that makes awithholdable payment to an entity that isdisregarded for U.S. federal tax purposesunder § 301.7701–2(c)(2)(i) as an entityseparate from its single owner must treatthe single owner as the payee. The rulesunder § 1.1471–3(d)(4) and (e)(3) applyto determine the circumstances underwhich a withholding agent may treat apayment made to a disregarded entityowned by an FFI as made to a payee thatis a participating FFI or registereddeemed-compliant FFI, and not as apayment made to a payee that is a non-participating FFI. A withholding agentthat makes a payment to a limitedbranch (including an entity disregardedas a separate entity from its owner ifsuch owner is an FFI and the disre-garded entity is unable to comply withthe terms of an FFI agreement with re-spect to accounts that it maintains) willbe required to treat the payment as beingmade to a nonparticipating FFI.

(vi) U.S. branch of certain foreignbanks or foreign insurance companies. Awithholdable payment to a U.S. branch ofeither a participating FFI or registereddeemed-compliant FFI is a payment to aU.S. person if the U.S. branch is treated asa U.S. person for purposes of § 1.1441–1(b)(2)(iv). In such case the U.S. branch istreated as the payee. A U.S. branch, how-ever, that is treated as a U.S. person under§ 1.1441–1(b)(2)(iv) is not treated as aU.S. person for purposes of the withhold-ing certificate it may provide to a with-holding agent for purposes of chapter 4.Accordingly, a U.S. branch of either aparticipating FFI or registered deemed-compliant FFI that is treated as a U.S.person must furnish a withholding certif-icate on a Form W–8 to certify its chapter4 status (and not a Form W–9, “Requestfor Taxpayer Identification Number andCertification”). See also paragraph (f)(6)

of this section for the rules under which awithholding agent can presume a paymentconstitutes income that is effectively con-nected with a U.S. trade or business. AU.S. branch of either a participating FFIor registered deemed-compliant FFI thatis treated as a U.S. person for purposes ofchapter 3 may not make an election to bewithheld upon, as described in section1471(b)(3) and § 1.1471–2(a)(2)(iii), forpurposes of chapter 4. See § 1.1471–4(c)(2)(v) for the rule requiring a U.S.branch that has elected to be treated as aU.S. person to apply the due diligencerules applicable to a U.S. withholdingagent in lieu of those otherwise applicableto a participating FFI. See also § 1.1474–1(i)(1) and (2) for the requirement of aU.S. branch to report information regard-ing certain U.S. owners of owner docu-mented FFIs and passive NFFEs. See§ 1.1471–4(d) for rules for when a U.S.branch of a participating FFI is required toreport as a U.S. person.

(vii) [Reserved]. For further guidance,see § 1.1471–3(a)(3)(vii).



(3) Determination of whether the pay-ment is made to a QI, WP, or WT. Awithholding agent may treat the personwho receives a payment as a QI, WP, orWT if the withholding agent can reliablyassociate the payment with a valid FormW–8IMY, as described in paragraph(c)(3)(iii) of this section, that indicatesthat the person who receives the paymentis a QI, WP, or WT, provides the person’sQI-EIN, WP-EIN, or WT-EIN, and theperson’s GIIN, if applicable.



(1) through (2)(ii) [Reserved]. For fur-ther guidance, see § 1.1471–3(c)(1) through (c)(2)(ii).

(3) [Reserved]. For further guidance,see § 1.1471–3(c)(3).

(i) [Reserved]. For further guidance,see § 1.1471–3(c)(3)(i).

(ii) [Reserved]. For further guidance,see § 1.1471–3(c)(3)(ii).

(A) through (B) [Reserved]. For furtherguidance, see § 1.1471–3(c)(3)(ii)(A)through (B).

(C) The person’s entity classificationfor U.S. tax purposes;

(D) The person’s chapter 4 status; and(E) [Reserved]. For further guidance,

see § 1.1471–3(c)(3)(ii)(E).(iii) [Reserved]. For further guidance,

see § 1.1471–3(c)(3)(iii).(A) In general. A withholding certifi-

cate of an intermediary, flow-through en-tity, or U.S. branch of such entity(whether or not such branch is treated as aU.S. person) is valid for purposes of chap-ter 4 only if it is furnished on a FormW–8IMY, an acceptable substitute form,or such other form as the IRS may pre-scribe, it is signed under penalties of per-jury by a person with authority to sign forthe person named on the form, its validityperiod has not expired, and it contains thefollowing information, statements, andcertifications—

(1) through (4) [Reserved]. For furtherguidance, see § 1.1471–3(c)(3)(iii)(A)(1)through (4).

(5) A GIIN, in the case of a participat-ing FFI or a registered deemed-compliantFFI (including a U.S. branch of such anentity, whether or not such branch istreated as a U.S. person, and a QI, WP, orWT that is a participating FFI or regis-tered deemed-compliant FFI), and an EINin the case of a QI, WP, or WT. Addition-ally, if a branch (other than a U.S. branch)of a participating FFI or registereddeemed-compliant FFI outside of itscountry of residence acts as an intermedi-ary, the GIIN of such branch must beprovided on the withholding certificate. Inthe case of a U.S. branch, the GIIN pro-vided must be the GIIN assigned to theparticipating FFI or registered deemed-compliant FFI.

(6) through (12) [Reserved]. For furtherguidance, see § 1.1471–3(c)(3)(iii)(A)(6)through (12).

(B) [Reserved]. For further guidance,see § 1.1471–3(c)(3)(iii)(B).

(1) In general. A withholding state-ment forms an integral part of the with-holding certificate and the penalties ofperjury statement provided on the with-holding certificate applies to the withhold-ing statement as well. The withholdingstatement may be provided in any manner,


and in any form, to which the personsubmitting the form and the withholdingagent mutually agree, including elec-tronically. A withholding statement maybe provided electronically only if itmeets the requirements of § 1.1441–1(e)(3)(iv)(B). The withholding state-ment must be updated as often as nec-essary for the withholding agent to meetits reporting and withholding obliga-tions under chapter 4. A withholdingagent will be liable for tax, interest, andpenalties under § 1.1474 –1(a) to the ex-tent it does not follow the presumptionrules of paragraph (f) of this section forany payment, or portion thereof, forwhich a withholding statement is re-quired and the withholding agent doesnot have a valid withholding statementprior to making a payment. A withhold-ing agent that is making a payment forwhich a withholding statement is alsorequired for purposes of chapter 3 mayonly rely upon the withholding state-ment if, in addition to providing theinformation required by paragraph(c)(3)(iii)(B) of this section, the with-holding statement also includes all ofthe information required for purposes ofchapter 3 and specifies the chapter 4status of each payee or pool of payeesidentified on the withholding statementfor purposes of chapter 3.

(2) Special requirements for an FFIwithholding statement.

(i) An FFI withholding statement mayinclude either payee-specific informationor pooled information that indicates theportion of the payment allocable to achapter 4 withholding rate pool of U.S.payees, each class of recalcitrant accountholders identified in § 1.1471–4(d)(6), ora class of nonparticipating FFIs. If payee-specific information is provided for pur-poses of chapter 4 it must indicate boththe portion of the payment allocated toeach payee and each payee’s chapter 4status. A participating FFI that applies theescrow procedures described in § 1.1471–4(b)(6) for dormant accounts must alsoindicate the portion of the payment allo-cated to a chapter 4 withholding rate poolof recalcitrant account holders that holddormant accounts for which the participat-ing FFI (and not the withholding agent)will withhold in escrow. The withholdingstatement provided by a participating FFI

that applies the election to backup with-hold under § 1.1471–4(b)(3)(iii) mustalso indicate the portion of the reportablepayment that is a withholdable paymentallocated to each recalcitrant accountholders subject to backup withholding un-der section 3406. See section 3406 forwhen backup withholding is required, in-cluding the exception to backup withhold-ing under § 31.3406(g)–1(e). Regardlessof whether the FFI withholding statementprovides information on a pooled orpayee-specific basis, a withholding state-ment provided by an FFI other than an FFIacting as a WP, WT, or QI with respect tothe account must also identify each inter-mediary or flow-through entity that re-ceives the payment and such entity’schapter 4 status and GIIN, when applica-ble. An FFI withholding statement mustalso include any other information that thewithholding agent or payor reasonably re-quests in order to fulfill its obligationsunder chapter 4, and chapters 3 and 61, ifapplicable.

(ii) An FFI withholding statement pro-vided by a reporting Model 2 FFI or areporting Model 1 FFI may indicate, withrespect to a withholdable payment, thatthe payment is allocable to a chapter 4withholding rate pool of U.S. payees,which is comprised of account holdersthat are not subject to withholding underchapters 3 or 4 or to backup withholdingunder section 3406 (for example, pre-sumed U.S. non-exempt recipients) andthat are, with respect to a reporting Model2 FFI, the holders of non-consenting U.S.accounts as described in an applicableIGA when the FFI reports the accounts inone of the pools described in § 1.1471–4(d)(6) for the year in which the paymentis made; or with respect to a reportingModel 1 FFI, the holders of accounts thathave U.S. indicia for which appropriatedocumentation sufficient to treat the ac-counts as held by other than specified U.S.persons has not been provided pursuant toan applicable Model 1 IGA and the report-ing Model 1 FFI reports the accounts asU.S. reportable accounts pursuant to theapplicable Model 1 IGA for the year inwhich the payment is made.

(iii) An FFI withholding statement pro-vided by a participating FFI or registereddeemed-compliant FFI that is a non-U.S.payor (a payor other than a U.S. payor as

defined in § 1.6049–5(c)(5)) may indi-cate, with respect to a withholdable pay-ment, that the payment is allocable to achapter 4 withholding rate pool of U.S.payees (in addition to the U.S. payeesdescribed in paragraph (c)(3)(iii)(B)(2)(ii)of this section), which is comprised ofaccount holders that are not subject towithholding under chapters 3 or 4 or tobackup withholding under section 3406and that are, with respect to a participatingFFI (including a reporting Model 2 FFI),account holders that hold U.S. accounts(as defined in § 1.1471–1(b)(134) and anapplicable Model 2 IGA) that the FFI re-ports as U.S. accounts pursuant to§ 1.1471–4(d)(3) or (5) for the year inwhich the payment is made; with respectto a registered deemed-compliant FFI(other than a reporting Model 1 FFI), ac-count holders of U.S. accounts that theFFI reports pursuant to the conditions ofits applicable deemed-compliant statusunder § 1.1471–5(f)(1) for the year inwhich the payment is made; or withrespect to a reporting Model 1 FFI, ac-count holders of U.S. accounts that thereporting Model 1 FFI reports as report-able U.S. accounts pursuant to an appli-cable Model 1 IGA, and which includesthe U.S. TINs of such account holders,for the year in which the payment ismade.

(3) Special requirements for a chapter4 withholding statement. A chapter 4withholding statement must contain thename, address, TIN (if any), entity type,and chapter 4 status of each payee, theamount allocated to each payee, a validwithholding certificate or other appropri-ate documentation sufficient to establishthe chapter 4 status of each payee, andeach intermediary or flow-through entitythat receives the payment on behalf of thepayee, in accordance with paragraph (d)of this section, and any other informationthe withholding agent reasonably requestsin order to fulfill its obligations underchapter 4. Notwithstanding the prior sen-tence, a chapter 4 withholding statement ispermitted to provide pooled allocation in-formation with respect to payees that aretreated as nonparticipating FFIs. Addi-tionally, if the payment is a reportableamount under chapters 3 or 61, see theprovisions of those chapters for any addi-tional information that may be required


(including pooled information under thealternative procedures described in§ 1.1441–1(e)(3)(iv)(D), if applicable).

(4) Special requirements for an exemptbeneficial owner withholding statement.An exempt beneficial owner withholdingstatement must include the name, address,TIN (if any), entity type, and chapter 4status of each exempt beneficial owner onbehalf of which the nonparticipating FFIis receiving the payment, the amount ofthe payment allocable to each exemptbeneficial owner, a valid withholding cer-tificate or other documentation sufficientto establish the chapter 4 status of eachexempt beneficial owner in accordancewith paragraph (d) of this section, and anyother information the withholding agentreasonably requests in order to fulfill itsobligations under chapter 4. The with-holding statement must allocate the re-mainder of the payment that is not allo-cated to an exempt beneficial owner to thenonparticipating FFI receiving the pay-ment. With respect to the amount of thepayment allocable to each exempt benefi-cial owner and subject to withholding un-der chapter 3, see § 1.1441–1(e)(3)(iv).

(C) through (H) [Reserved]. For furtherguidance, see § 1.1471–3(c)(3)(iii)(C)through (H).

(iv) through (v) [Reserved]. For furtherguidance, see § 1.1471–3(c)(3)(iv)through (v).



(i) [Reserved]. For further guidance,see § 1.1471–3(c)(5)(i) through (c)(5)(i)(E).


(A) [Reserved]. For further guidance,see § 1.1471–3(c)(5)(ii)(A).

(B) Preexisting obligation documen-tary evidence. With respect to a preexist-ing obligation of an entity, any classifica-tion in the withholding agent’s recordswith respect to the payee that was deter-mined based on documentation suppliedby the payee (or other person receivingthe payment) or a standardized industrycoding system and that was recorded bythe withholding agent consistent with itsnormal business practices for AML or an-other regulatory purpose (other than fortax purposes), to the extent permitted by

paragraph (d) of this section and providedthere is no U.S. indicia associated with thepayee for which appropriate curing docu-mentation has not been obtained as setforth in paragraph (e) of this section; and

(C) [Reserved]. For further guidance,see § 1.1471–3(c)(5)(ii)(C).





(B) [Reserved]. For further guidance,see § 1.1471–3(c)(6)(ii)(B).

(1) through (2) [Reserved]. For furtherguidance, see § 1.1471–3(c)(6)(ii)(B)(1)through (2).

(3) A beneficial owner withholdingcertificate that is provided by an entitydescribed in paragraph (c)(6)(ii)(C)(2) ofthis section (other than an entity describedin paragraph (c)(6)(ii)(C)(2)(iii) of thissection) and documentary evidence estab-lishing the entity’s foreign status whenboth are provided together;

(4) [Reserved]. For further guidance,see § 1.1471–3(c)(6)(ii)(B)(4).

(5) A withholding certificate, writtenstatement, or documentary evidence fur-nished by a foreign government, govern-ment of a U.S. territory, foreign centralbank (including the Bank for InternationalSettlements), international organization,or entity that is wholly owned by any suchentities;

(6) Documentary evidence that is notgenerally renewed or amended (such as acertificate of incorporation); and

(7) For the validity period of a benefi-cial owner withholding certificate pro-vided by an entity described in paragraph(c)(6)(ii)(C)(2)(iii) of this section, see§ 1.1441–1(e)(4)(ii).

(C) [Reserved]. For further guidance,see § 1.1471–3(c)(6)(ii)(C).

(1) through (2) [Reserved]. For furtherguidance, see § 1.1471–3(c)(6)(ii)(C)(1)through (c)(6)(ii)(C)(2)(x).

(3) A withholding certificate or writtenstatement of an owner-documented FFI,but not including the withholding state-ments, documentary evidence, and with-holding certificates of its owners (unless

such documentation is permitted indefi-nite validity under another provision);

(4) An owner reporting statement asso-ciated with a withholding certificate of anowner-documented FFI, provided the ac-count balance of all accounts held by suchowner-documented FFI with the with-holding agent does not exceed $1,000,000on the later of June 30, 2014, or the lastday of the calendar year in which theaccount was opened, and the last day ofeach subsequent calendar year precedingthe payment, applying the aggregationprinciples of § 1.1471–5(b)(4)(iii), andthe owner-documented FFI does not haveany contingent beneficiaries or designatedclasses with unidentified beneficiaries;and

(5) A withholding certificate of a pas-sive NFFE or excepted territory NFFE,provided the account balance of all ac-counts held by such entity with the with-holding agent does not exceed $1,000,000on the later of June 30, 2014, or the lastday of the calendar year in which theaccount was opened, and the last day ofeach subsequent calendar year precedingthe payment, applying the aggregationprinciples of § 1.1471–5(b)(4)(iii), andthe withholding agent does not know orhave reason to know that the entity hasany contingent beneficiaries or designatedclasses with unidentified beneficiaries.

(D) [Reserved]. For further guidance,see § 1.1471–3(c)(6)(ii)(D).

(E) [Reserved]. For further guidance,see § 1.1471–3(c)(6)(ii)(E).

(1) through (2) [Reserved]. For furtherguidance, see § 1.1471–3(c)(6)(ii)(E)(1)through (2).

(3) Withholding agent’s obligationwith respect to a change in circumstances.A certificate or other documentation be-comes invalid on the date that the with-holding agent holding the certificate ordocumentation knows or has reason toknow that circumstances affecting the cor-rectness of the certificate or documenta-tion have changed. However, a withhold-ing agent may choose to treat a person ashaving the same chapter 4 status that ithad prior to the change in circumstancesuntil the earlier of 90 days from the datethat the certificate or documentation be-came invalid due to the change in circum-stances or the date that a new certificate ornew documentation is obtained. See, how-


ever, § 1.1441–1(e)(4)(ii)(D) for require-ments, including the requirement to with-hold under chapters 3 or 61, applicablewhen a change in circumstances occursfor purposes of chapter 3 and the relatedgrace period allowed under § 1.1441–1(b)(3)(iv). A withholding agent may relyon a certificate without having to inquireinto possible changes of circumstancesthat may affect the validity of the state-ment, unless it knows or has reason toknow that circumstances have changed. Awithholding agent may require a new cer-tificate or additional documentation at anytime prior to a payment, regardless ofwhether the withholding agent knows orhas reason to know that any informationstated on the certificate or documentationhas changed.

(iii) through (iii)(B) [Reserved]. Forfurther guidance, see § 1.1471–3(c)(6)(iii)through (c)(6)(iii)(B).

(iv) Electronic transmission of with-holding certificate, written statement, anddocumentary evidence. A withholdingagent may accept a withholding certificate(including an acceptable substitute form),a written statement, or other such form asthe IRS may prescribe, electronically inaccordance with the requirements set forthin § 1.1441–1(e)(4)(iv)(B).

(v) [Reserved]. For further guidance,see § 1.1471–3(c)(6)(v).

(A) In general. A withholding agentmay substitute its own form for an offi-cial Form W– 8 (or such other officialform as the IRS may prescribe). A sub-stitute form will be acceptable if it con-tains provisions that are substantiallysimilar to those of the official form, itcontains the same certifications relevantto the transactions as are contained on theofficial form and these certifications areclearly set forth, and the substitute formincludes a signature-under-penalties-of-perjury statement identical to the one onthe official form. The substitute form isacceptable even if it does not contain allof the provisions contained on the officialform, so long as it contains those provi-sions that are relevant to the transactionfor which it is furnished. A withholdingagent may choose to provide a substituteform that does not include all of the chap-ter 4 statuses provided on the official ver-sion but the substitute form must includeany chapter 4 status for which withhold-

ing may apply, such as the categories fora nonparticipating FFI or passive NFFE.A withholding agent that uses a substituteform must furnish instructions relevant tothe substitute form only to the extent andin the manner specified in the instructionsto the official form. A withholding agentmay use a substitute form that is written ina language other than English and mayaccept a form that is filled out in a lan-guage other than English, but the with-holding agent must make available anEnglish translation of the form and itscontents to the IRS upon request. A with-holding agent may refuse to accept a cer-tificate (including the official Form W–8)from a person if the certificate provided isnot an acceptable substitute form providedby the withholding agent, but only if thewithholding agent furnishes the personwith an acceptable substitute form withinfive business days of receipt of an unac-ceptable form from the person. In thatcase, the substitute form is acceptableonly if it contains a notice that the with-holding agent has refused to accept theform submitted by the person and that theperson must submit the acceptable formprovided by the withholding agent in or-der for the person to be treated as havingfurnished the required withholding certif-icate.

(B) Non-IRS form for individuals. Awithholding agent may also substitute itsown form for an official Form W–8BEN(for individuals), regardless of whetherthe substitute form is titled a Form W–8.However, in addition to the name andaddress of the individual that is the payeeor beneficial owner, the substitute formmust provide all countries in which theindividual is resident for tax purposes,country of birth, a tax identification num-ber (if any) for each country of residence,the individual’s date of birth, and mustcontain a signed and dated certificationmade under penalties of perjury that theinformation provided on the form is accu-rate and will be updated by the individualwithin 30 days of a change in circum-stances that causes the form to becomeincorrect. Notwithstanding the previoussentence, the signed certification providedon a form need not be signed under pen-alties of perjury if the form is accompa-nied by documentary evidence that sup-ports the individual’s claim of foreign

status. Such documentary evidence maybe the same documentary evidence that isused to support foreign status in the caseof a payee whose account has U.S. indiciaas described in paragraph (e) of this sec-tion or § 1.1471–4(c)(4)(i)(A). The formmay also request other information re-quired for purposes of tax or AML duediligence in the United States or in othercountries.

(vi) through (vii) [Reserved]. For fur-ther guidance, see § 1.1471–3(c)(6)(vi)through (vii).

(7) through (7)(ii) [Reserved]. For fur-ther guidance, see § 1.1471–3(c)(7)through (c)(7)(ii).


(i) through (iv) [Reserved]. For furtherguidance, see § 1.1471–3(c)(8)(i) through (iv).

(v) Preexisting account. A withholdingagent may rely on documentation fur-nished by a payee for a preexisting ac-count held at another branch location ofthe same withholding agent or at a branchlocation of a member of the expandedaffiliated group of the withholding agent ifthe withholding agent obtains and reviewscopies of such documentation supportingthe chapter 4 status designated for thepayee and the withholding agent has noreason to know that, at the time the doc-umentation is obtained by the withholdingagent, the documentation is unreliable orincorrect. For example, the withholdingagent may not rely on documentation fur-nished by a payee for a preexisting ac-count held at another branch location ofthe same withholding agent or at a branchlocation of a member of the expandedaffiliated group of the withholding agentif, based on information in the withhold-ing agent’s account records, the withhold-ing agent has reason to know that suchdocumentation is unreliable or incorrect.





(B) The third-party data provider mustbe in the business of providing credit re-ports or business reports to customers un-related to it and must have reviewed all


information it has for the entity and veri-fied that such additional information doesnot conflict with the chapter 4 statusclaimed by the entity. For purposes of thisparagraph (c)(9)(ii)(B), a customer is re-lated to a third-party data provider if theyhave a relationship with each other that isdescribed in section 267(b).

(C) through (F) [Reserved]. For furtherguidance, see § 1.1471–3(c)(9)(ii)(C)through (F).

(iii) through (iv)(D) [Reserved]. Forfurther guidance, see § 1.1471–3(c)(9)(iii)through (c)(9)(iv)(D).

(v) Reliance upon documentation foraccounts acquired in merger or bulk ac-quisition for value. A withholding agentthat acquires an account from a predeces-sor or transferor in a merger or bulk ac-quisition of accounts for value is permit-ted to rely upon valid documentation (orcopies of valid documentation) collectedby the predecessor or transferor. In addi-tion, a withholding agent that acquires anaccount in a merger or bulk acquisition ofaccounts for value, other than a relatedparty transaction, from a U.S. withholdingagent, a participating FFI that has com-pleted all due diligence required under itsagreement with respect to the accountstransferred, or a reporting Model 1 FFIthat has completed all due diligence re-quired pursuant to the applicable Model 1IGA, may also rely upon the predecessor’sor transferor’s determination of the chap-ter 4 status of an account holder for atransition period of the lesser of sixmonths from the date of the merger oruntil the acquirer knows that the claim ofstatus is inaccurate or a change in circum-stances occurs. At the end of the transitionperiod, the acquirer will be permitted torely upon the predecessor’s determinationas to the chapter 4 status of the accountholder only if the documentation that theacquirer has for the account holder, in-cluding documentation obtained from thepredecessor or transferor, supports thechapter 4 status claimed. An acquirer thatdiscovers at the end of the transition pe-riod that the chapter 4 status assigned bythe predecessor or transferor to the ac-count holder was incorrect and, as a result,has not withheld as it would have beenrequired to but for its reliance upon thepredecessor’s determination, will be re-quired to withhold on payments made af-

ter the transition period, if any, to theaccount holder equal to the amount of taxthat should have been withheld during thetransition period but for the erroneousclassification as to the account holder’sstatus. For purposes of this paragraph(c)(9)(v), a related party transaction is amerger or sale of accounts in which eitherthe acquirer is in the same expanded af-filiated group as the predecessor or trans-feror prior to or after the merger or acqui-sition or the predecessor or transferor (orshareholders of the predecessor or trans-feror) obtains a controlling interest in theacquirer or in a newly formed entity cre-ated for purposes of the merger or acqui-sition. See § 1.1471–4(c)(2)(ii)(B) for anadditional allowance for a participatingFFI to rely upon the determination madeby another participating FFI as to thechapter 4 status of an account obtained aspart of a merger or bulk acquisition forvalue.

(d) [Reserved]. For further guidance,see § 1.1471–3(d).

(1) Reliance on pre-FATCA FormW–8. To establish a payee’s status as aforeign individual, foreign government,government of a U.S. territory, or interna-tional organization, a withholding agentmay rely upon a pre-FATCA Form W–8in lieu of obtaining an updated version ofthe withholding certificate. This relianceis only available in the case of a payee thatis an international organization if suchpayee is described under section7701(a)(18). To establish the chapter 4status of a payee that is not a foreignindividual, a foreign government, or aninternational organization, a withholdingagent may, for payments made prior toJanuary 1, 2017, rely upon a pre-FATCAForm W–8 in lieu of obtaining an updatedversion of the withholding certificate ifthe withholding agent has one or moreforms of documentary evidence describedin paragraphs (c)(5)(ii), as necessary, toestablish the chapter 4 status of the payeeand the withholding agent has obtainedany additional documentation or informa-tion required for the particular chapter 4status (such as withholding statements,certifications as to owners, or requireddocumentation for underlying owners), asset forth under the specific payee rules inparagraphs (d)(2) through (12) of this sec-tion. See paragraph (d)(4)(ii) and (iv) of

this section for specific requirements ap-plicable when relying upon a pre-FATCAForm W–8 for a participating FFI or reg-istered deemed-compliant FFI. This para-graph (d)(1) does not apply to nonregis-tering local banks, FFIs with only low-value accounts, sponsored FFIs, owner-documented FFIs, territory financialinstitutions that are not the beneficialowners of the payment, foreign centralbanks (other than a foreign central bankspecifically identified as an exempt bene-ficial owner under a Model 1 IGA orModel 2 IGA), or international organiza-tions not described under section7701(a)(18).

(2) [Reserved]. For further guidance,see § 1.1471–3(d)(2).

(i) In general. A withholding agentmust treat a payee as a U.S. person, in-cluding a payee that is a foreign branch ofa U.S. person (other than a branch that istreated as a QI) or is an FFI that haselected to be treated as a U.S. person fortax purposes under section 953(d), if it hasa valid Form W–9 associated with thepayee or if it must presume the payee is aU.S. person under the presumption rulesset forth in paragraph (f) of this section.Consistent with the presumption rules inparagraph (f)(3) of this section, a with-holding agent must treat a payee that hasprovided a valid Form W–9 as a specifiedU.S. person unless the Form W–9 con-tains a certification that the payee is otherthan a specified U.S. person. Notwith-standing the foregoing, a withholdingagent receiving a Form W–9 indicatingthat the payee is other than a specifiedU.S. person must treat the payee as aspecified U.S. person if the withholdingagent knows or has reason to know thatthe payee’s claim that it is other than aspecified U.S. person is incorrect. For ex-ample, a withholding agent that receives aForm W–9 from a payee that is an indi-vidual would be required to treat thepayee as a specified U.S. person regard-less of whether the Form W–9 indicatesthat the payee is not a specified U.S. per-son, because an individual that is a U.S.person is not excepted from the definitionof a specified U.S. person.

(ii) [Reserved]. For further guidance,see § 1.1471–3(d)(2)(ii).

(iii) Preexisting obligations. As an al-ternative to applying the rules in para-


graphs (d)(2)(i) and (ii) of this section, awithholding agent that makes a paymentwith respect to a preexisting obligationmay treat a payee as a U.S. person if it hasa notation in its files that it has previouslyreviewed a Form W–9 that establishedthat the payee is a U.S. person and hasretained the payee’s TIN. A withholdingagent, other than a participating FFI orregistered deemed-compliant FFI, mayalso treat a payee of a payment with re-spect to a preexisting obligation as a U.S.person if it has previously classified thepayee as a U.S. person for purposes ofchapters 3 or 61 and established(through the documentation or the appli-cation of the rules in § 1.6049 –4(c)(1)(ii)) that the payee is an exemptrecipient for purposes of chapter 61.

(3) through (3)(ii) [Reserved]. For fur-ther guidance, see § 1.1471–3(d)(3) through(d)(3)(ii).


(i) In general. Except as otherwise pro-vided in paragraphs (d)(4)(ii) through (iv)or paragraphs (e)(3)(i) and (ii) of this sec-tion, a withholding agent may treat apayee as a participating FFI or registereddeemed-compliant FFI only if the with-holding agent has a withholding certificateidentifying the payee as a participatingFFI, registered deemed-compliant FFI, orbranch thereof (including an entity that isdisregarded as an entity separate from theFFI), and the withholding certificate con-tains a GIIN for the payee that is verifiedagainst the published IRS FFI list in themanner described in paragraph (e)(3) ofthis section (indicating when a withhold-ing agent may rely upon a GIIN). Forpayments made prior to January 1, 2016, aregistered deemed-compliant FFI that is asponsored FFI must provide the GIIN ofits sponsoring entity on the withholdingcertificate if the sponsored FFI has notobtained a GIIN. See paragraph (c)(3)(iii)of this section for additional requirementsthat apply to a valid withholding certifi-cate provided by a participating FFI orregistered deemed-compliant FFI that is aflow-through entity or is acting as an in-termediary with respect to the payment, orby a U.S. branch of a participating FFI orregistered deemed-compliant FFI (includ-ing a U.S. entity that is disregarded as anentity separate from the FFI).

(ii) Exception for payments made priorto January 1, 2017, with respect to preex-isting obligations (transitional). For pay-ments made prior to January 1, 2017, withrespect to a preexisting obligation, a with-holding agent may treat a payee as aparticipating FFI or registered deemed-compliant FFI, or branch thereof (includ-ing an entity that is disregarded as anentity separate from the FFI), if the payeehas provided the withholding agent with apre-FATCA Form W–8 and (either orallyor in writing) its GIIN and has indicatedwhether it is a participating FFI or a reg-istered deemed-compliant FFI (or whethersuch branch or disregarded entity istreated as a participating FFI or a regis-tered deemed-compliant FFI), and thewithholding agent has verified the GIIN ofthe FFI, branch, or disregarded entity, asthe context requires, in the manner de-scribed in paragraph (e)(3) of this section.

(iii) Exception for offshore obligations.A withholding agent that makes a payment,other than a payment of U.S. source FDAPincome, with respect to an offshore obliga-tion may treat a payee as a participatingFFI or registered deemed-compliant FFI,or branch thereof (including an entity thatis disregarded as an entity separate fromthe FFI), if the payee provides the with-holding agent with its GIIN and stateswhether the payee is a participating FFI ora registered deemed-compliant FFI, andthe withholding agent verifies the GIIN inthe manner described in paragraph (e)(3)of this section. A withholding agent thatmakes a payment of U.S. source FDAPincome with respect to an offshore obli-gation may treat the payee as a participat-ing FFI or registered deemed-compliantFFI, or branch thereof (including an entitythat is disregarded as an entity separatefrom the FFI) if—

(A) [Reserved]. For further guidance,see § 1.1471–3(d)(4)(iii)(A).

(1) A written statement that containsthe payee’s GIIN, states that the payee isthe beneficial owner of the payment, andindicates whether the payee is treated as aparticipating FFI or a registered deemed-compliant FFI, as appropriate; and

(2) [Reserved]. For further guidance,see § 1.1471–3(d)(4)(iii)(A)(2).

(B) [Reserved]. For further guidance,see § 1.1471–3(d)(4)(iii)(B).

(iv) [Reserved]. For further guidance,see § 1.1471–3(d)(4)(iv).

(A) For payments made prior to Janu-ary 1, 2015, a withholding agent may treata payee that is an FFI or branch of an FFI(including an entity that is disregarded asan entity separate from the FFI) as a re-porting Model 1 FFI if it receives a with-holding certificate from the payee indicat-ing that the payee is a reporting Model 1FFI and the country in which the payee isa reporting Model 1 FFI, regardless ofwhether the certificate contains a GIIN forthe payee.

(B) [Reserved]. For further guidance,see § 1.1471–3(d)(4)(iv)(B).

(C) For payments made prior to Janu-ary 1, 2015, with respect to an offshoreobligation, a withholding agent may treata payee as a reporting Model 1 FFI if thepayee informs the withholding agent thatthe payee is a reporting Model 1 FFI andprovides the country in which the payee isa reporting Model 1 FFI. In the case of apayment of U.S. source FDAP income,such payee must also provide a writtenstatement that it is the beneficial ownerand documentary evidence supporting thepayee’s claim of foreign status (as de-scribed in paragraph (c)(5)(i) of this sec-tion).

(D) For payments made on or afterJanuary 1, 2015, that do not constituteU.S. source FDAP income, the withhold-ing agent may continue to treat a payee asa reporting Model 1 FFI if the payee pro-vides the withholding agent with its GIIN,either orally or in writing, and the with-holding agent verifies the GIIN in themanner described in paragraph (e)(3) ofthis section.

(v) Reason to know. Except as other-wise provided in this paragraph (d)(4), awithholding certificate or written state-ment pursuant to which the payee claims astatus as a participating FFI or registereddeemed-compliant FFI but does not pro-vide the payee’s GIIN or provides a GIINthat does not appear on the current pub-lished IRS FFI list will be invalid forpurposes of chapter 4 beginning on thedate that is 90 days after the date thatthe claim is made by the payee. The payeewill be treated as an undocumented payeebeginning on the date that the form isinvalid, and will be subject to withholdingon payments made on or after that date


until valid documentation (which includesa confirmed GIIN under paragraph(e)(3)(i) of this section) is provided. Awithholding agent that has withheld asrequired in the previous sentence may ap-ply reimbursement or set-off procedures,as described in § 1.1474–2(a), if it is laterdetermined that the payee appeared on theIRS FFI list as a participating FFI or reg-istered deemed-compliant FFI at the timeof payment.


(i) In general. Except as otherwise pro-vided in this paragraph (d)(5), a withhold-ing agent may treat a payee as a certifieddeemed-compliant FFI, other than a spon-sored, closely held investment vehicle, ifthe withholding agent has a withholdingcertificate that identifies the payee as acertified deemed-compliant FFI, and thewithholding certificate contains a certifi-cation by the payee that it meets the re-quirements to qualify as the type of certi-fied deemed-compliant FFI identified onthe withholding certificate. See paragraph(c)(3)(iii) of this section for additional re-quirements that apply to a valid withhold-ing certificate provided by a certifieddeemed-compliant FFI that is a flow-through entity or is acting as an interme-diary with respect to the payment, or by aU.S. branch of a certified deemed-compliant FFI.

(ii) Sponsored, closely held investmentvehicles — (A) In general. A withholdingagent may treat a payee as a sponsored,closely held investment vehicle describedin § 1.1471–5(f)(2)(iii) if the withholdingagent can reliably associate the paymentwith a withholding certificate that identi-fies the payee as a sponsored, closely heldinvestment vehicle and includes the spon-soring entity’s GIIN, which the withhold-ing agent has verified against the pub-lished IRS FFI list in the mannerdescribed in paragraph (e)(3) of this sec-tion. In addition to the standards of knowl-edge rules indicated in paragraph (e) ofthis section, a withholding agent will havereason to know that the payee is not asponsored, closely held investment vehi-cle described in § 1.1471–5(f)(2)(iii) if itsAML due diligence indicates that thepayee has in excess of 20 individual in-vestors that own direct and/or indirect in-terests in the payee. See paragraph

(c)(3)(iii) of this section for additional re-quirements that apply to a valid withhold-ing certificate provided by a sponsored,closely held investment vehicle that is aflow-through entity or is acting as an in-termediary with respect to the payment, orby a U.S. branch of such vehicle.

(B) Offshore obligations. A withhold-ing agent that makes a payment with re-spect to an offshore obligation may treat apayee as a sponsored, closely held invest-ment vehicle if it obtains a written state-ment that indicates that the payee is asponsored, closely held investment vehi-cle, and provides the sponsoring entity’sGIIN, which the withholding agent hasverified in the manner described in para-graph (e)(3) of this section. In the case ofa payment of U.S. source FDAP income,the written statement must also indicatethat the payee is the beneficial owner andmust be supplemented with documentaryevidence supporting the payee’s claim offoreign status (as described in paragraph(c)(5)(i) of this section).

(iii) Investment advisors and invest-ment managers.

(A) In general. A withholding agentmay treat a payee as an investment advi-sor and investment manager described in§ 1.1471–5(f)(2)(v) if the withholdingagent can reliably associate the paymentwith a withholding certificate that identi-fies the payee as an investment advisorand investment manager. In addition tothe standards of knowledge rules indi-cated in paragraph (e) of this section, awithholding agent will have reason toknow that the payee is not an investmentadvisor and investment manager de-scribed in § 1.1471–5(f)(2)(v) if its AMLdue diligence documentation indicatesthat the payee has financial accounts.

(B) Offshore obligations. A withhold-ing agent that makes a payment with re-spect to an offshore obligation may treat apayee as an investment advisor and in-vestment manager described in § 1.1471–5(f)(2)(v) if it obtains a written statementthat indicates that the payee is an invest-ment advisor and investment manager. Inthe case of a payment of U.S. sourceFDAP income, the written statement mustalso indicate that the payee is the benefi-cial owner and must be supplementedwith documentary evidence supportingthe payee’s claim of foreign status (as

described in paragraph (c)(5)(i) of thissection).


(i) through (vi) [Reserved]. For furtherguidance, see § 1.1471–3(d)(6)(i) through (vi).

(vii) [Reserved]. For further guidance,see § 1.1471–3(d)(6)(vii).

(A) [Reserved]. For further guidance,see § 1.1471–3(d)(6)(vii)(A).

(1) The payment is made with respectto an offshore obligation that has a bal-ance or value not exceeding $1,000,000on the later of June 30, 2014, or the lastday of the calendar year in which theaccount was opened, and the last day ofeach subsequent year preceding the pay-ment, applying the aggregation principlesof § 1.1471–5(b)(4);

(2) through (5) [Reserved]. For furtherguidance, see § 1.1471–3(d)(6)(vii)(A)(2)through (5).

(B) [Reserved]. For further guidance,see § 1.1471–3(d)(6)(vii)(B).

(7) through (10)(iii) [Reserved]. Forfurther guidance, see § 1.1471–3(d)(7)through (d)(10)(iii).


(i) through (vii)(B)(3) [Reserved]. Forfurther guidance, see § 1.1471–3(d)(11)(i)through (d)(11)(vii)(B)(3).

(viii) [Reserved]. For further guidance,see § 1.1471–3(d)(11)(viii).

(A) Exception for payments made priorto January 1, 2017, with respect to preex-isting obligations of $1,000,000 or less(transitional). A withholding agent thatmakes a payment prior to January 1, 2017,with respect to a preexisting obligationwith a balance or value not exceeding$1,000,000 on June 30, 2014, and Decem-ber 31, 2015, applying the aggregationprinciples of § 1.1471–5(b)(4)(iii), maytreat a payee as an excepted territoryNFFE described in § 1.1472–1(c)(1)(iii) ifthe withholding agent—

(1) through (3) [Reserved]. For furtherguidance, see § 1.1471–3(d)(11)(viii)(A)(1)through (3).

(B) through (B)(2) [Reserved]. For fur-ther guidance, see § 1.1471–3(d)(11)(viii)(B)through (d)(11)(viii)(B)(2).

(C) Exception for preexisting offshoreobligations of $1,000,000 or less. A with-holding agent that makes a payment withrespect to an offshore obligation that is


also a preexisting obligation with a bal-ance or value not exceeding $1,000,000on June 30, 2014 (or the effective date ofthe FFI agreement for a withholding agentthat is a participating FFI) and the last dayof each subsequent calendar year preced-ing the payment, applying the aggregationprinciples of § 1.1471–5(b)(4)(iii), mayrely upon its review conducted for AMLdue diligence purposes to determinewhether the owners of the payee are bonafide residents of the U.S. territory inwhich the payee is organized, in lieu ofobtaining a written statement or documen-tary evidence described in paragraph(d)(11)(viii)(B) of this section. The pre-ceding sentence applies only if the with-holding agent is subject, with respect tosuch account, to the laws of a FATF-compliant jurisdiction and has identifiedthe residence of the owners. The with-holding agent relying upon this paragraph(d)(11)(viii)(C) must still obtain a writtenstatement, documentary evidence (as pro-vided in paragraph (d)(11)(viii)(B) of thissection), or preexisting account documen-tary evidence (as described in paragraph(c)(5)(ii)(B) of this section) establishingthat the payee is an entity other than adepository institution, custodial institu-tion, or specified insurance company or-ganized in a U.S. territory.

(ix) through (ix)(C) [Reserved]. Forfurther guidance, see § 1.1471–3(d)(11)(ix)through (d)(11)(ix)(C).

(x) Identifying a direct reportingNFFE—(A) In general. A withholdingagent may treat a payment as having beenmade to a direct reporting NFFE if it hasa withholding certificate that identifies thepayee as a direct reporting NFFE and thewithholding certificate contains a GIINfor the payee that is verified against thepublished IRS FFI list in the manner de-scribed in paragraph (e)(3)(iii) of this sec-tion (indicating when a withholding agentmay rely upon a GIIN).

(B) Exception for offshore obligations.A withholding agent that makes a pay-ment with respect to an offshore obliga-tion may treat the payment as made to adirect reporting NFFE if the withholdingagent has—

(1)(i) General documentary evidence(as described in paragraph (c)(5)(ii)(A) ofthis section) for the payee providing suf-ficient information to determine that the

payee is a foreign entity that is not afinancial institution; or

(ii) A written statement that the payeeis a foreign entity that is not a financialinstitution and, for a payment of U.S.source FDAP income, documentary evi-dence supporting the payee’s claim of for-eign status (as described in paragraph(c)(5)(i) of this section), and

(2) Received (either orally or in writ-ing) a GIIN from the direct reportingNFFE and has verified the GIIN in themanner described in paragraph (e)(3)(iii)of this section.

(C) Special rule for preexisting off-shore obligations. A withholding agentthat makes a payment with respect to anoffshore obligation that is also a preexist-ing obligation may treat the payee as adirect reporting NFFE if the withholdingagent has preexisting account documen-tary evidence (as described in paragraph(c)(5)(ii)(B) of this section) providing suf-ficient information to determine that thepayee is a foreign entity that is not afinancial institution and it has received(either orally or in writing) a GIIN fromthe direct reporting NFFE and has verifiedthe GIIN in the manner described in para-graph (e)(3)(iii) of this section.

(xi) Identifying a sponsored direct re-porting NFFE—(A) In general. A with-holding agent may treat a payment as hav-ing been made to a sponsored directreporting NFFE if it has a withholdingcertificate that identifies the payee as asponsored direct reporting NFFE and thewithholding certificate includes the spon-sored direct reporting NFFE’s GIIN,which the withholding agent has verifiedagainst the published IRS FFI list in themanner described in paragraph (e)(3)(iv)of this section (indicating when a with-holding agent may rely upon a GIIN). Forpayments prior to January 1, 2016, a spon-sored direct reporting NFFE may providethe GIIN of its sponsoring entity on thewithholding certificate if the sponsoreddirect reporting NFFE has not obtained aGIIN.

(B) Exception for offshore obligations.A withholding agent that makes a pay-ment with respect to an offshore obliga-tion may treat the payment as made to asponsored direct reporting NFFE if thewithholding agent has—

(1) A written statement that the payeeis a foreign entity that is a sponsoreddirect reporting NFFE and, for a paymentof U.S. source FDAP income, documen-tary evidence supporting the payee’sclaim of foreign status (as described inparagraph (c)(5)(i) of this section), and

(2) Received (either orally or in writ-ing) the GIIN of the sponsored direct re-porting NFFE and has verified the GIINin the manner described in paragraph(e)(3)(iv) of this section. For paymentsprior to January 1, 2016, such requirementmay be fulfilled by receiving (either orallyor in writing) the GIIN of the sponsoringentity to the extent that the sponsored di-rect reporting NFFE has not obtained aGIIN.

(xii) Identification of excepted inter-affiliate FFI.

(A) In general. A participating FFImay treat a payee as an excepted inter-affiliate FFI described in § 1.1471–5(e)(5)(iv) if it has obtained a withholdingcertificate identifying the payee as such anentity.

(B) Offshore obligations. A participat-ing FFI that makes a payment with respectto an offshore obligation may treat thepayment as made to an excepted inter-affiliate FFI described in § 1.1471–5(e)(5)(iv) if the participating FFI obtainsa written statement in which the payeecertifies that it is a foreign entity operatingas an excepted inter-affiliate FFI and thatit is a member of an expanded affiliatedgroup of participating FFIs or registereddeemed-compliant FFIs. In the case of apayment of U.S. source FDAP income,the written statement must also indicatethat the payee is the beneficial owner andmust be supplemented with documentaryevidence (as described in § 1.1471–3(c)(5)(i)) that provides the participatingFFI with sufficient information to estab-lish that the payee is an excepted inter-affiliate FFI described in § 1.1471–5(e)(5)(iv).

(C) Reason to know. A participatingFFI has reason to know that an entity isnot an excepted inter-affiliate FFI if itmakes any payments (other than a pay-ment of bank deposit interest) to suchentity.



(i) through (ii) [Reserved]. For furtherguidance, see § 1.1471–3(d)(12)(i)through (ii).

(iii) [Reserved]. For further guidance,see § 1.1471–3(d)(12)(iii).

(A) In general. A passive NFFE will berequired to provide to the withholdingagent either a written certification (con-tained on a withholding certificate or in awritten statement) that it does not haveany substantial U.S. owners or the name,address, and TIN of each substantial U.S.owner of the NFFE, to avoid being with-held upon under § 1.1472–1(b).

(B) Exception for preexisting obliga-tions of $1,000,000 or less (transitional).A withholding agent that makes a pay-ment prior to January 1, 2017, with respectto a preexisting obligation with a balance orvalue not exceeding $1,000,000 on June 30,2014, and December 31, 2015, applyingthe aggregation principles of § 1.1471–5(b)(4)(iii), may rely upon its review con-ducted for AML due diligence purposes toidentify any substantial U.S. owners of thepayee in lieu of obtaining the certificationor information required in paragraph(d)(12)(iii)(A) of this section if the with-holding agent is subject, with respect tosuch obligation, to the laws of a FATF-compliant jurisdiction and has identifiedthe residence of any controlling persons(within the meaning of the withholdingagent’s AML due diligence rules). A with-holding agent that makes a payment withrespect to an offshore obligation that isalso a preexisting obligation with a bal-ance or value not exceeding $1,000,000on June 30, 2014, (or the effective date ofthe FFI agreement for a withholding agentthat is a participating FFI) and the last dayof each subsequent calendar year preced-ing the payment, applying the aggregationprinciples of § 1.1471–5(b)(4)(iii), mayrely upon its review conducted for AMLdue diligence purposes to identify anysubstantial U.S. owners of the payee in lieuof obtaining the certification or informationrequired in paragraph (d)(12)(iii)(A) of thissection if the withholding agent is sub-ject, with respect to such obligation, tothe laws of a FATF-compliant jurisdic-tion and has identified the residence ofany controlling persons (within themeaning of the withholding agent’sAML due diligence rules).

(e) [Reserved]. For further guidance,see § 1.1471–3(e).

(1) [Reserved]. For further guidance,see § 1.1471–3(e)(1).

(2) Notification by the IRS. A withhold-ing agent that has received notification bythe IRS that a claim of status as a U.S.person, a participating FFI, a deemed-compliant FFI, or other entity entitled to areduced rate of withholding under section1471 or 1472 is incorrect knows that sucha claim is incorrect beginning on the datethat is 30 days after the date the notice isreceived.

(3) GIIN verification.(i) In general. A withholding agent that

has received a payee’s claim of statusas a participating FFI or registereddeemed-compliant FFI, and that is re-quired under paragraph (d)(4) of thissection to confirm that the FFI or branchthereof (including an entity that is dis-regarded as an entity separate from theFFI) claiming status as a participatingFFI or registered deemed-compliant FFIhas a GIIN that appears on the publishedIRS FFI list, has reason to know thatsuch payee is not such a financial insti-tution if the payee’s name (including aname reasonably similar to the name thewithholding agent has on file for thepayee) and GIIN do not appear on themost recently published IRS FFI listwithin 90 days of the date that the claimis made. For purposes of this paragraph(e)(3)(i), the GIIN that the withholdingagent must confirm is, with respect to apayee that is a participating FFI or reg-istered deemed-compliant FFI, the GIINassigned to the FFI identifying its coun-try of residence for tax purposes (orplace of organization if the FFI has nocountry of residence) or, with respect toa payment that is made to a branch of, oran entity that is disregarded as an entityseparate from, a participating FFI orregistered deemed-compliant FFI lo-cated outside of the FFI’s country ofresidence or organization, the GIIN as-signed to the FFI identifying the countryin which the branch or disregarded en-tity receiving the payment is located.The withholding agent will have reasonto know that a withholdable payment ismade to a limited branch (including adisregarded entity) of a participating orregistered deemed-compliant FFI when

it is directed to make the payment to anaddress in a jurisdiction other than thatof the participating FFI or registereddeemed-compliant FFI (or branch of, ordisregarded entity wholly owned by,such FFI) that is identified as the FFI (orbranch of, or disregarded entity whollyowned by, such FFI) that is supposed toreceive the payment and for which theFFI’s GIIN is not confirmed as de-scribed in the preceding sentence. Forexample, if a participating FFI has iden-tified Branch A, located in JurisdictionA, as its branch to receive withholdablepayments on a withholding certificatedescribed in § 1.1471–3(e)(3)(ii), butsubsequently directs the withholdingagent to make the payment to an addressof the FFI in Jurisdiction B, then thewithholding agent will have reason toknow that the payment is made to alimited branch, unless the withholdingagent obtains documentation to treat thepayment to the address in Jurisdiction Bas made to a payee that is a participatingFFI or deemed-compliant FFI. An FFIwhose registration with the IRS as aparticipating FFI or a registereddeemed-compliant FFI is in process buthas not yet received a GIIN may providea withholding agent with a Form W– 8claiming the chapter 4 status it appliedfor and writing “applied for” in the boxfor the GIIN. In such case, the withhold-ing agent will have 90 days from thedate it receives the Form W– 8 to obtaina GIIN and to verify the accuracy of theGIIN against the published IRS FFI listbefore it has reason to know that thepayee is not a participating FFI or reg-istered deemed-compliant FFI. If an FFIis removed from the published IRS FFIlist, the withholding agent knows thatsuch FFI is not a participating FFI orregistered deemed-compliant FFI on theearlier of the date that the withholdingagent discovers that the FFI has beenremoved from the list or the date that isone year from the date the FFI’s GIINwas actually removed from the list.

(ii) Special rules for reporting Model 1FFIs. Prior to January 1, 2015, a with-holding agent that receives an FFI’s claimof status as a reporting Model 1 FFI willnot be required to confirm that the FFI hasa GIIN that appears on the published IRSFFI list. A withholding agent has reason to


know that the FFI is not a reporting Model1 FFI if the withholding agent does nothave a permanent residence address forthe FFI, or an address of the relevantbranch of the FFI, located in the countryin which the FFI claims to be a reportingModel 1 FFI, or the withholding agent ismaking a payment to a branch of the FFIat an address in a country that does nothave in effect a Model 1 IGA.

(iii) Special rules for direct reportingNFFEs. A withholding agent that hasreceived a payee’s claim of status as adirect reporting NFFE and that is re-quired under paragraph (d)(11)(x) ofthis section to confirm that the entityclaiming status as a direct reportingNFFE has a GIIN that appears on thepublished IRS FFI list, has reason toknow that such payee is not such aNFFE if the payee’s name (including aname reasonably similar to the namethe withholding agent has on file for thepayee) and GIIN do not appear on themost recently published IRS FFI listwithin 90 days of the date that the claimis made. A payee whose registrationwith the IRS as a direct reporting NFFEis in process but has not yet received aGIIN may provide a withholding agentwith a Form W– 8 claiming the chapter 4status it applied for and writing “appliedfor” in the box for the GIIN. In suchcase, the withholding agent will have 90days from the date it receives the FormW– 8 to verify the accuracy of the GIINagainst the published IRS FFI list beforeit has reason to know that the payee isnot a direct reporting NFFE. If a directreporting NFFE is removed from thepublished IRS FFI list, the withholdingagent knows that such NFFE is not adirect reporting NFFE on the earlier ofthe date that the withholding agent dis-covers that the NFFE has been removedfrom the list or the date that is one yearfrom the date the NFFE’s GIIN wasactually removed from the list.

(iv) Special rules for sponsored directreporting NFFEs and sponsoring enti-ties—(A) Sponsored direct reportingNFFEs. A withholding agent that has re-ceived a payee’s claim of status as a spon-sored direct reporting NFFE and that isrequired under paragraph (d)(11)(xi) ofthis section to confirm that the entityclaiming status as a sponsored direct re-

porting NFFE has a GIIN that appears onthe published IRS FFI list, has reason toknow that such payee is not such aNFFE if its name (including a namereasonably similar to the name the with-holding agent has on file for the payee)and GIIN do not appear on the mostrecently published IRS FFI list within90 days of the date that the claim ismade. A sponsored direct reportingNFFE whose registration with the IRSas a sponsored direct reporting NFFE isin process but has not yet received aGIIN may provide a withholding agentwith a Form W– 8 claiming the chapter 4status it applied for and writing “appliedfor” in the box for the GIIN. In suchcase, the withholding agent will have 90days from the date it receives the FormW– 8 to verify the accuracy of the GIINagainst the published IRS FFI list beforeit has reason to know that the payee isnot a sponsored direct reporting NFFE.If a sponsored direct reporting NFFE isremoved from the published IRS FFIlist, the withholding agent knows thatsuch NFFE is not a sponsored directreporting NFFE on the earlier of the datethat the withholding agent discovers thatthe sponsored entity has been removedfrom the list or the date that is one yearfrom the date the sponsored entity’sGIIN was actually removed from thelist.

(B) Sponsoring entities (transitionalrule). For payments made prior to January1, 2016, a withholding agent that has re-ceived a payee’s claim of status as a spon-sored direct reporting NFFE has reason toknow that such payee is not such a NFFEif the name of its sponsoring entity (in-cluding a name reasonably similar to thename the withholding agent has on file forthe sponsoring entity) and the GIIN of itssponsoring entity do not appear on themost recently published IRS FFI listwithin 90 days of the date that the claim ismade. A sponsoring entity whose registra-tion with the IRS is in process but has notyet received a GIIN may provide a with-holding agent with a Form W–8 claimingthe chapter 4 status it applied for andwriting “applied for” in the box for theGIIN. In such case, the withholding agentwill have 90 days from the date it receivesthe Form W–8 to verify the accuracy ofthe GIIN against the published IRS FFI

list before it has reason to know that thepayee is not a sponsored direct reportingNFFE. If the sponsoring entity of theNFFE is removed from the publishedIRS FFI list, the withholding agentknows that such NFFE is not a spon-sored direct reporting NFFE on the ear-lier of the date that the withholdingagent discovers that the sponsoring en-tity has been removed from the list orthe date that is one year from the datethe sponsoring entity’s GIIN was actu-ally removed from the list.

(4) Reason to know. A withholdingagent has reason to know that a claim ofchapter 4 status is unreliable or incorrectif its knowledge of relevant facts or state-ments contained in the withholding certif-icate or other documentation is such that areasonably prudent person in the positionof the withholding agent would questionthe claim being made. For an obligationother than a preexisting obligation, a with-holding agent has reason to know that aperson’s claim of chapter 4 status is unre-liable or incorrect if any information con-tained in its account opening files or othercustomer account files, including docu-mentation collected for AML due dili-gence purposes, conflicts with the chapter4 status being claimed. A withholdingagent will not, however, have reason toknow that a person’s claim of chapter 4status is unreliable or incorrect based ondocumentation collected for AML due dil-igence purposes until the date that is 30days after the obligation is created. Inaddition to the specific standards ofknowledge set forth in this paragraph (e)regarding a person’s claim of chapter 4status, a withholding agent is also requiredto apply any specific standards of knowl-edge applicable to the chapter 4 statusclaimed as set forth in paragraph (d) ofthis section. A withholding agent that hasobtained documentation to reliably asso-ciate a payment to a foreign person underparagraph (c) of this section has reason toknow that the person’s claim of foreignstatus is unreliable or incorrect only to theextent provided in this paragraph (e)(4).See also § 1.1441–1(e)(4)(ii)(D) for re-quirements that apply when a change incircumstances occurs for purposes ofchapter 3 and the related grace periodallowed under § 1.1441–1(b)(3)(iv). Thelimits on reason to know for multiple ob-


ligations held by the same person set forthin § 1.1441–7(b)(11) shall apply by sub-stituting the term chapter 4 status for theterm foreign status. See § 1.1471–3(e)(4)(vii) for the limits on reason toknow with respect to a preexisting obliga-tion.

(i) Reason to know regarding an enti-ty’s chapter 4 status. A withholding agenthas reason to know that a withholdingcertificate, written statement, or documen-tary evidence provided by or on behalf ofan entity is unreliable or incorrect if thereis information on the face of the documen-tation or in the withholding agent’s ac-count files that conflicts with the entity’sclaim regarding its chapter 4 status. Forexample, a withholding agent has reasonto know that an entity’s claim that it is anexcepted NFFE is unreliable or incorrectif the withholding agent has obtained afinancial statement or credit report forAML purposes that indicates that the en-tity is engaged in business as a financialinstitution. See also paragraph (e)(4) ofthis section for the 30-day period beforea withholding agent has reason to knowa claim is unreliable or incorrect basedon AML information. Further, a with-holding agent that has classified an en-tity as engaged in a particular type ofbusiness based on its records, such asthrough the use of a standardized indus-try coding system, has reason to knowthat the chapter 4 status claimed by theentity is unreliable or incorrect if theentity’s claim conflicts with the with-holding agent’s classification of the en-tity’s business type.

(ii) Reason to know applicable to with-holding certificates.

(A) In general. A withholding agenthas reason to know that a withholdingcertificate provided by a person is unreli-able or incorrect if the withholding certif-icate is incomplete with respect to anyitem on the certificate that is relevant tothe claims made by the person, the with-holding certificate contains any informa-tion that is inconsistent with the person’sclaim, the withholding agent has otheraccount information that is inconsistentwith the person’s claim, or the withhold-ing certificate lacks information necessaryto establish entitlement to an exemptionfrom withholding for chapter 4 purposes.Except as otherwise provided in this para-

graph (e)(4)(ii)(A), a withholding agentthat has obtained a withholding certificateto reliably associate a payment to a for-eign person under paragraph (c) of thissection has reason to know that the per-son’s claim of foreign status is unreliableor incorrect only if there are U.S. indicia,as described in § 1.1441–7(b)(5), associ-ated with the person and for which appro-priate documentation sufficient to cure theU.S. indicia has not been obtained in ac-cordance with § 1.1441–7(b) within 90days of when the U.S. indicia was firstidentified by the withholding agent. Seealso § 1.1441–1(e)(4)(ii)(D) for require-ments that apply when a change in cir-cumstances occurs for purposes of chapter3 and the related grace period allowedunder § 1.1441–1(b)(3)(iv). A withhold-ing agent that relies on an agent to reviewand maintain a withholding certificate isconsidered to know or have reason toknow the facts within the knowledge ofthe agent.

(B) Withholding certificate provided byan FFI. A withholding agent that ob-tains a withholding certificate to reliablyassociate a payment to a participatingFFI, a registered deemed-compliant FFI,a sponsoring entity, or a sponsored FFIdoes not need to apply the standardsof knowledge described in § 1.1441–7(b)(5) if it has confirmed the FFI’sGIIN on the current published IRS FFIlist, in the manner described under para-graph (e)(3) of this section, within 90days of receipt of the withholding cer-tificate.

(iii) Reason to know applicable to writ-ten statements. A withholding agent mustapply the standards of knowledge applica-ble to withholding certificates, as set forthin paragraph (e)(4)(ii) of this section, todetermine whether it has reason to knowthat a written statement is unreliable orincorrect in terms of establishing a per-son’s claim of foreign status. The rulesunder paragraph (e)(4)(ii) shall be appliedby substituting the term written statementfor withholding certificate.

(iv) Reason to know applicable to doc-umentary evidence.

(A) In general. A withholding agentmay not treat documentary evidence pro-vided by a person as valid if the documen-tary evidence does not reasonably estab-lish the identity of the person presenting

the documentary evidence. For example,documentary evidence is not valid if it isprovided in person by an individual andthe photograph or signature on the docu-mentary evidence does not match the ap-pearance or signature of the person pre-senting the document. A withholdingagent may not treat documentary evidenceas valid if the documentary evidence con-tains information that is inconsistent withthe person’s claim as to its chapter 4status, the withholding agent has otheraccount information that is inconsistentwith the person’s chapter 4 status, or thedocumentary evidence lacks informa-tion necessary to establish the person’schapter 4 status. Additionally, a with-holding agent that has obtained docu-mentary evidence to reliably associate apayment to a foreign person under para-graph (c) of this section has reason toknow that the person’s claim of foreignstatus is unreliable or incorrect only ifthere are U.S. indicia, as described in§ 1.1441–7(b)(8), associated with the per-son and appropriate documentation suffi-cient to cure the U.S. indicia has not beenobtained in accordance with § 1.1441–7(b) within 90 days of when the U.S. indiciawas first identified by the withholding agent.See also § 1.1441–1(e)(4)(ii)(D) for require-ments when a change in circumstances oc-curs for purposes of chapter 3 and the re-lated grace period allowed under § 1.1441–1(b)(3)(iv).

(B) Standards of knowledge applicableto certain types of documentary evidence— (1) Financial statement. A withholdingagent that obtains a financial statement forpurposes of establishing that a foreignpayee meets a certain asset threshold hasreason to know that the chapter 4 statusclaimed is unreliable or incorrect only ifthe total assets shown on the financialstatement for the payee, and if relevant thepayee’s expanded affiliated group, are notwithin the permissible thresholds, or thefootnotes to the financial statement indi-cate that the payee is not a foreign entityor is not a type of FFI eligible for thechapter 4 status claimed. A withholdingagent that obtains a financial statement forpurposes of establishing that the payee isan active NFFE will be required to reviewthe balance sheet and income statement todetermine whether the payee meets theincome and asset thresholds set forth in


§ 1.1472–1(c)(1)(iv) and the footnotes ofthe financial statement for an indicationthat the payee is not a foreign entity or isa financial institution. A withholdingagent that obtains a financial statement forpurposes of establishing a chapter 4 statusfor a payee that does not require the payeeto meet an asset or income threshold willbe required to review only the footnotes tothe financial statement to determinewhether the financial statement supportsthe claim of chapter 4 status. A withhold-ing agent that is not relying upon a finan-cial statement to establish the chapter 4status of the payee (for example because ithas other documentation that establishesthe payee’s chapter 4 status) is not re-quired to independently evaluate the fi-nancial statement solely because the with-holding agent also has collected thefinancial statement in the course of itsaccount opening or other procedures.

(2) Organizational documents. A with-holding agent that obtains organizationaldocuments for a payee solely for the pur-pose of supporting the chapter 4 statusclaimed by the entity will only be requiredto review the document sufficiently to es-tablish that the entity is a foreign personand that the purposes for which the entitywas formed and its basic activities appearto be of a type consistent with the chapter4 status claimed, unless otherwise speci-fied in paragraph (d) of this section. Awithholding agent that obtains organiza-tional documents for the purpose of estab-lishing that an entity has a particular chap-ter 4 status will only be required to reviewthe document to the extent needed toestablish that the entity is a foreign per-son, that the requirements applicable tothe particular chapter 4 status are met, andthat the document was executed, but willnot be required to review the remainder ofthe document.

(v) Specific standards of knowledgeapplicable when only documentary evi-dence is a code or classification describedin paragraph (c)(5)(ii)(B) of this section.A withholding agent may not rely upon aclassification described in paragraph(c)(5)(ii)(B) of this section or a standard-ized industry coding system to treat anentity as having a foreign status if thereare U.S. indicia described in paragraph(e)(4)(v)(A) of this section associatedwith the entity, unless such U.S. indicia

are cured in the manner set forth in para-graph (e)(4)(v)(B) of this section.

(A) through (A)(7) [Reserved]. For fur-ther guidance, see § 1.1471–3(e)(4)(v)(A)through (e)(4)(v)(A)(7).

(B) [Reserved]. For further guidance,see § 1.1471–3(e)(4)(v)(B).

(1) If there are U.S. indicia described inparagraphs (e)(4)(v)(A)(1) through (4) ofthis section associated with the entity, thewithholding agent may treat the entity as aforeign person only if the withholdingagent obtains a withholding certificate forthe entity and one form of documentaryevidence, described in paragraph (c)(5) ofthis section, that establishes the entity’sstatus as a foreign person (such as a cer-tificate of incorporation).

(2) If there are U.S. indicia described inparagraphs (e)(4)(v)(A)(1) through (4) ofthis section associated with the entity andthe withholding agent is making a pay-ment with respect to an offshore obliga-tion, the withholding agent may alsotreat the entity as a foreign person if thewithholding agent obtains a withholdingcertificate for the entity and the with-holding agent treats the entity as foreignfor purposes of foreign tax reporting. Awithholding agent will treat an entity asforeign for purposes of foreign tax re-porting only if the withholding agentclassifies the entity as a resident of thecountry in which the obligation is main-tained, the withholding agent is requiredto report a payment made to the entityannually on a tax information statementthat is filed with the tax authority of thecountry in which the account is main-tained as part of that country’s residentreporting requirements, and that countryhas a tax information exchange agree-ment or income tax treaty in effect withthe United States.

(3) [Reserved]. For further guidance,see § 1.1471–3(e)(4)(v)(B)(3).

(vi) [Reserved]. For further guidance,see § 1.1471–3(e)(4)(vi).

(A) through (A)(2) [Reserved]. For fur-ther guidance, see § 1.1471–3(e)(4)(vi)(A)through (e)(4)(vi)(A)(2).

(B) Limits on reason to know with re-spect to documentation received from par-ticipating FFIs and registered deemed-compliant FFIs that are intermediaries orflow-through entities. A withholdingagent that receives documentation from a

participating FFI or registered deemed-compliant FFI that is not the payee mustapply the requirements of paragraph(e)(4)(vi)(A) of this section, except thatthe withholding agent may rely upon thechapter 4 status provided by the partici-pating FFI or registered deemed-compliant FFI in the withholding state-ment unless the withholding agent hasinformation that conflicts with the chapter4 status provided. If underlying documen-tation is provided for the payee and infor-mation in the documentation or in thewithholding agent’s records conflicts withthe chapter 4 status claimed, the withhold-ing agent has reason to know that thechapter 4 status claimed is unreliable orincorrect. A withholding agent is not,however, required to verify informationcontained in documentation provided byan intermediary or flow-through entitythat is a participating FFI or registereddeemed-compliant FFI that is not faciallyincorrect and is not required to obtainsupporting documentation for the payee inaddition to a withholding certificate unlessthe withholding agent obtains such docu-mentation for purposes of chapters 3 or 61or unless the withholding agent knowsthat the review conducted by the partici-pating FFI or registered deemed-compliant FFI for purposes of chapter 4was not adequate. For example, a with-holding agent that receives a withholdingstatement from a participating FFI that isan intermediary stating that the payee is aregistered deemed-compliant FFI is onlyrequired to determine that any withhold-ing certificate provided for the payee con-tains a GIIN and that the GIIN does notappear to be facially invalid (for example,because it does not contain the correctamount of digits), but is not subject to therequirements set forth in paragraph (e)(3)of this section. Similarly, a withholdingagent that receives from a participatingFFI that is a partnership a withholdingstatement claiming that the payee is anactive NFFE has reason to know that theclaim is unreliable or incorrect if it re-ceives a withholding statement that con-tains a U.S. address for the payee unlessthe partnership also provides a copy ofdocumentation sufficient to cure the U.S.indicia in the manner set forth in para-graph (e) of this section or the withhold-ing statement indicates that appropriate


documentation sufficient to cure the U.S.indicia in the manner set forth in para-graph (e) of this section has been obtainedand provides details of such documenta-tion, such as the type of documentationand an identification number of the personcontained in the document.

(vii) [Reserved]. For further guidance,see § 1.1471–3(e)(4)(vii).

(A) [Reserved]. For further guidance,see § 1.1471–3(e)(4)(vii)(A).

(B) Reason to know there are U.S. in-dicia associated with preexisting obliga-tions. With respect to a preexisting obli-gation, a withholding agent may apply thelimits on reason to know described in§ 1.1441–7(b)(3)(ii) for a person that thewithholding agent has previously docu-mented for purposes of chapters 3 or 61(applied without regard to the fact thatsection 1441 generally applies to report-able amounts under chapter 3 and withoutregard to whether the person was so doc-umented before July 1, 2014). A with-holding agent that applies the limits onreason to know described in § 1.1441–7(b)(3)(ii) must, however, review for U.S.indicia any additional documentationupon which the withholding agent is rely-ing to determine the chapter 4 status of theperson, if any.

(viii) [Reserved]. For further guidance,see § 1.1471–3(e)(4)(viii).

(A) [Reserved]. For further guidance,see § 1.1471–3(e)(4)(viii)(A).

(1) through (3) [Reserved]. For furtherguidance, see § 1.1471–3(e)(4)(viii)(A)(1)through (3).

(4) Is a spouse or unmarried child un-der the age of 21 years of an individualdescribed in one of the paragraphs(e)(4)(viii)(A)(1) through (3) of this sec-tion;

(B) through (D) [Reserved]. For furtherguidance, see § 1.1471–3(e)(4)(viii)(B)through (D).

(5) through (6) [Reserved]. For furtherguidance, see § 1.1471–3(e)(5) through (6).

(f) [Reserved]. For further guidance,see § 1.1471–3(f).

(1) In general. A withholding agentthat cannot, prior to the payment, reliablyassociate (within the meaning of para-graph (c) of this section) the payment withvalid documentation may rely on the pre-sumptions of this paragraph (f) to deter-mine the status of the payee (or other

person receiving the payment) as a U.S. orforeign person and such person’s otherrelevant characteristics (for example, as anonparticipating FFI). Paragraph (f)(2) ofthis section provides the presumptionrules with respect to classification as anindividual or entity. Paragraph (f)(3) ofthis section provides the presumptionrules to determine a payee’s U.S. or for-eign status. Paragraph (f)(4) of this sectionprovides the presumption rules with re-spect to an entity’s chapter 4 status. Para-graph (f)(5) of this section provides thepresumption rules with respect to an in-termediary or flow-through entity. Para-graph (f)(6) of this section provides thepresumption rules with respect to effec-tively connected income paid to a U.S.branch of a payee. Paragraph (f)(7) of thissection provides the presumption rulesthat apply to a payment made to jointpayees. Paragraph (f)(8) of this sectionprovides rules for how a payee may rebutthe presumptions described in this para-graph (f). Paragraph (f)(9) of this sectionprovides the consequences to a withhold-ing agent that fails to withhold in accor-dance with the presumptions set forth inthis paragraph (f) or that has actual knowl-edge or reason to know facts that arecontrary to the presumptions set forth inthis paragraph (f).

(2) Presumptions of classification asan individual or entity and entity as thebeneficial owner. A withholding agentthat cannot reliably associate a paymentwith a valid withholding certificate, orthat has received valid documentary ev-idence (as described in paragraph (c)(5)of this section), but cannot determine apayee’s status as an individual or anentity from the documentary evidence,must apply the presumption rules of§ 1.1441–1(b)(3)(ii) to determine thepayee’s classification as an individual,trust, partnership, corporation, interme-diary, or flow-through entity. Addition-ally, a withholding agent that receivesvalid documentary evidence with re-spect to an entity must apply the rulesunder § 1.1441–1(b)(3)(ii) to determinewhen it may treat such entity as a ben-eficial owner.

(3) Presumptions of U.S. or foreignstatus. If a withholding agent cannot reli-ably associate a payment with a validwithholding certificate or valid documen-

tary evidence from which it is possible todetermine the payee’s U.S. or foreign sta-tus, it must apply the presumption rules of§ 1.1441–1(b)(3)(iii) to determine theU.S. or foreign status of the payee (sub-stituting the term withholdable paymentfor the term payment). In the case of apayment that a withholding agent can re-liably associate with valid documentationthat indicates the payment is made to aU.S. person but does not indicate whetherthe person is a specified U.S. person, thepayment will be presumed made to a spec-ified U.S. person unless the withholdingagent can apply the presumption rules of§ 1.6049–4(c)(1)(ii)(B), (C), (D), (E), (I),(J), (K), (L), or (N), to presume that theperson is other than a specified U.S. per-son, or the person’s name reasonably in-dicates that the person is a bank (for ex-ample because it contains the word Bankor a foreign equivalent).

(4) Presumption of chapter 4 status fora foreign entity. If a withholding agentcannot reliably associate a valid with-holding certificate or valid documentaryevidence sufficient to determine thechapter 4 status of the entity receivingpayment under paragraph (d) of this sec-tion (for example, as a participating FFI,nonparticipating FFI, or NFFE), it mustpresume that the entity is a nonpartici-pating FFI.

(5) Presumption of chapter 4 status ofpayee with respect to a payment to anintermediary or flow-through entity. If awithholding agent makes a payment to aforeign flow-through entity or intermedi-ary, including a payment that it is requiredto treat as made to such an entity underparagraphs (f)(2) and (3) of this section,and cannot reliably associate such pay-ment with valid documentation underparagraph (c) of this section, the withhold-ing agent must presume that the paymentis made to a nonparticipating FFI.

(6) Presumption of effectively con-nected income for payments to certainU.S. branches. A withholding agent thatmakes a payment to a U.S. branch de-scribed in this paragraph (f)(6) may pre-sume, in the absence of documentationindicating otherwise, that the U.S. branchis the payee of a payment that is effec-tively connected with the conduct of atrade or business in the United States ifthe withholding agent has obtained an


EIN from the U.S. branch (either orally orin writing). A U.S. branch is described inthis paragraph (f)(6) if it is a U.S. branchof a foreign bank subject to regulatorysupervision by the Federal Reserve Boardor a U.S. branch of a foreign insurancecompany required to file an annual state-ment on a form approved by the NationalAssociation of Insurance Commissionerswith the Insurance Department of a State,a Territory, or the District of Columbia. Apayment is treated as made to a U.S.branch of a foreign bank or foreign insur-ance company if the payment is creditedto an account maintained in the UnitedStates in the name of a U.S. branch of theforeign person, or the payment is made toan address in the United States where theU.S. branch is located and the name of theU.S. branch appears on documents (inwritten or electronic form) associated withthe payment (for example, the checkmailed or letter addressed to the branch).

(7) Joint payees — (i) In general. If awithholding agent makes a payment tojoint payees and cannot reliably associatethe payment with valid documentationfrom each payee but all of the joint payeesappear to be individuals, then the paymentis presumed made to an unidentified U.S.person. If any joint payee does not appear,by its name and other information con-tained in the account file, to be an indi-vidual, then the entire payment will betreated as made to a nonparticipating FFI.However, if one of the joint payees pro-vides a Form W–9 in accordance with theprocedures described in §§ 31.3406(d)–1 through 31.3406(d)-5, the payment shallbe treated as made to that payee.

(ii) Exception for offshore obligations.If a withholding agent makes a paymentoutside the United States with respect toan offshore obligation held by joint pay-ees and cannot reliably associate a pay-ment with valid documentation fromeach payee but all of the joint payeesappear to be individuals, then the pay-ment is presumed made to an unknownforeign individual if the payment withrespect to the offshore obligation ismade outside the United States (as de-scribed in § 1.6049 –5(e)).

(8) Rebuttal of presumptions. A payeemay rebut the presumptions described inparagraphs (f)(2) through (7) of this sec-tion by providing reliable documentation

to the withholding agent or, if applicable,to the IRS.

(9) Effect of reliance on presumptionsand of actual knowledge or reason toknow otherwise — (i) In general. Exceptas otherwise provided in this paragraph(f)(9), a withholding agent that withholdson a payment under section 1471 or 1472in accordance with the presumptions setforth in this paragraph (f) shall not beliable for withholding under this sectioneven if it is later established that the payeehas a chapter 4 status other than the statuspresumed. A withholding agent that failsto report and withhold in accordance withthe presumptions described in paragraphs(f)(2) through (7) of this section with re-spect to a payment that it cannot reliablyassociate with valid documentation shallbe liable for tax, interest, and penalties.See § 1.1474–1(a) for the extent of awithholding agent’s liability for failing towithhold in accordance with the presump-tions described in this paragraph (f).

(ii) Actual knowledge or reason toknow that amount of withholding isgreater than is required under the pre-sumptions or that reporting of the pay-ment is required. Notwithstanding theprovisions of paragraph (f)(9)(i) of thissection, a withholding agent that knows orhas reason to know that the status or char-acteristics of the person are other thanwhat is presumed under this paragraph (f)may not rely on the presumptions de-scribed in this paragraph (f) to the extentthat, if it determined the status of theperson based on such knowledge or rea-son to know, it would be required to with-hold (under this section or another with-holding provision of the Code) an amountgreater than would be the case if it reliedon the presumptions described in thisparagraph (f). In such a case, the with-holding agent must rely on its knowledgeor reason to know rather than on the pre-sumptions set forth in this paragraph (f).Failure to do so shall result in liability fortax, interest, and penalties to the extentdescribed in § 1.1474–1(a).

(g) [Reserved]. For further guidance,see § 1.1471–3(g).

(h) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 8. Section 1.1471–4 is amended:1. By removing paragraph (d)(3)(v).

2. By redesignating paragraphs(d)(3)(vi) through (viii) as paragraphs(d)(3)(v) through (vii).

3. By adding paragraphs (d)(2)(iii)(C),(d)(2)(ii)(F), and (d)(6)(vii).

4. By revising paragraphs (a)(3), (b)(1)through (3), (b)(6), (c)(5)(iv)(B)(2)(vi),(c)(5)(iv)(E), (d)(1), (d)(2)(i), (d)(2)(ii)(A),(d)(2)(ii)(B)(2), (d)(2)(ii)(E), (d)(2)(iii)(A),(d)(2)(iii)(B) introductory text, (d)(3)(ii)(E),(d)(3)(iii)(F), (d)(5)(v) through (vi), (d)(7)(i),(d)(7)(ii)(A), (d)(7)(iii), (d)(7)(iv)(A) through(B), (d)(8), (d)(9) Example 3, Example 5, andExample 7, (e)(1), (e)(2)(ii), (f)(4)(i) through(ii), (g)(1) introductory text, (g)(1)(ii), and(g)(2).

5. By removing the heading of para-graph (d)(7) and adding introductory textto paragraph (d)(7).


§ 1.1471–4 FFI agreement.

(a) * * *(3) [Reserved]. For further guidance,

see § 1.1471–4T(a)(3).* * * * *(b) * * *(1) [Reserved]. For further guidance,



see § 1.1471–4T(b)(3).(i) [Reserved]. For further guidance,

see § 1.1471–4T(b)(3)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–4T(b)(3)(ii).(iii) [Reserved]. For further guidance,

see § 1.1471–4T(b)(3)(iii).* * * * *(6) [Reserved]. For further guidance,

see § 1.1471–4T(b)(6).* * * * *(c) * * *(5) * * *(iv) * * *(B) * * *(2) * * *(vi) [Reserved]. For further guidance,

see § 1.1471–4T(c)(5)(iv)(B)(2)(vi).* * * * *(E) [Reserved]. For further guidance,

see § 1.1471–4T(c)(5)(iv)(E).* * * * *(d) * * *


(1) [Reserved]. For further guidance,see § 1.1471–4T(d)(1).

(2) * * *(i) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(i).(ii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(ii)(A).(B) * * *(2) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(ii)(B)(2).* * * * *(E) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(ii)(E).(F) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(ii)(F).(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(iii)(A).(B) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(iii)(B).* * * * *(C) [Reserved]. For further guidance,

see § 1.1471–4T(d)(2)(iii)(C).(3) * * *(ii) * * *(E) [Reserved]. For further guidance,

see § 1.1471–4T(d)(3)(ii)(E).(iii) * * *(F) [Reserved]. For further guidance,

see § 1.1471–4T(d)(3)(iii)(F).* * * * *(5) * * *(v) [Reserved]. For further guidance,

see § 1.1471–4T(d)(5)(v).(vi) [Reserved]. For further guidance,

see § 1.1471–4T(d)(5)(vi).* * * * *(6) * * *(vii) [Reserved]. For further guidance,

see § 1.1471–4T(d)(6)(vi).* * * * *(7) [Reserved]. For further guidance,

see § 1.1471–4T(d)(7).(i) [Reserved]. For further guidance,

see § 1.1471–4T(d)(7)(i).(ii) * * *(A) [Reserved]. For further guidance,

see § 1.1471–4T(d)(7)(ii)(A).* * * * *(iii) [Reserved]. For further guidance,

see § 1.1471–4T(d)(7)(iii).(iv) * * *(A) [Reserved]. For further guidance,

see § 1.1471–4T(d)(7)(iv)(A).(B) [Reserved]. For further guidance,

see § 1.1471–4T(d)(7)(iv)(B).


(9) * * *Example 3. [Reserved]. For further guidance, see

§ 1.1471–4T(d)(9), Example 3.

* * * * *Example 5. [Reserved]. For further guidance, see

§ 1.1471–4T(d)(9), Example 5.

* * * * *Example 7. [Reserved]. For further guidance, see

§ 1.1471–4T(d)(9), Example 7.

(e) * * *(1) [Reserved]. For further guidance,

see § 1.1471–4T(e)(1).(2) * * *(ii) [Reserved]. For further guidance,

see § 1.1471–4T(e)(2)(ii).* * * * *(f) * * *(4) * * *(i) [Reserved]. For further guidance,

see § 1.1471–4T(f)(4)(i).(ii) [Reserved]. For further guidance,

see § 1.1471–4T(f)(4)(ii).(g) * * *(1) [Reserved]. For further guidance,

see § 1.1471–4T(g)(1).* * * * *(ii) [Reserved]. For further guidance,

see § 1.1471–4T(g)(1)(ii).* * * * *(2) [Reserved]. For further guidance,

see § 1.1471–4T(g)(2).* * * * *Par. 9. Section 1.1471–4T is added to

read as follows:

§ 1.1471–4T FFI Agreement(temporary).



(3) Reporting. A participating FFI isrequired to report the information de-scribed in paragraph (d) of this sectionannually with respect to U.S. accountsunder section 1471(c) and accounts heldby recalcitrant account holders. A partic-ipating FFI must also comply with thefiling requirements described in§ 1.1474–1(c) and (d) to report paymentsthat are chapter 4 reportable amounts paidto recalcitrant account holders and non-participating FFIs (including the transi-tional reporting of foreign reportableamounts paid to nonparticipating FFIs for

calendar years 2015 and 2016 described in§ 1.1471– 4(d)(2)(ii)(F)). A participat-ing FFI that is unable to obtain a waiver,if required by foreign law, to report anaccount as required under paragraph (d)of this section must close or transfersuch account within a reasonable periodof time as described in paragraph (i) ofthis section.



(1) In general. Except as otherwiseprovided in a Model 2 IGA, a participat-ing FFI is required to deduct and withholda tax equal to 30 percent of any withhold-able payment made by such participatingFFI to an account held by a recalcitrantaccount holder or to a nonparticipatingFFI after June 30, 2014, to the extentrequired under paragraph (b)(3) of thissection. See paragraph (b)(2) of this sec-tion for rules for a participating FFI toidentify the payee of a payment in order todetermine whether withholding is re-quired under this paragraph (b). See para-graph (b)(4) of this section for the extentof a participating FFI’s requirement todeduct and withhold tax on a foreign pass-thru payment made by such participatingFFI to an account held by a recalcitrantaccount holder or to a nonparticipatingFFI. See paragraph (b)(5) of this sectionfor the rules for withholding on paymentsto limited branches and limited FFIs. Seeparagraph (b)(6) for the special allowanceto set aside in escrow amounts withheldwith respect to dormant accounts. Seeparagraph (b)(7) of this section for thewithholding requirements of certain U.S.branches of participating FFIs. See§ 1.1471–2 for the exceptions to and spe-cial rules for withholding and the exclu-sion from the definitions of the termswithholdable payment and foreign pass-thru payment that applies to any paymentmade under a grandfathered obligation orthe gross proceeds from the disposition ofsuch an obligation. See § 1.1474–1(d)(4)(iii) for the requirement of partici-pating FFIs to report payments that arechapter 4 reportable amounts. See§ 1.1474–6 for the coordination of with-holding on payments under this paragraph(b) with the other withholding provisionsunder the Code.


(2) Withholding determination. Exceptas otherwise provided under § 1.1471–2 and, with respect to certain preexistingaccounts, under paragraph (c) of this sec-tion, a participating FFI is required todetermine whether withholding applies atthe time a payment is made by reliablyassociating the payment with valid docu-mentation described in paragraph (c) ofthis section for the payee of the payment.For a payment made to an account, if theaccount is held by one or more individu-als, the payee is each individual accountholder. For a payment made to an accountheld by an entity, except as otherwiseprovided in § 1.1471–3(a)(3), the payee isthe account holder. If the participating FFImakes a withholdable payment to a payeethat is an entity and the payment is madewith respect to an obligation that is not anaccount, except as otherwise provided in§ 1.1471–3(a)(3), the payee is the personto whom the payment is made. See§ 1.1473–1(a) to determine when a pay-ment is made in the case of a withholdablepayment. If a participating FFI cannot re-liably associate a payment (or any portionof a payment) with valid documentation,the rules described in paragraph (c) of thissection shall apply to determine the chap-ter 4 status of the account holder (andpayee if other than the account holder).Notwithstanding the foregoing, a partici-pating FFI may establish after the date ofpayment that withholding was not re-quired to the extent permitted under§ 1.1471–3(c)(7) or may apply the proce-dures provided in § 1.1474–2 when over-withholding occurs.

(3) Satisfaction of withholding require-ments.

(i) In general. A participating FFI thatcomplies with the withholding obligationsof this paragraph (b) with respect to ac-counts held by recalcitrant account hold-ers and payees that are nonparticipatingFFIs shall be deemed to satisfy its with-holding obligations under sections1471(a) and 1472 with respect to suchaccount holders and payees.

(ii) Withholding not required. A partic-ipating FFI that is an NQI, NWP, NWT,or that is a QI that elects under section1471(b)(3) not to assume withholding re-sponsibility for a payment and that pro-vides its withholding agent with the infor-mation necessary to allocate all or a

portion of the payment to each payee aspart of a withholding certificate describedin § 1.1471–3(c)(3)(iii) will generally notbe required to withhold under paragraph(b)(1) of this section. See § 1.1471–2(a)(2)(ii), however, for the circumstancesunder which a participating FFI that is anNQI, NWP, or NWT has a residual with-holding responsibility. See also § 1.1471–3(c)(9)(iii)(B) for the circumstances underwhich a participating FFI that is a brokerhas a residual withholding responsibilityas an intermediary of the payment andmay also be liable for any underwithhold-ing that occurs. See § § 1.1471–2(a) and1.1472–1(a)(2)(i) and the QI, WP, or WTagreement for the withholding require-ments of a participating FFI that is a QI,WP, or WT for purposes of chapter 4.

(iii) Election to withhold under section3406. A participating FFI may elect tosatisfy its withholding obligation underparagraph (b)(1) of this section with re-spect to recalcitrant account holders thatare also U.S. non-exempt recipients sub-ject to backup withholding under section3406 receiving withholdable payments, tothe extent that the payments also consti-tute reportable payments, by applyingwithholding under section 3406 at thebackup withholding rate to such withhold-able payments. A participating FFI maymake the election described in this para-graph only if it complies with the infor-mation reporting rules under chapter 61and section 3406. Nothing in this para-graph relieves a participating FFI of itsrequirement to backup withhold undersection 3406 with respect to reportablepayments that are not also withholdablepayments. See § 1.1474–6(f) for the gen-eral rule that satisfying withholding re-quirements under chapter 4 will satisfybackup withholding requirements undersection 3406 for a payment that is both awithholdable payment and a reportablepayment.

(4) through (5)(ii) [Reserved]. For fur-ther guidance, see § 1.1471–4(b)(4) through(b)(5)(ii).

(6) Special rule for dormant accounts.A participating FFI that makes a with-holdable payment not otherwise subject towithholding under chapter 3 or backupwithholding under section 3406 to a recal-citrant account holder of a dormant ac-count that it maintains must withhold on

the account for purposes of chapter 4.However, the participating FFI may, inlieu of depositing the tax withheld, setaside the amount withheld in escrow untilthe date that the account ceases to be adormant account. In such case, the taxwithheld becomes due 90 days followingthe date that the account ceases to be adormant account if the account holderdoes not provide the documentation re-quired under paragraph (c) of this sectionor becomes refundable to the accountholder if the account holder provides thedocumentation required under paragraph(c) of this section establishing that with-holding does not apply. A participatingFFI that maintains a dormant account of arecalcitrant account holder and that electsto escrow withheld tax pursuant to thisparagraph (b)(6) may not delegate the re-sponsibility to escrow withheld tax to thewithholding agent from which it is receiv-ing payment. Once a dormant account es-cheats irrevocably to a foreign govern-ment under the relevant laws in thejurisdiction in which the participating FFI(or branch thereof) operates, the partici-pating FFI is no longer required to depositwith the IRS the amount held in escrowwith respect to the account. See paragraph(d)(6)(ii) of this section for the definitionof dormant account.



(1) through (4)(iii)(B) [Reserved]. Forfurther guidance, see § 1.1471–4(c)(1)through (c)(4)(iii)(B).


(i) through (iii)(C) [Reserved]. For fur-ther guidance, see § 1.1471–4(c)(5)(i)through (c)(5)(iii)(C).

(iv) [Reserved]. For further guidance,see § 1.1471–4(c)(5)(iv).

(A) [Reserved]. For further guidance,see § 1.1471–4(c)(5)(iv)(A).

(B) [Reserved]. For further guidance,see § 1.1471–4(c)(5)(iv)(B).

(1) through (1)(vii) [Reserved]. For fur-ther guidance, see § 1.1471–4(c)(5)(iv)(B)(1)through (c)(5)(iv)(B)(1)(vii).

(2) [Reserved]. For further guidance,see § 1.1471–4(c)(5)(iv)(B)(2).


(i) through (v) [Reserved]. For furtherguidance, see § 1.1471–4(c)(5)(iv)(B)(2)(i)through (v).

(vi) Standing instructions to payamounts. If information required to bereviewed with respect to the account con-tains standing instructions to pay amountsfrom the account to an account maintainedin the United States for an account holder,the participating FFI must retain a recordof a withholding certificate and either aform of documentary evidence describedin § 1.1471–3(c)(5)(i)(A) through (C) or awritten reasonable explanation (as definedin § 1.1441–7(b)(12)) establishing the ac-count holder’s status as a foreign person.

(vii) [Reserved]. For further guidance,see § 1.1471–4(c)(5)(iv)(B)(2)(vii).

(C) through (D)(4)(vi) [Reserved]. Forfurther guidance, see § 1.1471–4(c)(5)(iv)(C)through (c)(5)(iv)(D)(4)(vi).

(E) Exception for preexisting individ-ual accounts previously documented asheld by foreign individuals. A participat-ing FFI that has previously obtained doc-umentation from an account holder to es-tablish the account holder’s status as aforeign individual in order to meet its ob-ligations under its QI, WP, or WT agree-ment with the IRS, or to fulfill its report-ing obligations as a U.S. payor underchapter 61, is not required to perform theelectronic search described in paragraph(c)(5)(iv)(C) of this section or the en-hanced review described in paragraph(c)(5)(iv)(D)(3) of this section for suchaccount. Additionally, a participating FFIwith a U.S. payor as its paying agent is notrequired to perform the electronic searchdescribed in paragraph (c)(5)(iv)(C) ofthis section or the enhanced review de-scribed in paragraph (c)(5)(iv)(D)(3) ofthis section for an account for which itspaying agent that is a U.S. payor has pre-viously obtained documentation to estab-lish the account holder’s status as a for-eign individual under chapter 61. Theparticipating FFI is required, however, toperform the relationship manager inquirydescribed in paragraph (c)(5)(iv)(D)(2)of this section if the account is a high-value account described in paragraph(c)(5)(iv)(D)(1) of this section. For pur-poses of this paragraph (c)(5)(iv)(E), aparticipating FFI has documented an ac-count holder’s foreign status under chap-ter 61 if the participating FFI (or its pay-

ing agent that is a U.S. payor) has retaineda record of the documentation requiredunder chapter 61 to establish the foreignstatus of an individual and the accountreceived a reportable payment as definedunder section 3406(b) in any prior yearthat was properly reported in that year. Inthe case of a participating FFI that is a QI,WP, or WT, the participating FFI has doc-umented an account holder’s foreign sta-tus under its QI, WP, or WT agreement(as applicable) if the participating FFI hasmet the relevant documentation and re-porting requirements of its agreementwith respect to an account holder that re-ceived a reportable amount in any year inwhich its agreement was in effect.

(6) through (7) [Reserved]. For furtherguidance, see § 1.1471–4(c)(6) through (7).


(1) Scope of paragraph. This para-graph (d) provides rules addressing theinformation reporting requirements appli-cable to participating FFIs with respect toU.S. accounts, accounts held by owner-documented FFIs, and recalcitrant ac-count holders. Paragraph (d)(2) of thissection describes the accounts subject toreporting under this paragraph (d), andspecifies the participating FFI that is re-sponsible for reporting an account or ac-count holder. Paragraph (d)(3) of this sec-tion describes the information required tobe reported and the manner of reportingby a participating FFI under section1471(c)(1) with respect to a U.S. accountor an account held by an owner-documented FFI. Paragraph (d)(4) of thissection provides definitions of terms ap-plicable to paragraph (d)(3). Paragraph(d)(5) of this section describes the condi-tions for a participating FFI to elect toreport its U.S. accounts and accounts heldby owner-documented FFIs under section1471(c)(2) and the information required tobe reported under such election. Para-graph (d)(6) of this section provides rulesfor a participating FFI to report its recal-citrant account holders. Paragraph (d)(7)of this section provides special transi-tional reporting rules applicable to reportsdue in 2015 and 2016. Paragraph (d)(8) ofthis section provides the reporting require-ments of a participating FFI that is a QI,WP, or WT with respect to U.S. accounts.See chapter 61 for reporting requirements

that may apply to a payor that is a partic-ipating FFI or registered deemed-compliant FFI with respect to payees. See§ 301.1474–1(a) for the requirement for afinancial institution to file the informationrequired under this paragraph (d) on mag-netic media.


(i) Accounts subject to reporting. Sub-ject to the rules of paragraph (d)(7) of thissection, a participating FFI shall report bythe time and in the manner prescribed inparagraph (d)(3)(vi) of this section, theinformation described in paragraph (d)(3)of this section with respect to accountsmaintained at any time during each calen-dar year for which the participating FFI isresponsible for reporting under paragraph(d)(2)(ii) of this section and that it is re-quired to treat as U.S. accounts or ac-counts held by owner-documented FFIs,including accounts that are identified asU.S. accounts by the end of such calendaryear pursuant to a change in circum-stances during such year as described inparagraph (c)(2)(iii) of this section. Alter-natively, a participating FFI may elect toreport under paragraph (d)(5) of this sec-tion with respect to such accounts for eachcalendar year. With respect to accountsheld by recalcitrant account holders, a par-ticipating FFI is required to report withrespect to each calendar year under para-graph (d)(6) of this section and not underparagraph (d)(3) or (5) of this section. Forseparate reporting requirements of partic-ipating FFIs with respect to foreign re-portable amounts and for transitionalrules for participating FFIs to report cer-tain foreign reportable amounts paid toaccounts held by nonparticipating FFIs,see § 1.1471– 4(d)(2)(ii)(F).


(A) In general. Except as otherwiseprovided in paragraphs (d)(2)(ii)(B)through (F) of this section, the participat-ing FFI that maintains the account is re-sponsible for reporting the account in ac-cordance with the requirements ofparagraph (d)(2)(iii), (d)(3), or (d)(5) ofthis section (as applicable) for each calen-dar year. Except as otherwise provided inparagraph (d)(2)(ii)(C) of this section, aparticipating FFI is responsible for report-ing accounts held by recalcitrant account


holders that it maintains in accordancewith the requirements of paragraph (d)(6)of this section. A participating FFI is notrequired to report the information requiredunder paragraph (d)(6) of this section withrespect to an account held by a recalcitrantaccount holder of another participatingFFI even if that other participating FFIholds the account as an intermediary onbehalf of such account holder and regard-less of whether the participating FFI isrequired to report payments made to therecalcitrant account holder of such otherFFI under § 1.1474–1(d)(4)(iii).

(B) [Reserved]. For further guidance,see § 1.1471–4(d)(2)(ii)(B).

(1) [Reserved]. For further guidance,see § 1.1471–4(d)(2)(ii)(B)(1).

(2) If the territory financial institutiondoes not agree to be treated as a U.S.person with respect to a withholdable pay-ment, the participating FFI must reportwith respect to each specified U.S. personor substantial U.S. owner of an entity thatis treated as a passive NFFE with respectto which the territory financial institutionacts as an intermediary and provides theparticipating FFI with the information anddocumentation required under § 1.1471–3(c)(3)(iii)(G). The participating FFI shallbe treated as having satisfied these report-ing requirements if it reports with respectto each such specified U.S. person or sub-stantial U.S. owner of a passive NFFEeither—

(i) The information required by chapter61 and described in paragraph (d)(5)(ii) or(d)(5)(iii) of this section (except accountnumber); or

(ii) The information described in para-graph (d)(3)(ii), (d)(3)(iii), or (d)(3)(iv) ofthis section (except account number andaccount balance or value).

(C) through (D) [Reserved]. For furtherguidance, see § 1.1471– 4(d)(2)(ii)(C)through (D).

(E) Requirement to identify the GIIN ofa branch that maintains an account. Aparticipating FFI may report under para-graph (d)(3) or (d)(5) of this section eitherwith respect to all of its U.S. accounts andrecalcitrant accounts, or separately withrespect to any clearly identified group ofaccounts (such as by line of business orthe location of where the account is main-tained). A participating FFI shall includethe GIIN assigned to the participating FFI

or its branches to identify the jurisdictionof the FFI or branch that maintains theaccounts subject to reporting under para-graph (d)(3) or (d)(5) of this section. Ad-ditionally, a participating FFI shall filewith the IRS the information required tobe reported on accounts that it maintainsin accordance with the forms and theiraccompanying instructions provided bythe IRS. For the definition of a branchthat applies for purposes of this para-graph (d), see paragraph (e)(2)(ii) of thissection.

(F) Reporting by participating FFIsand registered deemed-compliant FFIs(including QIs, WPs, WTs, and certainU.S. branches not treated as U.S. persons)for accounts of nonparticipating FFIs(transitional). Except as otherwise pro-vided in the instructions to Form 8966,“FATCA Report,” if a participating FFI orregistered deemed-compliant FFI (includ-ing a QI, WP, WT, or U.S. branch of aparticipating FFI or registered deemed-compliant FFI that is not treated as a U.S.person) maintains an account for a non-participating FFI (including a limitedbranch and limited FFI treated as a non-participating FFI), the participating FFI orregistered deemed-compliant FFI must re-port on Form 8966 the name and addressof the nonparticipating FFI, and the aggre-gate amount of foreign source payments,as described in paragraph (d)(4)(iv) of thissection, paid to or with respect to eachsuch account (foreign reportable amount)for each of the calendar years 2015 and2016. If, however, the participating FFI isprohibited under domestic law from re-porting on a specific payee basis withoutconsent from the nonparticipating FFI ac-count holder and the participating FFI hasnot been able to obtain such consent, theparticipating FFI may instead report theaggregate number of accounts held bysuch non-consenting nonparticipatingFFIs and the aggregate amount of foreignreportable amounts paid with respect tosuch accounts, as described in paragraph(d)(4)(iv) of this section, during the cal-endar year. A participating FFI may, inlieu of reporting only foreign reportableamounts, report all income, gross pro-ceeds, and redemptions (irrespective ofthe source) paid to the nonparticipatingFFI’s account by the participating FFIduring the calendar year. In addition, the

participating FFI must retain the accountstatements related to such nonparticipat-ing FFI accounts. See paragraphs(d)(6)(iv), (v), (vi) and (vii) of this sectionfor rules relating to reporting on recalci-trant account holders. Form 8966 shall befiled electronically with the IRS on orbefore March 31 of the year following theend of the calendar year to which the formrelates.


(A) Special reporting rule for U.S.payors other than U.S. branches. Partici-pating FFIs that are U.S. payors (otherthan U.S. branches) shall be treated ashaving satisfied the chapter 4 reportingrequirements described in paragraph(d)(2)(i) of this section with respect toaccounts that the participating FFI is re-quired to treat as U.S. accounts, or ac-counts held by owner-documented FFIs, ifthe participating FFI reports with respectto each such account either—

(1) The information required by chap-ter 61 and described in paragraph(d)(5)(ii) or (d)(5)(iii) of this section; or

(2) The information described in para-graph (d)(3)(ii), (d)(3)(iii), or (d)(3)(iv) ofthis section. However, such participatingFFI that is required to report on suchaccounts under chapter 61 is not relievedof that obligation.

(B) Special reporting rules for U.S.branches treated as U.S. persons. A U.S.branch of a participating FFI (and report-ing Model 1 FFI) that is treated as a U.S.person shall be treated as having satisfiedthe reporting requirements described inparagraph (d)(2)(i) of this section if itreports under—

(1) through (4) [Reserved]. For furtherguidance, see § 1.1471–4(d)(2)(iii)(B)(1)through (4).

(C) Special reporting rules for U.S.branches not treated as U.S. persons. AU.S. branch of a registered deemed-compliant FFI or limited FFI that is nottreated as a U.S. person shall be treated ashaving satisfied the reporting require-ments described in paragraph (d)(2)(i) ofthis section if it reports the informationdescribed in paragraph (d)(2)(iii)(B)(1)through (4) of this section with respect toaccount holders of accounts that the U.S.branch is required to treat as U.S. ac-


counts or accounts held by owner-documented FFIs.


(i) [Reserved]. For further guidance,see § 1.1471–4(d)(3)(i).


(A) through (D) [Reserved]. For furtherguidance, see § 1.1471–4(d)(3)(ii)(A)through (D).

(E) Such other information as is other-wise required to be reported under thisparagraph (d)(3) or in the form describedin paragraph (d)(3)(v) of this section andits accompanying instructions.


(A) through (E) [Reserved]. For furtherguidance, see § 1.1471–4(d)(3)(iii)(A)through (E).

(F) Such other information as is other-wise required to be reported under thisparagraph (d)(3) or in the form describedin paragraph (d)(3)(v) of this section andits accompanying instructions.

(iv) through (iv)(F) [Reserved]. Forfurther guidance, see § 1.1471–4(d)(3)(iv)through (d)(3)(iv)(F).

(v) [Reserved]. For further guidance,see § 1.1471–4(d)(3)(v).

(vi) [Reserved]. For further guidance,see § 1.1471–4(d)(3)(vi).


(4) through (4)(v) [Reserved]. For fur-ther guidance, see § 1.1471–4(d)(4) through(d)(4)(v).


(i) through (iv) [Reserved]. For furtherguidance, see § 1.1471–4(d)(5)(i) through(d)(5)(iv).

(v) Time and manner of making theelection. A participating FFI (or one ormore branches of the participating FFI)may make the election described in thisparagraph (d)(5) by reporting the informa-tion described in this paragraph (d)(5)on the form described in paragraph(d)(5)(vii) of this section on the next re-porting date following the end of the cal-endar year for which the election is made.A participating FFI may make an electionunder this paragraph (d)(5) either withrespect to all of its U.S. accounts andrecalcitrant accounts or, separately, with

respect to any clearly identified group ofaccounts (such as by line of business orthe location where the account is main-tained).

(vi) Revocation of election. A partici-pating FFI may revoke the election de-scribed in paragraph (d)(5)(i) of this sec-tion (as a whole or with regard to anyclearly identified group of accounts) byreporting the information described inparagraph (d)(3) of this section beginningon the first reporting date with respect tothe calendar year that follows the calendaryear for which it last reports an accountunder this paragraph (d)(5).



(i) through (v) [Reserved]. For furtherguidance, see § 1.1471–4(d)(6)(i) through (v).

(vi) Extensions in filing. The IRS shallgrant an automatic 90-day extension oftime in which to file Form 8966. Form8809, “Request for Extension of Time toFile Information Returns,” (or such otherform as the IRS may prescribe) must beused to request such extension of time andmust be filed no later than the due date ofForm 8966. Under certain hardship con-ditions, the IRS may grant an additional90-day extension. A request for extensiondue to hardship must contain a statementof the reasons for requesting the extensionand such other information as the forms orinstructions may require.


(7) Special reporting rules with respectto the 2014 and 2015 calendar years

(i) In general. If the effective date ofthe FFI agreement of a participating FFI ison or before December 31, 2015, the par-ticipating FFI is required to report U.S.accounts and accounts held by owner-documented FFIs that it maintained (orthat it is otherwise required to report un-der paragraph (d)(2)(ii) of this section)during the 2014 and 2015 calendar yearsin accordance with paragraph (d)(7)(ii) or(iii) of this section.


(A) Reporting with respect to the 2014calendar year. With respect to accountsmaintained during the 2014 calendaryear—

(1) through (3) [Reserved]. For furtherguidance, see § 1.1471–4(d)(7)(ii)(A)(1)through (3).


(1) through (2) [Reserved]. For furtherguidance, see § 1.1471–4(d)(7)(ii)(B)(1)through (2).

(iii) Participating FFIs that report un-der § 1.1471–4(d)(5). A participating FFIthat elects to report under paragraph (d)(5)of this section may report only the informa-tion described in paragraphs (d)(7)(ii)(A)(1)and (3) of this section for its 2014 calendaryear. With respect to its 2015 calendar year,a participating FFI is required to report all ofthe information required to be reported un-der paragraphs (d)(5)(i) through (iii) of thissection but may exclude from such report-ing amounts reportable under section 6045.


(A) In general. Except as provided inparagraph (d)(7)(iv)(B) of this section, re-porting under paragraph (d)(7)(ii) of thissection shall be made on Form 8966 (orsuch other form as the IRS may pre-scribe), in the manner described in para-graph (d)(3)(vi) of this section. Reportingunder paragraph (d)(7)(iii) of this sectionshall be made in accordance with para-graph (d)(5)(vii) of this section.

(B) Special determination date andtiming for reporting with respect to the2014 calendar year. With respect to the2014 calendar year, a participating FFImust report under paragraph (d)(3) or (5)of this section on all accounts that areidentified and documented under para-graph (c) of this section as U.S. accountsor accounts held by owner-documentedFFIs as of December 31, 2014, (or as ofthe date an account is closed if the accountis closed prior to December 31, 2014) ifsuch account was outstanding on July 1,2014. Reporting for the 2014 calendaryear shall be filed with the IRS on orbefore March 31, 2015. However, a U.S.payor (including a U.S. branch of a par-ticipating FFI or registered deemed-compliant FFI that is treated as a U.S.person) that reports in accordance withparagraph (d)(2)(iii) of this section mayreport all or a portion of its U.S. accountsand accounts held by owner-documentedFFIs in accordance with the dates other-


wise applicable to reporting under chapter61 with respect to the 2014 calendar year.

(8) Reporting requirements of QIs,WPs, and WTs. In general, the reportingrequirements with respect to the U.S. ac-counts maintained by a participating FFIthat is a QI, WP, or WT will be consistentwith the reporting requirements with re-spect to such accounts of a participatingFFI that is not a QI, WP, or WT. See theQI, WP, or WT agreement for the coordi-nation of the chapter 4 reporting obliga-tions of a participating FFI that also is aQI, WP, or WT.


Example 1. [Reserved]. For further guidance, see§ 1.1471–4(d)(9), Example 1.


Example 3. U.S. owned foreign entity. FC, apassive NFFE, holds a custodial account with PFFI1,a participating FFI. U, a specified U.S. person, owns3% of the only class of stock of FC. Q, anotherspecified U.S. person, owns 12% of the only class ofstock of FC. U is not a substantial U.S. owner of FC.See § 1.1473–1(b). Q is a substantial U.S. owner ofFC and FC identifies her as such to PFFI1. PFFI1does not elect to report under paragraph (d)(5) of thissection. PFFI1 must complete and file the reportingform described in paragraph (d)(3)(v) of this sectionand report the information described in paragraph(d)(3)(iii) with respect to both FC and Q. See para-graph (d)(3)(ii) of this section.


Example 5. Owner-documented FFI. DC, anowner-documented FFI under § 1.1471–3(d)(6), holdsa custodial account with PFFI1, a participatingFFI. U, a specified U.S. person, owns 3% of theonly class of stock of DC. Q, another specifiedU.S. person, owns 12% of the only class of stockof DC. Both U and Q are persons identified in§ 1.1471–3(d)(6)(iv)(A)(1) and DC identifies Uand Q to PFFI1 and otherwise provides to PFFI1all of the information required to be reported withrespect to DC. PFFI1 must complete and file aform described in paragraph (d)(3)(v) of this sec-tion with regard to U and Q. See paragraph(d)(3)(iii) of this section.


Example 7. Sponsored FFI. DC2 is an FFI thathas agreed to have a sponsoring entity, PFFI1, fulfillDC2’s chapter 4 responsibilities under § 1.1471–5(f)(2)(iii). U, a specified U.S. person, holds anequity interest in DC2 that is a financial accountunder § 1.1471–5(b)(3)(iii). PFFI1 must completeand file a form described in paragraph (d)(3)(v) ofthis section with regard to U’s account on behalf ofDC2. See paragraph (d)(2)(ii)(C) of this section.


(1) In general. Except as otherwiseprovided in this paragraph (e)(1) or para-

graphs (e)(2) and (e)(3) of this section,each FFI that is a member of an expandedaffiliated group must have the chapter 4status of a participating FFI, deemed-compliant FFI, or exempt beneficialowner as a condition for any member ofsuch group to obtain the status of a par-ticipating FFI or registered deemed-compliant FFI. Accordingly, except asotherwise provided in published guidance,each FFI other than a certified deemed-compliant FFI or exempt beneficial ownerin an expanded affiliated group must sub-mit a registration form to the IRS in suchmanner as the IRS may prescribe request-ing an FFI agreement, registered deemed-compliant status, or limited FFI status as acondition for any member to become aparticipating FFI or registered deemed-compliant FFI. Except as provided inparagraph (e)(2) of this section, each FFIother than a certified deemed-compliantFFI or exempt beneficial owner that is amember of such group must also agree toall of the requirements for the status forwhich it applies with respect to all ac-counts maintained at all of its branches,offices, and divisions. For the withholdingrequirements of a participating FFI withrespect to its limited branches and its af-filiates that are limited FFIs, see paragraph(b)(5) of this section. Notwithstanding theforegoing, an FFI (or branch thereof) thatis treated as a participating FFI or adeemed-compliant FFI pursuant to aModel 1 IGA or Model 2 IGA will main-tain such status provided that it meets theterms for such status pursuant to suchagreement.


(i) [Reserved]. For further guidance,see § 1.1471–4(e)(2)(i).

(A) through (C) [Reserved]. For furtherguidance, see § 1.1471–4(e)(2)(i)(A)through (C).

(ii) Branch defined. For purposes ofthis section, a branch is a unit, business, oroffice of an FFI that is treated as a branchunder the regulatory regime of a countryor that is otherwise regulated under thelaws of a country as separate from otheroffices, units, or branches of the FFI andalso includes an entity that is disregardedas an entity separate from an FFI (includ-ing branches maintained by such disre-garded entity). For purposes of this sec-

tion, a branch includes a unit, business, oroffice of an FFI located in a country inwhich it is resident, and a unit, business,or office of an FFI located in the countryin which the FFI is created or organized.All units, businesses, and offices of a par-ticipating FFI located in a single country,and all entities disregarded as entities sep-arate from a participating FFI and locatedin a single country, shall be treated as asingle branch and may use the same GIIN.An account will be treated as maintainedby a branch or disregarded entity if therights and obligations of the accountholder and the participating FFI with re-gard to such account (including any assetsheld in the account) are governed by thelaws of the country of the branch or dis-regarded entity.

(iii) through (v) [Reserved]. For furtherguidance, see § 1.1471–4(e)(2)(iii) through(v).

(3) through (4) [Reserved]. For furtherguidance, see § 1.1471–4(e)(3) through (4).


(1) through (3)(iv)(C) [Reserved]. Forfurther guidance, see § 1.1471–4(f)(1)through (f)(3)(iv)(C).

(4) [Reserved]. For further guidance,see § 1.1471–4(f)(4).

(i) General inquiries. The IRS, basedupon the information reporting forms de-scribed in paragraphs (d)(3)(v), (d)(5)(vii),or (d)(6)(iv) of this section filed with theIRS for each calendar year, may requestadditional information with respect to theinformation reported on the forms or mayrequest the account statements described inparagraph (d)(4)(v) of this section. The IRSmay request additional information to deter-mine an FFI’s compliance with its FFIagreement and to assist the IRS with itsreview of account holder compliance withtax reporting requirements.

(ii) Inquiries regarding substantialnon-compliance. If, based on the informa-tion reporting forms described in para-graphs (d)(3)(v), (d)(5)(vii), or (d)(6)(iv)of this section filed with the IRS for eachcalendar year, the certifications made bythe responsible officer described in para-graph (f)(3) of this section, or any otherinformation related to the participatingFFI’s compliance with its FFI agreement,the IRS determines in its discretion thatthe participating FFI may not have sub-


stantially complied with the requirementsof its FFI agreement, the IRS may requestfrom the responsible officer (or designee)information necessary to verify the partic-ipating FFI’s compliance with the FFIagreement. The IRS may request, for ex-ample, a description or copy of the partic-ipating FFI’s policies and procedures forfulfilling the requirements of the FFIagreement, a description of the participat-ing FFI’s procedures for conducting itsperiodic review, or a copy of any writtenreports documenting the findings of suchreview in order to evaluate the sufficiencyof the participating FFI’s compliance pro-gram and review of such program. TheIRS may also request the performance ofspecified review procedures by a person(including an external auditor or third-party consultant) that the IRS identifies ascompetent to perform such proceduresgiven the facts and circumstances sur-rounding the FFI’s potential failure tocomply with the FFI agreement. The IRSmay make these requests to a sponsoringentity with respect to any sponsored FFI.


(1) Defined. An event of default occursif a participating FFI fails to perform ma-terial obligations required with respect tothe due diligence, verification, withhold-ing, or reporting requirements of the FFIagreement or if the IRS determines thatthe participating FFI has failed to substan-tially comply with the requirements of theFFI agreement. An event of default alsoincludes the occurrence of the follow-ing—

(i) [Reserved]. For further guidance,see § 1.1471–4(g)(1)(i).

(ii) Failure to significantly reduce, overa period of time, the number of accountholders or payees that the participatingFFI is required to treat as recalcitrant ac-count holders or nonparticipating FFIs, asa result of the participating FFI failing tocomply with the due diligence proceduresfor the identification and documentationof account holders and payees, as set forthin paragraph (c) of this section;

(iii) through (ix) [Reserved]. For fur-ther guidance, see § 1.1471–4(g)(1)(iii)through (ix).

(2) Notice of event of default. Follow-ing an event of default known by or dis-closed to the IRS, the IRS will deliver to

the participating FFI a notice of defaultspecifying the event of default. The IRSwill request that the participating FFIremediate the event of default within aspecified time period. The participatingFFI must respond to the notice of defaultand provide information responsive toan IRS request for information or statethe reasons why the participating FFIdoes not agree that an event of defaulthas occurred. Taking into account theterms of any applicable Model 2 IGA, ifthe participating FFI does not provide aresponse within the specified time pe-riod, the IRS may, at its sole discretion,deliver a notice of termination that ter-minates the FFI’s participating FFI sta-tus. A participating FFI may request,within a reasonable period of time, re-consideration of a notice of default ornotice of termination by written requestto the Deputy Commissioner (Interna-tional), LB&I.

(3) [Reserved]. For further guidance,see § 1.1471–4(g)(3).

(h) through (j) [Reserved]. For furtherguidance, see § 1.1471–4(h) through (j).

(k) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 10. Section 1.1471–5 is amended:1. By removing paragraphs (a)(3)(ii)

(b)(3)(v)(B)(3), and (b)(3)(vi)(B)(3).2. By redesignating paragraphs

(a)(3)(iii) through (a)(3)(vi) as paragraphs(a)(3)(ii) through (a)(3)(v) and paragraph(j) as paragraph (l).

3. By adding paragraphs(f)(1)(i)(F)(3)(vii), (f)(2)(v), (j), and (k).

4. By revising paragraphs (a)(3)(i),(a)(4)(i), (b)(1)(iii)(B)(2), (b)(3)(iv),(b)(3)(v)(A), (b)(3)(v)(B)(1) through (2),(b)(3)(vi), (c), (e)(1)(v)(A), (e)(3)(ii), (e)(4)(v)Example 7 through Example 8, (e)(5)(i)(A)(3),(e)(5)(i)(B) introductory text, (e)(5)(i)(B)(1),(e)(5)(i)(C), (e)(5)(i)(D)(1)(iv) through (v),(e)(5)(iv)(B), (f)(1)(i)(A)(6), (f)(1)(i)(B)(1),(f)(1)(i)(B)(3), (f)(1)(i)(C)(2), (f)(1)(i)(D)(4)through (6), (f)(1)(i)(D)(7) introductory text,(f)(1)(i)(E), (f)(1)(i)(F)(1)(ii), (f)(1)(i)(F)(3)(v)through (vi), (f)(1)(i)(F)(5), (f)(1)(ii)(B), (f)(2)introductory text, (f)(2)(i)(B), (f)(2)(iii)through (iv), (f)(4)(i), (g)(3)(i)(D), and (i).


§ 1.1471–5 Definitions applicable tosection 1471.

(a) * * *(3) * * *(i) [Reserved]. For further guidance,

see § 1.1471–5T(a)(3)(i).* * * * *(4) * * *(i) [Reserved]. For further guidance,

see § 1.1471–5T(a)(4)(i).* * * * *(b) * * *(1) * * *(iii) * * *(B) * * *(2) [Reserved]. For further guidance,

see § 1.1471–5T(b)(1)(iii)(B)(2).* * * * *(3) * * *(iv) [Reserved]. For further guidance,

see § 1.1471–5T(b)(3)(iv).(v) * * *(A) [Reserved]. For further guidance,

see § 1.1471–5T(b)(3)(v)(A).(B) * * *(1) [Reserved]. For further guidance,

see § 1.1471–5T(b)(3)(v)(B)(1).(2) [Reserved]. For further guidance,

see § 1.1471–5T(b)(3)(v)(B)(2).(vi) [Reserved]. For further guidance,

see § 1.1471–5T(b)(3)(vi) through(b)(3)(vi)(B)(2).

* * * * *(c) [Reserved]. For further guidance,

see § 1.1471–5T(c).* * * * *(e) * * *(1) * * *(v) * * *(A) [Reserved]. For further guidance,

see § 1.1471–5T(e)(1)(v)(A).* * * * *(3) * * *(ii) [Reserved]. For further guidance,

see § 1.1471–5T(e)(3)(ii).* * * * *(4) * * *(v) * * *Example 7. [Reserved]. For further guidance, see

§ 1.1471–5T(e)(4)(v), Example 7.Example 8. [Reserved]. For further guidance, see

§ 1.1471–5T(e)(4)(v), Example 8.

* * * * *(5) * * *(i) * * *(A) * * *


(3) [Reserved]. For further guidance,see § 1.1471–5T(e)(5)(i)(A)(3).

(B) [Reserved]. For further guidance,see § 1.1471–5T(e)(5)(i)(B).

(1) [Reserved]. For further guidance,see § 1.1471–5T(e)(5)(i)(B)(1).

* * * * *(C) [Reserved]. For further guidance,

see § 1.1471–5T(e)(5)(i)(C).(D) * * *(1) * * *(iv) [Reserved]. For further guidance,

see § 1.1471–5T(e)(5)(i)(D)(1)(iv).(v) [Reserved]. For further guidance,

see § 1.1471–5T(e)(5)(i)(D)(1)(v).* * * * *(iv) * * *(B) [Reserved]. For further guidance,

see § 1.1471–5T(e)(5)(iv)(B).* * * * *(f) * * *(1) * * *(i) * * *(A) * * *(6) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(i)(A)(6).* * * * *(B) * * *(1) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(i)(B)(1).* * * * *(3) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(i)(B)(3).(C) * * *(2) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(i)(C)(2).* * * * *(D) * * *(4) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(i)(D)(4).(5) [Reserved]. For further guidance,



see § 1.1471–5T(f)(1)(i)(D)(7).* * * * *(E) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(i)(E). through(f)(1)(i)(E)(2).

(F) * * *(1) * * *(ii) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(i)(F)(1)(ii).* * * * *(3) * * *

(v) [Reserved]. For further guidance,see § 1.1471–5T(f)(1)(i)(F)(3)(v).

(vi) [Reserved]. For further guidance,see § 1.1471–5T(f)(1)(i)(F)(3)(vi).

(vii) [Reserved]. For further guidance,see § 1.1471–5T(f)(1)(i)(F)(3)(vii).


see § 1.1471–5T(f)(1)(i)(F)(5).(ii) * * *(B) [Reserved]. For further guidance,

see § 1.1471–5T(f)(1)(ii)(B).* * * * *(2) [Reserved]. For further guidance,

see § 1.1471–5T(f)(2).(i) * * *(B) [Reserved]. For further guidance,

see § 1.1471–5T(f)(2)(i)(B).* * * * *(iii) [Reserved]. For further guidance, see

§ 1.1471–5T(f)(2)(iii) through (f)(2)(iii)(E).(iv) [Reserved]. For further guidance, see

§ 1.1471–5T(f)(2)(iv) through (f)(2)(iv)(E).(F) [Reserved]. For further guidance,

see § 1.1471–5T(f)(2)(iv)(F).(v) [Reserved]. For further guidance, see

§ 1.1471–5T(f)(2)(v) through (f)(2)(v)(B).* * * * *(4) * * *(i) [Reserved]. For further guidance,

see § 1.1471–5T(f)(4)(i).* * * * *(g) * * *(3) * * *(i) * * *(D) [Reserved]. For further guidance,

see § 1.1471–5T(g)(3)(i)(D).* * * * *(i) [Reserved]. For further guidance,

see § 1.1471–5T(i) through (i)(10).(j) [Reserved]. For further guidance,

see § 1.1471–5T(j).(k) [Reserved]. For further guidance,

see § 1.1471–5T(k).Par. 11. Section 1.1471–5T is added to

read as follows:

§ 1.1471–5T Definitions applicable tosection 1471 (temporary).




(i) In general. Except as otherwise pro-vided in this paragraph (a)(3), the accountholder is the person listed or identified asthe holder or owner of the account withthe FFI that maintains the account, regard-less of whether such person is a flow-through entity. Thus, for example, exceptas otherwise provided in paragraph(a)(3)(ii) of this section, if a trust (includ-ing a simple or grantor trust) or an estateis listed as the holder or owner of a finan-cial account, the trust or estate is the ac-count holder, rather than its owners orbeneficiaries. Similarly, except as other-wise provided in this paragraph (a)(3), if apartnership is listed as the holder or ownerof a financial account, the partnership isthe account holder, rather than the part-ners in the partnership. In the case of anaccount held by an entity that is disre-garded for U.S. federal tax purposes under§ 301.7701–2(c)(2)(i), the account shallbe treated as held by the person owningsuch entity. With respect to an accountheld by an exempt beneficial owner, suchaccount is treated as held by an exemptbeneficial owner only when all paymentsmade to such account would be treated asmade to an exempt beneficial owner. See§ 1.1471–6(h) for when a payment de-rived from certain commercial activities isnot treated as made to an exempt benefi-cial owner.

(ii) [Reserved]. For further guidance,see § 1.1471–5(a)(3)(ii).



(v) [Reserved]. For further guidance,see § 1.1471–5(a)(3)(v).


(i) Exception for certain individual ac-counts of participating FFIs. Unless a par-ticipating FFI elects under paragraph(a)(4)(ii) of this section not to apply thisparagraph (a)(4)(i), the term U.S. accountshall not include any depository accountmaintained by such financial institutionduring a calendar year if the account isheld solely by one or more individualsand, with respect to each holder of suchaccount, the aggregate balance or value ofall depository accounts held by each suchindividual does not exceed $50,000 as ofthe end of the calendar year or on the date


the account is closed. For rules for deter-mining the account balance or value, seeparagraphs (a)(3)(iii) and (b)(4) of thissection.

(ii) [Reserved]. For further guidance,see § 1.1471–5(a)(4)(ii).




(i) through (ii) [Reserved]. For furtherguidance, see § 1.1471–5(b)(1)(i) through (ii).


(A) [Reserved]. For further guidance,see § 1.1471–5(b)(1)(iii)(A).

(B) [Reserved]. For further guidance,see § 1.1471–5(b)(1)(iii)(B).

(1) [Reserved]. For further guidance,see § 1.1471–5(b)(1)(iii)(B)(1).

(2) The return earned on the interest isdetermined, directly or indirectly, primar-ily by reference to one or more investmententities described in paragraph(e)(4)(i)(B) or (C) of this section or one ormore passive NFFEs that are members ofthe entity’s expanded affiliated group (asdetermined under paragraph (b)(3)(vi) ofthis section);

(3) through (4) [Reserved]. For furtherguidance, see § 1.1471–5(b)(1)(iii)(B)(3)through (4).

(C) [Reserved]. For further guidance,see § 1.1471–5(b)(1)(iii)(C) through(b)(1)(iii)(C)(2).

(iv) [Reserved]. For further guidance,see § 1.1471–5(b)(1)(iv).

(2) [Reserved]. For further guidance,see § 1.1471–5(b)(2) through (b)(2)(vi).


(i) through (iii) [Reserved]. For furtherguidance, see § 1.1471–5(b)(3)(i) through(b)(3)(iii)(B)(3).

(iv) Regularly traded on an establishedsecurities market. To determine if debt orequity interests described in paragraph(b)(1)(iii) of this section are regularlytraded, the principles of § 1.1472–1(c)(1)(i)(A)(2)(i) and (ii) shall apply withrespect to the interests, and the principlesof § 1.1472–1(c)(1)(i)(B)(1) shall applyfor this purpose in the case of an initialpublic offering of such interests. See§ 1.1472–1(c)(1)(i)(C) for the definition

of an established securities market. Forpurposes of paragraph (b)(1)(iii) of thissection, an interest is not regularly tradedon an established securities market if theholder of the interest (excluding a finan-cial institution acting as an intermediary)is registered on the books of the invest-ment entity. The preceding sentence shallnot apply to the extent a holder’s interestis registered prior to July 1, 2014, on thebooks of the investment entity.

(v) [Reserved]. For further guidance,see § 1.1471–5(b)(3)(v).

(A) Equity interest. The value of anequity interest is determined, directly orindirectly, primarily by reference to assetsthat give rise (or could give rise) to with-holdable payments if the return earned onsuch interest (including upon a sale, ex-change, or redemption) is determined pri-marily by reference to profits or assets ofa U.S. person or equity interests in a U.S.person.

(B) [Reserved]. For further guidance,see § 1.1471–5(b)(3)(v)(B).

(1) Debt is convertible into equity in-terests in a U.S. person; or

(2) The return earned on such interest(including upon a sale, exchange, or re-demption) is determined primarily by ref-erence to profits or assets of a U.S personor equity interests in a U.S. person.

(vi) Return earned on the interest (in-cluding upon a sale, exchange, or re-demption) determined, directly or indi-rectly, primarily by reference to one ormore investment entities or passiveNFFEs.

(A) Equity interest. The return earnedon an equity interest is determined, di-rectly or indirectly, primarily by referenceto one or more investment entities de-scribed in paragraph (e)(4)(i)(B) or (C) ofthis section or passive NFFEs that aremembers of the entity’s expanded affili-ated group if the return on such interest(including upon a sale, exchange, or re-demption) is determined primarily by ref-erence to profits or assets of, or equityinterests in, one or more investment enti-ties described in paragraph (e)(4)(i)(B) or(C) of this section or passive NFFEs thatare members of the entity’s expanded af-filiated group.

(B) Debt interest. The return earned ona debt interest is determined, directly orindirectly, primarily by reference to one or

more investment entities described inparagraph (e)(4)(i)(B) or (C) of this sec-tion or passive NFFEs that are membersof the entity’s expanded affiliated groupif—

(1) Debt is convertible into equity in-terests in one or more investment entitiesdescribed in paragraph (e)(4)(i)(B) or (C)of this section or passive NFFEs that aremembers of the entity’s expanded affili-ated group; or

(2) The return on such interest (includ-ing upon a sale, exchange, or redemption)is determined primarily by reference toprofits or assets of, or equity interests in,one or more investment entities describedin paragraph (e)(4)(i)(B) or (C) of thissection or passive NFFEs that are mem-bers of the entity’s expanded affiliatedgroup.

(vii) [Reserved]. For further guid-ance, see § 1.1471–5(b)(3)(vii) through(b)(3)(vii)(D)(3).


(c) U.S. owned foreign entity. The termU.S. owned foreign entity means any for-eign entity that has one or more substan-tial U.S. owners (as defined in § 1.1473–1(b)). See § 1.1473–1(e) for the definitionof foreign entity for purposes of chapter 4.For the requirements applicable to deter-mining direct and indirect ownership in anentity, see § 1.1473–1(b)(2).




(i) through (iv) [Reserved]. For furtherguidance, see § 1.1471–5(e)(1)(i) through (iv).

(v) [Reserved]. For further guidance,see § 1.1471–5(e)(1)(v).

(A) Is part of an expanded affiliatedgroup that includes a depository institu-tion, custodial institution, specified insur-ance company, or investment entity de-scribed in paragraphs (e)(4)(i)(B) or (C)of this section; or

(B) [Reserved]. For further guidance,see § 1.1471–5(e)(1)(v)(B).

(2) [Reserved]. For further guidance,see § 1.1471–5(e)(2) through (e)(2)(iv).



(i) [Reserved]. For further guidance, see§ 1.1471–5(e)(3)(i) through (e)(3)(i)(B).

(ii) Income attributable to holding fi-nancial assets and related financial ser-vices. For purposes of this paragraph(e)(3), the term income attributable toholding financial assets and related finan-cial services means custody, accountmaintenance, and transfer fees; commis-sions and fees earned from executing andpricing securities transactions; incomeearned from extending credit to customerswith respect to financial assets held incustody by the entity (or acquired throughsuch extension of credit); income earnedon the bid-ask spread of financial assets;fees for providing financial advice withrespect to financial assets held in (or po-tentially to be held in) custody by theentity; and fees for clearance and settle-ment services.

(iii) [Reserved]. For further guidance,see § 1.1471–5(e)(3)(iii).


(i) through (iv) [Reserved]. For furtherguidance, see § 1.1471–5(e)(4)(i) through(e)(4)(iv)(B).

(v) [Reserved]. For further guidance,see § 1.1471–5(e)(4)(v).

Example 1 through Example 6 [Reserved]. Forfurther guidance, see § 1.1471–5(e)(4)(v), Example1 through Example 6.

Example 7. Individual introducing broker. IB, anindividual introducing broker, primarily conducts abusiness of providing advice to clients, has discre-tionary authority to manage clients’ assets, and usesthe services of a foreign entity to conduct and exe-cute trades on behalf of clients. IB provides servicesas an investment advisor and manager to Entity, aforeign corporation. Entity has earned 50% or moreof its gross income for the past three years frominvesting, reinvesting, or trading in financial assets.Because IB is an individual, notwithstanding that IBprimarily conducts certain investment-related activ-ities, IB is not an investment entity under paragraph(e)(4)(i)(A) of this section. Further, Entity is not aninvestment entity under paragraph (e)(4)(i)(B) ofthis section because Entity is managed by IB, anindividual.

Example 8. Entity introducing broker. IB, a for-eign entity introducing broker, primarily conducts abusiness of providing advice to clients, has discre-tionary authority to manage clients’ assets, and usesthe services of a foreign entity to conduct and exe-cute trades on behalf of clients. IB provides itsservices as an investment advisor and manager toEntity, a foreign corporation. Entity has earned 50%or more of its gross income for the past three yearsfrom investing, reinvesting, or trading in financialassets. Because IB is an entity that primarily con-ducts certain investment-related activities, IB is an

investment entity under paragraph (e)(4)(i)(A) ofthis section. Further, Entity is an investment entityunder paragraph (e)(4)(i)(B) of this section becauseit is managed by IB, an investment entity that per-forms certain of the activities described in paragraph(e)(4)(i)(A) of this section on behalf of Entity.


(i) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(i).

(A) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(i)(A).

(1) through (2) [Reserved]. For furtherguidance, see § 1.1471–5(e)(5)(i)(A)(1)through (2).

(3) The entity does not hold itself outas (and was not formed in connection withor availed of by) an arrangement or in-vestment vehicle that is a private equityfund, venture capital fund, leveraged buy-out fund, or any similar investment vehi-cle established with an investment strat-egy to acquire or fund companies and totreat the interests in those companies ascapital assets held for investment pur-poses. For purposes of determiningwhether an entity was formed in connec-tion with or availed of by such an arrange-ment or investment vehicle, any entity thatexisted at least six months prior to itsacquisition by such arrangement or invest-ment vehicle and that, prior to the acqui-sition, regularly conducted activities in theordinary course of business will not beconsidered to have been formed in con-nection with or availed of by the arrange-ment or investment vehicle, in the absenceof other facts suggesting the existence ofan investment strategy described in theprior sentence.

(B) Nonfinancial group. An expandedaffiliated group defined in § 1.1471–5(i)(2) is a nonfinancial group if, takinginto account the application of this sec-tion—

(1) For the three-year period (or theperiod during which the expanded affili-ated group has been in existence, ifshorter) ending on December 31 of theyear preceding the year in which the de-termination is made, no more than 25 per-cent of the gross income of the expandedaffiliated group (excluding income de-rived by any member that is an entitydescribed in paragraph (e)(5)(ii) or (iii) ofthis section and income derived fromtransactions between members of the ex-panded affiliated group) consists of pas-

sive income (as defined in § 1.1472–1(c)(1)(iv)); no more than five percent ofthe gross income of the expanded affili-ated group is derived by members of theexpanded affiliated group that are FFIs(excluding income derived from transac-tions between members of the expandedaffiliated group or by any member of theexpanded affiliated group that is a certi-fied deemed-compliant FFI); and no morethan 25 percent of the value of assets heldby the expanded affiliated group (exclud-ing assets held by a member that is anentity described in paragraph (e)(5)(ii) or(iii) of this section and assets resultingfrom transactions between related mem-bers of the expanded affiliated group) areassets that produce or are held for theproduction of passive income; and

(2) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(i)(B)(2).

(C) Holding company. For purposes ofthis paragraph (e)(5)(i), an entity is a hold-ing company if its primary activity con-sists of holding (directly or indirectly) allor part of the outstanding stock of one ormore members of its expanded affiliatedgroup. A partnership or any other non-corporate entity shall be treated as a hold-ing company if substantially all the activ-ities of such partnership (or other entity)consist of holding more than 50 percent ofthe voting power and value of the stock ofone or more common parent corpora-tion(s) of one or more expanded affiliatedgroup(s). If a partnership or other non-corporate entity owns more than 50 per-cent of the voting power and value of thestock of more than one common parentcorporation of an expanded affiliatedgroup, each common parent corporation’sexpanded affiliated group will be treatedas a separate expanded affiliated group forpurposes of applying the rules of this sec-tion unless a non-corporate entity istreated as the common parent entity of theexpanded affiliated group in accordancewith § 1.1471–5(i)(10).

(D) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(i)(D).

(1) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(i)(D)(1).

(i) through (iii) [Reserved]. For furtherguidance, see § 1.1471–5(e)(5)(i)(D)(1)(i)through (iii).

(iv) Managing the working capital ofthe expanded affiliated group (or any


member thereof) such as by pooling thecash balances of affiliates (including bothpositive and deficit cash balances) or byinvesting or trading in financial assetssolely for the account and risk of suchentity or any member of its expanded af-filiated group; or

(v) Acting as a financing vehicle for theexpanded affiliated group (or any memberthereof).

(2) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(i)(D)(2).

(i) through (ii) [Reserved]. For furtherguidance, see § 1.1471–5(e)(5)(i)(D)(2)(i)through (ii).

(E) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(i)(E).

(ii) through (iii) [Reserved]. For furtherguidance, see § 1.1471–5(e)(5)(ii)through (iii).

(iv) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(iv).

(A) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(iv)(A).

(B) The entity does not hold an account(other than a depository account in thecountry in which the entity is operating topay for expenses in that country) with orreceive payments from any withholdingagent other than a member of its expandedaffiliated group;

(C) through (D) [Reserved]. For furtherguidance, see § 1.1471–5(e)(5)(iv)(C)through (D).

(v) [Reserved]. For further guidance,see § 1.1471–5(e)(5)(v) through (e)(5)(vi)(D).




(i) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i).

(A) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(A).

(1) through (5) [Reserved]. For furtherguidance, see § 1.1471–5(f)(1)(i)(A)(1)through (5).

(6) By the later of June 30, 2014, or thedate it registers as a deemed-compliantFFI, the FFI implements policies and pro-cedures, consistent with those set forth fora participating FFI under § 1.1471–4(c), to monitor whether the FFI opens ormaintains an account for a specified U.S.person who is not a resident of the country

in which the FFI is incorporated or orga-nized (including a U.S. person that was aresident when the account was opened butsubsequently ceases to be a resident), anentity controlled or beneficially owned (asdetermined under the FFI’s AML due dil-igence) by one or more specified U.S.persons that are not residents of the coun-try in which the FFI is incorporated ororganized, or a nonparticipating FFI. Suchpolicies and procedures must provide thatif any such account is discovered, the FFIwill close such account, transfer such ac-count to a participating FFI, reportingModel 1 FFI, or U.S. financial institution,or withhold and report on such account aswould be required under § 1.1471–4(b) and (d) if the FFI were a participatingFFI.

(7) through (9) [Reserved]. For furtherguidance, see § 1.1471–5(f)(1)(i)(A)(7)through (9).

(B) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(B).

(1) By the later of June 30, 2014, or thedate it registers with the IRS pursuant toparagraph (f)(1)(ii) of this section, the FFIimplements policies and procedures to en-sure that within six months of opening aU.S. account or an account held by arecalcitrant account holder or a nonpartic-ipating FFI, the FFI either transfers suchaccount to an affiliate that is a participat-ing FFI, reporting Model 1 FFI, or U.S.financial institution, closes the account, orbecomes a participating FFI.

(2) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(B)(2).

(3) By the later of June 30, 2014, or thedate it registers with the IRS pursuant toparagraph (f)(1)(ii) of this section, the FFIimplements policies and procedures to en-sure that it identifies any account that be-comes a U.S. account or an account heldby a recalcitrant account holder or a non-participating FFI due to a change in cir-cumstances. Within six months of the dateon which the FFI first has knowledge orreason to know of the change in the ac-count holder’s chapter 4 status, the FFItransfers any such account to an affiliatethat is a participating FFI, reportingModel 1 FFI, or U.S. financial institution,closes the account, or becomes a partici-pating FFI.

(C) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(C).

(1) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(C)(1).

(2) Each holder of record of direct debtinterests in the FFI in excess of $50,000,of any direct equity interests in the FFI(for example the holders of its units orglobal certificates), and of any other ac-count holder of the FFI is a participatingFFI, a registered deemed-compliant FFI, aretirement plan described in § 1.1471–6(f), a non-profit organization described inparagraph (e)(5)(vi) of this section, a U.S.person that is not a specified U.S. person,a nonreporting IGA FFI, or an exemptbeneficial owner. Notwithstanding theprior sentence, an FFI will not be prohib-ited from qualifying as a qualified collec-tive investment vehicle solely because ithas issued interests in bearer form pro-vided that the FFI ceased issuing interestsin such form after December 31, 2012,retires all such interests upon surrender,and establishes policies and procedures toredeem or immobilize all such interestsprior to January 1, 2017, and that prior topayment the FFI documents the accountholder in accordance with the proceduresset forth in § 1.1471–4(c) applicable toaccounts other than preexisting accountsand agrees to withhold and report on suchaccounts as would be required under§ 1.1471–4(b) and (d) if it were a partic-ipating FFI. For purposes of this para-graph (f)(1)(i)(C), an FFI may disregardequity interests owned by specified U.S.persons acquired with seed capital withinthe meaning of paragraph (i)(4) of thissection if the specified U.S. person is de-scribed in paragraph (i)(3)(i) and (ii) ofthis section (substituting the term U.S.person for the terms FFI and member),and the specified U.S. person neither hasheld, nor intends to hold, such interest formore than three years.

(3) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(C)(3).

(D) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(D).

(1) through (3) [Reserved]. For furtherguidance, see § 1.1471–5(f)(1)(i)(D)(1)through (3).

(4) The FFI ensures that by the later ofDecember 31, 2014, or six months afterthe date the FFI registers as a deemed-compliant FFI, each agreement that gov-erns the distribution of its debt or equityinterests prohibits sales and other transfers


of debt or equity interests in the FFI (otherthan interests that are both distributed byand held through a participating FFI) tospecified U.S. persons, nonparticipatingFFIs, or passive NFFEs with one or moresubstantial U.S. owners. In addition, bythat date, the FFI’s prospectus and allmarketing materials must indicate thatsales and other transfers of interests in theFFI to specified U.S. persons, nonpartici-pating FFIs, or passive NFFEs with one ormore substantial U.S. owners are prohib-ited unless such interests are both distrib-uted by and held through a participatingFFI.

(5) The FFI ensures that by the later ofDecember 31, 2014, or six months afterthe date the FFI registers as a deemed-compliant FFI, each agreement enteredinto by the FFI that governs the distribu-tion of its debt or equity interests requiresthe distributor to notify the FFI of achange in the distributor’s chapter 4 statuswithin 90 days of the change. The FFImust, with respect to any distributor thatceases to qualify as a distributor identifiedin paragraph (f)(1)(i)(D)(3) of this section,terminate its distribution agreement withthe distributor, or cause the distributionagreement to be terminated, within 90days of the notification of the distributor’schange in status and, with respect to alldebt and equity interests of the FFI issuedthrough that distributor, redeem those in-terests, convert those interests to directholdings in the fund, or cause those inter-ests to be transferred to another distributoridentified in paragraph (f)(1)(i)(D)(3) ofthis section within six months of the dis-tributor’s change in status.

(6) With respect to any of the FFI’spreexisting direct accounts that are heldby the beneficial owner of the interest inthe FFI, the FFI reviews those accounts inaccordance with the procedures (and timeframes) described in § 1.1471–4(c) appli-cable to preexisting accounts to identifyany U.S. account or account held by anonparticipating FFI. Notwithstanding theprevious sentence, the FFI will not berequired to review the account of any in-dividual investor that purchased its inter-est at a time when all of the FFI’s distri-bution agreements and its prospectuscontained an explicit prohibition of theissuance and/or sale of shares to U.S. en-tities and U.S. resident individuals. An

FFI will not be required to review theaccount of any investor that purchased itsinterest in bearer form until the time ofpayment, but at such time will be requiredto document the account in accordancewith procedures set forth in § 1.1471–4(c) applicable to accounts other than pre-existing accounts. By the later of Decem-ber 31, 2014, or six months after the datethe FFI registers as a deemed-compliantFFI, the FFI will be required to certify tothe IRS either that it did not identify anyU.S. account or account held by a nonpar-ticipating FFI as a result of its review or,if any such accounts were identified, thatthe FFI will either redeem such accounts,transfer such accounts to an affiliate orother FFI that is a participating FFI, re-porting Model 1 FFI, or U.S. financialinstitution, or withhold and report on suchaccounts as would be required under§ 1.1471–4(b) and (d) if it were a partic-ipating FFI.

(7) By the later of June 30, 2014, or thedate that it registers as a deemed-compliant FFI, the FFI implements thepolicies and procedures described in§ 1.1471–4(c) to ensure that it either—

(i) through (ii) [Reserved]. For furtherguidance, see § 1.1471–5(f)(1)(i)(D)(7)(i)through (ii).

(8) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(D)(8).

(E) Qualified credit card issuers andservicers. An FFI is described in this para-graph (f)(1)(i)(E) if the FFI meets the fol-lowing requirements.

(1) The FFI is an FFI solely because itis an issuer or servicer of credit cards thataccepts deposits, on its own behalf or, inthe case of a servicer, on behalf of a creditcard issuer, only when a customer makesa payment in excess of a balance due withrespect to the credit card account and theoverpayment is not immediately returnedto the customer.

(2) By the later of June 30, 2014, or thedate it registers as a deemed-compliantFFI, the FFI implements policies and pro-cedures to either prevent a customer de-posit in excess of $50,000 or to ensure thatany customer deposit in excess of $50,000is refunded to the customer within 60days. For this purpose, a customer depositdoes not refer to credit balances to theextent of disputed charges but does in-

clude credit balances resulting from mer-chandise returns.

(F) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(F).

(1) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(F)(1).

(i) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(F)(1)(i).

(ii) An entity, other than a nonpartici-pating FFI, has agreed with the FFI to actas a sponsoring entity for the FFI.

(2) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(i)(F)(2) through(f)(1)(i)(F)(2)(iii).


(i) through (iv) [Reserved]. For furtherguidance, see § 1.1471–5(f)(1)(i)(F)(3)(i)through (iv).

(v) Identifies the FFI in all reportingcompleted on the FFI’s behalf to the extentrequired under §§ 1.1471–4(d)(2)(ii)(C)and 1.1474–1;

(vi) Performs the verification proce-dures required under § 1.1471–4(f) on be-half of the FFI, including the certificationrequired under § 1.1471–4(f)(3);

(vii) Performs the verification proce-dures required under paragraphs (j) and(k) of this section; and

(viii) Has not had its status as a spon-soring entity revoked.


(5) A sponsoring entity is not liable forany failure to comply with the obligationscontained in paragraph (f)(1)(i)(F)(3) ofthis section unless the sponsoring entity isa withholding agent that is separately lia-ble for the failure to withhold on or reportwith respect to a payment made to thesponsored FFI. A sponsored FFI will re-main liable for any failure of its sponsor-ing entity to comply with the obligationscontained in paragraph (f)(1)(i)(F)(3) ofthis section that the sponsoring entity hasagreed to undertake on behalf of the FFI,even if the sponsoring entity is also awithholding agent and is itself separatelyliable for the failure to withhold on orreport with respect to a payment made tothe sponsored FFI. The same tax, interest,or penalties, however, shall not be col-lected more than once.

(ii) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(ii).


(A) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(ii)(A).

(B) Have its responsible officer certifyevery three years to the IRS, either indi-vidually or collectively for the FFI’s ex-panded affiliated group, that all of therequirements for the deemed-compliantcategory claimed by the FFI have beensatisfied since the later of the date the FFIregisters as a deemed-compliant FFI orJune 30, 2014;

(C) through (D) [Reserved]. For furtherguidance, see § 1.1471–5(f)(1)(ii)(C)through (D).

(iii) [Reserved]. For further guidance,see § 1.1471–5(f)(1)(iii).

(2) Certified deemed-compliant FFIs.A certified deemed-compliant FFI meansan FFI described in any of paragraphs(f)(2)(i) through (v) of this section that hascertified as to its status as a deemed-compliant FFI by providing a withholdingagent with the documentation described in§ 1.1471–3(d)(6) applicable to the rele-vant deemed-compliant category. A certi-fied deemed-compliant FFI also includes anonreporting FFI under a Model 1 IGAand a nonreporting FFI treated as a certi-fied deemed-compliant FFI under a Model2 IGA. A certified deemed-compliant FFIis not required to register with the IRS.


(A) [Reserved]. For further guidance,see § 1.1471–5(f)(2)(i)(A) through(f)(2)(i)(A)(2).

(B) The FFI’s business consists pri-marily of receiving deposits from andmaking loans to, with respect to a bank,retail customers that are unrelated to suchbank and, with respect to a credit union orsimilar cooperative credit organization,members, provided that no such memberhas a greater than 5 percent interest insuch credit union or cooperative creditorganization. For purposes of this para-graph (f)(2)(i)(B), a customer is related toa bank if the customer and the bank havea relationship described in section 267(b).For purposes of determining whether amember has a greater than 5 percent in-terest in a credit union or cooperativecredit organization, the member must ag-gregate the ownership or beneficial inter-ests in the credit union or cooperativecredit organization that are owned or heldby a related member. A member of a

credit union or cooperative credit organi-zation is related to another member if therelationship of such members is describedin section 267(b).

(C) through (F) [Reserved]. For furtherguidance, see § 1.1471–5(f)(2)(i)(C)through (F).

(ii) [Reserved]. For further guidance,see § 1.1471–5(f)(2)(ii) through (f)(2)(ii)(C).

(iii) Sponsored, closely held investmentvehicles. Subject to the provisions of para-graph (f)(2)(iii)(F) of this section, an FFIis described in this paragraph (f)(2)(iii) ifit meets the requirements described inparagraphs (f)(2)(iii)(A) through (D) ofthis section.

(A) The FFI is an FFI solely because itis an investment entity and is not a QI,WP, or WT.

(B) A participating FFI, reportingModel 1 FFI, or U.S. financial institutionagrees to fulfill all due diligence, with-holding, and reporting responsibilities thatthe FFI would have assumed if it were aparticipating FFI.

(C) Twenty or fewer individuals ownall of the debt and equity interests in theFFI (disregarding debt interests ownedby U.S. financial institutions, participat-ing FFIs, registered deemed-compliantFFIs, and certified deemed-compliantFFIs and equity interests owned by anentity if that entity owns 100 percent ofthe equity interests in the FFI and isitself a sponsored FFI under this para-graph (f)(2)(iii)).

(D) The sponsoring entity complieswith the following requirements—

(1) The sponsoring entity has regis-tered with the IRS as a sponsoring entity;

(2) The sponsoring entity agrees to per-form, on behalf of the FFI, all due dili-gence, withholding, reporting, and otherrequirements that the FFI would havebeen required to perform if it were a par-ticipating FFI and retains documentationcollected with respect to the FFI for aperiod of six years;

(3) The sponsoring entity identifies theFFI in all reporting completed on theFFI’s behalf to the extent required under§ § 1.1471–4(d)(2)(ii)(C) and 1.1474–1;

(4) Performs the verification proce-dures required under § 1.1471–4(f) on be-half of the FFI, including the certificationrequired under § 1.1471–4(f)(3);

(5) Performs the verification proce-dures required under paragraphs (j) and(k) of this section; and

(6) The sponsoring entity has not hadits status as a sponsor revoked.

(E) The IRS may revoke a sponsoringentity’s status as a sponsoring entity withrespect to all sponsored FFIs if there is amaterial failure by the sponsoring entity tocomply with its obligations under thisparagraph (f)(2)(iii)(E) with respect to anysponsored FFI. A sponsoring entity is notliable for any failure to comply with theobligations contained in this paragraph(f)(2)(iii)(E) unless the sponsoring entityis a withholding agent that is separatelyliable for the failure to withhold on orreport with respect to the payment madeto the sponsored FFI. A sponsored FFIwill remain liable for any failure of itssponsoring entity to comply with the ob-ligations contained in this paragraph(f)(2)(iii)(E) that the sponsoring entity hasagreed to undertake on behalf of the FFI,even if the sponsoring entity is also awithholding agent and is itself separatelyliable for the failure to withhold on orreport with respect to a payment made tothe sponsored FFI. The same tax, interest,or penalties, however, shall not be col-lected more than once.

(iv) Limited life debt investment enti-ties (transitional). An FFI is described inthis paragraph (f)(2)(iv) if the FFI is thebeneficial owner of the payment (or ofpayments made with respect to the ac-count) and the FFI meets the followingrequirements.

(A) The FFI is an investment entitythat issued one or more classes of debt orequity interests to investors pursuant to atrust indenture or similar agreement andall of such interests were issued on orbefore January 17, 2013.

(B) The FFI was in existence as ofJanuary 17, 2013, and has entered into atrust indenture or similar agreement thatrequires the FFI to pay to investors hold-ing substantially all of the interests in theFFI, no later than a set date or periodfollowing the maturity of the last assetheld by the FFI, all amounts that suchinvestors are entitled to receive from theFFI.

(C) The FFI was formed and operatedfor the purpose of purchasing or acquiringspecific types of debt instruments or inter-


ests therein and holding those assets sub-ject to reinvestment only under prescribedcircumstances to maturity.

(D) Substantially all of the assets of theFFI consist of debt instruments or inter-ests therein.

(E) All payments made to the investorsof the FFI (other than holders of a deminimis interest) are either clearedthrough a clearing organization or custo-dial institution that is a participating FFI,reporting Model 1 FFI, or U.S. financialinstitution or made through a transferagent that is a participating FFI, reportingModel 1 FFI, or U.S. financial institution.

(F) The FFI’s trustee or fiduciary is notauthorized through a fiduciary duty or oth-erwise to fulfill the obligations of a par-ticipating FFI under § 1.1471–4 and noother person has the authority to fulfill theobligations of a participating FFI under§ 1.1471–4 on behalf of the FFI.

(v) Investment advisors and investmentmanagers. An FFI is described in thisparagraph (f)(2)(v) if the FFI meets thefollowing requirements:

(A) The FFI is a financial institutionsolely because it is described in § 1.1471–5(e)(4)(i)(A).

(B) The FFI does not maintain finan-cial accounts.



(ii) [Reserved]. For further guidance,see § 1.1471–5(f)(3)(ii).

(A) through (E) [Reserved]. For furtherguidance, see § 1.1471–5(f)(3)(ii)(A)through (E).


(i) The distributor provides investmentservices to at least 30 customers unrelatedto each other and fewer than half of thedistributor’s customers are related to eachother. For purposes of this paragraph(f)(4)(i), customers are related to eachother if they have a relationship with eachother described in section 267(b).

(ii) through (viii) [Reserved]. For fur-ther guidance, see § 1.1471–5(f)(4)(ii)through (viii).


(1) through (2) [Reserved]. For furtherguidance, see § 1.1471–5(g)(1) through(g)(2)(iv).


(i) [Reserved]. For further guidance,see § 1.1471–5(g)(3)(i).

(A) through (C) [Reserved]. For furtherguidance, see § 1.1471–5(g)(3)(i)(A)through (C).

(D) Preexisting accounts that becomehigh-value accounts. With respect to acalendar year beginning after December 31,2015, an account holder that is described inparagraph (g)(2) of this section and thatholds a preexisting account that a participat-ing FFI identifies as a high-value accountpursuant to § 1.1471–4(c)(5)(iv)(D) will betreated as a recalcitrant account holder be-ginning on the earlier of the date a withhold-able payment is made to the account follow-ing end of the calendar year in which theaccount is identified as a high-value accountor the date that is six months after the cal-endar year end.

(ii) through (iii) [Reserved]. For fur-ther guidance, see § 1.1471–5(g)(3)(ii)through (iii).


(h) [Reserved]. For further guidance,see § 1.1471–5(h) through (h)(2).

(i) Expanded affiliated group— Scopeof paragraph. This paragraph (i) definesthe term expanded affiliated group forpurposes of chapter 4. For the require-ments of a participating FFI with respectto members of its expanded affiliatedgroup that are FFIs, see § 1.1471–4(e).

(1) [Reserved]. For further guidance,see § 1.1471–5(i)(1).

(2) Expanded affiliated group defined.Except as otherwise provided in this para-graph (i), an expanded affiliated group isdefined in accordance with the principlesof section 1504(a) to mean one or morechains of members connected throughownership by a common parent entity ifthe common parent entity directly ownsstock or other equity interests meeting therequirements of paragraph (i)(4) of thissection in at least one of the other mem-bers (for purposes of this paragraph (i),the constructive ownership rules of sec-tion 318 do not apply). Generally, only acorporation shall be treated as the com-mon parent entity of an expanded affili-

ated group, unless the taxpayer elects tofollow the approach described in para-graph (i)(10).

(3) Member of expanded affiliatedgroup. The term member of an expandedaffiliated group means a corporation orany entity other than a corporation (suchas a partnership or trust) with respect towhich the ownership requirements ofparagraph (i)(4) of this section are met,regardless of whether such entity is a U.S.person or a foreign person, but excludingcorporations described in paragraphs (1),(4), (6), (7), or (8) of section 1504(b).

(4) Ownership test. The ownership re-quirements of this paragraph (i)(4) aremet if—

(i) Corporations. For purposes of para-graph (i)(2) of this section, a corporation(except the common parent entity) will beconsidered owned by another member en-tity or by the common parent entity ifmore than 50 percent of the total votingpower of the stock of such corporationand more than 50 percent of the totalvalue of the stock of such corporation isowned directly by one or more othermembers of the group (including the com-mon parent entity).

(A) Stock not to include certain pre-ferred stock. For purposes of this para-graph (i)(4), the term stock does not in-clude any stock which is described insection 1504(a)(4).

(B) Valuation. For purposes of section1471(e) and this section, all shares ofstock within a single class are consideredto have the same value in determining theownership percentage. Thus, control pre-miums and minority blockage discountswithin a single class are not taken intoaccount.

(ii) Partnerships. For purposes of para-graph (i)(2) of this section, a partnershipwill be considered owned by anothermember entity (including the commonparent entity) if more than 50 percent (byvalue) of the capital or profits interest inthe partnership is owned directly by oneor more other members of the group (in-cluding the common parent entity).

(iii) Trusts. For purposes of paragraph(i)(2) of this section, a trust will be con-sidered owned by another member entityor by the common parent entity if morethan 50 percent (by value) of the benefi-cial interest in such trust is owned directly


by one or more other members of thegroup (including the common parent en-tity). A beneficial interest in a trust in-cludes an interest held by an entity treatedas a grantor or other owner of the trustunder sections 671 through 679 and a ben-eficial trust interest.

(5) Treatment of warrants, options,and obligations convertible into equity fordetermining ownership. For purposes ofparagraph (i)(4) of this section, ownershipof warrants, options, obligations convert-ible into the equity of a corporation orentity other than a corporation, and othersimilar interests is not considered for pur-poses of determining whether an entity isa member of an expanded affiliated group,except as follows:

(i) Ownership of a warrant, option, ob-ligation convertible into stock, or othersimilar instrument creating an interest in acorporation will be considered for pur-poses of paragraph (i)(4) of this section tothe extent that the common parent ormember of the expanded affiliated groupthat holds such instrument also maintainsvoting rights with respect to such corpo-ration. However, interests described in§ 1.1504–4(d)(2) will not be treated asoptions.

(ii) Ownership of a warrant, option,obligation convertible into an equity inter-est, or other similar instrument creating aninterest in a corporation or entity otherthan a corporation will be considered forpurposes of paragraph (i)(4) of this sec-tion to the extent that such instrument isreasonably certain to be exercised, basedon all of the facts and circumstances andin accordance with the principles set forthin § 1.1504–4(g).

(6) Exception for FFIs holding certaincapital investments. Notwithstandingparagraphs (i)(2) and (i)(4) of this section,an investment entity will not be consid-ered a member of an expanded affiliatedgroup as a result of a contribution of seedcapital by a member of such expandedaffiliated group if—

(i) The member that owns the invest-ment entity is an FFI that is in the businessof providing seed capital to form invest-ment entities, the interests in which it in-tends to sell to investors that do not havea relationship with each other described insection 267(b);

(ii) The investment entity is created inthe ordinary course of such other FFI’sbusiness described in paragraph (i)(6)(i)of this section;

(iii) As of the date the FFI acquired theequity interest, any equity interest in theinvestment entity in excess of 50 percentof the total value of the stock of the in-vestment entity is intended to be held bysuch other FFI (including ownership byother members of such other FFI’s ex-panded affiliated group) for no more thanthree years from the date on which suchother FFI first acquired an equity interestin the investment entity; and

(iv) In the case of an equity interest thathas been held by such other FFI for overthree years from the date referenced inparagraph (i)(6)(iii) of this section, theaggregate value of the equity interest heldby such other FFI and the equity interestsheld by other members of its expandedaffiliated group is 50 percent or less of thetotal value of the stock of the investmententity.

(7) Seed capital. For purposes of thisparagraph (i), the term seed capital meansan initial capital contribution made to aninvestment entity that is intended as atemporary investment and is deemed bythe manager of the entity to be necessaryor appropriate for the establishment of theentity, such as for the purpose of estab-lishing a track record of investment per-formance for such entity, achieving econ-omies of scale for diversified investment,avoiding an artificially high expense toreturn ratio, or similar purposes.

(8) Anti-abuse rule. A change in own-ership, voting rights, or the form of anentity that results in an entity meeting ornot meeting the ownership requirementsdescribed in paragraph (i)(4) of this sec-tion will be disregarded for purposes ofdetermining whether an entity is a mem-ber of an expanded affiliated group if thechange is pursuant to a plan a principalpurpose of which is to avoid reporting orwithholding that would otherwise be re-quired under any chapter 4 provision. Forpurposes of this paragraph (i)(8), a changein voting rights includes a separation ofvoting rights and value.

(9) Exception for limited life debt in-vestment entities. Notwithstanding para-graphs (i)(2) and (i)(4) of this section, anentity that meets the requirements of

§ 1.1471–5(f)(2)(iv), including the re-quirements to have been in existence as ofJanuary 17, 2013, and to have issued in-terests in the entity on or before January17, 2013, will not be considered a memberof an expanded affiliated group as a resultof any member of such expanded affili-ated group owning interests in such entity.

(10) Partnerships, trusts, and othernon-corporate entities. For purposes ofdetermining the composition of an ex-panded affiliated group, an entity otherthan a corporation may elect to be treatedas the common parent entity. Taxpayersfollowing this approach may not, in a lateryear, follow the rule described in para-graph (i)(2) without the approval of theCommissioner. See also § 1.1471–5(e)(5)(i)(C).

(j) Sponsoring entity verification. [Re-served].

(k) Sponsoring entity event of default.[Reserved].

(l) [Reserved]. For further guidance,see § 1.1471–5(l).

(m) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 12. In § 1.1471–6, revise para-graphs (d)(1), (d)(4), (f)(2)(iii)(B)through) (C), (f)(3)(ii) through (iii), (f)(5)through (6), (g), and (h)(2) to read asfollows:

§ 1.1471–6 Payments beneficially ownedby exempt beneficial owners.

* * * * *(d) * * *(1) [Reserved]. For further guidance,

see § 1.1471–6T(d)(1).* * * * *(4) [Reserved]. For further guidance,

see § 1.1471–6T(d)(4).* * * * *(f) * * *(2) * * *(iii) * * *(B) [Reserved]. For further guidance,

see § 1.1471–6T(f)(2)(iii)(B).(C) [Reserved]. For further guidance,

see § 1.1471–6T(f)(2)(iii)(C).* * * * *(3) * * *(ii) [Reserved]. For further guidance,

see § 1.1471–6T(f)(3)(ii).


(iii) [Reserved]. For further guidance,see § 1.1471–6T(f)(3)(iii).



see § 1.1471–6T(f)(6).* * * * *(g) [Reserved]. For further guidance,

see § 1.1471–6T(g).(h) * * *(2) [Reserved]. For further guidance,

see § 1.1471–6T(h)(2) through (h)(2)(iii).* * * * *Par. 13. Section 1.1471–6T is added to

read as follows:

§ 1.1471–6T Payments beneficiallyowned by exempt beneficial owners(temporary).

(a) through (c) [Reserved]. For furtherguidance, see § 1.1471–6(a) through (c)(3).


(1) In general. Solely for purposes ofthis section and except as provided inparagraph (h) of this section, the termforeign central bank of issue means aninstitution that is by law or governmentsanction the principal authority, other thanthe government itself, issuing instrumentsintended to circulate as currency. Such aninstitution is generally the custodian of thebanking reserves of the country underwhose law it is organized.

(2) through (3) [Reserved]. For furtherguidance, see § 1.1471–6(d)(2) through (3).

(4) Income on certain transactions.Solely for purposes of determiningwhether an entity is an exempt beneficialowner of a payment under this paragraph(d), a foreign central bank of issue is abeneficial owner with respect to incomeearned on cash and securities, includingcash and securities held as collateral orsecurities held in connection with a secu-rities lending transaction, held by the for-eign central bank of issue in the ordinarycourse of its operations as a central bankof issue.





(i) through (ii) [Reserved]. For fur-ther guidance, see § 1.1471– 6(f)(2)(i)through (ii).

(iii) [Reserved]. For further guidance,see § 1.1471–6(f)(2)(iii).

(A) [Reserved]. For further guidance,see § 1.1471–6(f)(2)(iii)(A).

(B) The fund receives at least 50 per-cent of its total contributions (other thantransfers of assets from accounts de-scribed in § 1.1471–5(b)(2)(i)(A) (refer-ring to retirement and pension accounts),from retirement and pension accounts de-scribed in an applicable Model 1 or Model2 IGA, or from other retirement fundsdescribed in this paragraph (f) or in anapplicable Model 1 or Model 2 IGA) fromthe sponsoring employers;

(C) Distributions or withdrawals fromthe fund are allowed only upon the occur-rence of specified events related to retire-ment, disability, or death (except rolloverdistributions to accounts described in§ 1.1471–5(b)(2)(i)(A) (referring to retire-ment and pension accounts), to retirementand pension accounts described in an ap-plicable Model 1 or Model 2 IGA, or toother retirement funds described in thisparagraph (f) or in an applicable Model 1or Model 2 IGA), or penalties apply todistributions or withdrawals made beforesuch specified events; or

(D) [Reserved]. For further guidance,see § 1.1471–6(f)(2)(iii)(D).



(ii) The fund is sponsored by one ormore employers and each of these em-ployers are not investment entities or pas-sive NFFEs;

(iii) Employee and employer contribu-tions to the fund (other than transfers ofassets from other retirement plans de-scribed in paragraph (f)(1) of this section,from accounts described in § 1.1471–5(b)(2)(i)(A) (referring to retirement andpension accounts), or retirement and pen-sion accounts described in an applicableModel 1 or Model 2 IGA) are limited byreference to earned income and compen-sation of the employee, respectively;

(iv) through (v) [Reserved]. For fur-ther guidance, see § 1.1471– 6(f)(3)(iv)through (v).


(5) Investment vehicles exclusively forretirement funds. A fund established ex-clusively to earn income for the benefit ofone or more retirement funds described inparagraphs (f)(1) through (5) of this sec-tion or in an applicable Model 1 or Model2 IGA, accounts described in § 1.1471–5(b)(2)(i)(A) (referring to retirement andpension accounts), or retirement and pen-sion accounts described in an applicableModel 1 or Model 2 IGA.

(6) Pension fund of an exempt benefi-cial owner. A fund established and spon-sored by an exempt beneficial owner de-scribed in paragraph (b), (c), (d), or (e) ofthis section or an exempt beneficial owner(other than a fund that qualifies as anexempt beneficial owner) described in anapplicable Model 1 or Model 2 IGA toprovide retirement, disability, or deathbenefits to beneficiaries or participantsthat are current or former employees ofthe exempt beneficial owner (or personsdesignated by such employees), or that arenot current or former employees, but thebenefits provided to such beneficiaries orparticipants are in consideration of per-sonal services performed for the exemptbeneficial owner.


(g) Entities wholly owned by exemptbeneficial owners. A person is describedin this paragraph (g) if it is an FFI solelybecause it is an investment entity, eachdirect holder of an equity interest in theinvestment entity is an exempt beneficialowner described in paragraph (b), (c), (d),(e), (f), or (g) of this section or an exemptbeneficial owner described in an applica-ble Model 1 or Model 2 IGA, and eachdirect holder of a debt interest in the in-vestment entity is either a depository in-stitution (with respect to a loan made tosuch entity), an exempt beneficial ownerdescribed in paragraph (b), (c), (d), (e),(f), or (g) of this section, or an exemptbeneficial owner described in an applica-ble Model 1 or Model 2 IGA.

(h) [Reserved]. For further guidance,see § 1.1471–6(h).


(1) [Reserved]. For further guidance,see § 1.1471–6(h)(1).

(2) Limitation. Paragraph (h)(1) of thissection will not apply to a foreign centralbank of issue as described in paragraph(d) if—

(i) The entity undertakes commercialfinancial activity described in paragraph(h)(1) of this section solely for or at thedirection of other exempt beneficialowners and such commercial financialactivity is consistent with the purposesof the entity;

(ii) The entity has no outstanding debtthat would be a financial account under§ 1.1471–5(b)(1)(iii)(C); and

(iii) The entity only maintains financialaccounts that are depository accounts forcurrent or former employees of the entity(and the spouses and children of such em-ployees) or financial accounts for exemptbeneficial owners.

(i) [Reserved]. For further guidance,see § 1.1471–6(i).

(j) Expiration date. The applicability ofthis section expires on February 28, 2017.

Par.14. Section 1.1472–1 is amended:1. By redesignating paragraph (f) as

paragraph (h).2. By adding paragraphs (c)(1)(vi)

through (vii), (c)(3) through (5), (f), and (g).3. By revising paragraphs (b)(1) intro-

ductory text, (b)(2), (c)(1) introductorytext, (c)(1)(i) introductory text, (c)(1)(ii)through (iii), (c)(1)(iv) introductory text,(c)(1)(iv)(C), (c)(1)(v), (c)(2), and (d)(1)through (2).


§ 1.1472–1 Withholding on NFFEs.



see § 1.1472–1T(b)(2).(c) * * *(1) [Reserved]. For further guidance,

see § 1.1472–1T(c)(1).(i) [Reserved]. For further guidance,

see § 1.1472–1T(c)(1)(i).* * * * *(ii) [Reserved]. For further guidance,

see § 1.1472–1T(c)(1)(ii).

(iii) [Reserved]. For further guidance,see § 1.1472–1T(c)(1)(iii).

(iv) [Reserved]. For further guidance,see § 1.1472–1T(c)(1)(iv).

* * * * *(C) [Reserved]. For further guidance,

see § 1.1472–1T(c)(1)(iv)(C).(v) [Reserved]. For further guidance,

see § 1.1472–1T(c)(1)(v).(vi) [Reserved]. For further guidance,

see § 1.1472–1T(c)(1)(vi).(vii) [Reserved]. For further guidance,

see § 1.1472–1T(c)(1)(vii).(2) [Reserved]. For further guidance,

see § 1.1472–1T(c)(2).(3) [Reserved]. For further guidance,



see § 1.1472–1T(c)(5) through (c)(5)(iv).(d) * * *(1) [Reserved]. For further guidance,

see § 1.1472–1T(d)(1).(2) [Reserved]. For further guidance,

see § 1.1472–1T(d)(2).* * * * *(f) [Reserved]. For further guidance,

see § 1.1472–1T(f).(g) [Reserved]. For further guidance,

see § 1.1472–1T(g).* * * * *Par. 15. Section 1.1472–1T is added to

read as follows:

§ 1.1472–1T Withholding on NFFEs(temporary).



(1) In general. Except as otherwiseprovided in paragraph (b)(2) of this sec-tion (providing transitional relief) or para-graphs (c)(1) or (2) of this section (pro-viding exceptions for payments to anexcepted NFFE or an exempt beneficialowner), § 1.1471–2(a)(4)(i) (providing anexception to withholding if the with-holding agent lacks control, custody, orknowledge), § 1.1471–2(a)(4)(vii) (pro-viding an exception to withholding forpayments made to an account held withor equity interests traded through aclearing organization with FATCA-compliant membership), or § 1.1471–

2(a)(4)(viii) (providing an exception towithholding for payments to certain ex-cepted accounts), a withholding agentmust withhold 30 percent of any with-holdable payment made after June 30,2014, to a payee that is a NFFE unless—

(i) through (iii) [Reserved]. For fur-ther guidance, see § 1.1472–1(b)(1)(i)through (iii).

(2) Transitional relief. For any with-holdable payment made prior to July 1,2016, with respect to a preexisting obliga-tion to a payee that is not a prima facieFFI and for which a withholding agentdoes not have documentation indicatingthe payee’s status as a passive NFFEwhen the NFFE has failed to provide theowner certification as required under§ 1.1471–3(d)(12)(iii), the withholdingagent is not required to withhold underthis section or report under § 1.1474–1(i)(2) (describing the reporting obliga-tions of withholding agents with respect toNFFEs).


(1) Payments to an excepted NFFE. Awithholding agent is not required to with-hold under section 1472(a) and paragraph(b) of this section on a withholdable pay-ment (or portion thereof) if the withhold-ing agent can treat the payment as made toa payee that is an excepted NFFE. Forpurposes of this paragraph, the term ex-cepted NFFE means a payee that the with-holding agent may treat as a NFFE that isa QI, WP, or WT. Additionally, the termexcepted NFFE means, with respect to thepayment, a NFFE described in paragraphs(c)(1)(i) through (vii) of this section to theextent the withholding agent may treat theNFFE as the beneficial owner of the pay-ment.

(i) Publicly traded corporation. ANFFE is described in this paragraph(c)(1)(i) if it is a corporation the stock ofwhich is regularly traded on one or moreestablished securities markets for the cal-endar year.

(A) through (C) [Reserved]. For furtherguidance, see § 1.1472–1(c)(1)(i)(A) through(c)(1)(i)(C)(3).

(ii) Certain affiliated entities related toa publicly traded corporation. A NFFE isdescribed in this paragraph (c)(1)(ii) if itis a corporation that is a member of thesame expanded affiliated group (as de-


fined in § 1.1471–5(i)) as a corporationdescribed in paragraph (c)(1)(i) of thissection.

(iii) Certain territory entities. A NFFEis described in this paragraph (c)(1)(iii) ifit is a territory entity that is directly orindirectly wholly owned by one or morebona fide residents of the U.S. territoryunder the laws of which the entity is or-ganized. The term bona fide resident of aU.S. territory means an individual whoqualifies as a bona fide resident undersection 937(a) and § 1.937–1.

(iv) Active NFFEs. A NFFE is de-scribed in this paragraph (c)(1)(iv) if it isan entity (an active NFFE) and less than50 percent of its gross income for thepreceding taxable year (i.e., calendar orfiscal) is passive income and less than 50percent of the weighted average percent-age of assets (tested quarterly) held by itare assets that produce or are held for theproduction of passive income, as deter-mined after the application of paragraph(c)(1)(iv)(B) of this section (passive as-sets).

(A) through (B) [Reserved]. For furtherguidance, see § 1.1472–1(c)(1)(iv)(A)through (c)(1)(B)(2)(ii).

(C) Methods of measuring assets. Forpurposes of this paragraph (c)(1)(iv), thevalue of a NFFE’s assets is determinedbased on the fair market value or bookvalue of the assets that is reflected on theNFFE’s balance sheet (as determined un-der either a U.S. or an international finan-cial accounting standard).

(v) Excepted nonfinancial entities. ANFFE is described in this paragraph(c)(1)(v) if it is an entity described in§ 1.1471–5(e)(5) (referring to holdingcompanies, treasury centers, and captivefinance companies that are members of anonfinancial group; start-up companies;entities that are liquidating or emergingfrom bankruptcy; and non-profit organiza-tions).

(vi) Direct reporting NFFEs. A NFFEis described in this paragraph (c)(1)(vi) ifit meets the requirements described in§ 1.1472–1(c)(3) to be treated as a directreporting NFFE.

(vii) Sponsored direct reportingNFFEs. A NFFE is described in this para-graph (c)(1)(vii) if it meets the require-ments described in § 1.1472–1(c)(5) to be

treated as a sponsored direct reportingNFFE.

(2) Payments made to an exempt ben-eficial owner. A withholding agent is notrequired to withhold on a withholdablepayment (or portion thereof) under section1472(a) and paragraph (b) of this sectionif the withholding agent may treat thepayment as made to an exempt beneficialowner.

(3) Definition of direct reportingNFFE. A direct reporting NFFE means aNFFE that elects to report informationabout its direct or indirect substantial U.S.owners to the IRS and meets the followingrequirements—

(i) The NFFE must register on Form8957, “FATCA Registration,” (or suchother form as the IRS may prescribe) withthe IRS to obtain a GIIN pursuant to theprocedures prescribed by the IRS;

(ii) The NFFE must report directly tothe IRS on Form 8966, “FATCA Report,”(or such other form as the IRS may pre-scribe) the following information for eachcalendar year (or, may be required by theIRS to certify on Form 8966, or in suchother manner as the IRS may prescribe,that the NFFE has no substantial U.S.owners):

(A) The name, address, and TIN ofeach substantial U.S. owner (as defined in§ 1.1473–1(b)) of such NFFE;

(B) The total of all payments made toeach substantial U.S. owner (including thegross amounts paid or credited to the sub-stantial U.S. owner with respect to suchowner’s equity interest in the NFFE dur-ing the calendar year, which include pay-ments in redemption or liquidation (inwhole or part) of the substantial U.S. own-er’s equity interest in the NFFE);

(C) The value of each substantial U.S.owner’s equity interest in the NFFE de-termined by applying the rules describedin § 1.1471–5(b)(4) (substituting the termequity for the terms account and financialaccount);

(D) The name, address, and GIIN ofthe NFFE, and

(E) Any other information as requiredby Form 8966 (or such other form as theIRS may prescribe) and its accompanyinginstructions;

(iii) The NFFE must obtain a writtencertification (contained on a withholdingcertificate or in a written statement) from

each person that would be treated as asubstantial U.S. owner of the NFFE ifsuch person were a specified U.S. person.Such written certification must indicatewhether the person is a substantial U.S.owner of the NFFE, and if so, the name,address and TIN of the person. If theNFFE has reason to know that such writ-ten certification is unreliable or incorrect,it must contact the person and request arevised written certification. If no revisedwritten certification is received, the NFFEmust treat the person as a substantial U.S.owner and report on Form 8966 the infor-mation required under paragraph (c)(3)(ii)of this section. The NFFE has reason toknow that such a written certification isunreliable or incorrect if the certificationis inconsistent with information in theNFFE’s possession, including informationthat the NFFE provides to a financial in-stitution in order for the financial institu-tion to meet its AML or other accountidentification due diligence procedureswith respect to the NFFE’s account, infor-mation that is publicly available, and U.S.indicia as described in § 1.1441–7(b) andfor which appropriate documentation suf-ficient to cure the U.S. indicia in the man-ner set forth in § 1.1441–7(b)(8) has notbeen obtained.

(iv) The NFFE must keep records thatit produces in the ordinary course of itsbusiness that summarize the activity (in-cluding the gross amounts described inparagraph (c)(3)(ii)(B) that are paid orcredited to each of its substantial U.S.owners) relating to its transactions withrespect to the equity of the NFFE held byeach of its substantial U.S. owners for anycalendar year in which the owner wasrequired to be reported under paragraph(c)(3)(ii) of this section. The records mustbe retained for the longer of six years orthe retention period under the NFFE’snormal business procedures. A NFFE maybe required to extend the six year reten-tion period if the IRS requests such anextension prior to the expiration of the sixyear period;

(v) The NFFE must respond to requestsmade by the IRS for additional informa-tion with respect to any substantial U.S.owner that is subject to reporting by theNFFE or with respect to the records de-scribed in paragraphs (c)(3)(iii) or (iv) ofthis section;


(vi) The NFFE must make a periodiccertification to the IRS within each six-month period following the end of eachcertification period relating to its compli-ance with respect to the election describedin paragraphs (c)(3) and (4) of this sec-tion. The first certification period beginson the date a GIIN is issued and ends atthe close of the third full calendar yearfollowing that date. Each subsequent cer-tification period is the three calendar yearperiod following the close of the previouscertification period. The certification willrequire an officer of the NFFE to certify tothe following statements—

(A)(1) The NFFE has not had anyevents of default described in paragraph(c)(4)(v) of this section; or

(2) If there are any events of default,appropriate measures were taken to reme-diate such failures and to prevent suchfailures from recurring; and

(B) With respect to any failure to reportto the extent required under paragraph(c)(3)(ii), the NFFE has corrected suchfailure by filing the appropriate informa-tion returns; and

(vii) The NFFE has not had its status asa direct reporting NFFE revoked by theIRS.

(4) Election to be treated as a directreporting NFFE—(i) Manner of makingelection. A NFFE may elect to be treatedas a direct reporting NFFE by registeringon Form 8957 (or such other form as theIRS may prescribe) with the IRS to obtaina GIIN pursuant to the procedures pre-scribed by the IRS.

(ii) Effective date of election. The elec-tion is effective upon the issuance of aGIIN to the NFFE.

(iii) Revocation of election by NFFE.The election may not be revoked by theNFFE without the consent of the Commis-sioner. The NFFE must notify its sponsor-ing entity (if applicable) and all relevantwithholding agents if it revokes its elec-tion.

(iv) Revocation of election by Commis-sioner. The election may be revoked bythe Commissioner upon an event of de-fault described in paragraph (v) of thissection.

(v) Event of default. An event of de-fault occurs if a direct reporting NFFEfails to perform any of the obligationsdescribed in (c)(3)(i) through (vi) of this

section. An event of default also includesany misrepresentation of a material fact tothe IRS.

(vi) Notice of event of default. Follow-ing an event of default known by or dis-closed to the IRS, the IRS will deliver tothe NFFE a notice of default specifyingthe event of default. The IRS will requestthat the NFFE remediate the event of de-fault within a specified time period. TheNFFE must respond to the notice of de-fault and provide information responsiveto an IRS request for information or statethe reasons why the NFFE does not agreethat an event of default has occurred. Ifthe NFFE does not provide a responsewithin the specified time period, the IRSmay, at its sole discretion, deliver a noticeto the NFFE that its election to be treatedas a direct reporting NFFE has been re-voked. A NFFE may request, within 90days of receipt, reconsideration of a noticeof default or notice of revocation by writ-ten request to the Deputy Commissioner(International), LB&I.

(vii) Remediation of event of default. ANFFE will be permitted to remediate anevent of default to the extent it agrees withthe IRS on a remediation plan. The IRSmay, as part of a remediation plan, requireadditional information from the NFFE.

(5) Election by a direct reportingNFFE to be treated as a sponsored directreporting NFFE.

(i) Definition of sponsored direct re-porting NFFE. A NFFE is a sponsoreddirect reporting NFFE if the NFFE is adirect reporting NFFE and if another en-tity, other than a nonparticipating FFI, hasagreed with the NFFE to act as its spon-soring entity, as described in paragraph(c)(5)(ii) of this section.

(ii) Requirements for sponsoring entityof a sponsored direct reporting NFFE. Asponsoring entity meets the requirementsof this paragraph (c)(5)(ii) if the sponsor-ing entity—

(A) Is authorized to act on behalf of theNFFE;

(B) Has registered with the IRS as asponsoring entity;

(C) Has registered the NFFE with theIRS as a sponsored direct reporting NFFE;

(D) Agrees to perform, on behalf of theNFFE, all due diligence, reporting, andother requirements that the NFFE would

have been required to perform as a directreporting NFFE;

(E) Identifies the NFFE in all reportingcompleted on the NFFE’s behalf;

(F) Complies with the certification andother requirements in paragraphs (f) and(g) of this section;

(G) Has not had its status as a sponsor-ing entity revoked; and

(H) Agrees to notify all relevant with-holding agents and the IRS if its status asa sponsoring entity is revoked, if it other-wise ceases to be the sponsoring entity ofany of its sponsored direct reportingNFFEs (for example, if the sponsored di-rect reporting NFFE changes sponsors), orif the status of any of its sponsored directreporting NFFEs has been revoked.

(iii) Revocation of status as sponsoringentity. The IRS may revoke a sponsoringentity’s status as a sponsoring entity withrespect to all sponsored direct reportingNFFEs if there is a material failure by thesponsoring entity to comply with its obli-gations under paragraph (c)(5)(ii) of thissection with respect to any sponsored di-rect reporting NFFE.

(iv) Liability of sponsoring entity. Asponsoring entity is not liable for any fail-ure to comply with the obligations con-tained in paragraph (c)(5)(ii) of this sec-tion. A sponsored direct reporting NFFEwill remain liable for all of its chapter 4obligations without regard to any failureof its sponsoring entity to comply with theobligations contained in paragraph(c)(5)(ii) of this section that the sponsor-ing entity has agreed to undertake on be-half of the NFFE.


(1) In general. For purposes of thissection, except in the case of a payee thatis a QI, WP, or WT, a withholding agentmay treat a withholdable payment as ben-eficially owned by the payee as deter-mined under § 1.1471–3. Thus, a with-holding agent may treat a withholdablepayment as beneficially owned by an ex-cepted NFFE (other than a QI, WP, orWT) if the withholding agent can reliablyassociate the payment with valid docu-mentation to determine the payee’s statusas an excepted NFFE under the rules of§ 1.1471–3(d).

(2) Payments made to a NFFE that is aQI, WP, or WT. A withholding agent may


treat the payee of a withholdable paymentas a NFFE that is a QI, WP, or WT if thewithholding agent can reliably associatethe payment with valid documentation todetermine the payee’s status as such underthe rules of § 1.1471–3(b)(3) and (d).

(3) through (5) [Reserved]. For fur-ther guidance, see § 1.1472–1(d)(3)through (5).

(e) [Reserved]. For further guidance,see § 1.1472–1(e) through (e)(2).

(f) Sponsoring entity verification. [Re-served].

(g) Sponsoring entity event of default.[Reserved].

(h) [Reserved]. For further guidance,see § 1.1472–1(h).

(i) Expiration date. The applicability ofthis section expires on February 28, 2017.

Par. 16. Section 1.1473–1 is amended byrevising paragraphs (a)(2)(vi), (a)(3)(iii)(B)(4),(a)(4)(vi), (a)(5)(i) through (vi), and (b)(2)(v)and by adding new paragraph (a)(4)(vii) toread as follows:

§ 1.1473–1 Section 1473 definitions.

(a) * * *(2) * * *(vi) [Reserved]. For further guidance,

see § 1.1473–1T(a)(2)(vi).* * * * *(3) * * *(iii) * * *(B) * * *(4) [Reserved]. For further guidance,

see § 1.1473–1T(a)(3)(iii)(B)(4).* * * * *(4) * * *(vi) [Reserved]. For further guidance,

see § 1.1473–1T(a)(4)(vi).(vii) [Reserved]. For further guidance,

see § 1.1473–1T(a)(4)(vii).(5) * * *(i) [Reserved]. For further guidance,

see § 1.1473–1T(a)(5)(i).(ii) [Reserved]. For further guidance,

see § 1.1473–1T(a)(5)(ii).(iii) [Reserved]. For further guidance,

see § 1.1473–1T(a)(5)(iii).(iv) [Reserved]. For further guidance,

see § 1.1473–1T(a)(5)(iv).(v) [Reserved]. For further guidance,

see § 1.1473–1T(a)(5)(v).(vi) [Reserved]. For further guidance,

see § 1.1473–1T(a)(5)(vi).* * * * *

(b) * * *(2) * * *(v) [Reserved]. For further guidance,

see § 1.1473–1T(b)(2)(v).* * * * *Par. 17. Section 1.1473–1T is added to

read as follows:

§ 1.1473–1T Section 1473 definitions(temporary).


(1) [Reserved]. For further guidance,see § 1.1473–1(a)(1) through (a)(1)(ii).


(i) through (v) [Reserved]. For fur-ther guidance, see § 1.1473–1(a)(2)(i)through (v).

(vi) Special rule for sales of interestbearing debt obligations. Income that isotherwise described as U.S. source FDAPincome in paragraphs (a)(2)(i) through (v)of this section does not include an amountof interest accrued on the date of a sale orexchange of an interest bearing debt obli-gation if the sale occurs between two in-terest payment dates and is not part of aplan described in § 1.1441–3(b)(2)(ii).

(vii) [Reserved]. For further guid-ance, see § 1.1473–1(a)(2)(vii) through(a)(2)(vii)(B).


(i) through (ii) [Reserved]. For furtherguidance, see § 1.1473–1(a)(3)(i) through(a)(3)(ii)(C).


(A) [Reserved]. For further guidance,see § 1.1473–1(a)(3)(iii)(A).

(B) [Reserved]. For further guidance,see § 1.1473–1(a)(3)(iii)(B).

(1) through (3) [Reserved]. For furtherguidance, see § 1.1473–1(a)(3)(iii)(B)(1)through (3).

(4) In the case of a sale of an obligationdescribed in paragraph (a)(2)(vi), grossproceeds includes any interest accrued be-tween interest payment dates other than anamount described in paragraph (a)(2)(vi)of this section that is treated as U.S.source FDAP income; and

(5) [Reserved]. For further guidance,see § 1.1473–1(a)(3)(iii)(B)(4).


(i) through (v) [Reserved]. For furtherguidance, see § 1.1473–1(a)(4)(i) through (v).

(vi) Offshore payments of U.S. sourceFDAP income prior to 2017 (transi-tional). A payment with respect to an off-shore obligation made prior to January 1,2017, if such payment is U.S. sourceFDAP income and made by a person thatis not acting as an intermediary or as a WPor WT with respect to the payment. Theexception for offshore payments of U.S.source FDAP income provided in the pre-ceding sentence shall not apply, how-ever, in the case of a flow-through entitythat has a residual withholding require-ment with respect to its partners, own-ers, or beneficiaries under § 1.1471–2(a)(2)(ii), or in the case of paymentsmade with respect to debt or equity is-sued by a U.S. person (excluding inter-est payments made by a foreign branchof a U.S. financial institution with re-spect to depository accounts it maintainsfor retail customers). For purposes ofthis paragraph (a)(4)(vi), an intermedi-ary includes a person that acts as a qual-ified securities lender as defined for pur-poses of chapter 3 and does not includea person acting as an insurance brokerwith respect to premiums.

(vii) Collateral arrangements prior to2017 (transitional). A payment madeprior to January 1, 2017, by a securedparty with respect to collateral securingone or more transactions under a collateralarrangement, provided that only a com-mercially reasonable amount of collateralis held by the secured party as part of thecollateral arrangement. For purposes ofthis paragraph (a)(4)(vii), the term trans-action generally includes a debt instrument,a derivative financial instrument (includinga notional principal contract, future, for-ward, and option), and any securities lend-ing transaction, sale-repurchase transac-tion, margin loan, or substantially similartransaction that is subject to a collateralarrangement.


(i) In general. This paragraph (a)(5)provides special rules for a flow-throughentity, complex trust, or estate to deter-mine when such entity must treat a pay-ment of U.S. source FDAP income that is


also a withholdable payment as havingbeen paid by such entity to its partners,owners, or beneficiaries (as applicable de-pending on the type of entity).

(ii) Partnerships. An amount of U.S.source FDAP income that is also a with-holdable payment is treated as being paidto a partner under rules similar to the rulesprescribing when withholding is requiredfor chapter 3 purposes as described in§ 1.1441–5(b)(2)(i)(A).

(iii) Simple trusts. An amount of U.S.source FDAP income that is also a with-holdable payment is treated as being paidto a beneficiary of a simple trust underrules similar to the rules prescribingwhen withholding is required for chap-ter 3 purposes as described in § 1.1441–5(b)(2)(ii).

(iv) Complex trusts and estates. Anamount of U.S. source FDAP income thatis also a withholdable payment is treatedas being paid to a beneficiary of a com-plex trust or estate under rules similar tothe rules prescribing when withholding isrequired for chapter 3 purposes as de-scribed in § 1.1441–5(b)(2)(iii).

(v) Grantor trusts. If an amount of U.S.source FDAP income that is also a with-holdable payment is paid to a grantortrust, a person treated as an owner of all ora portion of such trust is treated as havingbeen paid such income by the trust at thetime it is received by or credited to thetrust or portion thereof.

(vi) Special rule for an NWP or NWT.In the case of a partnership, simple trust,or complex trust that is an NWP or NWT,the rules described in paragraphs (a)(5)(ii)and (iii) of this section shall not apply, andU.S. source FDAP income that is also awithholdable payment is treated as beingpaid to the partner or beneficiary at thetime the income is paid to the partnershipor trust, respectively.

(vii) [Reserved]. For further guidance,see § 1.1473–1(a)(5)(vii).




(1) [Reserved]. For further guidance,see § 1.1473–1(b)(1) through (b)(1)(iii)(B).


(i) through (iv) [Reserved]. For fur-ther guidance, see § 1.1473–1(b)(2)(i)through (iv).

(v) Interests owned or held by a relatedperson. For purposes of determiningwhether a specified U.S. person is a sub-stantial U.S. owner in a foreign entitydescribed in paragraphs (b)(2)(i) through(iv) of this section, if a specified U.S.person owns or holds, directly or indi-rectly, any interest in the foreign entity,that interest must be aggregated with anysuch interest in the foreign entity ownedor held, directly or indirectly, by a relatedperson. For purposes of the preceding sen-tence, a related person is a person orspouse of a person described in§ 1.267(c)–1(a)(4), determined by refer-ence to such specified U.S. person.

(3) through (7) [Reserved]. For fur-ther guidance, see § 1.1473–1(b)(3)through (7).

(c) through (f) [Reserved]. For furtherguidance, see § 1.1473–1(c) through (f).

(g) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 18. Section 1.1474–1 is amended:1. By removing paragraphs

(d)(1)(ii)(A)(1)(ix), (d)(3)(iii), (d)(4)(ii)(C),and (i)(1)(iv) through (v).

2. By redesignating paragraphs(d)(1)(ii)(A)(1)(x) through (xii) as(d)(1)(ii)(A)(1)(ix) through (xi), and para-graphs (d)(3)(iv) through (x) as (d)(3)(iii)through (ix).

3. By revising paragraphs (d)(1)(i),(d)(1)(ii)(A)(1)(viii) through (ix),(d)(1)(ii)(B)(1)(i), (d)(1)(ii)(B)(1)(vi)through (vii), (d)(1)(ii)(B)(1)(ix), (d)(2)(i),(d)(4)(i)(B), (d)(4)(i)(E), (d)(4)(ii)(B),(d)(4)(iii), (i)(1) introductory text, (i)(1)(i)through (iii), (i)(2) introductory text, and(i)(2)(iii).


§ 1.1474–1 Liability for withheld taxand withholding agent reporting.

* * * * *(d) * * *(1) * * *(i) [Reserved]. For further guidance,

see § 1.1474–1T(d)(1)(i).(ii) * * *(A) * * *

(1) * * *(viii) [Reserved]. For further guidance,

see § 1.1474–1T(d)(1)(ii)(A)(1)(viii).(ix) [Reserved]. For further guidance,

see § 1.1474–1T(d)(1)(ii)(A)(1)(ix).* * * * *(B) * * *(1) * * *(i) [Reserved]. For further guidance,

see § 1.1474–1T(d)(1)(ii)(B)(1)(i).* * * * *(vi) [Reserved]. For further guidance,

see § 1.1474–1T(d)(1)(ii)(B)(1)(vi).(vii) [Reserved]. For further guidance,

see § 1.1474–1T(d)(1)(ii)(B)(1)(vii).* * * * *(ix) [Reserved]. For further guidance,

see § 1.1474–1T(d)(1)(ii)(B)(1)(ix).* * * * *(2) * * *(i) [Reserved]. For further guidance,

see § 1.1474–1T(d)(2)(i).(A) [Reserved]. For further guidance,

see § 1.1474–1T(d)(2)(i)(A).(B) [Reserved]. For further guidance,

see § 1.1474–1T(d)(2)(i)(B).(C) [Reserved]. For further guidance,

see § 1.1474–1T(d)(2)(i)(C).* * * * *(4) * * *(i) * * *(B) [Reserved]. For further guidance,

see § 1.1474–1T(d)(4)(i)(B).* * * * *(E) [Reserved]. For further guidance,

see § 1.1474–1T(d)(4)(i)(E).(ii) * * *(B) [Reserved]. For further guidance,

see § 1.1474–1T(d)(4)(ii)(B).(C) [Reserved]. For further guidance,

see § 1.1474–1T(d)(4)(ii)(C).(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1474 –1T(d)(4)(iii) through(d)(4)(iii)(C).

* * * * *(i) * * *(1) [Reserved]. For further guidance,

see § 1.1474–1T(i)(1).(i) [Reserved]. For further guidance,

see § 1.1474–1T(i)(1)(i).(ii) [Reserved]. For further guidance,

see § 1.1474–1T(i)(1)(ii).(iii) [Reserved]. For further guidance, see

§ 1.1474–1T(i)(1)(iii) through (i)(1)(iii)(E).(2) [Reserved]. For further guidance,

see § 1.1474–1T(i)(2).



see § 1.1474–1T(i)(2)(iii).* * * * *Par. 19. Section 1.1474–1T is added to

read as follows:

§ 1.1474–1T Liability for withheld taxand withholding agent reporting(temporary).

(a) through (c) [Reserved]. For furtherguidance, see § 1.1474–1(a) through(c)(3).



(i) In general. Except as otherwise pro-vided in paragraph (d)(4) of this section orin the instructions to Form 1042–S, everywithholding agent must file an informa-tion return on Form 1042–S, “ForeignPerson’s U.S. Source Income Subject toWithholding,” (or such other form as theIRS may prescribe) to report to the IRSchapter 4 reportable amounts as describedin paragraph (d)(2)(i) of this section thatwere paid to a recipient during the preced-ing calendar year. Except as otherwiseprovided in paragraphs (d)(4)(ii)(B) (cer-tain unknown recipients) and (d)(4)(i)(B)and (d)(4)(iii)(A) of this section (describ-ing payees includable in reporting poolsof a participating FFI or registereddeemed-compliant FFI), a separate Form1042–S must be filed with the IRS foreach recipient of an amount subject toreporting under paragraph (d)(2)(i) of thissection and for each separate type of pay-ment made to a single recipient in accor-dance with paragraph (d)(4)(i) of this sec-tion. The Form 1042–S shall be preparedin such manner as the form and its accom-panying instructions prescribe. One copyof the Form 1042–S shall be filed with theIRS on or before March 15 of the cal-endar year following the year in whichthe amount subject to reporting waspaid, with a transmittal form as providedin the instructions to the form. With-holding certificates, certifications, docu-mentary evidence, or other statements ordocumentation provided to a withhold-ing agent are not required to be attachedto the form. A copy of the Form 1042–Smust be furnished to the recipient for

whom the form is prepared (or any otherperson, as required under this paragraphor the instructions to the form) and toany intermediary or flow-through entitydescribed in paragraph (d)(3)(vii) of thissection on or before March 15 of thecalendar year following the year inwhich the amount subject to reportingwas paid. The withholding agent mustretain a copy of each Form 1042–S forthe period of limitations on assessmentand collection applicable to the tax re-portable on the Form 1042 to which theForm 1042–S relates (determined as setforth in paragraph (c)(1) of this section).See paragraph (d)(4)(iii) of this sectionfor the additional reporting require-ments of participating FFIs and deemed-compliant FFIs.


(A) [Reserved]. For further guidance,see § 1.1474–1(d)(1)(ii)(A).

(1) [Reserved]. For further guidance,see § 1.1474–1(d)(1)(ii)(A)(1).

(i) through (vii) [Reserved]. For furtherguidance, see § 1.1474–1(d)(1)(ii)(A)(1)(i)through (vii).

(viii) An excepted NFFE and passiveNFFE that also is not a flow-through en-tity and that is not acting as an agent orintermediary with respect to the payment;

(ix) A foreign person that is a partner orbeneficiary in a flow-through entity that isa NFFE (looking through a partner or ben-eficiary that is a foreign intermediary orflow-through entity);

(x) through (xi) [Reserved]. For furtherguidance, see § 1.1474–1(d)(1)(ii)(A)(1)(x)through (xi).

(2) through (3) [Reserved]. For furtherguidance, see § 1.1474–1(d)(1)(ii)(A)(2)through (3).


(1) [Reserved]. For further guidance,see § 1.1474–1(d)(1)(ii)(B)(1).

(i) A certified deemed-compliant FFIthat is an NQI, NWP, or NWT and thatfails to provide its withholding agent withsufficient information to allocate the pay-ment to its account holders and payees;

(ii) through (v) [Reserved]. For furtherguidance, see § 1.1474–1(d)(1)(ii)(B)(1)(ii)through (v).

(vi) An account holder or payee of anonparticipating FFI except to the extent

described in paragraph (d)(1)(ii)(A)(1)(x)of this section for an exempt beneficialowner;

(vii) Except as provided in paragraph(d)(1)(ii)(A)(1) of this section, an entitythat is disregarded under § 301.7701–2(c)(2) as an entity separate from its owner;

(viii) [Reserved]. For further guidance,see § 1.1474–1(d)(1)(ii)(B)(1)(viii).

(ix) A passive NFFE or an exceptedNFFE that is a flow-through entity or actsas an intermediary;

(2) through (3) [Reserved]. For furtherguidance, see § 1.1474–1(d)(1)(ii)(B)(2)through (3).


(i) In general. Subject to paragraph(d)(2)(iii) of this section, the term chapter4 reportable amount means each of thefollowing amounts reportable on a Form1042–S for purposes of chapter 4—

(A) An amount of a withholdable pay-ment that is subject to withholding underchapter 4 paid after June 30, 2014;

(B) An amount of a withholdable pay-ment of U.S. source FDAP income that isalso reportable on Form 1042–S under§ 1.1461–1(c)(2)(i); or

(C) A foreign passthru payment subjectto withholding under chapter 4.

(ii) through (iii) [Reserved]. For fur-ther guidance, see § 1.1474 –1(d)(2)(ii)through (iii).

(3) [Reserved]. For further guidance,see § 1.1474–1(d)(3) through (d)(3)(x).


(i) [Reserved]. For further guidance,see § 1.1474–1(d)(4)(i).

(A) [Reserved]. For further guidance,see § 1.1474–1(d)(4)(i)(A).

(B) Payments to participating FFIs,deemed-compliant FFIs, and certain QIs.Except as otherwise provided in this para-graph (d)(4)(i)(B), a U.S. withholdingagent that makes a payment of a chapter 4reportable amount to a participating FFIor deemed-compliant FFI that is an NQI,NWP, or NWT must complete a Form1042–S treating such FFI as the recipient.With respect to a payment of U.S. sourceFDAP income made to a participating FFIor registered deemed-compliant FFI thatis an NQI, NWP, or NWT or QI that electsto be withheld upon under section1471(b)(3) and from whom the withhold-


ing agent receives an FFI withholdingstatement allocating the payment (or por-tion of the payment) to a chapter 4 with-holding rate pool, a U.S. withholdingagent must complete a separate Form1042–S issued to the participating FFI,registered deemed-compliant FFI, or QI(as applicable) as the recipient with re-spect to each such pool identified on anFFI withholding statement, described in§ 1.1471–3(c)(3)(iii)(B)(2). If, however, aparticipating FFI, deemed-compliant FFI,or QI (as applicable) has made an electionunder § 1.1471–4(b)(3)(iii), for the por-tion of the payment that the FFI allocatesto each recalcitrant account holder that issubject to backup withholding under sec-tion 3406, the withholding agent must re-port on Form 1099 the amount of thepayment and tax withheld in accordancewith the form’s requirements and accom-panying instructions. See § 1.1471–2(a)(2)(i) for the requirement of a with-holding agent to withhold on payments ofU.S. source FDAP income made to a par-ticipating FFI or registered deemed-compliant FFI that is an NQI, NWP, orNWT. See also § 1.1471–2(a)(2)(iii) inthe case of payments made to a QI. See§ 1.1461–1(c)(4)(A) for the extent towhich reporting is required under that sec-tion for U.S. source FDAP income that isreportable on Form 1042–S under chapter3 and not subject to withholding underchapter 4, in which case the U.S. with-holding agent must report in the mannerdescribed under § 1.1461–1(c)(4)(ii) andparagraph (d)(4)(ii)(A) of this section. Seeparagraph (d)(4)(ii)(A) of this section forreporting rules applicable if participatingFFIs or deemed-compliant FFIs providespecific payee information for reporting tothe recipient of the payment for Form1042–S reporting purposes. See paragraph(d)(4)(iii) of this section for the residualreporting responsibilities of an NQI,NWP, or NWT that is an FFI.

(C) through (D) [Reserved]. For furtherguidance, see § 1.1474–1(d)(4)(i)(C) through(d)(4)(i)(D)(3).

(E) Amounts paid to NFFEs. A U.S.withholding agent that makes payments ofchapter 4 reportable amounts to an ex-cepted or passive NFFE shall completeForms 1042–S treating the NFFE as therecipient, except when the NFFE is aflow-through entity or acting as an inter-

mediary and the partner or beneficiary istreated as the payee. In cases in which thechapter 4 reportable amount is also anamount of U.S. source FDAP incomereportable on Form 1042–S (describedin § 1.1441–2(a)), see also § 1.1461–1(c)(4)(A) for the extent to which report-ing is required with respect to the partners,beneficiaries, or owners of such entities.


(A) [Reserved]. For further guidance,see § 1.1474–1(d)(4)(ii)(A).

(B) Nonparticipating FFI that is aflow-through entity or intermediary. If awithholding agent makes a payment of achapter 4 reportable amount to a nonpar-ticipating FFI that it is required to treat asan intermediary with regard to a paymentor as a flow-through entity under rulesdescribed in § 1.1471–3(c)(3)(iii), and ex-cept as otherwise provided in paragraph(d)(1)(ii)(A)(1)(x) of this section (relatingto an exempt beneficial owner), the with-holding agent must report the recipientof the payment as an unknown recipientand report the nonparticipating FFI asprovided in paragraph (d)(4)(ii)(A) ofthis section for an entity not treated as arecipient.

(C) Disregarded entities. If a U.S.withholding agent makes a payment to adisregarded entity and receives a validwithholding certificate or other documen-tary evidence from the person that is thesingle owner of such disregarded entity,the withholding agent must file a Form1042–S treating the single owner as therecipient in accordance with the instruc-tions to the Form 1042–S.

(iii) Reporting by participating FFIsand deemed-compliant FFIs (includingQIs, WPs, and WTs) — (A) In general.Except as otherwise provided in para-graph (d)(4)(iii)(B) (relating to NQIs,NWPs, NWTs, and FFIs electing undersection 1471(b)(3)) and § 1.1471–4(d)(2)(ii)(F) (relating to transitionalpayee-specific reporting for payments tononparticipating FFIs), a participating FFIor deemed-compliant FFI (including a QI,WP, WT, or U.S. branch of a participatingFFI that is not treated as a U.S. person)that makes a payment that is a chapter 4reportable amount to a recalcitrant ac-count holder or nonparticipating FFI mustcomplete a Form 1042–S to report such

payments. A participating FFI or regis-tered deemed-compliant FFI (including aQI, WP, WT, or U.S. branch of a partici-pating FFI that is not treated as a U.S.person) may report in pools consisting ofits recalcitrant account holders and payeesthat are nonparticipating FFIs. With re-spect to recalcitrant account holders, theFFI may report in pools consisting of re-calcitrant account holders within a partic-ular status described in § 1.1471–4(d)(6) and within a particular incomecode. Except as otherwise provided in§ 1.1471–4(d)(2)(ii)(F), with respect topayees that are nonparticipating FFIs, theFFI may report in pools consisting of oneor more nonparticipating FFIs that fallwithin a particular income code andwithin a particular status code describedin the instructions to Form 1042–S. Alter-natively, a participating FFI or registereddeemed-compliant FFI (including a QI,WP, WT, or U.S. branch of a participatingFFI that is not treated as a U.S. person)may (and a certified deemed-compliantFFI is required to) perform payee-specificreporting to report a chapter 4 reportableamount paid to a recalcitrant accountholder or a nonparticipating FFI whenwithholding was applied (or should haveapplied) to the payment.

(B) Special reporting requirements ofparticipating FFIs, deemed-compliantFFIs, and FFIs that make an election un-der section 1471(b)(3). Except as other-wise provided in § 1.1471–4(d)(2)(ii)(F), aparticipating FFI or deemed-compliantFFI that is an NQI, NWP, NWT (includ-ing a U.S. branch of a participating FFIthat is not treated as a U.S. person), or anFFI that has made an election under sec-tion 1471(b)(3) and has provided suffi-cient information to its withholding agentto withhold and report the payment is notrequired to report the payment on Form1042–S as described in paragraph(d)(4)(iii)(A) of this section if the pay-ment is made to a nonparticipating FFI orrecalcitrant account holder and its with-holding agent has withheld the correctamount of tax on such payment and cor-rectly reported the payment on a Form1042–S. Such FFI is required to report apayment, however, when the FFI knows,or has reason to know, that less than therequired amount has been withheld bythe withholding agent on the payment or


the withholding agent has not correctlyreported the payment on Form 1042–S. Insuch case, the FFI must report on Form1042–S to the extent required under para-graph (d)(4)(iii)(A) of this section. See,however, § 1.1471–4(d)(6) for the re-quirement to report certain aggregate in-formation regarding accounts held by re-calcitrant account holders on Form 8966,“FATCA Report,” regardless of whetherwithholdable payments are made to suchaccounts.

(C) Reporting by a U.S. branch of aparticipating FFI or registered deemed-compliant FFI treated as a U.S. person. AU.S. branch of a participating FFI or reg-istered deemed-compliant FFI that is treatedas a U.S. person must report amounts paidto recipients on Forms 1042–S in the samemanner as a U.S. withholding agent underparagraph (d)(4)(i) of this section.

(iv) through (vi) [Reserved]. For fur-ther guidance, see § 1.1474–1(d)(4)(iv)through (vi).

(e) through (h) [Reserved]. For furtherguidance, see § 1.1474–1(e) through (h).

(i) [Reserved]. For further guidance,see § 1.1474–1(i).

(1) Reporting by certain withholdingagents with respect to owner-documentedFFIs.

(i) Beginning on July 1, 2014, if a with-holding agent (other than an FFI reportingaccounts held by owner-documented FFIsunder § 1.1471–4(d)) makes a withhold-able payment to an entity account holderor payee of an obligation and the with-holding agent treats the entity as anowner-documented FFI under § 1.1471–3(d)(6), the withholding agent is requiredto report for July 1 through December 31,2014, with respect to each specified U.S.person that has a direct or indirect debt orequity interest in such entity the informa-tion described in paragraph (i)(1)(iii) ofthis section.

(ii) Beginning in calendar year 2015, if awithholding agent (other than an FFI report-ing accounts held by owner-documentedFFIs under § 1.1471–4(d)) makes during acalendar year a payment of a chapter 4 re-portable amount to an entity accountholder or payee of an obligation and thewithholding agent treats the entity as anowner-documented FFI under § 1.1471–3(d)(6), the withholding agent is requiredto report for such calendar year with re-

spect to each specified U.S. person thathas a direct or indirect debt or equityinterest in such entity the informationdescribed in paragraph (i)(1)(iii) of thissection.

(iii) The information that a withholdingagent (other than an FFI reporting ac-counts held by owner-documented FFIsunder § 1.1471–4(d)) is required to reportunder paragraphs (i)(1)(i) and (i)(1)(ii) ofthis section must be made on Form 8966(or such other form as the IRS may pre-scribe) and filed on or before March 31 ofthe calendar year following the year inwhich the withholdable payment wasmade. The report must contain the follow-ing information—

(A) The name of the owner-documentedFFI;

(B) The name, address, and TIN ofeach specified U.S. person identified in§ 1.1471–3(d)(6)(iv)(A)(1) and (2);

(C) For the period from July 1 throughDecember 31, 2014, the total of all pay-ments made to the owner-documented FFIand with respect to payments made afterthe 2014 calendar year the total of allpayments made to the owner-documentedFFI during the calendar year;

(D) The account balance or value of theaccount held by the owner-documentedFFI; and

(E) Any other information required onForm 8966 and its accompanying instruc-tions provided for purposes of such re-porting.

(2) Reporting by certain withholdingagents with respect to U.S. owned foreignentities that are NFFEs. Beginning onJuly 1, 2014, in addition to the reportingon Form 1042–S required under para-graph (d)(4)(i)(E) of this section, a with-holding agent (other than an FFI reportingaccounts held by NFFEs under § 1.1471–4(d)) that receives information about anysubstantial U.S. owners of a NFFE that isnot an excepted NFFE as defined in§ 1.1472–1(c) shall file a report with theIRS for the period from July 1 throughDecember 31, 2014, and in each subse-quent calendar year with respect to anysubstantial U.S. owners of such NFFE.Such report must be made on Form 8966(or such other form as the IRS may pre-scribe) and filed on or before March 31 ofthe calendar year following the year inwhich the withholdable payment was

made. The IRS shall grant an automatic90-day extension of time in which to fileForm 8966. Form 8809, “Request for Ex-tension of Time to File Information Re-turns,” (or such other form as the IRS mayprescribe) must be used to request suchextension of time and must be filed nolater than the due date of Form 8966.Under certain hardship conditions, theIRS may grant an additional 90-day ex-tension. A request for extension due tohardship must contain a statement of thereasons for requesting the extension andsuch other information as the form or in-structions may require. The report mustcontain the following information—

(i) through (ii) [Reserved]. For fur-ther guidance, see § 1.1474 –1(i)(2)(i)through (ii).

(iii) For the period from July 1, 2014through December 31, 2014, the total ofall payments made to the NFFE and, withrespect to payments made after the 2014calendar year, the total of all paymentsmade to the NFFE during the calendaryear; and

(iv) [Reserved]. For further guidance,see § 1.1474–1(i)(2)(iv).

(3) [Reserved]. For further guidance,see § 1.1474–1(i)(3).

(j) [Reserved]. For further guidance,see § 1.1474–1(j).


Par. 20. Section 1.1474–6 is amendedby revising paragraph (b)(1), by redesig-nating paragraph (f) as (g), and by addingnew paragraph (f) to read as follows:

§ 1.1474–6 Coordination of chapter 4with other withholding provisions.


see § 1.1474–6T(b)(1).* * * * *(f) [Reserved]. For further guidance,

see § 1.1474–6T(f).* * * * *Par. 21. Section 1.1474–6T is added to

read as follows:


§ 1.1474–6T Coordination of chapter 4with other withholding provisions(temporary).



(1) In general. In the case of a with-holdable payment that is both subject towithholding under chapter 4 and is anamount subject to withholding under§ 1.1441–2(a), a withholding agent maycredit the withholding applied under chap-ter 4 against its liability for any tax dueunder sections 1441, 1442, or 1443. See§ 1.1474–1(c) and (d) for the income taxreturn and information return reporting re-quirements that apply in the case of apayment that is a withholdable paymentsubject to withholding under chapter 4that is also an amount subject to withhold-ing under § 1.1441–2(a).


(c) through (e) [Reserved]. For furtherguidance, see § 1.1474–6(c) through (e).

(f) Coordination with section 3406. Aparticipating FFI that makes a withhold-able payment that is also a reportable pay-ment (as defined in the relevant sectionsof chapter 61) to a recalcitrant accountholder that is a U.S. non-exempt recipientis not required to withhold under section3406 if it withholds on the payment at a30-percent rate in accordance with itswithholding obligations under chapter 4.See, however, § 1.1471–4(b)(3)(iii) forthe election to withhold on recalcitrantaccount holders that are non-exempt U.S.recipients under section 3406 instead ofwithholding under chapter 4.



John DalrympleDeputy Commissioner for Services and

Enforcement.

Approved February 14, 2014.

Mark J. MazurAssistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register on February 28,2014, 4:15 p.m., and published in the issue of the FederalRegister for March 6, 2014, 79 F.R. 12812)

Section 1441.—Withholdingof tax on nonresident aliens

T.D. 9658

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Parts 1, 31, and 301

Withholding of Tax on Certain U.S.Source Income Paid to Foreign Persons,Information Reporting and BackupWithholding on Payments Made toCertain U.S. Persons, and PortfolioInterest Treatment


ACTION: Final and temporary regulations.

SUMMARY: This document contains fi-nal and temporary regulations that revisecertain provisions of the final regulationsregarding withholding of tax on certainU.S. source income paid to foreign per-sons, information reporting and backupwithholding with respect to paymentsmade to certain U.S. persons, portfoliointerest paid to nonresident alien individ-uals and foreign corporations, and the as-sociated requirements governing collec-tion, refunds, and credits of withheldamounts under these rules. The revisionsare necessary to coordinate these regula-tions with the documentation, withhold-ing, and reporting provisions included inregulations regarding information report-ing by foreign financial institutions (FFIs)with respect to U.S. accounts and with-holding on certain payments to FFIs andother foreign entities under chapter 4 ofSubtitle A of the Internal Revenue Code(Code). The temporary regulations alsorevise certain provisions of the final reg-ulations relating to the statutory exemp-tion for portfolio interest in light ofamendments to the statute. Moreover,these temporary regulations remove cer-tain transitional documentation rules fromthe regulations relating to withholding oftax on certain U.S. source income paid toforeign persons. These temporary regula-

tions affect persons making payments ofU.S. source income to foreign persons,persons making payments to certain U.S.persons subject to reporting, and foreignpersons making claims for refund or creditof income tax withheld or claiming theexclusion from tax provided for portfoliointerest. The text of these temporary reg-ulations also serves as the text of the pro-posed regulations (REG–134361–12) setforth in the Proposed Rules section in thisissue of the Bulletin.

DATES: Effective date: These regulationsare effective on March 6, 2014.

Applicability dates: For dates of appli-cability, see §§ 1.1441–1(g), 1.1441–3(j),1.1441–4(g)(3), 1.1441–5(g)(3), 1.1441–6(i)(3), 1.1441–7(h), 1.1461–1(i), 1.1461–2(e), 1.6041–1(j)(2), 1.6041–4(d)(2),1.6042–3(b)(5)(ii), 1.6045–1(c)(3)(xv),1.6049–4(h), 1.6049–5(g)(2).

FOR FURTHER INFORMATIONCONTACT: John Sweeney, (202) 317-6942 (not a toll-free number).


Background

This document contains amendmentsto the Income Tax Regulations (26 CFRpart 1) under sections 871, 1441, 1461,6041, 6042, 6045, and 6049 of the Code,the Employment Tax Regulations (26CFR part 31) under section 3406 of theCode, and the Procedure and Administra-tion Regulations (26 CFR part 301) undersection 6402 of the Code. These tempo-rary regulations are necessary to coordi-nate the final regulations under chapters 3and 61 with the final regulations underchapter 4. Certain of the revisions to thefinal regulations under chapters 3 and 61contained in these temporary regulationswere previewed in Notice 2013–69,2013–46 IRB 503 (November 12, 2013),Rev. Proc. 2014–13, 2014–3 IRB 419(January 13, 2014), and draft forms re-lated to chapter 4.

Information Reporting and Withhold-ing Regimes

A. Chapters 3 and 61

On October 14, 1997, the IRS and theTreasury Department published final andtemporary regulations (TD 8734) in the


Federal Register (62 FR 53387) dealingwith the withholding of tax under sections1441, 1442, and 1443 (contained in chap-ter 3 of Subtitle A of the Code) on certainU.S. source income paid to foreign per-sons, the related tax deposit and reportingrequirements under section 1461, and thestatutory exemptions for portfolio interestunder sections 871(h) and 881(c) (1997final regulations). In addition, the 1997final regulations finalized changes thatwere included in proposed regulations ap-plicable to the reporting provisions of sec-tions 6041, 6042, 6044, 6045, and 6049under chapter 61 of the Code. On May 22,2000, the IRS and the Treasury Depart-ment published final regulations (TD8881) in the Federal Register (65 FR32152) amending certain provisions of the1997 final regulations under sections1441, 1442, 1443, 6041, 6041A, 6042,6045, and 6049 (collectively the final reg-ulations under chapters 3 and 61 are re-ferred to herein as the final regulations).

1. Chapter 3

Generally, under sections 871(a) and881(a), foreign persons are subject to taxat a 30-percent rate on the gross amount ofcertain payments of U.S. source fixed ordeterminable annual or periodical (FDAP)income, which includes, among otherthings, interest, dividends, and other sim-ilar types of investment income, unless thebeneficial owner of the payment is entitledto a reduced rate of, or exemption from,withholding tax under domestic law, in-cluding an income tax treaty. This sub-stantive tax liability generally is collectedthrough a withholding tax imposed atsource pursuant to chapter 3 and the reg-ulations under chapter 3. The chapter 3regulations provide comprehensive rulesfor withholding agents to identify theproper treatment of a payee for informa-tion reporting and withholding tax pur-poses based on documentation providedby the payee. The regulations under chap-ter 3 generally allow withholding agentsto rely on a withholding certificate (forexample, Form W–8BEN, “Certificate ofForeign Status of Beneficial Owner forUnited States Tax Withholding”) fur-nished by a payee that certifies the payee’sstatus as a foreign person, and whethersuch person is entitled to a reduction in or

exemption from withholding. The chapter3 regulations recognize that foreign inter-mediaries and flow-through entities thatreceive U.S. source FDAP income pay-ments on behalf of their customers, part-ners, or beneficiaries may have privacyand competitiveness concerns about shar-ing beneficial ownership information withother intermediaries (or chains of interme-diaries) and competing financial institu-tions. Accordingly, the chapter 3 regula-tions permit certain types of foreignpersons to assume primary withholdingand reporting responsibility with respectto U.S. source FDAP income that is sub-ject to chapter 3 withholding by becom-ing, respectively, qualified intermediaries,withholding foreign partnerships, or with-holding foreign trusts.

A withholding agent generally is re-quired to file an annual income tax returnon Form 1042, “Annual Withholding TaxReturn for U.S. Source Income of ForeignPersons,” to report amounts that are actu-ally withheld under chapter 3, or thatwould have been withheld but for an ap-plicable exception, and, with respect toeach recipient, to file an information re-turn on Form 1042–S, “Foreign Person’sU.S. Source Income Subject to Withhold-ing,” to report each recipient’s identifyinginformation, the amount paid, and taxwithheld, if any. A copy of Form 1042–Sgenerally is required to be furnished to therecipient. The withholding and informa-tion reporting rules under chapter 3 facil-itate the compliance of foreign personswith their U.S. tax obligations.

2. Chapter 61 and section 3406

U.S. persons are subject to U.S. in-come tax at graduated rates on theirworldwide income, regardless of source,and irrespective of whether such U.S. per-sons reside within or without the UnitedStates. Generally, under chapter 61, apayor must report to the IRS certain pay-ments or transactions with respect to U.S.persons that are not exempt recipients(U.S. non-exempt recipients, generallyU.S. individuals, partnerships, estates, andtrusts) using the appropriate form in the1099 series (Form 1099) and furnish acopy to the payee. The scope of paymentssubject to reporting under chapter 61 de-pends, in part, on whether the payor is a

U.S. payor (as defined in § 1.6049–5(c)(5), which generally includes U.S.persons and their foreign branches, as wellas controlled foreign corporations withinthe meaning of section 957(a)) or non-U.S. payor (which is a payor other than aU.S. payor). For a U.S. payor, paymentssubject to reporting generally include cer-tain gross income, such as dividends andinterest (including short-term original is-sue discount and bank deposit interest),from U.S. and non-U.S. sources, and grossproceeds from, among other things, thedisposition of certain securities through abroker. A non-U.S. payor generally is re-quired to report only on payments of cer-tain U.S. source income and, under nar-row circumstances, foreign source incomeand gross proceeds from broker transac-tions.

Similar to the chapter 3 informationreporting and withholding regime, thechapter 61 regime provides comprehen-sive rules for a payor to identify theproper treatment of a payee for informa-tion reporting purposes, which generallyare based on documentation or informa-tion about the payee. Additionally, apayor that does not have sufficient infor-mation with respect to a payee to satisfyits reporting obligations under chapter 61,such as a U.S. taxpayer identificationnumber (TIN), may be required to backupwithhold on a payment made to the payeeat the statutory backup withholding rate(currently 28 percent) under section 3406.

A payor must file an annual income taxreturn on Form 945, “Annual Return ofWithheld Federal Income Tax,” to reportamounts withheld under section 3406. Apayor must also file a Form 1099 to reportpayments made to a U.S. non-exempt re-cipient and any amounts withheld undersection 3406. A copy of the Form 1099must be furnished to the payee.

These information reporting rules as-sist U.S. taxpayers in complying withtheir income tax obligations. The infor-mation reported under chapter 61 andsection 3406 is also an integral part ofIRS compliance efforts to identify U.S.taxpayers who fail to properly reportincome.


B. Chapter 4

On March 18, 2010, the Hiring Incen-tives to Restore Employment Act of 2010,Public Law 111–147 (the HIRE Act),added to the Code chapter 4 of SubtitleA, comprised of sections 1471 through1474 (commonly known as FATCA).Chapter 4 generally requires withhold-ing agents to withhold 30 percent onwithholdable payments (as defined in§ 1.1471–1(b)(136) and sometimes re-ferred to herein as chapter 4 withhold-able payments) made to FFIs that do notagree to report certain information to theIRS regarding their U.S. accounts (asdefined in § 1.1471–1(b)(134), whichgenerally includes accounts held byspecified U.S. persons and U.S. ownedforeign entities, as defined in § 1.1471–1(b)(141) and § 1.1471–1(b)(138), re-spectively), and on withholdable pay-ments made to passive non-financialforeign entities (passive NFFEs, as de-fined in § 1.1471–1(b)(94)) that do notprovide information on their substantialU.S. owners (as defined in § 1.1471–1(b)(128)) to withholding agents. Chap-ter 4 thus extends the scope of the U.S.information reporting regime to includeFFIs that maintain U.S. accounts. In or-der to avoid withholding tax under chap-ter 4, FFIs generally must agree toperform prescribed due diligence proce-dures to identify the chapter 4 status oftheir account holders, report informationon U.S. accounts, and, in certain cir-cumstances, withhold tax on certain ac-count holders. Chapter 4 also imposeson withholding agents certain withhold-ing, documentation, and information re-porting requirements with respect towithholdable payments made to passiveNFFEs. Amounts withheld under chap-ter 4 generally may be credited againstthe U.S. income tax liability of the ben-eficial owner of the payment to whichthe withholding is attributable, or re-funded to the extent there is an overpay-ment of tax.

On February 15, 2012, the IRS and theTreasury Department published a noticeof proposed rulemaking (REG–121647–10) in the Federal Register (77 FR 9022)addressing FATCA’s due diligence, with-holding, reporting, and associated require-ments. On October 24, 2012, the IRS and

the Treasury Department advance re-leased Announcement 2012–42, 2012–47IRB 561 (November 19, 2012) which an-nounced the intention to amend certainprovisions of the proposed chapter 4 reg-ulations in final regulations. On January28, 2013, the IRS and the Treasury De-partment published final regulations underchapter 4 (TD 9610) in the Federal Reg-ister (78 FR 5874), and on September 10,2013, published correcting amendmentsto these regulations (78 FR 55202) (finalchapter 4 regulations). The final chapter 4regulations include comprehensive duediligence, withholding, and reporting re-quirements for withholding agents andFFIs that were to begin on January 1,2014. On July 12, 2013, the IRS and theTreasury Department published Notice2013–43, 2013–31 I.R.B. 113, which an-nounced, among other things, that with-holding agents generally will be requiredto begin chapter 4 withholding on with-holdable payments made after June 30,2014, and that the requirements of partic-ipating FFIs (as defined in § 1.1471–1(b)(91), which includes reporting Model2 FFIs) under the agreement described in§ 1.1471–4 (FFI agreement) will beginafter June 30, 2014. On October 29, 2013,the IRS and the Treasury Department pub-lished Notice 2013–69 containing a draftof the FFI agreement, which an FFI mayenter into with the IRS in order to betreated as a participating FFI that is gen-erally exempt from FATCA withholdingunder chapter 4. Notice 2013–69 also pre-viewed some of the changes to the finalregulations that, among other things,would coordinate the information report-ing and backup withholding rules in chap-ter 61 and section 3406 with the rulesunder chapter 4. On January 13, 2014, theIRS and the Treasury Department pub-lished the final FFI agreement in RevenueProcedure 2014–13. In addition, tempo-rary regulations (temporary chapter 4regulations) amending the final chapter 4regulations are being published contem-poraneously with these temporary regula-tions. The temporary chapter 4 regulationsamend and revise the final chapter 4 reg-ulations, in part, to coordinate with thesetemporary regulations.

To address situations where foreignlaw would prevent an FFI from report-ing directly to the IRS the information

required by chapter 4, the Treasury De-partment, in collaboration with certainforeign governments, developed twoalternative model intergovernmentalagreements (IGAs) that facilitate the ef-fective and efficient implementation ofFATCA information reporting in a man-ner that removes foreign law impedi-ments to compliance, fulfills the infor-mation reporting objectives of chapter 4,and further reduces burdens on FFIs lo-cated in partner jurisdictions. Specifi-cally, a partner jurisdiction signing anagreement with the United States basedon the first model (Model 1 IGA) gen-erally agrees to adopt rules to require allrelevant FFIs located in the jurisdiction(reporting Model 1 FFIs, as defined in§ 1.1471–1(b)(114)) to identify U.S. ac-counts pursuant to due diligence rulesspecified in the agreement and to reportthe information required under FATCAfor U.S. accounts to the partner jurisdic-tion, which, in turn, will report the in-formation to the IRS. A partner jurisdic-tion signing an agreement based on thesecond model (Model 2 IGA) agrees todirect all relevant FFIs located in thejurisdiction (reporting Model 2 FFIs, asdefined in § 1.1471–1(b)(115)) to followthe terms of an FFI Agreement by re-porting information about U.S. accountsdirectly to the IRS in a manner consis-tent with the final chapter 4 regulations,except as expressly modified by theModel 2 IGA. Under a Model 2 IGA,the information reported to the IRS di-rectly by FFIs is supplemented bygovernment-to-government exchange ofinformation in order to overcome legalimpediments to direct FFI reportingwith respect to account holders that re-fuse to consent to having their informa-tion reported.

Under the final chapter 4 regulations, aparticipating FFI (including a reportingModel 2 FFI) generally is required to re-port information on U.S. accounts to theIRS on Form 8966, “FATCA Report,”including the account number, certainpayment information, and account bal-ance and, in the case of an account held bya U.S. person, the U.S. person’s name,address, and TIN, or, in the case of anaccount held by a U.S. owned foreignentity, the name of the entity and thename, address, and TIN of each substan-


tial U.S. owner. With respect to accountsheld by a U.S. person, an FFI may insteadelect to satisfy its chapter 4 reporting ob-ligations by electing to report on Form1099 the information required under chap-ter 61, as modified to include the accountnumber. A payor that makes the electionmust report under chapter 61 as if it werea U.S. payor and each holder of a U.S.account was a U.S. citizen and withoutregard to whether a payment was made onthe account.

Chapter 4 also requires withholdingagents to report on Form 8966 informa-tion on withholdable payments to pas-sive NFFEs with substantial U.S. own-ers. A copy of Form 8966 is notcurrently required to be furnished to theaccount holder or passive NFFE. Addi-tionally, a withholding agent that with-holds on a payment under chapter 4generally is required to file an annualincome tax return on Form 1042 to re-port the payment and amount of taxwithheld, and an information return onForm 1042–S to report, with respect toeach recipient or pool, the payment andamount of tax withheld. A copy of Form1042–S generally is required to be fur-nished to the recipient, except in caseswhere the chapter 4 rules allow pooledreporting on Form 1042–S.

The information reporting regime im-plemented under the final chapter 4 reg-ulations and the IGAs will enhance IRScompliance efforts by enlisting the FFIs,which are in the best position to provideinformation on their accounts, to reporton offshore accounts held by U.S. per-sons and by passive foreign entities withsubstantial U.S. owners. Like the Form1099 reporting that already occurs pri-marily with respect to domestic ac-counts, this new information reportingwill help the IRS identify U.S. taxpayersthat may have failed to properly reportand pay taxes on income earned or hid-den offshore. This new enforcement toolwill also strengthen the integrity of theU.S. voluntary tax compliance systemby reassuring compliant taxpayers thatthe IRS will be able to enforce our taxlaws on those who would attempt toavoid paying their fair share of taxesthrough the use of offshore accounts oroffshore entities.

Explanation of Provisions

I. Overview of Changes to Coordi-nate Chapter 4 (Including InformationReporting Provided by FFIs under anIGA) with the Regulations under Chap-ters 3 and 61

Payors of payments that are subject tothe information reporting and withholdingregimes under chapters 3, 4, and 61 andsection 3406 play an important role inU.S. tax compliance by providing infor-mation about payments made to, and in-come earned by, U.S. and foreign taxpay-ers. These temporary regulations provideguidance necessary to coordinate the reg-ulations under chapters 3 and 61 and sec-tion 3406 with the final chapter 4 regula-tions and the IGAs. The preexistingregimes under chapters 3 and 61 werealready coordinated to establish an inte-grated set of rules that enabled payors toidentify payments and payees subject toreporting and to determine which of thetwo information reporting and withhold-ing regimes, chapter 3 (information re-porting and withholding on foreign per-sons) or chapter 61 and section 3406(information reporting and backup with-holding on U.S. non-exempt recipients),applied to a particular payment. The reg-ulations under chapter 4 also providecomprehensive rules for withholdingagents and FFIs with respect to the iden-tification of payees and account holders,withholding, and information reporting.The IGAs similarly set forth a frameworkfor FFIs to identify account holders anddetermine which accounts must be re-ported as U.S. accounts. These temporaryregulations provide guidance coordinatingthe requirements under chapters 3 and 61and section 3406 with the requirementsunder chapter 4 in order to develop a moreintegrated set of rules that reduces bur-dens (including certain duplicative infor-mation reporting obligations) and con-forms the due diligence, withholding, andreporting rules under these provisions tothe extent appropriate in light of the sep-arate objectives of each chapter or section.

The remainder of this overview dis-cusses the three main areas in which thesetemporary regulations revise the final reg-ulations under chapters 3 and 61 and sec-tion 3406 in order to coordinate with thefinal chapter 4 regulations.

A. Identification of Payee Status

The documentation requirements (in-cluding the applicable presumptionrules in the absence of documentation)for withholding agents, participatingFFIs (including reporting Model 2 FFIs),and registered deemed-compliant FFIs (asdefined in § 1.1471–1(b)(111), which in-cludes reporting Model 1 FFIs) under thefinal chapter 4 regulations or an appli-cable IGA differ in certain respects fromthe corresponding documentation re-quirements for withholding agents underthe final chapter 3 regulations for deter-mining when chapter 3 withholding isrequired, and from the documentationrequirements of payors and middlemenunder the final chapter 61 regulationsfor determining when payments aremade to persons for which reporting isrequired. These temporary regulationsremove inconsistencies in the documen-tation requirements (including inconsis-tencies regarding presumption rules inthe absence of valid documentation)based, in part, on stakeholder commentsto the final chapter 4 regulations. Exam-ples of such coordination rules, dis-cussed in greater detail in sections II andIII later in this preamble, include rulesthat conform the requirements of a validwithholding certificate by requiring thata global intermediary identificationnumber (GIIN) be included on the formif the payee is an FFI (when applicable);provide for indefinite validity periodsfor certain withholding certificates andextended periods of validity for certaindocumentation; conform the rules forelectronic transmission of withholdingcertificates and statements; coordinaterules regarding the required content of awithholding statement provided by anFFI or flow-through entity; revise thepresumption rules applicable to joint ac-counts; and provide uniform limits onwhen a withholding agent will be treatedas having reason to know of a payee’sU.S. or foreign status.

B. Information Reporting with Respectto U.S. Persons

The final chapter 4 regulations re-quire participating FFIs (including re-porting Model 2 FFIs) and, when appli-


cable, registered deemed-compliantFFIs, but excluding reporting Model 1FFIs, to report their U.S. accounts onForm 8966, irrespective of the type ofpayments made to the account holders.This reporting and similar reporting re-ceived pursuant to Model 1 IGAs may insome cases be duplicative of the infor-mation required to be reported on Form1099 for payments made to the sameaccount holders if they are U.S. non-exempt recipients under chapter 61. Asdiscussed in the Background section ofthis preamble, FFIs may be able to mit-igate this duplication by electing to sat-isfy their chapter 4 reporting obligationswith respect to such accounts by report-ing on Form 1099 the information re-quired under chapter 61, as modified toinclude certain information required un-der chapter 4. This election, however, isnot expected to relieve burden for FFIsthat are required to report on U.S. ac-counts pursuant to local laws imple-menting a Model 1 IGA. As previewedin Notice 2013– 69, in order to furtherreduce burdens and mitigate instances ofduplicative reporting under chapters 4and 61 and based, in part, on stakeholdercomments requesting relief, these tem-porary regulations provide that non-U.S.payors that are also participating FFIs(including reporting Model 2 FFIs) orregistered deemed-compliant FFIs (in-cluding reporting Model 1 FFIs) are ex-cepted from the requirement to report onpayments made to accounts held by U.S.non-exempt recipients under chapter 61to the extent the payor reports on theaccount under chapter 4 or an applicableIGA.

These temporary regulations do notprovide a similar exception to reportingunder chapter 61 for U.S. payors that areFFIs required to report under chapter 4.While some of the information reportedon Form 8966 and Form 1099 may over-lap, there are also significant differ-ences. Most notably, the requirementunder chapter 61 to furnish a copy ofForm 1099 to the payee facilitates vol-untary compliance, and there is noequivalent requirement for payee state-ments under chapter 4. Moreover, U.S.payors generally have well-establishedsystems for reporting and are subject toreporting on a broader range of pay-

ments under chapter 61 than non-U.S.payors. In light of these differences, thebenefits of chapter 61 reporting by U.S.payors to the voluntary compliance sys-tem outweigh the reduction in burdenthat would be achieved by eliminatingthis reporting for U.S. payors that reporton the same account under chapter 4 oran applicable IGA.

These temporary regulations do pro-vide a limited exception to reporting un-der chapter 61 for both U.S. payors andfor non-U.S. payors that are FFIs re-quired to report under chapter 4 or anapplicable IGA with respect to pay-ments that are not subject to withhold-ing under chapter 3 or section 3406 andthat are made to an account holder thatis a presumed (but not known) U.S. non-exempt recipient. FFIs that are requiredto report under chapter 4 or an applica-ble IGA will provide information re-garding account holders who are pre-sumed U.S. non-exempt recipients.Moreover, such presumed U.S. non-exempt recipients may not actually beU.S. persons for whom the recipientcopy of Form 1099 would be relevant tofacilitate voluntary compliance. As a re-sult, the IRS and the Treasury Depart-ment believe that reporting under chap-ter 61 should be eliminated on paymentsto account holders who are presumedU.S. non-exempt recipients and forwhom there is FATCA reporting.

These temporary regulations also pro-vide a new exception from reporting un-der chapter 61 that will generally benefitU.S. persons acting as stock transferagents or paying agents of certain passiveforeign investment companies (PFICs).This exception is based, in part, on com-ments suggesting ways to reduce dupli-cative reporting with respect to PFICshareholders without significantly im-pacting taxpayer compliance. Com-ments indicated that, due to the mannerin which shareholders of PFICs aretaxed under sections 1291 through 1298,the current Form 1099 reporting per-formed by transfer agents or payingagents of a PFIC generally does notassist taxpayers in properly reportingPFIC income on their tax returns, al-though it could remind taxpayers thatthey may have had a taxable event withrespect to the PFIC. In light of the lim-

ited benefit of such 1099 reporting andthe burden reduction that would resultfrom its elimination, the IRS and theTreasury Department have concludedthat this reporting should be eliminatedto the extent the PFIC will report infor-mation with respect to the payment (orthe account to which the payment ismade) under chapter 4 or an applicableIGA.

C. Withholding

In certain cases, the payments subjectto withholding under chapter 4 are alsopayments that could be subject to eitherwithholding under chapter 3 or backupwithholding under section 3406. Thesetemporary regulations provide rules to ad-dress the potential for overwithholding toensure that payments are not subject towithholding under both chapters 3 and 4,or under both chapter 4 and section 3406.Additionally, as previewed in Notice2013–69, these temporary regulationsalso allow participating FFIs (includingreporting Model 2 FFIs) and registereddeemed-compliant FFIs to satisfy theirchapter 4 withholding requirements byelecting to continue to perform backupwithholding under section 3406 at thestatutory backup withholding rate (28 per-cent) in certain circumstances. A partici-pating FFI (including a reporting Model 2FFI) or registered deemed-compliant FFImay make the election to continue to ap-ply backup withholding under section3406 only if it complies with the require-ments of chapter 61 and section 3406 withrespect to the payment. Thus, for example,if an FFI is unable to report the informa-tion required with respect to a paymentbecause local law prohibits payee specificreporting without the consent of the ac-count holder and such consent is notgiven, the FFI cannot elect to report underchapter 61 or apply backup withholdingwith respect to such payment. When avail-able, the election allows payors that havepreexisting backup withholding systemsto continue to perform backup withhold-ing under such systems rather than toswitch between withholding systems un-der chapter 4 and section 3406.

In addition to amending and revisingthe regulations under chapters 3 and 61and section 3406 to coordinate with the


final chapter 4 regulations, other revi-sions are included in the temporary reg-ulations. For example, these temporaryregulations amend the regulations undersection 871 (and make conformingchanges to the withholding requirementsof the regulations under section 1441) inresponse to the HIRE Act’s repeal ofsection 163(f)(2)(B) with respect toregistration-required obligations andamendment of section 871(h)(2), theregulations under which provided wheninterest with respect to obligations notin registered form and targeted to for-eign markets qualified as deductible in-terest and portfolio interest.

II. Changes to Chapter 3 WithholdingProvisions

A. U.S. agent of a foreign person

Under § 1.1441–1(b)(2)(ii) of the finalregulations, a withholding agent making apayment to a U.S. person, and who hasactual knowledge that the U.S. person re-ceives the payment on behalf of a foreignperson, must treat the payment as made tothe foreign person, unless the U.S. personis a financial institution (as defined in§ 1.165–12(c)(1)(iv)) and the withholdingagent has no reason to believe the finan-cial institution will not comply with itsobligation to withhold. A similar payeeprovision is included in the chapter 4 reg-ulations. These temporary regulationsrevise the scope of U.S. persons that arefinancial institutions under § 1.1441–1(b)(2)(ii) and that the withholding agentmay treat as payees by defining the termfinancial institution consistent with thechapter 4 definition of a financial institu-tion, which, in addition to depository andcustodial institutions, includes certain in-vestment entities and certain insurancecompanies.

B. U.S. branch treated as a U.S. person

For purposes of the withholding re-quirements of chapter 3, a U.S. branch ofa regulated foreign bank or foreign insur-ance company (including a territory finan-cial institution) may agree to be treated asa U.S. person if it meets the requirementsof § 1.1441–1(b)(2)(iv) of the final regu-lations. Under the chapter 4 regulations, aU.S. branch of an FFI may be treated as

a U.S. person only if it is also a branch ofa participating FFI (including a reportingModel 2 FFI) or registered deemed-compliant FFI (including a reportingModel 1 FFI) and it meets the require-ments of § 1.1441–1(b)(2)(iv). To be con-sistent with the chapter 4 regulations,these temporary regulations add a newrequirement in § 1.1441–1(b)(2)(iv) that aU.S. branch of an FFI must be a branch ofa participating FFI or registered deemed-compliant FFI in order for it to be treatedas a U.S. person for purposes of chapter 3.In addition, these temporary regulationsclarify that a territory financial institutionthat is a flow-through entity receiving apayment on behalf of its owners or part-ners may also be treated as a U.S. person(in addition to a territory financial institu-tion that is acting as an intermediary onbehalf of third-parties). These temporaryregulations also provide a requirementthat if a U.S. branch is treated as a U.S.person for purposes of chapter 3, it mustalso be treated as a U.S. person for pur-poses of chapter 4. Moreover, as a resultof the account documentation require-ments in the chapter 4 regulations thatapply to a participating FFI (including areporting Model 2 FFI) that is not treatedas a U.S. person, these temporary regula-tions provide that a U.S. branch thatagrees to be treated as a U.S. person mustbe treated as a U.S. person with respect toall withholding agents from which it re-ceives payments.

Under § 1.1441–1(b)(2)(iv)(B)(3) ofthe final regulations, a withholding agentthat makes a payment to a U.S. branch ofa foreign person must treat the payment asa payment to a foreign person of incomeeffectively connected with a U.S. trade orbusiness if it cannot reliably associate thepayment with a withholding certificatefrom the branch or with other documen-tation from another person. These tempo-rary regulations add a requirement that awithholding agent obtain an employmentidentification number (EIN) from a U.S.branch before it may treat a payment tothe branch as effectively connected in-come. For payments to which this pre-sumption does not apply because no EINis provided, these temporary regulationsrequire that the withholding agent treat thepayment as made to a foreign person ofincome that is not effectively connected

with the conduct of a trade or business inthe United States. Further, these tempo-rary regulations include a similar provi-sion under § 1.1441–4 that requires awithholding agent to obtain an EIN from aU.S. branch in order to presume the pay-ment to the branch is effectively con-nected income. The requirement to obtainan EIN from a U.S. branch is consistentwith the requirements under chapter 4.

C. Other payees (authorized foreignagents)

Under § 1.1441–1(b)(2)(vi) of the finalregulations, an authorized foreign agent(as described in § 1.1441–7(c)(2) of thefinal regulations) of a withholding agent istreated as a payee. The chapter 4 regula-tions do not have a special provision totreat a foreign agent of a withholdingagent as a payee with respect to paymentsit collects on behalf of the withholdingagent. See § 1.1474–1(a)(3). Accord-ingly, these temporary regulations removethe rules under § 1.1441–1(b)(2)(vi) thattreat an authorized foreign agent as apayee, consistent with chapter 4, and theperson to whom the authorized agent (asdefined in § 1.1441–7(c)(2) of these tem-porary regulations) is making the paymenton behalf of the withholding agent istreated as a payee by applying the payeerules under § 1.1441–1(b)(2) to such per-son. A series of other revisions have beenmade by these temporary regulations withrespect to the use of authorized agentsconsistent with chapter 4 and are dis-cussed throughout this preamble. In par-ticular, see section II.S of this preamblefor a description of changes to a withhold-ing agent’s use of an authorized agent.

D. Reliable association withdocumentation

Section 1.1441–1(b)(2)(vii)(A) of thefinal regulations generally describes thesituations in which a withholding agentcan reliably associate a payment withvalid documentation to determine whenwithholding applies. Sections 1.1441–1(b)(2)(vii)(B) through (b)(2)(vii)(F) ofthe final regulations provide specialrules for situations in which a withhold-ing agent can reliably associate a pay-ment with documentation for a payment


made to a foreign intermediary (includ-ing a qualified intermediary). Thesetemporary regulations revise § 1.1441–1(b)(2)(vii)(B) through (b)(2)(vii)(F)and the examples under those sectionsconsistent with the documentation andwithholding requirements of chapter 4.

With respect to nonqualified interme-diaries, these temporary regulations re-vise the rules for reliable association toallow a withholding agent to associate awithholdable payment with a chapter 4withholding rate pool (as defined in§ 1.1441–1(c)(48)) consistent with thereliable association requirements ofwithholding statements provided bynonqualified intermediaries for chapter4 purposes. Accordingly, these tempo-rary regulations provide that a withhold-ing agent need not associate a paymentwith documentation for payees includedin any chapter 4 withholding rate pool.These temporary regulations also revisethe examples relating to when a with-holding agent can reliably associatepayments to nonqualified intermediarieswith valid documentation and clarifythat each example refers to a paymentthat is not a withholdable payment underchapter 4. These temporary regulationsadd an example under § 1.1441–1(e)(3)(iv)(C) that illustrates the re-quirements of a withholding statementprovided by a nonqualified intermediaryfor a withholdable payment under chap-ter 4 that is also a payment subject towithholding under chapter 3.

With respect to qualified intermediar-ies, these temporary regulations revise therules for reliable association to allow awithholding agent to associate a withhold-able payment with a chapter 4 withholdingrate pool (in addition to the withholdingrate pools provided for chapter 3 pur-poses) consistent with the reliable asso-ciation requirements of withholdingstatements provided by qualified inter-mediaries for chapter 4 purposes. Underthe revised rule, a withholding agentmay reliably associate a payment with achapter 4 withholding rate pool of U.S.payees in a case in which the qualifiedintermediary does not assume primaryForm 1099 and backup withholding re-sponsibilities. A withholding agent thatmakes a payment to a qualified interme-diary that does not elect to assume pri-

mary Form 1099 and backup withhold-ing responsibilities must continue toreliably associate the payment to thequalified intermediary with Forms W–9,“Request for Taxpayer IdentificationNumber and Certification,” for eachU.S. non-exempt recipient not includedin a chapter 4 withholding rate pool ofU.S. payees on whose behalf the quali-fied intermediary is receiving the pay-ment. The revised rule further providesthat a withholding agent that makes apayment to a qualified intermediary thatassumes primary Form 1099 and backupwithholding responsibilities and pri-mary withholding responsibility for pur-poses of both chapters 3 and 4 need notobtain any withholding statement fromthe qualified intermediary. These tem-porary regulations also add an examplein § 1.1441–1(e)(5)(v)(D) to illustratewhen a withholding agent can reliablyassociate payments made to qualified in-termediaries providing chapter 4 with-holding rate pools with respect to awithholdable payments under chapter 4.

E. Presumption rules and joint payees

Section 1.1441–1(b)(3) of the final reg-ulations provides presumption rules forwithholding agents that apply in the ab-sence of valid documentation and pro-vides that a payment made to an exemptrecipient (as determined based on theindicia of such status described in§ 1.6049 – 4(c)(1)(ii) or similar provi-sion under chapter 61 for a paymentother than interest) generally is pre-sumed made to a U.S. person unless oneof the indicia of foreign status describedin § 1.1441–1(b)(3)(iii)(A) is present.These temporary regulations modifywhat constitutes indicia of foreign statusfor purposes of the presumption ruleapplicable to exempt recipients. In par-ticular, these temporary regulations pro-vide that references to the terms corpo-ration or company in the name of thepayee are not indications that the payeeis an entity included on the list of perse corporations under § 301.7701–2(b)(8)(i) for purposes of treating thepayee as a foreign person. These tempo-rary regulations also remove the term apayment made outside the U.S. undernew § 1.1441–1(b)(3)(iii)(A)(1)(iv) and

replace it with the term a payment madewith respect to an offshore obligation.These temporary regulations further co-ordinate the regulations under chapters3 and 61 with the regulations underchapter 4 by making a similar change tothe term used in § 1.6049 –5(c)(1).

In addition, these temporary regula-tions add a presumption rule under§ 1.1441–1(b)(3)(iii)(A)(2) consistent withchapter 4 to provide that a payment that isalso a withholdable payment under chap-ter 4 made to specified classes of exemptrecipients (that is, generally those withoutan apparent U.S. status) will be presumedmade to a foreign payee absent documen-tary evidence establishing U.S. status.This presumption will not apply, however,to a withholdable payment made with re-spect to a preexisting obligation deter-mined by a withholding agent prior to July1, 2014, to be held by a U.S. exemptrecipient. A withholding agent will be al-lowed to apply this rule to all payments(including payments other than withhold-able payments) made with respect to anobligation.

These temporary regulations alsomodify the presumption rules applicableto payments made to certain payees tocoordinate with presumptions that applyunder the chapter 4 regulations. Thesetemporary regulations modify § 1.1441–1(b)(3)(iii) to coordinate with the pre-sumptions under § 1.1471–3(f) for with-holding agents making withholdablepayments subject to the presumptionrules of § 1.1441–1(b)(3) and chapter 4.Section 1.1441–1(b)(3)(iii) of the tem-porary regulations provides that in thecase of a withholdable payment underchapter 4, a withholding agent must ap-ply the presumption rules under§ 1.1471–3(f) to determine the payee’sstatus for chapter 4 purposes. Further-more, § 1.1441–1(b)(3)(v)(B) providesthat a withholding agent making a with-holdable payment to a foreign interme-diary should apply the presumptionrules of § 1.1471–3(f)(5) to determinewhether withholding applies underchapter 4 (instead of applying the pre-sumption rules in § 1.1441–1(b)(3)). Forexample, if a withholding agent makes awithholdable payment to a foreign inter-mediary and cannot reliably associatethe payment with documentation for a


payee, the withholding agent must applythe presumption rule of § 1.1471–3(f)(5) to treat the unidentified payee asa nonparticipating FFI (as defined in§ 1.1471–1(b)(82)) and withhold on thepayment at a 30-percent rate underchapter 4. Accordingly, no withholdingor reporting under chapter 3 would berequired to apply with respect to thepayment.

Consistent with the chapter 4 presump-tion rules, these temporary regulationsalso provide that if a withholding agentmakes a withholdable payment to jointpayees and one or more of the payees doesnot appear, by name or other informationin the account file, to be an individual,then the payment will be presumed to bemade to a nonparticipating FFI. See§ 1.1471–3(f)(7).

F. Grace period

Under § 1.1441–1(b)(3)(iv) of the finalregulations, a withholding agent may ap-ply the 90-day grace period provided un-der § 1.6049–5(d)(2)(ii) to amounts de-scribed in § § 1.1441–6(c)(2) and 1.1441–4(b)(2)(ii) to treat a payee as anundocumented foreign person, and with-hold under chapter 3, while waiting fornew documentation. The chapter 4 regu-lations allow a withholding agent to ap-ply a 90-day grace period following achange in circumstances during whichthe withholding agent may rely on thepayee’s claimed chapter 4 status. Thesetemporary regulations do not provide asimilar allowance for chapter 3 purposesto avoid potential deficits in withholdingthat could apply during the grace periodallowed under chapter 4 because of thedifferent objectives between chapters 3and 4. These temporary regulations re-move the requirement that a withholdingagent withhold on payments during thegrace period when a form is receivedby facsimile since these temporary reg-ulations also provide that such formsmay be generally relied upon under§ 1.1441–1(e)(4)(iv)(C).

G. Exemptions from chapter 3withholding

Section 1.1441–1(b)(4) of the final reg-ulations specifies certain types of pay-

ments that may be fully or partially ex-empt from withholding under chapter 3.To distinguish these exemptions fromthe withholding exemptions that applyfor purposes of chapter 4, these tempo-rary regulations add language to clarifythat the exemptions specified under§ 1.1441–1(b)(4) apply only for pur-poses of chapter 3 and that withholdingunder chapter 4 may still apply. In ad-dition, these temporary regulations addthe applicable sunset dates to the de-scriptions of payments that are portfoliointerest to coordinate with the elimina-tion of portfolio interest treatment forforeign-targeted bearer obligations un-der section 502 of the HIRE Act (forobligations issued after March 18, 2012)and the elimination of portfolio interesttreatment for foreign-targeted registeredobligations under § 1.871–14(e) for ob-ligations issued on or after January 1,2016.

H. Establishing foreign status underchapter 61

These temporary regulations add sec-tion 6050W to the list of provisions refer-enced in § 1.1441–1(b)(5) for which theforeign status of a payee may be estab-lished for chapter 61 purposes based onthe documentation provided for chapter 3purposes.

I. Curing late or incompletedocumentation

Section 1.1441–1(b)(2) of the final reg-ulations provides that a withholding agentmust reliably associate a payment withdocumentation by the date of the pay-ment. Notwithstanding the general ruleunder § 1.1441–1(b)(2), § 1.1441–1(b)(7) of the final regulations allows awithholding agent to rely on documen-tation obtained after the date of a pay-ment to avoid liability for underwith-holding during the period that thewithholding agent had no documenta-tion. The final regulations also specifythat the IRS may require a withholdingagent to obtain additional documenta-tion, however, when the IRS determinesthat delays in obtaining the documenta-tion affect its reliability. The chapter 4

regulations specify the documentationthat must be obtained by a withholdingagent after the date of a payment todetermine a payee’s chapter 4 status,depending on the length of the delay.Consistent with the chapter 4 regula-tions, these temporary regulations incor-porate the chapter 4 requirements fordocumentation obtained after the date ofthe payment (including documentationto support a claim for treaty benefits).These temporary regulations also add aprovision consistent with the chapter 4regulations that permits a withholdingagent to cure a withholding certificatecontaining inconsequential errors withrespect to a claim of status for chapter 3purposes.

J. Definitions

Section 1.1441–1(c) of the final regu-lations provides definitions used for pur-poses of the chapter 3 regulations. First,these temporary regulations modify thedefinitions in § 1.1441–1(c)(1) through(c)(30) as appropriate to provide consis-tency with certain definitions in the chap-ter 4 regulations. For example, the termfinancial institution in § 1.1441–1(c)(5) isamended to be consistent the term finan-cial institution in the chapter 4 regula-tions.

Second, these temporary regulationsalso add new terms that are referenced forchapter 3 purposes. These terms are addedto § 1.1441–1(c) of these temporary reg-ulations in order to help navigate the reg-ulations and to reflect more completelythe terms used throughout these regula-tions. Finally, these temporary regulationsalso add new definitions adopted fromchapter 4 that are relevant for chapter 3purposes. For example, § 1.1441–1(c)(48) of these temporary regulationsincorporates the term chapter 4 withhold-ing rate pool (modified as appropriate forchapter 3 purposes with respect to thechapter 4 withholding rate pool of U.S.payees) in order to provide for situationsin which intermediaries may providewithholding statements to withholdingagents that include these pools rather thanthe documentation otherwise required forchapter 3 purposes.


K. Withholding certificates

1. Beneficial Owner WithholdingCertificate

Section 1.1441–1(e)(2)(ii) of the finalregulations provides the requirements ofa valid beneficial owner withholdingcertificate. For a payment made to anentity that is a beneficial owner of awithholdable payment, these temporaryregulations provide that the withholdingcertificate must also include the chapter4 status of the entity on the same form tocoordinate with the requirements of thecertification provided for chapter 4 pur-poses.

2. Withholding Certificate Provided by aQualified Intermediary or NonqualifiedIntermediary

Sections 1.1441–1(e)(3)(ii) and (e)(3)(iii)of the final regulations provide the re-quirements of a valid qualified interme-diary (QI) or nonqualified intermediary(NQI) withholding certificate, respec-tively. These temporary regulationsamend these sections to include the in-formation required for purposes of chap-ter 4 with respect to a QI or an NQI thatreceives a withholdable payment. Addi-tionally, these temporary regulationsadd a requirement that a QI or an NQIcertify its chapter 4 status and provideits GIIN (if applicable) on the withhold-ing certificate. A GIIN will be required,for example, when a QI or an NQI isalso a participating FFI (including a re-porting Model 2 FFI) or a registereddeemed-compliant FFI (including a re-porting Model 1 FFI). These temporaryregulations also require a QI or an NQIto certify that it is fulfilling its reportingobligations under chapter 4 with respectto any U.S. persons included in a chap-ter 4 withholding rate pool of U.S. pay-ees on a withholding statement providedto the withholding agent.

3. Withholding Certificate Provided by aU.S. Branch or Territory FinancialInstitution

As discussed in section II.B of thispreamble, the requirements for a U.S.branch or territory financial institution

to be treated as a U.S. person under§ 1.1441–1(b)(2)(iv) are modified bythese temporary regulations consistentwith the chapter 4 regulations. To fur-ther coordinate with chapter 4, thesetemporary regulations amend § 1.1441–1(e)(3)(v), which provides the require-ments for a valid U.S. branch withhold-ing certificate provided by a U.S. branch(or territory financial institution treatedas a U.S. branch under § 1.1441–1(b)(2)(iv)) that is not the beneficialowner of the income, as well as therequirements for when a withholdingagent may treat the branch as a U.S.person. For example, a U.S. branch ofan FFI will be required to provide aGIIN on the withholding certificate tocertify to its chapter 4 status in order tobe treated as a U.S. person when receiv-ing a withholdable payment. In addition,a U.S. branch or territory financial insti-tution will be required to provide itsEIN on a withholding certificate in orderto be treated as a U.S. person.

4. Who May Sign WithholdingCertificates

The chapter 4 regulations provide ex-amples in § 1.1471–3(c)(6)(i) of personsauthorized to sign a withholding certifi-cate. To clarify the persons authorized tosign a withholding certificate for chapter 3purposes consistent with the chapter 4regulations, these temporary regulationsincorporate into § 1.1441–1(e)(4)(i) theexamples of persons described in§ 1.1471–3(c)(6)(i). The list of personsauthorized to sign a withholding certifi-cate includes an officer or director of acorporation, a partner of a partnership, atrustee of a trust, an executor of an estate,any foreign equivalent of the foregoingtitles, and any other person authorized inwriting to sign documentation on behalfof the individual or entity named on thecertificate.

5. Period of Validity of WithholdingCertificates

Section 1.1441–1(e)(4)(ii)(A) of the fi-nal regulations provides that a withhold-ing certificate or documentary evidencegenerally remains valid until the last dayof the third calendar year following the

year in which the withholding certificateis signed or documentary evidence is pro-vided to the withholding agent, or until achange in circumstances makes any infor-mation on the withholding certificate in-correct.

Under certain circumstances describedin § 1.1441–1(e)(4)(ii)(B) of the final reg-ulations, a withholding certificate or doc-umentary evidence may remain valid in-definitely until a withholding agent knowsor has reason to know of a change incircumstances that makes any informationon the withholding certificate incorrect.These circumstance include when a with-holding agent obtains a TIN for a payeeand reports a payment to the payee annu-ally on Form 1042–S, as well as withhold-ing certificates provided by certain foreignentities such as intermediaries, flow-through entities, foreign central banks,and integral parts of foreign governments.

These temporary regulations modify§ 1.1441–1(e)(4)(ii)(B) in appropriatecases to coordinate the chapter 3 regula-tions with the chapter 4 regulations andexpand the circumstances under which awithholding agent may treat documenta-tion as having indefinite validity for chap-ter 3 purposes. These temporary regula-tions also provide that certain types ofdocumentary evidence may remain validfor purposes of establishing a payee’s for-eign status for a longer period if the doc-umentary evidence contains an expirationdate that is beyond the three-year period,in which case the documentary evidencewill remain valid until the expiration date.Because of the changes to the rules forindefinite validity, these temporary regu-lations remove and replace the allowancethat permits a withholding agent to treat awithholding certificate with a TIN as be-ing valid indefinitely provided that thewithholding agent reports a payment eachyear on a Form 1042–S with respect to theperson providing the certificate.

Consistent with the chapter 4 regula-tions and in response to comments re-questing further transitional relief dur-ing the period when withholding agentswill be obtaining documentation for pre-existing accounts for both chapter 4 andchapter 3 purposes, these temporary reg-ulations provide that a withholding cer-tificate or documentary evidence thatwould otherwise expire under § 1.1441–


1(e)(4)(ii)(A) on December 31, 2013,will not be treated as invalid until Jan-uary 1, 2015, unless a change in circum-stances occurs before that date. See§ 1.1441–1(e)(4)(ii)(D).

6. Change in Circumstances

As discussed in section II.K.5 of thispreamble, under § 1.1441–1(e)(4)(ii)(D)of the final regulations, a withholdingagent may no longer rely on a withholdingcertificate or documentation when thewithholding agent knows or has reason toknow of a change in circumstances thatmakes the withholding certificate or doc-umentation incorrect. The regulations un-der chapter 4 adopt a similar requirementfor documentation provided for chapter 4purposes and further provide that an inter-mediary (including a U.S. branch or terri-tory financial institution not treated asa U.S. person) that becomes aware of achange in circumstances with respect to aperson for whom it furnishes documenta-tion to a withholding agent must notify thewithholding agent within 30 days of thedate the intermediary knows or has rea-son to know of the change in circum-stances. Consistent with the chapter 4regulations, these temporary regulationsrevise § 1.1441–1(e)(4)(ii)(D) to adoptthis 30-day requirement.

7. Retention of Withholding Certificatesor Documentary Evidence

Section 1.1441–1(e)(4)(iii) of the finalregulations requires a withholding agentto retain a withholding certificate or doc-umentation for as long as it may be rele-vant for purposes of determining the with-holding agent’s liability under section1461. This paragraph is amended to beconsistent with retention requirements ap-plicable to a withholding agent underchapter 4 by permitting a withholdingagent to retain an original, certified copy,or scanned version of a withholding cer-tificate. A withholding agent may also re-tain a withholding certificate by othermeans (such as microfiche) provided thatthe withholding agent is able to a producea hard copy of the form or document andmaintains a record of the receipt of thedocument. For documentary evidence,this paragraph cross references the reten-

tion requirements provided in § 1.6049–5(c)(1) (as amended by these temporaryregulations), which coordinate with chap-ter 4 by permitting a withholding agent toretain a photocopy of the documentaryevidence.

8. Electronic and Other Transmission ofForms and Documentation

The chapter 4 regulations required awithholding agent to authenticate theidentity of a person furnishing a with-holding certificate or documentary evi-dence in the form of a facsimile orscanned documentation. In response tocomments, these temporary regulationsdo not incorporate this requirement.These temporary regulations insteadprovide that a withholding agent mayrely on a signed form or a documentreceived by facsimile or scanned andsent by e-mail unless the withholdingagent knows that the person transmittingthe form or documentary evidence is notauthorized to do so. This rule is intendedto apply to a withholding agent thatdoes not receive the document as partof a system established by a withholdingagent described in § 1.1441–1(e)(4)(iv)(B),the requirements for which are unchangedby these temporary regulations except fora provision clarifying that the IRS mayprovide written guidance to its examinersregarding the requirements acceptable forthe system. This same rule applies forchapter 4 purposes under a revision madeby the temporary chapter 4 regulations (tocross-reference this paragraph).

9. Substitute Certification Forms

A withholding agent may substitute itsown certification form for an official FormW–8 or Form 8233, “Exemption FromWithholding on Compensation for Inde-pendent (and Certain Dependent) PersonalServices of a Nonresident Alien Individ-ual,” so long as the substitute form satis-fies the requirements described in§ 1.1441–1(e)(4)(vi) of the final regula-tions. Consistent with the chapter 4 reg-ulations, these temporary regulations al-low a withholding agent to use asubstitute form written and completed ina language other than English, providedthat an English translation is available

upon request. In addition, these tempo-rary regulations clarify that, consistentwith the current regulations, a substituteform may omit provisions that are notrelevant to the transaction or purpose forwhich the form is furnished, and specif-ically provide that a substitute formneed not contain a chapter 4 status for apayee when the withholding agent is notrequired to determine a payee’s chapter4 status. See § 1.1471–3(c)(6)(v). Al-though the chapter 4 regulations alsoallow a withholding agent to rely on anon-IRS form in lieu of Forms W– 8 orsubstitute forms for a payee who is anindividual, this provision is not incorpo-rated into these temporary regulationsfor chapter 3 purposes. The IRS and theTreasury Department have determinedthat an official Form W– 8 or Form 8233(or acceptable substitute form or accept-able documentary evidence when per-mitted) should be required for a pay-ment subject to chapter 3 withholding.

10. TIN Requirement for WithholdingCertificate

In the circumstances described in§ 1.1441–1(e)(4)(vii) of the final regula-tions, a withholding certificate must in-clude a TIN in order for a withholdingagent to treat the withholding certificate asvalid for purposes of chapter 3, such as awithholding certificate provided for pur-poses of claiming treaty benefits (otherthan treaty benefits with respect to pub-licly traded securities) or a withholdingcertificate provided by a beneficial ownerclaiming the income is effectively con-nected with a U.S. trade or business. Toupdate these circumstances to reflect guid-ance issued for purposes of chapter 3 afterthe effective date of the current regula-tions, these temporary regulations add tothe list of withholding certificates requir-ing a TIN a withholding certificate pro-vided by a withholding foreign trust or byan entity acting as a qualified securitieslender with respect to a substitute divi-dend paid in a securities lending or sim-ilar transaction. See Notice 2010 – 46,2010 –24 IRB 757 (June 14, 2010).These temporary regulations also pro-vide in § 1.1441– 6(c)(2) an exceptionfrom the TIN requirement for a with-holding certificate on which a beneficial


owner claims treaty benefits and insteadprovides its foreign TIN, as an alterna-tive to providing a U.S. TIN for thispurpose.

11. Coordinated Account InformationSystems

Section 1.1441–1(e)(4)(ix) of the finalregulations generally requires a withhold-ing agent that is a financial institution toobtain documentation (including with-holding certificates) on an account-by-account basis subject to certain excep-tions. Section 1.1441–1(e)(4)(ix)(A) ofthe final regulations allows a withholdingagent to rely on documentation providedby a customer for another account held atthe same branch location. If the accountsare not located at the same branch loca-tion, § 1.1441–1(e)(4)(ix)(A) of the finalregulations allows a withholding agent torely on documentation for an account heldat another branch location of the with-holding agent or a related person providedthat the withholding agent and related per-son are part of the same universal accountsystem or a system described in § 1.1441–1(e)(4)(ix)(A)(3).

The final chapter 4 regulations gener-ally incorporate the provisions of§ 1.1441–1(e)(4)(ix)(A) of the final regu-lations but modify certain of the require-ments for account systems. The finalchapter 4 regulations require that the with-holding agent treat the accounts as con-solidated obligations, a requirement notdescribed in the final regulations, for doc-umentation shared at the same branch lo-cation or through a universal account sys-tem. For universal account systems andshared account systems, the final chapter 4regulations require that the withholdingagent and the branch with which it issharing information be part of the sameexpanded affiliated group (rather than berelated persons as under the final regula-tions). In addition, the final chapter 4 reg-ulations require a withholding agent toproduce upon request any documentationupon which it relies for purposes of deter-mining the status of the payee and clarifythat a withholding agent is liable for anyunderwithholding attributable to failing toassign the correct status to the payeebased on the available information. Fi-nally, although the final chapter 4 regula-

tions do not require a withholding agent todocument how and when it accesses theshared account system, the withholdingagent is required to be able to obtain acopy of the documentation.

To provide consistent standards forwhen withholding agents may sharedocumentation for purposes of bothchapters 3 and 4, these temporary regu-lations delete the existing text of§ 1.1441–1(e)(4)(ix) and replace it witha cross-reference to the requirements fordocumentation sharing in the final chap-ter 4 regulations. These temporaryregulations also replace § 1.1441–1(e)(4)(ix)(A)(4) with the rule under thechapter 4 regulations for documentationcollected by an agent of the withholdingagent. The revised requirements applyto a shared account system other than ashared account system in use by a with-holding agent as of July 1, 2014. Section1.1441–1(e)(4)(ix)(B) allows for a sin-gle withholding certificate for shares inmultiple mutual funds that have a com-mon investment advisor or commonprincipal underwriter with respect toshares owned or acquired in any of thefunds. The chapter 4 regulations addressthis issue to achieve a similar resultthrough the general principal-agent ruleof § 1.1471–3(c)(9)(i), which is incor-porated into these temporary regula-tions.

The final regulations provide other ex-ceptions to the requirement to obtain awithholding certificate for each accountthat allow a withholding agent to rely on acertification from a U.S. broker statingthat the broker holds beneficial ownerwithholding certificates of payees forwhich the broker acts as an agent withrespect to any readily tradable instrument.The final chapter 4 regulations also pro-vide a similar exception that permits awithholding agent to rely on a certifica-tion from a qualified intermediary inaddition to a U.S. broker. To coordinatewith the final chapter 4 regulations,these temporary regulations add a pro-vision allowing a withholding agent torely for chapter 3 purposes on a similarcertification from a qualified intermedi-ary that receives a payment from thewithholding agent.

With respect to accounts acquired inmergers and bulk acquisitions for value,

these temporary regulations add a new§ 1.1441–1(e)(4)(ix)(D) to clarify that awithholding agent may rely on valid doc-umentation collected by a predecessor ortransferor, consistent with the rule thatapplies for purposes of chapter 4. Alsoconsistent with the chapter 4 regulations,these temporary regulations allow a with-holding agent that acquires accounts in amerger or bulk acquisition for value froman unrelated person to rely on the prede-cessor’s or transferor’s determination ofan account holder’s chapter 3 status fora transition period of six months, subjectto certain requirements that apply at theend of the transition period. However,this provision is modified to require thepredecessor or transferor to be a U.S.withholding agent or qualified interme-diary rather than a participating FFI asprovided in the chapter 4 regulations inlight of the different purposes of chap-ters 3 and 4.

Finally, the final chapter 4 regulationsallow a withholding agent to rely upondocumentation collected by a third-partydata provider in order to establish thechapter 4 status of an entity. The IRS andthe Treasury Department do not believethat this allowance is appropriate for pur-poses of chapter 3 and instead expectwithholding agents to utilize the otherdocument sharing provisions discussedearlier in this section II.K.11. However,see § 1.1441–7 of these temporary regu-lations for rules permitting a withholdingagent (acting as a principal) to rely ondocumentation collected by an agent, sub-ject to the qualification that as principal itremains liable for its agent’s performance.

L. Withholding statement of anonqualified intermediary

1. General Requirements Other thanAlternative Procedures

Section 1.1441–1(e)(3)(iv) of the finalregulations describes the requirements ofa withholding statement provided by anNQI (NQI withholding statement) to awithholding agent with respect to re-portable amounts (including amountssubject to chapter 3 withholding). Thisprovision is amended by these tempo-rary regulations to coordinate with thechapter 4 requirements for withholding


statements when an NQI receives awithholdable payment by permitting theNQI to include chapter 4 withholdingrate pools on the statement in lieu ofpayee-specific information. To coordi-nate with the chapter 4 requirements forreporting on Form 1042–S, this provi-sion is further modified to require anNQI receiving a withholdable paymentto provide on the withholding statementthe chapter 4 status of each payee that isa foreign person not included in a chap-ter 4 withholding rate pool.

For reportable amounts received by anNQI (including reportable amounts thatare not withholdable payments underchapter 4), the requirements for an NQIwithholding statement are modified tospecify when an NQI may provide to awithholding agent a withholding state-ment that includes an allocation of thepayment to a chapter 4 withholding ratepool of U.S. payees in lieu of providingForms W–9 for each U.S. non-exempt re-cipient and identifying each such recipienton the statement. For this purpose, an NQIthat is a participating FFI or registereddeemed-compliant FFI may include a U.S.payee in the pool to the extent permittedunder § 1.6049–4(c)(iii), which coordi-nates with the allowance for when an NQIthat has reporting obligations under chap-ter 4 need not also report under chapter 61with respect to a payment.

These temporary regulations also addan example to illustrate when a withhold-ing agent can reliably associate a with-holdable payment with a chapter 4 with-holding statement that allocates thepayment (or portion of the payment) toone or more chapter 4 withholding ratepools.

2. Alternative Procedures for an NQIWithholding Statement

An NQI generally is required to pro-vide payee-specific information (treat-ing a chapter 4 withholding rate pool asa payee) to a withholding agent at thetime of payment, as described in sectionII.L.1 of this preamble. However, thealternative procedures described in§ 1.1441–1(e)(3)(iv)(D) of the final reg-ulations permit an NQI to provide awithholding agent with pooled informa-tion (by withholding rate) prior to re-

ceiving the payment if the NQI willprovide information sufficient to allo-cate the payment to specific payees byJanuary 31 of the year following thepayment. These temporary regulationsretain the alternative procedures but ex-pand the circumstances under which theprocedures may be used in order to co-ordinate with when a chapter 4 with-holding rate pool may be included on awithholding statement provided by anNQI. Section 1.1441–1(e)(3)(iv)(D) ofthe final regulations is modified in thecase of an NQI receiving a reportableamount that is also a chapter 4 withhold-able payment to permit the NQI to in-clude payees that are nonparticipatingFFIs or recalcitrant account holders in-cludable in a chapter 4 withholding ratepool in a single withholding rate poolthat includes payees subject to with-holding under chapter 3 at a 30-percentrate for reporting to a withholding agent.Similarly, payees includable in a chapter4 withholding rate pool of U.S. payeesmay be included in a zero-percent ratepool with other payees to which nowithholding applies. Thus, an NQI mayprovide withholding rate pools under al-ternative procedures irrespective ofwhether withholding is applied underchapter 3 or chapter 4 or when withhold-ing is excepted under chapters 3 and 4and section 3406.

Because of the allowance to includepayees in withholding rate pools under thealternative procedures for purposes ofboth chapters 3 and 4, these temporaryregulations add a provision that, in ad-dition to the allocation information re-quired to be provided by the NQI foreach payee for chapter 3 purposes byJanuary 31 following the year of thepayment, the NQI must provide thewithholding agent with sufficient infor-mation to allocate the income to eachapplicable chapter 4 withholding ratepool and may treat each such pool as apayee for the purpose of determiningwhether an NQI has provided a with-holding agent with sufficient informa-tion to allocate the income by such date.See § 1.1441–1(e)(3)(iv)(D)(3) and(e)(3)(iv)(D)(4). Any payments allo-cated to a specific payee for whom doc-umentation has not been provided shallbe allocated to an undocumented payee

in accordance with the presumptionrules, and these temporary regulationsadd a reference to the presumption rulein § 1.1471–3(f)(5) for a case in whichan NQI fails to allocate a withholdablepayment in the time prescribed.

3. Electronic Transmission of NQIWithholding Statement

As discussed in section II.K.8 of thispreamble, these temporary regulationsprovide new procedures allowing the elec-tronic transmission of withholding certif-icates and documentary evidence. Section1.1441–1(e)(3)(iv)(B) is amended to pro-vide that a withholding statement mayalso be transmitted by e-mail or facsimileunder the same procedures provided in§ 1.1441–1(e)(4)(iv)(C) for withholdingcertificates and documentary evidencewhen the statement is not provided as partof a system established by the NQI orwithholding agent.

M. Qualified intermediaries

1. In General

Section 1.1441–1(e)(5) of the final reg-ulations provides rules for entering into aqualified intermediary agreement (QIagreement) with the IRS, generally de-scribes the requirements of the QI agree-ment, provides the requirements of a QIwithholding statement, and establishes thepersons eligible to enter into the QI agree-ment. Consistent with the intent of chapter4 that a QI’s reporting of U.S. accountholders be expanded from the present re-quirements to report as a payor or middle-man for chapter 61 purposes, these tem-porary regulations provide that, in orderto enter into a QI agreement, a QI that isan FFI must assume the chapter 4 re-porting obligations of a participatingFFI (including a reporting Model 2 FFI),registered deemed-compliant FFI (in-cluding a reporting Model 1 FFI), or anFFI treated as certified deemed-compliant pursuant an applicable IGAand that is subject to due diligence andreporting requirements with respect toits accounts similar to those of regis-tered deemed-compliant FFIs under thechapter 4 regulations. Under this newrequirement, a QI will be required to


report its U.S. accounts without regardto whether the QI designates the accountas an account covered by the QI agree-ment (as applicable under the current QIagreement). Subject to IRS approval, anNFFE may also become a QI for pur-poses of presenting claims of benefitsunder an income tax treaty on behalf ofits shareholders or when acting as anintermediary for persons other than itsshareholders.

Section 1.1441–1(e)(5)(iii) of thesetemporary regulations reflects changes tothe requirements of the QI agreement.Specifically, these temporary regula-tions provide that the QI agreement willprovide the requirements for a QI actingas a qualified securities lender with re-spect to the payment of U.S. source sub-stitute dividends. Moreover, to providecompliance procedures generally similarto those applicable to a participating FFIunder chapter 4, the QI agreement willprovide that the QI must establish pro-cedures to ensure compliance with itsagreement, arrange for a periodic re-view, and provide certain factual infor-mation to the IRS. Furthermore, in ap-propriate cases, the IRS may require thatan approved auditor perform reviewprocedures concerning the QI’s compli-ance with its QI agreement in addition tothe review procedures performed underthe periodic review. In such a case, theIRS may conduct a review of the audi-tor’s findings.

2. Assumption of Primary WithholdingResponsibility

The current regulations provide that aQI may assume the primary obligationto withhold, deposit, and report amountsunder chapter 3 or under chapter 61 andsection 3406 (or under both chapters 3and 61, including backup withholdingunder section 3406). These temporaryregulations coordinate with chapter 4with respect to both a QI’s chapter 3 andchapter 61 requirements. First, to coor-dinate with the withholding require-ments of chapter 4, a QI assuming pri-mary withholding responsibility underchapter 3 with respect to an account willalso be required to assume such respon-sibility for purposes of chapter 4 withrespect to the account. Second, a QI that

is an FFI may represent on a withhold-ing certificate provided to a withholdingagent that it assumes primary chapter 61reporting and section 3406 responsibil-ity for an account that it maintains if theQI complies with its obligations as aparticipating FFI (including a reportingModel 2 FFI) or registered deemed-compliant FFI (including a reportingModel 1 FFI) under the chapter 4 regu-lations or an applicable IGA. See§ 1.6049 – 4(c)(4)(i) and (c)(4)(ii) ofthese temporary regulations for when anFFI that reports an account under chap-ter 4 is not required to report a paymentmade to the account under chapter 61.

3. Withholding Statement Provided bya QI

Section 1.1441–1(e)(5)(v) of the finalregulations provides the requirements of awithholding statement provided by a QI.These temporary regulations permit a QIthat assumes primary reporting and with-holding responsibility under chapters 3, 4,and 61 and section 3406 to provide anintermediary withholding certificate with-out attaching a withholding statement (in-cluding under the circumstances describedabove when a QI reports under chapter4). However, if a QI does not assumeprimary reporting and withholding re-sponsibility under chapters 3 and 4 orunder chapter 61 and section 3406, thenthe QI is required to provide a withhold-ing statement. A QI may provide a with-holding statement to allocate the pay-ment to a chapter 4 withholding ratepool of U.S. payees to the extent per-mitted for a NQI when the QI does notassume primary chapter 61 reportingand backup withholding responsibilities.See section II.L.1 of this preamble.

These temporary regulations modifythe requirements for a withholdingstatement provided by a QI with respectto a withholdable payment. These tem-porary regulations permit pooled infor-mation (for each chapter 3 withholdingrate pool by applicable chapter 4 exemp-tion code based on Form 1042–S and therelated instructions) with respect to for-eign payees subject to withholding un-der chapter 3 and not subject to chapter4 withholding. For payments to whichchapter 4 withholding applies, these

temporary regulations permit a QI thatis an FFI to report chapter 4 withholdingrate pools for nonparticipating FFIs andrecalcitrant account holders on an FFIwithholding statement (as described in1.1471–3(c)(3)(iii)(B)(2)), and, for a QIother than an FFI, permit the QI to pro-vide a chapter 4 withholding statementto report payees that are nonparticipat-ing FFIs in a chapter 4 withholding ratepool. The revised QI agreement will fur-ther provide the circumstances in whicha QI may provide a chapter 4 withhold-ing rate pool on a withholding state-ment, including a chapter 4 withholdingrate pool provided to the QI by anotherintermediary or flow-through entity.

4. Electronic Transmission of QIWithholding Statement

These temporary regulations providethe same allowances for the electronictransmission of a QI withholding state-ment as for an NQI withholding state-ment. See section II.L.3 of this preambleregarding the electronic transmission ofan NQI withholding statement.

N. Coordination of § 1.1441–3 withchapter 4 withholding

Section 1.1441–3 of the final regula-tions provides rules for determining theamount to be withheld for purposes ofsection 1441. These temporary regula-tions add provisions to coordinate with-holding under chapters 3 and 4 by provid-ing that when a payment is both a chapter4 withholdable payment and an amountsubject to withholding under chapter 3, awithholding agent must apply the with-holding provisions of chapter 4 to deter-mine whether withholding is required un-der chapter 4 (and does not need towithhold under chapter 3 to the extent thatit has withheld under chapter 4). The co-ordination rule cross references § 1.1474–6(b)(1), which allows a withholding agentto credit withholding applied on a pay-ment under chapter 4 against any tax lia-bility due under chapter 3 with respect tosuch payment, and cross references§ 1.1474–6(b)(2) for determining whenwithholding is considered applied by awithholding agent.


These temporary regulations do not,however, include provisions specificallyaddressing a credit for taxes withheld un-der chapter 4 in a series of securities lend-ing transactions using the same underly-ing security. Notice 2010–46 outlines aproposed regulatory framework to addresspotential overwithholding that may occurin such transactions and provides transi-tion rules applicable until the issuance ofregulations to ensure that the withholdingdoes not exceed 30 percent in the aggre-gate. Under the transition rules, a with-holding agent that is obligated to make asubstitute dividend payment pursuant to asecurities lending transaction may pre-sume that U.S. tax has been paid in anamount equal to the amount implied bythe net payment received by the withhold-ing agent provided certain conditions aresatisfied, including that the withholdingagent does not know or have reason toknow that tax was not withheld and de-posited or paid. For purposes of the tran-sition rules and pending further guidance,the IRS will permit a withholding agent toapply this presumption absent informationon whether the net payment resulted fromtaxes withheld under chapter 3 or chapter4. The IRS will, however, treat a with-holding agent as having reason to knowthat the tax was not withheld and depos-ited or paid to the extent that (i) the with-holding agent knows that withholding wasapplied under chapter 4 to a dividend orsubstitute dividend paid to a nonpartici-pating FFI (which may be the withholdingagent) that is entitled to a refund of thetax, and (ii) the nonparticipating FFI par-ticipated in such transaction with a pur-pose of reducing the aggregate amountof gross basis tax that would have oth-erwise been due had it not participatedin the series of transactions. See section1474(b)(2).

Section 1.1441–3(c)(4) of the final reg-ulations provides rules that coordinatewithholding under section 1441 (or 1442or 1443) with withholding under section1445 on distributions by U.S. real prop-erty holding companies and real estateinvestment trusts. Under these temporaryregulations, the coordination rules also ap-ply to distributions made by qualified in-vestment entities (as defined under section897(h)(4)). These temporary regulationsalso clarify that to the extent a payment is

subject to withholding under section 1441(rather than section 1445) under these co-ordination rules, a withholding agent mustapply the withholding provisions of chap-ter 4 before determining whether with-holding is required under chapter 3 (and,therefore, will not need to withhold underthis section if withholding is applied un-der chapter 4).

Section 1.1441–3(d) of the final regu-lations permits a withholding agent mak-ing a payment of an undetermined amountof income to make a reasonable estimateof the amount from U.S. sources or of thetaxable amount and place a correspondingamount in escrow until the amount fromU.S. sources or the taxable amount can bedetermined. To coordinate with the chap-ter 4 regulations, this rule is modified tostate that a withholding agent may retain30 percent of a payment of an undeter-mined amount of income in escrow untilthe earlier of the date that the amountfrom U.S. sources or the taxable amountcan be determined or one year from thedate the amount is placed in escrow. Uponsuch date, the withholding becomes dueor, to the extent that withholding underchapter 3 has been determined not to ap-ply, the escrowed amount must be paid tothe payee.

O. Presumption rule for payments toU.S. branches and removal oftransitional documentation rules

Section 1.1441–4 of the final regula-tions provides an exception to withhold-ing under section 1441 on income that is(or is deemed to be) effectively connectedwith the conduct of a trade or businesswithin the United States. A presumptionrule under the final regulations allows awithholding agent to treat a payment ofincome as effectively connected incomewhen it is made to a U.S. branch of aforeign bank or foreign insurance com-pany described in § 1.1441–2(b)(iv)(A).These temporary regulations revise thepresumption rule to require a withhold-ing agent to obtain an EIN for a U.S.branch before it may presume the pay-ment to the U.S. branch is a payment ofeffectively connected income. In addi-tion, these temporary regulations re-move the transitional documentation

provisions that applied to paymentsmade before January 1, 2001.

P. Coordination of § 1.1441–5 withchapter 4 withholding and removal oftransitional documentation rules

These temporary regulations revise§ 1.1441–5 to coordinate with the doc-umentation, withholding, and reportingrequirements of chapter 4 that apply toU.S. and foreign partnerships, trusts,and estates, and they remove a transitionrule applicable to withholding certifi-cates.

Section 1.1441–5(b) of the final regu-lations prescribes withholding rules forU.S. partnerships, trusts, and estates withrespect to their partners, beneficiaries,and owners. These temporary regula-tions add a coordination rule in§ 1.1441–5(b) to clarify that a U.S. part-nership, trust, or estate that makes apayment of U.S. source FDAP incomethat is a withholdable payment subjectto chapter 4 withholding must apply thespecial rules included in the final chap-ter 4 regulations for determining whenan amount that is a chapter 4 withhold-able payment is treated as paid to apartner, beneficiary, or owner. Thesetemporary regulations also cross refer-ence the general rule coordinating with-holding under chapter 3 with withhold-ing under chapter 4 to clarify that, forpayments included in the gross incomeof a partner, beneficiary, or owner, awithholding agent must apply the with-holding provisions of chapter 4 beforedetermining whether withholding is re-quired under chapter 3 (and, therefore,does not need to withhold under thissection when withholding is applied un-der chapter 4).

Sections 1.1441–5(c) and (e) of thefinal regulations include requirementsfor withholding agents to determine thestatus of a payee of a payment made toa foreign partnership or to a foreignsimple or grantor trust, including therequirements for withholding certifi-cates and withholding statements pro-vided by such entities, the requirementsfor determining when reduced withhold-ing applies with respect to paymentsmade to such entities, and the presump-tion rules that apply in the absence of


reliable documentation. These tempo-rary regulations amend § 1.1441–5(c) and (e) to include revised rules fordetermining the status of a partner, ben-eficiary, or owner as a payee of a pay-ment (and when reduced withholdingapplies). These temporary regulationsalso amend § 1.1441–5(c) and (e) con-sistent with the allowance in the chapter4 regulations for both nonqualified andqualified intermediaries that are foreignpartnerships or trusts to provide with-holding statements that report chapter 4withholding rate pools instead of spe-cific payee information. In addition,these temporary regulations amend§ 1.1441–5(c) and (e) to coordinatewithholding under chapter 3 with with-holding applied under chapter 4 on pay-ments made to foreign partnerships andtrusts by permitting a withholding agentthat has withheld on a withholdable pay-ment made to the partnership or trustunder chapter 4 to not also withhold onthe payment under chapter 3. The part-nership or trust is also not required towithhold with respect to a partner, ben-eficiary, or owner if withholding underchapter 4 was applied by a withholdingagent based on the status of the partner-ship or trust for chapter 4 purposes.

Sections 1.1441–5(c) and (e) of the fi-nal regulations also describe the require-ments of withholding foreign partnerships(WPs) and withholding foreign trusts(WTs). These temporary regulations re-vise these rules to coordinate with therequirements applicable to these entitiesunder the final chapter 4 regulations byrequiring WPs and WTs to assume chap-ter 4 withholding responsibilities (in ad-dition to their chapter 3 withholding re-sponsibilities) with respect to theirpartners, beneficiaries, and owners. Thetemporary regulations also add the re-quirement that a WP or WT that is anFFI obtain status as a participating FFI,registered deemed-compliant FFI, or anFFI treated as a deemed-compliant FFIunder an applicable IGA that is subjectto due diligence and reporting require-ments with respect to its accounts sim-ilar to those applicable to a registereddeemed-compliant FFI under § 1.1471–5(f)(1). The requirements for withhold-ing certificates provided by WPs andWTs are amended by these temporary

regulations to provide that an FFI that isa WP or WT receiving a withholdablepayment must include its chapter 4 sta-tus and GIIN (if applicable) on the cer-tificate, in addition to its WP-EIN orWT-EIN. The temporary regulationsalso reference certain compliance-related provisions that will be includedin the revised WP and WT agreements.

The presumption rules for determin-ing a payee’s status applicable to for-eign partnerships and trusts in § 1.1441–5(c) and (e) of the final regulations areamended by these temporary regulationsconsistent with the chapter 4 presump-tion rules that apply to a withholdablepayment made to a partnership or trust.Section 1.1441–5(e)(6)(ii) of the finalregulations is also amended to provide arevised presumption rule for determin-ing the classification of a foreign trust.The current presumption rule generallyprovides that a withholding agent maypresume a foreign entity to be a complextrust when it cannot determine the statusof the trust. Under the revised rule, awithholding agent that has the U.S. TINand U.S. address for the settlor of a trustmust presume such trust to be a U.S.grantor trust when the settlor is a U.S.person. In such a case, the withholdingagent would issue an applicable Form1099 to the U.S. settlor rather than with-hold and report the payment under therequirements of chapter 3.

These temporary regulations removethe transition rule in § 1.1441–5(g)(2), forwithholding certifications obtained beforeJanuary 1, 2001.

Q. Coordination with chapter 4withholding for payments subject toreduced withholding under an incometax treaty

Section 1.1441– 6 of the final regula-tions specifies the conditions underwhich withholding under sections 1441,1442, and 1443 on a payment to a for-eign person may be applied at a reducedrate under the terms of an applicableincome tax treaty. These temporary reg-ulations add certain provisions to thissection to coordinate with withholdingand documentation retention require-ments applicable under the final chapter4 regulations.

First, the allowance for reduced with-holding at source under § 1.1441– 6 ofthe final regulations is revised to statethat even if the requirements of thissection are met, withholding underchapter 4 may still apply to paymentsthat are withholdable payments. Second,for payments to fiscally transparent en-tities, language is added to indicate thata withholding agent must apply the rulesof chapter 4 to determine the payee of awithholdable payment for purposes ofdetermining its withholding obligationsunder chapter 4. This provision clarifiesthat even when the interest holders of afiscally transparent entity are eligible forreduced withholding under an applica-ble treaty, chapter 4 withholding maystill apply to a payment made to suchentity depending on its chapter 4 status.Finally, based on comments received,the rules regarding the maintenance ofdocumentary evidence for purposes ofthis section are revised to clarify that awithholding agent maintains the re-viewed documents by retaining the orig-inal, certified copy, or photocopy ofsuch documents, without regard towhether the withholding agent notes theperson who reviewed the documenta-tion. The revised rule conforms to thedocumentation-maintenance require-ments applicable under the final chapter4 regulations and the new rules in thesetemporary regulations for maintainingdocumentary evidence under § 1.6049 –5(c).

R. U.S. TIN requirement and removal oftransitional documentation rules

For payments of certain types of in-come, § 1.1441–6 of the final regulationsprovides that a withholding agent can re-liably associate a payment with a benefi-cial owner withholding certificate to sup-port a claim for treaty benefits only if thecertificate contains the beneficial owner’sU.S. TIN. These temporary regulations re-vise this rule to allow a withholding agentto rely on a withholding certificate thatcontains the beneficial owner’s foreignTIN issued by a country with which theUnited States has in effect an income taxtreaty or tax information exchange agree-ment. The Treasury and the IRS believethat, in such cases, a foreign TIN is an


effective alternative to a U.S. TIN forpurposes of supporting a claim for treatybenefits with respect to income for whicha TIN is required. In addition, these tem-porary regulations remove the transitionaldocumentation provisions that applied topayments made before January 1, 2001.

S. Coordination of § 1.1441–7 withchapter 4 withholding

Section 1.1441–7 of the final regula-tions provides general provisions regard-ing when a withholding agent has reasonto know that it cannot rely on a claim ofstatus for chapter 3 purposes. These tem-porary regulations revise § 1.1441–7, pri-marily to coordinate with the standardsof knowledge applicable to withholdingagents and participating FFIs for purposesof determining the foreign status of apayee under chapter 4.

Section 1.1441–7(b)(3) of the final reg-ulations provides reason to know stan-dards for financial institutions, whichlimit when a withholding agent that is afinancial institution has a reason to knowthat documentation is unreliable or incor-rect to when certain U.S. indicia are asso-ciated with the account holder based onthe institution’s account information.These temporary regulations define a fi-nancial institution for this purpose by ref-erence to the definition of financial insti-tution that applies for chapter 4 purposes.In addition, the temporary regulations de-fine account information to include docu-mentation collected for purposes of AMLdue diligence (as defined under § 1.1471–1(b)(4)), but provide that a withholdingagent will not be considered to have rea-son to know that documentation collectedfor AML due diligence conflicts with theaccount holder’s claim until the date thatis 30 days after the obligation is executed(or the account is opened, in the case of anobligation that is an account with a finan-cial institution). These temporary regula-tions also add § 1.1441–7(b)(3)(ii) to pro-vide that a withholding agent that haspreviously documented a preexisting ob-ligation for purposes of chapter 3 or chap-ter 61 before July 1, 2014 will not berequired to review such documentation orthe account information associated withthe obligation to search for U.S. indicia.If, however, a withholding agent reviews

such documentation and it contains a U.S.place of birth for the account holder, or ifthere is a change in circumstances, thewithholding agent will then have reason toknow as of the date of the review orchange in circumstances that the docu-mentation is unreliable or incorrect andthat it must cure such U.S. indicia in orderto continue to treat the account holder as aforeign person. This rule therefore pro-vides withholding agents a transition pe-riod to address new U.S. indicia, such as aU.S birthplace for an account holder,which were added in the chapter 4 regu-lations and are incorporated in these tem-porary regulations.

Sections 1.1441–7(b)(5) through (b)(9)of the final regulations describe the scopeof review by a withholding agent that is afinancial institution of withholding certif-icates and documentary evidence, and arerevised to incorporate the same U.S. indi-cia referenced in the final chapter 4 regu-lations and the same cures specified inthose regulations in order for a withhold-ing agent to continue to treat a payee as aforeign person notwithstanding such U.S.indicia. Section 1.1441–7(b)(5) of the fi-nal regulations describes when a with-holding certificate furnished by a directaccount holder is unreliable or incorrectfor establishing foreign status and is re-vised to add new U.S. indicia for thispurpose. The new indicia are a withhold-ing agent’s classification of the accountholder as a U.S. person in the withholdingagent’s account files and a current tele-phone number for the person in the UnitedStates (and no telephone number for theperson outside of the United States). Thecures to treat a payee as a foreign personnotwithstanding these indicia conform tothe cures provided under chapter 4 andare the same cures that are applicableto a U.S. address. Specifically, § 1.1441–7(b)(5)(i)(A) and (b)(5)(i)(B) are revisedto adopt the chapter 4 definition of docu-mentary evidence required to treat a payeeas a foreign person notwithstanding U.S.indicia. For a payment made with respectto an offshore obligation, these temporary reg-ulations modify § 1.1441–7(b)(5)(i)(A)(2) tocoordinate with the chapter 4 cure rulespertaining to participating FFIs (includingreporting Model 2 FFIs) by adding that awithholding agent may treat an accountholder as a foreign person if the withhold-

ing agent obtains documentary evidenceestablishing foreign status, even if thedocumentary evidence contains a U.S.address.

These temporary regulations add§ 1.1441–7(b)(5)(ii) to provide that awithholding agent has reason to knowthat a withholding certificate claimingforeign status provided by an individualis unreliable or incorrect if the withhold-ing agent has an unambiguous indica-tion of a place of birth for the individualin the United States. Section 1.1441–7(b)(5)(ii) is consistent with the chapter4 rules in providing the same documen-tation requirements as those provided in§ 1.1471– 4(c)(5)(iv)(B)(2)(ii) applica-ble to a participating FFI (including areporting Model 2 FFI) to cure a U.S.place of birth in order to treat an accountholder as a foreign person.

To coordinate with the chapter 4 regu-lations, § 1.1441–7(b)(5)(iii) of these tem-porary regulations (formerly § 1.1441–7(b)(5)(ii)) is revised to allowdocumentary evidence establishing for-eign status as an alternative to providing areasonable explanation to cure standinginstructions with respect to an offshoreobligation directing the withholding agentto pay amounts to an address or an ac-count maintained in the United States.Similarly, for purposes of an accountholder’s claim for treaty benefits,§ 1.1441–7(b)(6)(iii) is revised to adddocumentary evidence establishing resi-dence in a treaty country as a cure forstanding instructions provided with re-spect to an offshore obligation directingthe withholding agent to pay amounts toan address or an account maintained out-side the country in which the accountholder claims benefits under an incometax treaty.

Section 1.1441–7(b)(8) of the final reg-ulations provides the standards of knowl-edge applicable to documentary evidenceused to establish a payee’s foreign status.Under § 1.1441–7(b)(8) of the final regu-lations, a withholding agent may not relyon documentary evidence to treat a payeeas a foreign person if the withholdingagent has U.S. indicia for the payee. Thesetemporary regulations revise § 1.1441–7(b)(8)(ii), consistent with the chapter 4regulations, to include as U.S. indicia: (i)a classification in the withholding agent’s


account files that the recipient is a U.S.person, and (ii) a current telephone num-ber for the person in the United States aspart of the withholding agent’s customerinformation, provided that the customerinformation does not include a tele-phone number for the person outside ofthe United States. In addition, these tem-porary regulations revise § 1.1441–7(b)(8)(iii) to add a U.S. place of birth asU.S. indicia. Section 1.1441–7(b)(8)(iii)also provides the same documentation re-quirements as those in the chapter 4 reg-ulations for treating an account holder as aforeign person notwithstanding a U.S.place of birth. These temporary regula-tions also add § 1.1441–7(b)(8)(iv) (for-merly § 1.1441–7(b)(8)(iii) of the finalregulations) and (b)(9)(ii), which treatstanding instructions to pay amounts to anaddress or account maintained in theUnited States or outside of a treaty coun-try as U.S. indicia, to coordinate with thechapter 4 regulations by allowing the ac-count holder to cure the U.S. indicia byproviding a valid beneficial owner with-holding certificate to establish foreign sta-tus or residence in a treaty country (asapplicable).

These temporary regulations add§ 1.1441–7(b)(11) to provide limits onreason to know for withholding agentsthat are financial institutions in the case ofmultiple obligations belonging to a singleperson, which limits are consistent withthose provided in the chapter 4 regula-tions. Also, in response to commentsseeking clarification, § 1.1441–7(b)(12) isadded to define what constitutes a reason-able explanation supporting a claim offoreign status (which also applies underthe chapter 4 regulations).

Section 1.1441–7(c) of the final regu-lations provides that a withholding agentmay designate an agent to fulfill its obli-gations under chapter 3. These temporaryregulations revise § 1.1441–7(c) to har-monize with the chapter 4 regulations forthe requirements of a withholding agent’suse of an agent to fulfill its withholdingobligations. The revised rules allow awithholding agent to appoint an agent (in-cluding a foreign person) if there is awritten agreement between the withhold-ing agent and the person acting as agent,the books and records of the agent areavailable to the withholding agent, and the

agent files Form 8655, “Reporting AgentAuthorization,” with the IRS if the agent(including any sub-agent) is acting as areporting agent for purposes of filingForm 1042 or making tax deposits andpayments. These rules replace the rulesthat pertained to authorized foreignagents, which required that the foreignagent’s books and records be available tothe IRS for examination and that the with-holding agent notify the IRS of its ap-pointment of a foreign agent. Under thenew rules, the withholding agent remainsliable for the acts of its agent (including aforeign agent) and thus the withholdingagent, rather than its agent, is required tosubstantiate its compliance with its with-holding obligations.

T. Coordination of § 1.1461–1 withchapter 4 withholding

Section 1.1461–1(b) of the final regu-lations provides requirements for makingan income tax return on Form 1042 forincome paid that the withholding agent isrequired to report on an information returnon Form 1042–S. These temporary regu-lations revise § 1.1461–1(b) consistentwith chapter 4 to allow a withholdingagent to file a single Form 1042 to reportamounts under chapters 3 and 4.

Section 1.1461–1(c)(1)(i) of the finalregulations provides requirements regard-ing the manner in which withholdingagents report information about paymentsmade to foreign persons for purposes ofchapter 3. This section states that theForm 1042–S shall be prepared in suchmanner as the form and accompanyinginstructions prescribe. The instructions toForm 1042–S (as previewed in draft formon November 1, 2013) are being revisedto incorporate the requirements for report-ing on Form 1042–S for chapter 4 pur-poses and to remove language that cur-rently permits a withholding agent toinclude more than one type of income orother payment on a recipient copy of theForm 1042–S. To allow sufficient time forwithholding agents to adapt to these re-quirements, however, a withholding agentwill be permitted to include more than onetype of income or other payment on therecipient copy of the Form 1042–S forcalendar year 2014. Starting with calendaryear 2015, the Form 1042–S and accom-

panying instructions will require a sepa-rate Form 1042–S for each type of incomeor other payment.

Section 1.1461–1(c)(1)(ii) of the finalregulations lists categories of persons thatare treated as recipients with respect toamounts subject to chapter 3 reporting andother categories of persons that are nottreated as recipients of such amounts.These temporary regulations amend§ 1.1461–1(c)(1)(ii) consistent with chap-ter 4 to add as recipients: (i) territoryfinancial institutions treated as U.S. per-sons under § 1.1441–1(b)(2)(iv)(A); (ii)foreign intermediaries and nonwithhold-ing foreign partnerships and trusts that areparticipating FFIs (including reportingModel 2 FFIs) or registered deemed-compliant FFIs (including reportingModel 1 FFIs) with respect to a chapter 4withholding rate pool of U.S. payees; and(iii) participating FFIs (including report-ing Model 2 FFIs) or registered deemed-compliant FFIs (including reportingModel 1 FFIs) that are recipients of with-holdable payments under § 1.1474–1(d)(1)(ii)(A)(1)(iii). These temporaryregulations amend § 1.1461–1(c)(1)(ii)consistent with chapter 4 to treat as per-sons that are not recipients: (i) payeesincluded in chapter 3 and chapter 4 with-holding rate pools; (ii) authorized foreignagents (to coordinate with revised rulesfor authorized agents under § 1.1441–7(c) of these temporary regulations); (iii)NQIs and flow-through entities unlessthey are FFIs treated as recipients under§ 1.1474–1(d)(1)(ii)(A)(1)(iii) (becausethey have identified the payment as allo-cable to a chapter 4 withholding ratepool); and (iv) certain territory financialinstitutions that are not treated as U.S.persons under § 1.1441–1(b)(2)(iv)(A).These temporary regulations also add new§ 1.1461–1(c)(1)(ii)(C), which providesthat, with respect to the reporting of achapter 4 reportable amount, a withhold-ing agent must report the chapter 4 statusof the recipient consistent with § 1.1474–1(d)(1)(ii)(A).

Section 1.1461–1(c)(3) of the final reg-ulations describes the specific informationrequired to be reported on Form 1042–S.These temporary regulations revise§ 1.1461–1(c)(3)(i) to require the report-ing of a withholding agent’s chapter 3status code. The chapter 3 status codes are


listed in the instructions to Form 1042–Sfor calendar year 2014 and, with respect toan entity, the chapter 3 status code isgenerally the entity’s classification forU.S. tax purposes. These temporary regu-lations also revise § 1.1461–1(b)(3)(iii) torequire that, in the case of a paymentsubject to withholding under chapter 3 butnot subject to withholding under chapter4, a withholding agent must report thebasis for exempting the payment fromwithholding under chapter 4. The instruc-tions to Form 1042–S for calendar year2014 will add chapter 4 exemption codesto Form 1042–S for this purpose.

These temporary regulations also addprovisions in § 1.1461–1(c)(4)(i) and(c)(4)(ii) to coordinate the reporting re-quirements for payments to intermediariesand flow-through entities when a with-holding agent is provided information fora chapter 4 withholding rate pool. Also,§ 1.1461–1(c)(4)(i)(D) is removed bythese temporary regulations to coordinatewith the removal of the rules pertaining toauthorized foreign agents in § 1.1441–7 ofthese temporary regulations.

Section 1.1461–1(c)(5) of the final reg-ulations provides the magnetic media fil-ing requirements for withholding agentsfiling Forms 1042–S. These temporaryregulations revise this rule for financialinstitutions consistent with chapter 4 torequire financial institutions to file infor-mation reports on magnetic media withoutregard to whether the financial institutionfiles 250 or more information returns an-nually. See § 301.1474–1(a).

III. Changes to Information ReportingProvisions Under Chapter 61

A. General coordination of informationreporting under § 1.6049–4 with chapter 4

Section 1.6049–4 of the final regula-tions provides rules for determiningwhether an information return is requiredunder section 6049 for a payment of in-terest or for certain original issue discount(OID) and includes definitions of termsused for purposes of section 6049 andother sections of chapter 61.

1. Exceptions to Reporting Under§ 1.6049–4(c)(4) to Coordinate withInformation Reporting under FATCA

Section 1.6049–4(c) of the final regu-lations provides exceptions with respect towhether an information return is requiredwith respect to a payment of interest orcertain OID. These temporary regulationsadd a new exception in § 1.6049–4(c)(4)(i) for a non-U.S. payor that is alsoa participating FFI (including a reportingModel 2 FFI) or a registered deemed-compliant FFI (including a reportingModel 1 FFI) that reports an accountholder of a U.S. account pursuant to therequirements under chapter 4 (or an appli-cable IGA), provided that such informa-tion includes the account holder’s TIN.For the requirements to report an accountas a U.S. account, see the FFI agreementfor participating FFIs (including reportingModel 2 FFIs), § 1.1471–5(f)(1) for reg-istered deemed-compliant FFIs, and theapplicable Model 1 IGA for reportingModel 1 FFIs.

These temporary regulations also add anew exception in § 1.6049–4(c)(4)(ii) fora participating FFI (including a reportingModel 2 FFI) or registered deemed-compliant FFI (including a reportingModel 1FFI), regardless of whether theFFI is a U.S. payor or non-U.S. payor,from the requirement to report a paymentof interest for the year in which the inter-est is paid. The exception applies if theaccount holder of an account maintainedby the FFI receives a payment of interestthat is not subject to withholding underchapter 3 or backup withholding undersection 3406 and either the FFI reports theaccount consistent with the pools de-scribed in § 1.1471–4(d)(6) (referring torecalcitrant account pools) or, in the caseof a reporting Model 1 FFI, the accountholder has not provided information suf-ficient for the FFI to confirm the U.S. ornon-U.S. status of the account holder andthe FFI treats and reports the account as aU.S. reportable account under an applica-ble IGA. This new exception to reportingmay apply to payments made by an FFI toan account holder that it must presume tobe a U.S. non-exempt recipient if the pay-ment is not subject to withholding underchapter 3 and is not subject to backupwithholding under section 3406 because

the amount is paid outside the UnitedStates with respect to an offshore obliga-tion.

Finally, the temporary regulations add§ 1.6049–4(c)(4)(iii) to specify the cir-cumstances in which an FFI may, ona withholding statement provided to apayor, allocate an interest payment to aU.S. non-exempt recipient within a pool(referred to as a “U.S. payee pool”), inlieu of providing payee-specific informa-tion with respect to each U.S. non-exemptrecipient, for purposes of applying the ex-ceptions described in paragraphs§ 1.6049–4(c)(4)(i) and (c)(4)(ii). Thesetemporary regulations provide that a par-ticipating FFI (including a reportingModel 2 FFI) or registered deemed-compliant FFI (including a reportingModel 1 FFI) may allocate a payment to achapter 4 withholding rate pool of U.S.payees on an applicable withholding state-ment to the extent the FFI is exceptedfrom reporting the payment under§ 1.6049–4(c)(4)(i) or both the FFI is ex-cepted from reporting under § 1.6049–4(c)(4)(ii) and the payment is not subjectto withholding under chapter 4.

The coordination rules in § 1.6049–4(c)(4) that provide an exception from therequirement to report information with re-spect to certain account holders of an FFIalso apply for purposes of informationreporting under sections 6041, 6042, and6045.

2. Additions and Revisions toDefinitions in § 1.6049–4(f) Related toInterest Reporting Under §§ 1.6049–4 and 1.6049–5

Section 1.6049–4(f) of the final regu-lations provides definitions that apply forpurposes of section 6049 and that are alsorelevant for other sections of chapter 61.These temporary regulations amend cer-tain of the definitions and add additionaldefinitions to coordinate with terms usedunder chapter 4. First, these temporaryregulations add to § 1.6049–4(f) theterms chapter 4 withholding rate pool,participating FFI, registered deemed-compliant FFI, reporting Model 1 FFI,reporting Model 2 FFI, recalcitrant ac-count holder, non-consenting U.S. ac-count, and intergovernmental agreement


(IGA) to coordinate and provide helpfulcross-references to navigate these rules.

Second, these temporary regulationsadd the term offshore obligation, whichincludes accounts of banks and other fi-nancial institutions and obligations (otherthan such accounts) maintained outsidethe United States, in § 1.6049–5(c)(1) (asdiscussed in section III.D of this pream-ble).

Finally, these temporary regulationsadd to § 1.6049–4(f)(16) the term paidand received outside the United States.The definition of paid and received out-side the United States is relevant for pur-poses of determining the circumstancesunder which (i) a payment of interest fromnon-U.S. sources is reportable by a non-U.S. payor, (ii) the exception to backupwithholding under § 31.3406(g)–1(e) ap-plies with respect to a payment of interest,and (iii) an agent of a payee (other than aU.S. middleman) is excluded from report-ing a payment of interest on an obligationdescribed in § 1.6049–5(b)(10). This newterm is largely based on the description ofamounts paid outside the United States in§ 1.6049–5(e) of the final regulations.Section 1.6049–5(e) (as modified by thesetemporary regulations) describes when apayment is made outside the UnitedStates, which is relevant for determiningcases in which a payor may rely upondocumentary evidence in lieu of an appli-cable withholding certificate to establish apayee’s foreign status for a payment madewith respect to an offshore obligation.

The new definition of an amount paidand received outside the United States un-der § 1.6049–4(f)(16) also applies forpurposes of information reporting rulesunder sections 6041 and 6042 and fordetermining whether the exception tobackup withholding under section 3406applies to payments reportable under sec-tions 6041 and 6042 and to gross proceedsreportable under section 6045.

B. Further coordination of interestreporting under § 1.6049–5(b) withchapter 4

Section 1.6049–5(b) of the final regu-lations describes payments that are nottreated as interest or OID for purposes ofsection 6049. Accordingly, payments de-scribed in § 1.6049–5(b) of the final reg-

ulations are not subject to reporting undersection 6049. These temporary regula-tions modify the rule for payments withrespect to foreign intermediaries (whichhas been renumbered as new § 1.6049–5(b)(15)) and add a new exception in§ 1.6049–5(b)(14) for certain paymentsthat a payor or middleman can reliablyassociate with documentation or certainother information provided by a foreignintermediary or flow-through entity.

1. Exception to Reporting InterestPayments Made to Foreign Intermediaryor Flow-Through Entity Under New§ 1.6049–5(b)(14)

These temporary regulations add a newexception from reporting in § 1.6049–5(b)(14). The exception applies to pay-ments made by a payor or middleman thatcan be reliably associated with documen-tation to treat the payments as made to aforeign intermediary or flow-through en-tity, provided that the payor or middlemanhas obtained a withholding statementfrom the foreign intermediary or flow-through entity allocating the payment (orportion thereof) to a chapter 4 withholdingrate pool or to specific payees to whichwithholding under chapter 4 applies. Thisexception for payments made to a chapter4 withholding rate pool coordinates withthe requirements under the chapter 4 reg-ulations describing the circumstances un-der which a withholding agent may, withrespect to a chapter 4 withholdable pay-ment, rely on an FFI withholding state-ment (described in § 1.1471–3(c)(3)(iii)(B)(2)) that allocates thepayment to a chapter 4 withholding ratepool of nonparticipating FFIs and recalci-trant account holders or a chapter 4 with-holding statement that allocates the pay-ment to a chapter 4 withholding rate poolof nonparticipating FFIs, instead of re-quiring payee-specific information withrespect to such payees and account hold-ers. For purposes of applying this excep-tion, these temporary regulations also pro-vide that a payor or middleman mayreliably associate a payment with a chap-ter 4 withholding rate pool of U.S. payeeson a withholding statement provided byan FFI if the payor or middleman identi-fies the intermediary or flow-through en-tity receiving the payment as either a par-

ticipating FFI (including a reportingModel 2 FFI) or a registered deemed-compliant FFI (including a reportingModel 1 FFI) (by applying the due dili-gence requirements described in§ 1.1471–3(d)(4)).

The exception to reporting added bythese temporary regulations in § 1.6049–5(b)(14) shall also apply for purposes ofinformation reporting under sections 6041and 6042.

2. Exception to Reporting InterestPayments Made by a ForeignIntermediary Under Renumbered§ 1.6049–5(b)(15)

These temporary regulations renumberthe exception from reporting that was in-cluded in § 1.6049–5(b)(14) of the finalregulations as new § 1.6049–5(b)(15) fora foreign intermediary (or a U.S. branchnot treated as a U.S. person under§ 1.1441–1(b)(2)(iv)) receiving a paymentfrom a payor, if the intermediary furnishesto the payor or middleman the informationrequired for the payor or middleman toreport the payment under section 6049.This exception does not apply to a foreignintermediary that knows that the paymentsare required to be reported by the payor ormiddleman under § 1.6049–4 and werenot so reported. These temporary regula-tions also clarify that a territory financialinstitution that is not treated as a U.S.person under § 1.1441–1(b)(2)(iv) is ex-cepted from reporting under this para-graph if it provides the information re-quired for the payor or middleman fromwhich it is receiving a payment to report.These temporary regulations incorporateby cross-reference the exception from re-porting provided in § 1.6049–4(c)(4) (re-ferring to rules that exempt certain FFIsthat are non-U.S. payors from reportingunder chapter 61 if the payments are madeto account holders that will be reported bythe FFI and, in narrower circumstances,rules that exempt certain FFIs that areU.S. or non-U.S. payors from reportingunder chapter 61 on certain presumedU.S. non-exempt recipients), such that anintermediary need not report under thisparagraph if the payment is not required tobe reported under § 1.6049–4(c)(4).

The exception to reporting in§ 1.6049–5(b)(15) also applies for pur-


poses of information reporting under sec-tions 6041, 6042, and 6045. (For a discus-sion of the applicable exemptions fromreporting under sections 6041, 6042, and6045 for certain FFIs that report informa-tion about their account holders underchapter 4 or an applicable IGA, see thediscussion of the coordination rules under§ 1.6049–4(c)(4) in section III.A.1 of thispreamble.)

C. Exceptions to reporting for certainpayments made on behalf of a PFIC

These temporary regulations add twonew exceptions to reporting that apply topaying agents and stock transfer agentsmaking certain payments on behalf of acorporation described in section 1297(a)(a passive foreign investment company orPFIC). The first exception relates to divi-dend payments made by a paying agent onbehalf of a PFIC as described in § 1.6042–2(a)(1)(i)(B). The second exception re-lates to certain payments made by a stocktransfer agent with respect to a redemp-tion of PFIC stock as described in§ 1.6045–1(c)(3)(xiv). Both exceptionsapply if the agent (that is, the paying agentor stock transfer agent, as applicable) sat-isfies four requirements. First, the agentmust obtain, for each year that the agentrelies on this exception, a written state-ment from the PFIC that states that thecorporation is described in section1297(a). This written certification fromthe PFIC must be signed by an officer ofthe corporation, and the agent must haveno reason to know that the written certi-fication is unreliable or incorrect. Second,the agent must identify, prior to payment,the PFIC as a participating FFI (includinga reporting Model 2 FFI) or a reportingModel 1 FFI in accordance with the re-quirements of § 1.1471–3(d)(4) (as if, forpurposes of that section, the paying agentor stock transfer agent were a withholdingagent and as if the PFIC were a payee).Third, the agent must obtain, before theyear the payment would otherwise be re-ported, a written certification representingthat the PFIC will report information withrespect to the payment (or the account towhich the payment is made) as requiredby its reporting obligations under chapter4 or an applicable IGA. If the agent, how-ever, knows that the PFIC is not reporting

the information as represented in the writ-ten certification, the agent must report allpayments reportable under sections 6041or 6045 that are made during the year forwhich the agent knows the PFIC is notreporting such information. Finally, theagent must not also be acting in its capac-ity as a custodian, nominee, or other agentof the payee (that is, the PFIC share-holder).

D. Reliance on documentary evidenceunder § 1.6049–5(c)

Section 1.6049–5(c) of the final regu-lations provides rules for determiningwhether a payor may rely upon documen-tary evidence instead of a withholdingcertificate for purposes of determining apayee’s status under section 6049, pre-scribes the types of documentation thatconstitutes documentary evidence for thispurpose, and describes the requirementsfor maintaining the documentary evi-dence. To provide consistency betweenthe documentation standards applicable towithholding agents in determiningwhether withholding applies under chap-ters 3 and 4, or an applicable IGA, thesetemporary regulations revise the final reg-ulations in several respects.

1. Modification to § 1.6049–5(c)(1) andCoordinating Change to § 1.6045–1(g)

Section 1.6049–5(c)(1) of the final reg-ulations provides that a payor may rely ondocumentary evidence described in§ 1.6049–5(c)(1) (which may include, butis not limited to, a certificate of residenceissued by an appropriate tax official of theforeign government or other official doc-uments issued by an authorized govern-mental body) for payments made outsidethe United States to an offshore account.These temporary regulations modify thisrule in several respects.

First, these temporary regulations in§ 1.6049–5(c)(1) replace the term off-shore account with the term offshore ob-ligation for purposes of determiningwhether a payor may rely upon documen-tary evidence with respect to a paymentmade outside the United States. Thesetemporary regulations define an offshoreobligation that is not an account of a bankor other financial institution as, among

other things, an obligation with respect towhich the payor is either engaged in busi-ness as a broker or dealer in securities ora financial institution defined in § 1.1471–5(e). Thus, these temporary regulationsexpand the circumstances in which docu-mentary evidence may be relied upon by,among other things, allowing for the useof documentary evidence beyond pay-ments made to accounts of banks andother financial institutions and allowingfor the use of documentary evidence by awithholding agent consistent with chapter 4.

Second, the use of documentary evi-dence is further expanded as a result ofchanges made by these temporary regula-tions to the description of payment outsidethe United States under § 1.6049–5(e), which eliminates the requirement forpayors to monitor whether certain U.S.connections are present as a condition forusing documentary evidence (see sectionIII.F of this preamble for a description ofchanges to § 1.6049–5(e)).

Third, these temporary regulationsmodify the types of documentation thatqualify as documentary evidence under§ 1.6049–5(c)(1) by prescribing rules re-garding the types of documentary evi-dence that may be relied upon that are thesame as those in the chapter 4 regulations.

Fourth, the requirements for payors tomaintain documentary evidence under§ 1.6049–5(c)(1) of the final regulationsare also modified by these temporary reg-ulations to be consistent with the require-ments for maintaining documentary evi-dence applicable to withholding agents inthe chapter 4 regulations.

In addition, § 1.6049–5(c)(1) of the fi-nal regulations includes a rule providingthat a payor of broker proceeds describedin § 1.6045–1(c)(2) may rely on docu-mentary evidence described in § 1.6049–5(c)(1) of the final regulations if the bro-ker completes the acts necessary to effectthe sale outside the United States. Becausereporting of gross proceeds is governed bysection 6045 and not section 6049, thesetemporary regulations remove this rulefrom § 1.6049–5(c)(1) and add a cross-reference to a revised rule that is providedin § 1.6045–1(g)(1)(i) addressing the cir-cumstances under which a broker payinggross proceeds may determine a payee’sstatus using documentary evidence. Therevised rule under § 1.6045–5(c)(1) de-


fines a sale effected outside the UnitedStates as a sale with respect to which abroker completes the acts necessary toeffect the sale outside of the United Statesprovided that no office of the same brokerwithin the United States negotiated thesale with the customer or received instruc-tions with respect to the sale from thecustomer. The revised rule also removesthe limitations on the use of documentaryevidence described in § 1.6045–1(g)(3)(iii)(B) of the final regulations, ex-cept in circumstances in which the brokercompletes the acts necessary to effect tosale at an office of the same broker in theUnited States.

Finally, consistent with § 1.1441–1(e)(3)(iii), these temporary regulationsclarify that documentary evidence is per-mitted to be used with respect to paymentsmade to a foreign intermediary (in addi-tion to a foreign partnership or foreigntrust), regardless of whether the obligationwith respect to which the payment is madeis maintained outside the United States.

The new definition of the term offshoreobligation in § 1.6049–5(c)(1) also ap-plies for purposes of information report-ing under sections 6041 and 6042.

2. Modifications to DocumentationStandards Under § 1.6049–5(c)(4)

Section 1.6049–5(c)(4) of the final reg-ulations provides special documentationrules for certain offshore accounts main-tained at a bank or other financial institu-tion, which modify the documentationstandards of § 1.6049–5(c)(1) of the finalregulations for payments that are not sub-ject to withholding under chapter 3 andare not payments of certain U.S. sourceshort-term OID or bank deposit interestpaid to foreign intermediaries and flow-through entities. These temporary regula-tions in § 1.6049–5(c)(4) retain the mod-ified documentation standards inparagraph § 1.6049–5(c)(1) for such pay-ments and provide additional allowancesfor payors to determine the status of pay-ees receiving such payments to be consis-tent with the documentation rules pre-scribed under the chapter 4 regulations forparticipating FFIs (including reportingModel 2 FFIs) to identify their accountholders. In particular, these temporaryregulations allow a payor that is a partic-

ipating FFI (including a reporting Model 2FFI) or registered deemed-compliant FFIto establish a payee’s status based onidentification by a third-party creditagency to the extent permitted in§ 1.1471–4(c)(4)(ii). A payor that is a re-porting Model 1 FFI or reporting Model 2FFI may rely upon documentation or acertification establishing a payee’s statusunder an applicable IGA. A payor that isan FFI may also rely on a written state-ment (as defined in § 1.1471–1(b)(150)) to establish a payee’s foreignstatus in circumstances in which the state-ment is allowed to be used by the FFI toestablish the chapter 4 status of the payeewithout documentary evidence under thechapter 4 regulations. Consistent with theprovision in the chapter 4 regulations thatpermits reliance on documentary evidencewithout a definitive renewal period forpayments made with respect to offshoreobligations, these temporary regulationsprovide the same treatment for documen-tation permitted to be relied upon by apayor under § 1.6049–5(c)(4). Thus, apayor may rely upon documentation under§ 1.6049–5(c)(4) if the payor does nothave for the payee any of the indicia ofU.S. status described in § 1.1471–3(c)(6)(ii)(C)(1) until the payor knows orhas reason to know of a change in circum-stances. Finally, these temporary regula-tions allow a payor to maintain a record ofdocumentary evidence instead of retainingthe actual documentation reviewed, whichis consistent with the rules for a partici-pating FFI under chapter 4.

E. Coordination of chapter 4 withpresumption rules under § 1.6049–5(d)

Section 1.6049–5(d) of the final regu-lations provides general requirements foridentifying payees (referencing the rele-vant requirements of § 1.1441–1) and pre-sumptions that apply in the absence ofvalid documentation for determining thestatus of a payee as a U.S. or foreignperson for purposes of reporting undersection 6049.

1. Payee Identification

In general, § 1.6049–5(d)(1) of the fi-nal regulations provides that a payee of apayment that is otherwise reportable un-

der section 6049 is identified pursuant tocertain provisions that apply to identifythe payee for purposes of chapter 3, withtwo exceptions that apply to paymentsthat are not subject to withholding underchapter 3. The first exception modifies thetreatment of a payment made to a U.S.agent by treating any such payment as apayment made to a U.S. payee (even if theU.S. agent is an agent of a foreign payee).The second exception modifies the treat-ment of a payment to a U.S. branch of aforeign bank or of a foreign insurancecompany by treating the payment as madeto a foreign payee, regardless of the factthat the U.S. branch is treated as a U.S.person for payments of amounts subject towithholding and is a U.S. payor.

The temporary regulations modifythese two exceptions to be consistent withthe rules under chapter 4 by clarifying thatthese exceptions also do not apply withrespect to amounts that are withholdablepayments. The chapter 4 regulations pro-vide that withholdable payments made toU.S. agents and intermediaries and certainU.S. branches are treated as made to U.S.persons. In addition, these temporary reg-ulations, consistent with the chapter 4 reg-ulations, add that the first exception ap-plies to a U.S. intermediary in addition toa U.S. agent, and they clarify that thesecond exception applies to paymentsmade to a territory financial institutionthat is treated as a U.S. person under§ 1.1441–1(b)(2)(iv) (as well as to a U.S.branch of a foreign bank or of a foreigninsurance company treated as a U.S. per-son under that section).

2. Presumptions in the Absence ofDocumentation Under § 1.6049–5(d)(2)

a. General rule under § 1.6049–5(d)(2)(i)

In general, § 1.6049–5(d)(2)(i) of thefinal regulations incorporates the pre-sumption rules of § § 1.1441–1(b)(3) and1.1441–5(d) and (e)(6) (general presump-tion rules) to determine the classificationand other relevant characteristics of thepayee if a payment cannot be reliably as-sociated with valid documentation. Thechapter 61 regulations incorporate theserules regardless of whether a payment issubject to withholding under chapter 3.The presumption rule for payments with


respect to offshore obligations providedunder the general presumption rules doesnot apply to a payment that is not subjectto withholding under chapter 3.

These temporary regulations modifythis exception (which would not apply thegeneral presumption rules to a paymentthat is not subject to withholding underchapter 3) in the case of a withholdablepayment made to a payee that is an entityby applying the presumption rule for pay-ments with respect to offshore obligationsunder § 1.1441–1(b)(3)(iii)(D) and(b)(3)(vii)(B) regardless of whether thepayment is an amount subject to withhold-ing under chapter 3. This avoids conflict-ing presumptions under chapters 4 and 61given that § 1.1471–3(f) treats such pay-ments as made to a nonparticipating FFI(and therefore as made to a foreign entity).

These temporary regulations also add anew presumption rule that applies to apayment that is not subject to withholdingunder chapter 3 made to a payee that is anindividual with respect to an offshore ob-ligation. This new presumption rule willlimit the cases in which individuals arepresumed U.S. non-exempt recipients tocases where a payor has U.S. indicia as-sociated with the individual.

b. Grace period under § 1.6049–5(d)(2)(ii)

For purposes of applying the presump-tion rules, § 1.6049–5(d)(2)(ii) of the finalregulations provides a 90-day grace pe-riod during which a payor may treat anaccount as held by a foreign person ifcertain indications of foreign status arepresent to avoid reporting under chapter61 and backup withholding under section3406. The chapter 61 regulations also pro-vide rules for determining when the graceperiod begins, depending on whether anaccount is a new or preexisting account ofthe payor. These temporary regulationsretain the 90-day grace period in§ 1.6049–5(d)(2)(ii) without modificationbut expand the types of accounts that willbe treated as existing accounts to includeaccounts treated as consolidated obliga-tions for purposes of chapter 4 (defined in§ 1.1471–1(b)(23)) as long as all pay-ments made to the account are not subjectto withholding under chapter 3.

c. Joint owners under § 1.6049–5(d)(2)(iii)

These temporary regulations modifythe presumption rule with respect to with-holdable payments made to joint ownersof a joint account consistent with the pre-sumption rule described in § 1.1471–3(f)(7). Thus, in the case of an amountthat is a withholdable payment made to ajoint account, the payment is presumedmade to a foreign payee that is a nonpar-ticipating FFI if any joint payee does notappear to be an individual. This modifica-tion creates consistency between the pre-sumption rules applicable under chapters4 and 61 with respect to withholdablepayments made to joint accounts.

The joint account holder presumptionrule described in § 1.1471–3(f)(7) also ap-plies for purposes of reporting under sec-tions 6041 and 6042 and backup with-holding under section 3406.

3. Foreign Intermediaries or Flow-Through Entities Under § 1.6049–5(d)(3)

Section 1.6049–5(d)(3)(i) of the finalregulations provides a presumption rulefor determining whether a payment of anamount subject to withholding underchapter 3 may be treated as made to aforeign intermediary or flow-through en-tity by cross-references to the applicablepresumption rules under § § 1.1441–1(b)(3) and 1.1441–5(d) and (e)(6). Thesetemporary regulations add a cross-reference to the chapter 4 regulations foran amount that is a withholdable paymentunder chapter 4 for purposes of both iden-tifying the payee and providing the pre-sumption rule that applies to the payment.In addition, these temporary regulationsclarify that the presumption rule under§ 1.6049–5(d)(3)(ii), applicable to pay-ments not subject to withholding underchapter 3, does not apply to amounts thatare withholdable payments under chapter4, consistent with the presumption ruleunder chapter 4.

The chapter 61 regulations also pro-vide a presumption rule for payments ofcertain U.S. source short-term interest orOID and bank deposit interest paid to aforeign intermediary or flow-through en-tity that treats the payment as made to aU.S. non-exempt recipient. These tempo-rary regulations under § 1.6049–

5(d)(3)(iii) remove bank deposit interestfrom the existing rule to make it consis-tent with the chapter 4 presumption ruleapplicable to withholdable payments(which includes such interest) made to aforeign intermediary or flow-through en-tity. See § 1.1471–3(f)(5) (treating thepayment as made to a nonparticipatingFFI). These temporary regulations alsoprovide that this presumption rule is notrequired to be applied with respect to apayment of U.S. source short-term OIDallocated on a withholding statement to achapter 4 withholding rate pool of U.S.payees by an intermediary or flow-through entity receiving the payment thatthe payor documents to be a participatingFFI (including a reporting Model 2 FFI)or registered deemed-compliant FFI (in-cluding a reporting Model 1 FFI) underthe identification requirements of chapter 4.

F. Paid outside the United States under§ 1.6049–5(e)

Section 1.6049–5(e) of the final regu-lations describes the circumstances inwhich an amount is considered paid out-side the United States for purposes of,among other things, determining whethera payor may rely upon documentary evi-dence under § 1.6049–5(c)(1) of the finalregulations to document a payee. It re-quires that the payor or middleman (i)complete the acts necessary to effect pay-ment outside the United States and (ii)verify that the obligation or payee doesnot have certain specified connectionswith the United States (U.S. connections),such as a U.S. mailing address for thepayee. See § 1.6049–5(e)(1)(i) through(e)(1)(ii) and (e)(2) through (e)(4) of thefinal regulations. These temporary regula-tions retain the requirement that a payor ormiddleman complete the acts necessary toeffect payment outside the United States,but remove the other U.S. connectionsdescribed in § 1.6049–5(e) of the finalregulations for the purpose of being al-lowed to use documentary evidence under§ 1.6049–5(c). This modification reducesburdens by eliminating the need for apayor or middleman to monitor whetherthese U.S. connections are present for pur-poses of determining if the payor or mid-dleman may rely upon documentary evi-dence under § 1.6049–5(c)(1). (For a


discussion of the documentary evidencerule in § 1.6049–5(c), see section III.D ofthis preamble.) The U.S. connections,however, are still retained for other pur-poses under chapter 61 and section 3406,and have been included in the definition ofthe term paid and received outside theUnited States under § 1.6049–4(f)(16) (asdiscussed in section III.A of this pream-ble).

IV. Other Changes With Respect toBackup Withholding Under Section 3406,Claims for Refund or Credit Under Sec-tion 6402, and Repeal of Portfolio InterestTreatment for Certain Obligations UnderSection 871

A. Coordination of withholding under§ 31.3406(g)–1(e) with chapter 4

Section 31.3406(g)–1 of the final reg-ulations requires backup withholding withrespect to certain reportable payments andprovides an exception to backup with-holding for such payments if they aremade outside the United States to payeesother than known U.S. persons or are pay-ments to which withholding under chapter3 has been applied. The final regulationsalso provide the same exception for pay-ments to which the documentary evidencerule under § 1.6049–5(c) applies. Thesetemporary regulations modify this excep-tion (consistent with the changes made bythese temporary regulations in§ § 1.6049–4 and 1.6049–5) so that itapplies to a reportable payment that ispaid and received outside the UnitedStates (as defined in § 1.6049–4(f)(16)) with respect to an offshore obli-gation (or a sale effected outside theUnited States).

In addition, these temporary regula-tions do not require backup withholdingunder section 3406 for certain paymentswith respect to which withholding underchapter 4 has been applied, regardless ofwhether the payee is a known U.S. personto prevent duplicative withholding withrespect to the same payment.

B. Claims for credit or refund ofchapter 4 withholding under§ 301.6402–3(e)

Section 6402 provides authority for theSecretary to make a credit or refund of an

overpayment, and § 301.6402–3(e) of thefinal regulations provides the general re-quirements applicable to a claim for creditor refund of income tax made by a non-resident alien individual or foreign corpo-ration, including a claim for amountswithheld under chapter 3. These tempo-rary regulations modify these rules to alsoapply to claims for refund or credit ofamounts withheld under chapter 4. Similarto the request for a claim for refund orcredit of an amount withheld under chap-ter 3, these temporary regulations providethat, for an overpayment of tax that re-sulted from withholding under chapter 4, ataxpayer must attach a copy of the Form1042–S to the income tax return on whichthe claim for refund or credit is made.These temporary regulations eliminate,however, the requirement that the Form1042–S include the TIN of the recipient inorder for the claim to be valid. In addition,these temporary regulations clarify thatthe “other statement” that a taxpayer mayattach in lieu of the Form 1042–S or Form8805, “Foreign Partner’s InformationStatement of Section 1446 WithholdingTax,” is a statement described in§ 1.1446–3(d)(2). Finally, to coordinateclaims under chapter 3 with those underchapter 4, which permits a participatingFFI (including a reporting Model 2 FFI) tofile a collective claim for refund foramounts withheld under chapter 4 withrespect to its account holders, these tem-porary regulations provide that no claimfor refund or credit may be made by ataxpayer for an amount repaid to the tax-payer pursuant to a collective refundclaim filed by a participating FFI (includ-ing a reporting Model 2 FFI).

C. Repeal of portfolio interest treatmentfor foreign-targeted obligations under§ 1.871–14

Section 1.871–14 of the final regula-tions provides procedures for interest toqualify as portfolio interest under section871(h)(2) or section 881(c). Section 502of the HIRE Act, among other things,repealed section 163(f)(2)(B) with respectto obligations that are not issued in regis-tered form. In response to the eliminationof the foreign targeting rules by the HIREAct, the IRS and Treasury Departmentissued Notice 2012–20, 2012–13 IRB 574

(March 26, 2012), which clarified the cir-cumstances in which an obligation held ina book entry system by a clearing organi-zation qualifies as an obligation in regis-tered form and postponed until January 1,2014, the elimination of the treatment ofinterest paid with respect to foreign-targeted registered obligations under§ 1.871–14(e) as portfolio interest. Notice2012–20 was amplified by Notice 2013–43, 2013–31 IRB 113 (July 29, 2013),which further postpones the elimination ofthe allowance for foreign-targeted regis-tered obligations to apply to obligationsissued before July 1, 2014. In response tocomments, these temporary regulationsprovide an additional transitional exten-sion until January 1, 2016, for the portfo-lio interest treatment of foreign-targetedregistered obligations issued before thatdate in order to afford the time for foreigninstitutions to become qualified interme-diaries in accordance with the forthcom-ing amendment of the qualified interme-diary agreement and governing revenueprocedure. Because of the continuing ap-plicability of Notice 2012–20 (as ampli-fied), these temporary regulations do notrevise the requirements for determiningwhether an obligation is in registered formunder § 5f.103–1(c). Instead, these tempo-rary regulations include updated citationsto sections 871(h)(2)(A) and (B) and881(c)(2)(A) and (B) for the applicablesunset dates of obligations issued in non-registered form and of foreign-targetedregistered obligations and include provi-sions to coordinate the exception fromwithholding for portfolio interest with thewithholding requirements of chapter 4. Inaddition, § 1.871–14(c)(2) of the final reg-ulations describes cases in which a U.S.person will be considered to have receiveda statement that meets the requirements ofsection 871(h)(5), which permits receiptof the statement by an authorized foreignagent (as described in § 1.1441–7(c)(2)) of a U.S. person. To further co-ordinate with revisions made by thesetemporary regulations to § 1.1441–7(c)(2), including the removal of the al-lowance for the use of an authorized for-eign agent, these temporary regulationsupdate references in § 1.871–14(c)(2) toremove the term authorized foreign agentand replace it with the term authorizedagent.


The IRS and the Treasury Departmentintend to issue additional amendments tothis and other regulatory provisions af-fected by section 502 of the HIRE Act (forexample, the definition of an obligation inregistered form) in separate publishedguidance and seek comments on the re-quirements that should apply under suchamendments. Until such guidance is is-sued, taxpayers may continue to rely onNotice 2012–20 to treat an obligation asan obligation in registered form.

D. Removal of example in § 1.6045–1(g)(4)

In general, § 1.6045–1(c)(2) of the fi-nal regulations requires a broker to make areturn of information for each sale by acustomer of the broker if the broker ef-fects the sale in the ordinary course of atrade or business in which the brokerstands ready to effect sales to be made byothers. Exceptions to the reporting re-quirement of § 1.6045–1(c)(2) of the finalregulations include sales effected for ex-empt recipients within the meaning of§ 1.6045–1(c)(3) and sales made by a bro-ker with respect to a customer who isconsidered to be an exempt foreign personunder § 1.6045–1(g). Example 8 in§ 1.6045–1(g)(4) of the final regulationsdeals with the sale of an obligation pay-able 183 days or less from the date oforiginal issue. These temporary regula-tions remove Example 8 from the finalregulations because the sale of a short-term obligation is generally no longer sub-ject to reporting under section 6045, andformer Example 9 is renumbered to beExample 8.

Special Analyses

It has been determined that this Trea-sury decision is not a significant regula-tory action as defined in Executive Order12866, as supplemented by Executive Or-der 13653. Therefore, a regulatory assess-ment is not required. It also has beendetermined that section 553(b) of the Ad-ministrative Procedure Act (5 U.S.C.Chapter 5) does not apply to these regu-lations.

The collection of information in thesetemporary regulations is contained in anumber of provisions including§§ 1.1441–1, 1.1441–3, 1.1441–4, and

1.1441–5. The IRS intends that the infor-mation collection requirements of thesetemporary regulations will be imple-mented through use of the W–8 series offorms, Form W–9, Form 1042, Form1042–S, the 1099 series of forms, andForm 8966, as well as certain income taxreturns (for example, Forms 1040, 1040-NR, and 1120F) and Form 843 relating torefunds. As a result, for purposes of thePaperwork Reduction Act (44 U.S.C.3507), the reporting burden associatedwith the collection of information in thesetemporary regulations will be reflected inthe information collection burden andOMB control number of the appropriateIRS form.

An agency may not conduct or spon-sor, and a person is not required to re-spond to, a collection of information un-less the collection of information displaysa valid OMB control number.

Books and records relating to a collec-tion of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

Section 202 of the Unfunded MandatesReform Act of 1995, Public Law 104–4,requires that an agency prepare a costsand benefits analysis and a budgetary im-pact statement before promulgating a rulethat may result in the expenditure byState, local, and tribal governments, in theaggregate, or by the private sector, of$100 million or more in any one year. If abudgetary impact statement is required,section 205 of the Unfunded MandatesReform Act requires an agency to identifyand consider a reasonable number of reg-ulatory alternatives before promulgating arule. The Treasury Department and theIRS have determined that there is no fed-eral mandate imposed by this rulemakingthat may result in the expenditure byState, local, and tribal governments, in theaggregate, or by the private sector, of$100 million or more in any one year.

For the applicability of the RegulatoryFlexibility Act (5 U.S.C. chapter 6),please refer to the Special Analyses sec-tion of the preamble to the cross-referenced notice of proposed rulemakingpublished in the Proposed Rules section inthis issue of the Bulletin. Pursuant to sec-

tion 7805(f) of the Internal Revenue Code,these regulations have been submitted tothe Chief Counsel for Advocacy of theSmall Business Administration for com-ment on their impact on small business.


The principal authors of these regula-tions are John Sweeney, Joshua Rabon,Subin Seth, and Nancy Lee of the Officeof Associate Chief Counsel (Interna-tional). However, other personnel fromthe IRS and the Treasury Department par-ticipated in the development of these reg-ulations.

List of Subjects

* * * * ** * * * ** * * * *

Amendments to the Regulations

Accordingly, 26 CFR parts 1, 31, and301 are amended as follows:



Authority: 26 U.S.C. 7805 * * *Par. 2. Section 1.871–14 is amended

by:1. Revising paragraph (b).2. In the last sentence of paragraph

(c)(1)(i)(B), removing the first instance ofthe word “in”.

3. Revising paragraphs (c)(2), (c)(3)(i),(c)(4), and (e)(1).

4. Adding paragraph (i)(3).The additions and revisions read as fol-

lows:

§ 1.871–14 Rules relating to repeal oftax on interest of nonresident alienindividuals and foreign corporationsreceived from certain portfolio debtinvestments.

* * * * *(b) [Reserved]. For further guidance,

see § 1.871–14T(b).(c) * * *(2) through (3)(i) [Reserved]. For fur-

ther guidance, see § 1.871–14T(c)(2) through (c)(3)(i).

* * * * *


(4) [Reserved]. For further guidance,see § 1.871–14T(c)(4).

* * * * *(e)(1) [Reserved]. For further guid-

ance, see § 1.871–14T(e)(1).* * * * *(i) * * *(3) [Reserved]. For further guidance,

see § 1.871–14T(i)(3).Par. 3. Section 1.871–14T is added to

read as follows:

§ 1.871–14T Rules relating to repeal oftax on interest of nonresident alienindividuals and foreign corporationsreceived from certain portfolio debtinvestments (temporary).


(b) Rules concerning obligations inbearer form before March 19, 2012—(1)In general. Interest (including original is-sue discount) with respect to an obligationin bearer form is portfolio interest withinthe meaning of section 871(h)(2)(A) or881(c)(2)(A) only if it is paid with respectto an obligation issued after July 18, 1984,and issued before March 19, 2012, that isdescribed in section 163(f)(2)(B), as ineffect prior to the amendment by section502 of the Hiring Incentives to RestoreEmployment Act of 2010 (HIRE Act),Public Law 111–147, and the regulationsunder that section and an exception undersection 871(h) or 881(c) does not apply.Any obligation that is not in registeredform as defined in paragraph (c)(1)(i) ofthis section is an obligation in bearerform.

(2) Coordination with withholding andreporting rules. For an exemption fromwithholding under section 1441 with re-spect to obligations described in this para-graph (b), see § 1.1441–1(b)(4)(i). See§ 1.1471–2 for rules relating to withhold-ing under chapter 4 of the Code that mayapply to withholdable payments (as de-fined in § 1.1471–4(b)(145)) made on orafter July 1, 2014, with respect to anagreement or instrument that is not treatedas an obligation outstanding before March19, 2012. For purposes of the precedingsentence, the terms obligation and out-standing are described in § 1.1471–2(b)). See also § 1.1471–4(d)(6) for thereporting requirements of participating

foreign financial institutions (as defined in§ 1.1471–1(b)(91)) with respect to ac-counts held by recalcitrant account hold-ers (as defined in § 1.1471–5(g)). Forrules relating to an exemption from Form1099 reporting and backup withholdingunder section 3406, see section 6049 and§ 1.6049–5(b)(8) for the payment of in-terest and § 1.6045–1(g)(1)(ii) for the re-demption, retirement, or sale of an obli-gation in bearer form.

(c)(1) through (c)(1)(ii)(D) [Reserved].For further guidance, see § 1.1871–14(c)(1) introductory text through(c)(1)(ii)(D).

(2) Required statement. For purposesof paragraph (c)(1)(ii)(C) of this section, aU.S. person will be considered to havereceived a statement that meets the re-quirements of section 871(h)(5) if either itcomplies with one of the procedures de-scribed in this paragraph (c)(2) and doesnot have actual knowledge or reason toknow that the beneficial owner is a U.S.person or it complies with the proceduresdescribed in paragraph (d) or (e) of thissection (to the extent applicable).

(i) The U.S. person (or its authorizedagent described in § 1.1441–7(c)(2)) canreliably associate the payment with docu-mentation upon which it can rely to treatthe payment as made to a foreign benefi-cial owner in accordance with § 1.1441–1(e)(1)(ii). See § 1.1441–1(b)(2)(vii) forrules regarding reliable association withdocumentation.

(ii) The U.S. person (or its authorizedagent described in § 1.1441–7(c)(2)) canreliably associate the payment with awithholding certificate described in§ 1.1441–5(c)(2)(iv) from a person claim-ing to be a withholding foreign partner-ship or § 1.1441–5(e)(v) for a personclaiming to be a withholding foreign trust.

(iii) The U.S. person (or its authorizedagent described in § 1.1441–7(c)(2)) canreliably associate the payment with awithholding certificate described in§ 1.1441–1(e)(3)(ii) from a person repre-senting to be a qualified intermediary thathas assumed primary withholding respon-sibility for the payment in accordancewith § 1.1441–1(e)(5)(iv) or a qualifiedintermediary that has provided a with-holding statement that meets the require-ments of § 1.1441–1(e)(5)(v)(C) or thatincludes the payment in a withholding rate

pool for payments excepted from with-holding.

(iv) The U.S. person (or its authorizedagent described in § 1.1441–7(c)(2)) canreliably associate the payment with awithholding certificate described in§ 1.1441–1(e)(3)(v) from a person claim-ing to be a U.S. branch of a foreign bankor of a foreign insurance company that isdescribed in § 1.1441–1(b)(2)(iv)(A) or aU.S. branch designated in accordancewith § 1.1441–1(b)(2)(iv)(E).

(3) Time for providing certificate ordocumentary evidence—(i) General rule.Interest on a registered obligation shallqualify as portfolio interest if the with-holding certificate or documentary evi-dence that must be provided is furnishedbefore expiration of the beneficial owner’speriod of limitation for claiming a refundof tax with respect to such interest. See,however, § 1.1441–1(b)(7) for conse-quences to a withholding agent that makesa payment without withholding eventhough it cannot reliably associate thepayment with the documentation prior tothe payment. If a withholding agent with-holds an amount under chapter 3 of theCode because it cannot reliably associatethe payment with the documentation forthe beneficial owner on the date of pay-ment, the beneficial owner may neverthe-less claim the benefit of an exemptionfrom tax under this section by claiming arefund or credit for the amount withheldbased upon the procedures described in§ § 1.1464–1 and 301.6402–3(e) of thischapter. See § 1.1474–5 and § 301.6402–3(e) for the allowance and requirementsfor a refund with respect to an amount(including a payment of interest) that waswithheld upon under chapter 4 of theCode. In the alternative, adjustments toany amount of overwithheld tax may bemade under the procedures described in§ 1.1461–2(a) for a payment withheldupon under chapter 3 of the Code or in§ 1.1474–2 for a payment withheld uponunder chapter 4 of the Code.


(4) Coordination with withholding andreporting rules. For an exemption fromwithholding under section 1441 with re-spect to obligations described in this para-graph (c)(4), see § 1.1441–1(b)(4)(i). Forrules applicable to withholding certifi-


cates, see § 1.1441–1(e)(4). For rules re-garding documentary evidence, see§ 1.6049–5(c)(1). For application of pre-sumptions when the U.S. person cannotreliably associate the payment with docu-mentation, see § 1.1441–1(b)(3). For stan-dards of knowledge applicable to with-holding agents, see § 1.1441–7(b). Forrules relating to reporting on Forms 1042and 1042–S, see § 1.1461–1(b) and (c).For rules relating to an exemption fromForm 1099 reporting and backup with-holding under section 3406, see section6049 and § 1.6049–5(b)(8) for the pay-ment of interest and § 1.6045–1(g)(1)(i) for the redemption, retirement,or sale of an obligation in registered form.For rules relating to withholding undersections 1471 and 1472 that may applynotwithstanding the exemption for pay-ments of portfolio interest under section1441, see § § 1.1471–2(a), 1.1471–4(b),and 1.1472–1(b).

(d) [Reserved]. For further guidance,see § 1.871–14(d) introductory textthrough (d)(3)(iv).

(e) Foreign-targeted registered obliga-tions—(1) General rule. The statementdescribed in paragraph (c)(1)(ii) of thissection is not required with respect to in-terest paid on an obligation issued beforeJanuary 1, 2016, that is a registered obli-gation targeting foreign markets in accor-dance with the provisions of paragraph(e)(2) of this section if the interest is paidby a U.S. person, a withholding foreignpartnership, or a U.S. branch described in§ 1.1441–1(b)(2)(iv)(A) or (E) to a regis-tered owner at an address outside theUnited States, provided that the registeredowner is a financial institution describedin section 871(h)(5)(B). In that case, theU.S. person otherwise required to deductand withhold tax may treat the interest asportfolio interest if it does not have actualknowledge that the beneficial owner is aUnited States person and if it receives thecertificate described in paragraph (e)(3)(i)of this section from a financial institutionor member of a clearing organization,which member is the beneficial owner ofthe obligation, or the documentary evi-dence or statement described in paragraph(e)(3)(ii) of this section from the benefi-cial owner, in accordance with the proce-dures described in paragraph (e)(4) of thissection.

(2) through (i)(2) [Reserved]. For fur-ther guidance, see § 1.871–14(e)(2) through (i)(2).

(3) Effective/applicability date. Therules of paragraphs (b)(2), (c)(3)(i), and(c)(4) of this section apply to payments ofinterest made after June 30, 2014. (Forpayments of interest made before July 1,2014, see paragraphs (b)(2), (c)(3)(i), and(c)(4) of this section as in effect prior toFebruary 28, 2017.)

(j) Expiration date. The applicability ofthis section expires on or before February28, 2017.

Par. 4. Section 1.1441–1 is amendedby:

1. Revising paragraph (a).2. Revising paragraphs (b)(1), (b)(2)(i),

(b)(2)(iii)(A), (b)(2)(iv)(A), (b)(2)(iv)(B)(2)and (b)(2)(iv)(B)(3).

3. Adding paragraph (b)(2)(iv)(B)(4).4. Revising paragraphs (b)(2)(iv)(C),

(b)(2)(iv)(E), (b)(2)(vi), (b)(2)(vii), (b)(3)(i),(b)(3)(ii), (b)(3)(iii) introductory text, and(b)(3)(iii)(A).

5. Revising paragraphs (b)(3)(iii)(D),(b)(3)(iv) introductory text, (B)(3)(iv)(A),(b)(3)(v)(B), (b)(3)(vi), (b)(3)(vii),(b)(3)(ix)(A), (b)(3)(x), (b)(4) introduc-tory text, (b)(4)(i).

6. Adding paragraph (b)(5)(ix).7. Revising paragraphs (b)(6), (b)(7)(i)

introductory text, (b)(7)(i)(A), (b)(7)(i)(B),(b)(7)(i)(C), (b)(7)(ii), and (b)(7)(iv).

8. Adding paragraph (b)(7)(v).9. Revising paragraphs (c) introductory

text, (c)(2), (c)(5), (c)(10), (c)(12), (c)(16),(c)(17), (c)(25), (c)(28), (c)(29), and (c)(30).

10. Adding paragraphs (c)(31) through(56).

11. Revising paragraph (d)(4).12. Revising paragraphs (e)(1)(ii)(A)(2),

(e)(1)(ii)(A)(3), (e)(2)(ii), (e)(3)(ii) intro-ductory text, (e)(3)(ii)(A), (e)(3)(ii)(C), and(e)(3)(ii)(D).

13. Adding paragraph (e)(3)(ii)(E).14. Revising paragraphs (e)(3)(iii) intro-

ductory text, (e)(3)(iii)(A), (e)(3)(iii)(C),and (e)(3)(iii)(D).

15. Adding paragraph (e)(3)(iii)(E).16. Revising paragraphs (e)(3)(iv)(A),

(e)(3)(iv)(B), and (e)(3)(iv)(C).17. Revising paragraphs (e)(3)(iv)(D)(1)

through (6), (e)(3)(iv)(E), and (e)(3)(v).18. Revising paragraphs (e)(4) introductory

text, (e)(4)(i), (e)(4)(ii)(A), (e)(4)(ii)(B)(1)through (6), and (e)(4)(ii)(B)(8), and add-

ing paragraphs (e)(4)(ii)(B)(9) through(12).

19. Revising paragraphs (e)(4)(ii)(C)and (D).

20. Revising paragraphs (e)(4)(iii),(e)(4)(iv)(A), (e)(4)(iv)(C), (e)(4)(v),(e)(4)(vi), (e)(4)(vii) introductory text,(e)(4)(vii)(A), (e)(4)(vii)(F), and (e)(4)(vii)(H).

21. Adding paragraph (e)(4)(vii)(I).22. Revising paragraph (e)(4)(viii)(B)

and adding paragraph (e)(4)(viii)(C).23. Revising paragraphs (e)(4)(ix) and

(e)(5).24. Adding paragraph (f)(3).The revisions and additions read as fol-

lows:

§ 1.1441–1 Requirement for thededuction and withholding of tax onpayments to foreign persons.

(a) [Reserved]. For further guidance,see § 1.1441–1T(a).

(b) * * *(1) [Reserved]. For further guidance,

see § 1.1441–1T(b)(1).(2) * * *(i) [Reserved]. For further guidance,

see § 1.1441–1T(b)(2)(i).* * * * *(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1441–1T(b)(2)(iii)(A).* * * * *(iv) * * *(A) [Reserved]. For further guidance,

see § 1.1441–1T(b)(2)(iv)(A).(B) * * *(2) through (4) [Reserved]. For further

guidance, see § 1.1441–1T(b)(2)(iv)(B)(2)through (b)(2)(iv)(B)(4).

(C) [Reserved]. For further guidance,see § 1.1441–1T(b)(2)(iv)(C).

* * * * *(E) [Reserved]. For further guidance,

see § 1.1441–1T(b)(2)(iv)(E).* * * * *(vi) [Reserved]. For further guidance,

see § 1.1441–1T(b)(2)(vi).(vii) * * *(B) * * *(b)(2)(vii)(B)(1) through (b)(2)(vii)(E)(2)

[Reserved]. For further guidance, see§ 1.1441–1T(b)(2)(vii)(B)(1) through(b)(2)(vii)(E)(2).

(F) [Reserved]. For further guidance,see § 1.1441–1T(b)(2)(vii(F).



see § 1.1441–1T(b)(3)(i).(ii) * * *(A) through (C) [Reserved]. For further

guidance, see § 1.1441–1T(b)(3)(ii)(A)trough (b)(3)(ii)(C).

(iii) [Reserved]. For further guidance,see § 1.1441–1T(b)(3)(iii).

(A) [Reserved]. For further guidance,see § 1.1441–1T(b)(3)(iii)(A).

(1) [Reserved]. For further guidance,see § 1.1441–1T(b)(3)(iii)(A)(1).


see § 1.1441–1T(b)(3)(iii)(A)(1)(iii).(iv) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(iii)(A)(1)(iv).(v) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(iii)(A)(1)(v).(2) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(iii)(A)(2).* * * * *(D) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(iii)(D).* * * * *(iv) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(iv).(A) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(iv)(A).* * * * *(v) * * *(B) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(v)(B).(vi) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(vi).(vii) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(vii).* * * * *(ix) * * *(A) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(ix)(A).* * * * *(x) [Reserved]. For further guidance,

see § 1.1441–1T(b)(3)(x).(4) [Reserved]. For further guidance,

see § 1.1441–1T(b)(4).(i) [Reserved]. For further guidance,

see § 1.1441–1T(b)(4)(i).* * * * *(5) * * *(ix) [Reserved]. For further guidance,

see § 1.1441–1T(b)(5)(ix).(6) [Reserved]. For further guidance,

see § 1.1441–1T(b)(6).(7) * * *

(i) [Reserved]. For further guidance,see § 1.1441–1T(b)(7)(i).

(A) through (C) [Reserved]. For furtherguidance, see § 1.1441–1T(b)(7)(i)(A)through (b)(7)(i)(C).

* * * * *(ii) [Reserved]. For further guidance,

see § 1.1441–1T(b)(7)(ii).* * * * *(iv) [Reserved]. For further guidance,

see § 1.1441–1T(b)(7)(iv).(v) [Reserved]. For further guidance,

see § 1.1441–1T(b)(7)(v).* * * * *(c) [Reserved]. For further guidance,

see § 1.1441–1T(c).* * * * *(2) [Reserved]. For further guidance,

see § 1.1441–1T(c)(2).* * * * *(5) [Reserved]. For further guidance,



see § 1.1441–1T(c)(12).* * * * *(c)(16) through (c)(17) [Reserved]. For

further guidance, see § 1.1441–1T(c)(16)through (c)(17).


see § 1.1441–1T(c)(25).* * * * *(c)(28) through (c)(56) [Reserved]. For

further guidance, see § 1.1441–1T(c)(28)through (c)(56).

(d) * * *(4) [Reserved]. For further guidance,

see § 1.1441–1T(d)(4).(e) * * *(1) * * *(ii) * * *(A) * * *(2) through (e)(1)(ii)(A)(3) [Reserved].

For further guidance, see § 1.1441–1T(e)(1)(ii)(A)(2) through (e)(1)(ii)(A)(3).

* * * * *(2) * * *(ii) [Reserved]. For further guidance,

see § 1.1441–1T(e)(2)(ii).(3) * * *(ii) [Reserved]. For further guidance,

see § 1.1441–1T(e)(3)(ii).

(A) [Reserved]. For further guidance,see § 1.1441–1T(e)(3)(ii)(A).

* * * * *(C) through (E) [Reserved]. For further

guidance, see § 1.1441–1T(e)(3)(ii)(C)through (e)(3)(ii)(E).

(iii) [Reserved]. For further guidance,see § 1.1441–1T(e)(3)(iii).

(A) [Reserved]. For further guidance,see § 1.1441–1T(e)(3)(iii)(A).

* * * * *(C) through (E) [Reserved]. For further

guidance, see § 1.1441–1T(e)(3)(iii)(C)through (e)(3)(iii)(E).

(iv) * * *(A) [Reserved]. For further guidance,

see § 1.1441–1T(e)(3)(iv)(A) through (C).(D) * * *(1) [Reserved]. For further guidance,

see § 1.1441–1T(e)(3)(iv)(D)(1).(2) [Reserved]. For further guidance,





see § 1.1441–1T(e)(3)(iv)(D)(6).* * * * *(E) [Reserved]. For further guidance,

see § 1.1441–1T(e)(3)(iv)(E).(v) [Reserved]. For further guidance,

see § 1.1441–1T(e)(3)(v).* * * * *(4) [Reserved]. For further guidance,


see § 1.1441–1T(e)(4)(i).(ii) * * *(A) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(ii)(A).(B) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(ii)(B).* * * * *(8) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(ii)(B)(8).(9) [Reserved]. For further guidance,




see § 1.1441–1T(e)(4)(ii)(B)(12).


(C) [Reserved]. For further guidance,see § 1.1441–1T(e)(4)(ii)(C).

(D) [Reserved]. For further guidance,see § 1.1441–1T(e)(4)(ii)(D).

(iii) [Reserved]. For further guidance,see § 1.1441–1T(e)(4)(iii).

(iv) * * *(A) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(iv)(A).* * * * *(C) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(iv)(C).(v) through (vii) [Reserved]. For fur-

ther guidance, see § 1.1441–1T(e)(4)(v) through (e)(4)(vii).

(A) [Reserved]. For further guidance,see § 1.1441–1T(e)(4)(vii)(A).

* * * * *(F) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(vii)(F).* * * * *(H) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(vii)(H).(I) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(vii)(I).(viii) * * *(B) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(viii)(B).(C) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(viii)(C).(ix) [Reserved]. For further guidance,

see § 1.1441–1T(e)(4)(ix).(5) [Reserved]. For further guidance,

see § 1.1441–1T(e)(5).(f) * * *(3) [Reserved]. For further guidance,

see § 1.1441–1T(f)(3).Par. 5. Section 1.1441–1T is added to

read as follows:

§ 1.1441–1T Requirement for thededuction and withholding of tax onpayments to foreign persons(temporary).

(a) Purpose and scope. This section,§ § 1.1441–2 through 1.1441–9, and1.1443–1 provide rules for withholdingunder sections 1441, 1442, and 1443when a payment is made to a foreignperson. This section provides definitionsof terms used in chapter 3 of the InternalRevenue Code (Code) and regulationsthereunder. It prescribes procedures to de-termine whether an amount must be with-held under chapter 3 of the Code anddocumentation that a withholding agent

may rely upon to determine the status of apayee or a beneficial owner as a U.S.person or as a foreign person and otherrelevant characteristics of the payee thatmay affect a withholding agent’s obliga-tion to withhold under chapter 3 of theCode and the regulations thereunder. Spe-cial procedures regarding payments to for-eign persons that act as intermediaries arealso provided. Section 1.1441–2 definesthe income subject to withholding undersection 1441, 1442, and 1443 and the reg-ulations under these sections. Section1.1441–3 provides rules regarding theamount subject to withholding and rulesfor coordinating withholding under thissection with withholding under section1445 and under chapter 4 of the Code.Section 1.1441–4 provides exemptionsfrom withholding for, among other things,certain income effectively connected withthe conduct of a trade or business in theUnited States, including certain compen-sation for the personal services of an in-dividual. Section 1.1441–5 provides rulesfor withholding on payments made toflow-through entities and other similar ar-rangements. Section 1.1441–6 providesrules for claiming a reduced rate of with-holding under an income tax treaty. Sec-tion 1.1441–7 defines the term withhold-ing agent and provides due diligence rulesgoverning a withholding agent’s obliga-tion to withhold. Section 1.1441–8 pro-vides rules for relying on claims of ex-emption from withholding for paymentsto a foreign government, an internationalorganization, a foreign central bank ofissue, or the Bank for International Settle-ments. Sections 1.1441–9 and 1.1443–1provide rules for relying on claims of ex-emption from withholding for paymentsto foreign tax exempt organizations andforeign private foundations.

(b) General rules of withholding—(1)Requirement to withhold on payments toforeign persons. A withholding agentmust withhold 30-percent of any paymentof an amount subject to withholding madeto a payee that is a foreign person unless itcan reliably associate the payment withdocumentation upon which it can rely totreat the payment as made to a payee thatis a U.S. person or as made to a beneficialowner that is a foreign person entitled to areduced rate of withholding. However, awithholding agent making a payment to a

foreign person need not withhold wherethe foreign person assumes responsibilityfor withholding on the payment underchapter 3 of the Code and the regulationsthereunder as a qualified intermediary (seeparagraph (e)(5) of this section), as a U.S.branch of a foreign person (see paragraph(b)(2)(iv) of this section), as a withholdingforeign partnership (see § 1.1441–5(c)(2)(i)), or as a withholding foreigntrust (see § 1.1441–5(e)(5)(v)). Withhold-ing is also not required under this sectionwhen withholding under chapter 4 wasapplied to the payment. See § 1.1441–3(a)(2). This section (dealing with generalrules of withholding and claims of foreignor U.S. status by a payee or a beneficialowner), and § § 1.1441–4, 1.1441–5,1.1441–6, 1.1441–8, 1.1441–9, and1.1443–1 provide rules for determiningwhether documentation is required as acondition for reducing the rate of with-holding on a payment to a foreign bene-ficial owner or to a U.S. payee and if so,the nature of the documentation uponwhich a withholding agent may rely inorder to reduce such rate. Paragraph (b)(2)of this section prescribes the rules for de-termining who the payee is, the extent towhich a payment is treated as made to aforeign payee, and reliable association ofa payment with documentation. Paragraph(b)(3) of this section describes the appli-cable presumptions for determining thepayee’s status as U.S. or foreign and thepayee’s other characteristics (i.e., as anowner or intermediary, as an individual,partnership, corporation, etc.). Paragraph(b)(4) of this section lists the types ofpayments for which the 30-percent with-holding rate may be reduced. Because thetreatment of a payee as a U.S. or a foreignperson also has consequences for pur-poses of making an information returnunder the provisions of chapter 61 of theCode and for withholding under other pro-visions of the Code, such as sections3402, 3405 or 3406, paragraph (b)(5) ofthis section lists applicable provisions out-side chapter 3 of the Code that requirecertain payees to establish their foreignstatus (for example, in order to be exemptfrom information reporting). Paragraph(b)(6) of this section describes the with-holding obligations of a foreign personmaking a payment that it has received inits capacity as an intermediary. Paragraph


(b)(7) of this section describes the liabilityof a withholding agent that fails to with-hold at the required 30-percent rate in theabsence of documentation. Paragraph(b)(8) of this section deals with adjust-ments and refunds in the case of overwith-holding. Paragraph (b)(9) of this sectiondeals with determining the status of thepayee when the payment is jointly owned.See paragraph (c)(6) of this section for adefinition of beneficial owner. See§ 1.1441–7(a) for a definition of withhold-ing agent. See § 1.1441–2(a) for the de-termination of an amount subject to with-holding. See § 1.1441–2(e) for thedefinition of a payment and when it isconsidered made. Except as otherwiseprovided, the provisions of this sectionapply only for purposes of determining awithholding agent’s obligation to with-hold under chapter 3 of the Code and theregulations thereunder.

(2) Determination of payee and pay-ee’s status—(i) In general. Except as oth-erwise provided in this paragraph (b)(2)and § 1.1441–5(c)(1) and (e)(3), a payeeis the person to whom a payment is made,regardless of whether such person is thebeneficial owner of the amount (as definedin paragraph (c)(6) of this section). A for-eign payee is a payee who is a foreignperson. A U.S. payee is a payee who is aU.S. person. Generally, the determinationby a withholding agent of the U.S. orforeign status of a payee and of its otherrelevant characteristics (e.g., as a benefi-cial owner or intermediary, or as an indi-vidual, corporation, or flow-through en-tity) is made on the basis of a withholdingcertificate that is a Form W–8 or a Form8233 (indicating foreign status of thepayee or beneficial owner) or a Form W–9(indicating U.S. status of the payee). Theprovisions of this paragraph (b)(2), para-graph (b)(3) of this section, and § 1.1441–5 (c), (d), and (e) dealing with determina-tions of payee and applicablepresumptions in the absence of documen-tation, apply only to payments of amountssubject to withholding under chapter 3 ofthe Code (within the meaning of§ 1.1441–2(a)). However, for a paymentthat is both an amount subject to with-holding under chapter 3 and a withhold-able payment under chapter 4, first applythe rules of § 1.1471–3 for determiningthe payee of a withholdable payment un-

der chapter 4 and applicable presumptionsin the absence of documentation applica-ble to such payments. See also § 1.6049–5(d) for payments of amounts that are notsubject to withholding under chapter 3 ofthe Code (or the regulations thereunder)but that may be reportable under provi-sions of chapter 61 of the Code (and theregulations thereunder). See paragraph (d)of this section for documentation uponwhich the withholding agent may rely inorder to treat the payee or beneficialowner as a U.S. person. See paragraph (e)of this section for documentation uponwhich the withholding agent may rely inorder to treat the payee or beneficialowner as a foreign person. For applicablepresumptions of status in the absence ofdocumentation, see paragraph (b)(3) ofthis section and § 1.1441–5(d). For defi-nitions of a foreign person and U.S. per-son, see paragraph (c)(2) of this section.


(iii) Payments to wholly-owned enti-ties—(A) Foreign-owned domestic entity.A payment to a wholly-owned domesticentity that is disregarded for federal taxpurposes under § 301.7701–2(c)(2) of thischapter as an entity separate from itsowner and whose single owner is a for-eign person shall be treated as a paymentto the owner of the entity, subject to theprovisions of paragraph (b)(2)(iv) of thissection. For purposes of this paragraph(b)(2)(iii)(A), a domestic entity means aperson that would be treated as a U.S.person if it had an election in effect under§ 301.7701–3(c)(1)(i) of this chapter to betreated as a corporation. For example, alimited liability company, A, organizedunder the laws of the State of Delaware,opens an account at a U.S. bank. Uponopening of the account, the bank requestsA to furnish a Form W–9 as requiredunder section 6049(a) and the regulationsunder that section. A does not have anelection in effect under § 301.7701–3(c)(1)(i) of this chapter and, therefore, isnot treated as an organization taxable as acorporation, including for purposes of theexempt recipient provisions in § 1.6049–4(c)(1). If A has a single owner and theowner is a foreign person (as defined inparagraph (c)(2) of this section), then Amay not furnish a Form W–9 because itmay not represent that it is a U.S. person

for purposes of the provisions of chapters3, 4, and 61 of the Code, and section 3406.Therefore, A must furnish a Form W–8with the name, address, and taxpayeridentifying number (TIN) (if required) ofthe foreign person who is the single ownerin the same manner as if the account wereopened directly by the foreign singleowner. See § § 1.894–1T(d) and 1.1441–6(b)(2) for special rules where the entity’sowner is claiming a reduced rate of with-holding under an income tax treaty.

(B) [Reserved]. For further guidance,see § 1.1441–1(b)(2)(iii)(B).

(iv) Payments to a U.S. branch of cer-tain foreign banks or foreign insurancecompanies —(A) U.S. branch treated as aU.S. person in certain cases. A paymentto a U.S. branch of a foreign person is apayment to a foreign person. However, aU.S. branch of a participating FFI, regis-tered deemed compliant FFI or NFFE thatis described in this paragraph(b)(2)(iv)(A) may agree to be treated as aU.S. person for purposes of withholdingon specified payments to the U.S. branch.See § 1.1471–3(d) for rules regarding howa withholding agent may determine thechapter 4 status of an entity. If a U.S.branch agrees to be treated as a U.S. per-son with a withholding agent, it is re-quired to act as a U.S. person with respectto all other withholding agents, includingwhen acting as an intermediary with re-spect to withholdable payments for pur-poses of chapter 4. See § 1.1471–3(a)(3)(iv). In such cases, the U.S. branchis treated as a payee that is a U.S. person.Notwithstanding the preceding sentence, awithholding agent making a payment to aU.S. branch treated as a U.S. person underthis paragraph (b)(2)(iv)(A) shall not treatthe branch as a U.S. person for purposesof reporting the payment made to thebranch. Therefore, a payment to such U.S.branch shall be reported on Form 1042–Sunder § 1.1461–1(c) and § 1.1474–1(d)(1)(i)for a payment of U.S. source FDAP in-come that is a chapter 4 reportable amountas defined in § 1.1471–1(b)(16). Further, aU.S. branch that is treated as a U.S. personunder this paragraph (b)(2)(iv)(A) shallnot be treated as a U.S. person for pur-poses of the withholding certificate it pro-vides to a withholding agent. Therefore,the U.S. branch must furnish a U.S.branch withholding certificate on a Form


W–8IMY as provided in paragraph(e)(3)(v) of this section and not a FormW–9. An agreement to treat a U.S. branchas a U.S. person must be evidenced by aU.S. branch withholding certificate de-scribed in paragraph (e)(3)(v) of this sec-tion furnished by the U.S. branch to thewithholding agent. A U.S. branch de-scribed in this paragraph (b)(2)(iv)(A) isany U.S. branch of a foreign bank subjectto regulatory supervision by the FederalReserve Board or a U.S. branch of a for-eign insurance company required to file anannual statement on a form approved bythe National Association of InsuranceCommissioners with the Insurance De-partment of a State, a Territory, or theDistrict of Columbia. In addition, a terri-tory financial institution (including a ter-ritory financial institution that is a flow-through entity) will be treated as a U.S.branch for purposes of this paragraph(b)(2)(iv)(A). The Internal Revenue Ser-vice (IRS) may approve a list of U.S.branches that may qualify for treatment asa U.S. person under this paragraph(b)(2)(iv)(A) (see § 601.601(d)(2) of thischapter). See § 1.6049–5(c)(5)(vi) for thetreatment of U.S. branches as U.S. payorsif they make a payment that is subject toreporting under chapter 61 of the InternalRevenue Code. Also see § 1.6049–5(d)(1)(ii) for the treatment of U.S.branches as foreign payees under chapter61 of the Internal Revenue Code.

(B) [Reserved]. For further guidance,see § 1.1441–1(b)(2)(iv)(B).

(1) [Reserved]. For further guidance,see § 1.1441–1(b)(2)(iv)(B)(1).

(2) As a payment directly to the per-sons whose names are on withholding cer-tificates or other appropriate documenta-tion forwarded by the U.S. branch to thewithholding agent when no agreement isin effect to treat the U.S. branch as a U.S.person for such payment, to the extent thewithholding agent can reliably associatethe payment with such certificates or doc-umentation;

(3) As a payment to a foreign person ofincome that is effectively connected withthe conduct of a trade or business in theUnited States if the withholding agent hasobtained an EIN for the branch and cannotreliably associate the payment with awithholding certificate from a U.S. branch(or any other certificate or other appropri-

ate documentation from another person).See § 1.1441–4(a)(2)(ii); or

(4) As a payment to a foreign person ofincome that is not effectively connectedwith the conduct of a trade or business inthe United States if the withholding agenthas not obtained an EIN for the branchand cannot reliably associate the paymentwith a withholding certificate from theU.S. branch.

(C) Consequences to the U.S. branch.A U.S. branch that is treated as a U.S.person under paragraph (b)(2)(iv)(A) ofthis section shall be treated as a separateperson for purposes of section 1441(a)and all other provisions of chapters 3 and4 of the Internal Revenue Code and theregulations thereunder (other than for pur-poses of reporting the payment to the U.S.branch under § 1.1461–1(c) and§ 1.1474–1(d)(1)(i) for a chapter 4 report-able amount) or for purposes of the doc-umentation such a branch must furnishunder paragraph (e)(3)(v) of this section)for any payment that it receives as such.Thus, the U.S. branch shall be responsiblefor withholding on the payment in accor-dance with the provisions under chapters3 and 4 of the Internal Revenue Code andthe regulations thereunder and other ap-plicable withholding provisions of the In-ternal Revenue Code. For this purpose, itshall obtain and retain documentationfrom payees or beneficial owners of thepayments that it receives as a U.S. personin the same manner as if it were a separateentity. For example, if a U.S. branch re-ceives a payment on behalf of its homeoffice and the home office is a qualifiedintermediary, the U.S. branch must obtaina qualified intermediary withholding cer-tificate described in paragraph (e)(3)(ii) ofthis section from its home office. In addi-tion, a U.S. branch that has not provideddocumentation to the withholding agentfor a payment that is, in fact, not effec-tively connected income is a withholdingagent with respect to that payment. Seeparagraph (b)(6) of this section and§ 1.1441–4(a)(2)(ii).

(D) [Reserved]. For further guidance,see § 1.1441–1(b)(2)(iv)(D).

(E) Payments to other U.S. branches.Similar withholding procedures may ap-ply to payments to U.S. branches that arenot described in paragraph (b)(2)(iv)(A)of this section to the extent permitted by

the IRS. Any such branch must establishthat its situation is analogous to that of aU.S. branch described in paragraph(b)(2)(iv)(A) of this section. In the alter-native, the branch must establish that thewithholding and reporting requirementsunder chapter 3 of the Code and the reg-ulations thereunder impose an undue ad-ministrative burden and that the collectionof the tax imposed by section 871(a) or881(a) on the foreign person (or its mem-bers in the case of a foreign partnership)will not be jeopardized by the exemptionfrom withholding. Generally, an undueadministrative burden will be found toexist in a case where the person entitled tothe income, such as a foreign insurancecompany, receives from the withholdingagent income on securities issued by asingle corporation, some of which is, andsome of which is not, effectively con-nected with conduct of a trade or businesswithin the United States and the criteriafor determining the effective connectionare unduly difficult to apply because ofthe circumstances under which such secu-rities are held. No exemption from with-holding shall be granted under this para-graph (b)(2)(iv)(E) unless the personentitled to the income complies with suchother requirements as may be imposed bythe IRS and unless the IRS is satisfied thatthe collection of the tax on the incomeinvolved will not be jeopardized by theexemption from withholding. The IRSmay prescribe such procedures as are nec-essary to make these determinations (see§ 601.601(d)(2) of this chapter).


(vi) Other payees. A payment to a per-son described in § 1.6049–4(c)(1)(ii) thatthe withholding agent would treat as apayment to a foreign person without ob-taining documentation for purposes of in-formation reporting under section 6049 (ifthe payment were interest) is treated as apayment to a foreign payee for purposesof chapter 3 of the Code and the regula-tions thereunder (or to a foreign beneficialowner to the extent provided in paragraph(e)(1)(ii)(A) (6) or (7) of this section).Further, a payment that the withholdingagent can reliably associate with docu-mentary evidence described in § 1.6049–5(c)(1) relating to the payee is treated as apayment to a foreign payee. See § 1.1441–


5(b)(1) and (c)(1) for payee determina-tions for payments to partnerships. See§ 1.1441–5(e) for payee determinationsfor payments to foreign trusts or foreignestates.

(vii) [Reserved]. For further guidance,see § 1.1441–1(b)(2)(vii) introductorytext and (b)(2)(vii)(A).

(B) Special rules applicable to a with-holding certificate from a nonqualified in-termediary or flow-through entity—(1) Inthe case of a payment made to a nonquali-fied intermediary, a flow-through entity(as defined in paragraph (c)(23) of thissection), or a U.S. branch described inparagraph (b)(2)(iv) of this section (otherthan a U.S. branch that is treated as a U.S.person), a withholding agent can reliablyassociate the payment with valid docu-mentation only to the extent that, prior tothe payment, the withholding agent canallocate the payment to a valid nonquali-fied intermediary, flow-through, or U.S.branch withholding certificate (and awithholding certificate provided by a non-participating FFI with respect to a portionof a payment that is a withholdable pay-ment allocated to an exempt beneficialowner as described in § 1.1471–3(c)(3)(iii)(B)(4)); the withholding agentcan reliably determine how much of thepayment relates to valid documentationprovided by a payee as determined underparagraph (c)(12) of this section (i.e., aperson that is not itself an intermediary,flow-through entity, or U.S. branch); andthe withholding agent has sufficient infor-mation to report the payment on Form1042–S or Form 1099, if reporting is re-quired. See, however, paragraph (e)(3)(iv)of this section for when a nonqualifiedintermediary may report payees to thewithholding agent in a chapter 4 withhold-ing rate pool, in which case a withholdingagent need not associate the portion of thepayment attributable to such payees withdocumentation from each such payee. Seealso paragraph (e)(3)(iii) of this sectionfor the requirements of a nonqualified in-termediary withholding certificate, para-graph (e)(3)(v) of this section for the re-quirements of a U.S. branch certificate,and §§ 1.1441–5(c)(3)(iii) and (e)(5)(iii)for the requirements of a flow-throughwithholding certificate (including the re-quirements for a withholding certificateassociated with a withholdable payment).

Thus, a payment cannot be reliably asso-ciated with valid documentation providedby a payee to the extent such documenta-tion is lacking or unreliable, or to theextent that information required to allo-cate and report all or a portion of thepayment to each payee is lacking or unre-liable. If a withholding certificate attachedto an intermediary, U.S. branch, or flow-through withholding certificate is anotherintermediary, U.S. branch, or flow-through withholding certificate, the rulesof this paragraph (b)(2)(vii)(B) apply bytreating the share of the payment allocableto the other intermediary, U.S. branch, orflow-through entity as if the payment weremade directly to such other entity. Seeparagraph (e)(3)(iv)(D) of this section forrules permitting information allocating apayment to documentation to be receivedafter the payment is made.

(2) The rules of paragraph(b)(2)(vii)(B)(1) of this section are illus-trated by the following examples. Eachexample illustrates a payment that is not awithholdable payment and, therefore, nei-ther the chapter 4 status of the NQI norpayee specific documentation is requiredto be provided to the withholding agent(and no withholding applies under chapter4 on each payment). See paragraph(e)(3)(iv)(C) of this section for the re-quirements of a withholding statementprovided by a nonqualified intermediarythat receives a withholdable payment andfor an example illustrating the require-ments of an NQI providing a withholdingstatement to a withholding agent for awithholdable payment.

Example 1. WA, a withholding agent, makes apayment of U.S. source interest with respect to agrandfathered obligation as described in § 1.1471–2(b) (and thus the payment is not a withholdablepayment) to NQI, an intermediary that is a nonquali-fied intermediary. NQI provides a valid intermediarywithholding certificate under paragraph (e)(3)(iii) ofthis section. NQI does not, however, provide validdocumentation from the persons on whose behalf itreceives the interest payment, and, therefore, theinterest payment cannot be reliably associated withvalid documentation provided by a payee. WA mustapply the presumption rules of paragraph (b)(3)(v) ofthis section to the payment.

Example 2. The facts are the same as in Example1, except that NQI does attach valid beneficial ownerwithholding certificates (as defined in paragraph(e)(2)(i) of this section) from A, B, C, and D estab-lishing their status as foreign persons. NQI does not,however, provide WA with any information allocat-ing the payment among A, B, C, and D and, there-fore, WA cannot determine the portion of the pay-

ment that relates to each beneficial ownerwithholding certificate. The interest payment cannotbe reliably associated with valid documentation froma payee and WA must apply the presumption rules ofparagraph (b)(3)(v) of this section to the payment.See, however, paragraph (e)(3)(iv)(D) of this sectionproviding for alternative procedures that allow anonqualified intermediary to provide allocation in-formation after a payment is made.

Example 3. The facts are the same as in Example2, except that NQI provides allocation informationassociated with its intermediary withholding certifi-cate indicating that 25% of the interest payment isallocable to A and 25% to B. NQI does not provideany allocation information regarding the remaining50% of the payment. WA may treat 25% of thepayment as made to A and 25% as made to B. Theremaining 50% of the payment cannot be reliablyassociated with valid documentation from a payee,however, since NQI did not provide informationallocating the payment. Thus, the remaining 50% ofthe payment is subject to the presumption rules ofparagraph (b)(3)(v) of this section.

Example 4. WA makes a payment of U.S. sourceinterest to NQI1, an intermediary that is not a qual-ified intermediary. NQI1 provides WA with a validnonqualified intermediary withholding certificate aswell valid beneficial owner withholding certificatesfrom A and B and a valid nonqualified intermediarywithholding certificate from NQI2. NQI2 has pro-vided valid beneficial owner documentation from Csufficient to establish C’s status as a foreign person.Based on information provided by NQI1, WA canallocate 20% of the interest payment to A, and 20%to B. Based on information that NQI2 providedNQI1 and that NQI1 provides to WA, WA canallocate 60% of the payment to NQI2, but can onlyallocate one half of that payment (30%) to C. There-fore, WA cannot reliably associate the remainder ofthe payment made to NQI2 (30% of the total pay-ment) with valid documentation and must apply thepresumption rules of paragraph (b)(3)(v) of this sec-tion to that portion of the payment.

(C) Special rules applicable to a with-holding certificate provided by a qualifiedintermediary that does not assume pri-mary withholding responsibility—(1) If apayment is made to a qualified intermedi-ary that does not assume primary with-holding responsibility under chapter 3 ofthe Internal Revenue Code or primaryForm 1099 reporting and backup with-holding responsibility under chapter 61and section 3406 of the Internal RevenueCode for the payment, a withholdingagent can reliably associate the paymentwith valid documentation only to the ex-tent that, prior to the payment, the with-holding agent has received a valid quali-fied intermediary withholding certificatedescribed in paragraph (e)(3)(ii) of thissection and the withholding agent can re-liably determine the portion of the pay-ment that relates to a chapter 3 withhold-


ing rate pool, as defined in paragraph(c)(44) of this section, a chapter 4 with-holding rate pool (including for a with-holdable payment as described in para-graph (e)(5)(v)(C)(2) of this section) asdefined in paragraph (c)(48) of this sec-tion, or a pool attributable to U.S. exemptrecipients. In the case of a withholdingrate pool attributable to a U.S. non-exempt recipient, a payment cannot bereliably associated with valid documenta-tion unless, prior to the payment, the qual-ified intermediary has provided the U.S.person’s Form W–9 (or, in the absence ofthe form, the name, address, and TIN, ifavailable, of the U.S. person) and suffi-cient information for the withholdingagent to report the payment on Form1099. See, however, paragraph(e)(5)(v)(C)(3) of this section for alterna-tive procedures for allocating paymentsamong U.S. non-exempt recipients andparagraphs (e)(5)(iv)(C)(1) and (2) of thissection for when a chapter 4 withholdingrate pool of U.S. payees may be providedby a qualified intermediary instead of doc-umentation with respect to each U.S. non-exempt recipient.

(2) The rules of this paragraph(b)(2)(vii)(C) are illustrated by the follow-ing examples:

Example 1. WA, a withholding agent, makes apayment of U.S. source dividends that is a withhold-able payment to QI. QI provides WA with a validqualified intermediary withholding certificate onwhich it indicates that it does not assume primarywithholding responsibility under chapters 3 and 4 orprimary Form 1099 reporting and backup withhold-ing responsibility under chapter 61 and section 3406.QI does not provide any information allocating thedividend to withholding rate pools. WA cannot reli-ably associate the payment with valid payee docu-mentation and therefore must apply the presumptionrules applicable to a withholdable payment under§ 1.1471–3(f)(5) to determine the status of the payeefor purposes of chapter 4. See Example 2 for anapplication of the presumption rules under § 1.1471–3(f).

Example 2. WA makes a payment of U.S. sourcedividends that is a withholdable payment to QI,which is an NFFE. QI has 5 customers: A, B, C, D,and E, all of whom are individuals except for C. QIhas obtained valid documentation from A and Bestablishing their entitlement to a 15% rate of tax onU.S. source dividends under an income tax treaty. Cis a U.S. person that is an exempt recipient as definedin paragraph (c)(20) of this section. D and E are U.S.non-exempt recipients who have provided FormsW–9 to QI. A, B, C, D, and E are each entitled to20% of the dividend payment. QI provides WA witha valid qualified intermediary withholding certificateas described in paragraph (e)(3)(ii) of this section

with which it associates the Forms W–9 from D andE. QI associates the following allocation informationwith its qualified intermediary withholding certifi-cate: 40% of the payment is allocable to the 15%chapter 3 withholding rate pool, and 20% is allocableto each of D and E. QI does not provide any alloca-tion information regarding the remaining 20% of thepayment. WA cannot reliably associate 20% of thepayment with valid documentation and, therefore,must apply the presumption rules applicable to awithholdable payment. Because QI is receiving awithholdable payment as an intermediary, underparagraph (b)(3)(iii) of this section WA must applythe presumption rule of § 1.1471–3(f)(5) to treat theportion of the payment that cannot reliably be asso-ciated with valid documentation as made to a non-participating FFI account holder of QI. As a result,WA is required to withhold at a 30% rate of taxunder chapter 4. See § 1.1441–3(a)(2) permittingWA to credit the amount withheld under chapter 4against the liability for tax due on the payment undersection 1441. The 40% of the payment allocable tothe 15% withholding rate pool, and the portion of thepayments allocable to D and E are payments that canbe reliably associated with documentation.

(D) Special rules applicable to a with-holding certificate provided by a qualifiedintermediary that assumes primary with-holding responsibility under chapter 3 ofthe Internal Revenue Code—(1) In thecase of a payment made to a qualifiedintermediary that assumes primary with-holding responsibility under chapter 3 ofthe Internal Revenue Code with respect tothat payment (but does not assume pri-mary Form 1099 reporting and backupwithholding responsibility under chapter61 of the Internal Code and section 3406),a withholding agent can reliably associatethe payment with valid documentationonly to the extent that, prior to the pay-ment, the withholding agent has receiveda valid qualified intermediary withholdingcertificate and the withholding agent canreliably determine the portion of the pay-ment that relates to the withholding ratepool for which the qualified intermediaryassumes primary withholding responsibil-ity and the portion of the payment attrib-utable to withholding rate pools for eachU.S. non-exempt recipient for whom thequalified intermediary has provided aForm W–9 (or, in absence of the form, thename, address, and TIN, if available, ofthe U.S. non-exempt recipient). See para-graph (e)(5)(iv) of this section (requiring aqualified intermediary assuming primarywithholding responsibility under chapter 3to assume primary withholding responsi-bility under chapter 4). See also paragraph(e)(5)(v)(C)(3) of this section for alterna-

tive allocation procedures for paymentsmade to U.S. persons that are not exemptrecipients and paragraphs (e)(5)(v)(C)(1)and (2) of this section for when a qualifiedintermediary may provide a chapter 4withholding rate pool of U.S. payees to awithholding agent instead of documenta-tion with respect to each U.S. non-exemptrecipient.

(2) Examples. The following examplesillustrate the rules of paragraph(b)(2)(vii)(D)(1) of this section. However,see the example in paragraph (e)(5)(v)(D)for rules for reporting of U.S. non-exemptrecipients when a qualified intermediarythat is an FFI reports a U.S. account underchapter 4.

Example 1. WA makes a payment of U.S. sourceinterest that is a withholdable payment to QI, aqualified intermediary that is an NFFE. QI providesWA with a withholding certificate that indicates thatQI will assume primary withholding responsibilityunder chapters 3 and 4 of the Internal Revenue Codewith respect to the payment. In addition, QI attachesa Form W–9 from A, a U.S. non-exempt recipient, asdefined in paragraph (c)(21) of this section, andprovides the name, address, and TIN of B, a U.S.person that is also a non-exempt recipient but whohas not provided a Form W–9. QI associates a with-holding statement with its qualified intermediarywithholding certificate indicating that 10% of thepayment is attributable to A, and 10% to B, and thatQI will assume primary withholding responsibilityfor chapters 3 and 4 with respect to the remaining80% of the payment. WA can reliably associate theentire payment with valid documentation. Althoughunder the presumption rule of paragraph (b)(3)(v) ofthis section, an undocumented person receiving U.S.source interest is generally presumed to be a foreignperson, WA has actual knowledge that B is a U.S.non-exempt recipient and therefore must report thepayment on Form 1099 and backup withhold on theinterest payment under section 3406.

Example 2. The facts are the same as in Example1, except that no information has been provided forthe 20% of the payment that is allocable to A and B.Thus, QI has accepted withholding responsibility for80% of the payment, but has provided no informa-tion for the remaining 20%. In this case, 20% of thepayment cannot be reliably associated with validdocumentation, and, under paragraph (b)(3)(iii) ofthis section, WA must apply the presumption rule of§ 1.1471–3(f)(5) (because the payment is a with-holdable payment). See the Example 2 in paragraph(b)(2)(vii)(C)(2).

(E) Special rules applicable to a with-holding certificate provided by a qualifiedintermediary that assumes primary Form1099 reporting and backup withholdingresponsibility but not primary withholdingunder chapter 3—(1) If a payment ismade to a qualified intermediary that as-sumes primary Form 1099 reporting and


backup withholding responsibility for thepayment (but does not assume primarywithholding responsibility under chapters3 and 4 of the Internal Revenue Code), awithholding agent can reliably associatethe payment with valid documentationonly to the extent that, prior to the pay-ment, the withholding agent has receiveda valid qualified intermediary withholdingcertificate and the withholding agent canreliably determine the portion of the pay-ment that relates to a withholding ratepool or pools provided as part of the qual-ified intermediary’s withholding state-ment and the portion of the payment forwhich the qualified intermediary assumesprimary Form 1099 reporting and backupwithholding responsibility. See paragraph(e)(5)(v)(C)(2) of this section for when aqualified intermediary may include achapter 4 withholding rate pool on a with-holding statement provided to a withhold-ing agent with respect to a withholdablepayment.

(2) The following example illustratesthe rules of paragraph (b)(2)(vii)(D)(1) ofthis section:

Example. WA, a withholding agent, makes apayment of U.S. source dividends that is a withhold-able payment to QI, a qualified intermediary andparticipating FFI. QI has provided WA with a validqualified intermediary withholding certificate. QIstates on its withholding statement accompanyingthe certificate that it assumes primary Form 1099reporting and backup withholding responsibility butdoes not assume primary withholding responsibilityunder chapters 3 and 4 of the Internal Revenue Code.QI represents that 15% of the dividend is subject toa 30% rate of withholding, 75% of the dividend issubject to a 15% rate of withholding. QI representsthat it assumes primary Form 1099 reporting andbackup withholding for the remaining 10% of thepayment, and therefore need not provide a chapter 4withholding rate pool with respect to this portion ofthe payment or documentation with respect to U.S.non-exempt recipients. The entire payment can bereliably associated with valid documentation.

(F) Special rules applicable to a with-holding certificate provided by a qualifiedintermediary that assumes primary with-holding responsibility under chapter 3and primary Form 1099 reporting andbackup withholding responsibility and awithholding certificate provided by awithholding foreign partnership or a with-holding foreign trust. If a payment ismade to a qualified intermediary that as-sumes both primary withholding respon-sibility under chapters 3 and 4 of the In-ternal Revenue Code and primary Form

1099 reporting and backup withholdingresponsibility under chapter 61 and sec-tion 3406 of the Internal Revenue Codefor the payment, a withholding agent canreliably associate a payment with validdocumentation provided that it receives avalid qualified intermediary withholdingcertificate as described in paragraph(e)(3)(ii) of this section. In the case of apayment made to a withholding foreignpartnership or a withholding foreign trust,the withholding agent can reliably associ-ate the payment with valid documentationto the extent it can associate the paymentwith a valid withholding certificate de-scribed in § 1.1441–5(c)(2)(iv) or in§ 1.1441–5(e)(5)(v) (respectively). Seeparagraph (e)(5)(iv) of this section, pro-viding that a qualified intermediary as-suming primary withholding responsibil-ity under chapter 3 must also assumeprimary withholding responsibility underchapter 4 with respect to a withholdablepayment.

(3) Presumptions regarding payee’sstatus in the absence of documentation–(i)General rules. A withholding agent thatcannot, prior to the payment, reliably as-sociate (within the meaning of paragraph(b)(2)(vii) of this section) a payment of anamount subject to withholding (as de-scribed in § 1.1441–2(a)) with valid doc-umentation may rely on the presumptionsof this paragraph (b)(3) to determine thestatus of the person receiving the paymentas a U.S. or a foreign person and theperson’s other relevant characteristics (forexample, as an owner or intermediary, asan individual, trust, partnership, or corpo-ration). The determination of withholdingand reporting requirements applicable topayments to a person presumed to be aforeign person is governed only by theprovisions of chapters 3 and 4 of the Codeand the regulations thereunder. For thedetermination of withholding and report-ing requirements applicable to paymentsto a person presumed to be a U.S. person,see chapter 61 of the Code, section 3402,3405, or 3406, and, with respect to thereporting requirements of a participatingFFI or registered deemed-compliant FFI,see chapter 4 of the Code and the relatedregulations. A presumption that a payee isa foreign payee is not a presumption thatthe payee is a foreign beneficial owner.Therefore, the provisions of this para-

graph (b)(3) have no effect for purposes ofreducing the withholding rate if associat-ing the payment with documentation offoreign beneficial ownership is required asa condition for such rate reduction. Seeparagraph (b)(3)(ix) of this section forconsequences to a withholding agent thatfails to withhold in accordance with thepresumptions set forth in this paragraph(b)(3) or if the withholding agent has ac-tual knowledge or reason to know of factsthat are contrary to the presumptions setforth in this paragraph (b)(3). See para-graph (b)(2)(vii) of this section for rulesregarding the extent to which a withhold-ing agent can reliably associate a paymentwith documentation.

(ii) Presumptions of classification asindividual, corporation, partnership, etc.–(A) In general. A withholding agent thatcannot reliably associate a payment with avalid withholding certificate or that hasreceived valid documentary evidence un-der §§ 1.1441–1(e)(1)(ii)(A)(2) and1.6049–5(c)(1) or (4) but cannot deter-mine a payee’s classification from thedocumentary evidence must apply therules of this paragraph (b)(3)(ii) to deter-mine the payee’s classification as an indi-vidual, trust, estate, corporation, or part-nership. The fact that a payee is presumedto have a certain status under the provi-sions of this paragraph (b)(3)(ii) does notmean that it is excused from furnishingdocumentation if documentation is other-wise required to obtain a reduced rate ofwithholding under this section. For exam-ple, if, for purposes of this paragraph(b)(3)(ii), a payee is presumed to be atax-exempt organization based on§ 1.6049–4(c)(1)(ii)(B), the withholdingagent cannot rely on this presumption toreduce the rate of withholding on pay-ments to such person (if such person isalso presumed to be a foreign person un-der paragraph (b)(3)(iii)(A) of this sec-tion) because a reduction in the rate ofwithholding for payments to a foreign tax-exempt organization generally requiresthat a valid Form W–8 described in§ 1.1441–9(b)(2) be furnished to the with-holding agent.

(B) No documentation provided. If thewithholding agent cannot reliably associ-ate a payment with a valid withholdingcertificate or valid documentary evidence,it must presume that the payee is an indi-


vidual, a trust, or an estate, if the payeeappears to be such person (for example,based on the payee’s name or informationin the customer file). In the absence ofreliable indications that the payee is anindividual, trust, or an estate, the withhold-ing agent must presume that the payee is acorporation or one of the persons enumer-ated under § 1.6049–4(c)(1)(ii)(B)through (Q) if it can be so treated under§ 1.6049–4(c)(1)(ii)(A)(1) or any one ofthe paragraphs under § 1.6049–4(c)(1)(ii)(B)through (Q) without the need to furnishdocumentation. If the withholding agentcannot treat a payee as a person describedin § 1.6049–4(c)(1)(ii)(A)(1) through(Q), then the payee shall be presumed tobe a partnership. If such a partnership ispresumed to be foreign, it is not the ben-eficial owner of the income paid to it. Seeparagraph (c)(6) of this section. If such apartnership is presumed to be domestic, itis a U.S. non-exempt recipient for pur-poses of chapter 61 of the Internal Reve-nue Code.

(C) Documentary evidence furnishedfor offshore obligation. If the withholdingagent receives valid documentary evi-dence, as described in § 1.6049–5(c)(1) or(c)(4), with respect to an offshore obliga-tion from an entity but the documentaryevidence does not establish the entity’sclassification as a corporation, trust, es-tate, or partnership, the withholding agentmay presume (in the absence of actualknowledge otherwise) that the entity is thetype of person enumerated under§ 1.6049–4 (c)(1)(ii)(B) through (Q) if itcan be so treated under any one of thoseparagraphs without the need to furnishdocumentation. If the withholding agentcannot treat a payee as a person describedin § 1.6049–4(c)(1)(ii)(B) through (Q),then the payee shall be presumed to be acorporation unless the withholding agentknows, or has reason to know, that theentity is not classified as a corporation forU.S. tax purposes. If a payee is, or ispresumed to be, a corporation under thisparagraph (b)(3)(ii)(C) and a foreign per-son under paragraph (b)(3)(iii) of this sec-tion, a withholding agent shall not treatthe payee as the beneficial owner of in-come if the withholding agent knows, orhas reason to know, that the payee is notthe beneficial owner of the income. Forthis purpose, a withholding agent will

have reason to know that the payee is nota beneficial owner if the documentary ev-idence indicates that the payee is a bank,broker, intermediary, custodian, or otheragent, or is treated under § 1.6049–4(c)(1)(ii)(B) through (Q) as such a per-son. A withholding agent may, however,treat such a person as a beneficial owner ifthe foreign person provides a statement, inwriting and signed by a person with au-thority to sign the statement, that is at-tached to the documentary evidence stat-ing it is the beneficial owner of theincome.

(iii) Presumption of U.S. or foreignstatus. A payment that the withholdingagent cannot reliably associate with doc-umentation is presumed to be made to aU.S. person, except as otherwise providedin this paragraph (b)(3)(iii), in paragraphs(b)(3) (iv) and (v) of this section, or in§ 1.1441–5 (d) or (e). A withholding agentmust treat a payee that is presumed orknown to be a trust but for which thewithholding agent cannot determine thetype of trust in accordance with the pre-sumptions specified in § 1.1441–5(e)(6)(ii). In the case of a payment that isa withholdable payment, a withholdingagent must apply the presumption ruleunder § 1.1471–3(f) for purposes of chap-ter 4.

(A) Payments to exempt recipients—(1) In general. If a withholding agent can-not reliably associate a payment with doc-umentation from the payee and the payeeis an exempt recipient (as determined un-der the provisions of § 1.6049–4(c)(1)(ii)in the case of interest, or under similarprovisions under chapter 61 of the Codeapplicable to the type of payment in-volved, but not including a payee that thewithholding agent may treat as a foreignintermediary in accordance with para-graph (b)(3)(v) of this section), the payeeis presumed to be a foreign person and nota U.S. person—

(i) If the withholding agent has actualknowledge of the payee’s employer iden-tification number and that number beginswith the two digits “98”;

(ii) If the withholding agent’s commu-nications with the payee are mailed to anaddress in a foreign country;

(iii) If the name of the payee indicatesthat the entity is the type of entity that ison the per se list of foreign corporations

contained in § 301.7701–2(b)(8)(i) of thischapter (other than a name which containsthe designation “corporation” or “com-pany”);

(iv) If the payment is made with respectto an offshore obligation (as defined inparagraph (c)(37) of this section); or

(v) Only with respect to an accountopened after July 1, 2014, if the withhold-ing agent has a telephone number for theperson outside of the United States.

(2) Special rule for withholdable pay-ments made to exempt recipients. Not-withstanding the provisions of paragraph(b)(3)(iii)(A)(1) of this section, a paymentthat is also a withholdable payment madeto an entity determined to be an exemptrecipient under § 1.6049–4(c)(1)(ii)(A)(1),(F), (G), (H), (M), (O), (P), or (Q) in thecase of interest (or under similar provi-sions in chapter 61 applicable to the typeof income) shall be presumed made to aforeign payee in the absence of documen-tation (including documentary evidence)establishing the entity as a U.S. person.Additionally, a withholding agent may ap-ply the rule provided in this paragraph(b)(3)(iii)(A)(2) instead of the rule in pro-vided in paragraph (b)(3)(iii)(A)(1) of thissection for all payments with respect to anobligation. The provisions of this para-graph (b)(3)(iii)(A)(2) will not apply,however, to a withholdable payment madewith respect to a preexisting obligation toa payee that the withholding agent deter-mined prior to July 1, 2014 to be a U.S.exempt recipient.

(B) and (C) [Reserved]. For furtherguidance, see § 1.1441–1(b)(3)(iii)(B)and (C).

(D) Payments with respect to offshoreobligations. A payment is presumed madeto a foreign payee if the payment is madeoutside the United States (as defined in§ 1.6049–5(e)) with respect to an offshoreobligation (as defined in paragraph (c)(37)of this section) and the withholding agentdoes not have actual knowledge that thepayee is a U.S. person. See § 1.6049–5(d)(2) and (3) for exceptions to this rule.

(E) [Reserved]. For further guidance,see § 1.1441–1(b)(3)(iii)(E).

(iv) Grace period. A withholding agentmay choose to apply the provisions of§ 1.6049–5(d)(2)(ii) regarding a 90-daygrace period for purposes of this para-graph (b)(3) (by applying the term with-


holding agent instead of the term payor) toamounts described in § 1.1441–6(c)(2)and to amounts covered by a Form 8233described in § 1.1441–4(b)(2)(ii). Thus,for these amounts, a withholding agentmay choose to treat the payee as a foreignperson and withhold under chapter 3 ofthe Internal Revenue Code (and the regu-lations thereunder) while awaiting docu-mentation. For purposes of determiningthe rate of withholding under this section,the withholding agent must withhold atthe unreduced 30-percent rate at the timethat the amounts are credited to an ac-count. For reporting of amounts creditedboth before and after the grace period, see§ 1.1461–1(c)(4)(i)(A). The following ad-justments shall be made at the expirationof the grace period:

(A) If, at the end of the grace period,the documentation is not furnished in themanner required under this section and theaccount holder is presumed to be a U.S.non-exempt recipient, then backup with-holding only applies to amounts creditedto the account after the expiration of thegrace period. Amounts credited to the ac-count during the grace period shall betreated as owned by a foreign payee andadjustments must be made to correct anyunderwithholding on such amounts in themanner described in § 1.1461–2.

(B) [Reserved]. For further guidance,see § 1.1441–1(b)(3)(iv)(B).

(v) [Reserved]. For further guidance,see § 1.1441–1(b)(3)(v) introductory textand (b)(3)(v)(A).

(B) Beneficial owner documentation orallocation information is lacking or unre-liable. Except as otherwise provided inthis paragraph (b)(3)(v)(B), any portion ofa payment that the withholding agent maytreat as made to a foreign intermediary(whether a nonqualified or a qualified in-termediary) but that the withholding agentcannot treat as reliably associated withvalid documentation under the rules ofparagraph (b)(2)(vii) of this section is pre-sumed made to an unknown, undocu-mented foreign payee. As a result, a with-holding agent must deduct and withhold30 percent from any payment of anamount subject to withholding. If a with-holding certificate attached to an interme-diary certificate is another intermediarywithholding certificate or a flow-throughwithholding certificate, the rules of this

paragraph (b)(3)(v)(B) (or § 1.1441–5(d)(3) or (e)(6)(iii)) apply by treating theportion of the payment allocable to theother intermediary or flow-through entityas if it were made directly to the otherintermediary or flow-through entity. Anypayment of an amount subject to with-holding that is presumed made to an un-documented foreign person must be re-ported on Form 1042–S. See § 1.1461–1(c). See § 1.6049–5(d) for payments thatare not subject to withholding under chap-ter 3. However, in the case of a paymentthat is a withholdable payment made to aforeign intermediary, the presumptionrules under § 1.1471–3(f)(5) shall apply.

(vi) U.S. branches and territory finan-cial institutions not treated as a U.S. per-son. The rules of paragraph (b)(3)(v)(B)of this section shall apply to payments toa U.S. branch or a territory financial insti-tution described in paragraph(b)(2)(iv)(A) of this section that has pro-vided a withholding certificate as de-scribed in paragraph (e)(3)(v) of this sec-tion on which it has not agreed to betreated as a U.S. person.

(vii) Joint payees—(A) In general. Ex-cept as provided in paragraph (b)(3)(vii)(B)of this section and this paragraph(b)(3)(vii)(A), if a withholding agentmakes a payment to joint payees and can-not reliably associate a payment withvalid documentation from all payees, thepayment is presumed made to an uniden-tified U.S. person. If, however, a with-holding agent makes a payment that is awithholdable payment and any joint payeedoes not appear, by its name and otherinformation contained in the account file,to be an individual, then the entire amountof the payment will be treated as made toan undocumented foreign person. Seeparagraph (b)(3)(iii) of this section forpresumption rules that apply in the case ofa payment that is a withholdable payment.However, if one of the joint payees pro-vides a Form W–9 furnished in accor-dance with the procedures described in§ § 31.3406(d)–1 through 31.3406(d)–5of this chapter, the payment shall betreated as made to that payee. See§ 31.3406(h)–2 of this chapter for rules todetermine the relevant payee if more thanone Form W–9 is provided. For purposesof applying this paragraph (b)(3), thegrace period rules in paragraph (b)(3)(iv)

of this section shall apply only if eachpayee meets the conditions described inparagraph (b)(3)(iv) of this section.

(B) Special rule for offshore obliga-tions. If a withholding agent makes a pay-ment to joint payees and cannot reliablyassociate a payment with valid documen-tation from all payees, the payment ispresumed made to an unknown foreignpayee if the payment is made outside theUnited States (as defined in § 1.6049–5(e)) with respect to an offshore obliga-tion (as defined in § 1.6049–5(c)(1)).

(viii) [Reserved]. For further guidance,see § 1.1441–1(b)(3)(viii).

(ix) Effect of reliance on presumptionsand of actual knowledge or reason toknow otherwise—(A) General rule. Ex-cept as otherwise provided in paragraph(b)(3)(ix)(B) of this section, a withholdingagent that withholds on a payment undersection 3402, 3405 or 3406 in accordancewith the presumptions set forth in thisparagraph (b)(3) shall not be liable forwithholding under this section even if it islater established that the beneficial ownerof the payment is, in fact, a foreign per-son. Similarly, a withholding agent thatwithholds on a payment under this sectionin accordance with the presumptions setforth in this paragraph (b)(3) shall not beliable for withholding under section 3402or 3405 or for backup withholding undersection 3406 even if it is later establishedthat the payee or beneficial owner is, infact, a U.S. person. A withholding agentthat, instead of relying on the presump-tions described in this paragraph (b)(3),relies on its own actual knowledge towithhold a lesser amount, not withhold, ornot report a payment, even though report-ing of the payment or withholding agreater amount would be required if thewithholding agent relied on the presump-tions described in this paragraph (b)(3),shall be liable for tax, interest, and penal-ties to the extent provided under section1461 and the regulations under that sec-tion. See paragraph (b)(7) of this sectionfor provisions regarding such liability ifthe withholding agent fails to withhold inaccordance with the presumptions de-scribed in this paragraph (b)(3).

(B) [Reserved]. For further guidance,see § 1.1441–1(b)(3)(ix)(B).


(x) Examples. The provisions of thisparagraph (b)(3) are illustrated by the fol-lowing examples:

Example 1. A withholding agent, W, makes apayment of U.S. source interest with respect to agrandfathered obligation as described in § 1.1471–2(b) (and thus the payment is not a withholdablepayment) to person X, Inc. with respect to an ac-count W maintains for X, Inc. outside the UnitedStates. W cannot reliably associate the payment to X,Inc. with documentation. Under § 1.6049–4(c)(1)(ii)(A)(1), W may treat X, Inc. as a corpora-tion that is an exempt recipient under chapter 61.Thus, under the presumptions described in paragraph(b)(3)(iii) of this section as applicable to a paymentto an exempt recipient that is not a withholdablepayment, W must presume that X, Inc. is a foreignperson (because the payment is made with respect toan offshore obligation). However, W knows that X,Inc. is a U.S. person who is an exempt recipient. Wmay not rely on its actual knowledge to not withholdunder this section. If W’s knowledge is, in fact,incorrect, W would be liable for tax, interest, and, ifapplicable, penalties, under section 1461. W wouldbe permitted to reduce or eliminate its liability forthe tax by establishing, in accordance with paragraph(b)(7) of this section, that the tax is not due or hasbeen satisfied. If W’s actual knowledge is, in fact,correct, W may nevertheless be liable for tax, inter-est, or penalties under section 1461 for the amountthat W should have withheld based upon the pre-sumptions. W would be permitted to reduce or elim-inate its liability for the tax by establishing, in ac-cordance with paragraph (b)(7) of this section, thatits actual knowledge was, in fact, correct and that notax or a lesser amount of tax was due.

Example 2. A withholding agent, W, makes apayment of U.S. source interest with respect to agrandfathered obligation as described in § 1.1471–2(b) (and thus the payment is not a withholdablepayment) to Y who does not qualify as an exemptrecipient under § 1.6049–4(c)(1)(ii). W cannot reli-ably associate the payment to Y with documentation.Under the presumptions described in paragraph(b)(3)(iii) of this section, W must presume that Y isa U.S. person who is not an exempt recipient forpurposes of section 6049. However, W knows that Yis a foreign person. W may not rely on its actualknowledge to withhold under this section rather thanbackup withhold under section 3406. If W’s knowl-edge is, in fact, incorrect, W would be liable for tax,interest, and, if applicable, penalties, under section3403. If W’s actual knowledge is, in fact, correct, Wmay nevertheless be liable for tax, interest, or pen-alties under section 3403 for the amount that Wshould have withheld based upon the presumptions.Paragraph (b)(7) of this section does not apply toprovide relief from liability under section 3403.

Example 3. A withholding agent, W, makes apayment of U.S. source dividends to X, Inc. withrespect to an account that X, Inc. opened with Wafter June 30, 2014. W cannot reliably associate thepayment to X, Inc. with documentation but may treatX, Inc. as an exempt recipient for purposes of thissection applying the rules of § 1.6042–3(b)(1)(vii). However, because the dividend pay-ment is a withholdable payment and W did notdetermine the chapter 3 status of X, Inc. before July

1, 2014, W may treat X, Inc. as a U.S. person that isan exempt recipient only if W obtains documentaryevidence supporting X, Inc.’s status as a U.S. person.See paragraph (b)(3)(iii)(A)(2) of this section.

Example 4. A withholding agent, W, is a planadministrator who makes pension payments to per-son X with a mailing address in a foreign countrywith which the United States has an income taxtreaty in effect. Under that treaty, the type of pensionincome paid to X is taxable solely in the country ofresidence. The plan administrator has a record of X’sU.S. social security number. W has no actual knowl-edge or reason to know that X is a foreign person. Wmay rely on the presumption of paragraph(b)(3)(iii)(C) of this section in order to treat X as aU.S. person. Therefore, any withholding and report-ing requirements for the payment are governed bythe provisions of section 3405 and the regulationsunder that section.

(4) List of exemptions from, or reducedrates of, withholding under chapter 3 ofthe Code. A withholding agent that hasdetermined that the payee is a foreignperson for purposes of paragraph (b)(1) ofthis section must determine whether thepayee is entitled to a reduced rate of with-holding under section 1441, 1442, or1443. This paragraph (b)(4) identifiesitems for which a reduction in the rate ofwithholding may apply and whether therate reduction is conditioned upon docu-mentation being furnished to the with-holding agent. Documentation requiredunder this paragraph (b)(4) is documenta-tion that a withholding agent must be ableto associate with a payment upon which itcan rely to treat the payment as made to aforeign person that is the beneficial ownerof the payment in accordance with para-graph (e)(1)(ii) of this section. This para-graph (b)(4) also cross-references othersections of the Code and applicable regu-lations in which some of these exceptions,exemptions, or reductions are further ex-plained. See, for example, paragraph(b)(4)(viii) of this section, dealing witheffectively connected income, that cross-references § 1.1441–4(a); see paragraph(b)(4)(xv) of this section, dealing withexemptions from, or reductions of, with-holding under an income tax treaty, thatcross-references § 1.1441–6. This para-graph (b)(4) is not an exclusive list ofitems to which a reduction of the rate ofwithholding may apply and, thus, does notpreclude an exemption from, or reductionin, the rate of withholding that may oth-erwise be allowed under the regulationsunder the provisions of chapter 3 of theCode for a particular item of income iden-

tified in this paragraph (b)(4). The exclu-sions and limitations specified in thisparagraph (b)(4) apply for purposes ofchapter 3. Additional withholding anddocumentation requirements may apply towithholding agents under chapter 4 withrespect to payments that are withholdablepayments. See, for example, § 1.1471–2(a) requiring withholding on withhold-able payments made to certain FFIs and§ 1.1471–2(a)(4) for payments exemptedfrom withholding under section 1471(a).

(i) Portfolio interest described in sec-tion 871(h) or 881(c) and substitute inter-est payments described in § 1.871–7(b)(2) or 1.881–2(b)(2) are exempt fromwithholding under section 1441(a). See§ 1.871–14 for regulations regarding port-folio interest and section 1441(c)(9) forthe exemption from withholding for port-folio interest. Documentation establishingforeign status is required for interest on anobligation in registered form to qualify asportfolio interest. See section 871(h)(2)(B)(ii)and § 1.871–14(c)(1)(ii)(C).For special doc-umentation rules regarding foreign-targeted registered obligations describedin § 1.871–14(e)(2) (and issued beforeJanuary 1, 2016), see § 1.871–14(e) (3)and (4) and, in particular, § 1.871–14(e)(4)(i)(A) and (ii)(A) regarding whenthe withholding agent must receive thedocumentation. The documentation fur-nished for purposes of qualifying interestas portfolio interest serves as the basis forthe withholding exemption for purposesof this section and establishing foreignstatus for purposes of section 6049. See§ 1.6049–5(b)(8). Documentation estab-lishing foreign status is not required forqualifying interest on an obligation inbearer form described in § 1.871–14(b)(1) (and issued before March 19,2012) as portfolio interest. However, incertain cases, documentation for portfoliointerest on a bearer obligation may have tobe furnished in order to establish foreignstatus for purposes of the information re-porting provisions of section 6049 andbackup withholding under section 3406.See § 1.6049–5(b)(7).

(ii) through (xxi) [Reserved]. For fur-ther guidance, see § 1.1441–1(b)(4)(ii)through (xxi).

(5)(i) through (viii) [Reserved]. Forfurther guidance, see § 1.1441–1(b)(5)(i)through (viii).


(ix) Payments to a foreign person thatare governed by section 6050W (dealingwith payment card and third party net-work transactions) are exempt from infor-mation reporting under § 1.6050W–1(a)(5)(ii).

(6) Rules of withholding for paymentsby a foreign intermediary or certain U.S.branches—(i) In general. A foreign inter-mediary described in paragraph (e)(3)(i)of this section or a U.S. branch or territoryfinancial institution described in para-graph (b)(2)(iv) of this section that re-ceives an amount subject to withholding(as defined in § 1.1441–2(a)) shall be re-quired to withhold (if another withholdingagent has not withheld the full amountrequired) and report such payment underchapter 3 of the Internal Revenue Codeand the regulations thereunder except asotherwise provided in this paragraph(b)(6). A nonqualified intermediary, U.S.branch, or territory financial institutiondescribed in paragraph (b)(2)(iv) of thissection (other than a U.S. branch or terri-tory financial institution that is treated as aU.S. person) shall not be required to with-hold or report if it has provided a validnonqualified intermediary withholdingcertificate or a U.S. branch withholdingcertificate, it has provided all of the infor-mation required by paragraph (e)(3)(iv) ofthis section (withholding statement), andit does not know, and has no reason toknow, that another withholding agentfailed to withhold the correct amount orfailed to report the payment correctly un-der § 1.1461–1(c). The withholding re-quirement of a nonqualified intermediaryunder the previous sentence also excludesa case in which withholding under chapter4 was applied by a withholding agent onthe payment. See § 1.1441–3(a)(2) (coor-dinating withholding under chapter 3 withwithholding applied under chapter 4 of theCode). A qualified intermediary’s obliga-tions to withhold and report shall be de-termined in accordance with its qualifiedintermediary withholding agreement.

(ii) Examples. The following examplesillustrate the rules of paragraph (b)(6)(i)of this section and coordinate rules forwithholding that apply under chapter 4with those that apply under chapter 3. Seealso paragraph (e)(3)(iv)(C) of this sectionfor the requirements of withholding state-

ments provided by nonqualified interme-diaries.

Example 1. FB, a foreign bank, acts as interme-diary for five different individuals, A, B, C, D, andE, each of whom owns U.S. securities that generateU.S. source dividends (that are withholdable pay-ments). The dividends are paid by USWA, a U.S.withholding agent. FB furnished USWA with a non-qualified intermediary withholding certificate, de-scribed in paragraph (e)(3)(iii) of this section, onwhich FB certifies its status as a participating FFI(such that withholding under chapter 4 does notapply), to which it attached valid withholding certif-icates for A, B, C, D, and E. The withholding cer-tificates from A and B claim a 15% reduced rate ofwithholding under an income tax treaty. C, D, and Eclaim no reduced rate of withholding. FB provides awithholding statement that meets all of the require-ments of paragraph (e)(3)(iv) of this section, includ-ing information allocating 20% of each dividendpayment to each of A, B, C, D, and E. FB does nothave actual knowledge or reason to know thatUSWA did not withhold the correct amounts orreport the dividends on Forms 1042–S to each of A,B, C, D, and E. FB is not required to withhold or toreport the dividends to A, B, C, D, and E.

Example 2. The facts are the same as in Example1, except that FB did not provide any information forUSWA to determine how much of the dividendpayments were made to A, B, C, D, and E. BecauseUSWA could not reliably associate the dividendpayments with documentation under paragraph(b)(2)(vii) of this section with respect to a paymentthat is a withholdable payment, USWA applied thepresumption rule of § 1.1471–3(f)(5) and withheld30% from all dividend payments under chapter 4 andfiled a Form 1042–S reporting the payment to anaccount holder of FB that is a non-participating FFI.FB is deemed to know that USWA did not report thepayment to A, B, C, D, and E because it did notprovide all of the information required on a with-holding statement under paragraph (e)(3)(iv) of thissection (that is, allocation information). AlthoughFB is not required to withhold on the payment underthis section because the full 30% withholding wasimposed by USWA, it is required to report the pay-ments on Forms 1042–S to A, B, C, D, and E. FB’sintentional failure to do so will subject it to inten-tional disregard penalties under sections 6721 and6722.

(7) Liability for failure to obtain doc-umentation timely or to act in accordancewith applicable presumptions— (i) Gen-eral rule. A withholding agent that cannotreliably associate a payment with validdocumentation on the date of payment andthat does not withhold under this section,or withholds at less than the 30-percentrate prescribed under section 1441(a) andparagraph (b)(1) of this section, is liableunder section 1461 for the tax required tobe withheld under chapter 3 of the Codeand the regulations thereunder, withoutthe benefit of a reduced rate unless—

(A) The withholding agent has appro-priately relied on the presumptions de-scribed in paragraph (b)(3) of this section(including the grace period described inparagraph (b)(3)(iv) of this section) in or-der to treat the payee as a U.S. person or,if applicable, on the presumptions de-scribed in § 1.1441–4(a) (2)(ii) or (3)(i) totreat the payment as effectively connectedincome;

(B) The withholding agent can demon-strate to the satisfaction of the districtdirector or the Assistant Commissioner(International) that the proper amount oftax, if any, was in fact paid to the IRS;

(C) No documentation is required un-der section 1441 or this section in orderfor a reduced rate of withholding to apply;or

(D) [Reserved]. For further guidance,see § 1.1441–1(b)(7)(i)(D).

(ii) Proof that tax liability has beensatisfied. Proof of payment of tax may beestablished for purposes of paragraph(b)(7)(i)(B) of this section on the basis ofa Form 4669 (or such other form as theIRS may prescribe in published guidance(see § 601.601(d)(2) of this chapter)), es-tablishing the amount of tax, if any, actu-ally paid by or for the beneficial owner onthe income. Proof that a reduced rate ofwithholding was, in fact, appropriate un-der the provisions of chapter 3 of the Codeand the regulations thereunder may alsobe established after the date of paymentby the withholding agent on the basis of avalid withholding certificate or other ap-propriate documentation furnished afterthat date that was effective as of the dateof payment. A withholding certificate fur-nished after the date of payment will beconsidered effective as of the date of thepayment if the certificate contains asigned affidavit (either at the bottom ofthe form or on an attached page) thatstates that the information and representa-tions contained on the certificate were ac-curate as of the time of the payment. Acertificate obtained within 30 days afterthe date of the payment will not be con-sidered to be unreliable solely because itdoes not contain an affidavit. However, inthe case of a withholding certificate of anindividual received more than a year afterthe date of payment, the withholdingagent will be required to obtain, in addi-tion to the withholding certificate and af-


fidavit, documentary evidence, as de-scribed in § 1.1471–3(c)(5)(i), thatsupports the individual’s claim of foreignstatus or documentary evidence describedin § 1.1441–6(c)(4)(i) to support anytreaty claim made on the certificate. In thecase of a withholding certificate of anentity received more than a year after thedate of payment, the withholding agentwill be required to obtain, in addition tothe withholding certificate and affidavit,documentary evidence described in§ 1.1471–3(c)(5)(i) that supports the enti-ty’s claim of foreign status or documen-tary evidence described in § 1.1441–6(c)(4)(ii) to support any treaty claimmade on the certificate. If documentationother than a withholding certificate is sub-mitted from a payee more than a year afterthe date of payment, the withholdingagent will be required to obtain from thepayee a withholding certificate and affida-vit supporting the claim of chapter 3 statusas of the time of the payment. See§ 1.1471–3(c)(7)(ii) for additional re-quirements that may apply under chapter4 for documentation obtained after thedate of payment of a withholdable pay-ment.


(iv) Special rule for determining valid-ity of withholding certificate containinginconsequential errors. A withholdingagent may treat a withholding certificateas valid when the certificate includes anerror described as an inconsequential errorin § 1.1471–3(c)(7)(i) for which the with-holding agent obtains documentation suf-ficient for supporting a payee’s claim ofstatus as a foreign person or, for a payeethat is an entity, its classification to theextent permitted under § 1.1471–3(c)(7)(i). For example, if the country ofresidence is abbreviated in an ambiguousway on a beneficial owner withholdingcertificate provided to establish the bene-ficial owner’s foreign status, a withhold-ing agent may treat the withholding cer-tificate as valid if it has obtaineddocumentary evidence supporting that thebeneficial owner’s residence is in a coun-try other than the United States.

(v) Special effective date. See para-graph (f)(2)(ii) of this section for the spe-cial effective date applicable to this para-graph (b)(7).

(8) and (9) [Reserved]. For furtherguidance, see § 1.1441–1(b)(8) and (9).

(c) Definitions. The following defini-tions apply for purposes of sections 1441through 1443, 1461, and regulations underthose sections. For definitions of termsused in these regulations that are definedunder sections 1471 through 1474, seesubparagraphs (43) through (56) of thisparagraph.


(2) Foreign and U.S. person. The termforeign person means any person that isnot a U.S. person, including a QI branchof a U.S. financial institution (as definedin § 1.1471–1(b)(109). Such a branch con-tinues to be a U.S. payor for purposes ofchapter 61 of the Internal Revenue Code.See § 1.6049–5(c)(4). A U.S. person is aperson described in section 7701(a)(30),the U.S. government (including an agencyor instrumentality thereof), a State (in-cluding an agency or instrumentalitythereof), or the District of Columbia (in-cluding an agency or instrumentalitythereof).

(3) and (4) [Reserved]. For furtherguidance, see § 1.1441–1(c)(3) and (4).

(5) Financial institution and foreignfinancial institution (FFI). The term finan-cial institution means a person describedin § 1.1471–5(e). The term foreign finan-cial institution or FFI has the meaning setforth in § 1.1471–5(d).

(6) through (9) [Reserved]. For furtherguidance, see § 1.1441–1(c)(6) through(9).

(10) Chapter 3 of the Code (or chapter3). For purposes of the regulations undersections 1441, 1442, and 1443, any refer-ence to chapter 3 of the Code (or chapter3) shall not include references to sections1445 and 1446, unless the context indi-cates otherwise.


(12) Payee. For purposes of chapter 3of the Internal Revenue Code, the termpayee of a payment is determined underparagraph (b)(2) of this section, § 1.1441–5(c)(1) (relating to partnerships), and§ 1.1441–5(e)(2) and (3) (relating to trustsand estates) and includes foreign persons,U.S. exempt recipients, and U.S. non-exempt recipients. A nonqualified inter-mediary and a qualified intermediary (to

the extent it does not assume primarywithholding responsibility) are not payeesif they are acting as intermediaries and notthe beneficial owner of income. In addi-tion, a flow-through entity (other than awithholding foreign partnership, with-holding foreign trust, or qualified interme-diary that assumes primary withholdingresponsibility) is not a payee unless theincome is (or is deemed to be) effectivelyconnected with the conduct of a trade orbusiness in the United States. See§ 1.6049–5(d)(1) for rules to determinethe payee for purposes of chapter 61 of theInternal Revenue Code. See § § 1.1441–1(b)(3), 1.1441–5(d), and (e)(6) and§ 1.6049–5(d)(3) for presumption rulesthat apply if a payee’s identity cannot bedetermined on the basis of valid documen-tation. For purposes of chapter 4, the termpayee has the meaning set forth in§ 1.1471–3(a) with respect to a withhold-able payment.

(13) through (15) [Reserved]. For fur-ther guidance, see § 1.1441–1(c)(13)through (15).

(16) Withholding certificate. The termwithholding certificate means a FormW–8 described in paragraph (e)(2)(i) ofthis section (relating to foreign beneficialowners), paragraphs (e)(3)(i) or (e)(5)(i)of this section (relating to foreign inter-mediaries), § 1.1441–5(c)(2)(iv), (c)(3)(iii),and (e)(5)(iii) (relating to flow-throughentities), a Form 8233 described in§ 1.1441–4(b)(2), a Form W–9 as de-scribed in paragraph (d) of this section, astatement described in § 1.871–14(c)(2)(v)(relating to portfolio interest), or any othercertificates that under the Internal Reve-nue Code or regulations certifies or estab-lishes the status of a payee or beneficialowner as a U.S. or a foreign person.

(17) Documentary evidence; other ap-propriate documentation. The terms doc-umentary evidence or other appropriatedocumentation refer to documentary evi-dence that may be provided for paymentsmade outside the United States with re-spect to offshore obligations in accor-dance with § 1.6049–5(c)(1) or any otherevidence that under the Internal RevenueCode or regulations certifies or establishesthe status of a payee or beneficial owneras a U.S. or foreign person. See§ § 1.1441–6(b)(2), (c)(3) and (4) (relat-ing to treaty benefits), and 1.6049–5(c)(1)


and (4) (relating to chapter 61 reporting).Also see § 1.1441–4(a)(3)(ii) regardingdocumentary evidence for notional princi-pal contracts.

(18) through (24) [Reserved]. For fur-ther guidance, see § 1.1441–1(c)(18)through (c)(24).

(25) Foreign complex trust. A foreigncomplex trust is a foreign trust other thana foreign simple trust or foreign grantortrust.

(26) through (27) [Reserved]. For fur-ther guidance, see § 1.1441–1(c)(26)through (c)(27).

(28) Nonwithholding foreign partner-ship (or NWP). A nonwithholding foreignpartnership is a foreign partnership that isnot a withholding foreign partnership, asdefined in § 1.1441–5(c)(2)(i).

(29) Withholding foreign partnership(or WP). A withholding foreign partner-ship is defined in § 1.1441–5(c)(2)(i).

(30) Possessions of the United Statesor U.S. territory. For purposes of the reg-ulations under chapters 3 and 61 of theInternal Revenue Code, the term posses-sions of the United States or U.S. territorymeans Guam, American Samoa, theNorthern Mariana Islands, Puerto Rico, orthe Virgin Islands.

(31) Amount subject to chapter 3 with-holding. An amount subject to withhold-ing under chapter 3 is an amount de-scribed in § 1.1441–2(a).

(32) EIN. The term EIN means an em-ployer identification number (also knownas a federal tax identification number) de-scribed in § 301.6109–1(a)(1)(i).

(33) Flow-through withholding certifi-cate. The term flow-through withholdingcertificate means a Form W–8IMY sub-mitted by a foreign partnership, foreignsimple trust, or foreign grantor trust.

(34) Foreign payee. The term foreignpayee means any payee other than a U.S.payee.

(35) Intermediary withholding certifi-cate. The term intermediary withholdingcertificate means a Form W–8IMY sub-mitted by an intermediary.

(36) Nonwithholding foreign trust (orNWT). The term nonwithholding foreigntrust or NWT means a foreign trust asdefined in section 7701(a)(31)(B) that is asimple trust or grantor trust and is not awithholding foreign trust.

(37) Payment with respect to an off-shore obligation. The term payment withrespect to an offshore obligation means apayment made outside of the UnitedStates, within the meaning of § 1.6049–5(e), with respect to an offshore obligation(as defined in §§ 1.6049–5(c)(1)),1.6041–1(d),or 1.6042–3(b) (depending onthe type of payment).

(38) Permanent residence address. Theterm permanent residence address is theaddress in the country of which the personclaims to be a resident for purposes of thatcountry’s income tax. In the case of awithholding certificate furnished in orderto claim a reduced rate of withholdingunder an income tax treaty, the residencemust be determined in the manner pre-scribed under the applicable treaty. See§ 1.1441–6(b). The address of a financialinstitution with which the person main-tains an account, a post office box, or anaddress used solely for mailing purposesis not a permanent residence address un-less such address is the only permanentaddress used by the person and appears asthe person’s registered address in the per-son’s organizational documents. Further,an address that is provided subject to in-structions to hold all mail to that addressis not a permanent residence address. Ifthe person is an individual who does nothave a tax residence in any country, thepermanent address is the place at whichthe person normally resides. If the personis an entity and does not have a tax resi-dence in any country, then the permanentresidence address of the entity is the placeat which the person maintains its principaloffice.

(39) Standing instructions to payamounts. The term standing instructionsto pay amounts has the meaning set forthin § 1.1471–1(b)(126).

(40) Territory financial institution. Theterm territory financial institution has themeaning set forth in § 1.1471–1(b)(130).

(41) TIN. The term TIN means the taxidentifying number assigned to a personunder section 6109.

(42) Withholding foreign trust (or WT).The term withholding foreign trust (orWT) means a foreign grantor trust or for-eign simple trust that has executed the agree-ment described in § 1.1441–5(e)(5)(v).

(43) Certified deemed-compliant FFI.The term certified deemed-compliant FFI

means an FFI described in § 1.1471–5(f)(2).

(44) Chapter 3 withholding rate pool.The term chapter 3 withholding rate poolhas the meaning described in paragraph(e)(5)(v)(C)(1) of this section.

(45) Chapter 3 status. The term chapter3 status refers to the attributes of a payeerelevant for determining the rate of with-holding with respect to a payment made tothe payee for purposes of chapter 3.

(46) Chapter 4 of the Code (or chapter4). The term chapter 4 of the Code (orchapter 4) means sections 1471 through1474 and the regulations thereunder.

(47) Chapter 4 status. The term chapter4 status means a person’s status as a U.S.person, a specified U.S. person, an indi-vidual that is a foreign person, a partici-pating FFI, a deemed-compliant FFI, arestricted distributor, an exempt beneficialowner, a nonparticipating FFI, a territoryfinancial institution, an excepted NFFE, ora passive NFFE.

(48) Chapter 4 withholding rate pool.The term chapter 4 withholding rate poolhas the meaning set forth § 1.1471–1(b)(20). For when a withholding state-ment may include a chapter 4 withholdingrate pool of U.S. payees for purposes ofthis section and § 1.1441–5, however, seeparagraph (e)(3)(iv)(A) of this section (fora withholding statement provided by anonqualified intermediary) or paragraph(e)(5)(v)(C)(2) of this section (for a with-holding statement provided by a qualifiedintermediary).

(49) Deemed-compliant FFI. The termdeemed-compliant FFI means an FFI thatis treated, pursuant to section 1471(b)(2)and § 1.1471–5(f), as meeting the require-ments of section 1471(b). The termdeemed-compliant FFI also includes a QIbranch of a U.S. financial institution thatis a reporting Model 1 FFI.

(50) GIIN (or Global IntermediaryIdentification Number). The term GIIN orGlobal Intermediary Identification Num-ber means the identification number that isassigned to a participating FFI or regis-tered deemed-compliant FFI. The termGIIN or Global Intermediary Identifica-tion Number also includes the identifica-tion number assigned to a reporting Model1 FFI (as defined in § 1.1471–1(b)(114))for purposes of identifying such entity to


withholding agents. All GIINs will appearon the IRS FFI list.

(51) NFFE. The term NFFE or non-financial foreign entity has the meaningset forth in § 1.1471–1(b)(80).

(52) Nonparticipating FFI. The termnonparticipating FFI means an FFI otherthan a participating FFI, a deemed-compliant FFI, or an exempt beneficialowner.

(53) Participating FFI. The term par-ticipating FFI has the meaning set forth in§ 1.1471–1(b)(91).

(54) Preexisting obligation. The termpreexisting obligation has the meaning setforth in § 1.1471–1(b)(104).

(55) Registered deemed-compliantFFI. The term registered deemed- compli-ant FFI has the meaning set forth in§ 1.1471–5(f)(1).

(56) Withholdable payment. The termwithholdable payment has the meaning setforth in § 1.1473–1(a).

(d) [Reserved]. For further guidance,see § 1.1441–1(d) introductory textthrough (d)(3).

(4) When a payment to an intermediaryor flow-through entity may be treated asmade to a U.S. payee. A withholdingagent that makes a payment to an inter-mediary (whether a qualified intermediaryor nonqualified intermediary), a flow-through entity, or a U.S. branch or terri-tory financial institution described in para-graph (b)(2)(iv) of this section may treatthe payment as made to a U.S. payee tothe extent that, prior to the payment, thewithholding agent can reliably associatethe payment with a Form W–9 describedin paragraph (d)(2) or (3) of this sectionattached to a valid intermediary, flow-through, or U.S. branch withholding cer-tificate described in paragraph (e)(3)(i) ofthis section or to the extent the withhold-ing agent can reliably associate the pay-ment with a Form W–8 described in para-graph (e)(3)(v) of this section thatevidences an agreement to treat a U.S.branch or territory financial institution de-scribed in paragraph (b)(2)(iv) of this sec-tion as a U.S. person. In addition, a with-holding agent may treat the payment asmade to a U.S. payee only if it complieswith the electronic confirmation proce-dures described in paragraph (e)(4)(v) ofthis section, if required, and it has notbeen notified by the IRS that any of the

information on the withholding certificateor other documentation is incorrect or un-reliable. In the case of a Form W–9 that isrequired to be furnished for a reportablepayment that may be subject to backupwithholding, the withholding agent maybe notified in accordance with section3406(a)(1)(B) and the regulations underthat section. See applicable proceduresunder section 3406(a)(1)(B) and the reg-ulations under that section for payors whohave been notified with regard to such aForm W–9. Withholding agents who havebeen notified in relation to other FormsW–9, including under section 6724(b)pursuant to section 6721, may rely on thewithholding certificate or other documen-tation only to the extent provided underprocedures as prescribed by the IRS (see§ 601.601(d)(2) of this chapter).

(e) through (e)(1)(ii)(A)(1) [Reserved].For further guidance, see § 1.1441–1(e) introductory text through(e)(1)(ii)(A)(1)

(2) That the payment is made outsidethe United States (within the meaning of§ 1.6049–5(e)) with respect to an offshoreobligation (within the meaning of para-graph (c)(37) of this section) and the with-holding agent can reliably associate thepayment with documentary evidence de-scribed in §§ 1.1441–6(c)(3) or (4), or1.6049–5(c)(1) relating to the beneficialowner;

(3) That the withholding agent can re-liably associate the payment with a validqualified intermediary withholding certif-icate, as described in paragraph (e)(3)(ii)of this section, and the qualified interme-diary has provided sufficient informationfor the withholding agent to allocate thepayment to a chapter 3 withholding ratepool;

(4) through (7) [Reserved]. For furtherguidance, see § 1.1441–1(e)(1)(ii)(A)(4)through (7).

(B) [Reserved]. For further guidance,see § 1.1441–1(e)(1)(ii)(B).

(2) [Reserved]. For further guidance,see § 1.1441–1(e)(2) introductory textthrough (e)(2)(i).

(ii) Requirements for validity of certif-icate. A beneficial owner withholding cer-tificate is valid for purposes of a paymentof an amount subject to chapter 3 with-holding only if it is provided on a FormW–8, or a Form 8233 in the case of per-

sonal services income described in§ 1.1441–4(b) or certain scholarship orgrant amounts described in § 1.1441–4(c) (or a substitute form described inparagraph (e)(4)(vi) of this section or suchother form as the IRS may prescribe). AForm W–8 is valid only if its validityperiod has not expired, it is signed underpenalties of perjury by the beneficialowner, and it contains all of the informa-tion required on the form. The requiredinformation is the beneficial owner’sname, permanent residence address (asdefined in § 1.1441–1(c)(55)), TIN (if re-quired), a certification that the person isnot a U.S. citizen (if the person is anindividual) or a certification of the countryunder the laws of which the beneficialowner is created, incorporated, or gov-erned (if a person other than an individ-ual), the classification of the entity, andsuch other information as may be requiredby the regulations under section 1441 orby the form or accompanying instructionsin addition to, or in lieu of, the informa-tion described in this paragraph (e)(2)(ii)(including when a foreign TIN and anindividual’s date of birth are required). Abeneficial owner withholding certificatemust also include the chapter 4 status of abeneficial owner that is an entity receivinga withholdable payment in order to bevalid. See paragraph (e)(4)(vii) of this sec-tion for circumstances in which a TIN isrequired on a beneficial owner withhold-ing certificate.

(3) [Reserved]. For further guidance,see § 1.1441–1(e)(3) introductory text and(e)(3)(i).

(ii) Intermediary withholding certifi-cate from a qualified intermediary. Aqualified intermediary shall provide aqualified intermediary withholding certif-icate for withholdable payments or report-able amounts received by the qualifiedintermediary. See paragraph (e)(3)(vi) ofthis section for the definition of reportableamount. A qualified intermediary with-holding certificate is valid only if it isfurnished on a Form W–8, an acceptablesubstitute form, or such other form as theIRS may prescribe, it is signed under pen-alties of perjury by a person with authorityto sign for the qualified intermediary, itsvalidity has not expired, and it containsthe following information, statement, andcertifications—


(A) The name, permanent residenceaddress, qualified intermediary employeridentification number (QI-EIN), and thecountry under the laws of which the inter-mediary is created, incorporated, or gov-erned. For a withholding certificate pro-vided with respect to a withholdablepayment or associated with a withholdingstatement allocating the payment to achapter 4 withholding rate pool of U.S.payees, the withholding certificate mustalso include the chapter 4 status of thequalified intermediary (which, if the qual-ified intermediary is an FFI, it must be aparticipating FFI, a registered deemed-compliant FFI, or an FFI treated as adeemed-compliant FFI under an applica-ble IGA that is subject to due diligenceand reporting requirements with respect toits U.S. accounts similar to those applica-ble to a registered deemed-compliant FFIunder § 1.1471–5(f)(1), and its GIIN (ifapplicable). However, a qualified interme-diary withholding certificate may includea chapter 4 status of limited FFI as definedin § 1.1471–1(b)(77) through December31, 2015. See paragraph (e)(5)(ii) for thechapter 4 status required of a qualifiedintermediary. A qualified intermediarythat does not act in its capacity as a qual-ified intermediary must not use its QI-EIN. Rather, the intermediary should pro-vide a nonqualified intermediarywithholding certificate, if it is acting as anintermediary, and should use the taxpayeridentification number( if any) and GIIN (ifapplicable) that it uses for all other pur-poses;

(B) [Reserved]. For further guidance,see § 1.1441–1(e)(3)(ii)(B).

(C) A certification that the qualifiedintermediary has provided, or will pro-vide, a withholding statement as requiredby paragraph (e)(5)(v) of this section;

(D) A certification that the qualifiedintermediary is fulfilling its reporting ob-ligations under chapter 4 with respect toany payees included in the U.S. payeepool when the qualified intermediary pro-vides a withholding statement that allo-cates a payment to payees in such a pool;and

(E) Any other information, certifica-tions, or statements as may be required bythe form or accompanying instructions inaddition to, or in lieu of, the informationand certifications described in this para-

graph (e)(3)(ii) or paragraph (e)(3)(v) ofthis section. See paragraph (e)(5)(v) ofthis section for the requirements of a with-holding statement associated with thequalified intermediary withholding certif-icate.

(iii) Intermediary withholding certifi-cate from a nonqualified intermediary. Anonqualified intermediary shall provide anonqualified intermediary withholdingcertificate for reportable amounts receivedby the nonqualified intermediary. Seeparagraph (e)(3)(vi) of this section for thedefinition of reportable amount. A non-qualified intermediary withholding certif-icate is valid only to the extent it is fur-nished on a Form W–8, an acceptablesubstitute form, or such other form as theIRS may prescribe, it is signed under pen-alties of perjury by a person authorized tosign for the nonqualified intermediary, itcontains the information, statements, andcertifications described in this paragraph(e)(3)(iii) and paragraph (e)(3)(iv) of thissection, its validity has not expired, and itcontains the withholding certificates andother appropriate documentation for allpersons to whom the certificate relates areassociated with the certificate. Withhold-ing certificates and other appropriate doc-umentation consist of beneficial ownerwithholding certificates described in para-graph (e)(2)(i) of this section, intermedi-ary and flow-through withholding certifi-cates described in paragraph (e)(3)(i) ofthis section, withholding foreign partner-ship and withholding foreign trust certifi-cates described in § 1.1441–5(c)(2)(iv)and (e)(5)(iii), documentary evidence de-scribed in §§ 1.1441–6(c)(3) or (4) and1.6049–5(c)(1), and any other documen-tation or certificates applicable underother provisions of the Internal RevenueCode or regulations that certify or estab-lish the status of the payee or beneficialowner as a U.S. or a foreign person. If anonqualified intermediary is acting on be-half of another nonqualified intermediaryor a flow-through entity, then the non-qualified intermediary must associate withits own withholding certificate the othernonqualified intermediary withholdingcertificate or the flow-through withhold-ing certificate and separately identify allof the withholding certificates and otherappropriate documentation that are asso-ciated with the withholding certificate of

the other nonqualified intermediary orflow-through entity. Nothing in this para-graph (e)(3)(iii) shall require an interme-diary to furnish original documentation.Copies of certificates or documentary ev-idence may be transmitted to the U.S.withholding agent, in which case the non-qualified intermediary must retain theoriginal documentation for the same timeperiod that the copy is required to beretained by the withholding agent underparagraph (e)(4)(iii) of this section andmust provide it to the withholding agentupon request. For purposes of this para-graph (e)(3)(iii), a valid intermediarywithholding certificate also includes astatement described in § 1.871–14(c)(2)(v) furnished for interest to qual-ify as portfolio interest for purposes ofsections 871(h) and 881(c). The informa-tion and certifications required on a FormW–8 described in this paragraph(e)(3)(iii) are as follows—

(A) The name and permanent residentaddress of the nonqualified intermediary,chapter 4 status (for a nonqualified inter-mediary receiving a withholdable pay-ment or providing a withholding state-ment associated with the Form W–8allocating a payment to a chapter 4 with-holding rate pool of U.S. payees), GIIN (ifapplicable), and the country under thelaws of which the nonqualified intermedi-ary is created, incorporated, or governed;

(B) [Reserved]. For further guidance,see § 1.1441–1(e)(3)(iii)(B).

(C) If the nonqualified intermediarywithholding certificate is used to transmitwithholding certificates or other appropri-ate documentation for more than one per-son on whose behalf the nonqualified in-termediary is acting, a withholdingstatement associated with the Form W–8that provides all the information requiredby paragraph (e)(3)(iv) of this section;

(D) A certification that the nonquali-fied intermediary is fulfilling its reportingobligations under chapter 4 with respect toany payees included in the U.S. payeepool when the nonqualified intermediaryprovides an FFI withholding statement de-scribed in § 1.1471–3(c)(3)(iii)(B)(2) thatallocates a payment to payees in such apool; and

(E) Any other information, certifica-tions, or statements as may be required bythe form or accompanying instructions in


addition to, or in lieu of, the information,certifications, and statements described inthis paragraph (e)(3)(iii) or paragraph(e)(5)(iv) of this section.

(iv) Withholding statement provided bynonqualified intermediary—(A) In gen-eral. A nonqualified intermediary shallprovide a withholding statement requiredby this paragraph (e)(3)(iv) to the extentthe nonqualified intermediary is requiredto furnish, or does furnish, documentationfor payees on whose behalf it receivesreportable amounts (as defined in para-graph (e)(3)(vi) of this section) or to theextent it otherwise provides the documen-tation of such payees to a withholdingagent. A nonqualified intermediary, how-ever, that is subject to withholding underchapter 4 due to its chapter 4 status as anonparticipating FFI need not provide awithholding statement unless it is provid-ing documentation with respect to an ex-empt beneficial owner as described in§ 1.1471–3(c)(3)(iii)(B)(4). A nonquali-fied intermediary is not required to dis-close to the withholding agent informationregarding persons for whom it collectsreportable amounts unless it has actualknowledge that any such person is a U.S.non-exempt recipient as defined in para-graph (c)(21) of this section. Informationregarding U.S. non-exempt recipients re-quired under this paragraph (e)(3)(iv)must be provided irrespective of any re-quirement under foreign law that prohibitsthe disclosure of the identity of an accountholder of a nonqualified intermediary orfinancial information relating to such ac-count holder. A nonqualified intermediaryis not required to provide information on awithholding statement regarding U.S.non-exempt recipients, provided that thenonqualified intermediary is a participat-ing FFI (including a reporting Model 2FFI) or registered deemed-compliant FFI(including a reporting Model 1 FFI) thatidentifies on the withholding statement theportion of a payment allocable to a chap-ter 4 withholding rate pool of U.S. payeesto the extent that the nonqualified inter-mediary is permitted to include such U.S.payees in a pool under § 1.6049–4(c)(4)(iii). See § 1.1471–3(d)(4) for therequirements of an entity to identify itselfas a participating FFI or registereddeemed-compliant FFI to a withholdingagent for purposes of chapter 4. Although

a nonqualified intermediary is not re-quired to provide documentation andother information required by this para-graph (e)(3)(iv) for persons other thanU.S. non-exempt recipients not includedin a chapter 4 withholding rate pool ofU.S. payees, a withholding agent that doesnot receive documentation and such infor-mation must apply the presumption rulesof paragraph (b) of this section,§ § 1.1441–5(d) and (e)(6), 1.6049–5(d),and 1.1471–3(f)(5) (for a withholdablepayment) or the withholding agent shallbe liable for tax, interest, and penalties. Awithholding agent must apply the pre-sumption rules even if it is not requiredunder chapter 61 of the Internal RevenueCode to obtain documentation to treat apayee as an exempt recipient and eventhough it has actual knowledge that thepayee is a U.S. person. For example, if anonqualified intermediary receives a pay-ment that is not a withholdable paymentand fails to provide a withholding agentwith a Form W–9 for an account holderthat is a U.S. exempt recipient that is notincluded in a chapter 4 withholding ratepool of U.S. payees to the extent permit-ted in this paragraph (e)(3)(iv)(A), thewithholding agent must presume (even ifit has actual knowledge that the accountholder is a U.S. exempt recipient) that theaccount holder is an undocumented for-eign person with respect to amounts sub-ject to chapter 3 withholding. See para-graph (b)(3)(v) of this section forapplicable presumptions. Therefore, thewithholding agent must withhold 30 per-cent from the payment even though if aForm W–9 had been provided, no with-holding or reporting on the payment at-tributable to a U.S. exempt recipientwould apply. Further, a nonqualified in-termediary that fails to provide the docu-mentation and the information under thisparagraph (e)(3)(iv) for another withhold-ing agent to report the payments on Forms1042–S (including under the requirementsof § 1.1474–1(d)(2) for a payment of achapter 4 reportable amount) and Forms1099 is not relieved of its responsibility tofile information returns. See paragraph(b)(6) of this section. Therefore, unlessthe nonqualified intermediary itself filessuch returns and provides copies to thepayees, it shall be liable for penalties un-der sections 6721 (failure to file informa-

tion returns), and 6722 (failure to furnishpayee statements), including the penaltiesunder those sections for intentional failureto file information returns. In addition,failure to provide either the documenta-tion or the information required by thisparagraph (e)(3)(iv) results in a paymentnot being reliably associated with validdocumentation. Therefore, the beneficialowners of the payment are not entitled toreduced rates of withholding and if thefull amount required to be held under thepresumption rules is not withheld by thewithholding agent, the nonqualified inter-mediary must withhold the difference be-tween the amount withheld by the with-holding agent and the amount required tobe withheld. Failure to withhold shall re-sult in the nonqualified intermediary beingliable for tax under section 1461, interest,and penalties, including penalties undersection 6656 (failure to deposit) and sec-tion 6672 (failure to collect and pay overtax).

(B) General requirements. A withhold-ing statement must be provided prior tothe payment of a reportable amount andmust contain the information specified inparagraph (e)(3)(iv)(C) of this section.The statement must be updated as often asrequired to keep the information in thewithholding statement correct prior toeach subsequent payment. The withhold-ing statement forms an integral part of thewithholding certificate provided underparagraph (e)(3)(iii) of this section, andthe penalties of perjury statement pro-vided on the withholding certificate shallapply to the withholding statement. Thewithholding statement may be provided inany manner the nonqualified intermediaryand the withholding agent mutually agree,including electronically. If the withhold-ing statement is provided electronically aspart of a system established by the with-holding agent or nonqualified intermedi-ary to provide the statement, however,there must be sufficient safeguards to en-sure that the information received by thewithholding agent is the information sentby the nonqualified intermediary and alloccasions of user access that result in thesubmission or modification of the with-holding statement information must be re-corded. In addition, the electronic systemmust be capable of providing a hard copyof all withholding statements provided by


the nonqualified intermediary. A with-holding statement may otherwise be trans-mitted by a nonqualified intermediary viae-mail or facsimile to a withholding agentunder the requirements specified in para-graph (e)(4)(iv)(C) of this section (substi-tuting the term withholding statement forthe term Form W–8 or the term docu-ment, as applicable). A withholding agentwill be liable for tax, interest, and penal-ties in accordance with paragraph (b)(7)of this section to the extent it does notfollow the presumption rules of paragraph(b)(3) of this section or § § 1.1441–5(d) and (e)(6), and 1.6049–5(d) for anypayment of a reportable amount, or por-tion thereof, for which it does not have avalid withholding statement prior to mak-ing a payment. , A withholding agent maynot treat as valid an allocation of a pay-ment to a chapter 4 withholding rate poolof U.S. payees described in paragraph(e)(3)(iv)(A) of this section or an alloca-tion of a payment to a chapter 4 withhold-ing rate pool of recalcitrant account hold-ers described in paragraph (e)(3)(iv)(C)(2)of this section unless the withholdingagent identifies the nonqualified interme-diary maintaining the account (as de-scribed in § 1.1471–5(b)(5)) as a partici-pating FFI (including a reporting Model 2FFI) or registered deemed-compliant FFI(including a reporting Model 1 FFI) byapplying the rules of § 1.1471–3(d)(4).

(C) Content of withholding statement.The withholding statement provided by anonqualified intermediary must containthe information required by this paragraph(e)(3)(iv)(C).

(1) In general. The withholding state-ment provided by a nonqualified interme-diary must contain the information re-quired by this paragraph (e)(3)(iv)(C).

(i) Except as otherwise provided in(e)(3)(iv)(A) of this section (which ex-cludes reporting of information with re-spect to certain U.S. persons on the with-holding statement), the withholdingstatement must contain the name, address,TIN (if any) and the type of documenta-tion (documentary evidence, Form W–9,or type of Form W–8) for every personfrom whom documentation has been re-ceived by the nonqualified intermediaryand provided to the withholding agent andwhether that person is a U.S. exempt re-cipient, a U.S. non-exempt recipient, or a

foreign person. See paragraphs (c)(2),(20), and (21) of this section for the def-initions of foreign person, U.S. exemptrecipient, and U.S. non-exempt recipient.In the case of a foreign person, the state-ment must indicate whether the foreignperson is a beneficial owner or an inter-mediary, flow-through entity, U.S.branch, or territory financial institutiondescribed in paragraph (b)(2)(iv) of thissection and include the type of recipient,based on recipient codes applicable forchapter 3 purposes used for filing Forms1042–S, if the foreign person is a recipientas defined in § 1.1461–1(c)(1)(ii).

(ii) The withholding statement must al-locate each payment, by income type, toevery payee required to be reported on thewithholding statement for whom docu-mentation has been provided (includingU.S. exempt recipients except as providedin paragraph (e)(3)(iv)(A) of this section).Any payment that cannot be reliably as-sociated with valid documentation from apayee shall be treated as made to an un-known payee in accordance with the pre-sumption rules of paragraph (b) of thissection and § § 1.1441–5(d) and (e)(6)and 1.6049–5(d). For this purpose, a typeof income is determined by the types ofincome required to be reported on Forms1042–S or 1099, as appropriate. Notwith-standing the preceding sentence, depositinterest (including original issue discount)described in section 871(i)(2)(A) or881(d) and interest or original issue dis-count on short-term obligations as de-scribed in section 871(g)(1)(B) or 881(e)is only required to be allocated to theextent it is required to be reported onForm 1099 or Form 1042–S. See§ 1.6049–8 (regarding reporting of bankdeposit interest to certain foreign per-sons). If a payee receives income throughanother nonqualified intermediary, flow-through entity, or U.S. branch or territoryfinancial institution described in para-graph (e)(2)(iv) of this section (other thana U.S. branch or territory financial insti-tution treated as a U.S. person), the with-holding statement must also state, withrespect to the payee, the name, address,and TIN, if known, of the other nonquali-fied intermediary or U.S. branch fromwhich the payee directly receives the pay-ment or the flow-through entity in whichthe payee has a direct ownership interest.

If another nonqualified intermediary,flow-through entity, or U.S. branch fails toallocate a payment, the name of the non-qualified intermediary, flow-through en-tity, or U.S. branch that failed to allocatethe payment shall be provided with re-spect to such payment.

(iii) If a payee is identified as a foreignperson, the nonqualified intermediarymust specify the rate of withholding towhich the payee is subject, the payee’scountry of residence and, if a reduced rateof withholding is claimed, the basis forthat reduced rate (e.g., treaty benefit, port-folio interest, exempt under section501(c)(3), 892, or 895). The allocationstatement must also include the taxpayeridentification numbers of those foreignpersons for whom such a number is re-quired under paragraph (e)(4)(vii) of thissection or § 1.1441–6(b)(1) (regardingclaims for treaty benefits for which a TINis provided unless a foreign tax identify-ing number described in § 1.1441–6(b)(1) is provided). In the case of a claimof treaty benefits, the nonqualified inter-mediary’s withholding statement mustalso state whether the limitation on bene-fits and section 894 statements required by§ 1.1441–6(c)(5) have been provided, ifrequired, in the beneficial owner’s FormW–8 or associated with such owner’sdocumentary evidence.

(iv) The withholding statement mustalso contain any other information thewithholding agent reasonably requests inorder to fulfill its obligations under chap-ter 3, chapter 61 of the Internal RevenueCode, and section 3406.

(2) Nonqualified intermediary with-holding statement for withholdable pay-ments. This paragraph (e)(3)(iv)(C)(2)modifies the requirements of a withhold-ing statement described in paragraph(e)(3)(iv)(C)(1) of this section that is pro-vided by a nonqualified intermediary withrespect to a reportable amount that is awithholdable payment. For such a pay-ment, the requirements applicable to awithholding statement described in para-graph (e)(3)(iv)(A) through (e)(3)(iv)(C)(1)of this section shall apply, except that—

(i) The withholding statement must in-clude the chapter 4 status and GIIN (whenrequired for chapter 4 purposes under§ 1.1471–3(d)) of each other intermediaryor flow-through entity that is a foreign


person and that receives the payment ex-cluding an intermediary or flow-throughentity that is an account holder of or in-terest holder in a withholding foreign part-nership, withholding foreign trust, orqualified intermediary;

(ii) If the nonqualified intermediarythat is a participating FFI or registereddeemed-compliant FFI provides a with-holding statement described in § 1.1471–3(c)(3)(iii)(B)(2) (describing an FFI with-holding statement), the withholdingstatement may include chapter 4 with-holding rate pools with respect to the por-tions of the payment allocated to nonpar-ticipating FFIs and recalcitrant accountholders (to the extent permitted on an FFIwithholding statement described in thatparagraph) in lieu of providing specificpayee information with respect to suchpersons reported on the statement (includ-ing persons subject to chapter 4 withhold-ing) as described in paragraph(e)(3)(iv)(C)(1) of this section;

(iii) If the nonqualified intermediaryprovides a withholding statement de-scribed in § 1.1471–3(c)(3)(iii)(B)(3) (de-scribing a chapter 4 withholding state-ment), the withholding statement mayinclude chapter 4 withholding rate poolswith respect to the portions of the pay-ment allocated to nonparticipating FFIs;and

(iv) For a payment allocated to a payeethat is a foreign person (other than a per-son included in a chapter 4 withholdingrate pool described in paragraphs(e)(3)(iv)(C)(2)(ii) and (iii) of this sec-tion) that is reported on a withholdingstatement described in § 1.1471–3(c)(3)(iii)(B)(2) or (3), the withholdingstatement must include the chapter 4 sta-tus of the payee and, for a payee otherthan an individual, the recipient code forchapter 4 purposes used for filing Form1042–S.

(3) Example. This example illustrates the princi-ples of paragraph (e)(3)(iv)(C) of this section. WAmakes a withholdable payment of U.S. source divi-dends to NQI, a nonqualified intermediary. NQI pro-vides WA with a valid intermediary withholdingcertificate under paragraph (e)(3)(iii) of this sectionthat includes NQI’s certification of its status forchapter 4 purposes as a participating FFI. NQI pro-vides a withholding statement on which NQI allo-cates 20% of the payment to a chapter 4 withholdingrate pool of recalcitrant account holders of NQI forpurposes of chapter 4 and allocates 80% of thepayment equally to A and B, individuals that are

account holders of NQI. NQI also provides WA withvalid beneficial owner withholding certificates fromA and B establishing their status as foreign personsentitled to a 15% rate of withholding under an ap-plicable income tax treaty. Because NQI has certifiedits status as a participating FFI, withholding underchapter 4 is not required with respect to NQI. See§ 1.1471–2(a)(4). Based on the documentation NQIprovided to WA with respect to A and B, WA canreliably associate the payment with valid documen-tation on the portion of the payment allocated tothem and, because the payment is a withholdablepayment, may rely on the allocation of the paymentfor NQI’s recalcitrant account holders in a chapter 4withholding rate pool in lieu of payee informationwith respect to such account holders. See paragraph(e)(3)(iv)(C)(2) of this section for the special rulesfor a withholding statement provided by a nonquali-fied intermediary for a withholdable payment. Alsosee § 1.1471–2(a) for WA’s withholding require-ments under chapter 4 with respect to the portion ofthe payment allocated to NQI’s recalcitrant accountholders and § 1.1441–3(a)(2) for coordinating with-holding under chapter 3 for payments to which with-holding is applied under chapter 4.

(D) Alternative procedures—(1) Ingeneral. Under the alternative proceduresof this paragraph (e)(3)(iv)(D), a non-qualified intermediary may provide infor-mation allocating a payment of a report-able amount to each payee (including U.S.exempt recipients) otherwise required un-der paragraph (e)(3)(iv)(B)(2) of this sec-tion after a payment is made. To use thealternative procedure of this paragraph(e)(3)(iv)(D), the nonqualified intermedi-ary must inform the withholding agent ona statement associated with its nonquali-fied intermediary withholding certificatethat it is using the procedure under thisparagraph (e)(3)(iv)(D) and the withhold-ing agent must agree to the procedure. Ifthe requirements of the alternative proce-dure are met, a withholding agent, includ-ing the nonqualified intermediary usingthe procedures, can treat the payment asreliably associated with documentationand, therefore, the presumption rules ofparagraph (b)(3) of this section and§§ 1.1441–5(d) and (e)(6) and 1.6049–5(d) do not apply even though informationallocating the payment to each payee hasnot been received prior to the payment.See paragraph (e)(3)(iv)(D)(7) of this sec-tion, however, for a nonqualified interme-diary’s liability for tax and penalties if therequirements of this paragraph(e)(3)(iv)(D) are not met. These alterna-tive procedures shall not be used for pay-ments that are allocable to U.S. non-exempt recipients except as provided in

paragraph (e)(3)(iv)(D)(2)(ii) of this sec-tion. Therefore, a nonqualified intermedi-ary is required to provide a withholdingagent with information allocating pay-ments of reportable amounts to U.S. non-exempt recipients prior to the paymentbeing made by the withholding agent.

(2) Withholding rate pools—(i) In gen-eral. In place of the information requiredin paragraph (e)(3)(iv)(C)(2) of this sec-tion allocating payments to each payee,the nonqualified intermediary must pro-vide a withholding agent with withholdingrate pool information prior to the paymentof a reportable amount. The withholdingstatement must contain all other informa-tion required by paragraph (e)(3)(iv)(C) ofthis section. Further, each payee listed inthe withholding statement must be as-signed to an identified withholding ratepool. To the extent a nonqualified inter-mediary is required to, or does provide,documentation, the alternative proceduresdo not relieve the nonqualified intermedi-ary from the requirement to provide doc-umentation prior to the payment beingmade. Therefore, withholding certificatesor other appropriate documentation andall information required by paragraph(e)(3)(iv)(C) of this section (other thanallocation information) must be providedto a withholding agent before any newpayee receives a reportable amount. Inaddition, the withholding statement mustbe updated by assigning a new payee to awithholding rate pool prior to the paymentof a reportable amount. A withholdingrate pool is a payment of a single type ofincome, determined in accordance withthe categories of income used to file Form1042–S, that is subject to a single rate ofwithholding. A withholding rate pool maybe established by any reasonable methodto which the nonqualified intermediaryand a withholding agent agree (e.g., byestablishing a separate account for a sin-gle withholding rate pool, or by dividing apayment made to a single account intoportions allocable to each withholdingrate pool). The nonqualified intermediaryshall determine withholding rate poolsbased on valid documentation or, to theextent a payment cannot be reliably asso-ciated with valid documentation, the pre-sumption rules of paragraph (b)(3) of thissection and § § 1.1441–5(d) and (e)(6)and 1.6049–5(d).


(ii) Withholding rate pools for with-holdable payments. This paragraph(e)(3)(iv)(D)(2)(ii) modifies the provi-sions of paragraph (e)(3)(iv)(D)(2)(i) ofthis section with respect to the withhold-ing rate pools permitted for the alternativeprocedures described in paragraph(e)(3)(iv)(D)(1) of this section in the caseof a reportable amount that is a withhold-able payment or for a payment for whichan FFI withholding statement is providedby the nonqualified intermediary. In thecase of a withholdable payment, a non-qualified intermediary may includeamounts allocable to a chapter 4 reportingpool (other than a U.S. payee pool) in a30-percent rate pool together with a with-holding rate pool for amounts subject tochapter 3 withholding at the 30-percentrate. For the amount of the payment allo-cable to a U.S. payee pool on an FFIwithholding statement, a nonqualified in-termediary may include such an amount ina withholding rate pool with the amountof the payment that is exempt from with-holding under chapter 3 instead of provid-ing documentation regarding U.S. non-exempt recipients included in the pool. Tothe extent that a nonqualified intermediaryallocates an amount to any chapter 4 with-holding rate pool, the nonqualified inter-mediary is required to notify the withhold-ing agent of the allocation beforereceiving the payment and is not requiredto provide documentation with respect tothe payees included in such pool. Thenonqualified intermediary shall determinethe chapter 4 withholding rate pools per-mitted to be used under this paragraph(e)(3)(iv)(D)(2)(ii) in accordance with thenonqualified intermediary’s applicablechapter 4 status and under § 1.1471–3(c)(3)(iii)(B)(2) (for an FFI withholdingstatement) or (3) (for a chapter 4 with-holding statement). Additionally, the non-qualified intermediary shall identify thosepayees to which withholding under chap-ter 4 applies that are not included in achapter 4 reporting pool (including payeesthat could be included in a chapter 4 with-holding rate pool for whom the nonquali-fied intermediary chooses to providepayee specific information).

(3) Allocation information. The non-qualified intermediary must provide thewithholding agent with sufficient informa-tion to allocate the income in each with-

holding rate pool to each payee (includingU.S. exempt recipients or any chapter 4withholding rate pool identified by thewithholding agent under paragraph(c)(3)(iv)(D)(2)(ii) of this section) withinthe pool no later than January 31 of theyear following the year of payment. Anypayments that are not allocated to payeesfor whom documentation has been pro-vided or a chapter 4 withholding rate poolreferred to in the previous sentence shallbe allocated to an undocumented payee inaccordance with the presumption rules ofparagraph (b)(3) of this section and§ § 1.1441–5(d) and (e)(6), 1.6049–5(d),and 1.1471–3(f)(5) (for a withholdablepayment for chapter 4 purposes). Notwith-standing the preceding sentence, depositinterest (including original issue discount)described in section 871(i)(2)(A) or881(d) and interest or original issue dis-count on short-term obligations as de-scribed in section 871(g)(1)(B) or 881(e)is not required to be allocated to a U.S.exempt recipient or a foreign payee, ex-cept as required under § 1.6049–8 (re-garding reporting of deposit interest paidto certain foreign persons).

(4) Failure to provide allocation infor-mation. Except as provided in paragraph(e)(3)(iv)(D)(5) of this section, If a non-qualified intermediary fails to provide al-location information, if required, by Jan-uary 31 for any withholding rate pool tothe extent required in paragraph(e)(3)(iv)(D)(3) of this section, a with-holding agent shall not apply the alterna-tive procedures of this paragraph(e)(3)(iv)(D) to any payments of report-able amounts paid after January 31 in thetaxable year following the calendar yearfor which allocation information was notgiven and any subsequent taxable year.Further, the alternative procedures shallbe unavailable for any other withholdingrate pool (other than a chapter 4 withhold-ing rate pool as otherwise permitted) eventhough allocation information was givenfor that other pool. Therefore, the with-holding agent must withhold on a pay-ment of a reportable amount in accor-dance with the presumption rules ofparagraph (b)(3) of this section, and§§ 1.1441–5(d) and (e)(6), 1.6049–5(d),and 1.1471–3(f)(5) (for a withholdablepayment for chapter 4 purposes), unlessthe nonqualified intermediary provides all

of the information, including informationsufficient to allocate the payment to eachspecific payee or chapter 4 withholdingrate pool (as permitted), required by para-graph (e)(3)(iv)(A) through (C) of thissection prior to the payment. A nonquali-fied intermediary must allocate at least 90percent of the income required to be allo-cated for each withholding rate pool asrequired under this paragraph(e)(3)(iv)(D)(4) or the nonqualified inter-mediary will be treated as having failed toprovide allocation information for pur-poses of this paragraph (e)(3)(iv)(D). Forpurposes of the allocation, a nonqualifiedintermediary is required to identify byJanuary 31 the portion of the payment thatis allocated to each chapter 4 withholdingrate pool (rather than the payees includedin each such pool). See paragraph(e)(3)(iv)(D)(7) of this section for liabilityfor tax and penalties if a nonqualified in-termediary fails to provide allocation in-formation in whole or in part.

(5) Cure provision. A nonqualified in-termediary may cure any failure to pro-vide allocation information by providingthe required allocation information to thewithholding agent no later than February14 following the calendar year of pay-ment. If the withholding agent receivesthe allocation information by that date, itmay apply the adjustment procedures of§ 1.1461–2 (or of § 1.1474–2 for anamount withheld under chapter 4) to anyexcess withholding for payments made onor after February 1 and on or before Feb-ruary 14. Any nonqualified intermediarythat fails to cure by February 14, mayrequest the ability to use the alternativeprocedures of this paragraph (e)(3)(iv)(D)by submitting a request, in writing, to the.The request must state the reason that thenonqualified intermediary did not complywith the alternative procedures of thisparagraph (e)(3)(iv)(D) and steps that thenonqualified intermediary has taken, orwill take, to ensure that no failures occurin the future. If the IRS determines thatthe alternative procedures of this para-graph (e)(3)(iv)(D) may apply, a determi-nation to that effect will be issued by theIRS to the nonqualified intermediary.

(6) Form 1042–S reporting in case ofallocation failure. If a nonqualified inter-mediary fails to provide allocation infor-mation by February 14 following the year


of payment for a withholding rate pool,the withholding agent must file Forms1042–S for payments made to each payeein that pool (other than U.S. exempt re-cipients) in the prior calendar year by prorating the payment to each payee (includ-ing U.S. exempt recipients) listed in thewithholding statement for that withhold-ing rate pool, treating as a payee for thispurpose each chapter 4 withholding ratepool identified by the nonqualified inter-mediary under paragraph(e)(3)(iv)(D)(2)(ii) of this section. If thenonqualified intermediary fails to allocate10 percent or less of an amount requiredto be allocated for a withholding rate pool,a withholding agent shall report the unal-located amount as paid to a single un-known payee in accordance with the pre-sumption rules of paragraph (b) of thissection and § § 1.1441–5(d) and (e)(6),1.6049–5(d), and § 1.1471–3(f)(5) (for awithholdable payment for chapter 4 pur-poses). The portion of the payment thatcan be allocated to specific recipients, asdefined in § 1.1461–1(c)(1)(ii), shall bereported to each recipient in accordancewith the rules of § 1.1461–1(c) and§ 1.1471–1(d)(2) (for a withholdable pay-ment).

(7) and (8) [Reserved]. For further guid-ance, see § 1.1441–1(e)(iv)(D)(7) and (8).

(E) Notice procedures. The IRS maynotify a withholding agent that the alter-native procedures of paragraph(e)(3)(iv)(D) of this section are not appli-cable to a specified nonqualified interme-diary, a U.S. branch described in para-graph (b)(2)(iv) of this section, or a flow-through entity. If a withholding agentreceives such a notice, it must commencewithholding under this section or chapter4 (if applicable) in accordance with thepresumption rules of paragraph (b)(3) ofthis section and § § 1.1441–5(d) and(e)(6), 1.6049–5(d), and1.1471–3(f)(5)(for a withholdable payment for chapter 4purposes) unless the nonqualified interme-diary, U.S. branch, or flow-through entitycomplies with the procedures in para-graphs (e)(3)(iv)(A) through (C) of thissection. In addition, the IRS may notify awithholding agent, in appropriate circum-stances, that it must apply the presumptionrules of paragraph (b)(3) of this sectionand § § 1.1441–5(d) and (e)(6), 1.6049–5(d), and § 1.1471–3(f)(5) (for a with-

holdable payment for chapter 4 purposes)to payments made to a nonqualified inter-mediary, a U.S. branch, or a flow-throughentity even if the nonqualified intermedi-ary, U.S. branch or flow-through entityprovides allocation information prior tothe payment. A withholding agent thatreceives a notice under this paragraph(e)(3)(iv)(E) must commence withholdingin accordance with the presumption ruleswithin 30 days of the date of the notice.The IRS may withdraw its prohibitionagainst using the alternative procedures ofparagraph (e)(3)(iv)(D) of this section, orits requirement to follow the presumptionrules, if the nonqualified intermediary,U.S. branch, or flow-through entity candemonstrate to the satisfaction of the IRSthat it is capable of complying with therules under chapter 3 of the Internal Rev-enue Code and any other conditions re-quired by the IRS.

(v) Withholding certificate from cer-tain U.S. branches (including territory fi-nancial institutions). A U.S. branch cer-tificate is a withholding certificateprovided by a U.S. branch (including aterritory financial institution) described inparagraph (b)(2)(iv) of this section that isnot the beneficial owner of the income.The withholding certificate is providedwith respect to reportable amounts andmust state that such amounts are not ef-fectively connected with the conduct of atrade or business in the United States. Thewithholding certificate must either trans-mit the appropriate documentation for thepersons for whom the branch receives thepayment (i.e., as an intermediary) or beprovided as evidence of its agreementwith the withholding agent to be treated asa U.S. person with respect to any paymentassociated with the certificate. A U.S.branch withholding certificate is validonly if it is furnished on a Form W–8, anacceptable substitute form, or such otherform as the IRS may prescribe, it is signedunder penalties of perjury by a personauthorized to sign for the branch, its va-lidity has not expired, and it contains theinformation, statements, and certificationsdescribed in this paragraph (e)(3)(v). Ifthe certificate is furnished to transmitwithholding certificates and other docu-mentation, it must contain the informa-tion, certifications, and statements de-scribed in paragraphs (e)(3)(v)(A) through

(C) of this section and in paragraphs(e)(3)(iii) and (iv) (alternative procedures)of this section, applying the term U.S.branch instead of the term nonqualifiedintermediary. If the certificate is furnishedpursuant to an agreement to treat the U.S.branch or territory financial institution asa U.S. person (which agreement must befor purposes of chapter 4 in addition tothis section in the case of a payment that isa withholdable payment), the informationand certifications required on the with-holding certificate are limited to the fol-lowing—

(A) The name of the territory financialinstitution or person of which the U.S.branch is a part, the address of the terri-tory financial institution or U.S. branch,and, for a withholding certificate providedby a U.S. branch, a certification that theperson of which the branch is a part is aparticipating FFI or registered deemed-compliant FFI;

(B) A certification that the paymentsassociated with the certificate are not ef-fectively connected with the conduct of itstrade or business in the United States;

(C) The EIN of the territory financialinstitution or branch;

(D) The GIIN of the FFI of which theU.S. branch is a part, if applicable; and

(E) Any other information, certifica-tions, or statements as may be required bythe form or accompanying instructions inaddition to, or in lieu of, the informationand certification described in this para-graph (e)(3)(v).

(vi) [Reserved]. For further guidance,see § 1.1441–1(e)(3)(vi).

(4) Applicable rules. The provisions inthis paragraph (e)(4) describe proceduresapplicable to withholding certificates onForm W–8 or Form 8233 (or a substituteform) or documentary evidence furnishedto establish foreign status. These provi-sions do not apply to Forms W–9 (or theirsubstitutes). For corresponding provisionsregarding Form W–9 (or a substituteform), see section 3406 and the regula-tions under that section.

(i) Who may sign the certificate. Awithholding certificate (including an ac-ceptable substitute) may be signed by anyperson authorized to sign a declarationunder penalties of perjury on behalf of theperson whose name is on the certificate asprovided in section 6061 and the regula-


tions under that section (relating to whomay sign generally for an individual, es-tate, or trust, which includes certainagents who may sign returns and otherdocuments), section 6062 and the regula-tions under that section (relating to whomay sign corporate returns), and section6063 and the regulations under that sec-tion (relating to who may sign partnershipreturns). A person authorized to sign awithholding certificate includes an officeror director of a corporation, a partner of apartnership, a trustee of a trust, an execu-tor of an estate, any foreign equivalent ofthe former titles, and any other person thathas been provided written authorizationby the individual or entity named on thecertificate to sign documentation on suchperson’s behalf.

(ii) Period of validity—(A) Generalrule. Except as provided otherwise inparagraphs (e)(4)(ii)(B) and (C) of thissection and this paragraph (e)(4)(ii)(A), awithholding certificate described in para-graph (e)(2)(i) of this section, or a certif-icate described in § 1.871–14(c)(2)(v)(furnished to qualify interest as portfoliointerest for purposes of sections 871(h)and 881(c)), will remain valid until the[earlier of the] last day of the third calen-dar year following the year in which thewithholding certificate is signed [or theday that a change in circumstances occursthat makes any information on the certif-icate incorrect]. For example, a withhold-ing certificate signed on September 30,2015, remains valid through December31, 2018, unless circumstances changethat make the information on the form nolonger correct. Documentary evidence de-scribed in § 1.1441–6(c)(3) or (4) or§ 1.6049–5(c)(1) shall remain valid untilthe last day of the third calendar yearfollowing the year in which the documen-tary evidence is provided to the withhold-ing agent except as provided in paragraph(e)(4)(ii)(B) of this section. Documentaryevidence described in § 1.6049–5(c)(1) provided to establish a payee’sforeign status that contains an expirationdate may, however, be treated as validuntil that expiration date if doing so wouldprovide a longer period of validity thanthe three-year period. Additionally, awithholding certificate or documentaryevidence with a period of validity that isvalid on December 31, 2013 will not be

treated as invalid based solely on the pe-riod described in this paragraph (e)(4)(ii)before January 1, 2015. Notwithstandingthe validity periods prescribed by thisparagraph (e)(4)(ii)(A) and paragraphs(e)(4)(ii)(B) and (C) of this section, awithholding certificate and documentaryevidence will cease to be valid if a changein circumstances makes the informationon the documentation incorrect.

(B) Indefinite validity period. Notwith-standing paragraph (e)(4)(ii)(A) of thissection, the following certificates (or partsof certificates) and documentary evidencedescribed in paragraphs (e)(4)(ii)(B)(1)through (11) of this section shall remainvalid until the a change in circumstancesmakes the information on the documentationincorrect under paragraph (e)(4)(ii)(D)(3).See, however, § 1.1471–3(c)(6)(ii) forwhen a withholding certificate or docu-mentary evidence remains valid (or is sub-ject to renewal) when also provided withrespect to a withholdable payment madeto an entity (including an intermediary)for purposes of whether a withholdingagent may continue to rely on the entity’sclaim of chapter 4 status. Additionally, theprovisions of paragraphs (e)(4)(ii)(B)(1),(2), and (12) of this section do not apply todocumentary evidence or a withholdingcertificate furnished prior to July 1, 2014.

(1) A beneficial owner withholdingcertificate (other than the portion of thecertificate making a claim for treaty ben-efits) and documentary evidence support-ing a claim of foreign status when both areprovided together by an individual claim-ing foreign status if the withholding agentdoes not have a current U.S. residenceaddress or U.S. mailing address for thepayee, does not have one or more currentU.S. telephone numbers that are the onlytelephone numbers the withholding agenthas for the payee, and, for a paymentdescribed in § 1.6049–5(c)(1), the with-holding agent has not been providedstanding instructions to make a paymentto an account in the United States for theobligation.

(2) A beneficial owner withholding cer-tificate (other than the portion of the certif-icate making a claim for treaty benefits)described in § 1.1471–3(c)(6)(ii)(C)(2)and documentary evidence provided by anentity supporting the entity’s claim of for-eign status.

(3) A beneficial owner withholdingcertificate provided by an entity claimingstatus as a tax-exempt entity under section501(c) that is not a foreign private foun-dation under section 509, provided thatthe withholding agent reports at least onepayment annually to the entity under§ 1.1461–1(c).

(4) A certificate described in paragraph(e)(3)(ii) of this section (a qualified inter-mediary withholding certificate) but notincluding the withholding certificates,documentary evidence, statements orother information associated with the cer-tificate.

(5) A certificate described in paragraph(e)(3)(iii) of this section (a nonqualifiedintermediary certificate), but not includingthe withholding certificates, documentaryevidence, statements or other informationassociated with the certificate.

(6) A certificate described in paragraph(e)(3)(v) of this section (a U.S. branch(including a territory financial institution)withholding certificate that is not providedby the beneficial owner ), but not includ-ing the withholding certificates, documen-tary evidence, statements or other infor-mation associated with the certificate.

(7) [Reserved]. For further guidance,see § 1.1441–1(e)(4)(ii)(B)(7).

(8) A withholding certificate providedby a withholding foreign trust described in§ 1.1441–5(e)(5)(v).

(9) A certificate described in § 1.1441–5(c)(2)(iv) (dealing with a certificate froma person representing to be a withholdingforeign partnership).

(10) A certificate described in§ 1.1441–5(c)(3)(iii) (a withholding cer-tificate from a nonwithholding foreignpartnership) but not including the with-holding certificates, documentary evi-dence, statements or other information re-quired to be associated with the certificate.

(11) A certificate furnished by a personrepresenting to be an integral part of aforeign government (within the meaningof § 1.892–2T(a)(2)) in accordance with§ 1.1441–8(b), or by a person represent-ing to be a foreign central bank of issue(within the meaning of § 1.861–2(b)(4)) or the Bank for International Set-tlements in accordance with § 1.1441–8(c)(1); and


(12) Documentary evidence that is notgenerally renewed or amended (such as acertificate of incorporation).

(C) Withholding certificate for effec-tively connected income. Notwithstandingparagraph (e)(4)(ii)(B) of this section, theperiod of validity of a withholding certif-icate furnished to a withholding agent toclaim a reduced rate of withholding forincome that is effectively connected withthe conduct of a trade or business withinthe United States shall be limited to thethree-year period described in paragraph(e)(4)(ii)(A) of this section.

(D) Change in circumstances—(1) De-fined. A certificate or documentation be-comes invalid from the date of a change incircumstances affecting the correctness ofthe certificate or documentation to the ex-tent provided in this paragraph(e)(4)(ii)(D). For purposes of this section,a person is considered to have a change incircumstances only if such change affectsthe person’s claim of chapter 3 status.Thus, for example, a change of address isnot a change in circumstances with re-spect to a claim of only foreign statusunder this paragraph (e)(4)(ii)(D) if thechange is to another address outside theUnited States, but is a change in circum-stances if the change is to an address inthe U.S.

(2) Obligation to notify a withholdingagent of a change in circumstances. If achange in circumstances makes any infor-mation on a certificate or other documen-tary evidence incorrect, then the personwhose name is on the certificate or otherdocumentation must inform the withhold-ing agent within 30 days of the changeand furnish a new certificate or new doc-umentary evidence. If an intermediary (in-cluding a U.S. branch or territory financialinstitution described in paragraph(b)(2)(iv)(A) of this section) or a flow-through entity becomes aware that a cer-tificate or other appropriate documenta-tion it has furnished to the person fromwhom it collects a payment is no longervalid because of a change in the circum-stances of the person who issued the cer-tificate or furnished the other appropriatedocumentation, then the intermediary orflow-through entity must notify the personfrom whom it collects the payment of thechange of circumstances within 30 days ofthe date that it knows or has reason to

know of the change in circumstances. Itmust also obtain a new withholding cer-tificate or new appropriate documentationto replace the existing certificate or docu-mentation the validity of which has ex-pired due to the change in circumstancesto continue to treat the person who pro-vided the certificate or documentary evi-dence under its claimed chapter 3 status.

(3) Withholding agent’s obligationwith respect to a change in circumstances.A withholding agent may rely on a certif-icate without having to inquire into possi-ble changes of circumstances that mayaffect the validity of the statement, unlessit knows or has reason to know that cir-cumstances have changed, as permittedunder paragraph (e)(4)(viii) of this sec-tion. A withholding agent is required tonotify any person providing documentaryevidence (in lieu of a withholding certifi-cate) of the person’s obligation to notifythe withholding agent of a change in cir-cumstances. However, a withholdingagent may choose to apply the provisionsof paragraph (b)(3)(iv) of this section re-garding the 90-day grace period as of thatdate while awaiting a new certificate ordocumentation or while seeking informa-tion regarding changes, or suspectedchanges, in the person’s circumstances. Awithholding agent may also require a newcertificate at any time prior to a payment,even though the withholding agent has noactual knowledge or reason to know thatany information stated on the certificatehas changed.

(iii) Retention of documentation. Awithholding agent must retain each with-holding certificate and other documenta-tion for purposes of this section for aslong as it may be relevant to the determi-nation of the withholding agent’s tax lia-bility under section 1461 and § 1.1461–1. A withholding agent may retain awithholding certificate or documentaryevidence that is an original, certified copy,or a scanned document (as described inparagraph (e)(4)(iv)(C) of this section). Awithholding agent may also retain a with-holding certificate by other means (suchas microfiche) that allows a reproductionof the document provided that the with-holding agent has recorded its receipt of aform described in the preceding sentenceand is able to a produce a hard copy of theform. See § 1.6049–5(c)(1) for the re-

quirements for maintaining documentaryevidence that also apply for purposes ofdetermining a payee’s U.S. or foreign sta-tus for purposes of chapter 3.

(iv) Electronic transmission of infor-mation—(A) In general. A withholdingagent may establish a system for a bene-ficial owner or payee to electronically fur-nish a Form W–8, an acceptable substi-tute Form W–8, or such other form as theInternal Revenue Service may prescribe.The system must meet the requirementsdescribed in paragraph (e)(4)(iv)(B) ofthis section. See paragraph (e)(iv)(4)(C)of this section for other cases in which aForm W–8 (or other documentation) maybe furnished electronically.

(B) [Reserved]. For further guidance,see § 1.1441–1(e)(4)(iv)(B).

(C) Forms and documentary evidencereceived by facsimile or e-mail. A with-holding agent may rely upon an otherwisevalid Form W–8 (or documentary evi-dence) received by facsimile or a form ordocument scanned and received electron-ically, such as, for example, an imageembedded in an e-mail or as a PortableDocument Format (.pdf) attached to ane-mail. A withholding agent may not relyon a form or document received by suchmeans, however, if the withholding agentknows that the form or document wastransmitted to the withholding agent by aperson not authorized to do so by theperson required to execute the form. Awithholding agent may establish otherprocedures to authenticate and verify aform or document sent by such means andmay reject any form or document that failsto satisfy the requirements of such proce-dures.

(v) Additional procedures for certifi-cates provided electronically. The IRSmay prescribe procedures in a revenueprocedure (see § 601.601(d)(2) of thischapter) or may issue other appropriateguidance (including a written directive forrevenue agents) to further prescribe theconditions by which the IRS will deter-mine that a system developed by a with-holding agent to permit beneficial ownersand payees to provide Forms W–8 elec-tronically satisfies the requirements ofparagraph (e)(4)(iv)(B) of this section.

(vi) Acceptable substitute form. Awithholding agent may substitute its ownform instead of an official Form W–8 or


8233 (or such other official form as theIRS may prescribe). Such a substitute foran official form will be acceptable if itcontains provisions that are substantiallysimilar to those of the official form, itcontains the same certifications relevant tothe transactions as are contained on theofficial form and these certifications areclearly set forth, and the substitute formincludes a signature-under-penalties-of-perjury statement identical to the onestated on the official form. The substituteform is acceptable even if it does notcontain all of the provisions contained onthe official form, so long as it containsthose provisions that are relevant to thetransaction for which it is furnished (in-cluding those required for purposes ofchapter 4). For example, a withholdingagent that pays no income for which treatybenefits are claimed may develop a sub-stitute form that is identical to the officialform, except that it does not include in-formation regarding claims of benefits un-der an income tax treaty. Similarly, awithholding agent that is not required todetermine the chapter 4 status of a payeeproviding a form may develop a substituteform that does not contain chapter 4 sta-tuses. A withholding agent who uses asubstitute form must furnish instructionsrelevant to the substitute form only to theextent and in the manner specified in theinstructions to the official form. A with-holding agent may use a substitute formthat is written in a language other thanEnglish and may accept a form that isfilled out in a language other than English,but the withholding agent must makeavailable an English translation of theform and its contents to the IRS uponrequest. A withholding agent may refuseto accept a certificate from a payee orbeneficial owner (including the officialForm W–8 or 8233) if the certificate pro-vided is not an acceptable substitute formprovided by the withholding agent, butonly if the withholding agent furnishes thepayee or beneficial owner with an accept-able substitute form within 5 businessdays of receipt of an unacceptable formfrom the payee or beneficial owner. In thatcase, the substitute form is acceptableonly if it contains a notice that the with-holding agent has refused to accept theform submitted by the payee or beneficialowner and that the payee or beneficial

owner must submit the acceptable formprovided by the withholding agent in or-der for the payee or beneficial owner to betreated as having furnished the requiredwithholding certificate.

(vii) Requirement of taxpayer identify-ing number. A TIN must be stated on awithholding certificate when required bythis paragraph (e)(4)(vii) for the withhold-ing certificate to be valid for purposes ofthis section. A TIN is required to be statedon—

(A) A withholding certificate on whicha beneficial owner is claiming the benefitof a reduced rate under an income taxtreaty (other than for amounts described in§ 1.1441–6(c)(2) or amounts for which aforeign tax identifying number has beenprovided, as described in § 1.1441–6(c)(2));

(B) through (E) [Reserved]. For furtherguidance, see § 1.1441–1(e)(4)(vii)(B)through (E).

(F) A withholding certificate from aperson representing to be a withholdingforeign partnership or a withholding for-eign trust;

(G) [Reserved]. For further guidance,see § 1.1441–1(e)(4)(vii)(G).

(H) A withholding certificate from aperson representing to be a U.S. branch orterritory financial institution described inparagraph (b)(2)(iv) of this section; and

(I) A withholding certificate providedby an entity acting as a qualified securitieslender, as defined for purposes of chapter3, with respect to a substitute dividendpaid in a securities lending or similartransaction.

(viii) [Reserved]. For further guidance,see § 1.1441–1(e)(4)(viii) introductorytext and (e)(4)(viii)(A).

(B) Status of payee as an intermediaryor as a person acting for its own account.A withholding agent may rely on the typeof certificate furnished as indicative of thepayee’s status as an intermediary or as anowner, unless the withholding agent hasactual knowledge or reason to know oth-erwise. For example, a withholding agentthat receives a beneficial owner withhold-ing certificate from a foreign financial in-stitution may treat the institution as thebeneficial owner, unless it has informationin its records that would indicate other-wise or the certificate contains informa-tion that is not consistent with beneficial

owner status (e.g., sub-account numbersthat do not correspond to accounts main-tained by the withholding agent for suchperson or names of one or more personsother than the person submitting the with-holding certificate). If the financial insti-tution also acts as an intermediary, thewithholding agent may request that theinstitution furnish two certificates, i.e., abeneficial owner certificate described inparagraph (e)(2)(i) of this section for theamounts that it receives as a beneficialowner, and an intermediary withholdingcertificate described in paragraph (e)(3)(i)of this section for the amounts that itreceives as an intermediary. In the ab-sence of reliable representation or infor-mation regarding the status of the payee asan owner or as an intermediary, see para-graph (b)(3)(v)(A) for applicable pre-sumptions.

(C) Reliance on a prior version of awithholding certificate. Upon the issuanceby the IRS of an updated version of awithholding certificate, a withholdingagent may continue to accept the priorversion of the withholding certificate forsix months after the revision date shownon the updated withholding certificate, un-less the IRS has issued guidance that in-dicates otherwise, and may continue torely upon a previously signed prior ver-sion of the withholding certificate until itsperiod of validity expires.

(ix) Certificates to be furnished towithholding agent for each obligation un-less exception applies. Unless otherwiseprovided in paragraphs (e)(4)(ix)(A)through (D) of this section, a withholdingagent that is a financial institution withwhich a customer may open an accountshall obtain a withholding certificate ordocumentary evidence on an obligation-by-obligation basis and may not rely uponsuch documentation collected by anotherperson or another branch of the withhold-ing agent.

(A) Exception for certain branch oraccount systems or system maintained byagent. A withholding agent may rely on awithholding certificate or documentaryevidence furnished by a customer as partof a single branch system, universal ac-count system, or shared account systemdescribed in § 1.1471–3(c)(8) (substitut-ing the term chapter 3 status for chapter 4status each place it appears in that para-


graph). Furthermore, a withholding agentmay rely on a shared documentation sys-tem maintained by an agent as describedin § 1.1471–3(c)(9)(i) (also substitutingthe term chapter 3 status for chapter 4status each place it appears in that para-graph).

(B) Reliance on certification providedby introducing brokers—(1) In general. Awithholding agent may rely on the certi-fication of a broker indicating the broker’sdetermination of a payee’s chapter 3 sta-tus and that the broker holds a valid ben-eficial owner withholding certificate de-scribed in paragraph (e)(2)(i) of thissection or other appropriate documenta-tion for that beneficial owner with respectto any readily tradable instrument, as de-fined in § 31.3406(h)–1(d) of this chapter,if the broker is a United States person(including a U.S. branch treated as a U.S.person under paragraph (b)(2)(iv) of thissection) that is acting as the agent of abeneficial owner. A withholding agentmay also rely on a certification describedin the preceding sentence that is providedby a qualified intermediary that makespayments to beneficial owners that it re-ceives from the withholding agent. Thecertification must be in writing or in elec-tronic form and contain all of the infor-mation required of a nonqualified interme-diary under paragraphs (e)(3)(iv)(B) and(C) of this section. If a broker chooses touse this paragraph (e)(4)(ix)(B), that bro-ker will be solely responsible for applyingthe rules of § 1.1441–7(b) to the withhold-ing certificates or other appropriate docu-mentation and shall be liable for any un-derwithholding as a result of the broker’sfailure to apply such rules. See § 1.1471–3(c)(9)(iii) for a similar allowance thatapplies to a broker’s determination of apayee’s chapter 4 status for purposes ofchapter 4. For purposes of this paragraph(e)(4)(ix)(B), the term broker means aperson treated as a broker under § 1.6045–1(a).

(2) Example. The following exampleillustrates the rules of this paragraph(e)(4)(x)(B) with respect to a U.S. broker:

Example. SCO is a U.S. securities clearing orga-nization that provides clearing services for corre-spondent broker, CB, a U.S. corporation. Pursuant toa fully disclosed clearing agreement, CB fully dis-closes the identity of each of its customers to SCO.Part of SCO’s clearing duties include the crediting ofincome and gross proceeds of readily tradable instru-

ments (as defined in § 31.3406(h)–1(d)) to each cus-tomer’s account. For each disclosed customer that isa foreign beneficial owner, CB provides SCO withinformation required under paragraphs (e)(3)(iv)(B)and (C) of this section that is necessary to apply thecorrect rate of withholding and to file Forms 1042–S.SCO may use the representations and beneficialowner information provided by CB to determine theproper amount of withholding and to file Forms1042–S. CB is responsible for determining the va-lidity of the withholding certificates or other appro-priate documentation under § 1.1441–1(b).

(C) Reliance on documentation andcertifications provided between principalsand agents—(1) Withholding agent asagent. A withholding agent may rely upondocumentation and certifications providedby a principal for purposes of determininga payee’s chapter 3 status only if the prin-cipal is a U.S. withholding agent, a qual-ified intermediary (when acting as suchfor determining a payee’s status), or awithholding foreign partnership or with-holding foreign trust with respect to apartner, owner, or beneficiary in the en-tity. Thus an agent (such as a paying agentor transfer agent) may not rely upon acertification provided by a principal that isa participating FFI but is not also a qual-ified intermediary, withholding foreignpartnership, or withholding foreign trustfor purposes of this section, even though itmay rely on the certification when pro-vided solely for purposes of chapter 4under § 1.1471–3(c)(9)(iv).

(2) Withholding agent as principal. Awithholding agent may also rely on doc-umentation collected by an agent of thewithholding agent in order to fulfill itschapter 3 obligations because such agent’sactions are imputed to the principal (thewithholding agent). For example, a with-holding agent may contract an agent tocollect Forms W–8 from account holders,but the withholding agent remains liablefor any tax liability resulting from a fail-ure of the agent to comply with the re-quirements of chapter 3.

(D) Reliance upon documentation foraccounts acquired in merger or bulk ac-quisition for value. A withholding agentthat acquires an account from a predeces-sor or transferor in a merger or bulk ac-quisition of accounts for value is permit-ted to rely upon valid documentation (orcopies of valid documentation) collectedby the predecessor or transferor for deter-mining the chapter 3 status of an accountholder of such an account. In addition, a

withholding agent that acquires an ac-count in a merger or bulk acquisition ofaccounts for value, other than a relatedparty transaction, from a U.S. withholdingagent (or a qualified intermediary whenthe withholding agent is also a qualifiedintermediary) may also rely upon the pre-decessor’s or transferor’s determination ofthe account holder’s chapter 3 status for atransition period of the lesser of sixmonths from the date of the merger oruntil the acquirer knows that the claim ofentity classification and status is inaccu-rate or a change in circumstances occurswith respect to the account. At the end ofthe transition period, the acquirer will bepermitted to rely upon the predecessor’sdetermination as to the chapter 3 status ofthe account holder only if the documenta-tion that the acquirer has for the accountholder, including documentation obtainedfrom the predecessor or transferor, sup-ports the status claimed. An acquirer thatdiscovers at the end of the transition pe-riod that the chapter 3 status assigned bythe predecessor or transferor to the ac-count holder was incorrect and has notwithheld as it would have been required tobut for its reliance upon the predecessor’sdetermination, will be required to with-hold on future payments, if any, made tothe account holder the amount of tax thatshould have been withheld during thetransition period but for the erroneousclassification as to the account holder’sstatus. For purposes of this paragraph(e)(4)(ix)(D), a related party transaction isa merger or sale of accounts in which theacquirer is in the same expanded affiliatedgroup, within the meaning of § 1.1471–5(i)(2), as the predecessor or transferoreither prior to or after the merger or ac-quisition or the predecessor or transferor(or shareholders of the predecessor ortransferor) obtain a controlling interest inthe acquirer or in a newly formed entitycreated for purposes of the merger or ac-quisition. See § 1.1471–3(c)(v) for a sim-ilar reliance rule that applies for purposesof chapter 4.

(5) Qualified intermediaries—(i) Gen-eral rule. A qualified intermediary, as de-fined in paragraph (e)(5)(ii) of this sec-tion, may furnish a qualified intermediarywithholding certificate to a withholdingagent. The withholding certificate pro-vides certifications on behalf of other per-


sons for the purpose of claiming and ver-ifying reduced rates of withholding undersection 1441 or 1442 and for the purposeof reporting and withholding under otherprovisions of the Internal Revenue Code,such as the provisions under chapters 4and 61 and section 3406 (and the regula-tions under those provisions). Furnishingsuch a certificate is in lieu of transmittingto a withholding agent withholding certif-icates or other appropriate documentationfor the persons for whom the qualifiedintermediary receives the payment, in-cluding interest holders in a qualified in-termediary that is fiscally transparent un-der the regulations under section 894.Although the qualified intermediary is re-quired to obtain withholding certificatesor other appropriate documentation frombeneficial owners, payees, or interestholders pursuant to its agreement with theIRS, it is generally not required to attachsuch documentation to the intermediarywithholding certificate. Notwithstandingthe preceding sentence a qualified inter-mediary must provide a withholding agentwith the Forms W–9, or disclose thenames, addresses, and taxpayer identify-ing numbers, if known, of those U.S. non-exempt recipients for whom the qualifiedintermediary receives reportable amounts(within the meaning of paragraph(e)(3)(vi) of this section) to the extentrequired in the qualified intermediary’sagreement with the IRS and except asotherwise provided in paragraph(e)(5)(v)(C)(1) of this section.

(ii) Definition of qualified intermedi-ary. With respect to a payment to a for-eign person, the term qualified intermedi-ary means a person that is a party to awithholding agreement with the IRS andsuch person is—

(A) A foreign financial institution thatis a participating FFI (including a report-ing Model 2 FFI), a registered deemed-compliant FFI (including a reportingModel 1 FFI), or an FFI treated as adeemed-compliant FFI under an applica-ble IGA that is subject to due diligenceand reporting requirements with respect toits U.S. accounts similar to those applica-ble to a registered deemed-compliant FFIunder § 1.1471–5(f)(1), excluding a U.S.branch of any of the foregoing entities;

(B) A foreign branch or office of a U.S.financial institution or a foreign branch or

office of a U.S. clearing organization thatis either a reporting Model 1 FFI or agreesto the reporting requirements applicable toa participating FFI with respect to its U.S.accounts;

(C) A foreign corporation for purposesof presenting claims of benefits under anincome tax treaty on behalf of its share-holders to the extent permitted to act as aqualified intermediary by the IRS; or

(D) Any other person acceptable to theIRS.

(iii) Withholding agreement—(A) Ingeneral. The IRS may, upon request, enterinto a withholding agreement with a for-eign person described in paragraph(e)(5)(ii) of this section pursuant to suchprocedures as the IRS may prescribe inpublished guidance (see § 601.601(d)(2)of this chapter). Under the withholdingagreement, a qualified intermediary shallgenerally be subject to the applicablewithholding and reporting provisions ap-plicable to withholding agents and payorsunder chapters 3, 4, and 61 of the InternalRevenue Code, section 3406, the regula-tions under those provisions, and otherwithholding provisions of the InternalRevenue Code, except to the extent pro-vided under the agreement.

(B) Terms of the withholding agree-ment. The agreement shall specify the ob-ligations of the qualified intermediary un-der chapters 3 and 4 and, for a qualifiedintermediary that is an FFI, require thequalified intermediary to satisfy the doc-umentation, withholding, and reportingobligations required of a participating FFIor registered deemed-compliant FFI (in-cluding a reporting Model 1 FFI as de-fined in § 1.1471–1(b)(114)) with respectto each branch of the qualified intermedi-ary other than a U.S. branch that is treatedas a U.S. person under paragraph(b)(2)(iv)(A) of this section. The agree-ment will specify the type of certificationsand documentation upon which the qual-ified intermediary may rely to ascertainthe classification (e.g., corporation or part-nership), status (i.e., U.S. or foreign andchapter 4 status) of beneficial owners andpayees who receive reportable amountsand reportable payments collected by thequalified intermediary for purposes ofchapters 3 and 61, section 3406, and, ifnecessary, entitlement to the benefits of areduced rate under an income tax treaty.

The agreement shall specify if, and towhat extent, the qualified intermediarymay assume primary withholding respon-sibility in accordance with paragraph(e)(5)(iv) of this section. It shall also spec-ify the extent to which applicable returnfiling and information reporting require-ments are modified so that, in appropriatecases, the qualified intermediary may re-port payments to the IRS on an aggregatedbasis, without having to disclose the iden-tity of beneficial owners and payees.However, the qualified intermediary maybe required to provide to the IRS the nameand address of those foreign customerswho benefit from a reduced rate under anincome tax treaty pursuant to the qualifiedintermediary arrangement for purposes ofverifying entitlement to such benefits, par-ticularly under an applicable limitation onbenefits provision. Under the agreement, aqualified intermediary may agree to act asan acceptance agent to perform the dutiesdescribed in § 301.6109–1(d)(3)(iv)(A) ofthis chapter. The agreement may specifythe manner in which applicable proce-dures for adjustments for underwithhold-ing and overwithholding, including refundprocedures, apply in the context of a qual-ified intermediary arrangement and theextent to which applicable proceduresmay be modified. In particular, a with-holding agreement may allow a qualifiedintermediary to claim refunds of over-withheld amounts. The agreement shallspecify the manner in which the qualifiedintermediary may deal with payments toother intermediaries and flow-through en-tities and the obligations of a qualifiedintermediary that acts as a qualified secu-rities lender with respect to payments ofsubstitute dividends under chapters 3 and4. In addition, the agreement shall specifythe manner in which the IRS will verifycompliance with the agreement, includingthe time and manner for which a qualifiedintermediary will be required to certify tothe IRS regarding its compliance with theagreement (including its performance of aperiodic review) and the types of informa-tion required to be disclosed as part of thecertification. In appropriate cases, the IRSmay require review procedures be per-formed by an approved auditor (in addi-tion to those performed as part of theperiodic review) and may conduct a re-view of the auditor’s findings. The agree-


ment may include provisions for the as-sessment and collection of tax in the eventthat failure to comply with the terms ofthe agreement results in the failure by thewithholding agent or the qualified inter-mediary to withhold and deposit the re-quired amount of tax. Further, the agree-ment may specify the procedures bywhich amounts withheld are to be depos-ited, if different from the deposit proce-dures under the Internal Revenue Codeand applicable regulations. To determinewhether to enter a qualified intermediarywithholding agreement and the terms ofany particular withholding agreement, theIRS will consider the type of local know-your-customer laws and practices towhich the entity is subject, as well as theextent and nature of supervisory and reg-ulatory control exercised under the lawsof the foreign country over the foreignentity.

(iv) Assignment of primary withhold-ing responsibility. Any person who meetsthe definition of a withholding agent un-der § 1.1441–7(a) (for payments subjectto chapter 3 withholding) and § 1.1473–1(d) (for withholdable payments)(whether a U.S. person or a foreign per-son) is required to withhold and depositany amount withheld under § § 1.1461–1(a) and 1.1474–1(b) and to make thereturns prescribed by § § 1.1461–1(b) and(c), and by 1.1474–1(c), and (d). Under itsqualified intermediary agreement, a qual-ified intermediary agreement may, how-ever, inform a withholding agent fromwhich it receives a payment that it willassume the primary obligation to with-hold, deposit, and report amounts underchapters 3 and 4 of the Internal RevenueCode and/or under chapter 61 of the In-ternal Revenue Code and section 3406.For assuming withholding obligations asdescribed in the previous sentence, a qual-ified intermediary that assumes primarywithholding responsibility for paymentsmade to an account under chapter 3 is alsorequired to assume primary withholdingresponsibility under chapter 4 for pay-ments made to the account that are with-holdable payments. Additionally, a quali-fied intermediary may represent that itassumes chapter 61 reporting and section3406 obligations for a payment when thequalified intermediary reports the pay-ment (or the account to which the pay-

ment is made) as part of its applicableU.S. account reporting requirements as aparticipating FFI or registered deemed-compliant FFI. If a withholding agentmakes a payment of an amount subject towithholding under chapter 3, a reportablepayment (as defined in section 3406(b)),or a withholdable payment to a qualifiedintermediary that represents to the with-holding agent that it has assumed primarywithholding responsibility for the pay-ment, the withholding agent is not re-quired to withhold on the payment. Thewithholding agent is not required to deter-mine that the qualified intermediaryagreement actually performs its primarywithholding responsibilities. A qualifiedintermediary that assumes primary with-holding responsibility under chapters 3and 4 or primary reporting and backupwithholding responsibility under chapter61 and section 3406 is not required toassume primary withholding responsibil-ity for all accounts it has with a withhold-ing agent but must assume primary with-holding responsibility for all paymentsmade to any one account that it has withthe withholding agent.

(v) Withholding statement—(A) Ingeneral. A qualified intermediary mustprovide each withholding agent fromwhich it receives reportable amounts as aqualified intermediary with a writtenstatement (the withholding statement)containing the information specified inparagraph (e)(5)(v)(B) of this section. Awithholding statement is not required,however, if all of the information a with-holding agent needs to fulfill its withhold-ing and reporting requirements is con-tained in the withholding certificate. Thequalified intermediary agreement will re-quire the qualified intermediary to includeinformation in its withholding statementrelating to withholdable payments for pur-poses of withholding under chapter 4 asdescribed in paragraph (e)(5)(v)(C)(2) ofthis section. The withholding statementforms an integral part of the qualified in-termediary’s qualified intermediary with-holding certificate and the penalties ofperjury statement provided on the with-holding certificate shall apply to the with-holding statement as well. The withhold-ing statement may be provided in anymanner, and in any form, to which quali-fied intermediary and the withholding

agent mutually agree, including electron-ically. If the withholding statement is pro-vided electronically, the statement mustsatisfy the requirements described in para-graph (e)(3)(iv) of this section (applicableto a withholding statement provided by anonqualified intermediary). The withhold-ing statement shall be updated as often asnecessary for the withholding agent tomeet its reporting and withholding obliga-tions under chapters 3, 4, and 61 andsection 3406. For purposes of this section,a withholding agent will be liable for tax,interest, and penalties in accordance withparagraph (b)(7) of this section to the ex-tent it does not follow the presumptionrules of paragraph (b)(3) of this section,§ § 1.1441–5(d) and (e)(6), and 1.6049–5(d) for a payment, or portion thereof, forwhich it does not have a valid withholdingstatement prior to making a payment.

(B) Content of withholding statement.The withholding statement must containsufficient information for a withholdingagent to apply the correct rate of with-holding on payments from the accountsidentified on the statement and to properlyreport such payments on Forms 1042–Sand Forms 1099, as applicable. The with-holding statement must—

(1) Designate those accounts for whichthe qualified intermediary acts as a quali-fied intermediary;

(2) Designate those accounts for whichqualified intermediary assumes primarywithholding responsibility under chapter 3and chapter 4 of the Code and/or primaryreporting and backup withholding respon-sibility under chapter 61 and section 3406;

(3) If applicable, designate those ac-counts for which the qualified intermedi-ary is acting as a qualified securitieslender with respect to a substitute divi-dend paid in a securities lending or similartransaction; and

(4) Provide information regardingwithholding rate pools, as described inparagraph (e)(5)(v)(C) of this section.

(C) Withholding rate pools—(1) Ingeneral. Except to the extent it has as-sumed both primary withholding respon-sibility under chapters 3 and 4 of the In-ternal Revenue Code and primaryreporting and backup withholding respon-sibility under chapter 61 and section 3406with respect to a payment, a qualified in-termediary shall provide as part of its


withholding statement the chapter 3 with-holding rate pool information that is re-quired for the withholding agent to meetits withholding and reporting obligationsunder chapters 3 and 61 of the InternalRevenue Code and section 3406. See,however, paragraph (e)(5)(v)(C)(2) of thissection for when a qualified intermediarymay provide a chapter 4 withholding ratepool (as described in paragraph (c)(48) ofthis section) with respect to a paymentthat is a withholdable payment. A chapter3 withholding rate pool is a payment of asingle type of income, determined in ac-cordance with the categories of incomereported on Form 1042–S that is subject toa single rate of withholding paid to apayee that is a foreign person and forwhich withholding under chapter 4 doesnot apply except as otherwise provided inthis paragraph (e)(5)(v)(C)(1). A chapter 3withholding rate pool may be establishedby any reasonable method on which thequalified intermediary and a withholdingagent agree (e.g., by establishing a sepa-rate account for a single chapter 3 with-holding rate pool, or by dividing a pay-ment made to a single account intoportions allocable to each chapter 3 with-holding rate pool). A qualified intermedi-ary may include a separate pool for ac-count holders that are U.S. exemptrecipients or may include such accounts ina chapter 3 withholding rate pool to whichwithholding does not apply. The with-holding statement must identify each ap-plicable chapter 4 exemption code (as pro-vided in the instructions to Form 1042–S)applicable to a chapter 3 withholding ratepool contained on the withholding state-ment (subdividing a chapter 3 withholdingrate pool into sub-pools as necessarybased on the applicable chapter 4 exemp-tion code). To the extent a qualified inter-mediary does not assume primary report-ing and backup withholding responsibilityunder chapter 61 and section 3406, a qual-ified intermediary’s withholding state-ment must establish a separate withhold-ing rate pool for each U.S. non-exemptrecipient account holder that the qualifiedintermediary has disclosed to the with-holding agent unless the qualified inter-mediary uses the alternative procedures inparagraph (e)(5)(v)(C)(3) of this sectionor the account holder is a payee that thequalified intermediary is permitted to in-

clude in a chapter 4 withholding rate poolof U.S. payees. A qualified intermediarymay include a chapter 4 withholding ratepool of U.S. payees on a withholdingstatement by applying the rules underparagraph (e)(3)(iv)(A) of this section (bysubstituting “qualified intermediary” for“nonqualified intermediary”) with respectto an account that it maintains (as de-scribed in § 1.1471–5(b)(5)) for the payeeof the payment. A qualified intermediaryshall determine withholding rate poolsbased on valid documentation that it ob-tains under its withholding agreementwith the IRS, or if a payment cannot bereliably associated with valid documenta-tion, under the applicable presumptionrules. If a qualified intermediary has anaccount holder that is another intermedi-ary (whether a qualified intermediary or anonqualified intermediary) or a flow-through entity, the qualified intermediarymay combine the account holder informa-tion provided by the other intermediary orflow-through entity with the qualified in-termediary’s direct account holder infor-mation to determine the qualified interme-diary’s chapter 3 withholding rate poolsand each of the qualified intermediary’schapter 4 withholding rate pools to theextent provided in the agreement de-scribed in (e)(5)(iii) of this section.

(2) Withholding rate pool requirementsfor a withholdable payment. This para-graph (e)(5)(v)(C)(2) modifies the re-quirements of a withholding statement de-scribed in paragraph (e)(5)(v)(C)(1)provided by a qualified intermediary withrespect to a withholdable payment (in-cluding a reportable amount that is a with-holdable payment). For such a payment,the regulations applicable to a withhold-ing statement described in paragraph(e)(5)(v)(C)(1) of this section shall apply,except that—

(i) If the qualified intermediary pro-vides a withholding statement describedin § 1.1471–3(c)(3)(iii)(B)(2) (describingan FFI withholding statement), the with-holding statement may include chapter 4withholding rate pools with respect to theportions of the payment allocated to recal-citrant account holders and nonparticipat-ing FFIs (to the extent permitted ) in lieuof reporting chapter 3 withholding ratepools with respect to such persons as de-

scribed in paragraph (e)(5)(v)(C)(1) ofthis section); or

(ii) If the qualified intermediary pro-vides a withholding statement describedin § 1.1471–3(c)(3)(iii)(B)(3) (describinga chapter 4 withholding statement), thewithholding statement may include achapter 4 withholding rate pool with re-spect to the portion of the payment allo-cated to nonparticipating FFIs.

(3) Alternative procedure for U.S. non-exempt recipients. If permitted under itsagreement with the IRS, a qualified inter-mediary may, by mutual agreement with awithholding agent, establish a single zerowithholding rate pool that includes U.S.non-exempt recipient account holders forwhom the qualified intermediary has pro-vided Forms W–9 prior to the withholdingagent paying any reportable payments, asdefined in the qualified intermediaryagreement, and a separate withholdingrate pool (subject to 28-percent withhold-ing, or other applicable statutory back-upwithholding tax rate) that includes onlyU.S. non-exempt recipient account hold-ers for whom a qualified intermediary hasnot provided Forms W–9 prior to thewithholding agent paying any reportablepayments. If a qualified intermediarychooses the alternative procedure of thisparagraph (e)(5)(v)(C)(3), the qualified in-termediary must provide the informationrequired by its qualified intermediaryagreement to the withholding agent nolater than January 15 of the year followingthe year in which the payments are paid.Failure to provide such information willresult in the application of penalties to thequalified intermediary under sections6721 and 6722, as well as any other ap-plicable penalties, and may result in thetermination of the qualified intermediary’swithholding agreement with the IRS. Awithholding agent shall not be liable fortax, interest, or penalties for failure tobackup withhold or report information un-der chapter 61 of the Internal RevenueCode due solely to the errors or omissionsof the qualified intermediary. If a qualifiedintermediary fails to provide the alloca-tion information required by this para-graph (e)(5)(v)(C)(3), with respect to U.S.non-exempt recipients, the withholdingagent shall report the unallocated amountpaid from the withholding rate pool to anunknown recipient, or otherwise in accor-


dance with the appropriate Form 1099 andthe instructions accompanying the form.

(D) Example. The following example illustratesthe application of paragraph (e)(5)(v)(C) for a qual-ified intermediary providing chapter 4 withholdingrate pools on an FFI withholding statement providedto a withholding agent. WA makes a payment ofU.S. source interest that is a withholdable paymentto QI, a qualified intermediary that is an FFI and anon-U.S. payor (as defined in § 1.6049–5(c)(5)), andA and B are account holders of QI (as defined under§ 1.1471–5(a)) and are both U.S. non-exempt recip-ients (as defined paragraph (c)(21) of this section).Ten percent of the payment is attributable to both Aand B. A has provided WA with a Form W–9, but Bhas not provided WA with a Form W–9. QI assumesprimary withholding responsibility under chapters 3and 4 with respect to the payment, 80-percent ofwhich is allocable to foreign payees who are accountholders other than A and B. As a participating FFI,QI is required to report with respect to its U.S.accounts under § 1.1471–4(d) (as incorporated intothe agreement described in paragraph (e)(5)(iii) ofthis section). Provided that QI reports A’s account asa U.S. account under the requirements referenced inthe preceding sentence, QI is not required to provideWA with a Form W–9 from A and may insteadinclude A in a chapter 4 withholding rate pool ofU.S. payees, allocating 10% of the payment to thispool. See § 1.6049–4(c)(4)(iii) concerning when re-porting under section 6049 for a payment of interestis not required when an FFI that is a non-U.S. payorreports an account holder receiving the paymentunder its chapter 4 requirements. With respect to B,the interest payment is subject to backup withhold-ing under section 3406. Because B is a recalcitrantaccount holder of QI for withholdable payments andbecause QI assumes primary chapter 4 withholdingresponsibility, however, QI may include the portionof the payment allocated to B with the remaining80% of the payment for which QI assumes primarywithholding responsibility. WA can reliably associ-ate the full amount of the payment based on thewithholding statement and does so regardless ofwhether WA knows B is a U.S. non-exempt recipientthat is receiving a portion of the payment. See§ 31.3406(g)–1(e) (providing exemption to backupwithholding when withholding was applied underchapter 4).

(f) [Reserved]. For further guidance,see § 1.1441–1(f)(1) and (2).

(3) Effective/applicability date. Thissection applies to payments made afterJune 30, 2014. (For payments made afterDecember 31, 2000, and before July 1,2014, see this section as in effect andcontained in 26 CFR part 1, as revisedApril 1, 2013.)


Par. 6. Section 1.1441–3 is amended byrevising paragraphs (a), (c)(4)(i), and (d)and adding paragraph (j) to read as fol-lows:

§ 1.1441–3 Determination of amounts tobe withheld.


* * * * *(c) * * *(4) * * *(i) [Reserved]. For further guidance,

see § 1.1441–3T(c)(4)(i).* * * * *(d) [Reserved]. For further guidance,

see § 1.1441–3T(d).* * * * *(j) [Reserved]. For further guidance,

see § 1.1441–3T(j).Par. 7. Section 1.1441–3T is added to

read as follows:

§ 1.1441–3T Determination of amountsto be withheld (temporary).

(a) General rule—(1) Withholding ongross amount. Except as otherwise pro-vided in regulations under section 1441,the amount subject to withholding under§ 1.1441–1 is the gross amount of incomesubject to withholding that is paid to aforeign person. The gross amount of in-come subject to withholding may not bereduced by any deductions, except to theextent that one or more personal exemp-tions are allowed as provided under§ 1.1441–4(b)(6).

(2) Coordination with chapter 4. Awithholding agent making a payment thatis both a withholdable payment and anamount subject to withholding under§ 1.1441–2(a) and that has withheld tax asrequired under chapter 4 from such pay-ment, is not an amount required to bewithheld under this section notwithstand-ing paragraph (a) (1) of this section. See§ 1.1474–6(b)(1) for the allowance for awithholding agent to credit withholdingapplied under chapter 4 against its liabilityfor tax due under sections 1441, 1442, or1443, and see § 1.1474–6(b)(1) for therule allowing a withholding agent to creditwithholding applied under chapter 4against its liability for tax due under sec-tions 1441, 1442, or 1443, and § 1.1474–6(b)(2) for when such withholding is con-sidered applied by a withholding agent. Ifthe withholdable payment is not requiredto be withheld upon under chapter 4, thenthe withholding agent must apply the pro-

visions of § 1.1441–1 to determinewhether withholding is required undersections 1441, 1442, or 1443.

(b) through (c)(3) [Reserved]. For fur-ther guidance, see § 1.1441–3(b) through(c)(3).

(4) Coordination with withholding un-der section 1445—(i) In general. A dis-tribution from a U.S. Real Property Hold-ing Corporation (USRPHC) (or from acorporation that was a USRPHC at anytime during the five-year period ending onthe date of distribution) with respect tostock that is a U.S. real property interestunder section 897(c) or from a Real EstateInvestment Trust (REIT) or other entitythat is a qualified investment entity (QIE)under section 897(h)(4) with respect to itsstock is subject to the withholding provi-sions under section 1441 (or section 1442or 1443) and section 1445. A USRPHCmaking a distribution shall be treated assatisfying its withholding obligations un-der both sections if it withholds in accor-dance with one of the procedures de-scribed in either paragraph (c)(4)(i)(A) or(B) of this section. A USRPHC must ap-ply the same withholding procedure to allthe distributions made during the taxableyear. However, the USRPHC may changethe applicable withholding procedurefrom year to year. For rules regardingdistributions by REITs and other entitiesthat are QIEs, see paragraph (c)(4)(i)(C)of this section. To the extent withholdingunder sections 1441, 1442, or 1443 ap-plies under this paragraph (c)(4)(i) to anyportion of a distribution that is a withhold-able payment, see paragraph (a)(2) forrules coordinating withholding underchapter 4.

(A) Withholding under section 1441.The USRPHC may choose to withhold ona distribution only under section 1441 (or1442 or 1443) and not under section 1445.In such a case, the USRPHC must with-hold under section 1441 (or 1442 or 1443)on the full amount of the distribution,whether or not any portion of the distri-bution represents a return of basis or cap-ital gain. If a reduced tax rate under anincome tax treaty applies to the distribu-tion by the USRPHC, then the applicablerate of withholding on the distributionshall be no less than 10-percent, unless theapplicable treaty specifies an applicablelower rate for distributions from a USR-


PHC, in which case the lower rate mayapply.

(B) Withholding under both sections1441 and 1445. As an alternative to theprocedure described in paragraph(c)(4)(i)(A) of this section, a USRPHCmay choose to withhold under both sec-tions 1441 (or 1442 or 1443) and 1445under the procedures set forth in this para-graph (c)(4)(i)(B). The USRPHC mustmake a reasonable estimate of the portionof the distribution that is a dividend underparagraph (c)(2)(ii)(A) of this section, andmust—

(1) Withhold under section 1441 (or1442 or 1443) on the portion of the dis-tribution that is estimated to be a dividendunder paragraph (c)(2)(ii)(A) of this sec-tion; and

(2) Withhold under section 1445(e)(3)and § 1.1445–5(e) on the remainder of thedistribution or on such smaller portionbased on a withholding certificate ob-tained in accordance with § 1.1445–5(e)(3)(iv).

(C) Coordination with REIT/QIE with-holding. Withholding is required undersection 1441 (or 1442 or 1443) on theportion of a distribution from a REIT orother entity that is a QIE that is not des-ignated (for REITs) or reported (for reg-ulated investment companies that areQIEs) as a capital gain dividend, a returnof basis, or a distribution in excess of ashareholder’s adjusted basis in the stockof the REIT or QIE that is treated as acapital gain under section 301(c)(3). Adistribution in excess of a shareholder’sadjusted basis in the stock of the REIT orQIE is, however, subject to withholdingunder section 1445, unless the interest inthe REIT or QIE is not a U.S. real prop-erty interest (e.g., an interest in a domes-tically controlled REIT or QIE under sec-tion 897(h)(2)). In addition, withholdingis required under section 1445 on the por-tion of the distribution designated (forREITs) or reported (for regulated invest-ment companies that are QIEs) as a capitalgain dividend to the extent that it is attrib-utable to the sale or exchange of a U.S.real property interest. See § 1.1445–8.


(d) Withholding on payments that in-clude an undetermined amount of in-come— (1) In general. Where the with-

holding agent makes a payment and doesnot know at the time of payment theamount that is subject to withholding be-cause the determination of the source ofthe income or the calculation of theamount of income subject to tax dependsupon facts that are not known at the timeof payment, then the withholding agentmust withhold an amount under § 1.1441–1 based on the entire amount paid that isnecessary to ensure that the tax withheldis not less than 30 percent (or other appli-cable percentage) of the amount that couldbe from sources within the United Statesor income subject to tax. See § 1.1471–2(a)(5) for similar rules under chapter 4that apply to payments made to payeesthat are entities. The amount so withheldshall not exceed 30 percent of the amountpaid. With respect to a payment describedin paragraph (d)(1) or (2) of this section,the withholding agent may elect to retain30 percent of the payment to hold in es-crow until the earlier of the date that theamount of income from sources within theUnited States or the taxable amount canbe determined or one year from the datethe amount is placed is in escrow, atwhich time the withholding becomes dueunder § 1.1441–1, or, to the extent thatwithholding is not required, the escrowedamount must be paid to the payee.

(2) Withholding on certain gains. Ab-sent actual knowledge or reason to knowotherwise, a withholding agent may relyon a claim regarding the amount of gaindescribed in § 1.1441–2(c) if the benefi-cial owner withholding certificate, orother appropriate withholding certificate,states the beneficial owner’s basis in theproperty giving rise to the gain. In theabsence of a reliable representation on awithholding certificate, the withholdingagent must withhold an amount under§ 1.1441–1 that is necessary to assure thatthe tax withheld is not less than 30 percent(or other applicable percentage) of therecognized gain. For this purpose, the rec-ognized gain is determined without regardto any deduction allowed by the Codefrom the gains. The amount so withheldshall not exceed 30 percent of the amountpayable by reason of the transaction giv-ing rise to the recognized gain. See§ 1.1441–1(b)(8) regarding adjustments inthe case of overwithholding.

(e) through (i) [Reserved]. For furtherguidance, see § 1.1441–3(e) through (i).

(j) Effective/applicability date. (1) Ex-cept as otherwise provided in paragraph(g) of this section, this section applies topayments made after June 30, 2014. (Forpayments made after December 31, 2000,see this section as in effect and containedin 26 CFR part 1 revised April 1, 2013.)

(2) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 8. Section 1.1441–4 is amendedby revising paragraphs (a)(2)(ii), (b)(2)(i),(b)(2)(iii), (b)(2)(v), and (b)(3) and addingparagraphs (g)(3) and (h) to read as fol-lows:

§ 1.1441–4 Exemptions fromwithholding for certain effectivelyconnected income and other amounts.

(a) * * *(2) * * *(ii) [Reserved]. For further guidance,

see § 1.1441–4T(a)(2)(ii).* * * * *(b) * * *(2) * * *(i) [Reserved]. For further guidance,

see § 1.1441–4T(b)(2)(i).* * * * *(iii) [Reserved]. For further guidance,

see § 1.1441–4T(b)(2)(iii).* * * * *(v) [Reserved]. For further guidance,

see § 1.1441–4T(b)(2)(v).(3) [Reserved]. For further guidance,

see § 1.1441–4T(b)(3).* * * * *(g) * * *(3) [Reserved]. For further guidance,

see § 1.1441–4T(g)(3).(h) [Reserved]. For further guidance,

see § 1.1441–4T(h).Par. 9. Section 1.1441–4T is added to

read as follows:

§ 1.1441–4T Exemptions fromwithholding for certain effectivelyconnected income and other amounts(temporary).

(a)(1) through (a)(2)(i) [Reserved]. Forfurther guidance, see § 1.1441–4(a)through (a)(2)(i).

(ii) Special rules for U.S. branches offoreign persons—(A) U.S. branches of


certain foreign banks or foreign insurancecompanies. A payment to a U.S. branchdescribed in § 1.1441–1(b)(2)(iv)(B)(3) ispresumed to be effectively connected withthe conduct of a trade or business in theUnited States without the need to furnish acertificate if the withholding agent obtainsan EIN for the entity, unless the U.S.branch provides a U.S. branch withhold-ing certificate described in § 1.1441–1(e)(3)(v) that represents otherwise. If nocertificate is furnished but the income isnot, in fact, effectively connected income,then the branch must withhold whetherthe payment is collected on behalf of otherpersons or on behalf of another branch ofthe same entity. See § 1.1441–1(b)(2)(iv)and (b)(6) for general rules applicable topayments to U.S. branches of foreign per-sons.

(B) Other U.S. branches. See§ 1.1441–1(b)(2)(iv)(E) for similar proce-dures for other U.S. branches to the extentprovided in a determination letter from theIRS.


(b)(1) [Reserved]. For further guid-ance, see § 1.1441–4(b)(1).

(2) Manner of obtaining withholdingexemption under tax treaty—(i) In gen-eral. In order to obtain the exemptionfrom withholding by reason of a taxtreaty, provided by paragraph (b)(1)(iv) ofthis section, a nonresident alien individualmust submit a withholding certificate (de-scribed in paragraph (b)(2)(ii) of this sec-tion) to each withholding agent fromwhom amounts are to be received. A sep-arate withholding certificate must be filedfor each taxable year of the alien individ-ual. If the withholding agent is satisfiedthat an exemption from withholding iswarranted (see paragraph (b)(2)(iii) of thissection), the withholding certificate shallbe accepted in the manner set forth inparagraph (b)(2)(iv) of this section. Theexemption from withholding becomes ef-fective for payments made at least tendays after a copy of the accepted with-holding certificate is forwarded to the IRS.The withholding agent may rely on anaccepted withholding certificate only ifthe IRS has not objected to the certificate.For purposes of this paragraph (b)(2)(i),the IRS will be considered to have notobjected to the certificate if it has not

notified the withholding agent within a10-day period beginning from the datethat the withholding certificate is for-warded to the IRS pursuant to paragraph(b)(2)(v) of this section. After expirationof the 10-day period, the withholdingagent may rely on the withholding certif-icate retroactive to the date of the firstpayment covered by the certificate. Thefact that the IRS does not object to thewithholding certificate within the 10-dayperiod provided in this paragraph (b)(2)(i)shall not preclude the IRS from examiningthe withholding agent at a later date withrespect to facts that the withholding agentknew or had reason to know regarding thepayment and eligibility for a reduced rateand that were not disclosed to the IRS aspart of the 10-day review process.


(iii) Review by withholding agent. Theexemption from withholding provided byparagraph (b)(1)(iv) of this section shallnot apply unless the withholding agentaccepts (in the manner provided in para-graph (b)(2)(iv) of this section) the state-ment on Form 8233, “Exemption FromWithholding on Compensation for Inde-pendent (and Certain Dependent) PersonalServices of a Nonresident Alien Individ-ual,” (or successor form) supplied by thenonresident alien individual. Before ac-cepting the statement, the withholdingagent must examine the statement. If thewithholding agent knows or has reason toknow that any of the facts or assertions onForm 8233 may be false or that the eligi-bility of the individual’s compensation forthe exemption cannot be readily deter-mined, the withholding agent may not ac-cept the statement on Form 8233 and isrequired to withhold under this section. Ifthe withholding agent accepts the state-ment and subsequently finds that any ofthe facts or assertions contained on Form8233 may be false or that the eligibility ofthe individual’s compensation for the ex-emption can no longer be readily deter-mined, then the withholding agent shallpromptly so notify the IRS by letter, andthe withholding agent is not relieved ofliability to withhold on any amounts stillto be paid. If the withholding agent isnotified by the IRS that the eligibility ofthe individual’s compensation for the ex-emption is in doubt or that such compen-

sation is not eligible for the exemption,the withholding agent is required to with-hold under this section. The rules of thisparagraph (b)(2) are illustrated by the fol-lowing examples.

Example 1. C, a nonresident alien individual,submits Form 8233 to W, a withholding agent. Thestatement on Form 8233 does not include all theinformation required by paragraph (b)(2)(ii) of thissection. Therefore, W has reason to know that he orshe cannot readily determine whether C’s compen-sation for personal services is eligible for an exemp-tion from withholding and, therefore, W must with-hold.

Example 2. D, a nonresident alien individual, isperforming services for W, a withholding agent. Whas accepted a statement on Form 8233 submitted byD, according to the provisions of this section. Wreceives notice from the Internal Revenue Servicethat the eligibility of D’s compensation for a with-holding exemption is in doubt. Therefore, W hasreason to know that the eligibility of the compensa-tion for a withholding exemption cannot be readilydetermined, as of the date W receives the notifica-tion, and W must withhold tax under section 1441 onamounts paid after receipt of the notification.

Example 3. E, a nonresident alien individual,submits Form 8233 to W, a withholding agent forwhom E is to perform personal services. The state-ment contains all the information requested on Form8233. E claims an exemption from withholdingbased on a personal exemption amount computed onthe number of days E will perform personal servicesfor W in the United States. If W does not know orhave reason to know that any statement on the Form8233 is false or that the eligibility of E’s compensa-tion for the withholding exemption cannot be readilydetermined, W can accept the statement on Form8233 and exempt from withholding the appropriateamount of E’s income.

(iv) [Reserved]. For further guidance,see § 1.1441–4(b)(2)(iv).

(v) Copies of Form 8233. The with-holding agent shall forward one copy ofeach Form 8233 that is accepted underparagraph (b)(2)(iv) of this section to theIRS within five days of such acceptance.The withholding agent shall retain a copyof Form 8233.

(3) Withholding agreements. Compen-sation for personal services of a nonresi-dent alien individual who is engaged dur-ing the taxable year in the conduct of atrade or business within the United Statesmay be wholly or partially exempted fromthe withholding required by § 1.1441–1 ifan agreement is reached between the IRSand the alien individual with respect to theamount of withholding required. Suchagreement shall be available in the cir-cumstances and in the manner set forth bythe Internal Revenue Service, and shall beeffective for payments covered by the


agreement that are made after the agree-ment is executed by all parties. The alienindividual must agree to timely file anincome tax return for the current taxableyear.

(b)(4) through (g)(2) [Reserved]. Forfurther guidance, see § 1.1441–4(b)(4) through (g)(2).

(g)(3) Effective/applicability date. Thissection applies to payments made afterJune 30, 2014. (For payments made afterDecember 31, 2000, see this section as ineffect and contained in 26 CFR part 1revised April 1, 2013.)



1. Revising paragraph (b)(2)(iii).2. Adding paragraph (b)(2)(vi).3. Revising paragraphs (c)(1)(i) intro-

ductory text, (c)(1)(i)(C), and (c)(1)(iv).4. Adding paragraph (c)(1)(v).5. Revising paragraphs (c)(2)(i) through

(iii), (c)(2)(iv)(A) and (B), (c)(3)(i),(c)(3)(ii), (c)(3)(iii)(A), (c)(3)(iv),(c)(3)(v), and (d)(2) through (4).

6. Adding paragraph (e)(3)(iii).7. Revising paragraphs (e)(5)(i),

(e)(5)(ii), (e)(5)(iii)(A), (e)(5)(iv), (e)(5)(v),(e)(6)(ii), and (f).

8. Adding paragraph (g)(3).The revisions and additions read as fol-

lows:

§ 1.1441–5 Withholding on payments topartnerships, trusts, and estates.

* * * * *(b) * * *(2) * * *(iii) [Reserved]. For further guidance,

see § 1.1441–5T(b)(2)(iii).* * * * *(vi) [Reserved]. For further guidance,

see § 1.1441–5T(b)(2)(vi).(c) * * *(1) * * *(i) [Reserved]. For further guidance,

see § 1.1441–5T(c)(1)(i).* * * * *(C) [Reserved]. For further guidance,

see § 1.1441–5T(c)(1)(i)(C).* * * * *(iv) and (v) [Reserved]. For further guid-

ance, see § 1.1441–5T(c)(1)(iv) and (v).

(2) * * *(i) through (iii) [Reserved]. For further

guidance, see § 1.1441–5T(c)(2)(i)through (c)(2)(iii).

(iv) * * *(A) and (B) [Reserved]. For further

guidance, see § 1.1441–5T(c)(2)(iv)(A)and (B).

* * * * *(3) * * *(i) and (ii) [Reserved]. For further

guidance, see § 1.1441–5T(c)(3)(i) and(ii)

(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1441–5T(c)(3)(iii)(A).* * * * *(iv) and (v) [Reserved]. For further guid-

ance, see § 1.1441–5T(c)(3)(iv) and (v).(d) * * *(2) through (4) [Reserved]. For further

guidance, see § 1.1441–5T(d)(2) through(d)(4).

(e) * * *(3) * * *(iii) [Reserved]. For further guidance,

see § 1.1441–5T(e)(3)(iii).* * * * *(5) * * *(i) and (ii) [Reserved]. For further guid-

ance, see § 1.1441–5T(e)(5)(i) and (ii).(iii) * * *(A) [Reserved]. For further guidance,

see § 1.1441–5T(e)(5)(iii)(A).* * * * *(iv) and (v) [Reserved]. For further

guidance, see § 1.1441–5T(e)(5)(iv) and(v).

(6) * * *(ii) [Reserved]. For further guidance,

see § 1.1441–5T(e)(6)(ii).* * * * *(f) [Reserved]. For further guidance,

see § 1.1441–5T(f).(g) * * *(3) [Reserved]. For further guidance,

see § 1.1441–5T(g)(3).Par. 11. Section 1.1441–5T is added to

read as follows:

§ 1.1441–5T Withholding on payments topartnerships, trusts, and estates(temporary).

(a) through (b)(2)(ii) [Reserved]. Forfurther guidance, see § 1.1441–5(a)through (b)(2)(ii).

(b)(2)(iii) U.S. complex trusts and U.S.estates. A U.S. trust that is not a trustdescribed in section 651(a) (see paragraph(b)(2)(ii) of this section) or sections 671through 679 (see paragraph (b)(2)(iv) ofthis section) (a U.S. complex trust) is re-quired to withhold under chapter 3 of theInternal Revenue Code (Code) as a with-holding agent on the distributable net in-come includible in the gross income of aforeign beneficiary to the extent the dis-tributable net income consists of anamount subject to withholding (as definedin § 1.1441–2(a)) that is, or is required tobe, distributed currently. The U.S. com-plex trust shall withhold when a distribu-tion is made to a foreign beneficiary. Thetrust may use the same procedures regard-ing an estimate of the amount subject towithholding as a U.S. simple trust underparagraph (b)(2)(ii) of this section. To theextent an amount subject to withholding isrequired to be, but is not actually distrib-uted, the U.S. complex trust must with-hold on the foreign beneficiary’s allocableshare at the time the income is required tobe reported on Form 1042–S under§ 1.1461–1(c), without extension. A U.S.estate is required to withhold under chap-ter 3 of the Code on the distributable netincome includible in the gross income of aforeign beneficiary to the extent the dis-tributable net income consists of anamount subject to withholding (as definedin § 1.1441–2(a)) that is actually distrib-uted. A U.S. estate may also use the rea-sonable estimate procedures of paragraph(b)(2)(ii) of this section. However, thoseprocedures apply to an estate that has ataxable year other than a calendar yearonly if the estate files an amended returnon Form 1042 for the calendar year inwhich the distribution was made and paysthe underwithheld tax and interest within60 days after the close of the taxable yearin which the distribution was made.

(iv) and (v) [Reserved]. For further guid-ance, see § 1.1441–5 (b)(2)(iv) and (v).

(vi) Coordination with chapter 4 re-quirements for U.S. partnerships, trusts,and estates. To the extent that a U.S.partnership is required to withhold on anamount under chapter 4 with respect to apartner, beneficiary or owner, the partner-ship, trust, or estate must apply the rulesdescribed in § 1.1473–1(a)(5) to deter-mine when it must withhold on the


amount under chapter 4. In a case inwhich withholding applies under chapter4 to such an amount, see § 1.1441–3(a)(2) to coordinate with withholdingthat otherwise applies to such an amountunder this paragraph (b).

(c) Foreign partnerships—(1) Deter-mination of payee. (i) Payments treated asmade to partners. Except as otherwiseprovided in paragraph (c)(1)(ii) or (iv) ofthis section, the payees of a payment to aperson that the withholding agent maytreat as a nonwithholding foreign partner-ship under paragraph (c)(3)(i) or (d)(2) ofthis section are the partners (lookingthrough partners that are foreign interme-diaries or flow-through entities) as fol-lows—

(A) and (B) [Reserved]. For furtherguidance, see § 1.1441–5(c)(1)(i)(A) and(B).

(C) If the withholding agent can reli-ably associate a partner’s distributiveshare of the payment with a qualified in-termediary withholding certificate under§ 1.1441–1(e)(3)(ii), a nonqualified inter-mediary withholding certificate under§ 1.1441–1(e)(3)(iii), or a U.S. branchcertificate under § 1.1441–1(e)(3)(v) (in-cluding one provided by a territory finan-cial institution), then the rules of§ 1.1441–1(b)(2)(v) shall apply to deter-mine who the payee is in the same manneras if the partner’s distributive share of thepayment had been paid directly to suchintermediary or U.S. branch or territoryfinancial institution;

(c)(1)(i)(D) through (c)(1)(iii) [Re-served]. For further guidance, see § 1.1441–5 (c)(1)(i)(D) through (c)(1)(iii).

(iv) Coordination with chapter 4 forpayments made to foreign partnerships. Awithholding agent that makes a paymentof U.S. source FDAP income to a foreignpartnership that is a withholdable paymentto which withholding under chapter 4 ap-plies must apply the rules described in§ 1.1473–1(a)(5)(vi) to determine whenthe payment is treated as made to a partnerin the partnership for purposes of chapter4. In a case in which withholding appliesunder chapter 4 to a withholdable pay-ment made to a foreign partnership, see§ 1.1441–3(a)(2) to coordinate with with-holding otherwise required under thisparagraph (c) with respect to the amountof the payment included in the gross in-

come of a partner. For when a withholdingagent may reliably associate a withhold-able payment with a chapter 4 withhold-ing rate pool in lieu of obtaining docu-mentation for each payee include in thepool, see § 1.1441–1(e)(3)(iv)(C)(2) (sub-stituting the term nonwithholding foreignpartnership for the term nonqualified in-termediary).

(v) Examples. The rules of paragraphs(c)(1)(i) and (ii) of this section are illus-trated by the following examples. Eachexample assumes that all payments are notwithholdable payments and thus no with-holding applies under chapter 4.

Example 1. FP is a nonwithholding foreign part-nership organized in Country X. FP has two partners,FC, a foreign corporation, and USP, a U.S. partner-ship. USWH, a U.S. withholding agent, makes apayment of U.S. source interest to FP that is not awithholdable payment. FP has provided USWH witha valid nonwithholding foreign partnership certifi-cate, as described in paragraph (c)(3)(iii) of thissection, with which it associates a beneficial ownerwithholding certificate from FC and a Form W–9,“Request for Taxpayer Identification Number andCertification,” from USP together with the withhold-ing statement required by paragraph (c)(3)(iv) of thissection. USWH can reliably associate the payment ofinterest with the withholding certificates from FCand USP. Under paragraph (c)(1)(i) of this section,the payees of the interest payment are FC and USP.

Example 2. The facts are the same as in Example1, except that FP1, a nonwithholding foreign part-nership, is a partner in FP rather than USP. FP1 hastwo partners, A and B, both foreign persons. FPprovides USWH with a valid nonwithholding for-eign partnership certificate, as described in para-graph (c)(3)(iii) of this section, with which it asso-ciates a beneficial owner withholding certificatefrom FC and a nonwithholding foreign partnershipcertificate from FP1. In addition, foreign beneficialowner withholding certificates from A and B areassociated with the nonwithholding foreign partner-ship withholding certificate from FP1. FP also pro-vides the withholding statement required by para-graph (c)(3)(iv) of this section. USWH can reliablyassociate the interest payment with the withholdingcertificates provided by FC, A, and B. Therefore,under paragraph (c)(1)(i) of this section, the payeesof the interest payment are FC, A, and B.

Example 3. USWH makes a payment of U.S.source dividends to WFP, a withholding foreignpartnership, that is not a withholdable payment.WFP has two partners, FC1 and FC2, both foreigncorporations. USWH can reliably associate the pay-ment with a valid withholding foreign partnershipwithholding certificate from WFP. Therefore, underparagraph (c)(1)(ii)(A) of this section, WFP is thepayee of the interest.

Example 4. USWH makes a payment of U.S.source royalties that is not a withholdable paymentto FP, a foreign partnership. USWH can reliablyassociate the royalties with a valid withholding cer-tificate from FP on which FP certifies that the in-

come is effectively connected with the conduct of atrade or business in the United States. Therefore,under paragraph (c)(1)(ii)(B) of this section, FP isthe payee of the royalties.

(2) Withholding foreign partner-ships—(i) Reliance on claim of withhold-ing foreign partnership status. A with-holding foreign partnership is a foreignpartnership that has entered into an agree-ment with the Internal Revenue Service(IRS), as described in paragraph (c)(2)(ii)of this section, with respect to distribu-tions and guaranteed payments it makes toits partners. A withholding agent that canreliably associate a payment with a certif-icate described in paragraph (c)(2)(iv) ofthis section may treat the person to whomit makes the payment as a withholdingforeign partnership for purposes of with-holding under chapters 3 and 4 of theCode, information reporting under chapter61 of the Code, backup withholding undersection 3406, and withholding under otherprovisions of the Code. Furnishing such acertificate is in lieu of transmitting to awithholding agent withholding certificatesor other appropriate documentation for itspartners. Although the withholding for-eign partnership generally will be requiredto obtain withholding certificates or otherappropriate documentation from its part-ners pursuant to its agreement with theIRS, it will generally not be required toattach such documentation to its withhold-ing foreign partnership withholding certif-icate to the extent it is permitted to act asa withholding foreign partnership with re-spect to the payment under its agreement.A foreign partnership may act as a quali-fied intermediary under § 1.1441–1(e)(5)with respect to payments it makes to per-sons other than its partners. In addition,the IRS may permit a foreign partnershipto act as a qualified intermediary under§ 1.1441–1(e)(5)(ii)(D) with respect to itspartners in appropriate circumstances.

(ii) Withholding agreement. The IRSmay, upon request, enter into a withhold-ing agreement with a foreign partnershippursuant to such procedures as the IRSmay prescribe in published guidance (see§ 601.601(d)(2) of this chapter). Underthe withholding agreement, a foreign part-nership shall generally be subject to theapplicable withholding and reporting pro-visions applicable to withholding agents(and payors as defined in § 1.6049–4(a) under chapters 3, 4, and 61 of the


Code, section 3406, the regulations underthose provisions, and other withholdingprovisions of the Code, except to the ex-tent provided under the agreement. Underthe agreement, a foreign partnership mayagree to act as an acceptance agent toperform the duties described in§ 301.6109–1(d)(3)(iv)(A) of this chap-ter. For a partnership that receives with-holdable payments on behalf of its part-ners and that is an FFI, the agreement willrequire the partnership to assume the re-quirements of a participating FFI, a regis-tered deemed-compliant FFI, or an FFItreated as a deemed-compliant FFI underan applicable IGA that is subject to duediligence and reporting requirements withrespect to its U.S. accounts similar tothose applicable to a registered deemed-compliant FFI under § 1.1471–5(f)(1).The agreement may specify the manner inwhich applicable procedures for adjust-ments for underwithholding and overwith-holding, including refund procedures, ap-ply to the withholding foreign partnershipand its partners and the extent to whichapplicable procedures may be modified. Inparticular, a withholding agreement mayallow a withholding foreign partnership toclaim refunds of overwithheld amounts onbehalf of its customers. In addition, theagreement must specify the manner inwhich the IRS will verify the partner-ship’s compliance with its agreement, in-cluding the requirements for a periodicreview of the partnership’s compliancewith the agreement and the procedures forthe partnership to certify to its compliancewith the agreement. A withholding for-eign partnership must file a return onForm 1042, “Annual Withholding TaxReturn for U.S. Source Income of ForeignPersons,” and information returns onForm 1042–S, “Foreign Person’s U.S.Source Income Subject to Withholding.”The withholding foreign partnershipagreement may also require a withholdingforeign partnership to file a partnershipreturn under section 6031(a) and partnerstatements under 6031(b), including foreach U.S. partner to the extent required inthe agreement. Additionally, a partnershipthat is an FFI will be required to file Form8966, “FATCA Report,” to the extent pro-vided in the agreement.

(iii) Withholding responsibility. Awithholding foreign partnership must as-

sume primary withholding responsibilityunder both chapters 3 and 4 of the Code.It is not required to provide information tothe withholding agent regarding each part-ner’s distributive share of the payment(including a withholdable payment). Thewithholding foreign partnership will beresponsible for reporting the payments un-der § 1.1461–1(c), § 1.1474–1(d), andchapter 61 of the Code and filing Form1042 (to the extent required in the agree-ment). A withholding agent making a pay-ment to a withholding foreign partnershipis not required to withhold any amountunder chapters 3 and 4 of the Code on thepayment unless it has actual knowledge orreason to know that the foreign partner-ship is not acting as a withholding foreignpartnership with respect to the payment orhas not withheld to the extent required.The withholding foreign partnership shallwithhold the payments under the sameprocedures and at the same time as pre-scribed for withholding by a U.S. partner-ship under paragraph (b)(2) of this sec-tion, except that, for purposes ofdetermining the partner’s status, the pro-visions of paragraph (d)(4) of this sectionshall apply.

(iv) [Reserved]. For further guidance,see § 1.1441–5(c)(2)(iv).

(A) The name, permanent residenceaddress (as described in § 1.1441–1(e)(2)(ii)), the employer identificationnumber of the partnership, the countryunder the laws of which the partnership iscreated or governed, and, for a withhold-ing certificate furnished for a partnershipreceiving a withholdable payment, thechapter 4 status of the partnership (andGIIN of the partnership, if applicable);

(B) A certification that the partnershipis a withholding foreign partnershipwithin the meaning of paragraph (c)(2)(i)of this section, and, for a partnership thatis an FFI receiving a withholdable pay-ment, a certification that the partnership isacting as a participating FFI, a registereddeemed-compliant FFI, or a nonreportingIGA FFI (as defined in § 1.1471–1(b)(83));and

(C) [Reserved]. For further guidance,see § 1.1441–5(c)(2)(iv)(C).

(3) Nonwithholding foreign partner-ships—(i) Reliance on claim of foreignpartnership status. A withholding agentmay treat a person as a nonwithholding

foreign partnership if it receives from thatperson a nonwithholding foreign partner-ship withholding certificate as describedin paragraph (c)(3)(iii) of this section. Awithholding agent that does not receive anonwithholding foreign partnership with-holding certificate, or does not receive avalid withholding certificate, from an en-tity it knows, or has reason to know, is aforeign partnership, must apply the pre-sumption rules of § § 1.1441–1(b)(3) and1.6049–5(d) and paragraphs (d) and (e)(6)of this section. In addition, to the extent awithholding agent cannot, prior to a pay-ment, reliably associate the payment withvalid documentation from a payee that isassociated with the nonwithholding for-eign partnership withholding certificate orhas insufficient information to report thepayment on Form 1042–S or Form 1099,to the extent reporting is required, thewithholding agent must apply the pre-sumption rules. See § 1.1441–1(b)(2)(vii)(A) and (b)(2)(vii)(B) for rulesregarding reliable association. See, how-ever, § 1.1441–1(e)(3)(iv)(C)(2) for whena withholding agent may reliably associ-ate a withholdable payment with a chapter4 withholding rate pool in lieu of obtain-ing documentation for each payee in-cluded in the pool (substituting the termnonwithholding foreign partnership forthe term nonqualified intermediary). Seealso § 1.1441–1(e)(3)(iv)(A) for when awithholding agent may reliably associatea payment with a chapter 4 withholdingrate pool of U.S. payees. See paragraph(c)(3)(iv) of this section and § 1.1441–1(e)(3)(iv) for alternative procedures per-mitting allocation information to be re-ceived after a payment is made.

(ii) Reliance on claim of reduced with-holding by a partnership for its partners.This paragraph (c)(3)(ii) describes themanner in which a withholding agent mayrely on a claim of reduced withholdingwhen making a payment to a nonwith-holding foreign partnership. To the extentthat a withholding agent treats a paymentto a nonwithholding foreign partnership asa payment to the nonwithholding foreignpartnership’s partners (whether direct orindirect) in accordance with paragraph(c)(1)(i) of this section, it may rely on aclaim for reduced withholding by the part-ner if, prior to the payment, the withhold-ing agent can reliably associate the pay-


ment (within the meaning of § 1.1441–1(b)(2)(vii)) with a valid withholdingcertificate or other appropriate documen-tation from the partner that establishesentitlement to a reduced rate of withhold-ing. A withholding certificate or other ap-propriate documentation that establishesentitlement to a reduced rate of withhold-ing is a beneficial owner withholding cer-tificate described in § 1.1441–1(e)(2)(i),documentary evidence described in§ 1.1441–6(c)(3) or (4) or § 1.6049–5(c)(1) (for a partner claiming to be aforeign person and a beneficial owner,determined under the provisions of§ 1.1441–1(c)(6)), a Form W–9 describedin § 1.1441–1(d) (for a partner claiming tobe a U.S. payee), a withholding foreignpartnership withholding certificate de-scribed in paragraph (c)(2)(iv) of this sec-tion, or a withholding statement allocatingthe payment to a chapter 4 withholdingrate pool of U.S. payees. For when thewithholding agent can reliably associatethe payment with a chapter 4 withholdingrate pool, see paragraph (c)(3)(i) of thissection. See also § 1.1441–3(a)(2) (coor-dinating withholding under chapter 3when withholding under chapter 4 is ap-plied to a payment). Unless a nonwith-holding foreign partnership withholdingcertificate is provided for income claimedto be effectively connected with the con-duct of a trade or business in the UnitedStates, a claim must be presented for eachportion of the payment that represents anitem of income includible in the distribu-tive share of a partner as required underparagraph (c)(3)(iii)(C) of this section.When making a claim for several partners,the partnership may present a single non-withholding foreign partnership withhold-ing certificate to which the partners’ cer-tificates or other appropriatedocumentation are associated. Where thenonwithholding foreign partnership with-holding certificate is provided for incomeclaimed to be effectively connected withthe conduct of a trade or business in theUnited States under paragraph (c)(3)(iii)(D)of this section, the claim may be presentedwithout having to identify any partner’sdistributive share of the payment.

(iii) [Reserved]. For further guidance,see § 1.1441–5(c)(3)(iii).

(A) The name, permanent residenceaddress (as described in § 1.1441–

1(e)(2)(ii)), the employer identificationnumber of the partnership, if any, thecountry under the laws of which the part-nership is created or governed, and thechapter 4 status of the partnership (for anonwithholding foreign partnership re-ceiving a withholdable payment or pro-viding a withholding statement associatedwith the Form W–8 allocating a paymentto a chapter 4 withholding rate pool ofU.S. payees), and the GIIN of the partner-ship (if applicable);

(B) through (E) [Reserved]. For furtherguidance, see § 1.1441–5(c)(3)(iii)(B)through (c)(3)(iii)(E).

(iv) Withholding statement provided bynonwithholding foreign partnership andcoordination with chapter 4. The provi-sions of § 1.1441–1(e)(3)(iv) (regarding awithholding statement) shall apply to anonwithholding foreign partnership bysubstituting the term nonwithholding for-eign partnership for the term nonqualifiedintermediary, including when a nonwith-holding foreign partnership may provideto a withholding agent a withholdingstatement that includes a chapter 4 with-holding rate pool in lieu of informationwith respect to each partner that is a payeeof a payment.

(v) Withholding and reporting by a for-eign partnership. A nonwithholding for-eign partnership described in this para-graph (c)(3) that receives an amountsubject to withholding (as defined in§ 1.1441–2(a)) shall be required to with-hold and report such payment under chap-ter 3 of the Code and the regulationsthereunder except as otherwise providedin this paragraph (c)(3)(v). A nonwith-holding foreign partnership shall not berequired to withhold and report if it hasprovided a valid nonwithholding foreignpartnership withholding certificate, it hasprovided all of the information requiredby paragraph (c)(3)(iv) of this section(withholding statement), and it does notknow, and has no reason to know, thatanother withholding agent failed to with-hold the correct amount or failed to reportthe payment correctly under § 1.1461–1(c). A nonwithholding foreign partner-ship is also not required to withhold andreport under this paragraph (c)(3) to theextent that withholding under chapter 4was applied to a payment that is includiblein the gross income of a partner in the

partnership. See also § 1.1441–3(a)(2) forcoordination rules when withholding un-der chapter 4 has been applied to a with-holdable payment. A withholding foreignpartnership’s obligations to withhold andreport shall be determined in accordancewith its withholding foreign partnershipagreement.

(d)(1) [Reserved]. For further guid-ance, see § 1.1441–5(d)(1).

(2) Determination of partnership statusas U.S. or foreign in the absence of doc-umentation. In the absence of a valid rep-resentation of U.S. partnership status inaccordance with paragraph (b)(1) of thissection or of foreign partnership status inaccordance with paragraph (c)(2)(i) or(c)(3)(i) of this section, the withholdingagent shall determine the classification ofthe payee under the presumptions set forthin § 1.1441–1(b)(3)(ii). If the withholdingagent treats the payee as a partnershipunder § 1.1441–1(b)(3)(ii), the withhold-ing agent shall apply the presumptions setforth in § 1.1441–1(b)(3)(iii) to determinewhether to treat the partnership as a U.S.person or foreign person. For rules regard-ing reliable association with a withholdingcertificate from a domestic or a foreignpartnership, see § 1.1441–1(b)(2)(vii).

(3) Determination of partners’ statusin the absence of certain documentation.If a nonwithholding foreign partnershiphas provided a nonwithholding foreignpartnership withholding certificate underparagraph (c)(3)(iii) of this section thatwould be valid except that the withhold-ing agent cannot reliably associate all or aportion of the payment with valid docu-mentation from a partner of the partner-ship, then the withholding agent may ap-ply the presumption rule of this paragraph(d)(3) with respect to all or a portion ofthe payment for which documentation hasnot been received. See § 1.1441–1(b)(2)(vii)(A) and (B) for rules regardingreliable association. The presumption ruleof this paragraph (d)(3) also applies to aperson that is presumed to be a foreignpartnership under the rule of paragraph(d)(2) of this section. Any portion of apayment that the withholding agent can-not treat as reliably associated with validdocumentation from a partner may be pre-sumed made to a foreign payee. As aresult, any payment of an amount subjectto withholding is subject to withholding at


a rate of 30 percent. Any payment that ispresumed to be made to an undocumentedforeign payee must be reported on Form1042–S. See § 1.1461–1(c). For a pay-ment described in this paragraph (d)(3)that is a withholdable payment, see§ 1.1471–3(f)(5) for the presumption rulefor determining the payee’s chapter 4 sta-tus to determine whether withholding un-der chapter 4 applies to the payment.

(4) Determination by a withholdingforeign partnership of the status of itspartners. Except as otherwise provided inthe agreement described in paragraph(c)(2) of this section, a withholding for-eign partnership shall determine whetherthe partners or some other persons are thepayees of the partners’ distributive sharesof any payment made by a withholdingforeign partnership by applying the rulesof § 1.1441–1(b)(2), paragraph (c)(1) ofthis section (in the case of a partner that isa foreign partnership), and paragraph(e)(3) of this section (in the case of apartner that is a foreign estate or a foreigntrust). Further, the provisions of paragraph(d)(3) of this section shall apply to deter-mine the status of partners and the appli-cable withholding rates to the extent that,at the time the foreign partnership is re-quired to withhold on a payment, it cannotreliably associate the amount with docu-mentation for any one or more of its part-ners.

(e)(1) through (e)(3)(ii) [Reserved].For further guidance, see § 1.1441–5(e)(1) through (e)(3)(ii).

(iii) Coordination with chapter 4 forpayments made to foreign simple trustsand foreign grantor trusts. A withholdingagent that makes a payment of U.S. sourceFDAP income to a foreign simple trust orforeign grantor trust that is a withholdablepayment to which withholding underchapter 4 applies must apply the rulesdescribed in § 1.1473–1(a)(5)(vi) to deter-mine when the payment is treated as madeto a beneficiary or owner of the trust forpurposes of chapter 4. In a case in whichwithholding applies under chapter 4 to awithholdable payment made to a foreignsimple trust or foreign grantor trust, see§ 1.1441–3(a)(2) to coordinate withhold-ing otherwise required under this para-graph (e) with respect to the amount of thepayment included in the gross income ofthe payee of the payment. For when a

withholding agent may reliably associatea withholdable payment with a chapter 4withholding rate pool in lieu of obtainingdocumentation for each payee include inthe pool, see § 1.1441–1(e)(3)(iv)(C)(2)(substituting the term nonwithholding for-eign trust for the term nonqualified inter-mediary).


(5) Foreign simple trust and foreigngrantor trust—(i) Reliance on claim offoreign simple trust or foreign grantortrust status. A withholding agent maytreat a person as a foreign simple trust orforeign grantor trust if it receives fromthat person a foreign simple trust or for-eign grantor trust withholding certificateas described in paragraph (e)(5)(iii) of thissection. A withholding agent must applythe presumption rules of § § 1.1441–1(b)(3) and 1.6049–5(d) and paragraphs(d) and (e)(6) of this section to the extentit cannot, prior to the payment, reliablyassociate a payment (within the meaningof § 1.1441–1(b)(2)(vii)) with a valid for-eign simple trust or foreign grantor trustwithholding certificate, it cannot reliablydetermine how much of the payment re-lates to valid documentation provided by apayee (e.g., a person that is not itself anonqualified intermediary, flow-throughentity, or U.S. branch) associated with theforeign simple trust or foreign grantortrust withholding certificate, or it does nothave sufficient information to report thepayment on Form 1042–S or Form 1099,if reporting is required. See § 1.1441–1(b)(2)(vii)(A) and (b)(2)(vii)(B). See,however, § 1.1441–1(e)(3)(iv)(C)(2) forwhen a withholding agent may reliablyassociate a withholdable payment with achapter 4 withholding rate pool in lieu ofobtaining documentation for each payeeincluded in a pool (substituting the termnonwithholding foreign trust for the termnonqualified intermediary). See also§ 1.1441–1(e)(3)(iv)(A) for when a with-holding agent may reliably associate apayment with a chapter 4 withholding ratepool of U.S. payees.

(ii) Reliance on claim of reduced with-holding by a foreign simple trust or for-eign grantor trust for its beneficiaries orowners. This paragraph (e)(5)(ii) de-scribes the manner in which a withholdingagent may rely on a claim of reduced

withholding when making a payment to aforeign simple trust or foreign grantortrust. To the extent that a withholdingagent treats a payment to a foreign simpletrust or foreign grantor trust as a paymentto payees other than the trust in accor-dance with paragraph (e)(3)(i) of this sec-tion, it may rely on a claim for reducedwithholding by a beneficiary or owner if,prior to the payment, the withholdingagent can reliably associate the payment(within the meaning of § 1.1441–1(b)(2)(vii)) with a valid withholding cer-tificate or other appropriate documenta-tion from a payee or beneficial owner thatestablishes entitlement to a reduced rate ofwithholding. A withholding certificate orother appropriate documentation that es-tablishes entitlement to a reduced rate ofwithholding is a beneficial owner with-holding certificate described in § 1.1441–1(e)(2)(i) or documentary evidence de-scribed in § 1.1441–6(c)(3) or (c)(4) or in§ 1.6049–5(c)(1) (for a beneficiary orowner claiming to be a foreign person anda beneficial owner, determined under theprovisions of § 1.1441–1(c)(6)), a FormW–9 described in § 1.1441–1(d) (for abeneficiary or owner claiming to be a U.S.payee), a withholding foreign partnershipwithholding certificate described in para-graph (c)(2)(iv) of this section, or a with-holding statement allocating the paymentto a chapter 4 withholding rate pool ofU.S. payees. For when the withholdingagent can reliably associate the paymentwith a chapter 4 withholding rate pool, seeparagraph (c)(3)(i) of this section. Seealso § 1.1441–3(a)(2) (coordinating with-holding under chapter 3 when withholdingunder chapter 4 is applied to a withhold-able payment). Unless a foreign simpletrust or foreign grantor trust withholdingcertificate is provided for income treatedas income effectively connected with theconduct of a trade or business in theUnited States, a claim must be presentedfor each payee’s portion of the payment.When making a claim for several payees,the trust may present a single foreign sim-ple trust or foreign grantor trust withhold-ing certificate with which the payees’ cer-tificates or other appropriatedocumentation are associated. Where theforeign simple trust or foreign grantortrust withholding certificate is providedfor income that is treated as effectively


connected with the conduct of a trade orbusiness in the United States under para-graph (e)(5)(iii)(D) of this section, theclaim may be presented without having toidentify any beneficiary’s or grantor’s dis-tributive share of the payment.


(A) The name, permanent residenceaddress (as described in § 1.1441–1(e)(2)(ii)), the employer identificationnumber, if required, of the trust, the coun-try under the laws of which the trust iscreated, the chapter 4 status of the trust(for a nonwithholding foreign trust receiv-ing a withholdable payment or providing awithholding statement associated with theForm W–8 allocating a payment to achapter 4 withholding rate pool of U.S.payees), and the GIIN of the trust (if ap-plicable);

(B) through (E) [Reserved]. For furtherguidance, see § 1.1441–5 (e)(5)(iii)(B)through (e)(5)(iii)(E).

(iv) Withholding statement provided bya foreign simple trust or foreign grantortrust. The provisions of § 1.1441–1(e)(3)(iv) (regarding a withholding state-ment) shall apply to a foreign simple trustor foreign grantor trust by substituting theterm foreign simple trust or foreigngrantor trust for the term nonqualified in-termediary, including when a withholdingstatement provided by a foreign simpletrust or foreign grantor trust may include achapter 4 withholding rate pool in lieu ofinformation with respect to each owner orbeneficiary that is a payee of a payment.

(v) Withholding foreign trusts. The IRSmay enter an agreement with a foreigntrust to treat the trust or estate as a with-holding foreign trust. Such an agreementshall generally follow the same principlesas an agreement with a withholding for-eign partnership under paragraph (c)(2)(ii)of this section. A withholding agent maytreat a payment to a withholding foreigntrust in the same manner the withholdingagent would treat a payment (including awithholdable payment) to a withholdingforeign partnership. The IRS may alsoenter an agreement to treat a trust as aqualified intermediary in appropriate cir-cumstances. See § 1.1441–1(e)(5)(ii)(D).For a withholding foreign trust that is anFFI and that receives withholdable pay-ments on behalf of its owners or benefi-

ciaries, the agreement will require thewithholding foreign trust to assume therequirements of either a participating FFI,registered deemed-compliant FFI, or anFFI treated as a deemed-compliant FFIunder an applicable IGA that is subject todue diligence and reporting requirementswith respect to its U.S. accounts similar tothose applicable to a registered deemed-compliant FFI under § 1.1471–5(f)(1).

(6)(i) [Reserved]. For further guidance,see § 1.1441–5(e)(6)(i).

(ii) Determination of status as U.S. orforeign trust or estate in the absence ofdocumentation. In the absence of validdocumentation that establishes the U.S.status of a trust or estate under paragraph(b)(1) of this section and of documenta-tion that establishes the foreign status of atrust or estate under paragraph (e)(4) or(e)(5)(iii) of this section, the withholdingagent shall determine the classification ofthe payee based upon the presumptions setforth in § 1.1441–1(b)(3)(ii). If, basedupon those presumptions, the withholdingagent classifies the payee as a trust orestate, the withholding agent shall applythe presumptions set forth in § 1.1441–1(b)(3)(iii) to determine whether the trustor estate is a U.S. person or foreign per-son. An undocumented payee presumed tobe a foreign trust shall be presumed to bea foreign complex trust. If a withholdingagent has documentary evidence that es-tablishes that an entity is a foreign trust,but the withholding agent cannot deter-mine whether the foreign trust is a com-plex trust, a simple trust, or foreigngrantor trust, the withholding agent shallpresume that the trust is a foreign complextrust. Notwithstanding the preceding sen-tence, in the case of a foreign trust with asettlor that is a U.S. person and for whicha withholding agent has both a U.S. ad-dress and TIN, the withholding agent shallpresume that the trust is a grantor trustwhen it cannot determine the status of thetrust as a simple trust, complex trust, orgrantor trust. See § 1.1471–3(f)(4) and (5)to determine the status of the payee forpurposes of chapter 4.


(f) Failure to receive withholding cer-tificate timely or to act in accordance withapplicable presumptions. See applicableprocedures described in § 1.1441–

1(b)(7) in the event the withholding agentdoes not hold an appropriate withholdingcertificate or other appropriate documen-tation at the time of payment or fails torely on the presumptions set forth in§ 1.1441–1(b)(3) or in paragraph (d) or (e)of this section. For a payment that is awithholdable payment, see § 1.1471–3(f) for the presumption rule for determin-ing the payee’s chapter 4 status.

(g)(1) and (2) [Reserved]. For furtherguidance, see § 1.1441–5(g)(1) and (2).

(g)(3) Effective/applicability date. Thissection applies to payments made afterJune 30, 2014. (For payments made afterDecember 31, 2000, and before July 1,2014, see this section as in effect andcontained in 26 CFR part 1, as revisedApril 1, 2013.)


Par. 12. Section 1.1441–6 is amendedby revising paragraphs (a), (b)(1),(b)(2)(i), (b)(2)(iv), (c)(1) and addingparagraph (i)(3) to read as follows:

§ 1.1441–6 Claim of reducedwithholding under an income tax treaty.


(b)(1) [Reserved]. For further guid-ance, see § 1.1441–6T(b)(1).

(2)(i) [Reserved]. For further guidance,see § 1.1441–6T(b)(2)(i).

* * * * *(iv) [Reserved]. For further guidance,

see § 1.1441–6T(b)(2)(iv).* * * * *(c)(1) [Reserved]. For further guid-

ance, see § 1.1441–6T(c)(1).* * * * *(i) * * *(3) [Reserved]. For further guidance,

see § 1.1441–6T(i)(3).Par. 13. Section 1.1441–6T is added to

read as follows:

§ 1.1441–6T Claim of reducedwithholding under an income tax treaty(temporary).

(a) In general. The rate of withholdingon a payment of income subject to with-holding may be reduced to the extent pro-vided under an income tax treaty in effect


between the United States and a foreigncountry. Most benefits under income taxtreaties are to foreign persons who residein the treaty country. In some cases, ben-efits are available under an income taxtreaty to U.S. citizens or U.S. residents orto residents of a third country. See para-graph (b)(5) of this section for claims ofbenefits by U.S. persons. If the require-ments of this section are met, the amountwithheld from the payment may be re-duced at source to account for the treatybenefit. See, however, § 1.1471–2(a) and§ 1.1472–1(b) for when withholding atsource on a withholdable payment maynot be reduced to account for a treatybenefit and the beneficial owner of thepayment may need to file a claim forrefund to obtain a refund for the overwith-held amount of tax. See also § 1.1441–4(b)(2) for rules regarding claims of re-duced rate of withholding under anincome tax treaty in the case of compen-sation from personal services.

(b) Reliance on claim of reduced with-holding under an income tax treaty—(1)In general. The withholding imposed un-der section 1441, 1442, or 1443 on anypayment to a foreign person is eligible forreduction under the terms of an incometax treaty only to the extent that suchpayment is treated as derived by a residentof an applicable treaty jurisdiction, suchresident is a beneficial owner, and allother requirements for benefits under thetreaty are satisfied. See section 894 andthe regulations under section 894 to deter-mine whether a resident of a treaty coun-try derives the income. Absent actualknowledge or reason to know otherwise, awithholding agent may rely on a claimthat a beneficial owner is entitled to areduced rate of withholding based upon anincome tax treaty if, prior to the payment,the withholding agent can reliably associ-ate the payment with a beneficial ownerwithholding certificate, as described in§ 1.1441–1(e)(2), that contains the infor-mation necessary to support the claim, or,in the case of a payment of income de-scribed in paragraph (c)(2) of this sectionmade outside the United States with re-spect to an offshore obligation, documen-tary evidence described in paragraphs(c)(3), (c)(4), and (c)(5) of this section.See § 1.6049–5(e) for the definition ofpayments made outside the United States

and § 1.6049–5(c)(1) for the definition ofan offshore obligation. For purposes ofthis paragraph (b)(1), a beneficial ownerwithholding certificate described in§ 1.1441–1(e)(2)(i) contains informationnecessary to support the claim for a treatybenefit only if it includes the beneficialowner’s taxpayer identifying number (ex-cept as otherwise provided in paragraph(c)(1) and (g) of this section, or the ben-eficial owner provides its foreign tax iden-tifying number issued by its country ofresidence and such country has with theUnited States an income tax treaty or in-formation exchange agreement in effect)and the representations that the beneficialowner derives the income under section894 and the regulations under section 894,if required, and meets the limitation onbenefits provisions of the treaty, if any.The withholding certificate must also con-tain any other representations required bythis section and any other information,certifications, or statements as may be re-quired by the form or accompanying in-structions in addition to, or in place of, theinformation and certifications described inthis section. Absent actual knowledge orreason to know that the claims are incor-rect (applying the standards of knowledgein § 1.1441–7(b)), a withholding agentmay rely on the claims made on a with-holding certificate or on documentary ev-idence. A withholding agent may also relyon the information contained in a with-holding statement provided under§ § 1.1441–1(e)(3)(iv) and 1.1441–5(c)(3)(iv) and (e)(5)(iv) to determinewhether the appropriate statements re-garding section 894 and limitation on ben-efits have been provided in connectionwith documentary evidence. The InternalRevenue Service (IRS) may apply the pro-visions of § 1.1441–1(e)(1)(ii)(B) to no-tify the withholding agent that the certif-icate cannot be relied upon to grantbenefits under an income tax treaty. See§ 1.1441–1(e)(4)(viii) regarding relianceon a withholding certificate by a withhold-ing agent. The provisions of § 1.1441–1(b)(3)(iv) dealing with a 90-day graceperiod shall apply for purposes of thissection.

(2) Payment to fiscally transparent en-tity—(i) In general. If the person claiminga reduced rate of withholding under anincome tax treaty is an interest holder of

an entity that is considered to be fiscallytransparent (as defined in the regulationsunder section 894) by the interest holder’sjurisdiction with respect to an item of in-come, then, with respect to such incomederived by that person through the entity,the entity shall be treated as a flow-through entity and may provide a flow-through withholding certificate withwhich the withholding certificate or otherdocumentary evidence of the interestholder that supports the claim for treatybenefits is associated. In the case of apayment that is a withholdable payment,see, however, § 1.1471–3(c) for determin-ing the payee of the payment and§§ 1.1471–2(a) and 1472–1(b) for whenwithholding at source may apply to thepayment based on the status of the payeenotwithstanding a claim for treaty benefitsmade under this paragraph (b)(2) by aninterest holder in the payee. In such acase, the interest holder may file a claimfor refund of the overwithheld amount oftax. For purposes of this paragraph(b)(2)(i), interest holders do not includeany direct or indirect interest holders thatare themselves treated as fiscally transpar-ent entities with respect to that income bythe interest holder’s jurisdiction. See§ 1.1441–1(c)(23) and (e)(3)(i) for thedefinition of flow-through entity and flow-through withholding certificate. The entitymay provide a beneficial owner withhold-ing certificate, or beneficial owner docu-mentation, with respect to any remainingportion of the income to the extent theentity is receiving income and is nottreated as fiscally transparent by its ownjurisdiction. Further, the entity may claima reduced rate of withholding with respectto the portion of a payment for which it isnot treated as fiscally transparent if itmeets all the requirements to make such aclaim and, in the case of treaty benefits, itprovides the documentation required byparagraph (b)(1) of this section. If dualclaims, as described in paragraph(b)(2)(iii) of this section, are made, mul-tiple withholding certificates may have tobe furnished. Multiple withholding certif-icates may also have to be furnished if theentity receives income for which a reduc-tion of withholding is claimed under aprovision of the Internal Revenue Code(e.g., portfolio interest) and income for


which a reduction of withholding isclaimed under an income tax treaty.

(ii) and (iii) [Reserved]. For furtherguidance, see § 1.1441–6(b)(2)(ii) and(iii).

(iv) Examples. The following examplesillustrate the rules of paragraph (b)(2) ofthis section. Each of the following exam-ples describes a payment of U.S. sourceroyalties, which are not withholdable pay-ments under chapter 4. See § 1.1473–1(a)(4)(iii) (describing nonfinancial pay-ments that are not treated as withholdablepayments). Thus, withholding under chap-ter 4 shall not apply with respect to theU.S. source royalties in any of the follow-ing examples:

Example 1. (i) Facts. Entity E is a businessorganization formed under the laws of country Y.Country Y has an income tax treaty with the UnitedStates. The treaty contains a limitation on benefitsprovision. E receives U.S. source royalties fromwithholding agent W and claims a reduced rate ofwithholding under the U.S.-Y tax treaty on its ownbehalf (rather than on behalf of its interest holders).E furnishes a beneficial owner withholding certifi-cate described in paragraph (b)(1) of this section thatrepresents that E is a resident of country Y (withinthe meaning of the U.S.-Y tax treaty), is the benefi-cial owner of the income, derives the income undersection 894 and the regulations under section 894,and is not precluded from claiming benefits by thetreaty’s limitation on benefits provision.

(ii) Analysis. Absent actual knowledge or reasonto know otherwise, W may rely on the representa-tions made by E to apply a reduced rate of withhold-ing.

Example 2. (i) Facts. The facts are the same asunder Example 1, except that one of E’s interestholders, H, is an entity organized in country Z. TheU.S.-Z tax treaty reduces the rate on royalties to zerowhereas the rate on royalties under the U.S.-Y taxtreaty applicable to E is 5%. H is not fiscally trans-parent under country Z’s tax law with respect to suchincome. H furnishes a beneficial owner withholdingcertificate to E that represents that H derives, withinthe meaning of section 894 and the regulations undersection 894, its share of the royalty income paid to Eas a resident of country Z, is the beneficial owner ofthe royalty income, and is not precluded from claim-ing treaty benefits by virtue of the limitation onbenefits provision in the U.S.-Z treaty. E furnishes toW a flow-through withholding certificate describedin § 1.1441–1(e)(3)(i) to which it attaches H’s ben-eficial owner withholding certificate and a withhold-ing statement for the portion of the payment that Hclaims as its distributive share of the royalty income.E also furnishes to W a beneficial owner withholdingcertificate for itself for the portion of the paymentthat H does not claim as its distributive share.

(ii) Analysis. Absent actual knowledge or reasonto know otherwise, W may rely on the documenta-tion furnished by E to treat the royalty payment to asingle foreign entity (E) as derived by different res-idents of tax treaty countries as a result of the claims

presented under different treaties. W may, at itsoption, grant dual treatment, that is, a reduced rate ofzero percent under the U.S.-Z treaty on the portion ofthe royalty payment that H claims to derive as aresident of country Z and a reduced rate of 5% underthe U.S.-Y treaty for the balance. However, underparagraph (b)(2)(iii) of this section, W may, at itsoption, treat E as the only relevant person derivingthe royalty and grant benefits under the U.S.-Y treatyonly.

Example 3. (i) Facts. E is a business organizationformed under the laws of country X. Country X hasan income tax treaty with the United States. E hastwo interest holders, H1, organized in country Y, andH2, organized in country Z. E receives from W, aU.S. withholding agent, a payment of U.S. sourceroyalties and interest, with respect to an obligationissued before July 1, 2014, that is eligible for theportfolio interest exception under sections 871(h)and 881(c), provided W receives the appropriatebeneficial owner statement required under section871(h)(5). E is classified as a corporation under U.S.tax law principles. Country X, E’s country of orga-nization, treats E as an entity that is not fiscallytransparent with respect to items of income under theregulations under section 894. Under the U.S.-Xincome tax treaty, royalties are subject to a 5% rateof withholding. Country Y, H1’s country of organi-zation, treats E as fiscally transparent with respect toitems of income under section 894 and H1 as notfiscally transparent with respect to items of income.Under the country Y-U.S. income tax treaty, royal-ties are exempt from U.S. tax. Country Z, H2’scountry of organization, treats E as not fiscally trans-parent under section 894 with respect to items ofincome. E provides W with a flow-through beneficialowner withholding certificate with which it associ-ates a beneficial owner withholding certificate fromH1. H1’s withholding certificate states that H1 is aresident of country Y, derives the royalty incomeunder section 894, meets the applicable limitationson benefits provisions of the U.S.-Y treaty, and is thebeneficial owner of the income. The withholdingstatement attached to E’s flow-through withholdingcertificate allocates one-half of the royalty paymentto H1. E also provides W with a beneficial ownerwithholding certificate for the interest income andthe remaining one-half of the royalty income. Thewithholding certificate states that E is a resident ofcountry X, derives the royalty income under section894, meets the limitation on benefits provisions ofthe U.S.-X treaty, and is the beneficial owner of theincome.

(ii) Analysis. Absent actual knowledge or reasonto know that the claims are incorrect, W may treatone-half of the royalty derived by E as subject to a5% withholding rate and one-half of the royalty asderived by H1 and subject to no withholding. Fur-ther, it may treat all of the interest as being paid to Eand as qualifying for the portfolio interest exception.W can, at its option, treat the entire royalty as paid toE and subject it to withholding at a 5% rate ofwithholding. In that case, H1 would be entitled toclaim a refund with respect to its one-half of theroyalty.

(3) and (4) [Reserved]. For furtherguidance, see § 1.1441–6(b)(3) and (4).

(c) Exemption from requirement to fur-nish a taxpayer identifying number andspecial documentary evidence rules forcertain income—(1) General rule. In thecase of income described in paragraph(c)(2) of this section, a withholding agentmay rely on a beneficial owner withhold-ing certificate described in paragraph(b)(1) of this section without regard to therequirement that the withholding certifi-cate include the beneficial owner’s tax-payer identifying number. In the case of apayment of income not described in para-graph (c)(2) of this section, a withholdingagent may rely on a withholding certifi-cate that includes the beneficial owner’sforeign taxpayer identifying number de-scribed in paragraph (b)(1) of this sectioninstead of the beneficial owner’s taxpayeridentifying number. In the case of pay-ments of income described in paragraph(c)(2) of this section made outside theUnited States (as defined in § 1.6049–5(e)) with respect to an offshore obliga-tion (as defined in § 1.6049–5(c)(1)), awithholding agent may, as an alternativeto a withholding certificate described inparagraph (b)(1) of this section, rely on acertificate of residence described in para-graph (c)(3) of this section or documen-tary evidence described in paragraph(c)(4) of this section, relating to the ben-eficial owner, that the withholding agenthas reviewed and maintains in its recordsin accordance with § 1.1441–1(e)(4)(iii).In the case of a payment to a person otherthan an individual, the certificate of resi-dence or documentary evidence must beaccompanied by the statements describedin paragraphs (c)(5)(i) and (ii) of this sec-tion regarding limitation on benefits andwhether the amount paid is derived bysuch person or by one of its interest hold-ers. The withholding agent maintains thereviewed documents by retaining the orig-inal, certified copy, or photocopy (micro-fiche, electronic scan, or similar means ofelectronic storage) of such documents.With respect to documentary evidence,the withholding agent must also note in itsrecords the date on which the documentswere received and reviewed. This para-graph (c)(1) shall not apply to amountsthat are exempt from withholding basedon a claim that the income is effectivelyconnected with the conduct of a trade orbusiness in the United States.


(2) through (i)(2) [Reserved]. For fur-ther guidance, see § 1.1441–6(c)(2)through (i)(2)

(i)(3) Effective/applicability dates.This section applies to payments madeafter June 30, 2014. (For payments madeafter December 31, 2000 (except for pay-ments to which paragraph (g) of this sec-tion applies, in which case substitute De-cember 31, 2001 for December 31, 2000),and before July 1, 2014, see this section asin effect and contained in 26 CFR part 1revised April 1, 2013.)


Par. 14. Section 1.1441–7 is amendedby revising paragraphs (b), (c), and(f)(2)(ii) and adding paragraph (h) to readas follows:

§ 1.1441–7 General provisions relatingto withholding agents.

* * * * *(b) [Reserved]. For further guidance,

see § 1.1441–7T(b).(c) [Reserved]. For further guidance,

see § 1.1441–7T(c).* * * * *(f) * * *(2) * * *(ii) [Reserved]. For further guidance,

see § 1.1441–7T(f)(2)(ii).* * * * *(h) [Reserved]. For further guidance,


read as follows:

§ 1.1441–7T General provisions relatingto withholding agents (temporary).


(b) Standards of knowledge—(1) Ingeneral. A withholding agent must with-hold at the full 30-percent rate under sec-tion 1441, 1442, or 1443(a) or at the full4-percent rate under section 1443(b) if ithas actual knowledge or reason to knowthat a claim of U.S. status or of a reducedrate of withholding under section 1441,1442, or 1443 is unreliable or incorrect. Awithholding agent shall be liable for tax,interest, and penalties to the extent pro-vided under sections 1461 and 1463 andthe regulations under those sections if it

fails to withhold the correct amount de-spite its actual knowledge or reason toknow the amount required to be withheld.For purposes of the regulations under sec-tions 1441, 1442, and 1443, a withholdingagent may rely on information or certifi-cations contained in, or associated with, awithholding certificate or other documen-tation furnished by or for a beneficialowner or payee unless the withholdingagent has actual knowledge or reason toknow that the information or certificationsare incorrect or unreliable and, if based onsuch knowledge or reason to know, itshould withhold (under chapter 3 of theCode or another withholding provision ofthe Code) an amount greater than wouldbe the case if it relied on the informationor certifications, or it should report (underchapter 3 of the Code or under anotherprovision of the Code) an amount thatwould not otherwise be reportable if itrelied on the information or certifications.See § 1.1441–1(e)(4)(viii) for applicablereliance rules. A withholding agent thathas received notification by the InternalRevenue Service (IRS) that a claim ofU.S. status or of a reduced rate is incorrecthas actual knowledge beginning on thedate that is 30 calendar days after the datethe notice is received. A withholdingagent that fails to act in accordance withthe presumptions set forth in § § 1.1441–1(b)(3), 1.1441–4(a), 1.1441–5 (d) and(e), or 1.1441–9(b)(3) may also be liablefor tax, interest, and penalties. See§ 1.1441–1(b)(3)(ix) and (7). In the caseof a withholding agent making a with-holdable payment to a payee that the with-holding agent is required to treat as aforeign entity, see § 1.1471–3(e) for stan-dards of knowledge and § § 1.1471–2 and1.1472–1(b) for withholding that may ap-ply under chapter 4.

(2) Reason to know. A withholdingagent shall be considered to have reasonto know if its knowledge of relevant factsor of statements contained in the with-holding certificates or other documenta-tion is such that a reasonably prudent per-son in the position of the withholdingagent would question the chapter 3 claimsmade. For an obligation that is a preexist-ing obligation, a withholding agent willhave reason to know that a chapter 3 claimmade by the holder of the obligation (ac-count holder) is unreliable or incorrect if

any information contained in its accountopening files or other files pertaining tothe obligation (account information), in-cluding documentation collected for pur-poses of AML due diligence (as definedunder § 1.1471–1(b)(4)), conflicts withthe account holder’s claim. A withholdingagent will not, however, be considered tohave reason to know that a person’s chap-ter 3 claim is unreliable or incorrect basedon documentation collected for AML duediligence until the date that is 30 daysafter the obligation is executed (or theaccount is opened for an obligation that isan account with a financial institution).

(3) Financial institutions—limits onreason to know—(i) In general. For pur-poses of this paragraph (b)(3) and para-graphs (b)(4) through (10) of this section,the terms withholding certificate, docu-mentary evidence, and documentation aredefined in § 1.1441–1(c)(16), (17) and(18). Except as otherwise provided inparagraphs (b)(4) through (9) of this sec-tion, a withholding agent that is an FFIunder § 1.1471–5(e), an insurance com-pany (without regard to whether suchcompany is a specified insurance com-pany), or a broker or dealer in securitiesthat maintains an account for a beneficialowner (a direct account holder) has reasonto know that documentation provided bythe direct account holder is unreliable orincorrect only if one or more of the cir-cumstances described in paragraphs (b)(4)through (9) of this section exist. If a directaccount holder has provided documenta-tion that is unreliable or incorrect underthe rules of paragraph (b)(4) through (9)of this section, the withholding agent mayrequire new documentation. Alternatively,the withholding agent may rely on thedocumentation originally provided if therules of paragraphs (b)(4) through (9) ofthis section permit such reliance based onadditional statements and documentationobtained by the withholding agent fromthe beneficial owner. Paragraph (b)(10) ofthis section provides rules regarding rea-son to know for withholding agents thatreceive beneficial owner documentationfrom persons (indirect account holders)that have an account relationship with, oran ownership interest in, a direct accountholder of the withholding agent. Para-graph (b)(11) of this section provides lim-itations on a withholding agent’s reason to


know for multiple obligations held by thesame person. Paragraph (b)(12) of thissection defines a reasonable explanationprovided by an individual with respect tothe individual’s claim of foreign status.For rules regarding reliance on FormW–9, see § 31.3406(g)–3(e)(2) of thischapter. For payments that are withhold-able payments, see § 1.1471–3(e)(3) and(4) for additional rules regarding a with-holding agent’s reason to know with re-spect to a payee’s claim of chapter 4 statusand § 1.1471–3(f) for presumption rulesthat apply when the claim of chapter 4status is unreliable or incorrect.

(ii) Limits on reason to know for pre-existing obligations. With respect to a pre-existing obligation, a withholding agentthat has documented the foreign status ofthe direct account holder for purposes ofchapter 3 or chapter 61 before July 1,2014 may continue to rely on such docu-mentation. If, however, the withholdingagent reviews documentation for an indi-vidual account holder claiming foreignstatus that contains a U.S. place of birth(as described in paragraph (b)(5)(ii) ofthis section) or if the withholding agent isnotified of a change in circumstances un-der the criteria of paragraphs (b)(5) and(8) of this section (as effective on July 1,2014), the obligation will be treated ashaving experienced a change in circum-stances under § 1.1441–1(e)(4)(ii)(D) asof the date that the withholding agent re-views the documentation or receives thenotification, and the withholding agentwill then have reason to know that thedocumentation is unreliable or incorrect.See § 1.1441–1(b)(3)(iv) for the grace pe-riod following a changes in circum-stances.

(4) Rules applicable to withholdingcertificates—(i) In general. A withhold-ing agent has reason to know that a ben-eficial owner withholding certificate pro-vided by a direct account holder isunreliable or incorrect if the withholdingcertificate is incomplete with respect toany item on the certificate that is relevantto the claims made by the direct accountholder, the withholding certificate con-tains any information that is inconsistentwith the direct account holder’s claim, thewithholding agent has account informa-tion that is inconsistent with the directaccount holder’s claim, or the withholding

certificate lacks information necessary toestablish entitlement to a reduced rate ofwithholding. For purposes of establishinga direct account holder’s status as a for-eign person or resident of a treaty countrya withholding certificate shall be consid-ered unreliable or inconsistent with an ac-count holder’s claims only if it is notreliable under the rules of paragraphs(b)(5) and (6) of this section. A withhold-ing agent that relies on an agent to reviewand maintain a withholding certificate isconsidered to know or have reason toknow the facts within the knowledge ofthe agent.

(ii) Examples. The rules of paragraph(b)(4) of this section are illustrated by thefollowing examples:

Example 1. F, a foreign person that has a directaccount relationship with USB, a bank that is a U.S.person, provides USB with a beneficial owner with-holding certificate for the purpose of claiming areduced rate of withholding on U.S. source divi-dends (which is a withholdable payment). F residesin a treaty country that has a limitation on benefitsprovision in its income tax treaty with the UnitedStates. The withholding certificate includes a certi-fication of F’s status for chapter 4 purposes to exceptthe payment from withholding under chapter 4, butdoes not contain a statement regarding limitations onbenefits or deriving the income under section 894 asrequired by § 1.1441–6(b)(1). USB cannot rely onthe withholding certificate to grant a reduced rate ofwithholding for chapter 3 purposes because it isincomplete with respect to the claim made by F.

Example 2. F, a foreign person and entity that hasa direct account relationship with USB, a broker thatis a U.S. person, provides USB with a withholdingcertificate for the purpose of claiming the portfoliointerest exception under section 881(c) with respectto interest paid on an obligation issued before July 1,2014. The payment of interest is not a withholdablepayment under § 1.1471–2(b) (referring to paymentsmade with respect to grandfathered obligations),and, therefore, withholding does not apply to thepayment under chapter 4. See § 1.1441–3(c)(4)(i) forrules coordinating withholding under chapters 3 and4. F indicates on its withholding certificate, however,that it is a partnership. USB may not treat F as abeneficial owner of the interest for purposes of theportfolio interest exception because F has indicatedon its withholding certificate that it is a foreignpartnership, and such entity classification is incon-sistent with its claim as a beneficial owner.

(5) Withholding certificate—establish-ment of foreign status. A withholdingagent has reason to know that a beneficialowner withholding certificate (as definedin § 1.1441–1(e)(2)) provided by a directaccount holder is unreliable or incorrectfor purposes of establishing the accountholder’s status as a foreign person as set

forth in paragraphs (b)(5)(i) through (iii)of this section.

(i) Classification of U.S. status, U.S.address, or U.S. telephone number. Awithholding certificate is unreliable or in-correct if the withholding agent has clas-sified the person as a U.S. person in itsaccount information, the withholding cer-tificate has a current permanent residenceaddress (as defined in § 1.1441–1(e)(2)(ii)) in the United States, the with-holding certificate has a current mailingaddress in the United States, the withhold-ing agent has a current residence or mail-ing address as part of its account informa-tion that is an address in the United States,or the direct account holder notifies thewithholding agent of a new residence ormailing address in the United States(whether or not provided on a withholdingcertificate). A withholding agent also hasreason to know that a withholding certif-icate provided by a person is unreliable orincorrect if the withholding agent has acurrent telephone number for the accountholder in the United States and has notelephone number for the account holderoutside of the United States. When any ofthe foregoing indicia are present (U.S. in-dicia), a withholding agent may neverthe-less rely on the beneficial owner withhold-ing certificate to establish the accountholder’s foreign status if it may do sounder the provisions of paragraph(b)(5)(i)(A) or (B) of this section.

(A) A withholding agent may treat adirect account holder as a foreign personif the beneficial owner withholding certif-icate has been provided by an individualand—

(1) The withholding agent has in itspossession or obtains documentary evi-dence establishing foreign status (as de-scribed in § 1.1471–3(c)(5)(i)) that doesnot contain a U.S. address and the indi-vidual provides the withholding agentwith a reasonable explanation, in writing,supporting the claim of foreign status (asdefined in paragraph (b)(12) of this sec-tion);

(2) For a payment made outside theU.S. with respect to an offshore obligation(as described in § 1.6049–5(c)(1)), thewithholding agent has in its possession orobtains documentary evidence establish-ing foreign status (as described in


§ 1.1471–3(c)(5)(i)), that does not containa U.S. address;

(3) For a payment made with respect toan offshore obligation (with offshore ob-ligation defined as in § 1.6049–5(c)(1)), the withholding agent classifiesthe individual as a resident of the countryin which the obligation is maintained, thewithholding agent is required to report apayment made to the individual annuallyon a tax information statement that is filedwith the tax authority of the country inwhich the office is located as part of thatcountry’s resident reporting requirements,and that country has a tax informationexchange agreement or income tax treatyin effect with the United States; or

(4) For a case in which the withholdingagent classified the account holder as aU.S. person in its account information, thewithholding agent has in its possession orobtains documentary evidence describedin § 1.1471–3(c)(5)(i)(B) evidencing citi-zenship in a country other than the UnitedStates.

(B) A withholding agent may treat adirect account holder as a foreign personif the beneficial owner withholding certif-icate has been provided by an entity thatthe withholding agent does not know, ordoes not have reason to know, is a flow-through entity and—

(1) The withholding agent has in itspossession or obtains documentation es-tablishing foreign status (as described in§ 1.1471–3(c)(5)(i) and as applicable toentities) that substantiates that the entity isactually organized or created under thelaws of a foreign country; or

(2) For a payment made with respect toan offshore obligation (with offshore ob-ligation defined as in § 1.6049–5(c)(1)),the withholding agent classifies the entityas a resident of the country in which theaccount is maintained, the withholdingagent is required to report a paymentmade to the entity annually on a tax in-formation statement that is filed with thetax authority of the country in which theoffice is located as part of that country’sresident reporting requirements, and thatcountry has a tax information exchangeagreement or income tax treaty in effectwith the United States.

(ii) U.S. place of birth. A withholdingagent has reason to know that a withhold-ing certificate claiming foreign status pro-

vided by a direct account holder that is anindividual is unreliable or incorrect if thewithholding agent has, either on accom-panying documentation or as part of itsaccount information, an unambiguous in-dication of a place of birth for the indi-vidual in the United States. A withholdingagent may treat the individual as a foreignperson, notwithstanding the U.S. place ofbirth, if the withholding agent has in itspossession or obtains documentary evi-dence described in § 1.1471–3(c)(5)(i)(B)evidencing citizenship in a country otherthan the United States and either a copy ofthe individual’s Certificate of Loss of Na-tionality of the United States or a reason-able written explanation of the accountholder’s renunciation of U.S. citizenshipor the reason the account holder did notobtain U.S. citizenship at birth.

(iii) Standing instructions with respectto offshore obligations. A beneficialowner withholding certificate is unreliableor incorrect if it is provided with respectto an offshore obligation (as defined in§ 1.6049–5(c)(1)) of a direct accountholder that has provided standing instruc-tions to pay amounts to an address or anaccount maintained in the United States.The withholding agent may treat the ac-count holder as a foreign person, however,if the account holder provides either areasonable explanation in writing thatsupports its foreign status or documentaryevidence establishing foreign status de-scribed in § 1.1471–3(c)(5)(i).

(6) Withholding certificate—claim ofreduced rate of withholding under treaty.A withholding agent has reason to knowthat a withholding certificate (other thanForm W–9) provided by a direct accountholder is unreliable or incorrect for pur-poses of establishing that the accountholder is a resident of a country withwhich the United States has an income taxtreaty if it is described in paragraphs(b)(6)(i) through (iii) of this section.

(i) Permanent residence address. Abeneficial owner withholding certificate isunreliable or incorrect if the permanentresidence address on the beneficial ownerwithholding certificate is not in the coun-try whose treaty is invoked, or the directaccount holder notifies the withholdingagent of a new permanent residence ad-dress that is not in the treaty country. Awithholding agent may, however, treat a

direct account holder as entitled to a re-duced rate of withholding under an in-come tax treaty if the account holder pro-vides a reasonable explanation for thepermanent residence address outside thetreaty country (e.g., the address is the ad-dress of a branch of the beneficial ownerlocated outside the treaty country in whichthe entity is a resident) or the withholdingagent has in its possession or obtains doc-umentary evidence described in § 1.1471–3(c)(5)(i) that establishes residency in atreaty country.

(ii) Mailing address. A beneficialowner withholding certificate is unreliableor incorrect if the permanent residenceaddress on the withholding certificate is inthe applicable treaty country but the with-holding certificate contains a mailing ad-dress outside the treaty country or thewithholding agent has a current mailingaddress as part of its account informationfor the direct account holder that is out-side the treaty country. A mailing addressthat is a P.O. Box, in-care-of address, oraddress at a financial institution (if thefinancial institution is not a beneficialowner) shall not preclude a withholdingagent from treating the account holder as aresident of a treaty country if such addressis in the treaty country. If a withholdingagent has a mailing address (whether ornot contained on the withholding certifi-cate) outside the applicable treaty country,the withholding agent may neverthelesstreat a direct account holder as a residentof an applicable treaty country if—

(A) The withholding agent has in itspossession or obtains documentary evi-dence described in § 1.1471–3(c)(5)(i)supporting the account holder’s claim ofresidence in the applicable treaty country(and the additional documentation doesnot contain an address outside the treatycountry);

(B) The withholding agent has in itspossession, or obtains, documentation thatestablishes that the direct account holderis an entity organized in a treaty country(or an entity managed and controlled in atreaty country, if the applicable treaty sorequires);

(C) The withholding agent knows thatthe address outside the applicable treatycountry (other than a P.O. box, or in-care-of address) is a branch of the account


holder that is an entity that is a resident ofthe applicable treaty country; or

(D) The withholding agent obtains awritten statement from the direct accountholder that reasonably establishes entitle-ment to treaty benefits.

(iii) Standing instructions. A beneficialowner withholding certificate is unreliableor incorrect to establish entitlement to areduced rate of withholding under an in-come tax treaty if the direct accountholder has standing instructions to payamounts directing the withholding agentto pay amounts from its account to anaddress or an account outside the treatycountry unless the account holder pro-vides a reasonable explanation, in writing,or the withholding agent has in its posses-sion or obtains documentary evidence de-scribed in § 1.1471–3(c)(5)(i) establishingthe account holder’s residence in the ap-plicable treaty country.

(7) Documentary evidence. A with-holding agent shall not treat documentaryevidence provided by a direct accountholder as valid if the documentary evi-dence does not reasonably establish theidentity of the person presenting the doc-umentary evidence. For example, docu-mentary evidence is not valid if it is pro-vided in person by a direct account holderthat is a natural person and the photographor signature on the documentary evidence,if any, does not match the appearance orsignature of the person presenting the doc-ument. A withholding agent shall not relyon documentary evidence to reduce therate of withholding that would otherwiseapply under the presumption rules of§ § 1.1441–1(b)(3), 1.1441–5(d) and(e)(6), and 1.6049–5(d) if the documen-tary evidence contains information that isinconsistent with the direct account hold-er’s claim of a reduced rate of withhold-ing, the withholding agent has other ac-count information that is inconsistent withthe direct account holder’s claim, or thedocumentary evidence lacks informationnecessary to establish entitlement to a re-duced rate of withholding. For example, ifa direct account holder provides docu-mentary evidence to claim treaty benefitsand the documentary evidence establishesthe direct account holder’s status as a for-eign person and a resident of a treatycountry, but the account holder fails toprovide the treaty statements required by

§ 1.1441–6(c)(5), the documentary evi-dence does not establish the direct accountholder’s entitlement to a reduced rate ofwithholding. For purposes of establishinga direct account holder’s status as a for-eign person or resident of a country withwhich the United States has an income taxtreaty, documentary evidence shall beconsidered unreliable or incorrect only ifit is not reliable under the rules of para-graph (b)(8) and (9) of this section.

(8) Documentary evidence—establish-ment of foreign status. A withholdingagent has reason to know that documen-tary evidence is unreliable or incorrect forpurposes of establishing the direct accountholder’s status as a foreign person if thedocumentary evidence is described inparagraphs (b)(8)(i), (ii), (iii), or (iv) ofthis section.

(i) Documentary evidence receivedprior to January 1, 2001. A withholdingagent shall not treat documentary evi-dence provided by a direct account holderbefore January 1, 2001, as valid for pur-poses of establishing the account holder’sstatus as a foreign person if it has actualknowledge that the account holder is aU.S. person or if it has a mailing or resi-dence address for the account holder inthe United States. If a withholding agenthas an address for the direct accountholder in the United States, the withhold-ing agent may nevertheless treat the ac-count holder as a foreign person if it canso treat the account holder under the rulesof paragraph (b)(8)(ii) of this section. See,however, paragraph (b)(3)(ii) of this sec-tion regarding changes in circumstanceswith respect to preexisting obligations.

(ii) Documentary evidence received af-ter December 31, 2000. A withholdingagent shall not treat documentary evi-dence provided by an account holder afterDecember 31, 2000, as valid for purposesof establishing the direct account holder’sforeign status if the withholding agentdoes not have a permanent residence ad-dress for the account holder. Documentaryevidence is also unreliable or incorrect toestablish a direct account holder’s statusas a foreign person if the withholdingagent has classified the account holder asa U.S. person in its account information, ifthe withholding agent has a current mail-ing or permanent residence address(whether or not on the documentation) for

the direct account holder in the UnitedStates, the direct account holder notifiesthe withholding agent of a new residenceor mailing address in the United States, orif the withholding agent has a current tele-phone number for the account holder inthe United States and has no telephonenumber for the account holder outside ofthe United States. Notwithstanding theforegoing, a withholding agent may relyon documentary evidence as establishingthe direct account holder’s foreign statusif it may do so under the provisions ofparagraph (b)(8)(ii)(A) or (B) of this sec-tion.

(A) Treatment of individual’s foreignstatus. A withholding agent may treat adirect account holder that is an individualas a foreign person even if it has any ofthe U.S. indicia described in paragraph(b)(8)(ii) of this section for the accountholder if—

(1) The withholding agent has in itspossession or obtains additional documen-tary evidence supporting the claim of for-eign status (described in § 1.1471–3(c)(5)(i)) that does not contain a U.S.address and a reasonable explanation inwriting supporting the account holder’sforeign status;

(2) The withholding agent obtains avalid beneficial owner withholding certif-icate on Form W–8 and the Form W–8contains a permanent residence addressoutside the United States and a mailingaddress outside the United States (or if amailing address is inside the United Statesthe account holder provides a reasonableexplanation in writing supporting the ac-count holder’s foreign status); or

(3) For a payment made with respect toan offshore obligation (with offshore ob-ligation defined as in § 1.6049–5(c)(1)),the withholding agent classifies the indi-vidual as a resident of the country inwhich the obligation is maintained, thewithholding agent is required to report apayment made to the individual annuallyon a tax information statement that is filedwith the tax authority of the country inwhich the office is located as part of thatcountry’s resident reporting requirements,and that country has a tax informationexchange agreement or income tax treatyin effect with the United States.

(B) Presumption of entity’s foreign sta-tus. A withholding agent may treat a direct


account holder that is an entity (other thana flow-through entity) as a foreign personeven if it has any of the U.S. indiciadescribed in paragraph (b)(8)(ii) of thissection for the account holder in theUnited States if—

(1) The withholding agent has in itspossession or obtains documentary evi-dence establishing foreign status (as de-scribed in § 1.1471–3(c)(5)(i)) that sub-stantiates that the entity is actuallyorganized or created under the laws of aforeign country;

(2) The withholding agent obtains avalid beneficial owner withholding certif-icate on Form W–8 and the Form W–8contains a permanent residence addressoutside the United States and a mailingaddress outside the United States (or if amailing address is inside the United Statesthe account holder provides additionaldocumentary evidence sufficient to estab-lish the account holder’s foreign status);or

(3) For a payment made with respect toan offshore obligation (with offshore ob-ligation defined as in § 1.6049–5(c)(1)),the withholding agent classifies the entityas a resident of the country in which theaccount is maintained, the withholdingagent is required to report a paymentmade to the entity annually on a tax in-formation statement that is filed with thetax authority of the country in which theoffice is located as part of that country’sresident reporting requirements, and thatcountry has a tax information exchangeagreement or income tax treaty in effectwith the United States.

(iii) U.S. place of birth. A withholdingagent has reason to know that documen-tary evidence provided by a direct accountholder to support an individual’s foreignstatus is unreliable or incorrect if the with-holding agent has, either on the documen-tary evidence or as part of its accountinformation, an unambiguous place ofbirth for the individual in the UnitedStates. A withholding agent may treat theindividual as a foreign person, notwith-standing the U.S. birth place, if the with-holding agent has in its possession or ob-tains documentary evidence described in§ 1.1471–3(c)(5)(i)(B) evidencing citizen-ship in a country other than the UnitedStates and a copy of the individual’s Cer-tificate of Loss of Nationality of the

United States. Alternatively, a withhold-ing agent may treat the individual as aforeign person if the withholding agentobtains a valid beneficial owner withhold-ing certificate on Form W–8 from theindividual that establishes the accountholder’s foreign status, documentary evi-dence described in § 1.1471–3(c)(5)(i)(B)evidencing citizenship in a country otherthan the United States, and a reasonablewritten explanation of the individual’s re-nunciation of U.S. citizenship or the rea-son the individual did not obtain U.S. cit-izenship at birth.

(iv) Standing instructions with respectto offshore obligations. Documentary ev-idence is unreliable or incorrect if it isprovided with respect to an offshore obli-gation (as defined in § 1.6049–5(c)(1)) ofa direct account holder that has providedthe withholding agent with standing in-structions to pay amounts to an address oran account maintained in the UnitedStates. The withholding agent may treatthe direct account holder as a foreign per-son, however, if the account holder pro-vides either a reasonable explanation inwriting that supports its foreign status or avalid beneficial owner withholding certif-icate claiming foreign status.

(9) Documentary evidence—claim ofreduced rate of withholding under treaty.A withholding agent has reason to knowthat documentary evidence is unreliable orincorrect for purposes of establishing thata direct account holder is a resident of acountry with which the United States hasan income tax treaty if it is described inparagraph (b)(9)(i) or (ii) of this section.

(i) Permanent residence address andmailing address. Documentary evidenceis unreliable or incorrect if the withhold-ing agent has a current mailing or currentpermanent residence address for the directaccount holder (whether or not on thedocumentary evidence) that is outside theapplicable treaty country, or the withhold-ing agent has no permanent residence ad-dress for the account holder. If a withhold-ing agent has a current mailing or currentpermanent residence address for the directaccount holder outside the applicabletreaty country, the withholding agent maynevertheless treat a direct account holderas a resident of an applicable treaty coun-try if the withholding agent—

(A) Has in its possession or obtainsadditional documentary evidence de-scribed in § 1.1471–3(c)(5)(i) supportingthe direct account holder’s claim of resi-dence in the applicable treaty country (andthe documentary evidence does not con-tain an address outside the applicabletreaty country, a P.O. box, an in-care-ofaddress, or the address of a financial in-stitution);

(B) Has in its possession or obtainsdocumentary evidence described in§ 1.1471–3(c)(5)(i) that establishes the di-rect account holder is an entity organizedin a treaty country (or an entity managedand controlled in a treaty country, if theapplicable treaty so requires); or

(C) Obtains a valid beneficial ownerwithholding certificate on Form W–8 thatcontains a permanent residence addressand a mailing address in the applicabletreaty country.

(ii) Standing instructions. Documen-tary evidence is unreliable or incorrect ifthe direct account holder has provided thewithholding agent with standing instruc-tions to pay amounts to an address or anaccount maintained outside the treatycountry unless the direct account holderprovides a reasonable explanation, in writ-ing, establishing the direct account hold-er’s residence in the applicable treatycountry, or a valid beneficial owner with-holding certificate that contains a perma-nent residence address and a mailing ad-dress in the applicable treaty country.

(10) Indirect account holders. A with-holding agent that receives documentationfrom a payee through a nonqualified in-termediary, a flow-through entity, or aU.S. branch (including a territory financialinstitution) described in § 1.1441–1(b)(2)(iv) (other than a U.S. branch orterritory financial institution that is treatedas a U.S. person) has reason to know thatthe documentation is unreliable or incor-rect if a reasonably prudent person in theposition of a withholding agent wouldquestion the claims made. This standardrequires, but is not limited to, a withhold-ing agent’s compliance with the rules ofparagraphs (b)(10)(i) through (iii).

(i) The withholding agent must reviewthe withholding statement described in§ 1.1441–1(e)(3)(iv) and may not rely oninformation in the statement to the extentthe information does not support the


claims made for any payee. For this pur-pose, a withholding agent may not treat apayee as a foreign person if an address inthe United States is provided for suchpayee and may not treat a person as aresident of a country with which theUnited States has an income tax treaty ifthe address for that person is outside theapplicable treaty country. Notwithstand-ing a U.S. address or an address outside atreaty country, the withholding agent maytreat a payee as a foreign person or aforeign person as a resident of a treatycountry if the withholding statement isaccompanied by a valid withholding cer-tificate and documentary evidence (as de-scribed in § 1.1471–3(c)(5)(i)) or a rea-sonable explanation is provided, inwriting, by the nonqualified intermediary,flow-through entity, or U.S. branch sup-porting the payee’s foreign status or theforeign person’s residency in a treatycountry.

(ii) The withholding agent must revieweach withholding certificate in accordancewith the requirements of paragraphs (b)(5)and (6) of this section and verify that theinformation on the withholding certificateis consistent with the information on thewithholding statement required under§ 1.1441–1(e)(3)(iv). If there is a discrep-ancy between the withholding certificateand the withholding statement, the with-holding agent may choose to rely on thewithholding certificate, if valid, and in-struct the nonqualified intermediary, flow-through entity, or U.S. branch to correctthe withholding statement or apply thepresumption rules of § § 1.1441–1(b),1.1441–5(d) and (e)(6), 1.6049–5(d), and1.1471–3(f) (for a withholdable paymentfor chapter 4 purposes) to the paymentallocable to the payee who provided thewithholding certificate. If the withholdingagent chooses to rely upon the withhold-ing certificate, the withholding agent isrequired to instruct the intermediary orflow-through entity to correct the with-holding statement and confirm that theintermediary or flow-through entity doesnot know or have reason to know that thewithholding certificate is unreliable or in-accurate.

(iii) The withholding agent must re-view the documentary evidence providedby the nonqualified intermediary, flow-through entity, or U.S. branch to deter-

mine that there is no obvious indicationthat the payee is a U.S. non-exempt recip-ient or that the documentary evidencedoes not establish the identity of the per-son who provided the documentation(e.g., the documentary evidence does notappear to be an identification document).

(11) Limits on reason to know for mul-tiple obligations belonging to a singleperson. A withholding agent that main-tains multiple obligations for a single per-son will have reason to know that a claimof foreign status for the person is inaccu-rate based on account information for an-other obligation held by the person only tothe extent that—

(i) The withholding agent’s computer-ized systems link the obligations by refer-ence to a data element such as client num-ber, EIN, or foreign tax identifyingnumber and consolidates the account in-formation and payment information forthe obligations; or

(ii) The withholding agent has treatedthe obligations as consolidated obligationsfor purposes of sharing documentationpursuant to § 1.1441–1(e)(4)(ix) or forpurposes of treating one or more accountsas preexisting obligations.

(12) Reasonable explanation support-ing claim of foreign status. A reasonableexplanation supporting an individual’sclaim of foreign status for purposes ofparagraphs (b)(5) and (8) of this sectionmeans a written statement prepared by theindividual or the individual’s completionof a checklist provided by the withholdingagent, stating that the individual meets therequirements of one of paragraphs(b)(12)(i) through (iv) of this section.

(i) The individual certifies that he orshe—

(A) Is a student at a U.S. educationalinstitution and holds the appropriate visa;

(B) Is a teacher, trainee, or intern at aU.S. educational institution or a partici-pant in an educational or cultural ex-change visitor program, and holds the ap-propriate visa;

(C) Is a foreign individual assigned to adiplomatic post or a position in a consul-ate, embassy, or international organizationin the United States; or

(D) Is a spouse or unmarried child un-der the age of 21 years of one of thepersons described in paragraphs(b)(12)(i)(A) through (C) of this section;

(ii) The individual provides informa-tion demonstrating that he or she has notmet the substantial presence test set forthin § 301.7701(b)–1(c) of this chapter (e.g.,a written statement indicating the numberof days present in the United States duringthe three-year period that includes the cur-rent year);

(iii) The individual certifies that he orshe meets the closer connection exceptiondescribed in § 301.7701(b)–2, states thecountry to which the individual has acloser connection, and demonstrates howthat closer connection has been estab-lished; or

(iv) With respect a payment entitled toa reduced rate of tax under a U.S. incometax treaty, the individual certifies that heor she is treated as a resident of a countryother than the United States and is nottreated as a U.S. resident or U.S. citizenfor purposes of that income tax treaty.

(13) Additional guidance. The IRSmay prescribe other circumstances forwhich a withholding certificate or docu-mentary evidence is unreliable or incor-rect in addition to the circumstances de-scribed in paragraph (b) of this section toestablish an account holder’s status as aforeign person or a beneficial owner enti-tled to a reduced rate of withholding inpublished guidance (see § 601.601(d)(2)of this chapter).

(c) Agent—(1) In general. A withhold-ing agent may authorize an agent to fulfillits obligations under chapter 3 if the re-quirements of paragraph (c)(2) of this sec-tion are satisfied. The acts of an agent of awithholding agent (including the receiptof withholding certificates, the payment ofamounts of income subject to withhold-ing, and the deposit of tax withheld) areimputed to the withholding agent onwhose behalf it is acting.

(2) Authorized agent. An agent is anauthorized agent only if—

(i) There is a written agreement be-tween the withholding agent and the for-eign person acting as agent that clearlyprovides which obligations under chapter3 that the agent is authorized to fulfill;

(ii) A Form 8655, “Reporting AgentAuthorization,” is filed with the IRS if theagent (including any sub-agent) is actingas a reporting agent for filing Form 1042or making tax deposits and payments;


(iii) Books and records and relevantpersonnel of the agent (including any sub-agent) are available to the withholdingagent (on a continuous basis, includingafter termination of the relationship) inorder to evaluate the withholding agent’scompliance with the provisions of chap-ters 3, 4, and 61 of the Code, section 3406,and the regulations under those provi-sions; and

(iv) The U.S. withholding agent re-mains fully liable for the acts of its agent(or for any sub-agent) and does not assertany of the defenses that may otherwise beavailable, including under common lawprinciples of agency in order to avoid taxliability under the Internal Revenue Code.

(3) Liability of withholding agent act-ing through an agent. An authorized agentis subject to the same withholding andreporting obligations that apply to anywithholding agent under the provisions ofchapter 3 of the Code and the regulationsthereunder. See the instructions to Form1042–S for the manner for filing the formwhen an authorized agent acts on behalfof a withholding agent. Except as other-wise provided in the QI, WP, and WTagreements, an authorized agent does notbenefit from the special procedures or ex-ceptions that may apply to a qualified in-termediary, WP, or WT. A withholdingagent acting through an authorized agentis liable for any failure of the agent, suchas failure to withhold an amount or makepayment of tax, in the same manner and tothe same extent as if the agent’s failurehad been the failure of the withholdingagent. For this purpose, the agent’s actualknowledge or reason to know shall beimputed to the withholding agent. Thewithholding agent’s liability shall exist ir-respective of the fact that the authorizedagent is also a withholding agent and isitself separately liable for failure to com-ply with the provisions of the regulationsunder section 1441, 1442, or 1443. How-ever, the same tax, interest, or penaltiesshall not be collected more than once.

(d) through (f)(2)(i) [Reserved]. Forfurther guidance, see § 1.1441–7(d) through (f)(2)(i).

(f)(2)(ii) Examples. The following ex-amples illustrate the operation of para-graph (d)(2) of this section. Each exampleassumes that withholding under chapter 4does not apply.

Example 1. (i) DS is a U.S. subsidiary of FP, acorporation organized in Country N, a country thatdoes not have an income tax treaty with the UnitedStates. FS is a special purpose subsidiary of FP thatis incorporated in Country T, a country that has anincome tax treaty with the United States that prohib-its the imposition of withholding tax on payments ofinterest. FS is capitalized with $10,000,000 in debtfrom BK, a Country N bank, and $1,000,000 incapital from FS.

(ii) On May 1, 1995, C, a U.S. person, purchasesan automobile from DS in return for an installmentnote. On July 1, 1995, DS sells a number of install-ment notes, including C’s, to FS in exchange for$10,000,000. DS continues to service the installmentnotes for FS and C is not notified of the sale of itsobligation and continues to make payments to DS.But for the withholding tax on payments of interestby DS to BK, DS would have borrowed directlyfrom BK, pledging the installment notes as collat-eral.

(iii) The C installment note is a financing trans-action, whether held by DS or by FS, and the FS noteheld by BK also is a financing transaction. After FSpurchases the installment note, and during the timethe installment note is held by FS, the transactionsconstitute a financing arrangement, within the mean-ing of § 1.881–3(a)(2)(i). BK is the financing entity,FS is the intermediate entity, and C is the financedentity. Because the participation of FS in the financ-ing arrangement reduces the tax imposed by section881 and because there was a tax avoidance plan, FSis a conduit entity.

(iv) Because C does not know or have reason toknow of the tax avoidance plan (and by extensionthat the financing arrangement is a conduit financingarrangement), C is not required to withhold tax undersection 1441. However, DS, who knows that FS’sparticipation in the financing arrangement is pursu-ant to a tax avoidance plan and is a withholdingagent for purposes of section 1441, is not relieved ofits withholding responsibilities.

Example 2. Assume the same facts as in Example1 except that C receives a new payment booklet onwhich DS is described as “agent”. Although C maydeduce that its installment note has been sold, with-out more C has no reason to know of the existence ofa financing arrangement. Accordingly, C is not liablefor failure to withhold, although DS still is not re-lieved of its withholding responsibilities.

Example 3. (i) DC is a U.S. corporation that is inthe process of negotiating a loan of $10,000,000from BK1, a bank located in Country N, a countrythat does not have an income tax treaty with theUnited States. Before the loan agreement is signed,DC’s tax lawyers point out that interest on the loanwould not be subject to withholding tax if the loanwere made by BK2, a subsidiary of BK1 that isincorporated in Country T, a country that has anincome tax treaty with the United States that prohib-its the imposition of withholding tax on payments ofinterest. BK1 makes a loan to BK2 to enable BK2 tomake the loan to DC. Without the loan from BK1 toBK2, BK2 would not have been able to make theloan to DC.

(ii) The loan from BK1 to BK2 and the loan fromBK2 to DC are both financing transactions and to-gether constitute a financing arrangement within the

meaning of § 1.881–3(a)(2)(i). BK1 is the financingentity, BK2 is the intermediate entity, and DC is thefinanced entity. Because the participation of BK2 inthe financing arrangement reduces the tax imposedby section 881 and because there is a tax avoidanceplan, BK2 is a conduit entity.

(iii) Because DC is a party to the tax avoidanceplan (and accordingly knows of its existence), DCmust withhold tax under section 1441. If DC doesnot withhold tax on its payment of interest, BK2, aparty to the plan and a withholding agent for pur-poses of section 1441, must withhold tax as requiredby section 1441.

Example 4. (i) DC is a U.S. corporation that hasa long-standing banking relationship with BK2, aU.S. subsidiary of BK1, a bank incorporated inCountry N, a country that does not have an incometax treaty with the United States. DC has borrowedamounts of as much as $75,000,000 from BK2 in thepast. On January 1, 1995, DC asks to borrow$50,000,000 from BK2. BK2 does not have thefunds available to make a loan of that size. BK2considers asking BK1 to enter into a loan with DCbut rejects this possibility because of the additionalwithholding tax that would be incurred. Accord-ingly, BK2 borrows the necessary amount from BK1with the intention of on-lending to DC. BK1 does notmake the loan directly to DC because of the with-holding tax that would apply to payments of interestfrom DC to BK1. DC does not negotiate with BK1and has no reason to know that BK1 was the sourceof the loan.

(ii) The loan from BK2 to DC and the loan fromBK1 to BK2 are both financing transactions andtogether constitute a financing arrangement withinthe meaning of § 1.881–3(a)(2)(i). BK1 is the financ-ing entity, BK2 is the intermediate entity, and DC isthe financed entity. The participation of BK2 in thefinancing arrangement reduces the tax imposed bysection 881. Because the participation of BK2 in thefinancing arrangement reduces the tax imposed bysection 881 and because there was a tax avoidanceplan, BK2 is a conduit entity.

(iii) Because DC does not know or have reasonto know of the tax avoidance plan (and by extensionthat the financing arrangement is a conduit financingarrangement), DC is not required to withhold taxunder section 1441. However, BK2, who is also awithholding agent under section 1441 and whoknows that the financing arrangement is a conduitfinancing arrangement, is not relieved of its with-holding responsibilities.

(3) and (g) [Reserved]. For furtherguidance, see § 1.1441–7(f)(3) and (g).

(h) Effective date/Applicability. Exceptas otherwise provided in paragraph (f)(3)of this section, this section applies to pay-ments made after June 30, 2014. (For pay-ments made after December 31, 2000, andbefore July 1, 2014, see this section as ineffect and contained in 26 CFR part 1, asrevised April 1, 2013.)


Par. 16. Section 1.1461–1 is amendedby revising paragraphs (b)(1), (c)(1)(i),


(c)(1)(ii), (c)(2)(ii)(E), (c)(2)(ii)(H),(c)(2)(ii)(I), (c)(3)(i), (c)(3)(iii), (c)(4)(i),(c)(4)(ii)(A), (c)(4)(iv), (c)(4)(v), (c)(5),and (i) to read as follows:

§ 1.1461–1 Payments and returns of taxwithheld.

* * * * *(b)(1) [Reserved]. For further guid-

ance, see § 1.1461–1T(b)(1).* * * * *(c)(1)(i) and (ii) [Reserved]. For fur-

ther guidance, see § 1.1461–1T(c)(1)(i)and (ii).

* * * * *(2) * * *(ii) * * *(E) [Reserved]. For further guidance,

see § 1.1.461–1T(c)(2)(ii)(E).* * * * *(c)(2)(ii)(H) and (I) [Reserved]. For

further guidance, see § 1.1.461–1T(c)(2)(ii)(H) and (I).


see § 1.1461–1T(c)(3)(i).* * * * *(iii) [Reserved]. For further guidance,

see § 1.1461–1T(c)(3)(iii).* * * * *(4) * * *(i) [Reserved]. For further guidance,

see § 1.1461–1T(c)(4)(i).(ii) * * *(A) [Reserved]. For further guidance,

see § 1.1461–1T(c)(4)(ii)(A).* * * * *(iv) [Reserved]. For further guidance,

see § 1.1461–1T(c)(4)(iv).(v) [Reserved]. For further guidance,

see § 1.1461–1T(c)(4)(v).* * * * *(5) [Reserved]. For further guidance,

see § 1.1461–1T(c)(5).* * * * *(i) [Reserved]. For further guidance,

see § 1.1461–1T(i).Par. 17. Section 1.1461–1T is added to

read as follows:

§ 1.1461–1T Payments and returns oftax withheld (temporary).


(b) Income tax return—(1) Generalrule. A withholding agent shall make anincome tax return on Form 1042 (or suchother form as the IRS may prescribe) forincome paid during the preceding calen-dar year that the withholding agent is re-quired to report on an information returnon Form 1042–S (or such other form asthe IRS may prescribe) under paragraph(c)(1) of this section. See section 6011 and§ 1.6011–1(c). The withholding agentmust file the return on or before March 15of the calendar year following the year inwhich the income was paid. The returnmust show the aggregate amount of in-come paid and tax withheld required to bereported on all the Forms 1042–S for thepreceding calendar year by the withhold-ing agent, in addition to such informationas is required by the form and accompa-nying instructions. See § 1.1474–1(c) forthe requirement to show the aggregatechapter 4 reportable amounts and taxwithheld on Form 1042. A single Form1042 may be filed by a withholding agentto report amounts under chapters 3 and 4,including tax withheld. Withholding cer-tificates or other statements or informationprovided to a withholding agent are notrequired to be attached to the return. Areturn must be filed under this paragraph(b)(1) even though no tax was required tobe withheld during the preceding calendaryear. The withholding agent must retain acopy of Form 1042 for the applicable stat-ute of limitations on assessments and col-lection with respect to the amounts re-quired to be reported on the Form 1042.See section 6501 and the regulationsthereunder for the applicable statute oflimitations. Adjustments to the totalamount of tax withheld, as described in§ 1.1461–2, shall be stated on the return asprescribed by the form and accompanyinginstructions.


(c) Information returns—(1) Filing re-quirement—(i) In general. A withholdingagent (other than an individual who is notacting in the course of a trade or businesswith respect to a payment) must make aninformation return on Form 1042–S (orsuch other form as the IRS may prescribe)to report the amounts subject to reporting,as defined in paragraph (c)(2) of this sec-tion, that were paid during the preceding

calendar year. Notwithstanding the pre-ceding sentence, any person that with-holds or is required to withhold an amountunder sections 1441, 1442, 1443, or§ 1.1446–4(a) (applicable to publiclytraded partnerships required to pay taxunder section 1446 on distributions) mustfile a Form 1042–S, “Foreign Person’sU.S. Source Income Subject to Withhold-ing,” for the payment withheld uponwhether or not that person is engaged in atrade or business and whether or not thepayment is an amount subject to reporting.The reference in the previous sentence towithholding under § 1.1446–4 shall applyto partnership taxable years beginning af-ter May 18, 2005, or such earlier time asthe regulations under § § 1.1446–1 through 1.1446–5 apply by reason of anelection under § 1.1446–7. A Form1042–S shall be prepared for each recipi-ent of an amount subject to reporting andfor each single type of income payment.The Form 1042–S shall be prepared insuch manner as the form and accompany-ing instructions prescribe. One copy of theForm 1042–S shall be filed with the IRSon or before March 15th of the calendaryear following the year in which theamount subject to reporting was paid. Itshall be filed with a transmittal form asprovided in the instructions to the Form1042–S and to the transmittal form. With-holding certificates, documentary evi-dence, or other statements or documenta-tion provided to a withholding agent arenot required to be attached to the form.Another copy of the Form 1042–S mustbe furnished to the recipient for whom theform is prepared (or any other person, asrequired under this paragraph (c) or theinstructions to the form) on or beforeMarch 15th of the calendar year followingthe year in which the amount subject toreporting was paid. The withholding agentmust retain a copy of each Form 1042–Sfor the statute of limitations on assessmentand collection applicable to the Form1042 to which the Form 1042–S relates.

(ii) Recipient—(A) Defined. For pur-poses of this section, the term recipientmeans—

(1) A beneficial owner as defined in§ 1.1441–1(c)(6), including a foreign es-tate or a foreign complex trust, as definedin § 1.1441–1(c)(25);


(2) A qualified intermediary as definedin § 1.1441–1(e)(5)(ii);

(3) A withholding foreign partnershipas defined in § 1.1441–5(c)(2) or a with-holding foreign trust under § 1.1441–5(e)(5)(v);

(4) A territory financial institutiontreated as a U.S. person under § 1.1441–1(b)(2)(iv)(A);

(5) A U.S. branch that is treated as aU.S. person under § 1.1441–1(b)(2)(iv)(A);

(6) A nonwithholding foreign partner-ship or a foreign simple trust as defined in§ 1.1441–1(c)(24), but only to the extentthe income is (or is treated as) effectivelyconnected with the conduct of a trade orbusiness in the United States by such en-tity;

(7) A payee, as defined in § 1.1441–1(b)(2) that is presumed to be a foreignperson under the presumption rules of§ 1.1441–1(b)(3); 1.1441–5(d) or (e)(6),or 1.6049–5(d);

(8) A partner receiving a distributionfrom a publicly traded partnership subjectto withholding under section 1446 and§ 1.1446–4 on distributions of effectivelyconnected income. This paragraph(c)(1)(ii)(A)(8) shall apply to partnershiptaxable years beginning after May 18,2005, or such earlier time as the regula-tions under §§ 1.1446–1 through1.1446–5 apply by reason of an electionunder § 1.1446–7.

(9) A foreign intermediary, nonwith-holding foreign partnership or nonwith-holding foreign trust that is a participatingFFI or registered deemed-compliant FFIwith respect to a chapter 4 reporting poolof U.S. payees;

(10) A participating FFI or a registereddeemed-compliant FFI that is a recipientof a withholdable payment described in§ 1.1474–1(d)(1)(ii)(A)(1)(iii); and

(11) Any other person as required onForm 1042–S or the instructions to theform.

(B) Persons that are not recipients. Arecipient does not include—

(1) A nonqualified intermediary, ex-cept with respect to a payment (or portionof a payment) for which a nonqualifiedintermediary that is an FFI is a recipientreporting as described in § 1.1474–1(d)(1)(ii)(A)(1)(iii);

(2) A payee included in a chapter 3 orchapter 4 withholding rate pool;

(3) A flow-through entity, as defined in§ 1.1441–1(c)(23) (to the extent it is re-ceiving amounts subject to reporting otherthan income effectively connected withthe conduct of a trade or business in theUnited States), that is not a recipient de-scribed in paragraphs (c)(1)(ii)(9) or(c)(1)(ii)(10) of this section; and

(4) A U.S. branch (including a territoryfinancial institution) described in§ 1.1441–1(b)(2)(iv)(A) that is not treatedas a U.S. person under that section and isnot a recipient described in paragraphs(c)(1)(ii)(9) or (c)(1)(ii)(10) of this sec-tion.

(C) Coordination with chapter 4 re-porting. See § 1.1474–1(d)(1)(ii)(A) forpersons that are defined as recipients of awithholdable payment of U.S. sourceFDAP income for purposes of chapter 4 inaddition to the persons that are recipientsunder this paragraph (c)(1)(ii).

(c)(2) introductory text through(c)(2)(ii)(D)[Reserved]. For further guid-ance, see § 1.1461–1(c)(2) introductorytext through (c)(2)(ii)(D).

(A) through (D) [Reserved]. For furtherguidance, see § 1.1461–1(c)(2)(ii)(A).

(E) Any item required to be reported onForm 1099, and such other forms as areprescribed pursuant to the information re-porting provisions of sections 6041through 6050W and the regulations underthose sections;

(F) and (G) [Reserved]. For furtherguidance, see § 1.1461–1(c)(2)(ii)(F) and(G).

(H) Interest (including original issuediscount) paid with respect to foreign-targeted registered obligations issued be-fore January 1, 2016, that are described in§ 1.871–14(e)(2) to the extent the docu-mentation requirements described in§ 1.871–14(e)(3) and (e)(4) are requiredto be satisfied (taking into account theprovisions of § 1.871–14(e)(4)(ii), if ap-plicable;

(I) Interest on a foreign-targeted bearerobligation (see § § 1.1441–1(b)(4)(i) and1.1441–2(a)) issued before March 19,2012;

(J) and (K) [Reserved]. For furtherguidance, see § 1.1461–1(c)(2)(ii)(J) and(K).


(i) The name, address, taxpayer identi-fying number of the withholding agent,and the withholding agent’s status forchapter 3 purposes (based on the statuscodes applicable for chapter 3 purposesprovided on the form);


(iii) For a payment not subject to with-holding under chapter 4, the rate of with-holding applied or the basis for exemptingthe payment from withholding underchapter 3, and the exemption applicable tothe payment for chapter 4 purposes (basedon the exemption codes provided on theform);

(iv) through (ix) [Reserved]. For fur-ther guidance, see § 1.1461–1(c)(3)(iv)through (ix).

(4) Method of reporting—(i) Paymentsby U.S. withholding agents to recipients.A withholding agent that is a U.S. person(other than a foreign branch of a U.S.person that is a qualified intermediary asdefined in § 1.1441–1(e)(5)(ii) that makespayments of amounts subject to reportingon Form 1042–S must file a separate Form1042–S for each recipient who receivessuch amount. For purposes of this para-graph (c)(4), a U.S. person includes a U.S.branch (including a territory financial in-stitution) described in § 1.1441–1(b)(2)(iv)(A) that is treated as a U.S.person. Except as may otherwise be re-quired on Form 1042–S or the instructionsto the form, only payments for which theincome code, exemption code, withhold-ing rate and recipient code are the samemay be reported on a single Form 1042–S.See paragraph (c)(4)(ii) of this section forreporting of payments made to a personthat is not a recipient. See § 1.1474–1(d)(4) for additional requirements thatmay apply for reporting on Form 1042–Swith respect to a withholdable paymentthat is a chapter 4 reportable amount.

(A) Payments to beneficial owners. If aU.S. withholding agent makes a paymentdirectly to a beneficial owner it must com-plete Form 1042–S treating the beneficialowner as the recipient. Under the graceperiod rule of § 1.1441–1(b)(3)(iv), a U.S.withholding agent may, under certain cir-cumstances, treat a payee as a foreignperson while the withholding agent awaits


a valid withholding certificate. A U.S.withholding agent who relies on the graceperiod rule to treat a payee as a foreignperson must file a Form 1042–S to reportall payments on Form 1042–S during theperiod that person was presumed to beforeign even if that person is later deter-mined to be a U.S. person based on ap-propriate documentation or is presumed tobe a U.S. person after the grace periodends. In the case of joint owners, a with-holding agent may provide a single Form1042–S made out to the owner whosestatus the U.S. withholding agent reliedupon to determine the applicable rate ofwithholding. If, however, any one of theowners requests its own Form 1042–S, thewithholding agent must furnish a Form1042–S to the person who requests it. Ifmore than one Form 1042–S is issued fora single payment, the aggregate amountpaid and tax withheld that is reported onall Forms 1042–S cannot exceed the totalamounts paid to joint owners and the taxwithheld thereon.

(B) Payments to a qualified intermedi-ary, a withholding foreign partnership, ora withholding foreign trust. A U.S. with-holding agent that makes payments to aqualified intermediary (whether or not thequalified intermediary assumes primarywithholding responsibility for purposes ofchapter 3 and chapter 4 of the Code), awithholding foreign partnership, or awithholding foreign trust shall completeForms 1042–S treating the qualified inter-mediary, withholding foreign partnership,or withholding foreign trust as the recipi-ent. The U.S. withholding agent mustcomplete a separate Form 1042–S foreach chapter 3 and chapter 4 withholdingrate pool with respect to each qualifiedintermediary. A qualified intermediarythat does not assume primary withholdingresponsibility on all payments it receivesprovides information regarding the pro-portions of income subject to a particularwithholding rate (that is, a chapter 3 with-holding rate pool) to the withholdingagent on a withholding statement associ-ated with a qualified intermediary with-holding certificate. In such a case, the U.S.withholding agent must complete a sepa-rate Form 1042–S for each chapter 3 andchapter 4 withholding rate pool with re-spect to the qualified intermediary. To theextent a qualified intermediary is required

to report a payment under chapter 61, itmay provide a U.S. withholding agentwith information regarding withholdingrate pools for U.S. non-exempt recipients(as defined under § 1.1441–1(c)(21)).Amounts paid with respect to such with-holding rate pools must be reported on aForm 1099 completed for each U.S. non-exempt recipient to the extent such U.S.non-exempt recipient is subject to Form1099 reporting and is not reported onForm 1042–S. See, however, § 1.1441–1(e)(5)(v)(C) for when a qualified inter-mediary may provide a chapter 4 with-holding rate pool of U.S payees (in lieu ofreporting such payees on a withholdingstatement) and for the withholding ratepools (including chapter 4 withholdingrate pools) otherwise reportable on a with-holding statement provided by a qualifiedintermediary.

(C) Amounts paid to U.S. branchestreated as U.S. persons. A U.S. withhold-ing agent making a payment to a U.S.branch of a foreign person (including aterritory financial institution) described in§ 1.1441–1(b)(2)(iv)(A) shall completeForm 1042–S as follows—

(1) If the branch has provided the U.S.withholding agent with a withholding cer-tificate that evidences its agreement withthe withholding agent to be treated as aU.S. person, the U.S. withholding agentfiles Forms 1042–S treating the U.S.branch or territory financial institution asthe recipient;

(2) If the branch has provided the U.S.withholding agent with a withholding cer-tificate that transmits information regard-ing beneficial owners, qualified interme-diaries, withholding foreign partnerships,or other recipients, the U.S. withholdingagent must complete a separate Form1042–S for each recipient whose docu-mentation is associated with the U.S.branch’s or territory financial institution’swithholding certificate; or

(3) If the U.S. withholding agent can-not reliably associate a payment with avalid withholding certificate from the U.S.branch, it shall treat the U.S. branch as therecipient and report the income as effec-tively connected with the conduct of atrade or business in the United States ex-cept as otherwise provided in § 1.1441–1(b)(2)(iv)(B)(4).

(D) Dual Claims. A U.S. withholdingagent may make a payment to a foreignentity that is simultaneously claiming areduced rate of tax on its own behalf for aportion of the payment and a reduced rateon behalf of persons in their capacity asinterest holders in that entity on the remain-ing portion. See § 1.1441–6(b)(2)(iii).If the claims are consistent and the with-holding agent accepts the multiple claims,the withholding agent must file a separateForm 1042–S for those payments forwhich the entity is treated as the beneficialowner and Forms 1042–S for each of theinterest holders in the entity for which theinterest holder is treated as the recipient.For those payments for which the interestholder in an entity is treated as the recip-ient, the U.S. withholding agent shall pre-pare the Form 1042–S in the same manneras a payment made to a nonqualified in-termediary or flow-through entity as setforth in paragraph (c)(4)(ii) of this section.If the claims are consistent but the with-holding agent has not chosen to accept themultiple claims, or if the claims are incon-sistent, the withholding agent must file aseparate Form 1042–S for the person orpersons it has chosen to treat as the recip-ients.

(ii) Payments made by U.S. withhold-ing agents to persons that are not recipi-ents—(A) Amounts paid to a nonqualifiedintermediary, a flow-through entity, andcertain U.S. branches. If a U.S. withhold-ing agent makes a payment to a nonquali-fied intermediary, a flow-through entity,or a U.S. branch (including a territoryfinancial institution) described in§ 1.1441–1(b)(2)(iv) (other than a U.S.branch or territory financial institutionthat is treated as a U.S. person), it mustcomplete a separate Form 1042–S foreach recipient to the extent the withhold-ing agent can reliably associate a paymentwith valid documentation (within themeaning of § 1.1441–1(b)(2)(vii)) fromthe recipient which is associated with thewithholding certificate provided by thenonqualified intermediary, flow-throughentity, or U.S. branch or territory financialinstitution. See § 1.1474–1(d)(4)(i) forwhen a withholding agent may report achapter 4 reportable amount made to suchan entity in a chapter 4 withholding ratepool. See also § 1.1441–1(e)(3)(iv)(A) forwhen a withholding statement provided


by a nonqualified intermediary may in-clude a chapter 4 withholding rate pool ofU.S. payees. If a payment is reported bythe withholding agent in a chapter 4 with-holding rate pool, the withholding agentmust report on Form 1042–S the non-qualified intermediary or flow-through en-tity as a recipient associated with the ap-plicable chapter 4 withholding rate pool.If a payment is made through tiers ofnonqualified intermediaries or flow-through entities, the withholding agentmust nevertheless complete Form 1042–Sfor the recipient to the extent it can reli-ably associate the payment with documen-tation from the recipient. A withholdingagent that is completing a Form 1042–Sfor a recipient that receives a paymentthrough a nonqualified intermediary, aflow-through entity, or a U.S. branch orterritory financial institution must includeon the Form 1042–S the name of the non-qualified intermediary, flow-through en-tity, U.S. branch or territory financial in-stitution from which the recipient directlyreceives the payment. If a U.S. withhold-ing agent cannot reliably associate thepayment, or any portion of the payment,with valid documentation from a recipienteither because no such documentation hasbeen provided or because the nonqualifiedintermediary, flow-through entity, or U.S.branch or territory financial institution hasfailed to provide sufficient allocation in-formation so that the withholding agentcan associate the payment, or any portionthereof, with valid documentation, thenthe withholding agent must report the pay-ments as made to an unknown recipient inaccordance with the appropriate presump-tion rules for that payment. Thus, if thepayment is not a withholdable paymentand under the presumption rules the pay-ment is presumed to be made to a foreignperson, the withholding agent must gen-erally withhold 30 percent of the paymentand report the payment on Form 1042–Smade out to an unknown recipient andshall also include the name of the non-qualified intermediary, flow-through en-tity, U.S. branch or territory financial in-stitution that received the payment onbehalf of the unknown recipient. If, how-ever, the recipient is presumed to be aU.S. non-exempt recipient (as defined in§ 1.1441–1(c)(21)), the withholding agentmust withhold on the payment as required

under section 3406 and report the pay-ment as required under chapter 61 of theInternal Revenue Code. See § 1.1474–1(d)(4) for reporting requirements that ap-ply to payments of chapter 4 reportableamounts paid to nonqualified intermediar-ies and flow-through entities. If, however,the payment is a withholdable payment,the withholding agent must report the pay-ment as made to a chapter 4 withholdingrate pool of nonparticipating FFIs in ac-cordance with the presumption rule under§ 1.1471–3(f)(5).

(B) [Reserved]. For further guidance,see § 1.1461–1(c)(4)(ii)(B).

(iii) [Reserved]. For further guidance,see § 1.1461–1(c)(4)(iii).

(iv) Reporting by a nonqualified inter-mediary, flow-through entity, and certainU.S. branches. A nonqualified intermedi-ary, flow-through entity, or U.S. branch(including a territory financial institution)described in § 1.1441–1(e)(2)(iv) (otherthan a U.S. branch or territory financialinstitution, that is treated as a U.S. person)is a withholding agent and must file Forms1042–S for amounts paid to recipients inthe same manner as a U.S. withholdingagent. A Form 1042–S will not be re-quired, however, if another withholdingagent has reported the same amount forwhich the nonqualified intermediary,flow-through entity, or U.S. branch wouldbe required to file a return and the entireamount that should be withheld from suchpayment has been withheld (includingwithholding and reporting in accordancewith the applicable presumption rule forthe payment). A nonqualified intermedi-ary, flow-through entity, or U.S. branchmust report payments made to recipientsto the extent it has failed to provide theappropriate documentation to anotherwithholding agent together with the infor-mation required for that withholding agentto reliably associate the payment with therecipient documentation or to the extent itknows, or has reason to know, that lessthan the required amount has been with-held. A nonqualified intermediary or flow-through entity that is required to report apayment on Form 1042–S must follow thesame rules as apply to a U.S. withholdingagent under paragraph (c)(4)(i) and(c)(4)(ii) of this section.

(v) Pro rata reporting for allocationfailures. If a nonqualified intermediary,

flow-through entity, or U.S. branch (in-cluding a territory financial institution)described in § 1.1441–1(b)(2)(iv) (otherthan a U.S. branch or territory financialinstitution treated as a U.S. person) usesthe alternative procedures of § 1.1441–1(e)(3)(iv)(D) and fails to provide infor-mation sufficient to allocate the amountsubject to reporting paid to a withholdingrate pool to the payees identified for thatpool, then the withholding agent shall re-port the payment in accordance with therule provided in § 1.1441–1(e)(3)(iv)(D)(6).

(vi) [Reserved]. For further guidance,see § 1.1461–1(c)(4)(vi).

(5) Magnetic media reporting. A with-holding agent that makes 250 or moreForm 1042–S information returns for ataxable year must file Form 1042–S re-turns on magnetic media. See, however,§ 301.1474–1(a) of this chapter for therequirements for a withholding agent thatis a financial institution to file Forms1042–S on magnetic media. See, also,§ 301.6011–2 of this chapter for require-ments applicable to a withholding agentthat files Forms 1042–S with the IRS onmagnetic media and publications of theIRS relating to magnetic media filing.

(d) through (h) [Reserved]. For furtherguidance, see § 1.1461–1(d) through (h).

(i) Effective/applicability date. Unlessotherwise provided in this section, thissection shall apply to amounts reportedunder this section beginning for calendaryear 2014. (For returns required for pay-ments made after December 31, 2000, seethis section as in effect and contained in26 CFR part 1 revised April 1, 2013.)


Par. 18. Section 1.1461–2 is amendedby revising paragraphs (a)(2)(i), (a)(4),and (d) to read as follows:

§ 1.1461–2 Adjustments foroverwithholding or underwithholding oftax.


see § 1.1461–2T(a)(2)(i).* * * * *(4) [Reserved]. For further guidance,

see § 1.1461–2T(a)(4).


* * * * *(d) Effective/applicability date—(1)

Unless otherwise provided in this section,this section applies to payments made af-ter December 31, 2000.


Par. 19. Section 1.1461–2T is added toread as follows:

§ 1.1461–2T Adjustments foroverwithholding or underwithholding oftax (temporary).

(a)(1) [Reserved]. For further guid-ance, see § 1.1461–2(a)(1).

(2) Reimbursement of tax— (i) Gen-eral rule. Under the reimbursement pro-cedure, the withholding agent repays thebeneficial owner or payee for the amountoverwithheld. In such a case, the with-holding agent may reimburse itself by re-ducing, by the amount of tax actually re-paid to the beneficial owner or payee, theamount of any deposit of tax made by thewithholding agent under § 1.6302–2(a)(1)(iii) for any subsequent paymentperiod occurring before the end of thecalendar year following the calendar yearof overwithholding. Any such reductionthat occurs for a payment period in thecalendar year following the calendar yearof overwithholding shall be allowed onlyif—

(A) The repayment to the beneficialowner or payee occurs before the earlierof the due date (not including extensions)for filing Form 1042–S for the calendaryear of overwithholding or the date theForm 1042–S is actually filed with theIRS;

(B) The withholding agent states on atimely filed (not including extensions)Form 1042 for the calendar year of over-withholding, that the filing of the Form1042 constitutes a claim for credit in ac-cordance with § 1.6414–1; and

(C) The withholding agent states, on atimely filed (not including extensions)Form 1042 for the calendar year of over-withholding, that the filing of the Form1042 constitutes a claim for credit in ac-cordance with § 1.6414–1.

(ii) and (3) [Reserved]. For furtherguidance, see § 1.1461–2(a)(2)(ii) and (3).

(4) Examples. The principles of thisparagraph (a) are illustrated by the follow-ing examples:

Example 1. (i) N is a nonresident alien individualwho is a resident of the United Kingdom. In Decem-ber 2001, a domestic corporation C pays a dividendof $100 to N, at which time C withholds $30 andremits the balance of $70 to N. On February 10,2002, prior to the time that C files its Form 1042 andForm 1042–S with respect to the payment, N fur-nishes a valid Form W–8 described in § 1.1441–1(e)(2)(i) upon which C may rely to reduce the rateof withholding to 15% under the provisions of theU.S.-U.K. tax treaty. Consequently, N advises C thatits tax liability is only $15 and not $30 and requestsreimbursement of $15. Although C has already de-posited the $30 that was withheld, as required by§ 1.6302–2(a)(1)(iv), C repays N in the amount of$15.

(ii) During 2001, C makes no other paymentsupon which tax is required to be withheld underchapter 3 of the Code; accordingly, its return onForm 1042 for such year, which is filed on March 15,2002, shows total tax withheld of $30, an adjustedtotal tax withheld of $15, and $30 previously paid forsuch year. Pursuant to § 1.6414–1(b), C claims acredit for the overpayment of $15 shown on theForm 1042 for 2001. Accordingly, it is permitted toreduce by $15 any deposit required by § 1.6302–2 tobe made of tax withheld during the calendar year2002. The Form 1042–S required to be filed by Cwith respect to the dividend of $100 paid to N in2001 is required to show tax withheld under chapter3 of $30 and tax repaid to N of $15.

Example 2. The facts are the same as in Example1. In addition, during 2002, C makes payments to Nupon which it is required to withhold $200 underchapter 3 of the Code, all of which is withheld inJune 2002. Pursuant to § 1.6302–2(a)(1)(iii), C de-posits the amount of $185 on July 15, 2002 ($200less the $15 for which credit is claimed on the Form1042 for 2001). On March 15, 2003, C Corporationfiles its return on Form 1042 for calendar year 2002,which shows total tax withheld of $200, $185 pre-viously deposited by C, and $15 allowable credit.

Example 3. The facts are the same as in Example1. Under § 1.6302–2(a)(1)(ii), C is required to de-posit on a quarter-monthly basis the tax withheldunder chapter 3 of the Code. C withholds tax of $100between February 8 and February 15, 2002, anddeposits $75 [($100�90%) less $15] of the withheldtax within 3 banking days after February 15, 2002,and by depositing $10 [($100�$15) less $75] within3 banking days after March 15, 2002.

(b) through (d)(1) [Reserved]. For fur-ther guidance, see § 1.1461–2(b) through(d)(1).

(2) The provisions of this section applyto payments made after June 30, 2014.

(e) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 20. In § 1.6041–1, paragraphs(d)(5)(i) and (ii) and (j) are revised to readas follows:

§ 1.6041–1 Return of information as topayments of $600 or more.

* * * * *(d) * * *(5) * * *(i) and (ii) [Reserved]. For further

guidance, see § 1.6041–1T(d)(5)(i) and(ii).

* * * * *(j) Effective/applicability date. (1) The

provisions of paragraphs (b), (c), (e), and(f) of this section apply to payments madeafter December 31, 2002. The provisionsof paragraphs (a)(1)(iv) and (a)(1)(v) ap-ply to payments made after December 31,2010.

(2) [Reserved]. For further guidance,see § 1.6041–1T(j)(2).


§ 1.6041–1T Return of information as topayments of $600 or more (temporary).

(a) through (d)(5) [Reserved]. For fur-ther guidance, see § 1.6041–1(a) through(d)(5).

(i) An amount paid with respect to anotional principal contract is not requiredto be reported if the amount is paid by anon-U.S. payor or a non-U.S. middlemanand is paid and received outside theUnited States (as defined in § 1.6049–4(f)(16)).

(ii) An amount paid with respect to anotional principal contract is not requiredto be reported if the amount is paid by apayor that has no actual knowledge thatthe payee is a U.S. person and is paid andreceived outside the United States (as de-fined in § 1.6049–4(f)(16)), and the payoris—

(d)(5)(ii)(A) through (j)(1) [Reserved].For further guidance, see § 1.6041–1(d)(5)(ii)(A) through (j)(1).

(2) The provisions of paragraphs(d)(5)(i) and (ii) of this section apply topayments made after June 30, 2014.


Par. 22. Section 1.6041–4 is amendedby revising paragraphs (a)(1) through (3),adding paragraph (a)(7), and revisingparagraphs (b) and (d) to read as follows:


§ 1.6041–4 Foreign-related items andother exceptions.

(a) * * *(1) through (3) [Reserved]. For further

guidance, see § 1.6041–4T(a)(1) through(3).


see § 1.6041–4T(a)(7).(b) [Reserved]. For further guidance,

see § 1.6041–4T(b).* * * * *(d) Effective/applicability date. (1) The

provisions of this section apply to pay-ments made after December 31, 2000.



§ 1.6041–4T Foreign-related items andother exceptions (temporary).


(1) Returns of information are not re-quired for payments that a payor can, priorto payment, reliably associate with docu-mentation upon which it may rely to treatas made to a foreign beneficial owner inaccordance with § 1.1441–1(e)(1)(ii) or asmade to a foreign payee in accordancewith § 1.6049–5(d)(1) or presumed to bemade to a foreign payee under § 1.6049–5(d)(2), (3), (4), or (5). Returns of infor-mation are also not required for a paymentthat a payor or middleman can, prior topayment, reliably associate with docu-mentation upon which it may rely to treatas made to a foreign intermediary or flow-through entity in accordance with§ 1.1441–1(b) if it obtains from the inter-mediary or flow-through entity a with-holding statement described in § 1.6049–5(b)(14) that allocates the payment to achapter 4 withholding rate pool (as de-fined in § 1.6049–4(f)(5)) or specific pay-ees to which withholding applies underchapter 4. Payments excepted from report-ing under this paragraph (a)(1) may bereportable, for purposes of chapter 3 of theInternal Revenue Code (Code), under§ 1.1461–1(b) and (c) and, for purposes ofchapter 4 of the Code, under § 1.1474–1(d)(2). The provisions in § 1.6049–5(c) regarding documentation of foreign

status shall apply for purposes of thisparagraph (a)(1). The provisions in§ 1.6049–5(c)(5) regarding the definitionsof U.S. payor and non-U.S. payor shallalso apply for purposes of this paragraph(a)(1). See § 1.1441–1(b)(3)(iii)(B) and(C) for special payee rules regardingscholarships, grants, pensions, annuities,etc. The provisions of § 1.1441–1 shallapply by substituting the term payor forthe term withholding agent and withoutregard to the fact that the provisions applyonly to amounts subject to withholdingunder chapter 3 of the Code and the reg-ulations under that chapter.

(2) Returns of information are not re-quired for payments of amounts fromsources outside the United States (deter-mined under the provisions of part I, sub-chapter N, chapter 1 of the Code and theregulations under those provisions) paidby a non-U.S. payor or non-U.S. middle-man and that are paid and received outsidethe United States. For a definition of non-U.S. payor and non-U.S. middleman, see§ 1.6049–5(c)(5). For circumstances inwhich an amount is considered to be paidand received outside the United States, see§ 1.6049–4(f)(16).

(3) If a foreign intermediary, as de-scribed in § 1.1441–1(c)(13), or a U.S.branch that is not treated as a U.S. personreceives a payment from a payor, whichpayment the payor can reliably associatewith a valid withholding certificate de-scribed in § 1.1441–1(e)(3)(ii) or (iii), or§ 1.1441–1(e)(3)(v), respectively, fur-nished by such intermediary or branch,then the intermediary or branch is notrequired to report such payment when it,in turn, pays the amount, unless, and to theextent, the intermediary or branch knowsthat the payment is required to be reportedunder this section and was not so reported.For example, if a U.S. branch described in§ 1.1441–1(b)(2)(iv) fails to provide in-formation regarding U.S. persons that arenot exempt from reporting under§ 1.6041–3(q) to the person from whomthe U.S. branch receives the payment, theU.S. branch must report the payment onan information return. See, however, para-graph (a)(7) of this section for when re-porting under section 6041is coordinatedwith reporting under chapter 4 of the Codeor an applicable IGA (as defined in§ 1.6049–4(f)(7)). The exception de-

scribed in this paragraph (a)(3) foramounts paid by a foreign intermediaryshall not apply to a qualified intermediarythat assumes reporting responsibility un-der chapter 61 of the Code with respect toamounts reportable under the agreementdescribed in § 1.1441–1(e)(5)(iii).

(4) through (6) [Reserved]. For furtherguidance, see § 1.6041–4(a)(4) through(6).

(7) Returns of information are not re-quired for payments with respect to whicha return is not required by applying therules of § 1.6049–4(c)(4) (by substitutingthe term a payment subject to reportingunder section 6041 for the term an inter-est payment).

(b) Joint owners. Amounts paid to jointowners for which a certificate or docu-mentation is required as a condition forbeing exempt from reporting under para-graph (a) of this section are presumedmade to U.S. payees who are not exemptrecipients if, prior to payment, the payoror middleman cannot reliably associatethe payment either with a Form W–9 fur-nished by one of the joint owners in themanner required in § § 31.3406(d)–1 through 31.3406(d)-5, or with documen-tation described in paragraph (a)(1) of thissection furnished by each joint ownerupon which the payor or middleman canrely to treat each joint owner as a foreignpayee or foreign beneficial owner. How-ever, in the case of a withholdable pay-ment (as defined in § 1.6049–4(f)(15)) made to joint payees, if any jointpayee does not appear to be an individual,the payment is presumed made to a for-eign payee that is a nonparticipating FFI(as defined in § 1.1471–1(b)(82)). See§ 1.1471–3(f)(7).

(c) through (d)(1) [Reserved]. For fur-ther guidance, see § 1.6041–4(c) through(d)(1).

(2) The provisions of paragraphs (a)(1)through (3), (a)(7), and (b) of this sectionapply to payments made after June 30,2014.

(e) Expiration date. The applicabilityof this section expires on February 28,2017.

Par. 24. Section 1.6042–2 is amendedby revising paragraph (a)(1)(i) and addingparagraph (f) to read as follows:


§ 1.6042–2 Returns of information as todividends paid.


see § 1.6042–2T(a)(1)(i).* * * * *(f) [Reserved]. For further guidance,

see § 1.6042–2T(f).Par. 25. Section 1.6042–2T is added to

read as follows:

§ 1.6042–2T Returns of information asto dividends paid (temporary).



(i) Every person who makes a paymentof dividends (as defined in § 1.6042–3) toany other person during a calendar year.The information return shall show the ag-gregate amount of the dividends, thename, address, and taxpayer identifyingnumber of the person to whom paid, theamount of tax deducted and withheld un-der section 3406 from the dividends, ifany, and such other information as re-quired by the forms. An information re-turn is generally not required if theamount of dividends paid to the other per-son during the calendar year aggregatesless than $10 or if the payment is made toa person who is an exempt recipient de-scribed in § 1.6049–4(c)(1)(ii) unless thepayor backup withholds under section3406 on such payment (because, for ex-ample, the payee has failed to furnish aForm W–9), in which case the payor mustmake a return under this section, unlessthe payor refunds the amount withheldpursuant to § 31.6413(a)–3 of this chapter.Further, a return of information is notrequired under this section for—

(A) Payments with respect to which areturn is not required by applying the rulesof § 1.6049–4(c)(4) (by substituting theterm dividend for the term interest); or

(B) Payments made by a paying agenton behalf of a corporation described insection 1297(a) with respect to a share-holder of the corporation if—

(1) The paying agent obtains from thecorporation a written certification signedby an officer of the corporation, that states

that the corporation is described in section1297(a) for each calendar year duringwhich the paying agent relies on the pro-visions of paragraph (a)(1)(i)(B) of thissection, and the paying agent has no rea-son to know the written certification isunreliable or incorrect;

(2) The paying agent identifies, prior topayment, the corporation as a participat-ing FFI (including a reporting Model 2FFI) (as defined in § 1.6049–4(f)(10) or(14), respectively), or reporting Model 1FFI (as defined in § 1.6049–4(f)(13)), inaccordance with the requirements of§ 1.1471–3(d)(4) (substituting the termspaying agent and corporation for theterms withholding agent and payee);

(3) The paying agent obtains, beforeeach year the payment would otherwise bereported, a written certification represent-ing that the corporation shall report thepayment as part of its reporting obliga-tions under chapter 4 of the Code or anapplicable IGA (as defined in § 1.6049–4(f)(7)) with respect to its U.S. accountsand provided the paying agent does notknow that the corporation is not reportingthe payment as required. A paying agentthat knows that the corporation is not re-porting the payment as required underchapter 4 of the Code or an applicableIGA (as defined in § 1.6049–4(f)(7)) must report all payments report-able under this section that it makes dur-ing the year in which it obtains suchknowledge; and

(4) The paying agent is not also actingin its capacity as a custodian, nominee, orother agent of the payee with respect tothe payments.

(ii) through (e) [Reserved]. For furtherguidance, see § 1.6042–2(a)(1)(ii) through (e).

(f) Effective/applicability date. Theprovisions of paragraphs (a)(1)(i) of thissection apply to payments made after June30, 2014.


Par. 26. In § 1.6042–3 paragraphs(b)(1)(iii), (b)(1)(iv), (b)(1)(vi), (b)(3),and (b)(5) are revised to read as follows:

§ 1.6042–3 Dividends subject toreporting.

* * * * *(b) * * *(1) * * *(iii) and (iv) [Reserved]. For further

guidance, see § 1.6042–3T(b)(1)(iii) and(iv).

* * * * *(vi) [Reserved]. For further guidance,

see § 1.6042–3T(b)(1)(vi).* * * * *(3) [Reserved]. For further guidance,

see § 1.6042–3T(b)(3).* * * * *(5) Effective/applicability date—(i)

The provisions of this paragraph (b) applyto payments made after December 31,2000.

(ii) [Reserved]. For further guidance,see § 1.6042–3T(b)(5)(ii).

* * * * *Par. 27. Section 1.6042–3T is added to

read as follows:

§ 1.6042–3T Dividends subject toreporting (temporary).

(a) through (b)(1)(ii) [Reserved]. Forfurther guidance, see § 1.6042–3(a)through (b)(1)(ii).

(iii) Distributions or payments that apayor can, prior to payment, reliably as-sociate with documentation upon which itmay rely to treat as made to a foreignbeneficial owner in accordance with§ 1.1441–1(e)(1)(ii) or as made to a for-eign payee in accordance with § 1.6049–5(d)(1) or presumed to be made to a for-eign payee under § 1.6049–5(d)(2), (3),(4), or (5). Returns of information are alsonot required for payments that a payor ormiddleman can, prior to payment, reliablyassociate with documentation upon whichit may rely to treat as made to a foreignintermediary in accordance with§ 1.1441–1(b) if it obtains from the inter-mediary entity a withholding statement(described in § 1.6049–5(b)(14)) that al-locates the payment to a chapter 4 with-holding rate pool (as defined in § 1.6049–4(f)(5)) or to specific payees to whichwithholding under chapter 4 applies. Pay-ments excepted from reporting under thisparagraph (b)(1)(iii) may be reportable,for purposes of chapter 3 of the Internal


Revenue Code (Code), under § 1.1461–1(b) and (c) or, for chapter 4 purposes,under § 1.1474–1(d)(2). The provisions in§ 1.6049–5(c) regarding documentationof foreign status shall apply for purposesof this paragraph (b)(1)(iii). The provi-sions in § 1.6049–5(c) regarding the def-initions of U.S. payor and non-U.S. payorshall also apply for purposes of this para-graph (b)(1)(iii). The provisions of§ 1.1441–1 shall apply by substituting theterm payor for the term withholding agentand without regard to the fact that theprovisions apply only to amounts subjectto withholding under chapter 3 of theCode.

(iv) Distributions or payments fromsources outside the United States (as de-termined under the provisions of part I,subchapter N, chapter 1 of the Code andthe regulations under those provisions)that are paid by a non-U.S. payor or non-U.S. middleman and that are paid andreceived outside the United States. For adefinition of non-U.S. payor and non-U.S.middleman, see § 1.6049–5(c)(5). For cir-cumstances in which an amount is consid-ered to be paid and received outside theUnited States, see § 1.6049–4(f)(16).


(vi) If a foreign intermediary, as de-scribed in § 1.1441–1(c)(13), or a U.S.branch that is not treated as a U.S. personreceives a payment from a payor, whichpayment the payor can reliably associatewith a valid withholding certificate de-scribed in § 1.1441–1(e)(3)(ii) or (iii), or§ 1.1441–1(e)(3)(v), respectively, fur-nished by such intermediary or branch,then the intermediary or branch is notrequired to report such payment when it,in turn, pays the amount, unless, and to theextent, the intermediary or branch knowsthat the payment is required to be reportedunder this section and was not so reported.For example, if a U.S. branch described in§ 1.1441–1(b)(2)(iv) fails to provide in-formation regarding U.S. persons that arenot exempt from reporting under§ 1.6049–4(c)(1)(ii) to the person fromwhom the U.S. branch receives the pay-ment, the amount paid by the U.S. branchto such person is a dividend. See, how-ever, § 1.6042–2(a)(1)(i)(A) for when re-porting under section 6042 is coordinatedwith reporting under chapter 4 of the Code

or an applicable IGA (as defined in§ 1.6049–4(f)(7)). The exception of thisparagraph (b)(1)(vi) for amounts paid by aforeign intermediary shall not apply to aqualified intermediary that assumes re-porting responsibility under chapter 61 ofthe Code with respect to amounts report-able under the agreement described in§ 1.1441–1(e)(5)(iii).

(vii) through (b)(2) [Reserved]. Forfurther guidance, see § 1.6042–3(b)(1)(vii) through (b)(2).

(3) Joint owners. Amounts paid to jointowners for which a certificate or docu-mentation is required as a condition forbeing exempt from reporting under thisparagraph (b) are presumed made to U.S.payees who are not exempt recipients if,prior to payment, the payor or middlemancannot reliably associate the payment ei-ther with a Form W–9 furnished by one ofthe joint owners in the manner required in§ § 31.3406(d)–1 through 31.3406(d)-5 ofthis chapter, or with documentation de-scribed in paragraph (b)(1)(iii) of this sec-tion furnished by each joint owner uponwhich it can rely to treat each joint owneras a foreign payee or foreign beneficialowner. However in the case of a withhold-able payment (as defined in § 1.6049–4(f)(15)) made to joint payees, if any suchjoint payee does not appear to be an indi-vidual, the payment is presumed made toa foreign payee that is a nonparticipatingFFI (as defined in § 1.1471–1(b)(82)). See§ 1.1471–3(f)(7). For purposes of apply-ing this paragraph (b)(3), the grace perioddescribed in § 1.6049–5(d)(2)(ii) shall ap-ply only if each payee qualifies for suchgrace period.

(4) through (5)(i) [Reserved]. For fur-ther guidance, see § 1.6042–3(b)(4)through (b)(5)(i).

(ii) The provisions of paragraphs(b)(1)(iii), (b)(1)(iv), (b)(1)(vi), and (b)(3)of this section apply to payments madeafter June 30, 2014.




1. Revising paragraph (c)(3)(ii) andadding paragraphs (c)(3)(xiv) and (xv).

2. Revising paragraphs (g)(1)(i),(g)(3)(iv), and (g)(4) and (5).


§ 1.6045–1 Returns of information ofbrokers and barter exchanges.

* * * * *(c) * * *(3) * * *(ii) [Reserved]. For further guidance,

see § 1.6045–1T(c)(3)(ii) through(c)(3)(ii)(B).

* * * * *(xiv) through (xv) [Reserved]. For fur-

ther guidance, see § 1.6045–1T(c)(3)(xiv) through (xv).

* * * * *(g) * * *(1) * * *(i) [Reserved]. For further guidance,

see § 1.6045–1T(g)(1)(i).* * * * *(3) * * *(iv) [Reserved]. For further guidance,

see § 1.6045–1T(g)(3)(iv).(4) [Reserved]. For further guidance,

see § 1.6045–1T(g)(4).(5) Effective/applicability date. (i) The

provisions of this paragraph (g) apply topayments made after December 31, 2000.

(ii) [Reserved]. For further guidance,see § 1.6045–1T(g)(5)(ii).

* * * * *Par. 29. Section 1.6045–1T is amended

by revising paragraphs (a) through (k) andadding paragraphs (p) and (q) to read asfollows:

§ 1.6045–1T Returns of information ofbrokers and barter exchanges(temporary).

(a) through (c)(3)(i) [Reserved]. Forfurther guidance, see § 1.6045–1(a)through (c)(3)(i)(C)(2)(iv).

(ii) Excepted sales. No return of infor-mation is required with respect to a saleeffected by a broker for a customer if thesale is an excepted sale. For this purpose,a sale is an excepted sale if it is—

(A) So designated by the Internal Rev-enue Service in a revenue ruling or reve-nue procedure (see § 601.601(d)(2) of thischapter); or


(B) A sale with respect to which areturn is not required by applying the rulesof § 1.6049–4(c)(4) (by substituting theterm a sale subject to reporting undersection 6045 for the term an interest pay-ment).

(iii) through (xiii) [Reserved]. For fur-ther guidance, see § 1.6045–1(c)(3)(iii)through (xiii).

(xiv) Certain redemptions. No returnof information is required under this sec-tion for payments made by a stock transferagent (as described in § 1.6045–1(b)(iv)) with respect to a redemption ofstock of a corporation described in section1297(a) with respect to a shareholder inthe corporation if—

(A) The stock transfer agent obtainsfrom the corporation a written certifica-tion signed by an officer of the corpora-tion, that states that the corporation isdescribed in section 1297(a) for each cal-endar year during which the stock transferagent relies on the provisions of paragraph(c)(3)(xiv) of this section, and the stocktransfer agent has no reason to know thatthe written certification is unreliable orincorrect;

(B) The stock transfer agent identifies,prior to payment, the corporation as aparticipating FFI (including a reportingModel 2 FFI) (as defined in § 1.6049–4(f)(10) or (f)(14), respectively), or re-porting Model 1 FFI (as defined in§ 1.6049–4(f)(13)), in accordance withthe requirements of § 1.1471–3(d)(4) (substituting the terms stock trans-fer agent and corporation for the termswithholding agent and payee);

(C) The stock transfer agent obtains,before each year the payment would oth-erwise be reported, a written certificationrepresenting that the corporation shall re-port the payment as part of its accountholder reporting obligations under chapter4 of the Code or an applicable IGA (asdefined in § 1.6049–4(f)(7)) and providedthe stock transfer agent does not knowthat the corporation is not reporting thepayment as required. A stock transferagent that knows that the corporation isnot reporting the payment as required un-der chapter 4 of the Code or an applicableIGA must report all payments reportableunder this section that it makes during theyear in which it obtains such knowledge;and

(D) The stock transfer agent is not alsoacting in its capacity as a custodian, nom-inee, or other agent of the payee withrespect to the payment.

(xv) Effective/applicability date. Para-graphs (c)(3)(ii) and (xiv) of this sectionapply to sales effected on or after July 1,2014. (For sales effected before July 1,2014, see paragraph (c)(3)(ii) of this sec-tion as in effect and contained in 26 CFRpart 1 revised April 1, 2013.)

(c)(4) through (g)(1) [Reserved]. Forfurther guidance, see § 1.6045–1(c)(4)through (g)(1).

(i) With respect to a sale effected at anoffice of a broker either inside or outsidethe United States, the broker may treat thecustomer as an exempt foreign person ifthe broker can, prior to the payment, reli-ably associate the payment with documen-tation upon which it can rely in order totreat the customer as a foreign beneficialowner in accordance with § 1.1441–1(e)(1)(ii), as made to a foreign payee inaccordance with § 1.6049–5(d)(1), or pre-sumed to be made to a foreign payeeunder § 1.6049–5(d)(2) or (3). For pur-poses of this paragraph (g)(1)(i), the pro-visions in § 1.6049–5(c) regarding rulesapplicable to documentation of foreignstatus shall apply with respect to a salewhen the broker completes the acts nec-essary to effect the sale at an office out-side the United States, as described inparagraph (g)(3)(iii)(A) of this section,and no office of the same broker withinthe United States negotiated the sale withthe customer or received instructions withrespect to the sale from the customer. Theprovisions in § 1.6049–5(c) regarding thedefinitions of U.S. payor, U.S. middle-man, non-U.S. payor, and non-U.S. mid-dleman shall also apply for purposes ofthis paragraph (g)(1)(i). The provisions of§ 1.1441–1 shall apply by substituting theterms broker and customer for the termswithholding agent and payee and withoutregard for the fact that the provisions ap-ply to amounts subject to withholding un-der chapter 3 of the Internal RevenueCode (Code). The provisions of§ 1.6049–5(d) shall apply by substitutingthe terms broker and customer for theterms payor and payee. For purposes ofthis paragraph (g)(1)(i), a broker that isrequired to obtain, or chooses to obtain, abeneficial owner withholding certificate

described in § 1.1441–1(e)(2)(i) from anindividual may rely on the withholdingcertificate only to the extent the certificateincludes a certification that the beneficialowner has not been, and at the time thecertificate is furnished, reasonably expectsnot to be present in the United States for aperiod aggregating 183 days or more dur-ing each calendar year to which the cer-tificate pertains. The certification is notrequired if a broker receives documentaryevidence under § 1.6049–5(c)(1) or (4).

(ii) through (3)(iii) [Reserved]. For fur-ther guidance, see § 1.6045–1(g)(1)(ii)through (g)(3)(iii).

(iv) Special rules where the customeris a foreign intermediary or certain U.S.branches. A foreign intermediary, as de-fined in § 1.1441–1(c)(13), is an exemptforeign person, except when the brokerhas actual knowledge (within the meaningof § 1.6049–5(c)(3)) that the person forwhom the intermediary acts is a U.S. per-son that is not exempt from reporting un-der paragraph (c)(3) of this section or thebroker is required to presume under§ 1.6049–5(d)(3) that the payee is a U.S.person that is not an exempt recipient. If aforeign intermediary, as described in§ 1.1441–1(c)(13), or a U.S. branch that isnot treated as a U.S. person receives apayment from a payor or middleman,which payment the payor or middlemancan reliably associate with a valid with-holding certificate described in § 1.1441–1(e)(3)(ii) or (iii) or § 1.1441–1(e)(3)(v),respectively, furnished by such intermedi-ary or branch, then the intermediary orbranch is not required to report such pay-ment when it, in turn, pays the amount,unless, and to the extent, the intermediaryor branch knows that the payment is re-quired to be reported under this sectionand was not so reported. For example, if aU.S. branch described in § 1.1441–1(b)(2)(iv) fails to provide information re-garding U.S. persons that are not exemptfrom reporting under paragraph (c)(3) ofthis section to the person from whom theU.S. branch receives the payment, theU.S. branch must report the payment onan information return. See, however, para-graph (c)(3)(ii) of this section for whenreporting under section 6045 is coordi-nated with reporting under chapter 4 ofthe Code or an applicable IGA (as definedin § 1.6049–4(f)(7)). The exception of


this paragraph (g)(3)(iv) for amounts paidby a foreign intermediary shall not applyto a qualified intermediary that assumesreporting responsibility under chapter 61of the Code except as provided under theagreement described in § 1.1441–1(e)(5)(iii).

(4) Examples. The application of theprovisions of this paragraph (g) may beillustrated by the following examples:

Example 1. FC is a foreign corporation that is nota U.S. payor or U.S. middleman described in§ 1.6049–5(c)(5) that regularly issues and retires itsown debt obligations. A is an individual whose res-idence address is inside the United States, who holdsa bond issued by FC that is in registered form (withinthe meaning of section 163(f) and the regulationsunder that section). The bond is retired by FP, aforeign corporation that is a broker within the mean-ing of paragraph (a)(1) of this section and the des-ignated paying agent of FC. FP mails the proceeds toA at A’s U.S. address. The sale would be consideredto be effected at an office outside the United Statesunder paragraph (g)(3)(iii)(A) of this section exceptthat the proceeds of the sale are mailed to a U.S.address. For that reason, the sale is considered to beeffected at an office of the broker inside the UnitedStates under paragraph (g)(3)(iii)(B) of this section.Therefore, FC is a broker under paragraph (a)(1) ofthis section with respect to this transaction because,although it is not a U.S. payor or U.S. middleman, asdescribed in § 1.6049–5(c)(5), it is deemed to effectthe sale in the United States. FP is a broker for thesame reasons. However, under the multiple brokerexception under paragraph (c)(3)(iii) of this section,FP, rather than FC, is required to report the paymentbecause FP is responsible for paying the holder theproceeds from the retired obligations. Under para-graph (g)(1)(i) of this section, FP may not treat A asan exempt foreign person and must make an infor-mation return under section 6045 with respect to theretirement of the FC bond, unless FP obtains thecertificate or documentation described in paragraph(g)(1)(i) of this section.

Example 2. The facts are the same as in Example1 except that FP mails the proceeds to A at anaddress outside the United States. Under paragraph(g)(3)(iii)(A) of this section, the sale is considered tobe effected at an office of the broker outside theUnited States. Therefore, under paragraph (a)(1) ofthis section, neither FC nor FP is a broker withrespect to the retirement of the FC bond. Accord-ingly, neither is required to make an informationreturn under section 6045.

Example 3. The facts are the same as in Example2 except that FP is also the agent of A. The result isthe same as in Example 2. Neither FP nor FC arebrokers under paragraph (a)(1) of this section withrespect to the sale since the sale is effected outsidethe United States and neither of them are U.S. payors(within the meaning of § 1.6049–5(c)(5)).

Example 4. The facts are the same as in Example1 except that the registered bond held by A wasissued by DC, a domestic corporation that regularlyissues and retires its own debt obligations. Also, FPmails the proceeds to A at an address outside the

United States. Interest on the bond is not described inparagraph (g)(1)(ii) of this section. The sale is con-sidered to be effected at an office outside the UnitedStates under paragraph (g)(3)(iii)(A) of this section.DC is a broker under paragraph (a)(1)(i)(B) of thissection. DC is not required to report the paymentunder the multiple broker exception under paragraph(c)(3)(iii) of this section. FP is not required to makean information return under section 6045 because FPis not a U.S. payor described in § 1.6049–5(c)(5) and the sale is effected outside the UnitedStates. Accordingly, FP is not a broker under para-graph (a)(1) of this section.

Example 5. The facts are the same as in Example4 except that FP is also the agent of A. DC is abroker under paragraph (a)(1) of this section. DC isnot required to report under the multiple brokerexception under paragraph (c)(3)(iii) of this section.FP is not required to make an information returnunder section 6045 because FP is not a U.S. payordescribed in § 1.6049–5(c)(5) and the sale is ef-fected outside the United States and therefore FP isnot a broker under paragraph (a)(1) of this section.

Example 6. The facts are the same as in Example4 except that the bond is retired by DP, a brokerwithin the meaning of paragraph (a)(1) of this sec-tion and the designated paying agent of DC. DP is aU.S. payor under § 1.6049–5(c)(5). DC is not re-quired to report under the multiple broker exceptionunder paragraph (c)(3)(iii) of this section. DP isrequired to make an information return under section6045 because it is the person responsible for payingthe proceeds from the retired obligations unless DPobtains the certificate or documentary evidence de-scribed in paragraph (g)(1)(i) of this section.

Example 7. Customer A owns U.S. corporatebonds issued in registered form after July 18, 1984,and carrying a stated rate of interest. The bonds areheld through an account with foreign bank, X, andare held in street name. X is a wholly-owned sub-sidiary of a U.S. company and is not a qualifiedintermediary within the meaning of § 1.1441–1(e)(5)(ii). X has no documentation regarding A. Ainstructs X to sell the bonds. In order to effect thesale, X acts through its agent in the United States, Y.Y sells the bonds and remits the sales proceeds to X.X credits A’s account in the foreign country. X doesnot provide documentation to Y and has no actualknowledge that A is a foreign person but it doesappear that A is an entity (rather than an individual).

(i) Y’s obligations to withhold and report. Ytreats X as the customer, and not A, because Ycannot treat X as an intermediary because it hasreceived no documentation from X. Y is not requiredto report the sales proceeds under the multiple brokerexception under paragraph (c)(3)(iii) of this section,because X is an exempt recipient. Further, Y is notrequired to report the amount of accrued interest paidto X on Form 1042–S under § 1.1461–1(c)(2)(ii) be-cause accrued interest is not an amount subject toreporting under chapter 3 unless the withholdingagent knows that the obligation is being sold with aprimary purpose of avoiding tax.

(ii) X’s obligations to withhold and report. Al-though X has effected, within the meaning of para-graph (a)(1) of this section, the sale of a security atan office outside the United States under paragraph(g)(3)(iii) of this section, X is treated as a broker,

under paragraph (a)(1) of this section, because as awholly-owned subsidiary of a U.S. corporation, X isa controlled foreign corporation and therefore is aU.S. payor. See § 1.6049–5(c)(5). Under the pre-sumptions described in § 1.6049–5(d)(2) (as appliedto amounts not subject to withholding under chapter3), X must apply the presumption rules of § 1.1441–1(b)(3)(i) through (iii) , with respect to the salesproceeds, to treat A as a partnership that is a U.S.non-exempt recipient because the presumption offoreign status for offshore obligations under§ 1.1441–1(b)(3)(iii)(D) does not apply. See para-graph (g)(1)(i) of this section. Therefore, unless X isan FFI (as defined in § 1.1471–1(b)(47)) that is ex-cepted from reporting the sales proceeds under para-graph (c)(3)(ii) of this section, the payment of pro-ceeds to A by X is reportable on a Form 1099 underparagraph (c)(2) of this section. X has no obligationto backup withhold on the payment based on theexemption under § 31.3406(g)–1(e) of this chapter,unless X has actual knowledge that A is a U.S.person that is not an exempt recipient. X is alsorequired to separately report the accrued interest (seeparagraph (d)(3) of this section) on Form 1099 undersection 6049 because A is also presumed to be a U.S.person who is not an exempt recipient with respect tothe payment because accrued interest is not anamount subject to withholding under chapter 3 and,therefore, the presumption of foreign status for off-shore obligations under § 1.1441–1(b)(3)(iii)(D)does not apply. See § 1.6049–5(d)(2)(i).

Example 8. The facts are the same as in Example7, except that X is a foreign corporation that is not aU.S. payor under § 1.6049–5(c).

(i) Y’s obligations to withhold and report. Y isnot required to report the sales proceeds under themultiple broker exception under paragraph (c)(3)(iii)of this section, because X is the person responsiblefor paying the proceeds from the sale to A.

(ii) X’s obligations to withhold and report. Al-though A is presumed to be a U.S. payee under thepresumptions of § 1.6049–5(d)(2), X is not consid-ered to be a broker under paragraph (a)(1) of thissection because it is a not a U.S. payor under§ 1.6049–5(c)(5). Therefore X is not required toreport the sale under paragraph (c)(2) of this section.

(5) introductory text and (5)(i) [Re-served]. For further guidance, see§ 1.6045–1(g)(5) introductory text and(g)(5)(i).

(ii) The provisions of paragraphs(g)(1)(i), (g)(3)(iv), and (g)(4) of this sec-tion apply to payments made on or afterJuly 1, 2014.

(h) through (k) [Reserved]. For furtherguidance, see § 1.6045–1(h) through (k).

* * * * *(p) [Reserved]. For further guidance,

see § 1.6045–1(p).(q) Expiration date. The applicability

of this section expires on February 28,2017.


1. Revising paragraph (b)(1).


2. Adding paragraph (c)(4).3. Revising paragraphs (f)(3) and

(f)(4)(ii).4. Adding paragraphs (f)(5) through

(16) and (h).The revisions and additions read as fol-

lows:

§ 1.6049–4 Return of information as tointerest paid and original issue discountincludible in gross income afterDecember 31, 1982.


see § 1.6049–4T(b)(1).* * * * *(c) * * *(4) [Reserved]. For further guidance,

see § 1.6049–4T(c)(4).* * * * *(f) * * *(3) [Reserved]. For further guidance,

see § 1.6049–4T(f)(3).(4) * * *(ii) [Reserved]. For further guidance,

see § 1.6049–4T(f)(4)(ii).(5) through (16) [Reserved]. For fur-

ther guidance, see § 1.6049–4T(f)(5)through (16)(iv).

* * * * *(h) [Reserved]. For further guidance,


read as follows:

§ 1.6049–4T Return of information as tointerest paid and original issue discountincludible in gross income afterDecember 31, 1982 (temporary).


(b) Information to be reported—(1) In-terest payments. Except as provided inparagraphs (b)(3) and (5) of this section,in the case of interest other than originalissue discount treated as interest under§ 1.6049–5(f), an information return onForm 1099 shall be made for the calendaryear showing the aggregate amount of thepayments, the name, address, and tax-payer identification number of the personto whom paid, the amount of tax deductedand withheld under section 3406 from thepayments, if any, and such other informa-tion as required by the forms. An infor-

mation return is generally not required ifthe amount of interest paid to a personaggregates less than $10 or if the paymentis made to a person who is an exemptrecipient described in paragraph (c)(1)(ii)of this section, unless the payor backupwithholds under section 3406 on suchpayment (because, for example, the payee(that is, exempt recipient) has failed tofurnish a Form W–9 on request), in whichcase the payor must make a return underthis section, unless the payor refunds theamount withheld pursuant to§ 31.6413(a)–3 (Employment Tax Regu-lations). For reporting interest paid to cer-tain nonresident alien individuals, see§ 1.6049–8.

(2) through (c)(3) [Reserved]. For fur-ther guidance, see § 1.6049–4(b)(2) through (c)(3).

(4) Coordination of reporting withchapter 4 reporting or an applicableIGA—(i) U.S. accounts reported by FFIsthat are non-U.S. payors. An informationreturn shall not be required with respect toan interest payment made by a participat-ing FFI (including a reporting Model 2FFI), or registered deemed-compliant FFI(including a reporting Model 1 FFI), thatis a non-U.S. payor (as defined in§ 1.6049–5(c)(5)) to an account holder ofan account maintained by the FFI, whenthe payment is not subject to withholdingunder chapters 3 or 4 or to backup with-holding under section 3406, and the con-ditions of paragraphs (c)(4)(i)(A) through(C) are met. See paragraph (c)(4)(iii) ofthis section for circumstances in which anFFI may allocate a payment described inthis paragraph (c)(4)(i) to a chapter 4withholding rate pool of U.S. payees.

(A) The FFI is a participating FFI (in-cluding a reporting Model 2 FFI) report-ing the account holder of the U.S. account(as defined in § 1.1471–1(b)(133)) pursu-ant to either § 1.1471–4(d)(3) or (5) forthe year in which the payment is made(including reporting of the account hold-er’s TIN).

(B) The FFI is a registered deemed-compliant FFI (other than a reportingModel 1 FFI) reporting the account holderof the U.S. account pursuant to the condi-tions of its applicable deemed-compliantstatus under § 1.1471–5(f)(1) for the yearin which the payment is made (includingreporting of the account holder’s TIN).

(C) The FFI is a reporting Model 1 FFIreporting the account holder of the report-able U.S. account pursuant to an applica-ble Model 1 IGA for the year in which thepayment is made (including reporting ofthe account holder’s TIN).

(ii) Other accounts reported by FFIsunder chapter 4. An information returnshall not be required under this sectionwith respect to a payment that is not sub-ject to withholding under chapter 3 (asdefined in § 1.1441–2(a)) or backup with-holding under § 31.3406(g)–1(e) and thatis made to a recalcitrant account holder ofa participating FFI (or non-consentingU.S. account of a reporting Model 2 FFI),provided that the FFI reports such accountholder in accordance with the classes ofaccount holders described in § 1.1471–4(d)(6) for the year in which the paymentis made. See paragraph (c)(4)(iii) of thissection for circumstances in which an FFImay allocate a payment described in thisparagraph (c)(4)(ii) to a chapter 4 with-holding rate pool of U.S. payees. In thecase of a payment made by an FFI that isa reporting Model 1 FFI, an informationreturn shall not be required with respect toa payment that is not subject to withhold-ing under chapter 3 or backup withholdingunder § 31.3406(g)–1(e) and that is madeto an account holder of the FFI if theaccount—

(A) Has U.S. indicia for which appro-priate documentation sufficient to treat theaccount as held by other than a specifiedU.S. person has not been provided pursu-ant to the due diligence requirements de-scribed in an applicable Model 1 IGA and,

(B) Is therefore treated as a U.S. report-able account that the FFI is required toreport pursuant to the applicable Model 1IGA.

(iii) Coordination of reporting excep-tions with reporting of chapter 4 with-holding rate pools. For purposes of para-graphs (c)(4)(i) and (ii) of this section, aparticipating FFI (including a reportingModel 2 FFI) or registered deemed-compliant FFI (including a reportingModel 1 FFI) receiving a payment fromanother payor may provide a withholdingstatement to the payor allocating the pay-ment to a chapter 4 withholding rate ofpool of U.S. payees only if the payment isexcepted from reporting under paragraph(c)(4)(i) of this section or if the payment is


both excepted from reporting under para-graph (c)(4)(ii) of this section and notsubject to withholding under chapter 4.See § 1.6049–5(b)(14) (providing an ex-ception from reporting under section 6049to a payor that has been furnished a with-holding statement from an participatingFFI (including a reporting Model 2 FFI)or registered deemed-compliant FFI (in-cluding a reporting Model 1 FFI) and thatallocates the payment to a chapter 4 with-holding rate pool). Thus, for example, aU.S. payor that is a participating FFI maynot allocate a payment to a chapter 4withholding rate pool of U.S. payees on awithholding statement described in§ 1.6049–5(b)(14) when the payment ismade to a U.S. account maintained by theFFI, regardless of whether the FFI reportsthe account in accordance with § 1.1471–4(d)(3) because the U.S. payor is not ex-cepted from reporting under this sectionpursuant to paragraph (c)(4)(i) of this sec-tion.

(iv) Example. The application of theprovisions of paragraphs (c)(4)(ii) and(iii) of this section may be illustrated bythe following example:

Example. USP is a payor that makes an interestpayment that is not a withholdable payment (as de-fined in paragraph (f)(15) of this section) to RM2, aU.S. payor and reporting Model 2 FFI. The paymentis paid and received outside of the United States andis not an amount subject to withholding under chap-ter 3. RM2 receives the payment as an intermediaryon behalf of its account holder, A. RM2 has accountinformation with respect to A which includes U.S.indicia as described in § 1.1441–7(b)(5) or (8). Ad-ditionally, A does not provide consent for RM2 toreport A’s account. Under the presumption rulesdescribed in § 1.6049–5(d)(2)(i), RM2 is required totreat A as a U.S. non-exempt recipient. Despite thispresumption rule, and because backup withholdingdoes not apply under § 31.3406(g)–1(e), no informa-tion return shall be required with respect to thepayment under paragraph (c)(4)(ii) of this section ifA is reported by RM2 consistent with § 1.1471–4(d)(6) as a non-consenting account holder. Addi-tionally, RM2 may include A in the chapter 4 with-holding rate pool of U.S. payees on the withholdingstatement provided to USP consistent with the re-quirements of paragraph (c)(4)(iii) of this section.

(d) through (f)(2) [Reserved]. For fur-ther guidance, see § 1.6049–4(d) through(f)(2).

(3) Obligation. The term obligation in-cludes bonds, debentures, notes, certifi-cates, and other evidences of indebtednessregardless of how denominated. For thedefinition of the term offshore obligation,see paragraph (f)(9) of this section.

(4) and (4)(i) [Reserved]. For furtherguidance, see § 1.6049–4(f)(4) introduc-tory text and (f)(4)(i).

(ii) Example. The application of theprovisions of paragraph (f)(4) of this sec-tion may be illustrated by the followingexample:

Example. In January, 1984, Broker B, a U.S.payor, purchases on behalf of its customer, Individ-ual A, an obligation issued by partnership RR in apublic offering on that date. Broker B holds theobligation for A throughout 1984. Broker B is re-quired to make an information return showing theamount of original issue discount treated as paid to Aunder § 1.6049–5(f).

(5) Chapter 4 withholding rate pool.The term chapter 4 withholding rate poolhas the meaning set forth in § 1.1471–1(b)(20). However, for determining theU.S. payees included in a chapter 4 with-holding rate pool for purposes of section6049, see paragraph (c)(4)(iii).

(6) Foreign financial institution (orFFI). The term foreign financial institu-tion or FFI means an entity described in§ 1.1471–1(b)(47),

(7) Intergovernmental agreement (orIGA). The term intergovernmental agree-ment or IGA has the meaning set forth in§ 1.1471–1(b)(67) (i.e., either a Model 1IGA described in § 1.1471–1(b)(78) or aModel 2 IGA described in § 1.1471–1(b)(79)).

(8) Non-consenting U.S. accounts. Theterm non-consenting U.S. accounts hasthe meaning set forth in an applicableModel 2 IGA.

(9) Offshore obligation. The term off-shore obligation means an offshore obli-gation defined in § 1.6049–5(c)(1). Forthe definition of the term obligation, seeparagraph (f)(3) of this section.

(10) Participating FFI. The term par-ticipating FFI means an FFI that is de-scribed in § 1.1471–1(b)(91).

(11) Recalcitrant account holder. Theterm recalcitrant account holder has thesame meaning set forth in § 1.1471–1(b)(110).

(12) Registered deemed-compliantFFI. The term registered deemed-compliant FFI means an FFI that is de-scribed in § 1.1471–1(b)(111).

(13) Reporting Model 1 FFI. The termreporting Model 1 FFI means an FFI thatis described in § 1.1471–1(b)(114).

(14) Reporting Model 2 FFI. The termreporting Model 2 FFI means a participat-

ing FFI that is described in § 1.1471–1(b)(91).

(15) Withholdable payment. The termwithholdable payment means a paymentdescribed in § 1.1471–1(b)(145).

(16) Paid and received outside theUnited States—(i) In general. Except asotherwise provided in paragraphs(f)(16)(ii) and (iii) of this section, the termpaid and received outside the UnitedStates means an amount that is paid by apayor or middleman outside the UnitedStates as described in § 1.6049–5(e).

(ii) Transfers to the United States.Without regard to the location of the ac-count from which the amount is drawn, anamount that is described in paragraph(f)(16)(ii)(A) or (B) of this section andpaid by transfer to an account maintainedby the payee in the United States or bymail to a United States address (includingan amount paid with respect to a bond ora discount obligation described in§ 1.6049–5(e)(4)) is not considered to bepaid and received outside the UnitedStates.

(A) An amount is described in thisparagraph (f)(16)(ii)(A) if it is paid by anissuer or the paying agent of the issuerwith respect to an obligation that is—

(1) Issued by a U.S. payor, as definedin § 1.6049–5(c)(5);

(2) Registered under the Securities Actof 1933 (15 U.S.C. 77a); or

(3) Listed on an exchange that is reg-istered as a national securities exchange inthe United States or included in an inter-dealer quotation system in the UnitedStates.

(B) An amount is described in thisparagraph (f)(16)(ii)(B) if it is paid by aU.S. middleman (as defined in § 1.6049–5(c)(5)) that, as a custodian, nominee, orother agent of a payee, collects the amountfor or on behalf of the payee.

(iii) Deposits or accounts with banksand other financial institutions. In the caseof an amount paid by a bank or otherfinancial institution with respect to a de-posit or an account that is considered paidat a branch or office outside the UnitedStates as described in § 1.6049–5(e)(2), the amount is not considered paidand received outside the United States ifthe institution has knowledge that the cus-tomer has transmitted instructions to anagent, branch, or office of the institution


from inside the United States by mail,telephone, electronic transmission, or oth-erwise concerning the deposit or account(unless the transmission from the UnitedStates has taken place in isolated and in-frequent circumstances).

(iv) Examples. The application of theprovisions of paragraph (f)(16) of this sec-tion may be illustrated by the followingexamples:

Example 1. FC is a foreign corporation that is nota U.S. payor or U.S. middleman, as defined in§ 1.6049–5(c)(5). A holds FC coupon bonds that arenot in registered form under section 163(f) and theregulations. FB, a foreign branch of DC, a domesticcorporation, is the designated paying agent with re-spect to the bonds issued by FC. A does not have anaccount with FB. A presents a coupon to FB at itsoffice outside the United States with instructions totransfer funds to a bank account maintained by A inthe United States. FB transfers the funds in accor-dance with A’s instructions. Even though the amountis credited to an account in the United States, theinterest on the FC bonds is paid and received outsidethe United States under paragraph (f)(16)(ii) of thissection and § 1.6049–5(e)(3) because the coupon ispresented for payment outside the United States;because FC is a foreign person that is not a U.S.payor or U.S. middleman, as defined in § 1.6049–5(d)(1); because FB is not acting as A’s agent; andbecause the obligation is not registered under theSecurities Act of 1933 (15 U.S.C. 77a), listed on asecurities exchange that is registered as a nationalsecurities exchange in the United States, or includedin an interdealer quotation system.

Example 2. FC is a foreign corporation that is nota U.S. payor or U.S. middleman, as defined in§ 1.6049–5(d)(1). B, a United States citizen, holds abond issued by FC in registered form under section163(f) and the regulations thereunder and registeredunder the Securities Act of 1933 (15 U.S.C. 77a).The bond is not a foreign-targeted registered obliga-tion as defined in § 1.871–14(e)(2). DB, a UnitedStates branch of a foreign corporation engaged in thecommercial banking business, is the registrar of thebonds issued by FC. DB supplies FC with a list ofthe holders of the FC bonds. Interest on the FC bondsis paid to B and other bondholders by checks pre-pared by FC at its principal office outside the UnitedStates, and B’s check is mailed from there to hisdesignated address in the United States. The bond isdescribed in paragraph (f)(16)(ii)(A)(2) of this sec-tion. The interest on the FC bonds paid to B by FCis not paid and received outside the United Statesunder paragraph (f)(16) of this section.

Example 3. The facts are the same as in Example2 except that the checks are prepared and mailed inthe United States by DC, a U.S. corporation engagedin the commercial banking business that is the des-ignated paying agent with respect to the bonds issuedby FC, and B’s check is mailed to his designatedaddress outside the United States. For purposes ofsection 6049, the interest on the FC bonds paid byDC is not paid and received outside the United Statesunder paragraph (f)(16)(i) of this section.

(g) [Reserved]. For further guidance,see § 1.6049–4(g)..

(h) Effective/applicability dates. Theprovisions of paragraphs (c)(4), (f)(5)through (f)(16) of this section apply topayments made after June 30, 2014.



1. Revising paragraphs (b)(6) through(b)(8), (b)(10)(i) through (b)(11)(ii)(A),and (b)(12).

2. Redesignating paragraphs (b)(14)and (15) as (b)(15) and (16), adding newparagraph (b)(14), and revising newly re-designated paragraph (b)(15).

3. Revising (c)(1) through (c)(4),(c)(5)(i)(F), (c)(6), (d)(1) and (2), (d)(3)(i)through (d)(3)(iii)(A), (d)(4), (e), and (g).


§ 1.6049–5 Interest and original issuediscount subject to reporting afterDecember 31, 1982 (temporary).

* * * * *(b) * * *(6) through (8) [Reserved]. For further

guidance, see § 1.6049–5T(b)(6) through(8).

* * * * *(10)(i) through (11)(ii)(A) [Reserved].

For further guidance, see § 1.6049–5T(b)(10)(i) through (b)(11)(ii)(A).


see § 1.6049–5T(b)(12).* * * * *(14) and (15) [Reserved]. For further

guidance, see § 1.6049–5T(b)(14) and(15).

* * * * *(c) * * *(1) through (4) [Reserved]. For further

guidance, see § 1.6049–5T(c)(1) through(4).

(5) * * *(i) * * *(F) [Reserved]. For further guidance,

see § 1.6049–5T(c)(5)(i)(F).* * * * *(6) [Reserved]. For further guidance,

see § 1.6049–5T(c)(6).(d) * * *

(1) [Reserved]. For further guidance,see § 1.6049–5T(d)(1)..

(2) * * *(i) through (iii) [Reserved]. For further

guidance, see § 1.6049–5T(d)(2)(i).(3) * * *(i) through (iii)(A) [Reserved]. For fur-

ther guidance, see § 1.6049–5T(d)(3)(i) through (d)(3)(iii)(A).


see § 1.6049–5T(d)(4).(e) * * *(1) through (5) [Reserved]. For further

guidance, see § 1.6049–5T(e)(g) Effective/applicability date—(1)

The provisions of paragraphs (b)(6)through (15), (c), (d), and (e) of this sec-tion apply to payments made after Decem-ber 31, 2000.

(2) [Reserved]. For further guidance,see § 1.6049–5T(g)(2).

Par. 33. Section 1.6049–5T is redesig-nated as section 1.6049(d)–5T.


§ 1.6049–5T Interest and original issuediscount subject to reporting afterDecember 31, 1982 (temporary).

(a) through (b)(5) [Reserved]. For fur-ther guidance, see § 1.6049–5(a) through(b)(5).

(6) Amounts from sources outside theUnited States (determined under the pro-visions of part I, subchapter N, chapter 1of the Internal Revenue Code (Code) andthe regulations under those provisions)paid by a non-U.S. payor or a non-U.S.middleman (as defined in paragraph (c)(5)of this section) and paid and received out-side the United States. See § 1.6049–4(f)(16) for circumstances in which a pay-ment is considered to be paid and receivedoutside the United States.

(7) Portfolio interest, as defined in§ 1.871–14(b)(1), paid with respect to ob-ligations in bearer form described in sec-tion 871(h)(2)(A), as in effect prior to theamendment by section 502 of the HiringIncentives to Restore Employment Act of2010 (HIRE Act), Public Law 111–147,or section 881(c)(2)(A), as in effect priorto the amendment by section 502 of theHIRE Act, that were issued prior to March19, 2012, or with respect to a foreign-


targeted registered obligation described in§ 1.871–14(e)(2) that was issued prior toJanuary 1, 2016, and for which the docu-mentation requirements described in§ 1.871–14(e)(3) and (4) have been satis-fied (other than by a U.S. middleman (asdefined in paragraph (c)(5) of this section)that, as a custodian or nominee of thepayee, collects the amount for, or on be-half of, the payee, regardless of whetherthe middleman is also acting as agent ofthe payor).

(8) Portfolio interest described in§ 1.871–14(c)(1)(ii), paid with respect toobligations in registered form described insection 871(h)(2) or 881(c)(2) that is notdescribed in paragraph (b)(7) of this sec-tion.


(10)(i) Amounts paid and received out-side the United States under § 1.6049–4(f)(16) (other than by a U.S. middleman(as defined in paragraph (c)(5) of this sec-tion) that are paid by a custodian or nom-inee or other agent of the payee, ofamounts that that it receives for, or onbehalf of, the payee, regardless of whetherthe middleman is also acting as agent ofthe payor) with respect to an obligationthat: has a face amount or principalamount of not less than $500,000 (as de-termined based on the spot rate on the dateof issuance if in foreign currency); has amaturity (at issue) of 183 days or less;satisfies the requirements of sections163(f)(2)(B)(i) and (ii)(I), as in effectprior to the amendment by section 502 ofthe HIRE Act, and the regulations there-under (as if the obligation would other-wise be a registration-required obligationwithin the meaning of section163(f)(2)(A)) (however, an original issuediscount obligation with a maturity of 183days or less from the date of issuance isnot required to satisfy the certification re-quirement of § 1.163–5(c)(2)(i)(D)(3))and is issued in accordance with the pro-cedures of § 1.163–5(c)(2)(i)(D); and hason its face the following statement (or asimilar statement having the same effect):

By accepting this obligation, the holder repre-

sents and warrants that it is not a United Statesperson (other than an exempt recipient de-scribed in section 6049(b)(4) of the InternalRevenue Code and regulations thereunder) andthat it is not acting for or on behalf of a United

States person (other than an exempt recipientdescribed in section 6049(b)(4) of the InternalRevenue Code and the regulations thereunder).

(ii) If the obligation is in registeredform, it must be registered in the name ofan exempt recipient described in§ 1.6049–4(c)(1)(ii). For purposes of thisparagraph (b)(10), a middleman may treatan obligation as described in section163(f)(2)(B)(i) and (f)(2)(B)(ii)(I), as ineffect prior to the amendment by section502 of the HIRE Act, and the regulationsunder that section if the obligation, orcoupons detached therefrom, whichever ispresented for payment, contains the state-ment described in this paragraph (b)(10).The exemption from reporting describedin this paragraph (b)(10) shall not apply ifthe payor has actual knowledge that thepayee is a U.S. person who is not anexempt recipient.

(11) Amounts paid with respect to anaccount or deposit with a U.S. or foreignbranch of a domestic or foreign corpora-tion or partnership that is paid with re-spect to an obligation described in eitherparagraph (b)(11)(i) or (ii) of this section,if the branch is engaged in the commercialbanking business; and the interest or OIDis paid and received outside the UnitedStates as defined in § 1.6049–4(f)(16)(other than by a U.S. middleman (as de-fined in paragraph (c)(5) of this section)that acts as a custodian, nominee, or otheragent of the payee, and collects theamount for, or on behalf of, the payee,regardless of whether the middleman isalso acting as agent of the payor). Theexemption from reporting described inthis paragraph (b)(11) shall not apply ifthe payor has actual knowledge that thepayee is a U.S. person who is not anexempt recipient.

(i) An obligation is described in thisparagraph (b)(11)(i) if it is not in regis-tered form (within the meaning of section163(f) and the regulations under that sec-tion), is described in section 163(f)(2)(B),as in effect prior to the amendment bysection 502 of the HIRE Act, and issued inaccordance with the procedures of§ 1.163–5(c)(2)(i)(C) or (D), and, in thecase of a U.S. branch, is part of a largersingle public offering of securities. Forpurposes of this paragraph (b)(11)(i), amiddleman may treat an obligation as de-scribed in section 163(f)(2)(B), as in ef-

fect prior to the amendment by section502 of the HIRE Act, if the obligation,and any detachable coupons, contains thestatement described in section163(f)(2)(B)(ii)(II), as in effect prior tothe amendment by section 502 of theHIRE Act, and the regulations under thatsection.

(ii)(A) An obligation is described inthis paragraph (b)(11)(ii) if it producesincome described in section 871(i)(2)(A);has a face amount or principal amount ofnot less than $500,000 (as determinedbased on the spot rate on the date ofissuance if in foreign currency); satisfiesthe requirements of sections163(f)(2)(B)(i) and (ii)(I), as in effectprior to the amendment by section 502 ofthe HIRE Act, and the regulations there-under (as if the obligation would other-wise be a registration-required obligationwithin the meaning of section163(f)(2)(A)) and is issued in accordancewith the procedures of § 1.163–5(c)(2)(i)(C) or (D) (however, an originalissue discount obligation with a maturityof 183 days or less from the date of issu-ance is not required to satisfy the certifi-cation requirement of § 1.163–5(c)(2)(i)(D)(3)). For purposes of thisparagraph (b)(11)(ii), a middleman maytreat an obligation as described in sections163(f)(2)(B)(i) and (ii), as in effect priorto the amendment by section 502 of theHIRE Act, and the regulations under thatsection if the obligation, or any detachablecoupon, contains the statement describedin paragraph (b)(11)(ii)(B) of this section.

(B) and (C) [Reserved]. For furtherguidance, see § 1.6049–5(b)(11)(ii)(B)and (C).

(12) Payments that a payor can, prior topayment, reliably associate with docu-mentation upon which it may rely to treatthe payment as made to a foreign benefi-cial owner in accordance with § 1.1441–1(e)(1)(ii) or as made to a foreign payee inaccordance with paragraph (d)(1) of thissection or presumed to be made to a for-eign payee under paragraph (d)(2) or (3)of this section. However, such paymentsmay be reportable under § 1.1461–1(b)and (c) or under § 1.1474–1(d)(2) (for achapter 4 reportable amount (as describedin § 1.1471–1(b)(18)). The provisions of§ 1.1441–1 shall apply by substituting theterm payor for the term withholding agent


and without regard to the fact that theprovisions apply only to amounts subjectto withholding under chapter 3 of theCode. In the event of a conflict betweenthe provisions of § 1.1441–1 and para-graph (d) of this section in determiningthe foreign status of the payee, the provi-sions of § 1.1441–1 shall govern for pay-ments of amounts subject to withholdingunder chapter 3 of the Code and the pro-visions of paragraph (d) of this sectionshall govern in other cases. This para-graph (b)(12) does not apply to interestpaid on or after January 1, 2013, to anonresident alien individual to the extentprovided in § 1.6049–8.


(14) Payments that a payor or middle-man can, prior to payment, reliably asso-ciate with documentation upon which itmay rely to treat as made to a foreignintermediary or flow-through entity in ac-cordance with § 1.1441–1(b) if it obtainsfrom the foreign intermediary or flow-through entity a withholding statementunder § 1.1471–3(c)(3)(iii)(B)(2) (de-scribing an FFI withholding statement),§ 1.1471–3(c)(3)(iii)(B)(3) (describing achapter 4 withholding statement),§ 1.1441–1(e)(3)(iv) (describing a with-holding statement provided by a non-qualified intermediary), § 1.1441–1(e)(5)(v) (describing a withholdingstatement provided by a qualified interme-diary), or under § 1.1441–5 (describing awithholding statement provided by a for-eign partnership, foreign simple trust, orforeign grantor trust), that allocates thepayment (or portion of a payment) to achapter 4 withholding rate pool or specificpayees to which withholding applies un-der chapter 4. The provisions of each ofthe foregoing sections shall apply by sub-stituting the term payor for the term with-holding agent. A payor or middleman mayrely on a withholding statement providedby a foreign intermediary or flow-throughentity that identifies a chapter 4 withhold-ing rate pool of U.S. payees (as describedin § 1.6049–4(c)(4)(iii)) or recalcitrantaccount holders (as described in§ 1.1471–4(d)(6)) if it identifies the for-eign intermediary or flow-through entitythat maintains the accounts (as describedin § 1.1471–5(b)(5)) included in the chap-ter 4 withholding rate pool as a participat-

ing FFI (including a reporting Model 2FFI) or registered deemed-compliant FFI(including a reporting Model 1 FFI) byapplying the rules in § 1.1471–3(d)(4) foridentifying the payee of a payment (bysubstituting the term payor with the termwithholding agent). A payor or middle-man may also rely on a withholding state-ment provided by a foreign intermediarythat identifies a chapter 4 withholding ratepool of U.S. payees or recalcitrant accountholders if it identifies the intermediary asa qualified intermediary (as defined in§ 1.1441–1(c)(15) by applying the rulesdescribed in § 1.1441–1(b)(2)(vii)). Seealso § 1.6049–4(c)(4)(iii) for when anFFI may provide a chapter 4 withholdingrate pool of U.S. payees on a withholdingstatement furnished to a payor or middle-man.

(15) If a foreign intermediary, as de-scribed in § 1.1441–1(c)(13), or a U.S.branch that is not treated as a U.S. personreceives a payment from a payor, whichpayment the payor can reliably associatewith a valid withholding certificate de-scribed in § 1.1441–1(e)(3)(ii) or (iii), or§ 1.1441–1(e)(3)(v), respectively, fur-nished by such intermediary or branch,then the intermediary or branch is notrequired to report such payment when it,in turn, pays the amount, unless, and to theextent, the intermediary or branch knowsthat the payment is required to be reportedunder this section and was not so reported.For example, if a U.S. branch described in§ 1.1441–1(b)(2)(iv) fails to provide in-formation regarding U.S. persons that arenot exempt from reporting under§ 1.6049–4(c)(1)(ii) to the person fromwhom the U.S. branch receives the pay-ment, the amount paid by the U.S. branchto such person is interest or original issuediscount. See, however, § 1.6049–4(c)(4) for when reporting under section6049 is coordinated with reporting underchapter 4 or an applicable IGA (as definedin § 1.6049–4(f)(7)). The exception forpayments described in this paragraph(b)(15) shall not apply to a qualified in-termediary that assumes reporting respon-sibility under chapter 61 of the Code forthe payment under the agreement de-scribed in § 1.1441–1(e)(5)(iii).


(c) Applicable rules—(1) Documen-tary evidence for offshore obligations andcertain other obligations—(i) A payormay rely on documentary evidence de-scribed in § 1.1471–3(c)(5)(i) instead of abeneficial owner withholding certificatedescribed in § 1.1441–1(e)(2)(i) in thecase of an amount paid outside the UnitedStates (as described in paragraph (e) ofthis section) with respect to an offshoreobligation, or, in the case of broker pro-ceeds described in § 1.6045–1(c)(2), tothe extent provided in § 1.6045–1(g)(1)(i). For purposes of this section, theterm offshore obligation means—

(A) An account maintained at an officeor branch of a bank or other financialinstitution located outside the UnitedStates; or

(B) An obligation as defined in§ 1.6049–4(f)(3) (other than an accountdescribed in paragraph (c)(1)(i)(A) of thissection), contract, or other instrumentwith respect to which the payor is eitherengaged in business as a broker or dealerin securities or a financial institution (asdefined in § 1.1471–5(e)) that engages insignificant activities at an office or branchlocated outside the United States. For pur-poses of the preceding sentence, an officeor branch of such payor shall be consid-ered to engage in significant activitieswith respect to an obligation when it par-ticipates materially and actively in nego-tiating the obligation under the principlesdescribed in § 1.864–4(c)(5)(iii) (substi-tuting the term obligation for the termstock or security).

(ii) A payor may rely on documentaryevidence if the payor has established pro-cedures to obtain, review, and maintaindocumentary evidence sufficient to estab-lish the identity of the payee and the statusof that person as a foreign person; and thepayor obtains, reviews, and maintainssuch documentary evidence in accordancewith those procedures. A payor maintainsthe documents reviewed for purposes ofthis paragraph (c)(1) by retaining an orig-inal, certified copy, or photocopy (includ-ing a microfiche, electronic scan, or sim-ilar means of electronic storage) of thedocuments reviewed for as long as it maybe relevant to the determination of thepayor’s obligation to report under§ 1.6049–4 and this section and noting inits records the date on which the docu-


ment was received and reviewed. Docu-mentary evidence furnished for a paymentof an amount subject to withholding underchapter 3 of the Code or that is a chapter4 reportable amount under § 1.1474–1(d)(2) must contain all of the informationthat is necessary to complete a Form1042–S for that payment. See § § 1.1471–3(c) and 1.1471–4(c) for additional docu-mentation requirements to identify apayee or account holder for chapter 4 pur-poses that may apply in addition to therequirements under paragraph (c) of thissection.

(iii) Even if an account or obligation(as defined in § 1.6049–4(f)(3)) is notmaintained outside the United States(maintained in the United States), a payormay rely on documentary evidence asso-ciated with a withholding certificate de-scribed in § 1.1441–1(e)(3)(iii) with re-spect to the persons for whom an entityacting as an intermediary collects the pay-ment. A payor may also rely on documen-tary evidence associated with a flow-through withholding certificate forpayments treated as made to foreign part-ners of a nonwithholding foreign partner-ship, as defined in § 1.1441–1(c)(28), theforeign beneficiaries of a foreign simpletrust, as defined in § 1.1441–1(c)(24), orforeign owners of a foreign grantor trust,as defined in § 1.1441–1(c)(26), eventhough the partnership or trust account isan obligation maintained in the UnitedStates.

(2) Other applicable rules. The provi-sions of § 1.1441–1(e)(4)(i) through (xii)(regarding who may sign a certificate, va-lidity period of certificates and documen-tary evidence, retention of certificates, re-liance rules, etc.) shall apply (bysubstituting the term payor for the termwithholding agent and disregarding thefact that the provisions under § 1.1441–1(e)(4) only apply to amounts subject towithholding under chapter 3 of the Code)to withholding certificates and documen-tary evidence furnished for purposes ofthis section. See § 1.1441–1(b)(2)(vii) forprovisions dealing with reliable associa-tion of a payment with documentation.

(3) Standards of knowledge. A payormay not rely on a withholding certificateor documentary evidence described inparagraph (c)(1) or (4) of this section if ithas actual knowledge or reason to know

that any information or certification statedin the certificate or documentary evidenceis unreliable. A payor has reason to knowthat information or certifications are unre-liable only if the payor would have reasonto know under the provisions of § 1.1441–7(b)(2) and (3) that the information andcertifications provided on the certificate orin the documentary evidence are unreli-able or, in the case of a Form W–9 (or anacceptable substitute), it cannot reason-ably rely on the documentation as set forthin § 31.3406(h)–3(e) of this chapter (seethe information and certification describedin § 31.3406(h)–3(e)(2)(i) through (iv) ofthis chapter that are required in order for apayor reasonably to rely on a Form W–9).The provisions of § 1.1441–7(b)(2) and(3) shall apply for purposes of this para-graph (c)(3) irrespective of the type ofincome to which § 1.1441–7(b)(2) is oth-erwise limited. The exemptions from re-porting described in paragraphs (b)(10)and (11) of this section shall not apply ifthe payor has actual knowledge that thepayee is a U.S. person who is not anexempt recipient.

(4) Special documentation rules forcertain payments. This paragraph (c)(4)modifies the provisions of paragraph(c)(1) of this section for payments ofamounts that are not subject to withhold-ing under chapter 3 of the Code, otherthan amounts described in paragraph(d)(3)(iii) of this section (dealing withU.S. short-term OID and U.S. source de-posit interest described in section871(i)(2)(A) or 881(d)(3)). Amounts arenot subject to withholding under chapter 3of the Code if they are not included in thedefinition of amounts subject to withhold-ing under § 1.1441–2(a) (e.g., deposit in-terest with foreign branches of U.S. banks,foreign source income, or broker pro-ceeds). A payor may rely upon documen-tation in lieu of documentary evidence (asdescribed in paragraph (c)(1) of this sec-tion) or a written statement (as defined in§ 1.1471–1(b)(150)) to the extent permit-ted in paragraphs (c)(4)(i) through (iii) ofthis section, until the payor knows or hasreason to know of a change in circum-stance that makes the documentation un-reliable or incorrect (as defined in§ 1.1441–1(e)) when the payor does nothave customer information for the payeethat includes any of the U.S. indicia de-

scribed in § 1.1471–3(c)(6)(ii)(C)(i). Fur-ther, a payor may maintain such documen-tation or documentary evidence asrequired in paragraph (c)(4)(iv) of thissection.

(i) Statement in lieu of documentaryevidence with respect to accounts. If un-der the local laws, regulations, or prac-tices of a country in which an account ismaintained, it is not customary to obtaindocumentary evidence described in para-graph (c)(1) of this section with respect tothe type of account, the payor may, in-stead of obtaining a beneficial ownerwithholding certificate described in§ 1.1441–1(e)(2)(i) or documentary evi-dence described in paragraph (c)(1) of thissection, establish a payee’s foreign statusbased on the statement described in thisparagraph (c)(4)(i)(A) (or such substitutestatement as the Internal Revenue Servicemay prescribe) made on an account open-ing form. However, see, also § 1.1471–4(c) or an applicable IGA for additionaldocumentation requirements that may ap-ply to a participating FFI (including areporting Model 2 FFI) for determiningthe status of its account holders for chap-ter 4 purposes. The statement referred toin this paragraph (c)(4)(i)(A) must appearnear the signature line and must state, “Byopening this account and signing below,the account owner represents and warrantsthat he/she/it is not a U.S. person for pur-poses of U.S. Federal income tax and thathe/she/it is not acting for, or on behalf of,a U.S. person. A false statement or mis-representation of tax status by a U.S. per-son could lead to penalties under U.S. law.If your tax status changes and you becomea U.S. citizen or a resident, you mustnotify us within 30 days.” Additionally, apayor may, instead of obtaining a benefi-cial owner withholding certificate de-scribed in § 1.1441–1(e)(2)(i) or§ 1.1471–3(c)(3)(ii) or documentary evi-dence described in paragraph (c)(1) of thissection, establish a payee’s foreign statusbased on a written statement described inparagraph § 1.1471–1(b)(150) to the ex-tent a payor uses such written statement toestablish a payee’s chapter 4 status and ispermitted to use the written statement un-der § 1.1471–3(d) (by substituting theterm payor for the term withholdingagent) without any other documentary ev-idence.


(ii) Third-party identification. A payorthat is a participating FFI (including areporting Model 2 FFI) or a registereddeemed-compliant FFI may establish apayee’s status based on information pro-vided by a third party credit agency underthis paragraph (c)(4) if the conditions de-scribed in § 1.1471–4(c)(4)(ii) are satis-fied (without regard to whether the payoris a participating FFI).

(iii) Documentation under IGA. Apayor that is a reporting Model 1 FFI orreporting Model 2 FFI may rely upon doc-umentation or a certification establishing apayee’s status that is permitted under anapplicable IGA for determining whetherthe account of the payee is other than aU.S. account and regardless of whethersuch documentation or certification is de-scribed in paragraph (c)(1) of this sectionor § 1.1441–1(e)(2).

(iv) Maintenance of documentationand written statement. A payor maintainsdocumentation if it either maintains thedocumentary evidence as described inparagraph (c)(1) of this section or retains arecord of the documentary evidence re-viewed if the payor is not required toretain copies of the documentation pursu-ant to the payor’s AML due diligence (asdefined in § 1.1471–1(b)(4)). A payor re-tains a record of documentary evidencereviewed by noting in its records the typeof documentation reviewed, the date thedocument was reviewed, the document’sidentification number (if any), andwhether such documentation containedany U.S. indicia described in § 1.1441–7(b)(8). Any statement described in para-graph (c)(4)(i)(A) of this section, must beretained in accordance with § 1.1471–3(c)(6)(iii).

(5) through (c)(5)(i)(E) [Reserved]. Forfurther guidance, see § 1.6049–5(c)(5) in-troductory text through (c)(5)(i)(E).

(F) A U.S. branch or territory financialinstitution described in § 1.1441–1(b)(2)(iv) that is treated as a U.S. person.


(6) Examples. The following examplesillustrate the provisions of paragraphs (b)and (c) of this section:

Example 1. FC is a foreign corporation that is notengaged in a trade or business in the United Statesduring the current calendar year. D, an individualwho is a resident and citizen of the United States,holds a registered obligation issued by FC in a public

offering. Interest is paid on the obligation within theUnited States by DC, a U.S. corporation that is thedesignated paying agent of FC. D does not have anaccount with DC. Although interest paid on theobligation issued by FC is foreign source, the interestpaid by DC to D is considered to be interest underparagraph (b)(6) of this section for purposes of in-formation reporting under section 6049 because it isnot paid and received outside the United Stateswithin the meaning of § 1.6049–4(f)(16).

Example 2. The facts are the same as in Example1 except that D is a nonresident alien individual whohas furnished DC with a Form W–8 in accordancewith the provisions of § 1.1441–1(e)(1)(ii). By rea-son of paragraph (b)(12) of this section, the paymentof interest by DC to D is not considered to be apayment of interest for purposes of information re-porting under section 6049. Therefore, DC is notrequired to make an information return under section6049.

Example 3. The facts are the same as in Example2 except that the obligation of FC is held in acustodial account for D by FB, a foreign branch of aU.S. financial institution. By reason of paragraph(c)(5) of this section, FB is considered to be a U.S.middleman. Therefore, FB is required to make aninformation return unless FB may treat D as a ben-eficial owner that is a foreign person in accordancewith the provisions of § 1.1441–1(e)(1)(ii).

Example 4. The facts are the same as in Example3 except that the FC obligation is held for D by NC,in a custodial account at NC’s foreign branch. NC isa foreign corporation that is a non-U.S. middlemandescribed in paragraph (c)(5) of this section. Thepayment by NC to D is paid and received outside ofthe United States under § 1.6049–4(f)(16) and there-fore is not considered to be a payment of interest forpurposes of section 6049 pursuant to paragraph(b)(6) of this section. Therefore, NC is not requiredto make an information return under section 6049with respect to the payment.

(d) Determination of status as U.S. orforeign payee and applicable presump-tions in the absence of documentation—(1) Identifying the payee. The provi-sions of § § 1.1441–1(b)(2), 1.1441–5(c)(1) and (e)(2) and (3) shall apply (byapplying the term payor instead of theterm withholding agent) to identify thepayee (other than a payee included in achapter 4 withholding rate pool describedin paragraph (b)(14) of this section) forpurposes of this section (and other sec-tions of the regulations under this chapterto which this paragraph (d)(1) applies),except to the extent provided in this para-graph (d)(1) in the case of a payment of anamount that is not subject to withholdingunder chapter 3 of the Code and that is nota withholdable payment (as defined in§ 1.6049–4(f)(15)). Amounts are not sub-ject to withholding under chapter 3 of theCode if they are not included in the defi-nition of amounts subject to withholding

under § 1.1441–2(a) (e.g., deposit interestwith foreign branches of U.S. banks, for-eign source income, or broker proceeds).The exceptions to the application of§ 1.1441–1(b)(2) to amounts that are notsubject to withholding under chapter 3 ofthe Code and that are not withholdablepayments are as follows:

(i) The provisions of § 1.1441–1(b)(2)(ii), dealing with payments to aU.S. agent or intermediary of a foreignperson, shall not apply. Thus, a paymentto a U.S. agent or intermediary of a for-eign person is treated as a payment to aU.S. payee.

(ii) Payments to U.S. branches or ter-ritory financial institution described in§ 1.1441–1(b)(2)(iv) shall be treated aspayments to a foreign payee, irrespectiveof the fact that the U.S. branch or territoryfinancial institution is otherwise treated asa U.S. person for payments of amountssubject to withholding under chapter 3and withholdable payments, and irrespec-tive of the fact that the branch or territoryfinancial institution is treated as a U.S.payor for purposes of paragraph (c)(5) ofthis section.

(2) Presumptions of U.S. or foreignstatus in the absence of documentation—(i) In general. Except as otherwise pro-vided in this paragraph (d)(2)(i), for pur-poses of this section (and other sections ofregulations under this chapter 61 to whichthis paragraph (d)(2) applies), the provi-sions of § 1.1441–1(b)(3)(i) through (ix)and § 1.1441–5(d) and (e)(6) shall apply(by applying the term payor instead of theterm withholding agent) to determine theclassification (e.g., individual, corpora-tion, partnership, trust), status (i.e., a U.S.or a foreign person), and other relevantcharacteristics (e.g., beneficial owner orintermediary) of a payee if a paymentcannot be reliably associated with valid doc-umentation under § 1.1441–1(b)(2)(vii)irrespective of whether the payments aresubject to withholding under chapter 3 ofthe Code or are withholdable payments.The provisions of § 1.1441–1(b)(3)(iii)(D)and (vii)(B) (referencing presumptionrules for payments with respect to off-shore obligations) shall not apply to apayment of an amount not subject to with-holding under chapter 3, unless it is anamount that is a withholdable paymentmade to a payee that is an entity. Thus, in


the case of a withholdable payment madeto an entity, the presumption rules of§ 1.1441–1(b)(3)(iii)(D) and (vii)(B) shallapply regardless of whether the paymentis an amount subject to withholding underchapter 3. Additionally, in the case of anamount paid outside the United Stateswith respect to an offshore obligation de-scribed in § 1.1441–1(b)(3)(iii)(D) or(vii)(B) of an amount not subject to with-holding under chapter 3 and that is treatedas made to a payee that is an individual,the presumption rules of § 1.1441–1(b)(3)(iii) shall not apply, and the payeeshall be presumed a U.S. person onlywhen the payee has any of the indicia ofU.S. status that are described in § 1.1441–7(b)(5) or (8). In a case in which a with-holding agent makes a withholdable pay-ment that cannot reliably be associatedwith documentation, see § 1.1471–3(f)(4) and (5) for determining the statusof the payee for chapter 4 purposes whenthe payment is treated as made to a for-eign entity (by applying the term payorinstead of the term withholding agent).The rules of § 1.1441–1(b)(2)(vii) shallapply for purposes of determining when apayment can reliably be associated withdocumentation, by applying the termpayor instead of the term withholdingagent. For this purpose, the information,documentary evidence, statement, or otherdocumentation described in paragraph(c)(4) of this section can be treated asdocumentation with which a payment canbe associated.

(ii) Grace period in the case of indiciaof a foreign payee. When the conditions ofthis paragraph (d)(2)(ii) are satisfied, the30-day grace period provisions under sec-tion 3406(e) shall not apply and the pro-visions of this paragraph (d)(2)(ii) shallapply instead. A payor that, at any timeduring the grace period described in thisparagraph (d)(2)(ii), credits an accountwith payments described in § 1.1441–6(c)(2) (or credits an account with brokerproceeds from securities described in§ 1.1441–6(c)(2)), that are reportable un-der sections 6042, 6045, 6049, or 6050Nmay, instead of treating the account asowned by a U.S. person and applyingbackup withholding under section 3406, ifapplicable, choose to treat the account asowned by a foreign person (and apply thegrace period described in § 1.1441–

1(b)(3)(iv)) if, at the beginning of thegrace period, the address that the payorhas in its records for the account holder isin a foreign country, the payor has beenfurnished the information contained in awithholding certificate described in§ 1.1441–1(e)(2), or the payor holds awithholding certificate that is no longerreliable other than because the validityperiod as described in § 1.1441–1(e)(4)(ii)(A) has expired. In the case of anewly opened account, the grace periodbegins on the date that the payor firstcredits the account. In the case of an ex-isting account for which the payor holds aForm W–8 or documentary evidence offoreign status, the payor may apply theprovisions of the grace period described in§ 1.1441–1(b)(3)(iv), beginning on thedate that the payor first credits the accountafter the existing documentation held withregard to the account can no longer berelied upon (other than because the valid-ity period described in § 1.1441–1(e)(4)(ii)(A) has expired). A new accountshall be treated as an existing account forpurposes of this paragraph (d)(2)(ii) if theaccount holder already holds an account atthe branch location at which the new ac-count is opened, or if the account istreated as a consolidated obligation as de-fined in § 1.1471–(1)(b)(23) for purposeof chapter 4 to the extent the account doesnot receive any amounts subject to with-holding under chapter 3. A new accountshall also be treated as an existing accountfor purposes of this paragraph (d)(2)(ii) ifan account is held at another branch loca-tion if the institution maintains an accountinformation system described in§ 1.1441–1(e)(4)(ix). The grace periodterminates on the earlier of the close of the90th day from the date on which the graceperiod begins or the date that valid docu-mentation is provided. The grace periodalso terminates when the remaining bal-ance in the account (due to withdrawals orotherwise) is equal to or less than 28 per-cent (or other statutory tax rate that isapplicable to backup withholding) of thetotal amounts credited since the beginningof the grace period that would be subjectto backup withholding if the provisions ofthis paragraph (d)(2)(ii) did not apply. Atthe end of the grace period, the payor shalltreat the amounts credited to the account,or paid with respect to an account, during

the grace period as paid to a U.S. or for-eign payee depending upon whether doc-umentation has been furnished and thenature of any such documentation fur-nished upon which the payor may rely totreat the account as owned by a U.S. orforeign payee. If the documentation hasnot been received on or before the date ofexpiration of the grace period, the payormay also apply the presumptions de-scribed in this paragraph (d) to amountscredited to the account after the date onwhich the grace period expires (until suchtime as the payor can reliably associatethe documentation with amounts cred-ited). See § 31.6413(a)–3(a)(1)(iv) of thischapter for treating backup withheldamounts under section 3406 as errone-ously withheld when the documentationestablishing foreign status is furnishedprior to the end of the calendar year inwhich backup withholding occurs. If theprovisions of this paragraph (d)(2)(ii) ap-ply, the provisions of § 31.3406(d)–3 ofthis chapter shall not apply. For purposesof this paragraph (d)(2)(ii), an accountholder’s reinvestment of gross proceeds ofa sale into other instruments constitutes awithdrawal and a non-qualified electronictransmission of information on a with-holding certificate is a transmission that isnot in accordance with the provisions of§ 1.1441–1(e)(4)(iv). See § 1.1092(d)–1 for a definition of the term activelytraded for purposes of this paragraph(d)(2)(ii).

(iii) Joint owners. Amounts paid to ac-counts held jointly for which a certificateor documentation is required as a condi-tion for being exempt from reporting un-der paragraph (b) of this section are pre-sumed made to U.S. payees who are notexempt recipients if, prior to payment, thepayor cannot reliably associate the pay-ment either with a Form W–9 furnishedby one of the joint owners in the mannerrequired in § § 31.3406(d)–1 through31.3406(d)-5 of this chapter, or with doc-umentation described in paragraph (b)(12)of this section furnished by each jointowner upon which it can rely to treat eachjoint owner as a foreign payee or foreignbeneficial owner. In the case of an amountthat is a withholdable payment made to ajoint account, however, see § 1.1471–3(f)(7) for when the payment is treated asmade to a foreign payee that is a nonpar-


ticipating FFI (as defined in § 1.1471–1(b)(82)). For purposes of applying thisparagraph (d)(2)(iii), the grace period de-scribed in paragraph (d)(2)(ii) of this sec-tion shall apply only if each payee quali-fies for such grace period.

(3) Payments to foreign intermediariesor flow-through entities—(i) Payments ofamounts subject to withholding underchapter 3 of the Code or withholdablepayments. In the case of payments ofamounts that the payor may treat as madeto a foreign intermediary or flow-throughentity in accordance with § § 1.1441–1(b)(3)(ii)(C) and (b)(3)(v)(A) and1.1441–5(c) or (e) and that are subject towithholding under § 1.1441–2(a), the pro-visions of § § 1.1441–1(b)(2)(v) and1.1441–5(c)(1), (e)(2), and (3) shall apply(by applying the term payor instead of theterm withholding agent) to identify thepayee. If a payment of an amount subjectto withholding cannot be reliably associ-ated with valid documentation from apayee in accordance with § 1.1441–1(b)(2)(vii), the presumption rules of§ § 1.1441–1(b)(3)(v) and 1.1441–5(d)and (e)(6) shall apply to determine thepayee’s status for purposes of this section(and other sections of regulations underthis chapter to which this paragraph (d)(3)applies). In the case of an amount that is awithholdable payment, see § 1.1471–3(c)(3) for rules to identify the payee andsee § 1.1471–3(f)(5) for the presumptionrule that shall apply to amounts treated asmade to a foreign intermediary or flow-through entity (by applying the termpayor instead of the term withholdingagent). For example, where a withhold-able payment is made to an intermediaryunder § 1.1471–3 that is treated as a non-participating FFI under § 1.1471–3(f)(5), the nonparticipating FFI shall betreated as the payee under § 1.1471–3(c)(3) and for purposes of this paragraph(d)(3)(i), therefore, no information returnshall be required under this section.

(ii) Payments of amounts not subject towithholding under chapter 3 of the Codeand that are not withholdable payments.Except as provided in paragraph (d)(3)(iii)of this section, amounts that are not sub-ject to withholding under chapter 3 of theCode and that are not withholdable pay-ments that the payor may treat as paid to aforeign intermediary or flow-through en-

tity shall be treated as made to an exemptrecipient described in § 1.6049–4(c) ex-cept to the extent that the payor has actualknowledge that any person for whom theintermediary or flow-through entity is col-lecting the payment is a U.S. person whois not an exempt recipient. In the case ofsuch actual knowledge, the payor shalltreat the payment that it knows is alloca-ble to such U.S. person as a payment to aU.S. payee who is not an exempt recipientand has actual knowledge of the amountallocable to such a person.

(iii) Special rule for payments of cer-tain short-term original issue discount—(A) General rule. A payment of U.S.source interest or original issue discounton the redemption of an obligation with amaturity from the date of issue of 183days or less (short-term OID) described insection 871(g)(1)(B) or 881(e) that thepayor may treat as paid to a foreign inter-mediary or flow-through entity in accor-dance with the provisions of § 1.1441–1(b)(3)(ii)(C), (b)(3)(v)(A), § 1.1441–5(d) or (e) (by substituting the term payorfor the term withholding agent), shall betreated as paid to an undocumented U.S.payee that is not an exempt recipient un-der paragraph § 1.6049–4(c) unless thepayor has documentation from the payeesof the payment and the payment is allo-cated to foreign payees, as a group, and toeach U.S. non-exempt recipient payee.See § 1.1441–1(e)(3)(iv)(C)(2). However,a payor may rely on a withholding state-ment provided by an intermediary de-scribed in § 1.1441–1(e)(3)(iv) (or similarwithholding statement for a flow-throughentity) that identifies a chapter 4 withhold-ing rate pool of U.S. payees (as describedin § 1.6049–4(c)(4)(iii)) only if it identi-fies the foreign intermediary or flow-through entity as a participating FFI (in-cluding a reporting Model 2 FFI) orregistered deemed-compliant FFI (includ-ing a reporting Model 1 FFI) under§ 1.1471–3(d)(4) (by substituting the termpayor with the term withholding agent).See also § 1.6049–4(c)(4)(iii) for whenan FFI may provide a chapter 4 withhold-ing rate pool of U.S. payees on a with-holding statement.

(B) [Reserved]. For further guidance,see § 1.6049–5(d)(3)(iii)(B).


(4) Examples. The rules of paragraphs(d)(1) through (3) of this section are illus-trated by the examples in this paragraph(d)(4). Unless otherwise specified in anexample, the following facts apply: allFFIs, such as a nonqualified intermediarythat is an FFI, are treated as participatingFFIs; all payees have been identified withchapter 4 statuses that do not require with-holding under chapter 4; and none of thepayments are withholdable payments.

Example 1. (i) Facts. USP is a U.S. payor asdefined in paragraph (c)(5) of this section. USP paysinterest from sources within the United States that isa withholdable payment to an account maintained inthe United States by X. The interest is not depositinterest described in sections 871(i)(2)(A) or 881(d).USP does not have a Form W–9, or withholdingcertificate from X as defined in § 1.1441–1(c)(16). Moreover, USP cannot treat X as an ex-empt recipient, as defined in § 1.6049–4(c)(1)(ii), without documentation and there is noindication that X is an individual, trust, or estate.

(ii) Analysis. The U.S. source interest is anamount subject to withholding as defined in§ 1.1441–2(a). Under paragraph (d)(1) of this sec-tion, USP must apply the provisions of § § 1.1441–1(b)(2) and 1.1441–5(c) and (e) to determine thepayee of the interest. Under § 1.1441–1(b)(2)(i), X,the person to whom the payment is made, is consid-ered to be the payee, unless X is determined to be aflow-through entity, in which case the rules of§ 1.1441–5 apply to determine the payee. Underparagraph (d)(2)(i) of this section, the rules of§ 1.1441–1(b)(3)(ii) apply to determine the classifi-cation of a payee as an individual, trust, estate,corporation, or partnership. Under § 1.1441–1(b)(3)(ii)(B), X is presumed to be a partnership,since X does not appear to be an individual, trust orestate, and X cannot be presumed to be an exemptrecipient in the absence of documentation. Paragraph(d)(2)(i) of this section requires USP to apply theprovisions of § § 1.1441–1(b)(3)(iii) and 1.1441–5(d) to determine whether X is presumed to be a U.S.or foreign partnership. Under § § 1.1441–1(b)(3)(iii) and 1.1441–5(d)(2), X is presumed to bea U.S. partnership in absence of any indicia of for-eign partnership status. The presumption of U.S.status applies even though the payment is a with-holdable payment (see paragraph (d)(2) of this sec-tion and § 1.1471–3(f)(2) cross referencing the pre-sumption rules of § 1.1441–1(b)(3)). The U.S.source interest paid to X is reportable under section6049 on Form 1099 and the interest is subject tobackup withholding under section 3406 because Xhas not provided its TIN on a valid Form W–9. Nowithholding or reporting applies to the payment un-der chapter 3 or 4 of the Code.

Example 2. (i) Facts. The facts are the same as inExample 1, except that the interest paid by USP isfrom sources outside the United States.

(ii) Analysis. Interest from sources outside theUnited States is not an amount subject to withhold-ing, as defined in § 1.1441–2(a) or a withholdablepayment. Under paragraph (d)(1) of this section,USP must apply the provisions of § § 1.1441–


1(b)(2) and 1.1441–5(c) and (e) to determine thepayee. Under § 1.1441–1(b)(2)(i), X, the person towhom the payment is made, is considered to be thepayee, unless X is determined to be a flow-throughentity, in which case the rules of § 1.1441–5(c) or (e)apply to determine the payee. Under paragraph(d)(2)(i) of this section, the rules of § 1.1441–1(b)(3)(ii) apply to determine the classification of apayee as an individual, trust, estate, corporation, orpartnership. These rules apply irrespective ofwhether the payment is an amount subject to with-holding. Under § 1.1441–1(b)(3)(ii)(B), X is pre-sumed to be a partnership, since X does not appear tobe an individual, trust or estate, and X cannot bepresumed to be an exempt recipient in the absence ofdocumentation. Paragraph (d)(2)(i) of this sectionrequires USP to apply the provisions of § § 1.1441–1(b)(3)(iii) and 1.1441–5(d) to determine whether, Xis presumed to be a U.S. or foreign partnership.Under § § 1.1441–1(b)(3)(iii) and 1.1441–5(d)(2), Xis presumed to be a U.S. partnership in absence ofany indicia of foreign partnership status. The foreignsource interest is a payment subject to reporting onForm 1099 under § 1.6049–5(a). Further, because Xis a non-exempt recipient that has failed to provideits TIN on a valid Form W–9, the foreign sourceinterest is subject to backup withholding under sec-tion 3406.

Example 3. (i) Facts. USP is a U.S. payor asdefined in paragraph (c)(5) of this section. USPmakes a payment of U.S. source interest outside theUnited States to an offshore account of X. See para-graphs (c)(1) for a definition of offshore account and(e) for a payment outside the United States. USPdoes not have a withholding certificate from X asdefined in § 1.1441–1(c)(16) nor does it have docu-mentary evidence as described in § 1.1441–1(e)(1)(ii)(A)(2) and § 1.6049–5(c)(1).

(ii) Analysis. The interest is an amount subject towithholding as defined in § 1.1441–2(a). Under para-graph (d)(1) of this section, USP must apply theprovisions of § 1.1441–1(b)(2) and § 1.1441–5(c) and (e) to determine the payee. Under § 1.1441–1(b)(2)(i), X, the person to whom the payment ismade, is considered to be the payee, unless X isdetermined to be a flow-through entity, in which casethe rules of § 1.1441–5(c) or (e) apply to determinethe payee. Under paragraph (d)(2)(i) of this section,the rules of § 1.1441–1(b)(3)(ii) apply to determinethe classification of a payee as an individual, trust,estate, corporation, or partnership. Under § 1.1441–1(b)(3)(ii)(B), X is presumed to be a partnership,since X does not appear to be an individual, trust orestate, and X cannot be presumed to be an exemptrecipient in the absence of documentation. Paragraph(d)(2)(i) of this section requires USP to apply theprovisions of § § 1.1441–1(b)(3)(iii) and 1.1441–5(d) to determine whether, X is presumed to be aU.S. or foreign partnership. Under § § 1.1441–1(b)(3)(iii)(D) and 1.1441–5(d)(2), X is presumed tobe a foreign partnership. Therefore, under paragraph(d)(1) of this section and § 1.1441–5(c)(1)(i)(E), thepayees of the interest are presumed to be the partnersof X. Under § 1.1441–5(d)(3), the partners are pre-sumed to be undocumented foreign persons. There-fore, USP must withhold 30% of the interest pay-ment under § 1.1441–1(b)(1) and report the payment

on Form 1042–S in accordance with § 1.1461–1(c).

Example 4. (i) Facts. The facts are the same as inExample 3, except that the interest is paid by F, anon-U.S. payor.

(ii) Analysis. The analysis and result are the sameas in Example 3. F is a withholding agent under§ 1.1441–7 and its status as a non-U.S. payor underparagraph (c)(5) of this section is irrelevant.

Example 5. (i) Facts. USP is a U.S. payor asdefined in paragraph (c)(5) of this section that is notan FFI. USP makes a payment outside the UnitedStates of interest from sources outside the UnitedStates with respect to an offshore obligation held byX. USP does not have a withholding certificate fromX as defined in § 1.1441–1(c)(16) nor does it havedocumentary evidence as described in § § 1.1471–3(c)(5)(i) and 1.6049–5(c)(1). USP does not haveactual knowledge of an employer identification num-ber for X. X does not appear to be an individual,trust, or estate and cannot be treated as an exemptrecipient, as defined in § 1.6049–4(c)(1)(ii) in theabsence of documentation.

(ii) Analysis. The interest is not an amount sub-ject to withholding as defined in § 1.1441–2(a) and isnot a withholdable payment. Under paragraph (d)(1)of this section, USP must apply the rules of§ § 1.1441–1(b)(2) and 1.1441–5(c) and (e) to deter-mine the payee of the interest. Under § 1.1441–1(b)(2)(i), X, the person to whom the payment ismade, is considered to be the payee, unless X isdetermined to be a flow-through entity, in which casethe rules of § 1.1441–5(c) or (e) apply to determinethe payee. Under paragraph (d)(2)(i) of this section,§ 1.1441–1(b)(3)(ii) applies to determine X’s classi-fication as an individual, trust, estate, corporation orpartnership. Under § 1.1441–1(b)(3)(ii)(B), X istreated as a partnership, since it does not appear to bean individual, trust, or estate and cannot be treated asan exempt recipient without documentation. Para-graph (d)(2)(i) of this section requires USP to applythe provisions of § § 1.1441–1(b)(3)(iii) and 1.1441–5(d) to determine whether, X is presumed to be aU.S. or foreign partnership. Paragraph (d)(2)(i) alsostates that the presumptions of foreign status forpayments made with respect to offshore obligationscontained in § § 1.1441–1(b)(3)(iii)(D) and 1.1441–5(d)(2) do not apply to amounts that are not subjectto withholding and that are not withholdable pay-ments described in paragraph (d)(2)(i). Therefore,under § § 1.1441–1(b)(3)(iii) and 1.1441–5(d)(2), Xis presumed to be a U.S. partnership because it doesnot have actual knowledge that X’s employer iden-tification number begins with the digits “98.” There-fore, USP must treat X as a U.S. person that is not anexempt recipient and report the payment on Form1099 under section 6049. Under § 31.3406(g)–1(e) of this chapter, however, USP is not required tobackup withhold on the payment unless it has actualknowledge that X is a U.S. person that is not anexempt recipient.

Example 6. (i) Facts. The facts are the same as inExample 5, except that the interest is paid by F, anon-U.S. payor, as defined under paragraph (c)(5) ofthis section.

(ii) Analysis. The analysis is the same as underExample 5. However, F is a non-U.S. payor payingforeign source interest outside the United States, and

there is no indication that the amount is received inthe United States under § 1.6049–4(f)(16). Thus,paragraph (b)(6) of this section exempts the paymentfrom reporting under section 6049.

Example 7. (i) Facts. USP, a U.S. payor as de-fined in paragraph (c)(5) of this section that is not anFFI, makes a payment of U.S. source interest that isa withholdable payment to NQI, a nonqualified in-termediary as defined in § 1.1441–1(c)(14), that is acertified deemed-compliant FFI under § 1.1471–5(f)(2). The interest is paid inside the United Statesto an account of a bank or other financial institutionmaintained in the United States. NQI has providedUSP with a nonqualified intermediary withholdingcertificate, as described in § 1.1441–1(e)(3)(iii) thatincludes its chapter 4 status, but has not attached anydocumentation from the persons on whose behalf itacts or a withholding statement as described in§ 1.1441–1(e)(3)(iv).

(ii) Analysis. U.S. source interest is an amountsubject to withholding under § 1.1441–2(a). USPmay treat the payment as made to a foreign interme-diary under § 1.1441–1(b)(3)(v)(A) because USPhas received a nonqualified intermediary withhold-ing certificate from NQI and may except NQI fromwithholding under chapter 4 of the Code givenNQI’s status for chapter 4 purposes as a deemed-compliant FFI. Under paragraph (d)(3)(i) of thissection, USP must then apply § 1.1471–3(c)(3) totreat the persons on whose behalf NQI is acting asthe payees. Paragraph (d)(3)(i) of this section alsorequires USP to apply the presumption rules of§ 1.1441–1(b)(3)(v) if it cannot reliably associate thepayment with valid documentation from a payee. See§ 1.1441–1(b)(2)(vii). As the payment is a withhold-able payment, the interest is treated as paid to anonparticipating FFI under § 1.1471–3(f)(4). There-fore, the payment is not subject to reporting on Form1099 under paragraph (b)(12) of this section. See§ 1.1471–2(a) for the withholding requirement withrespect to the payment and § 1.1474–1(d)(2) for therequirement to report the payment on Form 1042–S.

Example 8. (i) Facts. The facts are the same as inExample 7, except that the interest is paid outside theUnited States, as defined in paragraph (e) of thissection to an offshore account, as defined in para-graph (c)(1) of this section and is not a withholdablepayment.

(ii) Analysis. Under § 1.1441–1(b)(3)(v)(B), theinterest is treated as paid to an unknown foreignpayee because it cannot be reliably associated withdocumentation under § 1.1441–1(b)(2)(vii). There-fore, the payment is not subject to reporting on Form1099 under paragraph (b)(12) of this section becausethe payment is presumed made to a foreign person.The payment is subject to withholding, however,under § 1.1441–1(b) at a rate of 30% and is subjectto reporting on Form 1042–S under § 1.1461–1(c).

Example 9. (i) Facts. The facts are the same as inExample 8, except that the interest is paid by F, anon-U.S. payor, as defined in paragraph (c)(5) of thissection.

(ii) Analysis. The analysis and results are thesame as in Example 8.

Example 10. (i) Facts. USP, a U.S. payor asdefined in paragraph (c)(5) of this section, makes apayment of foreign source interest (other than de-posit interest) to NQI, a foreign corporation and a


nonqualified intermediary as defined in § 1.1441–1(c)(14). NQI has provided USP with a nonqualifiedintermediary withholding certificate, as described in§ 1.1441–1(e)(3)(iii), but has not attached any doc-umentation from the persons on whose behalf it actsor a withholding statement as described in § 1.1441–1(e)(3)(iv).

(ii) Analysis. Foreign source interest is not anamount subject to withholding under chapter 3 of theCode and is not a withholdable payment. See§ § 1.1441–2(a) and 1.1473–1(a). Under paragraph(d)(3)(ii) of this section, amounts that are not subjectto withholding under chapter 3 of the Code and thatare not withholdable payments described in para-graph (d)(2)(i) of this section that a payor may treatas paid to a foreign intermediary are treated as madeto an exempt recipient described in § 1.6049–4(c) absent actual knowledge that the payee is a U.S.person who is not an exempt recipient. Therefore,the foreign source interest is not subject to reportingon Form 1099.

Example 11. (i) Facts. USP is a U.S. payor asdefined in paragraph (c)(5) of this section that is abank. USP pays U.S. source original issue discountfrom the redemption of an obligation described insection 871(g)(1)(B) to NQI, a foreign corporationthat is a nonqualified intermediary as defined in§ 1.1441–1(c)(14. The redemption proceeds are notpaid outside of the United States as they are paidwith respect to an account NQI has with a branch ofa bank in the United States. See § 1.6049–5(c)(2). NQI provides a nonqualified intermediarywithholding certificate as described in § 1.1441–1(e)(3)(iii) that includes a certification of its status asa registered deemed-compliant FFI but does not at-tach any payee documentation or a withholdingstatement described in § 1.1441–1(e)(3)(iv).

(ii) Analysis. Under paragraph (d)(3)(ii)(A) ofthis section, USP must treat the payment as made toan undocumented U.S. payee that is not an exemptrecipient and report the payment on Form 1099.Further, because the payment is made inside theUnited States, the exception to backup withholdingwith respect to offshore obligations contained in§ 31.3406(g)–1(e) of this chapter does not apply, andthe payment is subject to backup withholding.

Example 12. (i) Facts. P, a payor, makes a pay-ment to NQI of U.S. source interest on debt obliga-tions issued prior to July 18, 1984 that mature 30years from their issuance dates. Therefore, the inter-est does not qualify as portfolio interest under sec-tion 871(h) or 881(d). Additionally, the interest isnot a withholdable payment under § 1.1471–2(b) asthe interest is a payment with respect to a grandfa-thered obligation for purposes of chapter 4 of theCode. NQI, a U.S. payor, is a nonqualified foreignintermediary, as defined in § 1.1441–1(c)(14), andhas furnished P a valid nonqualified intermediarywithholding certificate described in § 1.1441–1(e)(3)(iii) to which it has attached a valid FormW–9 for A, and two valid beneficial owner FormsW–8, one for B and one for C. A is not an exemptrecipient under § 1.6049–4(c). NQI furnishes awithholding statement, described in § 1.1441–1(e)(3)(iv), in which it allocates 20%of the U.S.source interest to A, but does not allocate the re-maining 80% of the interest between B and C. B’swithholding certificate indicates that B is a foreign

pension fund, exempt from U.S. tax under the U.S.income tax treaty with Country T. C’s withholdingcertificate indicates that C is a foreign corporationnot entitled to a reduced rate of withholding.

(ii) Analysis. As the interest is not a withholdablepayment under paragraph (d)(3)(i) of this section, Papplies the rules of § 1.1441–1(b)(2)(v) to determinethe payees of the interest even though NQI has notcertified its status for purposes of chapter 4 of theCode. Under that section, the payees are the personson whose behalf NQI acts—A, B and C. Because Pcan reliably associate 20% of the payment with validdocumentation provided by A, P must treat 20% ofthe interest as paid to A, a U.S. person not exemptfrom reporting, and report the payment on Form1099. P cannot reliably associate the remaining 80%of the payment with valid documentation under§ 1.1441–1(b)(2)(vii) and, therefore, under para-graph (d)(3)(i) of this section must apply the pre-sumption rules of § 1.1441–1(b)(3)(v). Under thatsection, the interest is presumed paid to an unknownforeign payee. Under paragraph (b)(12) of this sec-tion, P is not required to report the interest presumedpaid to a foreign person on Form 1099. Under§ 1.1441–1(b), 80% of the interest is subject to 30%withholding, however, and the interest is reportableon Form 1042–S under § 1.1461–1(c).

Example 13. (i) Facts. The facts are the same asin Example 12, except that P can reliably associate30% of the payment of interest to B, but cannotreliably associate the remaining 70 percent with A orC.

(ii) Analysis. Under paragraph (d)(3)(i) of thissection, P applies the rules of § 1.1441–1(b)(2)(v) todetermine the payees of the interest. Under thatsection, the payees are the persons on whose behalfNQI acts—A, B and C. Because P can reliablyassociate 30% of the payment with B, a foreignpensions fund exempt from withholding under anincome tax treaty, P may treat that payment as paidto B and not subject to reporting on Form 1099 underparagraph (b)(12) of this section. P cannot reliablyassociate the remaining 70% of the payment withvalid documentation under § 1.1441–1(b)(2)(vii) and, therefore, under paragraph (d)(3)(i)of this section must apply the presumption rules of§ 1.1441–1(b)(3)(v). Under that section, the interestis presumed paid to an unknown foreign payee.Under paragraph (b)(12) of this section, P is notrequired to report the interest presumed paid to aforeign person on Form 1099. Under § 1.1441–1(b), 80% of the interest is subject to 30% withhold-ing, however, and the interest is reportable on Form1042–S under § 1.1461–1(c).

Example 14. (i) Facts. The facts are the same asin Example 12, except that P also makes a paymentof foreign source interest to NQI.

(ii) Analysis. Under paragraph (d)(3)(ii), P maytreat the foreign source interest as paid to an exemptrecipient as defined in § 1.6049–4(c) and not subjectto reporting on Form 1099 even though some or allof the foreign source interest may in fact be ownedby A, the U.S. person that is not exempt from re-porting.

Example 15. (i) Facts. The facts are the same asin Example 12, except that NQI

is a non-U.S. payor.

(ii) Analysis. The analysis is the same as underExample 12 with respect to B and C. However,because NQI is a non-U.S. payor, it may under§ 1.6049–4(c)(4)(iii) allocate the portion of the pay-ment to A to a chapter 4 withholding rate pool ofU.S. payees on a withholding statement provided toP in lieu of furnishing the Form W–9 to P when NQIreports the payments in accordance with § 1.6049–4(c)(4)(i). In such a case, provided that P obtains acertification form confirming NQI’s status as a par-ticipating FFI, P is excepted from reporting the pay-ment under paragraph (b)(14) of this section becauseP can reliably associate the payment with the docu-mentation provided by NQI.

(e) Determination of whether amountsare considered paid outside the UnitedStates—(1) In general. For purposes ofsection 6049 and this section, an amountis considered to be paid by a payor ormiddleman outside the United States if thepayor or middleman completes the actsnecessary to effect payment outside theUnited States. See paragraphs (e)(2)through (5) of this section for further clar-ification of where amounts are consideredpaid. A payment shall not be considered tobe made within the United States for pur-poses of section 6049 merely by reason ofthe fact that it is made on a draft drawn ona United States bank account or by a wireor other electronic transfer from a UnitedStates account.

(2) Amounts paid with respect to de-posits or accounts with banks and otherfinancial institutions. Notwithstandingparagraph (e)(1) of this section, an amountpaid by a bank or other financial institu-tion with respect to a deposit or with re-spect to an account with the institution isconsidered paid at the branch or office atwhich the amount is credited unless theamount is collected by the financial insti-tution as the agent of the payee. However,an amount will not be considered to bepaid at the branch or office where theamount is considered to be credited unlessthe branch or office is a permanent placeof business that is regularly maintained,occupied, and used to carry on a bankingor similar financial business; the businessis conducted by at least one employee ofthe branch or office who is regularly inattendance at such place of business dur-ing normal business hours; and the branchor office receives deposits and engages inone or more of the other activities de-scribed in § 1.864–4(c)(5)(i).

(3) Coupon bonds and discount obliga-tions in bearer form. Notwithstanding


paragraph (e)(1) of this section, an amountpaid with respect to a bond with couponsattached (including a certificate of depositwith detachable interest coupons) or a dis-count obligation that is not in registeredform (within the meaning of section163(f) and the regulations thereunder) isconsidered to be paid where the coupon orthe discount obligation is presented to thepayor or its paying agent for payment.

(4) Foreign-targeted registered obliga-tions. Notwithstanding paragraph (e)(1) ofthis section, where the payor is the issueror the issuer’s agent, an amount is consid-ered paid outside the United States withrespect to a foreign-targeted registered ob-ligation issued before January 1, 2016, asdescribed in § 1.871–14(e)(2), if either theamount is paid by transfer to an accountmaintained by the registered owner out-side the United States, or by mail to anaddress of the registered owner outsidethe United States, or by credit to an inter-national account. For purposes of thisparagraph (e)(4), the term internationalaccount means the book-entry account ofa financial institution (within the meaningof section 871(h)(4)(B)) or of an interna-tional financial organization with the Fed-eral Reserve Bank of New York for whichthe Federal Reserve Bank of New Yorkmaintains records that specifically identifyan international financial organization or afinancial institution (within the meaningof section 871(h)(4)(B)) as either a non-United States person or a foreign branchof a United States person as registeredowner. An international financial organi-zation is a central bank or monetary au-thority of a foreign government or a pub-lic international organization of which theUnited States is a member to the extentthat such central bank, authority, or orga-nization holds obligations solely for itsown account and is exempt from tax undersection 892 or 895.

(5) Examples. The application of theprovisions of this paragraph (e) are illus-trated by the following examples:

Example 1. FC is a foreign corporation that is nota U.S. payor or U.S. middleman, as defined in para-graph (c)(5) of this section. A holds FC couponbonds that are not in registered form under section163(f) and the regulations thereunder. FB, a foreignbranch of DC, is the designated paying agent withrespect to the bonds issued by FC. A does not havean account with FB. A presents a coupon from a FCbond for payment to FB at its office outside theUnited States. FB pays A with a check drawn against

a bank account maintained in the United States. Forpurposes of section 6049, the place of payment ofinterest on the FC bond by FB to A is considered tobe outside the United States under paragraph (e)(3)of this section.

Example 2. Individual C deposits funds in anaccount with FB, a foreign country X branch of DB,a U.S. corporation engaged in the commercial bank-ing business. FB maintains an office and employeesin foreign country X, accepts deposits, and conductsone or more of the other activities listed in § 1.864–4(c)(5)(i). The terms of C’s deposit provide that itwill be payable with accrued interest. Under para-graph (e)(2) of this section, FB is considered to paythe interest on C’s deposit outside the United States.

Example 3. DC, a U.S. corporation engaged inthe commercial banking business, maintains FB, abranch in foreign country X. FB has an office andemployees in foreign country X, accepts deposits,and engages in one or more of the other activitieslisted in § 1.864–4(c)(5)(i). D, a United States citi-zen, purchases a certificate of deposit issued in 1980by FB. The certificate of deposit has a maturity of 20years and has detachable interest coupons payable atsix-month intervals. D presents some of the couponsat the U.S. office of DC and receives payment incash. Because the coupon is presented to DC forpayment within the United States, DC is consideredto have made the payment within the United Statesunder paragraph (e)(3) of this section.

Example 4. FB is recognized by both foreigncountry X and by the Federal Reserve Bank as aforeign country X branch of DC, a U.S. corporationengaged in the commercial banking business. A localforeign country X bank serves as FB’s resident agentin Country X. FB maintains no physical office oremployees in foreign country X. All the records,accounts, and transactions of FB are handled at theUnited States office of DC. E deposits funds in anamount maintained with FB. Interest earned on thedeposit is periodically credited to E’s account withFB by employees of DC. For purposes of section6049, the place of payment of the interest on E’sdeposit with FB is considered to be within the UnitedStates by reason of paragraphs (e)(1) and (e)(2) ofthis section.

Example 5. DC is a U.S. corporation. A holdsbonds that were issued by DC in registered formunder section 163(f), as in effect prior to the amend-ment by section 502 of the HIRE Act of 2010, andthe regulations thereunder and that are foreign-targeted registered obligations as defined in § 1.871–14(e)(2). DB, a commercial banking business, is theregistrar of bonds issued by DC. Interest on the DCbonds is paid to A and other bondholders by checkprepared by DB at its principal office inside theUnited States and mailed from there to A’s addressoutside the United States. The check is drawn on aUnited States account maintained by DC with DBwithin the United States. The place of payment to Aby DB of the interest on the DC bonds is consideredto be outside the United States under paragraph(e)(4) of this section.

(f) through (g)(1) [Reserved]. For fur-ther guidance, see § 1.6049–5(f) through(g)(1).

(2) The provisions of paragraphs (b)(6)through (8), (b)(10)(i) through

(b)(11)(ii)(A), (b)(12), (b)(14) (b)(15),(c)(1) through (c)(4), (c)(5)(i)(F), (c)(6),(d)(1) through (d)(1)(ii), (d)(2)(i) through(iii), (d)(3)(i) through (d)(3)(iii)(A),(d)(4), and (e)(1) through (5) of this sec-tion apply to payments made after June30, 2014.


PART 31—EMPLOYMENT TAXESAND COLLECTION OF INCOMETAX AT SOURCE

Par. 35. The authority citation for part31 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Par. 36. In § 31.3406(g)–1, paragraph

(e) is revised to read as follows:

§ 31.3406(g)–1 Exception for paymentsto certain payees and certain otherpayments.

* * * * *(e) [Reserved]. For further guidance,

see § 31.3406(g)–1T(e).* * * * *Par. 37. Section 31.3406(g)–1T is

added to read as follows:

§ 31.3406(g)–1T Exception for paymentsto certain payees and certain otherpayments (temporary).

(a) through (d) [Reserved]. For furtherguidance, see § 31.3406(g)–1(a) through(d).

(e) Certain reportable payments madeoutside the United States by foreign per-sons, foreign offices of United Statesbanks and brokers, and others. For report-able payments made after June 30, 2014, apayor is not required to backup withholdunder section 3406 on a reportable pay-ment that is paid and received outside theUnited States (as defined in § 1.6049–4(f)(16)) with respect to an offshore obli-gation (as defined in § 1.6049–5(c)(1)) oron gross proceeds from a sale effectedoutside the United States (as defined in§ 1.6045–1(g)(3)(iii)), unless the payorhas actual knowledge that the payee is aUnited States person. Further, no backupwithholding is required for reportable apayment of an amount already withheldupon by a participating FFI (as defined in


§ 1.1471–1(b)(91)) or another payor in ac-cordance with the withholding provisionsunder chapters 3 or 4 of the Code and theregulations under those chapters even ifthe payee is a known U.S. person. Forexample, a participating FFI is not re-quired to backup withhold on a reportablepayment allocable to its chapter 4 with-holding rate pool (as defined in § 1.6049–4(f)(5)) of recalcitrant account holders (asdescribed in § 1.6049–4(f)(11)), if with-holding was applied to the payment (ei-ther by the participating FFI or anotherpayor) pursuant to § 1.1471–4(b) or§ 1.1471–2(a). For rules applicable to no-tional principal contracts, see § 1.6041–1(d)(5) of this chapter. For rules applica-ble to reportable payments made beforeJuly 1, 2014, see this paragraph (e) as ineffect and contained in 26 CFR part 1revised April 1, 2013.)

(f) [Reserved]. For further guidance,see § 31.3406(g)–1(f) introductory textthrough (f)(5).


Par. 38. In § 31.3406(h)–2, paragraph(a)(3)(i) is revised to read as follows:

§ 31.3406(h)–2 Special rules.


see § 31.3406(h)–2T(a)(3)(i).* * * * *Par. 39. Section 31.3406(h)–2T is

added to read as follows:

§ 31.3406(h)–2T Special rules(temporary).

(a) through (a)(2) [Reserved]. For fur-ther guidance, see § 31.3406(h)–2(a) in-troductory text through (a)(2).

(3) Joint foreign payees—(i) In gen-eral. If the relevant payee listed on ajointly owned account or instrument pro-vides a Form W–8 or documentary evi-dence described in § 1.1441–1(e)(1)(ii)regarding its foreign status, withholdingunder section 3406 applies unless everyjoint payee provides the statement regard-ing foreign status (under the provisions ofchapters 3 or 61 of the Internal RevenueCode and the regulations under those pro-

visions); any one of the joint owners whohas not established foreign status providesa taxpayer identification number to thepayor in the manner required in§§ 31.3406(d)–1 through 31.3406(d)–5;or, in the case of a withholdable payment(as defined in § 1.6049–4(f)(15)), anyjoint payee does not appear to be an indi-vidual as described in § 1.1471–3(f)(7). See § 1.6049–5(d)(2)(iii) of thischapter for corresponding joint payeesprovisions.

(a)(3)(ii) through (h) [Reserved]. Forfurther guidance, see § 31.3406(h)–2(a)(3)(ii) through (h).


PART 301—PROCEDURE ANDADMINISTRATION


Authority: 26 U.S.C. 7805 * * *Par. 41. In § 301.6402–3, paragraphs

(e) and (f) are revised to read as follows:

§ 301.6402–3 Special rules applicable toincome tax.

* * * * *(e) [Reserved]. For further guidance,

see § 301.6402–3T(e).(f) Effective/applicability date. (1) Ref-

erences in paragraph (e) of this section toForm 8805 or other statements requiredunder § 1.1446–3(d)(2) shall apply topartnership taxable years beginning afterApril 29, 2008.

(2) [Reserved]. For further guidance,see § 301.6402–3T(f)(ii).

Par. 42. Section 301.6402–3T is addedto read as follows:

§ 301.6402–3T Special rules applicableto income tax (temporary).

(a) through (d) [Reserved]. For furtherguidance, see § 301.6402–3(a) through(d).

(e) In the case of a nonresident alienindividual or foreign corporation, the ap-propriate income tax return on which theclaim for refund or credit is made mustcontain the tax identification number ofthe taxpayer required pursuant to section6109 and the entire amount of income ofthe taxpayer subject to tax, even if the tax

liability for that income was fully satisfiedat source through withholding under chap-ters 3 or 4 of the Internal Revenue Code(Code). Also, if the overpayment of taxresulted from the withholding of tax atsource under chapters 3 or 4 of the Code,a copy of the Form 1042–S, “Foreign Per-son’s U.S. Source Income subject toWithholding,” Form 8805, “Foreign Part-ner’s Information Statement of Section1446 Withholding Tax,” or other state-ment (required under § 1.1446–3(d)(2) ofthis chapter) required to be provided to thebeneficial owner or partner pursuant to§ 1.1461–1(c)(1)(i), § 1.1474–1(d)(1)(i),or § 1.1446–3(d) of this chapter must beattached to the return. For purposes ofclaiming a refund, the Form 8805 or otherstatement must include the taxpayer iden-tification number of the beneficial owneror partner even if not otherwise required.No claim for refund or credit under chap-ter 65 of the Code may be made by thetaxpayer for any amount that the payorhas repaid to the taxpayer pursuant to re-imbursement or set-off procedures (de-scribed in § 1.1461–2(a)(2),(3) or§ 1.1474–2(a)(3), (4) of this chapter). Inaddition, no claim for refund or credit maybe made by a taxpayer for any amount thathas been repaid to a qualified intermediary(as described in § 1.1441–1(e)(5)(ii)) or aparticipating FFI (as described in§ 1.1471–1(b)(91)) pursuant to a collec-tive refund filed by such entity on behalfof the taxpayer. See § 1.1441–1(e)(5)(iii)(describing a qualified intermediaryagreement) and § 1.1471–4(h) (describinga collective refund). Upon request, a tax-payer must also submit such documenta-tion as the IRS, may require establishingthat the taxpayer is the beneficial owner ofthe income for which a claim for refund orcredit is being made and verifying thegrounds and facts set forth in taxpayer’sclaim as required by § 301.6402–2(b)(1). See § 1.1474–5 for additional re-quirements that may apply in the case of arefund of tax withheld under chapter 4.

(f) and (f)(1) [Reserved]. For furtherguidance, see § 301.6402–3(f) introduc-tory text and (f)(1).

(2) References in paragraph (e) of thissection to amounts withheld under chapter4 of the Code and claims made with re-spect to amounts withheld under chapter 4


of the Code shall apply to withholdablepayments made after June 30, 2014.


John DalrympleDeputy Commissioner for

Services and Enforcement.

Approved February 14, 2014.


(Tax Policy).


Section 6055.—Reportingof health insurancecoverage

T.D. 9660

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Parts 1, 301, and602

Information Reporting ofMinimum Essential Coverage


ACTION: Final regulations.

SUMMARY: This document contains fi-nal regulations providing guidance to pro-viders of minimum essential health cover-age that are subject to the informationreporting requirements of section 6055 ofthe Internal Revenue Code (Code), en-acted by the Patient Protection and Af-fordable Care Act. Health insurance issu-ers, certain employers, and others thatprovide minimum essential coverage toindividuals must report to the IRS infor-mation about the type and period of cov-erage and furnish the information in state-ments to covered individuals. These finalregulations affect health insurance issuersand carriers, employers, governments, and

other persons that provide minimum es-sential coverage to individuals.

DATES: Effective Date: These regula-tions are effective on March 10, 2014.

Applicability Dates: For dates of appli-cability, see §§ 1.6055–1(j) and 1.6055–2(b).

FOR FURTHER INFORMATIONCONTACT: Andrew Braden, (202) 317-7006 (not a toll-free number).


Paperwork Reduction Act

The collection of information con-tained in these regulations has been re-viewed and approved by the Office ofManagement and Budget in accordancewith the Paperwork Reduction Act of1995 (44 U.S.C. 3507(d)) under controlnumber 1545-2252.

The collection of information in thesefinal regulations is in §§ 1.6055–1 and1.6055–2. The collection of informationwill be used to determine whether an in-dividual has minimum essential coverageunder section 1501(b) of the Patient Pro-tection and Affordable Care Act (26U.S.C. 5000A(f)). The collection of infor-mation is required to comply with theprovisions of sections 5000A and 6055 ofthe Code. The likely respondents arehealth insurance issuers and carriers, self-insured employers or other sponsors ofself-insured group health plans, and gov-ernments that provide minimum essentialcoverage.

An agency may not conduct or spon-sor, and a person is not required to re-spond to, a collection of information un-less it displays a valid control numberassigned by the Office of Managementand Budget.

The burden for the collection of infor-mation contained in these final regulationswill be reflected in the burden on Form1095–B or another form that the IRS des-ignates, which will request the informa-tion in the final regulations.

Books or records relating to a collec-tion of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue law. Generally, tax returns andreturn information are confidential, as re-quired by section 6103.

Background

This document contains final regula-tions that amend the Income Tax Regula-tions (26 CFR part 1) under sections 6055and 6081 and the Procedure and Admin-istration Regulations (26 CFR part 301)under sections 6011, 6721, and 6722, re-lating to the requirement for providers ofminimum essential coverage (as definedin section 5000A(f)) to report to the IRScertain information about individuals cov-ered by minimum essential coverage andto provide a statement to the individuals.Section 6055 was enacted by section 1502of the Patient Protection and AffordableCare Act, Public Law 111–148 (124 Stat.119 (2010)), which together with theHealth Care and Education ReconciliationAct of 2010, Public Law 111–152 (124Stat. 1029 (2010)), is referred to as theAffordable Care Act.

On September 9, 2013, a notice of pro-posed rulemaking (REG–132455–11) waspublished in the Federal Register (78 FR54986). Written comments responding tothe proposed regulations were received. Apublic hearing was held on November 19,2013. The comments are available forpublic inspection at www.regulations.govor on request. After consideration of allthe comments, the proposed regulationsare adopted as amended by this Treasurydecision. These final regulations also in-clude certain nonsubstantive revisions toincrease consistency with final regulationsissued under section 6056 (TD 9661) con-temporaneously with these regulations.

Explanation of Provisions andSummary of Comments

1. Coverage Subject to Reporting

a. Minimum essential coverage

The proposed regulations provided thatevery person that provides minimum es-sential coverage to an individual during acalendar year must file an information re-turn and a transmittal on forms prescribedby the IRS. Minimum essential coverageis defined in section 5000A(f) and regula-tions issued under that section.

Commenters suggested that section6055 reporting should not be required foran individual who may be exempt from


the individual shared responsibility pay-ment under section 5000A.

Providers of minimum essential cover-age, including employers providing cov-erage under a self-insured group healthplan, may not have the information nec-essary to determine an individual’s ex-empt status under section 5000A. To en-sure complete and accurate reporting, thefinal regulations provide for section 6055reporting for all covered individuals.

b. Supplemental coverage arrangements

The proposed regulations provided thatreporting is not required for arrangementsthat provide benefits in addition or as asupplement to a health plan or arrange-ment that constitutes minimum essentialcoverage. The preamble to the proposedregulations identified health reimburse-ment arrangements as supplemental cov-erage to which this rule may apply. Inaddition, reporting is not required for cov-erage that is not minimum essential cov-erage. The preamble to the proposed reg-ulations noted that no reporting is requiredfor health savings accounts, which are notminimum essential coverage.

A commenter asked whether on-sitemedical clinics are supplemental benefitsfor which no reporting is required underthis rule. Another commenter askedwhether reporting is required for an indi-vidual who is covered by Medicare Part Bbut not Medicare Part A.

Under section 9832(c)(1)(G), coverageat on-site medical clinics are exceptedbenefits. Section 5000A(f)(3) providesthat excepted benefits are not minimumessential coverage. Under section5000A(f)(1)(A)(i), Medicare Part A butnot Medicare Part B is minimum essentialcoverage. Accordingly, section 6055 re-porting is not required for coverage aton-site medical clinics or for MedicarePart B.

Commenters asked whether the supple-mental coverage rule applies to wellnessprograms or to self-insured employer-provided retiree coverage that supple-ments Medicare benefits. Wellness pro-grams that are an element of otherminimum essential coverage (such aswellness programs offering reduced pre-miums or cost-sharing under a grouphealth plan) do not require separate sec-

tion 6055 reporting. The final regulationsclarify that minimum essential coveragethat supplements a primary plan of thesame plan sponsor or that supplementsgovernment-sponsored coverage (such asMedicare) are supplemental coverage notsubject to reporting.

2. Persons Required to Report

a. Self-insured group health plans

i. Controlled Groups

The proposed regulations provided thatthe plan sponsor is responsible for report-ing under section 6055 for a self-insuredgroup health plan and identified the spon-sor and reporting entity for various typesof self-insured arrangements. In general,the plan sponsor is the entity that estab-lishes or maintains the plan. The proposedregulations provided that the employer isthe plan sponsor for self-insured grouphealth plans established or maintained bya single employer and that each participat-ing employer is the plan sponsor for a planestablished or maintained by more thanone employer other than a multiple em-ployer welfare arrangement. The proposedregulations also provided that, for pur-poses of identifying the employer, the sec-tion 414 employer aggregation rules donot apply. Thus, under the proposed reg-ulations, a self-insured group health planor arrangement covering employees ofemployers in a controlled group wastreated as sponsored by more than oneemployer and each employer was requiredto report for its employees.

Commenters requested that the finalregulations allow, but not require, one en-tity in a controlled group to report undersection 6055 for all members of the group.A commenter noted that only one entitywithin the group may maintain the plan.Other commenters noted that in some con-trolled groups each entity may keep itsown records but other groups may nottrack the entity to which an employeebelongs.

Most employers that sponsor self-insured group health plans are applicablelarge employer members required to re-port under both section 6056 and section6055. As discussed later in this preamble,the final regulations provide that applica-

ble large employer members that are plansponsors of self-insured group healthplans will file a single information returnthat combines reporting under sections6055 and 6056. These entities apply therules under section 6056 for identifyingthe reporting entities in a controlledgroup. As stated in the preamble to theproposed regulations, one member of acontrolled group may assist the othermembers by filing returns and furnishingstatements on behalf of all members, thusproviding administrative flexibility. How-ever, each employer is treated as a plansponsor separately liable for timely andcorrect reporting. Employers in controlledgroups that are not applicable large em-ployer members (determined after apply-ing the aggregation rules under§ 54.4980H–1(a)(16)), and reporting enti-ties (such as issuers) that are not reportingas employers, may report under section6055 as separate entities, or one entitymay report for the group.

ii. Statutory Employees

A commenter asked that the final reg-ulations clarify that a company may reportself-insured group health plan coverageprovided to statutory employees, that is,individuals who are not common law em-ployees but are treated as employees un-der the Code for some purposes. The com-menter noted that the employer sharedresponsibility payment under section4980H and related information reportingunder section 6056 apply to common lawand not statutory employees.

Under section 6055, the provider ofminimum essential coverage must reportfor covered individuals. In many cases,the provider is not the employer of thecovered individuals. The proposed and fi-nal regulations provide that the plan spon-sor of a self-insured group health planreports under section 6055. Accord-ingly, the plan sponsor reports undersection 6055 for individuals covered bythe plan, whether or not the individualsare employees.

b. Small Business Health OptionsProgram (SHOP)

In order to reduce the compliance bur-den on health insurance issuers, the pro-


posed regulations provided that issuers arenot required to report under section 6055on qualified health plans enrolled inthrough Affordable Insurance Exchanges(Exchanges), also called Marketplaces.Commenters requested that Exchangesalso be responsible for section 6055 re-porting for coverage obtained through theSHOP.

The final regulations do not requirehealth insurance issuers to report undersection 6055 for coverage under individ-ual market qualified health plans pur-chased through an Exchange because Ex-changes must report on this coverageunder section 36B(f)(3). Exchanges arenot required, however, to report on cover-age obtained through the SHOP, thereforeissuer reporting of SHOP coverage undersection 6055 is necessary.

c. Government employers

Pursuant to section 6055(d), the pro-posed regulations provided that, in gen-eral, a government employer that main-tains a self-insured group health plan orarrangement may enter into a writtenagreement with another governmentalunit, or an agency or instrumentality of agovernmental unit, designating the othergovernmental unit, agency, or instrumen-tality as the person responsible for section6055 reporting. The proposed regulationsreserved the definition of agency or in-strumentality.

Under the proposed regulations, a gov-ernment employer included an Indiantribal government (as defined in section7701(a)(40)) or subdivision of an Indiantribal government (as defined in section7871(d)). A commenter asked whether awholly-owned tribal entity formed undertribal and federal law is an agency orinstrumentality of a governmental unit.The commenter suggested that it is admin-istratively burdensome for an Indian tribalgovernment (ITG) to determine whether aparticular entity qualifies as an agency orinstrumentality of an ITG under existingauthorities, such as Revenue Ruling 57–128 (1957–1 CB 311), see § 601.601(d),relating to employment taxes.

The final regulations continue to re-serve on the definition of agency or in-strumentality for purposes of section6055. Until future guidance is issued that

defines that term for purposes of section6055, in determining whether an entity isan agency or instrumentality of a govern-mental unit, the entity may make thatdetermination based on a reasonable andgood faith interpretation of existing rulesrelating to agency or instrumentalitydeterminations for other federal taxpurposes.

d. Government-sponsored programs

The proposed regulations providedthat, in general, a health insurance issuermust report under section 6055 for allinsured coverage. However, under theproposed regulations the responsible gov-ernment department or agency and not theissuer was the reporting entity for cover-age under a government-sponsored pro-gram provided through a health insuranceissuer (such as some Medicaid, Children’sHealth Insurance Program (CHIP), andMedicare programs). A commenter re-quested that the final regulations specifythat this rule applies to the Medicare Ad-vantage program. The final regulationsclarify that issuers do not report coverageunder the Medicare Advantage program.

3. Information Required to Be Reported

a. Information not required to bereported

Section 6055 calls for the reporting ofseveral data elements that are not requiredby taxpayers for preparing their tax re-turns or by the IRS for tax administration.As part of the effort to minimize the costand simplify the administrative imple-mentation of reporting under section6055, the proposed regulations did notrequire reporting these unnecessary items.For example, the proposed regulations didnot require reporting the amount of ad-vance payments of the premium tax creditand cost-sharing reductions or the amountof the premium for employer coveragepaid by an employer. Several commentersexpressed support for these simplifica-tions, and the final regulations retainthem.

b. Taxpayer identification numbers(TINs)

i. Requirement to Request TINs

The proposed regulations implementedthe statutory requirement that the section6055 information return include the nameand TIN for the primary insured or otherrelated person (such as a parent or spouse)who submits the application for coverage,which the proposed regulations called theresponsible individual, and for each cov-ered individual. However, the proposedregulations permitted reporting entities toreport a date of birth if a TIN is notavailable for an individual.

Some commenters advised that they donot currently obtain TINs for individualsenrolled in coverage, particularly for de-pendents, and asserted that the require-ment to obtain TINs is burdensome andunnecessary. Commenters suggested thatindividuals will be reluctant to provideTINs and that no enforcement mechanismsuch as backup withholding is available.Some commenters expressed concernsabout the risk of misuse of TINs and vi-olations of privacy. Commenters re-quested, in general, that the final regula-tions allow reporting entities to reportonly a date of birth in lieu of a TIN for allindividuals, or alternatively to provide aTIN only for an employee or other respon-sible individual and dates of birth forother covered individuals. Other com-menters suggested that TIN reportingshould be limited to the reporting undersection 111 of the Medicaid, Medicare,and SCHIP Extension Act of 2007 (PL110–173, 121 Stat. 2492), which requiresTIN reporting only for individuals age 45to 64 with coverage based on employmentstatus.

After consideration of the comments,the final regulations retain the rule in theproposed regulations directing reportingentities to provide TINs for all coveredindividuals and to provide a date of birthonly if a TIN is not available after thereporting entity makes reasonable effortsto obtain it. The purpose of informationreporting under section 6055 is for indi-viduals to establish, and the IRS to con-firm, that the individuals have minimumessential coverage and are not subject tothe section 5000A individual shared re-


sponsibility payment. The information onForm 1040 identifying dependents thatcan be matched with section 6055 report-ing is name and TIN. Because many indi-viduals have the same name, the name andTIN combination enables the IRS to iden-tify that a particular individual has mini-mum essential coverage.

Individuals have a strong incentive toprovide a TIN to the reporting entity ifone is available to establish that they havecoverage qualifying under section 5000A.Without a TIN to enable the IRS to matchcoverage reported on the Form 1040 withcoverage reported on a section 6055 re-turn, individuals will receive correspon-dence from the IRS asking them to verifycoverage. Accordingly, the final regula-tions allow section 6055 reporting of datesof birth in lieu of TINs only if the report-ing entity is informed that an individualhas no TIN or the reporting entity is un-able to obtain a TIN after making reason-able efforts, as discussed in more detaillater in this preamble. Nothing in thesefinal regulations authorizes a reporting en-tity to terminate coverage if a TIN is notprovided. Reporting a date of birth in oneyear does not eliminate the need to makereasonable efforts to obtain a TIN.

A commenter suggested that requiringTIN reporting for responsible individualsnot enrolled in the coverage reported isunnecessary and inconsistent with thestatute, which requires reporting a TIN forthe “primary insured” and each other cov-ered individual. Under section6055(b)(1)(B)(iv), the Secretary may di-rect the reporting of other information.Reporting of TINs for responsible individ-uals not enrolled in the coverage is helpfulfor tax administration because it facilitatesmatching the coverage of individuals re-ported under section 6055 with individu-als for whom the responsible individualclaims a personal exemption deduction.However, in response to the comment, thefinal regulations provide that reportingTINs for responsible individuals not en-rolled in the coverage is optional.

Commenters requested that the finalregulations include rules on confidential-ity and restricting the use of private infor-mation by issuers and employers. A com-menter suggested that the final regulationsinclude rules similar to 45 CFR 155.260and 45 CFR 155.715, which restrict the

use of confidential information by Ex-changes. The cited regulations under 45CFR are issued under the authority of theDepartment of Health and Human Ser-vices (HHS) to oversee and regulate theoperation of Exchanges. Because the IRSand Treasury Department lack similar reg-ulatory authority over section 6055 report-ing entities, the final regulations do notinclude rules on confidentiality. However,existing privacy rules, such as those is-sued by HHS, apply and protect consum-ers’ information.

To help protect against theft of socialsecurity numbers and other TINs, IRSrules permit reporting entities required tofurnish certain statements to partiallymask the TIN of statement recipients andothers reported on an information state-ment by using a truncated TIN. It is ex-pected that section 6055 reporting entitieswill be able to truncate the TINs of theresponsible individual and covered indi-viduals under these rules. The final regu-lations clarify that reporting entities arepermitted to use truncated TINs on section6055 statements.

ii. Reasonable Efforts to Obtain TINs

Under section 6724(d), as amended bythe Affordable Care Act, a reporting entitythat fails to comply with the filing andstatement furnishing requirements of sec-tion 6055 may be subject to penalties forfailure to file a correct information return(section 6721) or failure to furnish a cor-rect payee statement (section 6722). Thesepenalties may be waived if the failure wasdue to reasonable cause and not willfulneglect (section 6724(a)). The preamble tothe proposed regulations noted that thesection 6721 and 6722 penalties may ap-ply to a section 6055 reporting entity butthe penalties may be waived under section6724 and the related regulations for cer-tain failures due to reasonable cause. Thepreamble explained that penalties arewaived if a reporting entity demonstratesthat it acted in a responsible manner andthat the failure is due to significant miti-gating factors or events beyond the report-ing entity’s control. See § 301.6724–1(a)(1).

Some commenters were uncertainabout what solicitations are required tosatisfy the requirement to act in a respon-

sible manner. In general, under§ 301.6724(e) (regarding missing TINs), aperson will be treated as acting in a re-sponsible manner if the person properlysolicits the TIN but does not receive it.Under these rules, the reporting entitymakes an initial solicitation at the time therelationship with the payee is established.However, the reporting entity is not re-quired to make this initial solicitation if italready has the payee’s TIN and uses thatTIN for all relationships with the payee. Ifthe reporting entity does not receive theTIN, the first annual solicitation is gener-ally required by December 31 of the yearin which the relationship with the payeebegins (January 31 of the following year ifthe relationship begins in December).Generally, if the TIN is still not provided,a second solicitation is required by De-cember 31 of the following year. If a TINis still not provided, the reporting entityhas acted in a responsible manner andneed not continue to solicit a TIN.

For example, a reporting entity thatmakes an unsuccessful initial solicitationfor a TIN in December 2015 must makethe first annual solicitation by January 31,2016. The second annual solicitation mustbe made by December 31, 2016, to haveacted in a responsible manner. Assumingthat request is also unsuccessful, the re-porting entity would not be penalized if itssection 6055 reporting submitted in early2017 reported a date of birth in place of aTIN for the individual in question.

Commenters pointed out that the rulesfor solicitation in the existing regulationsmay not adequately address the circum-stances surrounding the relationship be-tween a reporting entity and a responsibleindividual and the covered individuals.Commenters requested that the final reg-ulations provide rules on soliciting TINsspecific to section 6055 reporting. For in-stance, a commenter suggested that a re-porting entity should be allowed to certifythat it has made reasonable efforts to ob-tain TINs and that the certification shouldbe reviewed only upon examination, sothat reporting entities do not have to re-spond to IRS notices requesting missingTINs. Commenters also suggested that thefinal regulations require reporting entitiesto request information only once or atmost twice. Other commenters askedwhether certain procedures that are not


addressed in the current section 6724 reg-ulations would satisfy the solicitation re-quirement, including: (1) Is a reportingentity required to restart the solicitationprocess if a new individual is added to apolicy; (2) does soliciting informationfrom the responsible individual serve assoliciting information from each coveredindividual on the section 6055 statement;(3) must reporting entities solicit informa-tion on a Form W–9, Request for Tax-payer Identification Number and Certifi-cation, or may a request for informationon, for example, an application for insur-ance coverage serve as the first solicita-tion; (4) may a reporting entity obtaininformation from other documents in itspossession; and (5) may reporting entitiessolicit information by email or phone call.

In enacting the Affordable Care Act,Congress added section 6055 reporting tothe list of reporting provisions to whichthe section 6721, 6722, and 6724 penaltyprovisions apply, indicating that Congressintended that section 6055 reportingshould be subject to the same rules in thisregard as other information reporting.Regulations and other authorities underthose sections already provide detailedrules for compliance, including the rulesdescribed above for waiving any penaltiesfor reasonable cause that address some ofthe commenters questions. For instance,consistent with the rules in § 301.6724–1(e)(1)(i), the reporting entity may makean initial solicitation orally (by phone orin person), in writing (including using anapplication), or by electronic means suchas e-mail. The rules for the manner ofmaking an annual solicitation should ap-ply in the case of section 6055 as well.See, for example, § 301.6724–1(e)(2).

Under § 301.6724–1(e)(1)(i), an initialsolicitation is not required if the reportingentity already has the payee’s TIN anduses that TIN for all relationships of thepayee with the reporting entity. In the caseof section 6055 reporting, a reporting en-tity would likewise not be required tomake an initial solicitation if the reportingentity has the TIN or other documents inits possession that it uses for other aspectsof its relationship with the covered indi-vidual and/or responsible individual. Forexample, if the reporting entity is also theresponsible individual’s employer, the re-porting entity does not have to make an

initial solicitation for the employee’s TINfor purposes of section 6055 reporting andmay use the TIN that is used for employ-ment purposes.

The solicitation rules under section6724 also address situations in which thereporting entity does not have TIN infor-mation for account holders. Accountscommonly are maintained jointly. In thesesituations, the solicitation rules do not re-quire solicitation of the accountholdermerely because another person is added tothe account. Similarly, although the addi-tion of a new individual to a policy wouldtrigger an obligation to obtain a TIN forthe newly added individual, it would nottrigger an obligation to solicit a TIN fromexisting covered individuals (or the re-sponsible person).

Treasury and the IRS recognize thatthe existing solicitation rules under sec-tion 6724 may not address certain circum-stances that may arise with respect to re-porting under section 6055. Although thefinal regulations do not revise the regula-tions under section 6724 to specificallyaddress these circumstances, Treasury andthe IRS will continue to study the issueand may provide additional clarification ifappropriate through guidance or formsand instructions.

c. Employer identification numbers(EINs)

The proposed regulations required re-porting entities to report the name, ad-dress, and EIN of the plan sponsor. Ahealth insurance issuer also must reportthe EIN of an employer maintaining aplan and whether coverage was enrolledin through the SHOP.

The proposed regulations providedthat, for a multiemployer group healthplan, the plan sponsor is the association,committee, joint board of trustees, orother similar group of representatives ofthe parties who establish or maintain theplan. A commenter asked that the finalregulations clarify that the plan sponsor ofa multiemployer plan is not required toreport the EIN of the participating em-ployers. The proposed and final regula-tions do not require sponsors of multiem-ployer plans to report the EINs of theparticipating employers. The regulationsrequire only health insurance issuers to

report the EIN of the employer sponsoringan insured group health plan.

d. Coverage dates

The proposed regulations provided thatsection 6055 information returns mustprovide the months for which an individ-ual is enrolled in and entitled for at leastone day to receive benefits under the cov-erage. Several commenters supported therequirement to report only the months ofcoverage, while others requested that re-porting entities be allowed to report cov-erage dates instead of months. Section6055 reporting of coverage on a monthlybasis simplifies compliance for individualtaxpayers because section 5000A requiresthat they demonstrate coverage underminimum essential coverage for eachmonth of a taxable year. Accordingly, thefinal regulations retain the rule in the pro-posed regulations.

4. Time and Manner of Filing

a. Electronic filing

The proposed regulations provided thatany person who is required to file undersection 6055 must file electronically if theperson is required to file at least 250 re-turns of any type. The proposed regula-tions aggregated all returns, including in-formation returns (for example, FormsW–2 and 1099), income tax returns, em-ployment tax returns, and excise tax re-turns, filed for the calendar year to deter-mine if the 250-return threshold is met. Acommenter requested that the final regu-lations require electronic reporting only ifa reporting entity files at least 250 FormsW–2.

A “no aggregation” method of deter-mining whether the 250-return thresholdis met is consistent with the application ofthe rule to other information returns, suchas Forms 1099 and W–2, that apply the250-return threshold separately to eachtype of return required to be filed. See§ 301.6011–2(c)(1). The final regulationsadopt this rule. As a result, Forms 1095–Band 1095–C will be required to be elec-tronically filed only if the reporting entityis required to file at least 250 of the spe-cific form. Like transmittals of other in-formation returns, the transmittal (Form


1094–B or 1094–C) is not treated as aseparate return but must be electronicallyfiled in the form and manner required bythe IRS when the Form 1095 is electron-ically filed. The final regulations amend§ 301.6011–2 to add Forms in the 1094and 1095 series. Proposed § 301.6011–8will be removed in a separate document.

b. Corrected returns

The proposed regulations provided thatthe section 6721 and section 6722 penal-ties for failing to timely report correctinformation apply to reporting entities un-der section 6055. Penalties under section6721 and section 6722 are reduced if areporting entity files a corrected returnwithin 30 days after the required filingdate. Penalties also are reduced, but by alesser amount, if a reporting entity makesa correction by August 1 following thereporting date. Penalties may be waivedunder section 6724 if the failure to timelyand accurately report is due to reasonablecause and not willful neglect.

A commenter stated that reporting en-tities should not be required to submitcorrected returns if the information in-cluded on the return is accurate at the timeit is filed. The commenter recommendedalternatively that the requirement to filecorrected returns should apply for nomore than 31 days after the end of thecalendar year. Other commenters sug-gested a cut-off of the corrected returnrequirement of 30 days past the returnfiling due date.

Taxpayers require correct informationto properly complete and file their incometax returns. The IRS must be able to ac-curately match information reporting withreturns. Individuals are subject to the sec-tion 5000A requirement to maintain min-imum essential coverage on a month-to-month basis. In the case of section 6055reporting, a return or statement may beincomplete or incorrect as a result of achange in circumstances occurring afterthe coverage year has ended. For example,a child born during a month may be en-rolled in coverage retroactive to the dateof birth, or coverage may be retroactivelycancelled due to a failure to pay premi-ums. Accordingly, consistent with otherinformation reporting rules, the final reg-ulations clarify that reporting entities that

fail to timely file corrected returns andfurnish corrected statements when infor-mation changes as a result of a change incircumstances have filed returns that areincomplete or incorrect within the mean-ing of sections 6721 and 6722.

5. Combined Reporting

Applicable large employer membersthat provide minimum essential coverageon a self-insured basis are subject to thereporting requirements of both section6055 and section 6056, as well as therequirement under section 6051 to fileForm W–2, Wage and Tax Statement, re-porting wages paid to employees andtaxes withheld. The proposed regulationsdid not permit combining section 6055reporting with reporting for section 6056or 6051. The proposed regulations al-lowed the use of substitute forms for thestatement to individuals, which mighthave permitted reporting entities to com-bine section 6055 and section 6056 report-ing for this purpose. The preamble to pro-posed regulations under section 6056 (78FR 54986) described a number of propos-als to simplify reporting under thatsection.

Commenters supported allowing com-bined section 6055 and section 6056 re-porting for applicable large employermembers sponsoring self-insured plans,suggesting that there is significant dupli-cation in the information reported. Somecommenters requested that combined re-porting be optional and that employers bepermitted to combine reporting for someemployees but not others.

In response to these comments, the fi-nal regulations provide that applicablelarge employer members will file a com-bined return and statement for all report-ing under sections 6055 and 6056. Anapplicable large employer member thatsponsors a self-insured plan will report onForm 1095–C, completing both sectionsto report the information required undersections 6055 and 6056. An applicablelarge employer member that provides in-sured coverage also will report on Form1095–C, but will complete only the sec-tion of Form 1095–C that reports the in-formation required under section 6056.Section 6055 reporting entities that are notapplicable large employer members or are

not reporting as employers, such ashealth insurance issuers, sponsors ofmultiemployer plans, and providers ofgovernment-sponsored coverage, willreport under section 6055 on Form1095–B. In accordance with usual pro-cedures, these forms will be made avail-able in draft form in the near future.

6. Statements Furnished to Individuals

a. Deceased recipients

The proposed regulations provided thata reporting entity must furnish a statementto each responsible individual reportingthe policy number and the name, address,and a contact number for the reportingentity, and the information required to bereported to the IRS. A responsible indi-vidual is a primary insured, employee,former employee, uniformed servicessponsor, parent, or other related personnamed on an application who enrolls oneor more individuals, including him or her-self, in minimum essential coverage.

Commenters requested that the finalregulations provide that a statement is notrequired to be furnished to a covered in-dividual who dies during the year. Thecommenters suggested alternatively that astatement should not be required for anindividual who dies during the first threemonths of a year who would be exemptfrom the shared responsibility paymentunder section 5000A because of a shortcoverage gap.

Under § 1.5000A–1(a), the minimumessential coverage requirement appliesonly to full months that an individual isalive. However, section 5000A does notprovide a general exemption from cover-age for the year of death and the coveragegap exception may not apply if the gapbegan in the previous calendar year. Ac-cordingly, to ensure that minimum essen-tial coverage is properly reflected on adecedent’s final income tax return and theestate is not held liable for a section5000A payment, the final regulations donot provide an exception for a coveredindividual who dies during the year.

b. Time for furnishing statements

Section 6055 and the proposed regula-tions required a reporting entity to furnish


the statement on or before January 31 ofthe year following the calendar year inwhich minimum essential coverage is pro-vided. Commenters requested that the fi-nal regulations permit reporting entities tofurnish statements within the last quarterof the calendar year of coverage withother material required to be sent at thattime. The final regulations do not addressfurnishing a statement during the cover-age year. However, the section 5000A re-quirement applies to each month during acalendar year, therefore a statement pro-vided early in the last calendar quarterwould not report coverage for thosemonths. As a result, furnishing a state-ment before the end of the year increasesthe risk of reporting information thatchanges after the end of the year, poten-tially subjecting the reporting entity topenalties.

A commenter requested that the finalregulations provide procedures for ex-tending the time to furnish the section6055 statement. Accordingly, in responseto this comment, like other informationreporting rules, the final regulations in-clude rules allowing reporting entitiesshowing good cause the flexibility to ap-ply for an extension of time not exceeding30 days to furnish statements.

A commenter requested that reportingentities be allowed to furnish statementsreporting employer-sponsored coveragewith the employees’ Form W–2. Neitherthe final regulations nor regulations gov-erning the furnishing of Forms W–2 under§ 1.6051–1 prohibit mailing a 6055 state-ment with Form W–2. Accordingly, re-porting entities may furnish the Form1095–B or 1095–C with the Form W–2 inthe same mailing.

c. Mailing address

The proposed regulations providedthat, if mailed, the statement required un-der section 6055 must be sent to the indi-vidual’s last known permanent address or,if no permanent address is known, to theindividual’s temporary address.

Commenters asked that reporting enti-ties be allowed to send statements to analternate address, such as an employer’saddress, for individuals residing outside ofthe United States for whom the entity doesnot have an address. Other commenters

requested clarification that the require-ment to furnish a statement would be sat-isfied if a mailing is returned to the sender.

The final regulations adopt the rule inthe proposed regulations requiring report-ing entities to send statements to an indi-vidual’s last known address. The final reg-ulations add a rule, however, that areporting entity’s first class mailing to therecipient’s last known permanent address,or if no permanent address is known, thetemporary address, discharges the require-ment to furnish the statement, even if thestatement is returned. A reporting entitythat has no address for an individualshould send the statement to the addresswhere the individual is most likely to re-ceive it, for example to the address thereporting entity uses for requesting or pro-viding information about the coverage.

d. Electronic furnishing of statements

The proposed regulations permittedelectronic furnishing of statements to in-dividuals if the recipient affirmativelyconsents. Commenters requested that re-porting entities be permitted to furnishstatements electronically unless the recip-ient requests paper statements, arguingthat most recipients have access to a com-puter. Other commenters suggested thataffirmative consent by the recipientshould not be required. A commenter sug-gested that the final regulations providerules for the electronic furnishing of state-ments to individuals that are similar to therules under section 2715 of the PublicHealth Service Act for providing a sum-mary of benefits and coverage, which al-lows furnishing in paper or electronicform.

Statutory and regulatory tax informa-tion reporting rules uniformly require arecipient’s affirmative consent to receiv-ing statements electronically. See, for ex-ample, section 401 of the Jobs Creationand Workers Assistance Act of 2002 (116Stat. 21 (2002)); § 1.401(a)–21(b)(2);§ 31.6051–1(j)(2)(i); 2014 General In-structions for Certain Information Returns(Forms 1097, 1098, 1099, 3921, 3922,5498, and W–2G), page 12. These rulesprotect individuals who do not have ac-cess to or are not comfortable using acomputer. Therefore, consistent with gen-eral information reporting rules, the final

regulations do not permit reporting enti-ties to furnish statements electronicallyunless an individual affirmatively con-sents to electronic furnishing.

The proposed regulations provided thatconsent to receive statements electroni-cally may be provided in any manner thatreasonably demonstrates that the recipientcan access the statement in the electronicformat in which it will be furnished. Com-menters suggested that consent to elec-tronic furnishing for other documentsshould be treated as consent to electronicfurnishing of the section 6055 statement.Other commenters requested that employ-ers be allowed to post a notice on thecompany’s Web site advising employeesthat statements are available and providepaper statements only on request.

Consent to receive a statement in elec-tronic format must be in a manner thatreasonably demonstrates that the recipientis able to access the statement in the elec-tronic format in which it will be furnished.See for example § 31.6051–1(j)(2)(i). Theproposed and final regulations explicitlyallow statement recipients to provide con-sent and to access section 6055 statementsin response to a notice on a Web site. Areporting entity may simultaneously re-quest consent to receive an electronic sec-tion 6055 statement and consent regardingother statements. For instance, a reportingentity may simultaneously request consentto provide electronic statements for FormsW–2 and 1095, but each form must bespecifically referenced in the request. Ageneral consent to receive statementselectronically does not reasonably demon-strate that the recipient is able to accessthe section 6055 statement in an electronicformat and does not serve as consent toreceive the section 6055 statement elec-tronically.

e. Form of statement

i. Information on the Statement

The proposed regulations provided thatthe statement furnished to the responsibleindividual must include a contact phonenumber for the person required to file thereturn. A commenter asked whether a re-porting entity may provide an automatedresponse to inquiries if a person ultimatelyis available. The final regulations do not


prohibit initial automated responses if acaller is able to reach a person during thecall.

A commenter requested that a report-ing entity be permitted to designate a thirdparty to be the contact person. The finalregulations clarify that the statement onlymust include a phone number for a persondesignated as the reporting entity’s con-tact person. The final regulations do notspecify that the contact person must be areporting entity’s employee or prohibitdesignating a third party as the contactperson.

ii. Substitute Statements

The proposed regulations permittedsubstitute statements if they include theinformation required to be shown on thereturn filed with the IRS and comply withapplicable requirements in publishedguidance relating to substitute statements,for example, Rev. Proc. 2012–38(2012–48 IRB 575), see § 601.601(d)(2)of this chapter.

Commenters expressed an interest increating substitute statements combininginformation reporting under sections 6055and 6056 and requested publication of arevenue procedure providing the specifi-cations. Other commenters asked that re-porting entities be allowed flexibility incustomizing section 6055 statements in astyle recognizable to their recipients.

The final regulations permit the use ofsubstitute statements under section 6055that conform to requirements provided inpublished guidance. The IRS plans to pro-vide these requirements in published guid-ance or instructions. Employers submit-ting Forms 1095–C combining reportingunder sections 6055 and 6056 to the IRSalso will report the information requiredby those sections to the individuals in asingle statement.

Commenters requested that the finalregulations allow reporting entities to pro-vide general rather than personalized in-formation in the section 6055 statement,for example “You were covered by mini-mum essential coverage for each monthyou were covered by the plan for at leastone day.” While the final regulations donot adopt this comment, it is anticipatedthat reporting entities will be able to checka box on the information return to report

that an individual was covered for all 12months of the calendar year.

e. TIN matching program

Commenters requested that the IRS TINmatching program, see Rev. Proc. 2003–09(2003–1 CB 516) and § 601.601(d),include section 6055 reporting. The TINmatching program may be used only forreportable payments subject to backupwithholding under section 3406. There-fore, TIN matching is not permitted forpurposes of section 6055 reporting and thefinal regulations do not include section6055 reporting in the TIN matchingprogram.

7. Penalties

The proposed regulations applied tocalendar years beginning after December31, 2014. Under Notice 2013–45(2013–31 IRB 116), the IRS will not ap-ply penalties for failure to comply withsection 6055 for 2014 (for coverage in2014 and information returns filed andstatements furnished to covered individu-als in 2015).

A commenter requested that the effec-tive date of the section 6055 reportingrequirements be extended an additionalyear if final regulations are not released byJanuary 1, 2014, thus requiring no report-ing in 2016 for coverage in 2015. Othercommenters requested that the IRS waivepenalties for reporting in 2016 on 2015coverage if a reporting entity makes agood faith effort to comply. One com-menter requested that penalties be waivedfor the two years following the release offinal regulations.

In implementing new information re-porting requirements, short-term relieffrom penalties frequently is provided.This relief generally allows additionaltime to develop appropriate proceduresfor collection of data and compliance withthese new reporting requirements. Afterconsidering the comments received, theIRS will not impose penalties under sec-tions 6721 and 6722 on reporting entitiesthat can show that they have made goodfaith efforts to comply with the informa-tion reporting requirements. Specifically,relief is provided from penalties undersections 6721 and 6722 for returns and

statements filed and furnished in 2016 toreport coverage in 2015, but only for in-correct or incomplete information re-ported on the return or statement, includ-ing TINs or dates of birth. No relief isprovided in the case of reporting entitiesthat do not make a good faith effort tocomply with these regulations or that failto timely file an information return or fur-nish a statement. However, consistentwith the existing information reportingrules, reporting entities that fail to timelymeet the requirements of these regulationsmay be eligible for penalty relief if theIRS determines that the standards for rea-sonable cause under section 6724 aresatisfied.

Effective/Applicability Date

These regulations apply for calendaryears beginning after December 31, 2014.Consistent with Notice 2013–45, report-ing entities will not be subject to penaltiesfor failure to comply with the section6055 reporting requirements for coveragein 2014 (including the provisions requir-ing the furnishing of statements to cov-ered individuals in 2015 with respect to2014). Accordingly, a reporting entity willnot be subject to penalties if it first reportsbeginning in 2016 for 2015 (including thefurnishing of statements to covered indi-viduals).

Taxpayers are encouraged, however, tovoluntarily comply with section 6055 in-formation reporting for minimum essen-tial coverage provided in 2014. Given sig-nificant changes in the informationreporting provisions in response to com-menters’ feedback on the proposed regu-lations, including requiring applicablelarge employer members to file a returnthat combines section 6055 and section6056 reporting, reporting entities thatwish to voluntarily comply with the sec-tion 6055 information reporting provi-sions for 2014 should build their systemsand report in accordance with these finalregulations. Real-world testing of report-ing systems and plan designs, built in ac-cordance with the terms of these final reg-ulations, through voluntary compliancefor 2014 will contribute to a smoothertransition to full implementation for 2015.


Special Analyses

It has been determined that these finalregulations are not a significant regulatoryaction as defined in Executive Order12866, as supplemented by Executive Or-der 13563. Therefore, a regulatory assess-ment is not required. It has also beendetermined that section 553(b) of the Ad-ministrative Procedure Act (5 U.S.C. chap-ter 5) does not apply to these regulations.

Sections 603 and 604 of the RegulatoryFlexibility Act (5 U.S.C. chapter 6) (RFA)generally require agencies to prepare aregulatory flexibility analysis addressingthe impact of proposed and final regula-tions, respectively, on small entities. Sec-tion 605(b) of the RFA, however, pro-vides that sections 603 and 604 do notapply if the head of the agency certifiesthat the rule will not have a significanteconomic impact on a substantial numberof small entities. It is hereby certified thatthese regulations will not have a signifi-cant economic impact on a substantialnumber of small entities.

Section 6055 requires a person thatprovides minimum essential coverage toan individual to file a return with the IRSreporting information specified by thestatute and to furnish a statement contain-ing this information to an individual.These final regulations implement the un-derlying statute and the economic impactis principally a result of the underlyingstatute. Specifically, these final regula-tions primarily provide the time and man-ner for filing and furnishing the returnsand statements that section 6055 requires.

Notice 2013–45 announced transitionrelief providing that information reportingunder section 6055 will be optional for2014. The notice advised that this reliefwould allow additional time for dialoguewith prospective reporting entities in aneffort to simplify the reporting require-ments. Between publication of Notice2013–45 and publication of the proposedregulations under section 6055, the IRSand the Treasury Department engaged in aseries of discussions with employers,health insurance issuers, and other report-ing entities. The proposed and final regu-lations address certain concerns expressedin those discussions.

These final regulations minimize theburden associated with the collection of

information imposed by section 6055 in anumber of ways. The regulations limitreporting to only the information that theIRS will use to verify minimum essentialcoverage and administer the premium taxcredit, all of which is specified in thestatute. For example, the regulations donot require reporting the amount of ad-vance payments of the premium tax creditand cost-sharing reductions or the amountof the premium for employer coveragepaid by an employer. Similarly, the onlyinformation the regulations require for ad-ministration of the small employer healthinsurance credit under section 45R iswhether a qualified health plan was en-rolled in through an Exchange.

The final regulations reduce burden forapplicable large employer members by al-lowing combined reporting under sections6055 and 6056. The final regulations al-low for substitute statements, furnishingof statements with Forms W–2, and elec-tronic delivery consistent with other infor-mation reporting rules. Finally, the finalregulations relieve health insurance issu-ers from reporting for individual marketqualified health plans enrolled in throughan Affordable Insurance Exchange be-cause Exchanges will report on these en-rollments under section 36B(f)(3).

Based on these facts, a RegulatoryFlexibility Analysis under the RegulatoryFlexibility Act is not required.

Pursuant to section 7805(f) of theCode, the notice of proposed rulemakingthat preceded these final regulations wassubmitted to the Chief Counsel for Advo-cacy of the Small Business Administra-tion for comment on its impact on smallbusiness.


The principal author of these final reg-ulations is Andrew Braden of the Office ofAssociate Chief Counsel (Income Tax andAccounting). However, other personnelfrom the IRS and the Treasury Depart-ment participated in the development ofthe regulations.

List of Subjects

* * * * ** * * * ** * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR parts 1, 301, and602 are amended as follows:


Paragraph 1. The authority citation forpart 1 is amended by adding entries innumerical order to read in part as follows:

Authority: 26 U.S.C. 7805***Sections 1.6055–1 and 1.6055–2 also

issued under 26 U.S.C. 6055.Par. 2. Sections 1.6055–1 and

1.6055–2 are added to read as follows:

§ 1.6055–1 Information reporting forminimum essential coverage.

(a) Information reporting requirement.Every person that provides minimum es-sential coverage to an individual during acalendar year must file an information re-turn and transmittal and furnish state-ments to responsible individuals on formsprescribed by the Internal RevenueService.

(b) Definitions—(1) In general. Thedefinitions in this paragraph (b) apply forpurposes of this section.

(2) Affordable Care Act. The term Af-fordable Care Act refers to the PatientProtection and Affordable Care Act, Pub-lic Law 111–148 (124 Stat. 119 (2010)),and the Health Care and Education Rec-onciliation Act of 2010, Public Law 111–152 (124 Stat. 1029 (2010)), and amend-ments to those acts.

(3) ERISA. The term ERISA means theEmployee Retirement Income SecurityAct of 1974, as amended (29 U.S.C. 1001et seq.).

(4) Exchange. Exchange has the samemeaning as in 45 CFR 155.20.

(5) Government employer. The termgovernment employer means an employerthat is a governmental unit or an agency orinstrumentality of a governmental unit.

(6) Governmental unit. The term gov-ernmental unit refers to the government ofthe United States, any State or politicalsubdivision of a State, or any Indian tribalgovernment (as defined in section7701(a)(40)) or subdivision of an Indiantribal government (as defined in section7871(d)).


(7) Agency or instrumentality of a gov-ernmental unit. [Reserved]

(8) Minimum essential coverage. Min-imum essential coverage is defined in sec-tion 5000A(f) and regulations issued un-der that section.

(9) Qualified health plan. The termqualified health plan has the same mean-ing as in section 1301(a) of the AffordableCare Act (42 U.S.C. 18021(a)).

(10) Reporting entity. A reporting en-tity is any person that must report, undersection 6055 and this section, minimumessential coverage provided to an individual.

(11) Responsible individual. The termresponsible individual includes a primaryinsured, employee, former employee, uni-formed services sponsor, parent, or otherrelated person named on an applicationwho enrolls one or more individuals, in-cluding him or herself, in minimum essen-tial coverage.

(12) Taxpayer identification number.The term taxpayer identification number(TIN) has the same meaning as in section7701(a)(41).

(c) Persons required to report—(1) Ingeneral. The following persons must filethe information return and transmittalform required under paragraph (a) of thissection to report minimum essentialcoverage—

(i) Health insurance issuers, or carriers(as used in 5 U.S.C. 8901), for all insuredcoverage, except as provided in paragraph(c)(3)(ii) of this section;

(ii) Plan sponsors of self-insured grouphealth plan coverage;

(iii) The executive department oragency of a governmental unit that pro-vides coverage under a government-sponsored program (within the meaningof section 5000A(f)(1)(A)); and

(iv) Any other person that providesminimum essential coverage to an indi-vidual.

(2) Plan sponsors of self-insured grouphealth plan coverage—(i) In general. Forpurposes of this section, a plan sponsor ofself-insured group health plan coverageis—

(A) The employer for a self-insuredgroup health plan or arrangement estab-lished or maintained by a single employer(determined without application of section414(b), (c), (m) or (o) in the case of anemployer described in paragraph (f)(2)(i)

of this section), including each participat-ing employer with respect to a self-insured group health plan or arrangementestablished or maintained by more thanone employer (and not including a mul-tiemployer plan as defined in section3(37) of ERISA or a Multiple EmployerWelfare Arrangement as defined in sec-tion 3(40) of ERISA);

(B) The association, committee, jointboard of trustees, or other similar group ofrepresentatives of the parties who estab-lish or maintain the plan for a self-insuredgroup health plan or arrangement that is amultiemployer plan (as defined in section3(37) of ERISA).

(C) The employee organization for aself-insured group health plan or arrange-ment maintained solely by an employeeorganization;

(D) Each participating employer for aself-insured group health plan or arrange-ment maintained by a Multiple EmployerWelfare Arrangement (as defined in sec-tion 3(40) of ERISA) with respect to theparticipating employer’s own employees;and

(E) For a self-insured group health planor arrangement for which a plan sponsoris not otherwise identified in paragraphs(c)(2)(i)(A) through (c)(2)(i)(D) of thissection, the person designated by planterms as the plan sponsor or plan admin-istrator or, if no person is designated asthe administrator and a plan sponsor can-not be identified, each entity that main-tains the plan or arrangement.

(ii) Government employers. Unlessotherwise provided by statute or regula-tion, a government employer that main-tains a self-insured group health plan orarrangement may enter into a writtenagreement with another governmentalunit, or an agency or instrumentality of agovernmental unit, that designates theother governmental unit, agency, or in-strumentality as the person required to filethe returns and to furnish the statementsrequired by this section for some or all ofthe individuals receiving minimum essen-tial coverage under that plan or arrange-ment. The designated governmental unit,agency, or instrumentality must be part ofor related to the same governmental unitas the government employer (for example,a political subdivision of a State may des-ignate the State or another political subdi-

vision of the state) and agree to the des-ignation. The government employer mustmake or revoke the designation before theearlier of the deadline for filing the returnsor furnishing the statements required bythis section and must retain a copy of thedesignation in its books and records. If therequirements of this paragraph (c)(2)(ii)are met, the designated governmental unit,agency, or instrumentality is the sponsorunder paragraph (c)(2)(i) of this section. Ifno entity is designated, the governmentemployer that maintains the self-insuredgroup health plan or arrangement is thesponsor under paragraph (c)(2)(i) of thissection.

(3) Special rules for government-sponsored programs—(i) Medicaid andChildren’s Health Insurance Program(CHIP) coverage. The State agency thatadministers the Medicaid program undertitle XIX of the Social Security Act (42U.S.C. 1396 and following sections) orthe CHIP program under title XXI of theSocial Security Act (42 U.S.C. 1396 andfollowing sections) must file the returnsand furnish the statements required by thissection for those programs.

(ii) Government-sponsored coverageprovided through health insurance issu-ers. An executive department or agency ofa governmental unit that provides cover-age under a government-sponsored pro-gram through a health insurance issuer(such as Medicaid, CHIP, or Medicare,including Medicare Advantage) must filethe returns and furnish the statements re-quired by this section.

(iii) Nonappropriated Fund HealthBenefits Program. The Secretary of De-fense may designate the Department ofDefense components (as used in DoD Di-rective 5100.01, Functions of the Depart-ment of Defense and Its Major Compo-nents (December 21, 2010)) that must filethe returns and furnish the statements re-quired by this section for the Nonappro-priated Fund Health Benefits Program.

(4) Other arrangements recognized asminimum essential coverage. The Com-missioner may designate in publishedguidance, see § 601.601(d) of this chapter,the reporting entity for arrangements theSecretary of Health and Human Services,in coordination with the Secretary of theTreasury, recognizes under section


5000A(f)(1)(E) as minimum essentialcoverage.

(d) Reporting not required—(1) Qual-ified health plans. A health insurance is-suer is not required to file a return orfurnish a report under this section for cov-erage in a qualified health plan in theindividual market enrolled in through anExchange.

(2) Additional health benefits. No re-porting is required under paragraph (a) ofthis section for minimum essential cover-age that provides benefits in addition or asa supplement to a health plan or arrange-ment that constitutes minimum essentialcoverage if—

(i) The primary and supplemental cov-erages have the same plan sponsor; or

(ii) The coverage supplementsgovernment-sponsored coverage (as de-fined in section 5000A(f)(1)(A) and theregulations under that section) such asMedicare.

(3) Individuals not enrolled in cover-age. No reporting is required under thissection for coverage offered to individualswho do not enroll.

(e) Information required to be reportedto the Internal Revenue Service—(1) Ingeneral. All information returns requiredby this section must report the followinginformation for the calendar year of cov-erage—

(i) The name, address, and employeridentification number (EIN) of the report-ing entity required to file the return;

(ii) The name, address, and TIN, ordate of birth if a TIN is not available, ofthe responsible individual, except that re-porting entities may but are not requiredto report the TIN of a responsible individ-ual not enrolled in the coverage;

(iii) The name and TIN, or date of birthif a TIN is not available, of each individ-ual who is covered under the policy orprogram;

(iv) For each covered individual, themonths for which, for at least one day, theindividual was enrolled in coverage andentitled to receive benefits; and

(v) Any other information specified informs, instructions, or published guid-ance, see §§ 601.601(d) and 601.602 ofthis chapter.

(2) Information relating to employer-provided coverage. In addition to the in-formation described in paragraph (e)(1) of

this section, information returns reportingminimum essential coverage provided toan individual that is coverage provided bya health insurance issuer through a grouphealth plan must report—

(i) The name, address, and EIN of theemployer sponsoring the plan;

(ii) Whether the coverage is a qualifiedhealth plan enrolled in through the SmallBusiness Health Options Program(SHOP) and the SHOP’s unique identifier;and

(iii) Other information specified informs, instructions, or published guid-ance, see §§ 601.601(d) and 601.602 ofthis chapter.

(f) Time and manner for filing return—(1) In general. A reporting entity must filethe return and transmittal form requiredunder paragraph (a) of this section on orbefore February 28 (March 31 if filedelectronically) of the year following thecalendar year in which it provided min-imum essential coverage to an individ-ual. A reporting entity must file the re-turn and transmittal form as specified informs or instructions. For extensions oftime for filing returns under this sectionsee §§ 1.6081–1 and 1.6081– 8. See§ 301.6011–2of this chapter for rules re-lating to electronic filing.

(2) Form of return—(i) Applicablelarge employer members. A reporting en-tity that is reporting under section 6055 asan applicable large employer member (asdefined in § 54.4980H–1(a)(5) of thischapter) makes the return required underthis paragraph (f) on Form 1094–C andForm 1095–C or other form designated bythe Internal Revenue Service.

(ii) Reporting entities not reporting asapplicable large employer members. En-tities reporting as health insurance issuersor carriers, sponsors of self-insured grouphealth plans that are not reporting as ap-plicable large employer members, spon-sors of multiemployer plans, and provid-ers of government-sponsored coverage,will report under section 6055 on Form1094–B and Form 1095–B or other formdesignated by the Internal RevenueService.

(iii) Substitute forms. Reporting enti-ties may make the return required underthis paragraph (f) on a substitute form. Asubstitute form must comply with revenueprocedures or other published guidance

(see § 601.601(d)(2) of this chapter) thatapply to substitute forms.

(g) Statements to be furnished to re-sponsible individuals—(1) In general. Ev-ery person required to file a return underthis section must furnish to the responsi-ble individual identified on the return awritten statement. For purposes of thepenalty under section 6722, furnishing astatement to the responsible individual istreated as furnishing a statement to thepayee. The statement must show—

(i) The phone number for a person des-ignated as the reporting entity’s contactperson and policy number, if any; and

(ii) Information described in paragraph(e) of this section required to be shown onthe section 6055 return for the responsibleindividual and each covered individuallisted on the return.

(2) Statements for individuals otherthan the responsible individual. A report-ing entity is not required to provide astatement described in paragraph (g)(1) ofthis section to an individual who is not theresponsible individual.

(3) Form of the statement. A statementrequired under this paragraph (g) may bemade either by furnishing to the responsi-ble individual a copy of the return filedwith the Internal Revenue Service or on asubstitute statement. A substitute state-ment must include the information re-quired to be shown on the return filed withthe Internal Revenue Service and mustcomply with requirements in publishedguidance (see § 601.601(d)(2) of thischapter) relating to substitute statements.An Internal Revenue Service truncatedtaxpayer identification number may beused as the identification number for anindividual in lieu of the identificationnumber appearing on the correspondinginformation return filed with the InternalRevenue Service.

(4) Time and manner for furnishingstatements—(i) Time for furnishing—(A)In general. A reporting entity must furnishthe statements required under this para-graph (g) on or before January 31 of theyear following the calendar year in whichminimum essential coverage is provided.

(B) Extensions of time—(1) In general.For good cause upon written applicationof the person required to furnish state-ments under this section, the Internal Rev-enue Service may grant an extension of


time not exceeding 30 days in which tofurnish these statements. The applicationmust be addressed to the Internal RevenueService, and must contain a full recital ofthe reasons for requesting the extension toaid the Internal Revenue Service in deter-mining the period of the extension, if any,that will be granted. A request in the formof a letter to the Internal Revenue Service,signed by the applicant, suffices as anapplication. The application must be filedon or before the date prescribed in para-graph (g)(4)(i)(A) of this section.

(2) Automatic extension of time. TheCommissioner may, in appropriate cases,prescribe additional guidance or proce-dures, published in the Internal RevenueBulletin (see § 601.601(d)(2) of this chap-ter), for automatic extensions of time tofurnish to one or more individuals thestatement required under section 6055.

(ii) Manner of furnishing. If mailed,the statement must be sent to the respon-sible individual’s last known permanentaddress or, if no permanent address isknown, to the individual’s temporary ad-dress. For purposes of this paragraph(g)(4), a reporting entity’s first class mail-ing to the last known permanent address,or if no permanent address is known, thetemporary address, discharges the require-ment to furnish the statement. A reportingentity may furnish the statement electron-ically if the requirements of § 1.6055–2are satisfied.

(h) Penalties—(1) In general. For pro-visions relating to the penalty for failureto file timely a correct information returnrequired under section 6055, see section6721 and the regulations under that sec-tion. For provisions relating to the penaltyfor failure to furnish timely a correct state-ment to responsible individuals requiredunder section 6055, see section 6722 andthe regulations under that section. See sec-tion 6724 and the regulations under thatsection for rules relating to the waiver ofpenalties if a failure to file timely or ac-curately is due to reasonable cause and isnot due to willful neglect.

(2) Application of section 6721 and6722 penalties to section 6055 reporting.For purposes of section 6055 reporting, ifthe information reported on a return (in-cluding a transmittal) or a statement re-quired by this section is incomplete orincorrect as a result of a change in circum-

stances (such as a retroactive change incoverage), a failure to timely file or fur-nish a corrected document is a failure tofile or furnish a correct return or statementunder sections 6721 and 6722.

(i) [Reserved.](j) Effective/applicability date. This

section applies for calendar years begin-ning after December 31, 2014. Reportingentities will not be subject to penaltiesunder section 6721 or 6722 for failure tocomply with the section 6055 reportingrequirements for coverage in 2014 (forinformation returns filed and statementsfurnished in 2015).

§ 1.6055–2 Electronic furnishing ofstatements

(a) Electronic furnishing of state-ments—(1) In general. A person requiredby section 6055 to furnish a statement(furnisher) to a responsible individual (arecipient) may furnish the statement in anelectronic format in lieu of a paper format.A furnisher who meets the requirementsof paragraphs (a)(2) through (a)(6) of thissection is treated as furnishing the state-ment in a timely manner.

(2) Consent—(i) In general. The recip-ient must have affirmatively consented toreceive the statement in an electronic for-mat. The consent may be made electroni-cally in any manner that reasonably dem-onstrates that the recipient can access thestatement in the electronic format inwhich it will be furnished. Alternatively,the consent may be made in a paper doc-ument that is confirmed electronically.

(ii) Withdrawal of consent. The con-sent requirement of this paragraph (a)(2)is not satisfied if the recipient withdrawsthe consent and the withdrawal takes ef-fect before the statement is furnished. Thefurnisher may provide that a withdrawalof consent takes effect either on the datethe furnisher receives it or on another dateno more than 60 days later. The furnisheralso may provide that a recipient’s requestfor a paper statement will be treated as awithdrawal of the recipient’s consent.

(iii) Change in hardware or softwarerequirements. If a change in the hardwareor software required to access the state-ment creates a material risk that the recip-ient will not be able to access a statement,a furnisher must, prior to changing the

hardware or software, notify the recipient.The notice must describe the revised hard-ware and software required to access thestatement and inform the recipient that anew consent to receive the statement inthe revised electronic format must be pro-vided to the furnisher. After implementingthe revised hardware or software, the fur-nisher must obtain from the recipient, inthe manner described in paragraph(a)(2)(ii) of this section, a new consent orconfirmation of consent to receive thestatement electronically.

(iv) Examples. The following examplesillustrate the rules of this paragraph (a)(2):

Example 1. Furnisher F sends Recipient R a letterstating that R may consent to receive the statementrequired under section 6055 electronically on a website instead of in a paper format. The letter containsinstructions explaining how to consent to receive thestatement electronically by accessing the web site,downloading and completing the consent document,and e-mailing the completed consent back to F. Theconsent document posted on the web site uses thesame electronic format that F will use for the elec-tronically furnished statement. R reads the instruc-tions and submits the consent in the manner providedin the instructions. R has consented to receive thestatement required under section 6055 electronicallyin the manner described in paragraph (a)(2)(i) of thissection.

Example 2. Furnisher F sends Recipient R ane-mail stating that R may consent to receive thestatement required under section 6055 electronicallyinstead of in a paper format. The e-mail contains anattachment instructing R how to consent to receivethe statement electronically. The e-mail attachmentuses the same electronic format that F will use forthe electronically furnished statement. R opens theattachment, reads the instructions, and submits theconsent in the manner provided in the instructions. Rhas consented to receive the statement required un-der section 6055 electronically in the manner de-scribed in paragraph (a)(2)(i) of this section.

Example 3. Furnisher F posts a notice on its Website stating that Recipient R may receive the state-ment required under section 6055 electronically in-stead of in a paper format. The Web site containsinstructions on how R may access a secure Web pageand consent to receive the statement electronically.The consent via the secure Web page uses the sameelectronic format that F will use for electronicallyfurnishing the statement. R accesses the secure Webpage and follows the instructions for giving consent.R has consented to receive the statement requiredunder section 6055 electronically in the manner de-scribed in paragraph (a)(2)(i) of this section.

(3) Required disclosures—(i) In gen-eral. Prior to, or at the time of, a recipi-ent’s consent, a furnisher must provide tothe recipient a clear and conspicuous dis-closure statement containing each of the dis-closures described in this paragraph (a)(3).


(ii) Paper statement. The furnishermust inform the recipient that the state-ment will be furnished on paper if therecipient does not consent to receive itelectronically.

(iii) Scope and duration of consent.The furnisher must inform the recipient ofthe scope and duration of the consent. Forexample, the recipient must be informedwhether the consent applies to each state-ment required to be furnished after theconsent is given until it is withdrawn or onlyto the first statement required to be fur-nished following the date of the consent.

(iv) Post-consent request for a paperstatement. The furnisher must inform therecipient of any procedure for obtaining apaper copy of the recipient’s statementafter giving the consent described in para-graph (a)(2)(i) of this section and whethera request for a paper statement will betreated as a withdrawal of consent.

(v) Withdrawal of consent. The fur-nisher must inform the recipient that—

(A) The recipient may withdraw a con-sent by writing (electronically or on pa-per) to the person or department whosename, mailing address, telephone number,and e-mail address is provided in the dis-closure statement;

(B) The furnisher will confirm thewithdrawal and the date on which it takeseffect in writing (either electronically oron paper); and

(C) A withdrawal of consent does notapply to a statement that was furnishedelectronically in the manner described inthis paragraph (a) before the date onwhich the withdrawal of consent takeseffect.

(vi) Notice of termination. The fur-nisher must inform the recipient of theconditions under which the furnisher willcease furnishing statements electronicallyto the recipient (for example, terminationof the recipient’s employment with a fur-nisher who is the recipient’s employer).

(vii) Updating information. The fur-nisher must inform the recipient of theprocedures for updating the informationneeded to contact the recipient. The furnishermust inform the recipient of any change in thefurnisher’s contact information.

(viii) Hardware and software require-ments. The furnisher must provide the re-cipient with a description of the hardwareand software required to access, print, and

retain the statement, and the date when thestatement will no longer be available onthe Web site. The furnisher must advisethe recipient that the statement may berequired to be printed and attached to aFederal, State, or local income tax return.

(4) Format. The electronic version ofthe statement must contain all requiredinformation and comply with applicablepublished guidance (see § 601.601(d) ofthis chapter) relating to substitute state-ments to recipients.

(5) Notice—(i) In general. If a state-ment is furnished on a Web site, the fur-nisher must notify the recipient. The no-tice may be delivered by mail, electronicmail, or in person. The notice must pro-vide instructions on how to access andprint the statement and include the follow-ing statement in capital letters, “IMPOR-TANT TAX RETURN DOCUMENTAVAILABLE.” If the notice is providedby electronic mail, this statement must beon the subject line of the electronic mail.

(ii) Undeliverable electronic address.If an electronic notice described in para-graph (a)(5)(i) of this section is returnedas undeliverable, and the furnisher cannotobtain the correct electronic address fromthe furnisher’s records or from the recip-ient, the furnisher must furnish the noticeby mail or in person within 30 days afterthe electronic notice is returned.

(iii) Corrected statement. If the fur-nisher has corrected a recipient’s state-ment and the original statement was fur-nished electronically, the furnisher mustfurnish a corrected statement to the re-cipient electronically. If the originalstatement was furnished through a Website posting, the furnisher must notifythe recipient that it has posted the cor-rected statement on the Web site in themanner described in paragraph (a)(5)(i)of this section within 30 days of theposting. The corrected statement or thenotice must be furnished by mail or inperson if—

(A) An electronic notice of the Website posting of an original statement or thecorrected statement was returned as unde-liverable; and

(B) The recipient has not provided anew e-mail address.

(6) Access period. Statements fur-nished on a Web site must be retainedon the Web site through October 15 of

the year following the calendar year towhich the statements relate (or the firstbusiness day after October 15, if Octo-ber 15 falls on a Saturday, Sunday, orlegal holiday). The furnisher must main-tain access to corrected statements thatare posted on the Web site through Oc-tober 15 of the year following the cal-endar year to which the statements relate(or the first business day after such Oc-tober 15, if October 15 falls on a Satur-day, Sunday, or legal holiday) or thedate 90 days after the corrected formsare posted, whichever is later.

(7) Paper statements after withdrawalof consent. A furnisher must furnish apaper statement if a recipient withdrawsconsent to receive a statement electroni-cally and the withdrawal takes effect be-fore the statement is furnished. A paperstatement furnished after the statementdue date under this paragraph (a)(7) istimely if furnished within 30 days afterthe date the furnisher receives the with-drawal of consent.

(b) Effective/applicability date. Thissection applies for calendar years begin-ning after December 31, 2014. Reportingentities will not be subject to penaltiesunder section 6722 with respect to thereporting requirements for 2014 (for state-ments furnished in 2015).

Par. 3. Section 1.6081–8 is amended inparagraph (a) by adding the language“1095 series,” between the words “1042–S,” and “1098”.

PART 301 — PROCEDURE ANDADMINISTRATION


Authority: 26 U.S.C. 7805 * * *Par. 5. Section 301.6011–2 is amended

in the first sentence of paragraph (b)(1) byadding “1094 series, 1095 series,” after“1042–S”.

Par 6. Section 301.6721–1 is amendedby removing the word “or” at the end ofparagraph (g)(3)(xxii), removing the pe-riod and adding a semi-colon in its placeat the end of paragraph (g)(3)(xxiii), andadding paragraphs (g)(3)(xxiv) and(g)(3)(xxv) to read as follows:


§ 301.6721–1 Failure to file correctinformation returns.

* * * * *(g) * * *(3) * * *(xxiv) Section 6055 (relating to infor-

mation returns reporting minimum essen-tial coverage); or

(xxv) Section 6056 (relating to infor-mation returns reporting on offers ofhealth insurance coverage by applicablelarge employer members).

* * * * *Par 7. Section 301.6722–1 is amended

by removing the word “or” at the end ofparagraph (d)(2)(xxxi), removing the pe-riod and adding a semi-colon in its placeat the end of paragraph (d)(2)(xxxii), andadding paragraphs (d)(2)(xxxiii) and(d)(2)(xxxiv) to read as follows:

§ 301.6722–1 Failure to furnish correctpayee statements.

* * * * *(d) * * *(2) * * *(xxxiii) Section 6055 (relating to infor-

mation returns reporting minimum essen-tial coverage); or

(xxxiv) Section 6056 (relating to infor-mation returns reporting on offers ofhealth insurance coverage by applicablelarge employer members).

* * * * *

PART 602 — OMB CONTROLNUMBERS UNDER THEPAPERWORK REDUCTION ACT

Par. 8. The authority citation for part602 continues to read as follows:

Authority: 26 U.S.C. 7805 * * *Par. 9. In § 602.101, paragraph (b) is

amended by adding two entries in numer-ical order to the table to read as follows:

§ 602.101 OMB Control numbers.

* * * * *(b) * * *

CFR part or sectionwhere identifiedand described

CurrentOMB

Control No.

* * * * *

1.6055–1. . . . . . . . . .1545–2252

1.6055–2. . . . . . . . . .1545–2252

* * * * *



Approved March 2, 2014,


(Tax Policy).

(Filed by the Office of the Federal Register on March 3,2014, 4:15 p.m., and published in the issue of the FederalRegister for March 10, 2014, 79 F.R. 13231)

Section 6056.—InformationReporting by ApplicableLarge Employers on HealthInsurance CoverageOffered Under Employer-Sponsored PlansT.D. 9661

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Parts 301 and 602

Information Reporting byApplicable Large Employerson Health InsuranceCoverage Offered UnderEmployer-Sponsored Plans


ACTION: Final regulations.

SUMMARY: This document contains fi-nal regulations providing guidance to em-ployers that are subject to the informationreporting requirements under section 6056of the Internal Revenue Code (Code), en-acted by the Affordable Care Act (gener-

ally employers with at least 50 full-timeemployees, including full-time equivalentemployees). Section 6056 requires thoseemployers to report to the IRS informa-tion about the health care coverage, if any,they offered to full-time employees, inorder to administer the employer sharedresponsibility provisions of section 4980Hof the Code. Section 6056 also requiresthose employers to furnish related state-ments to employees that employees mayuse to determine whether, for each monthof the calendar year, they may claim ontheir individual tax returns a premium taxcredit under section 36B (premium taxcredit). The regulations provide for a gen-eral reporting method and alternative re-porting methods designed to simplify andreduce the cost of reporting for employerssubject to the information reporting re-quirements under section 6056. The regu-lations affect those employers, employeesand other individuals.

DATES: Effective Date: These regula-tions are effective on March 10, 2014.

Applicability Date: For dates of appli-cability, see §§301.6056–1(m) and301.6056–2(b).

FOR FURTHER INFORMATIONCONTACT: Ligeia Donis at (202) 317–6846 (not a toll-free number).

SUPPLEMENTARY INFORMATION

Paperwork Reduction Act

The collection of information con-tained in these final regulations has beenreviewed and approved by the Office ofManagement and Budget in accordancewith the Paperwork Reduction Act of1995 (44 U.S.C. 3507(d)) under controlnumber 1545–2251.

The collection of information in theseregulations is in §§ 301.6056–1, and301.6056–2. This information is collectedin accordance with the return and em-ployee statement requirements under sec-tion 6056 and is used to administer section4980H and the premium tax credit. Thelikely respondents are employers that areapplicable large employers, as defined un-der section 4980H(c)(2).

An agency may not conduct or spon-sor, and a person is not required to re-spond to, a collection of information un-less it displays a valid control number


assigned by the Office of Managementand Budget.

The burden for the collection of infor-mation contained in these final regulationswill be reflected in the burden on Form1095–C or another form that the IRS des-ignates, which will request the informa-tion in the final regulations.

Books or records relating to a collec-tion of information must be retained aslong as their contents may become mate-rial in the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

Background

Sections I through V of the preamble(“Background”) describe the statutoryprovisions governing the information re-porting requirements, as well as relatedstatutory provisions. Sections VI throughXIII of the preamble (“Explanation ofProvisions and Summary of Comments”)describe and explain how these regula-tions implement the statutory provisionsof section 6056 and include a discussionof alternative reporting methods and sim-plifications that are adopted in these finalregulations. As is typical of regulations oninformation reporting, these regulationsrefer generally to additional informationthat may be required under applicableforms and instructions. Sections IX.B andC of the preamble set forth the specificdata elements that will be included withthe reporting, including the data elementsthat will be provided through the use of anindicator code.

I. Reporting Requirements forApplicable Large Employers (Section6056)

Section 60561 requires applicable largeemployers, as defined in section4980H(c)(2), to file returns at the timeprescribed by the Secretary with respect toeach full-time employee and to furnish astatement to each full-time employee byJanuary 31 of the calendar year followingthe calendar year for which the return

must be filed. Section 6056 specifies cer-tain information that must be reported onthe return and related statement and au-thorizes the Secretary to require additionalinformation and determine the form of thereturn. Section 6055 requires informationreporting by any person that providesminimum essential coverage to an indi-vidual during a calendar year, which in-formation relates to the section 5000Aindividual shared responsibility provi-sions. Sections 6055 and 6056 are effec-tive for periods beginning after December31, 2013; however, Notice 2013–45(2013–31 IRB 116) provides transition re-lief from the section 6056 information re-porting requirements (and section4980H), as well as the section 6055 infor-mation reporting requirements, so that re-porting is not required with respect to2014.

Proposed regulations under section6056 were published in the Federal Reg-ister on September 9, 2013 (REG–136630–12 [78 FR 54996]). The pro-posed regulations provide guidance on thereporting method proposed to implementthe statutory provisions of section 6056(referred to as the general method), anddiscuss a variety of potential simplifiedreporting methods, on which public com-ments were requested. Comments re-sponding to the proposed regulations andpotential simplified reporting methodswere submitted and are available for pub-lic inspection at www.regulations.gov orupon request. A public hearing was con-ducted on November 18, 2013.

Treasury and the IRS have sought todevelop final information reporting rulesthat will be as streamlined, simple, andworkable as possible, consistent with ef-fective implementation of the law. Thishas reflected a considered balancing of theimportance of (1) minimizing cost andadministrative tasks for reporting by enti-ties and individuals, (2) providing individ-uals the information to complete their taxreturns accurately, including with respectto the individual shared responsibility pro-visions and potential eligibility for thepremium tax credit, and (3) providing the

IRS with information needed for effectiveand efficient tax administration. Afterconsideration of all of the comments andtestimony, as well as the comments pre-viously submitted in response to Notice2012–33 (2012–20 IRB 912), the pro-posed regulations are adopted as amendedby this Treasury Decision. The amend-ments are discussed in the Summary ofComments and Explanation of Provisionssection of this preamble.

II. Shared Responsibility for Employers(Section 4980H)

Section 6056 reporting is needed forthe administration of section 4980H. Gen-erally, a payment will be assessed undersection 4980H if the employer either doesnot offer minimum essential coverage toits full-time employees (and their depen-dents) or the coverage offered is not af-fordable or does not provide minimumvalue, and one or more of the full-timeemployees receive a premium tax creditfor purchase of coverage on an AffordableInsurance Exchange (Exchange).2 Section4980H(c)(2) defines the term “applicablelarge employer” as, with respect to a cal-endar year, an employer that employed anaverage of at least 50 full-time employeeson business days during the preceding cal-endar year. Generally, for purposes of de-termining applicable large employer sta-tus, a full-time employee includes anyemployee who was employed on averageat least 30 hours of service per week andany full-time equivalents determined pur-suant to section 4980H(c)(2)(E). As pro-vided in section 4980H(c)(2)(C)(i), allemployers treated as a single employerunder section 414(b), (c), (m), or (o) aretreated as one employer for purposes ofdetermining applicable large employerstatus. Section 4980H contains rules fordetermining whether an employer quali-fies as an applicable large employer, in-cluding special rules addressing an em-ployer’s first year of existence. Seesection 4980H(c)(2)(C).

Section 4980H is effective for monthsafter December 31, 2013; however, No-tice 2013–45 provides transition relief for

1Section 6056 was enacted by section 1514(a) of the Patient Protection and Affordable Care Act, Public Law 111–148 (124 Stat. 119 (2010)), amended by the Health Care and EducationReconciliation Act of 2010, Public Law 111–152 (124 Stat. 1029 (2010)), and further amended by the Department of Defense and Full-Year Continuing Appropriations Act of 2011, PublicLaw 112–10 (125 Stat. 38 (2011)) (collectively, the Affordable Care Act).

2An Exchange is also referred to in other published guidance as a Marketplace.


2014 for section 6056 reporting require-ments which, given their role in adminis-tering section 4980H, means that no pay-ments will be assessed under section4980H for 2014. On February 12, 2014,Treasury and the IRS released final regu-lations under section 4980H (TD 9655 [79FR 8544]).

The final regulations under section4980H provide guidance on determiningapplicable large employer status and de-termining full-time employee status, in-cluding defining and providing rules forcalculating hours of service. See§§ 54.4980H–1(a)(24) (definition of hoursof service), 54.4980H–2 (determination ofapplicable large employer status), and54.4980H–3 (determination of full-timeemployee status).

III. Premium Tax Credit (Section 36B)

Section 6056 reporting is also essentialto the administration of the premium taxcredit under section 36B, which wasadded by the Affordable Care Act. Theadvanceable and refundable section 36Bpremium tax credit helps individuals andfamilies afford health insurance coveragepurchased through an Exchange. An em-ployee is not eligible for the premium taxcredit to subsidize the cost of Exchangecoverage if the employee is offered af-fordable minimum essential coverage un-der an employer-sponsored plan that pro-vides minimum value, or if the employeeenrolls in an employer-sponsored planthat provides minimum essential cover-age. For purposes of the premium taxcredit, an employer-sponsored plan is af-fordable if the employee’s required con-tribution for the lowest-cost self-onlyminimum value coverage offered does notexceed 9.5 percent of the employee’shousehold income. Since an employer or-dinarily will not know an employee’shousehold income, the final section4980H regulations provide various safeharbors for determining affordability forpurposes of section 4980H based on in-formation available to the employer.Those safe harbors do not affect afford-ability for purposes of the premium taxcredit, so that an employer will be treatedas having offered affordable health carecoverage for purposes of section 4980H ifit meets one of the safe harbors under the

section 4980H regulations even if the cov-erage is not treated as affordable to theindividual employee for purposes of thepremium tax credit. An employee who isoffered affordable minimum essentialcoverage providing minimum value underan employer-sponsored plan but insteadpurchases coverage on an Exchange willnot be eligible for a premium tax credit(and if such an employee’s spouse or de-pendents are also offered coverage underthe employer-sponsored plan but insteadpurchase coverage on an Exchange, theyalso will not be eligible for a premium taxcredit on the Exchange). Individuals andthe IRS will use the information reportedunder section 6056 on the cost of thelowest-cost employer-sponsored self-onlyminimum essential coverage that providesminimum value for purposes of verifyingan individual’s eligibility for the premiumtax credit.

Individuals, including employees, maybe eligible for advance payments of thepremium tax credit (APTC), which areadministered by HHS and paid to issuerson behalf of individuals who enrolled inExchange coverage. Individuals who donot request APTC also may be eligible toclaim the premium tax credit on their Fed-eral income tax returns if they purchasedcoverage on an Exchange and were notoffered employer-sponsored minimum es-sential coverage that was affordable andprovided minimum value. The IRS andemployees will use the information pro-vided on the section 6056 return and em-ployee statement to determine whether anemployee is eligible for the premium taxcredit. Note that in connection with pro-viding APTC, the Exchanges will employa verification process.

IV. Individual Shared Responsibility(Section 5000A)

The Affordable Care Act also addedsection 5000A to the Code. Section5000A provides that every individualmust have minimum essential coverage,qualify for an exemption, or include anadditional payment with their Federal in-come tax return. Taxpayers who can claima child or another individual as a depen-dent for federal income tax purposes areresponsible for making the payment if the

dependent does not have minimum essen-tial coverage or an exemption.

Section 5000A(f)(1)(B) provides thatminimum essential coverage includes cov-erage under an eligible employer-sponsoredplan. Under section 5000A(f)(2) and§ 1.5000A–2(c)(1), an eligible employer-sponsored plan is, with respect to an em-ployee, (1) group health insurance cover-age offered by, or on behalf of, anemployer to an employee that is either (a)a governmental plan within the meaningof section 2791(d)(8) of the Public HealthService Act (42 U.S.C. 300gg-91(d)(8)),(b) any other plan or coverage in the smallor large group market within a State, or (c)a grandfathered health plan, as defined insection 5000A(f)(1)(D), offered in a groupmarket, or (2) a self-insured group healthplan under which coverage is offered by,or on behalf of, an employer to an em-ployee. Section 5000A(f)(3) and regula-tions under that section provide that min-imum essential coverage does not includecoverage consisting solely of exceptedbenefits described in section 2791(c)(1),(c)(2), (c)(3), or (c)(4) of the Public HealthService Act or regulations issued underthese provisions. See § 1.5000A–2(g).

V. Information Reporting By Providersof Coverage (Issuers, Self-InsuringEmployers, and Sponsors of CertainGovernment-Sponsored Programs)(Section 6055)

The Affordable Care Act also addedsection 6055 to the Code, providing forinformation reporting for the administra-tion of section 5000A. The section 6055reporting requirements are effective foryears beginning after December 31, 2013;however, as noted above in section I ofthis preamble, Notice 2013–45 providestransition relief for 2014 from the section6055 reporting requirements so that thereporting is not required with respect to2014. Section 6055 requires informationreporting by any person that providesminimum essential coverage to an indi-vidual during a calendar year, includingcoverage provided under an eligibleemployer-sponsored plan, and the furnish-ing to taxpayers of a related statementcovering each individual listed on the sec-tion 6055 return. The information reportedunder section 6055 may be used by indi-


viduals and the IRS to verify the months(if any) in which they were covered byminimum essential coverage. Treasuryand the IRS are issuing final regulationsunder section 6055 (TD 9660) concur-rently with these final regulations.

Summary of Comments andExplanation of Provisions

In general, in addition to the changesdescribed elsewhere in this preamble, thefinal regulations adopt non-substantivechanges that were made to certain sectionsof the proposed regulations in order toincrease consistency with the final regula-tions under section 6055 issued concur-rently with these final regulations. In ad-dition, the proposed regulations providedthat reporting entities must file section6056 information returns electronically ifthey file 250 returns of any type. The finalregulations provide that reporting entitiesmust file section 6056 returns electroni-cally if they file 250 returns under section6056. These changes are discussed later inthis preamble.

VI. Introduction

This Explanation of Provisions (Sec-tions VI through XIII of this preamble)addresses the comments that were re-ceived and describes the provisions ofthese final regulations implementing thesection 6056 reporting provisions dis-cussed in the Background portion of thepreamble. Specifically, this section in-cludes the following:

Section VII.............Key TermsSection VIII............ ALE Member

Subject to Section 6056 RequirementsWith Respect to Full-Time Employees

Section IX.............General Method -Content, Manner, and Timing of Informa-tion Required to be Reported to the IRSand Furnished to Full-Time Employees

Section X..............Alternative Methodsfor Section 6056 Information Reportingfor Eligible ALE Members

Section XI.............Other Possible Al-ternative Methods Not Adopted in the Fi-nal Regulations

Section XII............ Person Responsiblefor Section 6056 Reporting

Section XIII............Applicability of In-formation Return Requirements and Pen-alty Relief for 2015

VII. Key Terms

These regulations under section 6056use a number of terms that are defined inother Code provisions or regulations. Forexample, section 6056(f) provides thatany term used in section 6056 that is alsoused in section 4980H shall have the samemeaning given to the term by section4980H. The final regulations provide forthe following defined terms:

A. Applicable Large Employer has thesame meaning as in section 4980H(c)(2)and § 54.4980H–1(a)(4).

B. Applicable Large Employer Mem-ber has the same meaning as in §54.4980H–1(a)(5). All persons treated asa single employer under section 414(b),(c), (m), or (o) are treated as one employerfor purposes of determining applicablelarge employer status.3 Under these regu-lations, the section 6056 filing and fur-nishing requirements are applied sepa-rately to each person comprising theapplicable large employer consistent withthe approach taken in the section 4980Hregulations with respect to the determina-tion of any assessable payment under sec-tion 4980H. The person or persons thatcomprise the applicable large employerare referred to as applicable large em-ployer members (and referred to else-where in this preamble as ALE members).

C. Dependent has the same meaning asin § 54.4980H–1(a)(12).

D. Eligible Employer-Sponsored Planhas the same meaning as in section5000A(f)(2) and § 1.5000A–2(c)(1).

E. Full-time Employee has the samemeaning as in section 4980H(c)(4) and §54.4980H–1(a)(21), but only as applied tothe determination and calculation of lia-bility under section 4980H(a) and (b) withrespect to any individual employee (andtherefore not including full-time equiva-lent employees as defined in § 54.4980H–1(a)(22)). The final regulations under sec-tion 4980H define an employee for

purposes of section 4980H as an individ-ual who is an employee under the com-mon law standard, and as not including aleased employee (as defined in section414(n)(2)), a sole proprietor, a partner in apartnership, a 2-percent S corporation share-holder, or a worker described in section3508.

F. Governmental Unit and Agency orInstrumentality of a Governmental Unit.The term governmental unit is defined asthe government of the United States, anyState or political subdivision of a State, orany Indian tribal government (as definedin section 7701(a)(40)) or subdivision ofan Indian tribal government (as defined insection 7871(d)). The regulations do notdefine the term agency or instrumentalityof a governmental unit for purposes ofsection 6056, but reserve on the issue.Until future guidance is issued that definesthe term for purposes of section 6056, anentity may determine whether it is anagency or instrumentality of a governmentalunit based on a reasonable and good faithinterpretation of existing rules relating toagency or instrumentality determinations forother federal tax purposes.

G. Minimum Essential Coverage hasthe same meaning as in section 5000A(f)and the regulations issued under that sec-tion.

H. Minimum Value has the same mean-ing as in section 36B and any applicableguidance. See proposed § 1.36B–6.

I. Person has the same meaning as pro-vided in section 7701(a)(1) and the relatedregulations.

VIII. ALE Member Subject to Section6056 Requirements with Respect to Full-Time Employees

As indicated earlier in section VII.B ofthis preamble, an ALE member is anyperson that is an applicable large em-ployer or a member of an aggregatedgroup (determined under section 414(b),414(c), 414(m) or 414(o)) that is deter-mined to be an applicable large employer.Under these regulations, the section 6056filing and statement furnishing require-ments apply on a member-by-member ba-sis to each ALE member, even though the

3Until further guidance is issued, government entities, churches, and a convention or association of churches may apply a reasonable, good faith interpretation of section 414(b), (c), (m),and (o) in determining whether a person or group of persons is an applicable large employer and whether a particular entity is an applicable large employer member. See section V.D. ofthe preamble to the final section 4980H regulations (TD 9655).


determination of whether an entity is anapplicable large employer is made at theaggregated group level.4 For example, ifan applicable large employer is comprisedof a parent corporation and 10 wholly-owned subsidiary corporations, there are11 ALE members (the parent corporationand each of the 10 subsidiary corpora-tions). Under these regulations, each ALEmember with full-time employees is theentity responsible for filing and furnishingstatements with respect to its full-time em-ployees under section 6056. This is consis-tent with the manner in which any potentialassessable payments under section 4980Hwill be calculated and administered.

Some commenters requested that theapplicable large employer be permitted toreport and furnish statements on a consol-idated basis, or that the sponsor of a healthplan offering coverage to employees ofmore than one ALE member plan be per-mitted to report and furnish statements onbehalf of all the employers of employeeseligible to participate in the plan. Whilethese regulations do not adopt these sug-gestions, Treasury and the IRS understandthat ALE members may benefit from theassistance of a third party in preparingthese returns, for example a third-partyplan administrator or a related ALE mem-ber tasked with preparing the returns forall the members of that applicable largeemployer. For a discussion of how thesethird parties may help an ALE memberfulfill its reporting obligations, see sectionXII.C of this preamble.

The section 6056 return will form thebasis for the process leading to any assess-ment of the ALE member under section4980H, which is determined separately withrespect to each ALE member. Any assess-able payment would be calculated based onthe relevant information related to the num-ber of full-time employees of each ALEmember and the nature of the offer of cov-erage, if any, made to each of that ALEmember’s full-time employees for each cal-

endar month. Accordingly, the ALE mem-ber is the appropriate taxpayer to file thereturn relating to its potential tax liability.

Whether an employee is a full-timeemployee is determined under section4980H(c)(4) and any applicable guidance.See §§ 54.4980H–1(a)(21) and54.4980H–3. This includes any full-timeemployees who may perform services formultiple ALE members within the appli-cable large employer.5 Under these regu-lations, only ALE members with full-timeemployees are subject to the filing andstatement furnishing requirements of sec-tion 6056 (and only with respect to theirfull-time employees). Accordingly, ALEmembers without any full-time employeesare not subject to the section 6056 report-ing requirements.

Generally, the ALE member providingthe section 6056 reporting is the commonlaw employer. An ALE member that is aqualified subchapter S subsidiary under sec-tion 1361(b)(3)(B) or an entity described in§ 301.7701–2(c)(2)(i) (collectively, a disre-garded entity) is treated as an entity separatefrom its owner for purposes of section4980H and section 6056 under §§ 1.1361–4(a)(8)(i)(E) and 301.7701–2(c)(2)(v)(A)(5)for periods after December 31, 2014. SeeTD 9655. Therefore, the reporting require-ments under section 6056 apply to an ALEmember that is a disregarded entity, and notto its owner.6

IX. General Method - Content, Manner,and Timing of Information Required tobe Reported to the IRS and Furnished toFull-Time Employees

This section describes the generalmethod for reporting to the IRS and fur-nishing statements to employees pursuantto section 6056 that is set forth in theseregulations. This general method is avail-able for all employers and with respect toreporting for all full-time employees.These regulations also provide alternative

reporting methods, which in some casesmay be available only with respect to acertain group or groups of employees. Inthose cases, with respect to those employ-ees for whom an alternative reportingmethod is not available, the employermust use the general method. In any case,the alternative reporting methods are op-tional so that an employer may choose toreport for any or all of its full-time em-ployees using the general method even ifan alternative reporting method is avail-able. For a further description of the alter-native reporting methods, see section X ofthis preamble.

A. Information Reporting to the IRS

In accordance with section 6056, theregulations provide for each ALE memberto file a section 6056 return with respect toits full-time employees. Similar to the sep-arate Form W–2, Wage and Tax State-ment, filed by an employer for each em-ployee and the Form W-3, Transmittal ofWage and Tax Statements, filed as a trans-mittal form for the Forms W–2, these reg-ulations provide that a separate return isrequired for each full-time employee, ac-companied by a single transmittal formfor all of the returns filed for a givencalendar year.

Many commenters recommended thatthe regulations allow combined informa-tion reporting under sections 6055 and6056 for applicable large employers thatsponsor self-insured plans and must reportunder both sections. The proposed regula-tions did not provide for combined report-ing. In an effort to minimize taxpayerburden and streamline the reporting pro-cess as authorized by section 6056(d),while minimizing the need for employersand the IRS to build multiple systems toaccommodate multiple forms, these finalregulations adopt this suggestion by pro-viding for use by all ALE members of asingle combined form for reporting the

4Government entities, churches, and a convention or association of churches should, for purposes of section 6056 reporting, use an interpretation of section 414(b), (c), (m), and (o) thatis consistent with that used for purposes of section 4980H in determining whether a person or group of persons is an applicable large employer and whether a particular entity is an applicablelarge employer member. See § 54.4980H–2(b)(4).

5For example, if a full-time employee performs services for two ALE members within an applicable large employer during a calendar month, the employee is treated as the employee ofthe ALE member for which the employee was credited the majority of the hours of service for that month. See § 54.4980H–5(d). Because an ALE member must report for any employeethat is its full-time employee for one or more months of the year, all ALE members that are an employer of an employee that is its full-time employee for one or more months of the calendaryear must file and furnish a section 6056 return with respect to services performed by the employee reflecting the months in which the employee was a full-time employee of that ALEmember.

6Section 301.7701–2(c)(2)(v)(B) provides that an entity that is disregarded as an entity separate from its owner for any purpose under § 301.7701–2 is treated as a corporation with respectto the reporting requirements under section 6056.


information required under both section6055 and section 6056.

Accordingly, as a general method,these regulations provide that the section6056 return may be made by filing Form1094–C (a transmittal) and Form 1095–C(an employee statement), or other formsthe IRS designates. Alternatively, the sec-tion 6056 return may be made by filing asubstitute form. Under these regulations, asubstitute form must include all of theinformation required to be reported onForms 1094–C and 1095–C or otherforms the IRS designates and comply withapplicable revenue procedures or otherpublished guidance relating to substitutereturns. See §§ 301.6056–1(d)(2) and601.601(d)(2). For a discussion of substi-tute statements for employees, see sectionIX.D of this preamble.

Form 1095–C will be used by ALEmembers to satisfy the section 6055 and6056 reporting requirements, as applica-ble. An ALE member that sponsors a self-insured plan will report on Form 1095–C,completing both sections to report the in-formation required under both sections6055 and 6056. An ALE member thatprovides insured coverage will also reporton Form 1095–C, but will complete onlythe section of Form 1095–C that reportsthe information required under section6056. Section 6055 reporting entities thatare not ALE members or are not reportingin their capacity as employers, such ashealth insurance issuers, self-insured mul-tiemployer plans, and providers ofgovernment-sponsored coverage, will re-port under section 6055 on Form 1095-B.In accordance with usual procedures,these forms will be made available in draftform in the near future.

In response to comments, Treasury andthe IRS also considered suggestions touse, for section 6055 and 6056 reportingpurposes, information that employerscommunicate to employees aboutemployer-sponsored coverage prior toemployees’ potential enrollment in Ex-change coverage. These comments ob-served that, under the Affordable CareAct, employers provide pre-enrollment in-

formation to employees by various means,including information in the Notice ofCoverage Options provided to employeespursuant to the requirements under section18B of the Fair Labor Standards Act7 andthe Employer Coverage Tool developedby the Department of Health and HumanServices (HHS) that supports the applica-tion for enrollment in a qualified healthplan and insurance affordability pro-grams.8

Treasury and the IRS have consideredand coordinated with the Departments ofHHS and Labor regarding the various pro-visions with a view to identifying ways tomake the entire process as effective andefficient as possible for all parties. Thatsaid, the various reports are designed fordifferent purposes, and pre-enrollment re-porting regarding anticipated employercoverage in an upcoming coverage year isunlikely to be helpful to individual tax-payers in accurately completing their taxreturns more than a year later (and afterthe coverage year has already ended).Among other issues, the pre-enrollmentinformation may not be readily availableto individuals at the time they are filingtheir tax returns, could be confused withother information (such as the pre-enrollment information provided to the in-dividual pertaining to the coverage yearfollowing the calendar year to which thetax return relates), may not include certaininformation, like premiums, necessary fortax administration, and is in a format thatdoes not facilitate easy transfer to the ap-propriate location on the Federal incometax return. In addition, the pre-enrollmentinformation is generally not specific to theparticular employee’s experience at theemployer. For these reasons, these regu-lations do not adopt these suggestions.

B. Information Required to Be Reportedand Furnished

Except as otherwise provided as part ofan alternative reporting method, these fi-nal regulations provide that each ALEmember reports on the section 6056 infor-mation return the same information setforth in the proposed regulations. Specif-

ically, the final regulations require the fol-lowing information: (1) the name, ad-dress, and employer identification numberof the ALE member, and the calendar yearfor which the information is reported; (2)the name and telephone number of theALE member’s contact person; (3) a cer-tification as to whether the ALE memberoffered to its full-time employees (andtheir dependents) the opportunity to enrollin minimum essential coverage under aneligible employer-sponsored plan, by cal-endar month; (4) the number of full-timeemployees for each calendar month dur-ing the calendar year, by calendar month;(5) for each full-time employee, themonths during the calendar year for whichminimum essential coverage under theplan was available; (6) for each full-timeemployee, the employee’s share of thelowest cost monthly premium for self-only coverage providing minimum valueoffered to that full-time employee underan eligible employer-sponsored plan, bycalendar month; and (7) the name, ad-dress, and taxpayer identification numberof each full-time employee during the cal-endar year and the months, if any, duringwhich the employee was covered under aneligible employer-sponsored plan. In ad-dition, these regulations provide, as withother information reporting, that the sec-tion 6056 information return may requestsuch other information as the Secretarymay prescribe or as may be required byforms or instructions.

Some commenters requested that ALEmembers be permitted to provide thename and telephone number of a thirdparty in the part of the section 6056 returnrequesting the name and telephone num-ber of the ALE member’s contact person.An ALE member may provide the nameand telephone number of any contact per-son, whether an employee of the ALEmember or an agent of the ALE member,acting on behalf of the ALE member forpurposes of section 6056 reporting.

Some commenters requested that thefinal regulations not require the reportingof social security numbers for an employ-ee’s spouse or dependents. Neither the

7On May 8, 2013, the Department of Labor issued Technical Release 2013–02 providing temporary guidance under Fair Labor Standards Act section 18B, as well as model notices. SeeTechnical Release 2013–02, model notice for employers who offer a health plan to some or all employees, and model notice for employers who do not offer a health plan, available athttp://www.dol.gov/ebsa/healthreform/regulations/coverageoptionsnotice.html Guidance on the Notice to Employees of Coverage

8Available at https://www.healthcare.gov/downloads/ECT_Application_508_130615.pdf


proposed regulations nor these final regu-lations require reporting of such informa-tion for purposes of section 6056.9 Thesefinal regulations require only that an ALEmember report the social security numberof the full-time employee.

Some commenters requested that thefinal regulations permit employers to re-port dates of coverage rather than monthsof coverage. Other commenters requestedthat ALE members be permitted to pro-vide the information on a payroll periodbasis, rather than a monthly basis, to ad-dress situations in which coverage is pro-vided based on payroll periods. Othercommenters requested that the ALE mem-ber be permitted to report by multi-monthperiods, rather than on a monthly basis,such as stating that coverage was offeredJanuary through October of a particularyear. As provided in the final regulationsunder section 4980H and adopted bycross-reference in these regulations, theindividuals who are full-time employeesof an ALE member for a particular calen-dar month generally may be identified ona weekly basis or a payroll period basisthat approximates the calendar month. See§§ 54.4980H–3(c)(3) and 54.4980H–3(d)(1)(ii). However, both section 4980Hand the premium tax credit are adminis-tered based on the calendar month, so thatwhether the individual identified as a full-time employee was offered coverage forthe entire calendar month is relevant to theadministration of both Code provisions.Accordingly, ALE members are requiredto report on the basis of the twelve calen-dar months with respect to the coverageoffered (or not offered) to each full-timeemployee.

As part of the effort to minimize thecost and administrative steps associatedwith the reporting requirements, the finalregulations omit information that is notrelevant to individual taxpayers or the IRSfor purposes of administering the pre-mium tax credit and section 4980H or thatis already provided at the same timethrough other means. Specifically, consis-tent with the proposed regulations, thesefinal regulations do not require the report-ing of the following four data elements

(and a more detailed description of thedata elements that will be included is pro-vided later in this section of the pream-ble):

First, the final regulations do not re-quire the reporting of the length of anypermissible waiting periods under section4980H10, because the length of a waitingperiod is not relevant for administration ofthe premium tax credit or section 4980Hor for an individual in preparing his or hertax return. However, Treasury and the IRSanticipate that information will be re-quested, using an indicator code, regard-ing whether coverage was not offered toan employee during certain months be-cause of a permissible waiting period un-der section 4980H, since this informationis relevant to the administration of section4980H.

Second, these regulations do not re-quire reporting of the employer’s share ofthe total allowed costs of benefits pro-vided under the plan because this infor-mation also is not relevant to the admin-istration of the premium tax credit andsection 4980H. In contrast, whether theemployer-sponsored plan provides mini-mum value coverage is relevant informa-tion; accordingly, Treasury and the IRSanticipate that information will be re-quested, using an indicator code. Somecommenters requested that information onthe employer contribution continue to berequired because it would be informativeto the employee. Given that this informa-tion is not relevant to tax administration,and generally may be discerned by theemployee from the information reportedat the same time on the Form W–2, Box12 using Code DD pursuant to section6051(a)(14) (reporting of the total valueof employer-provided health benefits pro-vided to the employee), these regulationsdo not adopt this suggestion.

Third, these regulations do not requirethe reporting of the monthly premium forthe lowest-cost option in each of the en-rollment categories (such as self-only cov-erage or family coverage) under the plan.Rather, because only the lowest-cost op-tion of self-only coverage providing min-imum value offered under any of the en-

rollment categories for which theemployee is eligible is relevant to the de-termination of whether coverage is afford-able (and thus to the administration of thepremium tax credit and section 4980H),that is the only cost information requested.

Fourth, the regulations do not requirethe reporting of the months, if any, duringwhich any of the employee’s dependentswere covered under the plan. Instead, theregulations require reporting only regard-ing whether the employee was coveredunder a plan. Information relating to themonths, if any, during which any of theemployee’s dependents were covered un-der the plan will be reported as part of thesection 6055 information return associ-ated with that employee’s coverage,whether on the combined Form 1095–Creturn submitted by an ALE member witha self-insured plan or otherwise on theForm 1095-B return submitted by the in-surance company or other person provid-ing the minimum essential coverage.

Some commenters requested that infor-mation related to whether the employeewas covered under a plan not be requiredto be reported as part of the section 6056reporting because that information will bereported on the section 6055 return. Al-though this information is required to bereported under section 6055 and section6056, this suggestion is not adopted in thefinal regulations because the employee’scoverage under the eligible employer-sponsored plan means that the employeeis not eligible for the premium tax credit.However, under the final regulations,ALE members with self-insured grouphealth plans will now use a combinedForm 1095–C to satisfy the section 6055and section 6056 reporting requirementsand will therefore only be required to re-port on a single form information regard-ing whether an employee was covered.ALE members that provide insured cov-erage will report information regardingwhether an employee was covered onceon the section 6056 section of the com-bined Form 1095–C and will leave thesection of the form pertaining to section6055 information blank.

9However, section 6055 requires reporting of taxpayer identification numbers for a responsible individual’s spouse and/or dependents enrolled in minimum essential coverage.

10References throughout this preamble to permissible waiting periods under section 4980H refer to any periods that are included in the term limited non-assessment period, as defined in§ 54.4980H–1(a)(26)


Under the regulations, each ALE mem-ber must file and furnish the section 6056return and employee statement using itsEIN. Any ALE member that does not havean EIN may easily apply for one online, orby telephone, fax, or mail. See Publication1635, Employer Identification Number,for further information at www.irs.gov.

To assist in administering section4980H and the premium tax credit, theIRS will need certain information not spe-cifically set forth under section 6056 butauthorized under section 6056(b)(2)(F).

Under the general method of section6056 reporting, the following informationwill be reported through the use of indi-cator codes for some information, as partof the section 6056 return (as well as thenumber of individual employee state-ments being submitted):

(1) Information as to whether the cov-erage offered to full-time employees andtheir dependents under an employer-sponsored plan provides minimum valueand whether the employee had the oppor-tunity to enroll his or her spouse in thecoverage;

(2) the total number of employees, bycalendar month;

(3) whether an employee’s effectivedate of coverage was affected by a per-missible waiting period under section4980H, by calendar month;

(4) whether the ALE member had noemployees or otherwise credited anyhours of service during any particularmonth, by calendar month;

(5) whether the ALE member is a per-son that is a member of an aggregatedgroup, determined under section 414(b),414(c), 414(m), or 414(o), and, if applica-ble, the name and EIN of each employermember of the aggregated group consti-tuting the applicable large employer onany day of the calendar year for which theinformation is reported;

(6) if an appropriately designated per-son is reporting on behalf of an ALEmember that is a governmental unit or anyagency or instrumentality thereof for pur-poses of section 6056, the name, address,and identification number of the appropri-ately designated person;

(7) if an ALE member is a contributingemployer to a multiemployer plan,whether, with respect to a full-time em-ployee, the employer is not subject to anassessable payment under section 4980Hdue to the employer’s contributions to themultiemployer plan; and

(8) if a third party is reporting for anALE member with respect to the ALEmember’s full-time employees, the name,address, and identification number of thethird party (in addition to the name, ad-dress, and EIN of the ALE member al-ready required under the final regula-tions).

Some commenters requested that fur-ther explanation be provided regarding themeaning of the provision included in theproposed regulations asking whether anALE member was conducting business.To clarify the intent, this provision ischanged to require an ALE member, usingan indicator code, to report any monthsduring which no employees were provid-ing services or otherwise being creditedwith hours of service for the ALE mem-ber.

Some commenters requested that em-ployers not be required to report whetherthey expect to be an ALE member thefollowing year. This comment is adoptedin the final regulations.

Some commenters requested that em-ployers be required to report informationin addition to what was described in theproposed regulations. Commenters re-quested that employers be required to re-port information relating to the look-backmeasurement method for determiningfull-time employee status set forth in§ 54.4980H–3(d). Specifically, comment-ers requested that employers be requiredto report on each variable hour employeewho may be subject to the look-back mea-surement method. For variable hour em-ployees, as defined in § 54.4980H–1(a)(49), commenters requested thatemployers be required to report the ad-ministrative and stability period start andend dates and length, as well as themonths in which coverage was offered.Commenters also requested that the costof coverage available to spouses and de-pendents be reported. Although Treasury

and the IRS agree that this informationmay be helpful to employees and theirspouses and dependents in certain circum-stances, reporting such information on thesection 6056 return is not necessary forthe administration of the premium taxcredit or section 4980H and is not directlyrelevant to the employee in determiningwhether the employee is eligible for apremium tax credit and is accuratelyclaiming the credit on the employee’s in-dividual tax return. Accordingly, this sug-gestion is not incorporated in the finalregulations.

Other commenters requested that thesection 6056 return provide a means toindicate whether an employee is a tribalmember who is exempt from the individ-ual shared responsibility provision undersection 5000A(e). Because an individual’sexempt status for purposes of section5000A is not relevant to the administra-tion of the premium tax credit or section4980H, this suggestion is not incorporatedin the final regulations.

C. Use of Indicator Codes to ProvideInformation With Respect to a ParticularFull-Time Employee

In an effort to simplify and streamlinethe section 6056 reporting process underthe general section 6056 reporting rules,Treasury and the IRS anticipate that cer-tain information described above as ap-plied to a particular full-time employeewill be reported to the IRS, and furnishedto the full-time employee, through the useof a code rather than by providing specificor detailed information. Specifically, it iscontemplated that the following informa-tion will be reported with respect to eachfull-time employee for each calendarmonth using a code:11

(1) minimum essential coverage meet-ing minimum value was offered to:

a. the employee only;b. the employee and the employee’s

dependents only;c. the employee and the employee’s

spouse only; ord. the employee, the employee’s

spouse and dependents;

11Section XV of the preamble to the section 4980H final regulations provides certain transition relief for 2015. Treasury and the IRS anticipate that additional indicator codes will be availableon the section 6056 return to indicate that an employer is using the transition relief.


(2) coverage was not offered to theemployee and:

a. any failure to offer coverage will notresult in a payment under section 4980H(a)or (b), for example because the employeewas in a limited non-assessment periodfor certain employees, as defined in§ 54.4980H–1(a)(26);

b. the employee was not a full-timeemployee;

c. the employee was not employed bythe ALE member during that month; or

d. no other code or exception applies;(3) coverage was offered to the em-

ployee for the month although the em-ployee was not a full-time employee forthat month;

(4) the employee was covered underthe plan; and

(5) the ALE member met one of theaffordability safe harbors under§ 54.4980H–5(e)(2) with respect to theemployee.

It is anticipated that if multiple codesapply with respect to a full-time employeefor a particular calendar month, the report-ing format will accommodate the neces-sary codes.

D. Section 6056 Statements to Full-timeEmployees

Under the general section 6056 report-ing rules set forth in these regulations,every ALE member required to file a sec-tion 6056 return must furnish a section6056 employee statement to each of itsfull-time employees that includes thename, address and EIN of the ALE mem-ber and the information required to beshown on the section 6056 return withrespect to the full-time employee. Thesection 6056 employee statement is notrequired to include a copy of the transmit-tal form that accompanies the return. Aspart of the alternative reporting methods,in certain circumstances, other methods offurnishing information to an employeemay be sufficient. For a detailed descrip-tion of these alternative reporting meth-ods, see section X of this preamble.

Some employers may wish to have theflexibility to use a substitute type of state-ment to provide the necessary informationto full-time employees. These regulationsprovide that the section 6056 employeestatement may be made by furnishing a

copy of the section 6056 return on Form1095–C (or another form the IRS desig-nates) or a substitute employee statementfor that full-time employee. Under theseregulations, a substitute statement mustinclude the information required to beshown on the section 6056 return filedwith the IRS with respect to that employeeand must comply with applicable revenueprocedures or other published guidancerelating to substitute statements. See§ 601.601(d)(2). These regulations pro-vide that section 6056 employee state-ments on Form 1095–C or another formthe IRS designates may identify the em-ployee using an IRS truncated TIN ratherthan the social security number or otheridentifying number of the employeeshown on the corresponding informationreturn filed with the IRS. See the proposedregulations on IRS Truncated TaxpayerIdentification Numbers (REG–148873–09[78 FR 913]).

E. Time for Filing Section 6056 Returnsand Furnishing Employee Statements

1. In general

These regulations provide that section6056 returns must be filed with the IRSannually, no later than February 28(March 31 if filed electronically) of theyear immediately following the calendaryear to which the return relates. This is thesame filing schedule applicable to otherinformation returns with which employersare familiar, such as Forms W–2 and1099. Because Notice 2013–45 providestransition relief for section 6056 reportingwith respect to 2014, the first section 6056returns required to be filed are for the2015 calendar year and must be filed nolater than March 1, 2016 (February 28,2016, being a Sunday), or March 31,2016, if filed electronically. In addition,the regulations provide that the section6056 employee statements be furnishedannually to full-time employees on or be-fore January 31 of the year immediatelyfollowing the calendar year to which theemployee statements relate. This meansthat the first section 6056 employee state-ments (meaning the statements for 2015)must be furnished no later than February1, 2016 (January 31, 2016, being a Sun-day). However, see section X.C of this

preamble for a discussion of the 2015section 6056 transition relief available foremployers eligible for the transition reliefset forth in section XV.D.6 of the pream-ble to the final regulations under section4980H (2015 section 4980H transition re-lief for employers with at least 50 and lessthan 100 full-time employees (includingfull-time equivalent employees) that meetcertain conditions).

Some commenters asked for use of analternate filing date for employers whosehealth plan is not a calendar year plan.While Treasury and the IRS understandthat employers may collect information ona plan year basis, employees will need toreceive their section 6056 employee state-ments early in the calendar year in orderto have the requisite information to cor-rectly and completely file their income taxreturns covering the calendar year and re-flecting any available premium tax creditfor that calendar year. For this reason,these regulations do not adopt thissuggestion.

The final regulations do not includerules regarding extensions of the time tofile section 6056 returns. This topic isaddressed in the final regulations undersection 6055, which include amendmentsto the regulations under section 6081 re-lating to general rules on extensions oftime to file to include returns under bothsections 6055 and 6056. The final section6055 regulations cross-reference theamendments to the regulations under sec-tion 6081; these regulations also includethis cross-reference.

2. Voluntary Reporting for CalendarYear 2014

Under Notice 2013–45 and the pro-posed regulations, in preparation for theapplication of the section 4980H provi-sions beginning in 2015, employers wereencouraged to voluntarily comply for2014 (that is, by filing and furnishing sec-tion 6056 returns and statements in early2015) with the information reporting pro-visions as described in the proposed reg-ulations, and to maintain or expand healthcoverage in 2014. At the time the noticeand proposed regulations were issued,Treasury and the IRS anticipated that atleast as to the general method of reporting,the final regulations would not differ sig-


nificantly from the proposed regulations.While the information required to be pro-vided to the IRS and furnished to employ-ees has remained largely unchanged underthe general method of reporting, in re-sponse to comments on the proposed reg-ulations the format in which that informa-tion is provided has changed significantlyto streamline the process and reduce ad-ministrative burden. Specifically, underthe final regulations, as suggested in com-ments, all ALE members will file a singlecombined return providing the relevantsection 6056 information and, as applica-ble, also the relevant section 6055 infor-mation.

Given this change in the informationreporting provisions in response to com-menters’ feedback on the proposed regu-lations, employers that wish to voluntarilycomply with the information reportingprovisions with respect to 2014 should doso in accordance with these final regula-tions (generally meaning providing bothsection 6056 and, if applicable, section6055 information on a single form). Trea-sury and the IRS continue to anticipatethat real-world testing of reporting sys-tems and plan designs, built in accordancewith the terms of these final regulations,through voluntary compliance for 2014will contribute to a smoother transition tofull implementation for 2015.

F. Manner of Filing of Section 6056Information Returns and Furnishing ofSection 6056 Employee Statements.

Treasury and the IRS understand thatelectronic filing is often easier and moreefficient for taxpayers, and several com-menters requested that employers bepermitted to file section 6056 returnselectronically. Some commenters re-quested that the proposed regulations bemodified so that the section 6056 returnwould not be aggregated with other re-turns for purposes of determiningwhether the returns are required to befiled electronically. The final regulationsadopt these suggestions. Consistent with

other tax information reporting require-ments, the final regulations require elec-tronic filing of section 6056 informationreturns (Forms 1094 –C and 1095–C)except for an ALE member filing fewerthan 250 returns under section 6056 dur-ing the calendar year, and provide thatonly section 6056 returns are counted inapplying the 250 return threshold forsection 6056 reporting. The final regu-lations under section 6055, issued con-temporaneously with these final regula-tions, amend § 301.6011–2 to add formsin the 1094 and 1095 series. Proposed§ 301.6011–9 will be removed in a sep-arate document.

Each section 6056 return for a full-timeemployee is counted as a separate return.ALE members filing fewer than 250 re-turns during the calendar year may chooseto make the section 6056 returns on theprescribed paper form, but are permitted(and encouraged) to file section 6056 re-turns electronically. This requirement forelectronic filing is the same as the currentrequirements for other informationreturns.

In addition to electronic filing, Trea-sury and the IRS understand that elec-tronic methods are often a simpler andmore efficient method to supply employ-ees with the required information, andseveral commenters requested that em-ployers be permitted to electronically fur-nish section 6056 employee statements tofull-time employees. In response, the reg-ulations permit electronic furnishing ofsection 6056 employee statements if no-tice, consent, and hardware and softwarerequirements modeled on existing rulesare met. To provide rules for electronicfurnishing with which employers are al-ready familiar, these final regulations,consistent with the proposed regulations,adopt a process substantially similar to theprocess currently in place for the elec-tronic furnishing of employee statements(that is, Forms W–2) pursuant to section6051 and applicable regulations.

Some commenters requested that ALEmembers be permitted simply to post the

information on a website accessible to theemployee (similar to the current processavailable to plan administrators of grouphealth plans for furnishing Summary ofBenefits and Coverage (SBCs)),12 or toprovide the information to an employeeonly upon request. Other commenters re-quested that the ALE member not be re-quired to obtain consent to furnish theinformation electronically. For many em-ployees, the information provided in thesection 6056 employee statement will beessential to the accurate preparation oftheir individual tax return with respect to aclaim for the premium tax credit. Becausethe employee’s eligibility for the premiumtax credit will be based on household in-come for that taxable year, which the em-ployer will not know, the employer willnot be able to determine the identity of theemployees for which the section 6056 in-formation is relevant. Moreover, given theindividualized nature of the informationrequired to be furnished to a full-timeemployee on a section 6056 employeestatement and its intended use in prepar-ing the employee’s individual tax return,permitting an employer to furnish suchinformation electronically without firsthaving obtained the employee’s consentto such electronic furnishing would beinconsistent with the current proceduresfor other information returns. Unlike sec-tion 6056 employee statements that con-tain individualized information, SBCs arethe same for a particular benefit packageunder the plan. For these reasons, the reg-ulations require that with respect to eachfull-time employee to whom the informa-tion is required to be furnished, the ALEmember must obtain consent from the em-ployee before the section 6056 employeestatement may be provided electronically.

With respect to the consent require-ment, some ALE members requested thatan employee’s consent to receive theForm W–2 electronically be deemed aconsent to also receive the employeestatement under section 6056 electroni-cally. Because an employee cannot pro-vide an informed consent to receive a

12The procedures for providing SBCs electronically via internet posting are found at 26 CFR 54.9815–2715(a)(4), 29 CFR 2590.715–2715(a)(4), and 45 CFR 147.200(a)(4). For participantsand beneficiaries covered under the plan, the plan must meet the requirements of the Department of Labor’s regulations at 29 CFR 2520–104b–1. Notably, the internet posting option isfor SBCs provided by an issuer to a plan or by a plan to participants and beneficiaries who are eligible but not enrolled in coverage, and requires that the format of the posting be readilyaccessible, that the SBC is provided in paper form free of charge upon request, and that the issuer or plan provide timely notification by paper or email that the SBC is available on the internetand the internet address. See Q1 of FAQs about Affordable Care Act Implementation (Part IX), available at http://www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html, which allows SBCs to be provided electronically to participants and beneficiaries in connection with their onlineenrollment or online renewal of coverage under the plan, and allows SBCs to be provided electronically to participants and beneficiaries who request an SBC online.


statement electronically about which he orshe does not have information, and be-cause the information furnished on thesection 6056 employee statement will berelevant in determining the employee’seligibility for the premium tax credit, anyconsent given must specifically identifythe section 6056 return. Additionally, therequirement for affirmative consent to re-ceive section 6056 employee statementselectronically is consistent with the re-quirements for other tax information re-turns (See §§ 1.6050S–2; 1.6050S–4;31.6051–1(j); Rev. Proc. 2012–17,2012–10 I.R.B. 453; 2014 General In-structions for Forms 1097, 1099, 1098,3921, 3922, 5498, and W–2G, page 12).Accordingly, the final regulations are con-sistent with all other tax information re-porting regulations and do not adopt thissuggestion.

Some commenters also requestedconfirmation that the section 6056employee statement and the section 6055employee statement (if the section 6055employee statement is provided by theALE member) may be provided in thesame mailing, and in the same mailing asthe Form W–2, in cases in which two ormore of those forms are provided by mail-ing to the same employee. Because thefinal regulations provide for ALE mem-bers to combine section 6055 and section6056 reporting, ALE members will beproviding only a single employee state-ment (with the section 6056 informationand, with respect to employers with a self-insured group health plan, section 6055information). Additionally, there is no re-quirement that employers mail informa-tion returns separately, and the regulationsunder sections 6051 do not prohibit fur-nishing in the same mailing as the FormW–2. Accordingly, employers are permit-ted to mail to an employee in the samemailing one or more of the required infor-mation returns such as the combined sec-tion 6055 and section 6056 employeestatement and the Form W–2.

X. Alternative Methods for Section 6056Information Reporting for Eligible ALEMembers

In developing these regulations, Trea-sury and the IRS have sought to developalternative reporting methods that will

minimize the cost and administrative tasksfor employers, consistent with the statu-tory requirements to file an informationreturn with the IRS and furnish an em-ployee statement to each full-time em-ployee. Comments suggested that, at leastfor some employers, the collection, as-sembling and processing of the necessarydata into an appropriate format for filingmay not be necessary if the employer of-fers sufficient coverage to make it un-likely that the employer will be subject toan assessable payment under section4980H because its employees will gener-ally be ineligible for a premium tax credit.In response to these concerns and as partof the development of the proposed regu-lations, Treasury and the IRS formulatedcertain potential simplified reportingmethods described in section XI of thepreamble to the proposed regulations andrequested comments on those methodsand on other possible simplified ap-proaches that would minimize compliancecosts while providing sufficient andtimely information to individual taxpayersand the IRS. After considering all of thecomments, Treasury and the IRS have for-mulated the alternative reporting methodsdescribed in this section X of the pream-ble as optional alternatives to the generalreporting method.

The information provided to the IRSand the employee pursuant to section6056 is important for administering sec-tion 4980H and the premium tax credit.However, in some circumstances, onlysome of the information required underthe general method is necessary. Treasuryand the IRS have identified specificgroups of employees for whom alternativereporting would provide sufficient infor-mation, and alternative reporting ap-proaches for these groups are outlined be-low. In many situations, not every full-time employee of an employer fits into thegroups of employees for which an alter-native reporting method is available. Inthat case, the employer would continue touse the general reporting method in theregulations for those full-time employeesfor whom an alternative reporting methodis not applicable. Commenters noted thatmany employers, especially larger em-ployers, may choose not to use an alter-native reporting method because an insuf-ficient number or an insufficient portion of

their employees will be eligible for thealternative reporting method so that it isnot advantageous to use. However, it isanticipated that many employers will finduse of an alternative reporting methodpreferable to the general reporting methodbecause a sufficient number of their em-ployees will fit into one or more of thealternative method categories describedbelow, and the more extensive reportingwill be required only for a sufficientlylimited number of their employees.

Subsections A through C of this sec-tion X of this preamble describe alterna-tive methods of reporting under section6056 that are permitted under these finalregulations. Each of these methods is op-tional for the reporting employer, and, ex-cept as otherwise specified, does not affectany reporting obligations under section6055.

Subsection A...........Reporting Basedon Certification of Qualifying Offers

Subsection B...........Option to ReportWithout Separate Identification of Full-Time Employees If Certain ConditionsRelated to Offers of Coverage Are Satis-fied (98 Percent Offers)

Subsection C..........Reporting for Ap-plicable Large Employers with FewerThan 100 Full-time Employees Eligiblefor Transition Relief Under Section4980H.

Subsection D...........Combinations ofAlternative Reporting Methods

A. Reporting Based on Certification ofQualifying Offers

1. In General

Under the final regulations, an ALEmember that satisfies specific require-ments is permitted to certify that it offeredcertain coverage (a qualifying offer, asdefined in this section X.A.1) to one ormore of its full-time employees and toreport simplified section 6056 return in-formation with respect to those employ-ees. Under this alternative method, theALE member also could provide a simpli-fied employee statement in lieu of a copyof the Form 1095–C to each full-time em-ployee who received a qualifying offer forall 12 months of the calendar year. To beeligible to use this alternative method withrespect to full-time employees, the ALE


member must certify that for all monthsduring the year in which the employeewas a full-time employee with respect towhom a section 4980H assessable pay-ment could apply13, the ALE member (1)offered minimum essential coverage pro-viding minimum value at an employeecost for employee-only coverage not ex-ceeding 9.5 percent of the mainland singlefederal poverty line to one or more of itsfull-time employees, and (2) offered min-imum essential coverage to the employ-ee’s spouses and dependents (a qualifyingoffer). For this purpose, the applicablefederal poverty line is the federal povertyline as defined in § 54.4980H–1(a)(19), ascalculated and applied to the 48 contigu-ous states and the District of Columbia. Ifthe employee cost of the employee-onlycoverage does not exceed 9.5 percent ofthe mainland single federal poverty line,then, regardless of the size of the employ-ee’s household or other income or loss ofany member of the employee’s household,either the employer’s coverage will beaffordable for purposes of the premiumtax credit or the employee’s householdincome will be less than 100 percent ofthe federal poverty line so the employeewill generally not be an applicable tax-payer for purposes of eligibility for thepremium tax credit.

For this purpose, an ALE member istreated as offering coverage to an employ-ee’s spouse or dependents even if the em-ployee does not have a spouse or depen-dent, provided that the employee wouldhave been able to elect such coverage ifthe employee did have a spouse or depen-dent. Note that an ALE member utilizingthe transition relief provided in the finalsection 4980H regulations pertaining tothe offer of coverage to dependents in2015 will not be treated as offering cov-erage to an employee’s dependents forpurposes of this alternative reportingmethod. Treasury and the IRS anticipatethat the certification of eligibility based onthe qualifying offer will be made as partof the section 6056 transmittal submittedby the ALE member.

Treasury and the IRS anticipate that anALE member eligible for and using thiscertification method will provide further

information depending on the circum-stances of the qualifying offer. With re-spect to employees for whom the qualify-ing offer was made for all 12 months ofthe calendar year, Treasury and the IRSanticipate that the ALE member will betreated as reporting the required section6056 information if it completes Form1095–C by providing particular informa-tion about the employee, specifically theemployee’s name, social security number,and address, and indicates, using an indi-cator code, that a qualifying offer wasmade for all 12 months of the calendaryear. In addition, the ALE member will betreated as fulfilling the requirement undersection 6056 to furnish information tothose employees if it provides each ofthem, by January 31 of the year followingthe year to which the offer applies, eithera copy of the Form 1095–C filed with theIRS, or a general statement in a formatprescribed by the IRS informing the em-ployee that the employee, the employee’sspouse (if any), and the employee’s de-pendents (if any) received a qualifyingoffer for all 12 months of the calendaryear for which the ALE member is report-ing, and therefore the employee and theemployee’s spouse (if any) and depen-dents (if any) are generally ineligible for apremium tax credit for all of those 12months.

Some ALE members may provide aqualifying offer for all 12 months of acalendar year to employees who are em-ployed during the entire year, but are notfull-time employees for one or moremonths during the calendar year. TheseALE members may elect to report forthese employees using the certificationmethod, and to furnish those employeeswith a copy of Form 1095–C filed with theIRS or the prescribed statement, or mayuse the general reporting method with re-spect to those employees.

For each employee who received aqualifying offer for fewer than 12 monthsof the calendar year, for example becausethe full-time employee was an employeefor fewer than 12 months of the calendaryear (for example, because the employeewas hired or terminated employment dur-ing the calendar year or was in a permis-

sible waiting period under section 4980Hor look-back measurement period undersection 4980H for one or more months),the ALE member will file and furnishsection 6056 returns and statements underthe general reporting method. The ALEmember will report information under thegeneral reporting method for thosemonths for which a qualifying offer wasnot received, but may use an indicatorcode to report for months for which thequalifying offer was received, in accor-dance with forms and instructions. How-ever, see section X.A.2 of this preamblefor an alternative method applicable to2015.

2. Alternative Method Based onCertification of Qualifying Offers for2015

Solely for 2015, an ALE member mayuse an alternative method as describedbelow. To utilize this method the ALEmember must (1) certify that it has made aqualifying offer (as described in sectionX.A.1) to at least 95 percent of its full-time employees and to their spouses anddependents, and (2) in lieu of providing aForm 1095–C (or another form the IRSdesignates) to its employees, satisfy itssection 6056 furnishing requirement withrespect to all of its full-time employees byfurnishing a statement to each of its full-time employees, by January 31 of the yearfollowing the year to which the statementrelates. The statement will be in a formatprescribed by the IRS and the form of thestatement may vary depending on whetherthe employee received a qualifying offerfrom the employer for all, some, or noneof the months of the calendar year. Aswith section X.A.1, if the qualifying offerapplied to an employee to all 12 months ofthe calendar year, it is anticipated that thestatement will inform the employee thatthe employee and the employee’s spouse(if any) and dependents (if any) will notbe eligible to claim a premium tax creditfor any of the twelve calendar months. Ifthe qualifying offer did not apply to anemployee for all 12 months of the calen-dar year, it is anticipated the statementwill inform the employee that the em-

13If the employee was not offered coverage by the employer, a section 4980H assessable payment might not apply, for example, for a month in which an employee was not a full-timeemployee or was in a permissible waiting period or initial measurement period under section 4980H and the associated regulations.


ployee and the employee’s spouse (if any)and dependents (if any) may be eligible toclaim a premium tax credit for one ormore of the 12 calendar months. Thestatement furnished to the employee mustinclude a contact name and contact tele-phone number for the ALE member fromwhom further information may be ob-tained regarding the offer of coverage thatmay affect the eligibility of the employee(or any spouse or dependents of the em-ployee) for the premium tax credit. Thecontact name and telephone number canbe a name and telephone number at theALE member or at another entity, such asa third party administrator, that is autho-rized to provide information on behalf ofthe ALE member.

If the ALE member meets the two con-ditions described above, then the em-ployer will be treated as reporting the re-quired section 6056 information to theIRS if it files with the IRS Form 1095–C,providing the employee’s name, social se-curity number, and address, and indicates,using an indicator code, either that a qual-ifying offer was made for all 12 months orthe specific months of the calendar year orit was not, and provides the statement tothe employee. Further details will be pro-vided in forms and instructions.

This alternative reporting method for2015 is optional and an ALE member mayuse any other available reporting method.

B. Option to Report Without SeparateIdentification of Full-Time Employees IfCertain Conditions Related to Offers ofCoverage Are Satisfied (98 percentOffers)

In section XI.B of the preamble to theproposed regulations, Treasury and theIRS stated that they understand that someemployers offer minimum essential cov-erage to all or nearly all of their employ-ees, and are able to accurately representthat the only employees not offered cov-erage are also not full-time employees. Anemployer making an offer of minimumessential coverage to all of its full-timeemployees would not owe an assessablepayment under section 4980H(a), whichrequires such an offer only to 95 percentof an employer’s full-time employees. See§ 54.4980H–4(a). However, while theemployer might know that it is offering

such coverage to a group consisting ofalmost all of its full-time employees andsome of its other employees, the employermight not have determined, in the case ofeach employee in the offeree group,whether that employee is, in fact, a full-time employee or not. This might arise,for example, if an employer offers suchcoverage to all of its employees whosehours of service average at least 20 hoursper week. Section XI.B of the preamble tothe proposed regulations suggested a pos-sible approach under which employers of-fering coverage to 100 percent of theirfull-time employees would be permittedto provide section 6056 reporting withoutdetermining whether each employee of-fered coverage is a full-time employeeand without specifying the number of theemployer’s full-time employees.

Some commenters requested that eligi-bility to use this simplified method beexpanded to include an employer that canrepresent that it offered coverage to sub-stantially all of its full-time employees,and requested that “substantially all” bedefined for this purpose as at least 95percent of the full-time employees. Thesecommenters suggested that while someemployers may be able to certify that theymeet a 100 percent offer standard, other,especially larger, employers could not becertain that an offer had been extended toevery full-time employee (including em-ployees who were full-time employees foronly certain months of the year).

In response to these concerns, the finalregulations relax the condition on use ofthis simplified method, which allows theemployer to report without identifying orspecifying the number of full-time em-ployees. To be eligible to use this methodunder the final regulations, an employermust certify on its transmittal form that itoffered minimum essential coverage provid-ing minimum value that is affordable, to atleast 98 percent of the employees on whomit reports in its section 6056 return. For thispurpose, coverage is treated as affordable ifthe cost of employee-only coverage satisfiesany applicable affordability safe harbor un-der the section 4980H final regulations. Set-ting the level at 98 percent will help ensurethat the employer has offered coverage to atleast 95 percent of its full-time employeesand therefore is not subject to an assessablepayment under section 4980H(a), without

knowing which reported employees are full-time and which are part-time. While thisalternative method allows reporting withoutidentifying or specifying the number of full-time employees, it does not exempt the em-ployer from any penalties that might applyfor failure to report with respect to any full-time employee. Thus, reporting is still re-quired under the normal rules for all full-time employees, including those employeesnot offered coverage. Accordingly, to theextent the employer fails to report with re-spect to any full-time employee, the alterna-tive method described here will not affectthe application of any generally applicablepenalties for failure to report (subject to anyrelief that might be provided for under theseregulations or other applicable guidance),and the possible application of any suchpenalties will not preclude the employerfrom using this simplified alternativemethod if the employer satisfies the 98 per-cent condition.

As noted, the 98 percent offer is re-quired to provide minimum value and beaffordable for purposes of section 4980Hto avoid overburdening employers and theIRS with the need to determine at a laterdate whether a substantial number of em-ployees who received a premium taxcredit were full-time employees. If an em-ployer were permitted to report under sec-tion 6056 on a large number of employeeswho were offered coverage that either wasnot minimum value or not affordable, thereporting could include large numbers ofemployees who may well be eligible toclaim a premium tax credit on the Ex-change, without identifying the employ-ee’s status as a full-time employee. Insuch a case, both employers and the IRSwould be overburdened with the processof determining at a later date whether anyemployees who received a premium taxcredit were full-time employees with re-spect to whom the employer is liable foran assessable payment under section4980H(b). The 98 percent standard helpsavoid the need for excessive inquiries toemployers as to whether particular em-ployees claiming a premium tax creditwere full-time employees.

Example: Employer has 1,000 employees whoare expected to have at least 27 hours of service perweek in a calendar year. Employer does not want todetermine which of these employees are full-timeemployees for purposes of section 4980H. Before thestart of the year, Employer makes an offer of mini-


mum essential coverage providing minimum valuethat is affordable for section 4980H purposes to 990of these 1,000 employees and reports under section6056 for all 1,000 employees. Because Employer hassatisfied the conditions set forth in this section X.B,Employer is not required to report either the totalnumber of full-time employees for the year orwhether any particular employee was a full-timeemployee for any calendar month during the year. Ifan employee included as part of the return declinesthe offer of coverage and properly claims a premiumtax credit with respect to coverage provided throughan Exchange for one or more months during thecalendar year, and the employer is contacted by theIRS to determine whether the employer did or didnot owe an assessable payment under section4980H(b), the employer could determine at thatpoint whether the employee was a full-time em-ployee for those months and supply that informationto the IRS.

C. Reporting for Applicable LargeEmployers with Fewer Than 100 Full-time Employees Eligible for TransitionRelief Under Section 4980H.

To assist applicable large employersthat are in the smaller size range, such asthose with at least 50 full-time employeesbut fewer than 100 full-time employees(including full-time equivalent employ-ees), in transitioning into compliance withsection 4980H, the final regulations pro-vide transition relief from section 4980Hfor 2015 (plus, in the case of any non-calendar plan year that begins in 2015, theportion of the 2015 plan year that falls in2016). See section XV.D.6 of the pream-ble to the final regulations under section4980H for a description of eligibility con-ditions for transition relief. (Note section4980H does not apply to employers withfewer than 50 full-time employees (in-cluding full-time equivalent employees)).Employers eligible for this section 4980Htransition relief will still report under sec-tion 6056 for 2015 in accordance withthese final regulations.

As part of this transition relief, theALE member must certify on its section6056 transmittal form for calendar year2015 (that is, for the section 6056 trans-mittal form that will be filed in 2016), asprescribed by the form and instructions,that it meets the eligibility requirementsset forth in section XV.D.6(a)(1) through(3) of the preamble to the final regulationsunder section 4980H. ALE members withnon-calendar year plans will certify withregard to their 2015 plan year, includingthe months of their 2015 plan year that fall

in calendar year 2015, on the section 6056transmittal form for 2015 (that is for thesection 6056 transmittal form that will befiled in 2016), and will certify with regardto the months of their 2015 plan year thatfall in calendar year 2016 on the section6056 transmittal form for 2016 (that is thesection 6056 transmittal form that will befiled in 2017).

D. Combinations of AlternativeReporting Methods

The alternative reporting methods de-scribed above would apply to particulargroups of employees that in many caseswould not be identical. An employer ispermitted to use different alternative re-porting methods for different employeesat the employer’s election, as specified informs and instructions..

XI. Other Possible Alternative MethodsNot Adopted in the Final Regulations

A. Mandatory Self-Insured No-CostMinimum Value Coverage

In section IX.B of the preamble to theproposed regulations, Treasury and theIRS stated they were considering whetheremployers that provide mandatory mini-mum value coverage to an employee, anemployee’s spouse, and an employee’sdependents, with no employee contribu-tion, could file and furnish only the returnrequired under section 6055, include acode on the employee’s Form W–2, andcomplete only summary information onthe section 6056 transmittal form.

This alternative method of reportingwas not adopted because its use wouldleave gaps in information needed for taxadministration of the premium tax credit,in particular because codes will not beused on the Form W–2 to report months ofmandatory minimum essential coverageproviding minimum value.

However, an ALE member that offersno-cost minimum essential coverage pro-viding minimum value coverage to all ofits employees will not be liable for a po-tential assessable payment under section4980H for any month in which an em-ployee received such an offer. Thus, ALEmembers will be treated as reporting therequired section 6056 information if theemployer files a Form 1095–C statement

and provides particular information aboutthe employee, specifically the employee’sname, social security number, and ad-dress, and indicates using a code if thecoverage was offered for all 12 calendarmonths or for some months of the year if,for example, the employee was not full-time in certain months or was no longeremployed. The employer must also fur-nish each employee a copy of the Form1095–C filed with the IRS. See also sec-tion X.A.1., Reporting Based on Certifi-cation of Qualifying Offers, of this pre-amble for a description of alternativereporting available.

If a self-insured employer is an ALEmember, the employer will report the cov-erage information on the part of the Form1095–C that is required under section6055. If the ALE member offers no costmandatory minimum essential coverageproviding minimum value to all its em-ployees, it will use an indicator code onthe Form 1094–C transmittal to indicatethat it offered this type of coverage. Self-insured employers that are not ALE mem-bers will file the section 6055 informationreturn under section 6055. Further detailswill be provided in forms and instructions.

B. Eliminating Section 6056 EmployeeStatements in Favor of Form W–2Reporting for Certain Groups ofEmployees Offered Coverage

The proposed regulations outlined apossible alternative reporting method un-der which employers would be permittedin certain circumstances to report offers ofminimum value coverage on Form W–2,in accordance with the form and instruc-tions, instead of reporting the offers to theIRS on a section 6056 return or furnishinga section 6056 employee statement to theemployee. The proposed regulations spec-ified that this possible alternative method,if permitted, could be used only for anemployee employed by the employer forthe entire calendar year in which the offer,the individuals to whom the offer is made,and the employee contribution for thelowest-cost option for self-only coverageproviding minimum value, all remainedthe same for all twelve months of thecalendar year.

Commenters indicated that such a pro-posed alternative reporting method, if per-


mitted, would need to be expanded to beavailable for employees offered coverageunder their employer’s plan for less than afull calendar year or for whom the offer ofcoverage changed during the calendaryear in order to be useful. Specifically,commenters suggested that additionalcodes or other modifications to the FormW–2 should be made so that the alterna-tive reporting method could be extendedto employees who were not employed forthe entire calendar year or not employedas full-time employees during the entirecalendar year, were not offered coveragefor the entire calendar year, or for whomthe cost of coverage changed during thecalendar year.

Expanding the alternative reportingmethod as requested would leave gaps ininformation that is needed for tax admin-istration. For example, if used for employ-ees who were not employed during thefull calendar year, the reporting would notprovide any information regarding theparticular calendar months for which cov-erage was offered (or not offered). Even ifthe employer represented that the cover-age was offered during all periods of em-ployment, the reporting could not be rec-onciled, for example, with another FormW–2 received by the employee from an-other employer using the same reportingmethod. That is because while both em-ployers would report the number ofmonths coverage was offered, that infor-mation would not be sufficient to deter-mine whether offers of coverage wereoverlapping (because the employee wasemployed simultaneously at both employ-ers). Additionally, for months for whichcoverage was not offered, information asto whether the employee was employedand also the reason coverage was not of-fered during certain months of the calen-dar year would not be captured (for exam-ple, the employee was in a permissiblewaiting period under section 4980H oremployed but not as a full-time em-ployee).

The specific reason coverage was notoffered is relevant to the administration ofsection 4980H because the failure to offercoverage for certain reasons does not re-sult in an assessable payment under sec-tion 4980H for a calendar month, even ifthe full-time employee receives a pre-mium tax credit for that month. More

codes and other data to be reported on theForm W–2 would be needed to administersection 4980H and the premium tax credit.

Commenters noted that, unless ex-panded, this proposed alternative report-ing method would be of little use to mostlarge employers.

Other commenters suggested that theincrease in complexity and, in some cases,modifications to the Form W–2, shouldnot be made because the Form W–2 issuch an established and integral part of thepayroll and tax system. These commentersnoted that revising Form W–2 would re-sult in additional administrative burdenand substantial added cost to employersgiven the need to modify the payroll andonline systems and could result in delayedfurnishing of Forms W–2 to employees orrequire corrected Forms W–2 to accountfor new information related to offers ofcoverage. Commenters further noted thatrevised Forms W–2 could create confu-sion among employees, particularly sincethe addition of information related to of-fers of coverage would likely result in anincrease in the number of pages of theForm W–2, requiring time for employeesto understand the changes, and possiblyresulting in disruptions in the preparationof individual tax returns. Treasury and theIRS agree with the commenters that thesuggested expansions of this alternativereporting method are in some cases notfeasible, and in other cases do not providesufficient administrative simplification towarrant the proposed increase in the com-plexity of the data reported on the FormW–2. Given that it is not feasible to ex-pand this proposed alternative method,that commenters indicated the method isnot workable as proposed because it doesnot reduce cost or burden for employers,and that other simplified reporting meth-ods are available, including the combina-tion of section 6055 and section 6056 re-porting for employers, the finalregulations do not adopt this alternativereporting method.

C. Voluntarily Reporting Section 6056Elements During or Prior to the Year ofCoverage

Some commenters have expressed aninterest in voluntarily reporting informa-tion about the coverage they offer their

employees prior to the end of a coverageyear, for example at their open enrollmentor before the open enrollment at the Ex-changes, on the theory that earlier section6056 reporting to the IRS could lead togreater efficiency in the employer verifi-cation system employed by Exchanges todetermine eligibility for premium taxcredits.

A proposal of this kind would need toaddress a number of issues. The regula-tions under section 6103 do not authorizethe IRS to share taxpayer information inthis manner. Even if this information shar-ing were permitted, individuals would notreceive the information for their tax returnpreparation proximate to when they arecompleting their tax returns. In addition,the information about the offer of cover-age before the year starts may changeduring the calendar year. Gaps in com-plete and timely information increase theneed for additional follow-up communica-tion among employers, employees, andthe IRS.

Also, offering 2 sets of reporting alter-natives with filing occurring at differenttime periods would present challenges.Because the reporting options would bevoluntary, different reporting protocolsand regimes would need to be establishedand would need to accommodate em-ployer choices to change the method ofreporting from year to year. The multipleforms, procedures, and protocols wouldcreate complexity and be difficult to ad-minister. Accordingly, the final regula-tions do not adopt this approach.

D. Reporting for Employees PotentiallyIneligible for the Premium Tax Credit

Some commenters have requested anexemption from reporting for employersthat have many employees who are rela-tively highly paid, on the theory that thoseemployees are unlikely to be eligible for apremium tax credit. The assumption isthat a relatively highly paid employee’shousehold income is likely to exceed 400percent of the federal poverty line andtherefore the employee is unlikely to qual-ify for a premium tax credit. The precon-dition of a section 4980H(b) assessablepayment—that the employee receive apremium tax credit—is unlikely to be sat-isfied.


Treasury and the IRS have consideredthis request and have concluded that suchan exemption would not be useful formany employers or administrable. Em-ployers would not be in a position to knowthe correlation between an employee’sForm W–2 wages and household incomewith sufficient accuracy to determinewhether an employee may be eligible forthe premium tax credit. The only pertinentinformation the employer retains is theemployee’s annual wages, yet the povertylevel from which the premium tax creditincome ceiling is determined varies con-siderably based on family size (which em-ployers may not know). In addition, em-ployees for whom an employer may usean affordability safe harbor based onwages for purposes of compliance withsection 4980H might still be eligible for apremium tax credit based on their house-hold income.

The preamble to the proposed regula-tions requested comments as to whetherthere is a level of Form W–2 wages atwhich such a determination might bemade with sufficient confidence, andwhether that level of wages would be sohigh as not to be of practical use to em-ployers. Comments indicated that someemployers would be interested in explor-ing options that would permit them to notfile a section 6056 return for an employeeif, for example, the employee’s wageswere $150,000, except if the employer hasactual knowledge that the coverage wouldbe unaffordable to the employee’s family.Other commenters indicated that if addi-tional follow-up would be required itwould create further economic and admin-istrative burden, such that it would bedoubtful that the method would be uti-lized. Additionally, the vast majority ofemployers would be required to reportwith respect to at least some full-timeemployees with lower income than thisthreshold. Accordingly, the final regula-tions do not adopt this suggestion.

XII. Person Responsible For Section6056 Reporting

Under the regulations, in general, eachALE member must file a section 6056

return with respect to its full-time employ-ees for a calendar year.

A. Special Rules for GovernmentalUnits: Designation

In accordance with section 6056(e),these regulations provide that in the caseof any ALE member that is a governmen-tal unit or any agency or instrumentalitythereof (together referred to in this pream-ble as a governmental unit), that govern-mental unit may report under section 6056on its own behalf or may appropriatelydesignate another person or persons toreport on its behalf.14 For purposes ofdesignation, another person is appropri-ately designated for purposes of the filingand furnishing requirements of section6056 if that other person is part of orrelated to the same governmental unit asthe ALE member. For example, a politicalsubdivision of a state may designate thestate, another political subdivision of thestate, or an agency or instrumentality ofthe foregoing as the designated person forpurposes of section 6056 reporting. Theperson designated might be the govern-mental unit that operates the relevanthealth plan or the governmental unit thatdoes other information reporting on behalfof the designating governmental unit. Ifthe designation is accepted by the desig-nee and is made before the filing deadline,the designated governmental unit is thedesignated entity responsible for section6056 reporting.

The person (or persons) appropriatelydesignated for this purpose would reportunder section 6056 on behalf of the ALEmember. Accordingly, the person (or per-sons) appropriately designated is (are) theperson(s) responsible for section 6056 re-porting on behalf of the ALE member andsubject to the penalties for failure to com-ply with information return requirementsunder sections 6721 and 6722. However,the ALE member remains subject to sec-tion 4980H.

Under these regulations, a separate sec-tion 6056 return must be filed for eachALE member for which the appropriatelydesignated person is reporting. The desig-nated entity would provide the name of

both the designated entity and the ALEmember for which it is reporting. Addi-tionally, the regulations require that therebe a single identified section 6056 trans-mittal (Form 1094–C) reporting aggregateemployer-level data for all full-time em-ployees of the ALE member (includingfull-time employees of the ALE memberthe reporting for which has been trans-ferred to a designated person), and thatthere be only one section 6056 employeestatement (Form 1095–C) for each full-time employee of the ALE member withrespect to employment with that ALEmember. Further details will be providedin forms and instructions.

These regulations further provide thatthe designation under section 6056(e)must be in writing, must contain certainlanguage, must be signed by both the ALEmember and the designated person, andmust be effective under all applicablelaws. These regulations also require thatthe designation set forth the name andEIN of the designated person, and appointthat person as the person responsible forreporting under section 6056 on behalf ofthe ALE member. The designation mustcontain information identifying the cate-gory of full-time employees (which maybe full-time employees eligible for a spec-ified health plan, or in a particular jobcategory, provided that the specific em-ployees covered by the designation can beidentified) for which the designated per-son is responsible for reporting under sec-tion 6056 on behalf of the ALE member.If the designated person is responsible forreporting under section 6056 for all full-time employees of an ALE member, thedesignation should so indicate.

The designation must also contain lan-guage that the designated person agreesthat it is the appropriately designated per-son under section 6056(e), and an ac-knowledgement that the designated per-son is responsible for reporting undersection 6056 on behalf of the ALE mem-ber and subject to the requirements ofsection 6056 and the information report-ing penalty provisions of sections 6721and 6722. The designation must also setforth the name, address, and EIN of theALE member, identifying the ALE mem-

14Until further guidance is issued, government entities, churches, and a convention or association of churches may apply a reasonable, good faith interpretation of section 414(b), (c), (m),and (o) in determining whether a person or group of persons is an applicable large employer.


ber as the person subject to the require-ments of section 4980H. These regula-tions provide that an equivalent applicablestatutory or regulatory designation con-taining similar language will be treated asa written designation for purposes of sec-tion 6056(e). The designation will not besubmitted to the IRS and should be main-tained under the normal record-retentionrules under section 6103.

B. ALE Members Participating inMultiemployer Plans

Several commenters noted that theunique structure of many multiemployerplans means that some of the informationrelevant to the section 6056 return, such asthe employee contribution (if any) for thelowest-cost self-only coverage providingminimum value, is held by the multiem-ployer arrangement. On the other hand,some of the information relevant to thesection 6056 return, such as whether aparticipant is a full-time employee for aparticular month, is held by the ALEmember. As noted by commenters, thismay make the preparation, filing, and fur-nishing of the returns challenging.

In response to this operating structureand its impact on the administration ofsection 4980H, section XV.E of the pre-amble to the final regulations under sec-tion 4980H provides that until furtherguidance is issued, employers generallywill be treated as having met their obliga-tions under section 4980H with respect toa full-time employee if the employer isrequired by a collective bargaining agree-ment (or appropriate related participationagreement) to contribute on behalf of thatemployee to a multiemployer plan thatprovides coverage, to individuals who sat-isfy the plan’s eligibility conditions, meet-ing the affordability and minimum valuerequirements and that offers coverage tothose individuals’ dependents. Comment-ers to the section 6056 proposed regula-tions noted that an employer could alsoprovide this information with respect to itsfull-time employees and thereby providethe information to the IRS that is relevantto the administration of section 4980H.However, that reporting would not pro-vide all the relevant information needed toadminister the premium tax credit becausethe employer’s contribution to the mul-

tiemployer plan on behalf of an employeefor a particular calendar month may notnecessarily align with whether the planoffered coverage to that particular full-time employee, nor would it provide theamount of the required employee contri-bution for the lowest-cost self-only cover-age providing minimum value.

Some commenters requested that theregulations apply the reporting require-ment to the multiemployer plan; however,section 6056 applies the reporting and fur-nishing requirements only to the employerand not the relevant plan in which theemployee participates. In the alternative,commenters requested that the regulationsrequire the multiemployer plan to transferany information to which it has access thatis required to be reported under section6056 to the contributing employer in atimely manner and form. However, thereis no authority under section 6056 or else-where in the Code that would permit im-posing such a requirement on a multiem-ployer plan. Furthermore, given thatsection 6056 does not apply to the mul-tiemployer plan, and that the return relatesto the employer’s potential liability undersection 6056, Treasury and the IRS do nothave the statutory authority to transfer thereporting obligations from the relevantemployer to the multiemployer plan.

Some commenters suggested that themultiemployer plan be permitted to sub-mit the section 6056 return on behalf ofthe contributing employers. Treasury andthe IRS understand that the plan adminis-trator of a multiemployer plan may havebetter access than a participating em-ployer to certain information on eligibleemployees required to be included as partof section 6056 reporting. For this reason,section 6056 reporting with respect tofull-time employees on behalf of whom anALE member contributed to a multiem-ployer plan is permitted under an ap-proach whereby the multiemployer planadministrator would prepare returns per-taining to the full-time employees coveredby the collective bargaining agreement el-igible to participate in the multiemployerplan and the ALE member would preparereturns pertaining to the remaining full-time employees (those who are not eligi-ble to participate in a multiemployerplan). The administrator of the multiem-ployer plan would file a separate section

6056 return for each ALE member that isa contributing employer on behalf ofwhom it files, providing the name, ad-dress, and identification number for boththe plan and the ALE member for whom itis reporting. In addition, the multiem-ployer plan may assist the employer infurnishing statements to the employees.

The regulations also require that therebe a single identified section 6056 trans-mittal (Form 1094–C) reporting aggregateemployer-level data for all full-time em-ployees of the ALE member (includingfull-time employees of the ALE memberthe reporting for which was done by amultiemployer plan), and that there beonly one section 6056 employee statement(Form 1095–C) for each full-time em-ployee of the ALE member with respect tothe employee’s employment with the ALEmember. Further details will be providedin forms and instructions.

The ALE member would remain theresponsible person under section 6056with respect to all of its full-time employ-ees and accordingly would be subject toany potential liability for failure to prop-erly file returns or furnish statements. Tothe extent the plan administrator that pre-pares returns or statements required undersection 6056 is a tax return preparer, it issubject to the requirements generally ap-plicable to return preparers. See sectionXII.C for information about third partyreporting.

C. Section 6056 Reporting Facilitated byThird Parties

Treasury and the IRS understand thatthird party administrators or other thirdparty service providers are integral to theoperation of many employers’ healthplans, including with respect to compli-ance with any reporting requirements. Asrequested by several commenters, ALEmembers are permitted to contract withand use third parties to facilitate filingreturns and furnishing employee state-ments to comply with section 6056, al-though ALE members remain responsiblefor reporting under section 6056, with theexception of certain governmental unit ap-plicable large employers that properlydesignate under section 6056(e). Whilethese regulations do not provide guidanceon contractual or other reporting arrange-


ments between private ALE members andother parties, they do not prohibit thesearrangements. Such contractual arrange-ments would not transfer the potential li-ability of the ALE member for failure toreport and furnish under section 6056 andthe regulations, or the ALE member’s po-tential liability under section 4980H. Tothe extent the other party that preparesreturns or statements required under sec-tion 6056 is a tax return preparer, it will besubject to the requirements generally ap-plicable to return preparers.

As one example, an ALE member thatis a member of an aggregated group ofrelated entities (determined under section414(b), 414(c), 414(m) or 414(o)) mayfacilitate the filing of returns and the fur-nishing of employee statements on behalfof one or more of the other ALE membersof the aggregated group. Each other ALEmember of the group, for example, couldhave the ALE member that operates theemployer-sponsored plan facilitate the fil-ing of section 6056 returns and furnishsection 6056 employee statements on itsbehalf.

In general, a separate section 6056 re-turn must be filed for each ALE member,providing that ALE member’s EIN. Ifmore than one third party is facilitatingreporting for an ALE member, for exam-ple, because the ALE member has con-tracted with two or more third parties eachof which will facilitate reporting with re-spect to certain groups of the ALE mem-ber’s employees, or if the ALE memberreports with respect to some of its em-ployees and has a third party report withrespect to other employees, there must beone authoritative section 6056 transmittal(Form 1094–C) reporting aggregateemployer-level data for all full-time em-ployees of the ALE member. Addition-ally, there must be only one section 6056employee statement (Form 1095–C) foreach full-time employee with respect toeach employee’s employment with theALE member, so that all required infor-mation for a particular full-time employeeof the applicable large employer memberis reflected on a single Form 1095–C.Further details will be provided in formsand instructions to accommodate thirdparties in facilitating section 6056 report-ing for ALE members (including for third

party service providers and multiemployerplan administrators).

XIII. Applicability of Information ReturnPenalties and Penalty Relief for 2015

These regulations provide that an ALEmember that fails to comply with the sec-tion 6056 information return and em-ployee statement requirements may besubject to the general reporting penaltyprovisions under sections 6721 (failure tofile correct information returns), and 6722(failure to furnish correct payee state-ment). These regulations also provide,however, that the waiver of penalty andspecial rules under section 6724 and theapplicable regulations, including abate-ment of information return penalties forreasonable cause, apply. The final regula-tions under section 6055 include amend-ments to the regulations under sections6721 and 6722 to include returns underboth sections 6055 and 6056 in the defi-nitions of information return and payeestatement. The final regulations under sec-tion 6056 cross-reference those amend-ments to the regulations under sections6721 and 6722.

In implementing new information re-porting requirements, short term relieffrom penalties frequently is provided.This relief generally allows additionaltime to develop appropriate proceduresfor collection of data and compliance withthese new reporting requirements. Afterconsidering the comments received, theIRS will not impose penalties under sec-tions 6721 and 6722 on ALE membersthat can show they make good faith effortsto comply with the information reportingrequirements. Specifically, relief frompenalties is provided under sections 6721and 6722 for returns and statements filedand furnished in 2016 to report offers ofcoverage in 2015, but only for incorrect orincomplete information reported on thereturn or statement, including social secu-rity numbers. No relief is provided in thecase of ALE members that do not make agood faith effort to comply with theseregulations or that fail to timely file aninformation return or statement. However,ALE members that fail to timely meet therequirements of these regulations may beeligible for penalty relief if the IRS deter-

mines that the standards for reasonablecause under section 6724 are satisfied.

Effective/Applicability Dates

These regulations are effective March10, 2014. These regulations apply for cal-endar years beginning after December 31,2014. Consistent with Notice 2013–45,reporting entities will not be subject topenalties for failure to comply with thesection 6056 information reporting provi-sions for 2014 (including the provisionsrequiring the furnishing of employeestatements in 2015 with respect to 2014).Accordingly, a reporting entity will not besubject to penalties if it first reports be-ginning in 2016 for 2015 (including thefurnishing of employee statements). Tax-payers are encouraged, however, to vol-untarily comply with section 6056 infor-mation reporting for 2014 by using any ofthe available reporting methods set forthin these final regulations.

Special Analyses

It has been determined that this Trea-sury decision is not a significant regula-tory action as defined in Executive Order12866, as supplemented by Executive Or-der 13563. Therefore, a regulatory assess-ment is not required. It has also beendetermined that section 553(b) of the Ad-ministrative Procedure Act (5 U.S.C.Chapter 5) does not apply to these regu-lations.

Sections 603 and 604 of the RegulatoryFlexibility Act (5 U.S.C. Chapter 6)(RFA) generally require agencies to pre-pare a regulatory flexibility analysis ad-dressing the impact of proposed and finalregulations, respectively, on small enti-ties. Section 605(b) of the RFA, however,provides that sections 603 and 604 shallnot apply if the head of the agency certi-fies that the rule will not have a significanteconomic impact on a substantial numberof small entities. For the reasons set forthin the following paragraphs, it is herebycertified that these regulations will nothave a significant economic impact on asubstantial number of small entities.

The regulations under sections 6011and 6056 affect employers that are appli-cable large employers, as defined in sec-tion 4980H(c)(2). Some small entities fallinto this category. Therefore, it has been


determined that these regulations will af-fect a substantial number of small entities.It has also been determined, however, thatthe economic impact on entities affectedby these regulations will not be signifi-cant.

The regulations implement the under-lying statute and the economic impact isprincipally a result of the underlying stat-ute, rather than the regulations. The regu-lations direct employers that are applica-ble large employers to file informationreturns with the IRS and to furnish state-ments to employees providing informa-tion as required by section 6056. Specifi-cally, the regulations require applicablelarge employers, as defined in section4980H(c)(2), to file a return with the IRSfor each full-time employee reporting cer-tain information regarding the health carecoverage offered and provided to the em-ployee for the year. The regulations fur-ther require applicable large employers tofurnish to each full-time employee a copyof the return, or a substitute statement,required to be filed by the applicable largeemployer with respect to the employee.As discussed in the Summary of Com-ments and Explanation of Provisions sec-tion of the preamble to this Treasury De-cision, Treasury and the IRS engaged indialogue with stakeholders. The final reg-ulations address certain concerns thatwere expressed by those stakeholders andminimize the cost and administrative stepsassociated with the reporting require-ments. Specifically, the regulations limitthe reporting requirements on applicablelarge employers by only requiring them tofile and furnish information that is neces-sary for the IRS to administer section4980H and the premium tax credit, andinformation employees will need in orderto complete their tax returns. Addition-ally, the regulations limit the reportingrequirements by providing for alternativeoptional reporting methods for certain em-ployers that will permit in certain situa-tions an employer to provide more limitedinformation on its return and employerstatement, thus lowering that employer’sburden.

Based on these facts, a RegulatoryFlexibility Analysis under the RegulatoryFlexibility Act (5 U.S.C. Chapter 6) is notrequired.

Pursuant to section 7805(f) of theCode, the proposed regulations precedingthese regulations were submitted to theChief Counsel for Advocacy of the SmallBusiness Administration for comment onits impact on small business.


The principal author of these regula-tions is Ligeia M. Donis of the Office ofthe Division Counsel/Associate ChiefCounsel (Tax Exempt and GovernmentEntities). However, other personnel fromthe IRS and Treasury participated in theirdevelopment.

List of Subjects

* * * * ** * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR parts 301 and602 are amended as follows:


Paragraph 1. The authority citation forpart 301 continues to read in part as fol-lows:

Authority: 26 U.S.C. 7805 * * *Par. 2. Section 301.6056–1 is added to

read as follows:

§ 301.6056–1 Rules relating toreporting by applicable large employerson health insurance coverage offeredunder employer-sponsored plans.

(a) In general. Section 6056 requiresan applicable large employer subject tothe requirements of section 4980H to re-port certain health insurance coverage in-formation to the Internal Revenue Service,and to furnish certain related employeestatements to its full-time employees.Paragraph (b) of this section contains def-initions for purposes of this section. Para-graph (c) of this section prescribes generalrules for filing the required informationwith the IRS and furnishing the requiredemployee statements to employees. Para-graphs (d) and (e) of this section describethe information required to be reported ona section 6056 information return and thetime and manner for filing. Paragraph (f)

of this section provides information aboutthe statement required to be furnished to afull-time employee. Paragraph (g) of thissection prescribes the time and manner offurnishing the statement, including exten-sions of time to furnish, to a full-timeemployee. Paragraph (h) addresses correc-tions of returns. Paragraph (i) of this sec-tion describes the information return pen-alties applicable to section 6056 returns.Paragraph (j) of this section describes al-ternative reporting methods available tocertain applicable large employers withcertain employees. Paragraph (k) of thissection describes certain special rules ap-plicable to applicable large employers thatare governmental units.

(b) Definitions—(1) In general. Thedefinitions in this paragraph (b) apply forpurposes of this section.

(2) Applicable large employer. Theterm applicable large employer has thesame meaning as in section 4980H(c)(2)and § 54.4980H–1(a)(4) of this chapter.

(3) Applicable large employer member.The term applicable large employer mem-ber has the same meaning as in§ 54.4980H–1(a)(5) of this chapter.

(4) Dependent. The term dependent hasthe same meaning as in § 54.4980H–1(a)(11) of this chapter.

(5) Eligible employer-sponsored plan.The term eligible employer-sponsoredplan has the same meaning as in section5000A(f)(2) and § 1.5000A–2(c)(1) ofthis chapter.

(6) Full-time employee. The term full-time employee has the same meaning as insection 4980H and § 54.5980H–1(a)(21)of this chapter, as applied to the determi-nation and calculation of liability undersection 4980H(a) and (b) with respect toany individual employee, and not as ap-plied to the determination of status as anapplicable large employer, if different.

(7) Governmental unit. The term gov-ernmental unit refers to the government ofthe United States, any State or politicalsubdivision thereof, or any Indian tribalgovernment (as defined in section7701(a)(40)) or subdivision of an Indiantribal government (as defined in section7871(d)).

(8) Agency or instrumentality of a gov-ernmental unit. [Reserved]

(9) Minimum essential coverage. Theterm minimum essential coverage has the


same meaning as in section 5000A(f) andthe regulations issued under that section.

(10) Minimum value. The term mini-mum value has the same meaning as insection 36B and any applicable regula-tions.

(11) Person. The term person has thesame meaning as in section 7701(a)(1)and applicable regulations.

(c) Content and timing of reporting byapplicable large employer members.—(1)In general. Each applicable large em-ployer member required to make a returnand furnish a related statement to its full-time employees under section 6056 for acalendar year must make a return and fur-nish the related statement using suchform(s) as may be prescribed by the In-ternal Revenue Service. An applicablelarge employer member will satisfy itsreporting requirements under section 6056if it files with the Internal Revenue Ser-vice a return for each full-time employeeusing Form 1095–C or another form theIRS designates, and a transmittal formusing Form 1094–C or another form theIRS designates, as prescribed in this sec-tion and in the instructions to the forms.Each Form 1095–C and the transmittalForm 1094–C will together constitute aninformation return to be filed with theInternal Revenue Service.

(2) Reporting facilitated by third par-ties. A separate section 6056 informationreturn must be filed for each applicablelarge employer member. If more than onesection 6056 information return is beingfiled for an applicable large employermember, there must be one authoritativesection 6056 transmittal (Form 1094–C)reporting aggregate employer-level datafor all full-time employees of the applica-ble large employer member, in accordancewith forms and instructions. Additionally,there must be only one section 6056 em-ployee statement (Form 1095–C) for eachfull-time employee with respect to thatfull-time employee’s employment withthe applicable large employer member, sothat all required information for a partic-ular full-time employee of the applicablelarge employer member is reflected on asingle Form 1095–C.

(d) Information required to be reportedto the Internal Revenue Service—(1) Ingeneral. Except as provided in paragraph(j) of this section (relating to alternative

reporting methods for eligible applicablelarge employer members), every applica-ble large employer member must make asection 6056 information return with re-spect to each full-time employee. Eachsection 6056 information return mustshow—

(i) The name, address, and employeridentification number of the applicablelarge employer member,

(ii) The name and telephone number ofthe applicable large employer member’s

contact person,(iii) The calendar year for which the

information is reported,(iv) A certification as to whether the

applicable large employer member of-fered to its full-time employees (and theirdependents) the opportunity to enroll inminimum essential coverage under an el-igible employer-sponsored plan, by calen-dar month,

(v) The months during the calendaryear for which minimum essential cover-age under the plan was available,

(vi) Each full-time employee’s share ofthe lowest cost monthly premium (self-only) for coverage providing minimumvalue offered to that full-time employeeunder an eligible employer-sponsoredplan, by calendar month;

(vii) The number of full-time employ-ees for each month during the calendaryear,

(viii) The name, address, and taxpayeridentification number of each full-timeemployee during the calendar year and themonths, if any, during which the em-ployee was covered under the plan, and

(ix) Any other information specified informs, instructions, or published guid-ance, see §§ 601.601(d) and 601.602 ofthis chapter.

(2) Form of the return. A return re-quired under this paragraph (d) may bemade on Forms 1094–C and 1095–C orother form(s) designated by the InternalRevenue Service, or a substitute form. Asubstitute form must include the informa-tion required to be reported on Forms1094–C and 1095–C and must complywith applicable revenue procedures orother published guidance relating to sub-stitute statements. See § 601.601(d)(2) ofthis chapter.

(e) Time and manner for filing return.An applicable large employer member

must file the return and transmittal formrequired under paragraph (d)(2) of thissection on or before February 28 (March31 if filed electronically) of the year suc-ceeding the calendar year to which it re-lates in accordance with any applicableguidance and the instructions to the form.An applicable large employer membermust file the return and transmittal form atthe address specified on the return form orits instructions. For extensions of time forfiling returns under this section, see§§ 1.6081–1 and 1.6081–8 of this chapter.See § 301.6011–2 for rules relating toelectronic filing.

(f) Statements required to be furnishedto full-time employees—(1) In general.Except as provided in paragraph (j) of thissection, every applicable large employermember required to file a return undersection 6056 must furnish to each of itsfull-time employees identified on the re-turn a written statement showing—

(i) The name, address and employeridentification number of the applicablelarge employer member, and

(ii) The information required to beshown on the section 6056 return withrespect to the full-time employee.

(2) Form of the statement. A statementrequired under this paragraph (f) may bemade either by furnishing to the full-timeemployee a copy of Form 1095–C or an-other form the IRS designates as pre-scribed in this section and in the instruc-tions to such forms, or a substitutestatement. A substitute statement must in-clude the information required to beshown on the return filed with the IRS andmust comply with requirements in pub-lished guidance (see § 601.601(d)(2) ofthis chapter) relating to substitute state-ments. An IRS truncated taxpayer identi-fication number may be used as the iden-tifying number for an individual in lieu ofthe identifying number appearing on thecorresponding information return filedwith the IRS.

(g) Time and manner for furnishingstatements—(1) Time for furnishing.—(i)In general. Each statement required bythis section for a calendar year must befurnished to a full-time employee on orbefore January 31 of the year succeedingthat calendar year in accordance with ap-plicable Internal Revenue Service proce-dures and instructions


(ii) Extensions of time—(A) In general.For good cause upon written applicationof the person required to furnish state-ments under this section, the Internal Rev-enue Service may grant an extension oftime not exceeding 30 days in which tofurnish such statements. The applicationmust be addressed to the Internal RevenueService, and must contain a full recital ofthe reasons for requesting the extension toaid the Internal Revenue Service in deter-mining the period of the extension, if any,that will be granted. A request in the formof a letter to the Internal Revenue Service,signed by the applicant, suffices as anapplication. The application must be filedon or before the date prescribed in para-graph (g)(1) of this section.

(B) Automatic extension of time. TheCommissioner may, in appropriate cases,prescribe additional guidance or proce-dures, published in the Internal RevenueBulletin (see § 601.601(d)(2) of this chap-ter), for automatic extensions of time tofurnish to one or more full-time employ-ees the statement required under section6056.

(2) Manner of furnishing. If mailed, thestatement must be sent to the full-timeemployee’s last known permanent addressor, if no permanent address is known, tothe employee’s temporary address. Forpurposes of this paragraph (g), an appli-cable large employer member’s first classmailing to the last known permanent ad-dress, or if no permanent address isknown, the temporary address, dischargesthe requirement to furnish the statement.An applicable large employer membermay furnish the statement electronicallyin accordance with § 301.6056–2.

(h) Correction of returns. See§ 301.6056–1(i)(2).

(i) Penalties.—(1) In general. For pro-visions relating to the penalty for failureto file timely a correct information returnrequired under section 6056, see section6721 and the regulations under that sec-tion. For provisions relating to the penaltyfor failure to furnish timely a correct state-ment to full-time employees required un-der section 6056, see section 6722 and theregulations under that section. See section6724 and the regulations under that sec-tion for rules relating to the waiver ofpenalties if a failure to file timely or ac-

curately is due to reasonable cause and isnot due to willful neglect.

(2) Application of section 6721 and6722 penalties to section 6056 reporting.For purposes of section 6056 reporting, ifthe information reported on a return (in-cluding a transmittal) or a statement re-quired by this section is incomplete orincorrect as a result of a change in circum-stances (such as a retroactive change incoverage), a failure to timely file or fur-nish a corrected document is a failure tofile or furnish a correct return or statementunder sections 6721 and 6722.

(j) Alternative reporting methods foreligible applicable large employer mem-bers. In lieu of the general reportingmethod described in paragraph (d) of thissection, eligible applicable large employermembers may use the following alterna-tive reporting methods described in thisparagraph (j).

(1) Certification of qualifying offer. Anapplicable large employer member is aneligible applicable large employer mem-ber and is treated as meeting its reportingobligation under section 6056 if:

(i) The applicable large employermember certifies on the section 6056transmittal form, in accordance with theform and the instructions to the form, thatit made a qualifying offer. A qualifyingoffer is an offer to one or more of itsfull-time employees for all months duringthe year for which the employee was afull-time employee and which are notwithin a limited nonassessment period (asdefined in § 54.4980H–1(a)(26) of thischapter), of minimum essential coverageproviding minimum value at an employeecost for employee-only coverage not ex-ceeding 9.5 percent of the mainland singlefederal poverty line, and that includes anoffer of minimum essential coverage tothe employees’ spouses and dependents.For this purpose, the applicable federalpoverty line is the federal poverty line asdefined in § 54.4980H–1(a)(19) of thischapter, as calculated and applied to the48 contiguous states and the District ofColumbia;

(ii) The applicable large employermember provides on the Form 1095–C orother form as designated by the IRS, inaccordance with the form and the instruc-tions to the form, the information withrespect to each full-time employee to

whom a qualifying offer, as defined inparagraph (j)(1)(i) of this section, is madefor all twelve months of the applicablecalendar year;

(iii) The applicable large employermember provides a statement to each full-time employee to whom a qualifying offer(as defined in paragraph (j)(1)(i) of thissection) was made for all twelve monthsof the applicable calendar year, in suchform and manner as prescribed by theSecretary, or a copy of the Form 1095–Cfiled with the IRS with respect to thatfull-time employee; and

(D) The applicable large employermember files section 6056 returns and fur-nishes section 6056 employee statementswith respect to all other full-time employ-ees under the general reporting methoddescribed in paragraph (d) of this section,in accordance with forms and instructions.

(2) Option to report without separateidentification of full-time employees if cer-tain conditions related to offers of cover-age are satisfied (98 percent offers). Anapplicable large employer member thatotherwise meets its reporting obligationunder section 6056 is not required to iden-tify on its section 6056 return whether aparticular employee is a full-time em-ployee for one or more calendar months ofthe reporting year or report the total num-ber of its full-time employees for the re-porting year, if it certifies that it offeredminimum essential coverage providingminimum value that was affordable undersection 4980H to at least 98 percent of theemployees (and their dependents) with re-spect to whom it reports for purposes ofsection 6056 in accordance with para-graph (d) of this section (regardless ofwhether the employee is a full-time em-ployee for purposes of section 4980H fora calendar month during the year).

(k) Special rules for governmentalunits—(1) Person appropriately desig-nated. In the case of any applicable largeemployer member that is a governmentalunit or any agency or instrumentalitythereof, the person or persons appropri-ately designated under section 6056(e) forpurposes of the filing and furnishing re-quirements of section 6056 must be partof or related to the same governmentalunit as the applicable large employermember. The applicable large employermember must make (or revoke) the desig-


nation before the earlier of the deadlinefor filing the returns or furnishing thestatements required by this section. A per-son that has been appropriately designatedunder section 6056(e) must file a separatesection 6056 return and transmittal foreach applicable large employer memberfor which the person is reporting. Theperson appropriately designated undersection 6056(e) assumes responsibility forthe section 6056 requirements on behalfof the applicable large employer memberfor which the person is designated. Not-withstanding the designation, a separatesection 6056 information return must befiled for each applicable large employermember that is a governmental unit. Ifmore than one section 6056 informationreturn is being filed for an applicable largeemployer member, there must be one au-thoritative section 6056 transmittal (Form1094–C) reporting aggregate employer-level data for all full-time employees ofthe applicable large employer member, inaccordance with forms and instructions. Inaddition, notwithstanding the designation,there must be only one section 6056 em-ployee statement (Form 1095–C) for eachfull-time employee with respect to thatfull-time employee’s employment withthe applicable large employer member, sothat all required information for a partic-ular full-time employee of the applicablelarge employer member is reflected on asingle Form 1095–C.

(2) Written designation. The designa-tion under section 6056(e) must be madein writing, must be signed by both theapplicable large employer member andthe designated person, and must be effec-tive under all applicable laws. The desig-nation must set forth the name, address,and employer identification number of thedesignated person, and appoint such per-son as the person responsible for reportingunder section 6056 on behalf of the appli-cable large employer member. The desig-nation must contain information identify-ing the category of full-time employees(which may be full-time employees eligi-ble for a specified health plan, or in aparticular job category, as long as the spe-cific employees covered by the designa-tion can be identified) for which the des-ignated person is responsible for reportingunder section 6056 on behalf of the appli-cable large employer member. If the des-

ignated person is responsible for reportingunder section 6056 for all full-time em-ployees of an applicable large employermember, the designation must so indicate.The designation must contain languagethat the designated person agrees and cer-tifies that it is the appropriately designatedperson under section 6056(e), and an ac-knowledgement that the designated per-son is responsible for reporting under sec-tion 6056 on behalf of the applicable largeemployer member and subject to the re-quirements of section 6056, including forpurposes of information reporting require-ments under sections 6721, 6722, and6724. The designation must also set forththe name and employer identificationnumber of the applicable large employermember, identifying the applicable largeemployer member as the person subject tothe requirements of section 4980H. Anequivalent applicable statutory or regula-tory designation containing the languagedescribed in this paragraph (k)(2) will betreated as a written designation for pur-poses of section 6056(e) and this section.The designation will not be submitted tothe IRS and should be maintained underthe normal record-retention rules undersection 6103.

(3) Application to alternative reportingmethods. A person designated under thisparagraph (k) may use the alternative re-porting method identified in paragraph(j)(1) of this section for the full-time em-ployees for which it is reporting with re-spect to a particular governmental unit ifthat particular governmental unit meetsthe eligibility requirements with respect tothose employees, but may use the alterna-tive reporting method identified in para-graph (j)(2) of this section only if thegovernmental unit on whose behalf it isreporting would itself be eligible to usethat alternative reporting method.

(l) Additional guidance. The Commis-sioner may prescribe additional guid-ance of general applicability, publishedin the Internal Revenue Bulletin (see§ 601.601(d)(2) of this chapter) to pro-vide additional rules under section 6056,including rules permitting use of alter-native optional methods to meet report-ing requirements.

(m) Effective/applicability date. Thissection applies for calendar years begin-ning after December 31, 2014. Reporting

entities will not be subject to penaltiesunder sections 6721 or 6722 for failure tocomply with the section 6056 reportingrequirements for 2014 (for information re-turns filed and for statements furnished toemployees in 2015).

Par 4. Section 301.6056–2 is added toread as follows:

§ 301.6056–2 Electronic furnishing ofstatements

(a) Electronic furnishing of state-ments—(1) In general. An applicablelarge employer member required by§ 301.6056–1 to furnish a statement (fur-nisher) to a full-time employee (a recipi-ent) as required by section 6056 may fur-nish the section 6056 employee statement(the statement) in an electronic format inlieu of a paper format, provided that thefurnisher meets the requirements of para-graphs (a)(2) through (a)(6) of this sec-tion. An applicable large employer mem-ber who meets the requirements ofparagraphs (a)(2) through (6) of this sec-tion is treated as furnishing the statementin a timely manner.

(2) Consent—(i) In general. The recip-ient must have affirmatively consented toreceive the statement in an electronic for-mat. The recipient may make the consentelectronically in any manner that reason-ably demonstrates that the recipient canaccess the statement in the electronic for-mat in which it will be furnished to therecipient. Alternatively, the recipient maymake the consent in a paper document ifthe recipient confirms the consent elec-tronically.

(ii) Withdrawal of consent. The con-sent requirement of this paragraph (a)(2)is not satisfied if the recipient withdrawsthe consent and the withdrawal takes ef-fect before the statement is furnished. Thefurnisher may provide that a withdrawalof consent takes effect either on the date itis received by the furnisher or on a sub-sequent date. The furnisher may also pro-vide that a recipient’s request for a paperstatement will be treated as a withdrawalof the recipient’s consent.

(iii) Change in hardware or softwarerequirements. If a change in the hardwareor software required to access the state-ment creates a material risk that the recip-ient will not be able to access the state-


ment, the furnisher must, prior tochanging the hardware or software, pro-vide the recipient with a notice. The noticemust describe the revised hardware andsoftware required to access the statementand inform the recipient that a new con-sent to receive the statement in the revisedelectronic format must be provided to thefurnisher. After implementing the revisedhardware and software, the furnisher mustobtain from the recipient, in the mannerdescribed in paragraph (a)(2)(i) of thissection, a new consent or confirmation ofconsent to receive the statement electron-ically.

(iv) Examples. The following examplesillustrate the rules of this paragraph (a)(2):

Example 1. Furnisher F sends Recipient R a letterstating that R may consent to receive the statementrequired under section 6056 electronically on a website instead of in a paper format. The letter containsinstructions explaining how to consent to receive thestatement electronically by accessing the web site,downloading the consent document, completing theconsent document and e-mailing the completed con-sent back to F. The consent document posted on theweb site uses the same electronic format that F willuse for the electronically furnished statement. Rreads the instructions and accesses the web site,downloads and completes the consent document, andemails the completed consent back to F. R has con-sented to receive the statement required under sec-tion 6056 electronically in the manner described inparagraph (a)(2)(i) of this section.

Example 2. Furnisher F sends Recipient R ane-mail stating that R may consent to receive thestatement required under section 6056 electronicallyinstead of in a paper format. The e-mail contains anattachment instructing R how to consent to receivethe statement electronically. The e-mail attachmentuses the same electronic format that F will use forthe electronically furnished statement. R opens theattachment, reads the instructions, and submits theconsent in the manner provided in the instructions. Rhas consented to receive the statement required un-der section 6056 electronically in the manner de-scribed in paragraph (a)(2)(i) of this section.

Example 3. Furnisher F posts a notice on its website stating that Recipient R may receive the state-ment required under section 6056 electronically in-stead of in a paper format. The web site containsinstructions on how R may access a secure web pageand consent to receive the statement electronically.The consent via the secure web page uses the sameelectronic format that F will use for the electroni-cally furnished statement. R accesses the web siteand follows the instructions for giving consent. R hasconsented to receive section 6056 statements elec-tronically in the manner described in paragraph(a)(2)(i) of this section.

(3) Required disclosures—(i) In gen-eral. Prior to, or at the time of, a recipi-ent’s consent, a furnisher must provide tothe recipient a clear and conspicuous dis-

closure statement containing each of thedisclosures described in paragraphs(a)(3)(ii) through (viii) of this section.

(ii) Paper statement. The furnishermust inform the recipient that the state-ment will be furnished on paper if therecipient does not consent to receive itelectronically.

(iii) Scope and duration of consent.The furnisher must inform the recipient ofthe scope and duration of the consent. Forexample, the recipient must be informedwhether the consent applies to each state-ment required to be furnished after theconsent is given until it is withdrawn inthe manner described in paragraph(a)(3)(v)(A) of this section or only to thefirst statement required to be furnishedfollowing the date of the consent.

(iv) Post-consent request for a paperstatement. The furnisher must inform therecipient of any procedure for obtaining apaper copy of the recipient’s statementafter giving the consent described in para-graph (a)(2)(i) of this section and whethera request for a paper statement will betreated as a withdrawal of consent.

(v) Withdrawal of consent. The fur-nisher must inform the recipient that–

(A) The recipient may withdraw a con-sent by writing (electronically or on pa-per) to the person or department whosename, mailing address, telephone number,and e-mail address is provided in the dis-closure statement,

(B) The furnisher will confirm thewithdrawal and the date on which it takeseffect in writing (either electronically oron paper), and

(C) A withdrawal of consent does notapply to a statement that was furnishedelectronically in the manner described inthis paragraph (a) before the date onwhich the withdrawal of consent takeseffect.

(vi) Notice of termination. The fur-nisher must inform the recipient of theconditions under which a furnisher willcease furnishing statements electronicallyto the recipient (for example, terminationof the recipient’s employment withfurnisher-employer).

(vii) Updating information. The fur-nisher must inform the recipient of theprocedures for updating the informationneeded to contact the recipient. The fur-nisher must inform the recipient of any

change in the furnisher’s contact informa-tion.

(viii) Hardware and software require-ments. The furnisher must provide the re-cipient with a description of the hardwareand software required to access, print, andretain the statement, and the date when thestatement will no longer be available onthe Web site. The furnisher must advicethe recipient that the statement may berequired to be printed and attached to aFederal, State, or local income tax return.

(4) Format. The electronic version ofthe statement must contain all requiredinformation and comply with applicablerevenue procedures relating to substitutestatements to recipients.

(5) Notice—(i) In general. If the state-ment is furnished on a Web site, the fur-nisher must notify the recipient that thestatement is posted on a Web site. Thenotice may be delivered by mail, elec-tronic mail, or in person. The notice mustprovide instructions on how to access andprint the statement. The notice must in-clude the following statement in capitalletters, “IMPORTANT TAX RETURNDOCUMENT AVAILABLE.” If the no-tice is provided by electronic mail, theforegoing statement must be on the sub-ject line of the electronic mail.

(ii) Undeliverable electronic address.If an electronic notice described in para-graph (a)(5)(i) of this section is returnedas undeliverable, and the correct elec-tronic address cannot be obtained from thefurnisher’s records or from the recipient,then the furnisher must furnish the noticeby mail or in person within 30 days afterthe electronic notice is returned.

(iii) Corrected statement. If the fur-nisher has corrected a recipient’s state-ment as directed in § 301.6056–1(k) andthe original statement was furnished elec-tronically, the furnisher must furnish thecorrected statement to the recipient elec-tronically. If the original statement wasfurnished through a Web site posting andthe furnisher has corrected the statement,the furnisher must notify the recipient thatit has posted the corrected statement onthe web site within 30 days of such post-ing in the manner described in paragraph(a)(5)(i) of this section. The correctedstatement or the notice must be furnishedby mail or in person if–


(A) An electronic notice of the web siteposting of an original statement or thecorrected statement was returned as unde-liverable, and

(B) The recipient has not provided anew e-mail address.

(6) Access period. Statements fur-nished on a web site must be retained onthe web site through October 15 of theyear following the calendar year to whichthe statements relate (or the first businessday after October 15, if October 15 fallson a Saturday, Sunday, or legal holiday).The furnisher must maintain access to cor-rected statements that are posted on theweb site through October 15 of the yearfollowing the calendar year to which thestatements relate (or the first business dayafter such October 15, if October 15 fallson a Saturday, Sunday, or legal holiday)or the date 90 days after the correctedforms are posted, whichever is later.

(7) Paper statements after withdrawalof consent. A furnisher must furnish apaper statement if a recipient withdrawsconsent to receive a statement electroni-cally and the withdrawal takes effect be-

fore the statement is furnished. A paperstatement furnished after the statementdue date under this paragraph (a)(7) istimely if furnished within 30 days afterthe date the furnisher receives the with-drawal of consent.

(b) Effective/applicability date. Thissection applies for calendar years begin-ning after December 31, 2014. Reportingentities will not be subject to penaltiesunder section 6722 with respect to thereporting requirements for 2014 (for state-ments furnished in 2015).

PART 602 — OMB CONTROLNUMBERS UNDER THEPAPERWORK REDUCTION ACT

Par. 5. The authority citation for part602 continues to read as follows:

Authority: 26 U.S.C. 7805 * * *Par. 6. In § 602.101, paragraph (b) is

amended by adding two entries in numer-ical order to the table to read as follows:

§ 602.101 OMB Control numbers.

* * * * *

(b) * * *

CFR part or sectionwhere identified and

describedCurrent OMBControl No.

* * * * *

301.6056–1. . . . . . . . 1545–2251

301.6056–2. . . . . . . . 1545–2251

* * * * *



Approved March 2, 2014.


(Tax Policy).

(Filed by the Office of the Federal Register on March 3,2014, 4:15 p.m., and published in the issue of the FederalRegister for March 10, 2014, 79 F.R. 13231)R


Part III. Administrative, Procedural, and Miscellaneous26 CFR 601.201: Rulings and determination letters.(Also Part 1, §§ 1502, 1.1502–75)

Rev. Proc. 2014–24

SECTION 1. PURPOSE

.01 Section 1.1502–75(b) of the In-come Tax Regulations authorizes theCommissioner in certain cases to treat asubsidiary member of an affiliated groupof corporations as if it had filed a Form1122, Authorization and Consent of Sub-sidiary Corporation To Be Included in aConsolidated Income Tax Return, eventhough it failed to do so. The Commis-sioner will treat one or more subsidiarymembers of an affiliated group (hereinaf-ter, subsidiary) as if it had filed a Form1122 under the conditions described insection 3 of this revenue procedure.

.02 Except as provided in section 1.04of this revenue procedure, if an affiliatedgroup satisfies the requirements of section3 of this revenue procedure, the automaticdetermination by the Commissioner under§ 1.1502–75(b) granted by section 3.01 ofthis revenue procedure is the exclusivemeans for the Commissioner to determineunder § 1.1502–75(b) that a subsidiary istreated as if it filed Form 1122 and thusjoined in the making of a consolidatedreturn by the affiliated group, notwith-standing that the subsidiary failed to actu-ally file Form 1122. Such an automaticdetermination by the Commissioner isavailable regardless of whether the returnof the common parent of the affiliatedgroup is under examination.

.03 If an affiliated group cannot satisfythe requirements of section 3 of this rev-enue procedure, a determination by theCommissioner under § 1.1502–75(b) isavailable only pursuant to a determinationletter issued by a Director (and not a letterruling issued by the Associate ChiefCounsel (Corporate)). See Rev. Proc.2014–1, 2014–1 I.R.B. 1 (or a successorrevenue procedure), for the procedures forrequesting a determination letter and theinformation that must be submitted in adetermination letter request. An affiliatedgroup may not request a determinationletter for a determination by the Commis-sioner under § 1.1502–75(b) if, at the timeof the request, the identical issue is under

examination or consideration or in litiga-tion. See section 6.01 of Rev. Proc.2014–1, 2014–1 I.R.B. 1, 14 (or a suc-cessor revenue procedure). A user fee isrequired for a determination letter request.See Appendix A of Rev. Proc. 2014–1,2014–1 I.R.B. 1, 67 (or a successor reve-nue procedure).

.04 The Commissioner, on his own ac-cord, or at the request of the commonparent of the affiliated group, may, uponexamination, determine pursuant to§ 1.1502–75(b)(2) or (3), based on thestandards described therein, that a subsid-iary is treated as if it filed a Form 1122,pursuant to § 1.1502–75(h)(2).

SECTION 2. BACKGROUND

.01 Section 1.1502–75(a)(1) providesthat an affiliated group of corporationsthat did not file a consolidated return forthe immediately preceding taxable yearmay file a consolidated return in lieu ofseparate returns for the taxable year, pro-vided that each corporation that has been amember of the group during any part ofthe taxable year for which the consoli-dated return is to be filed consents to theregulations under § 1502 (in the mannerprescribed in § 1.1502–75(b)). If a groupwishes to exercise its privilege of filing aconsolidated return, a consolidated returnmust be filed not later than the last dayprescribed by law (including extensions oftime) for the filing of the common pa-rent’s tax return. The consolidated returnmay not be withdrawn after such last day(but the group may withdraw the consol-idated return at any time prior to such lastday).

.02 Section 1.1502–75(b)(1) provides,as a general rule, that a corporation’s con-sent shall be made by the corporation join-ing in the making of the consolidated re-turn. A corporation shall be deemed tohave joined in the making of a consoli-dated return if it files a Form 1122 in themanner specified in § 1.1502–75(h)(2).

.03 Section 1.1502–75(b)(2) providesthat if a member of the group fails to fileForm 1122, the Commissioner may underthe facts and circumstances determine thatthe member has joined in the making of aconsolidated return by the group. The fol-

lowing circumstances, among others, willbe taken into account in making this de-termination: (i) whether or not the incomeand deductions of the member were in-cluded in the consolidated return; (ii)whether or not a separate return was filedby the member for that taxable year; and(iii) whether or not the member was in-cluded on Form 851, Affiliations Sched-ule. If the Commissioner determines thatthe member has joined in the making ofthe consolidated return, the member shallbe treated as if it had filed a Form 1122 forthe year for purposes of § 1.1502–75(h)(2).

.04 Section 1.1502–75(b)(3) providesthat if any member has failed to join in themaking of a consolidated return under ei-ther § 1.1502–75(b)(1) or § 1.1502–75(b)(2), then the tax liability of eachmember of the group shall be determinedon the basis of separate returns unless thecommon parent corporation establishes tothe satisfaction of the Commissioner thatthe failure of the member to join in themaking of the consolidated return was dueto a mistake of law or fact, or to inadver-tence. In such case, the member shall betreated as if it had filed a Form 1122 forthe year for purposes of § 1.1502–75(h)(2), and thus joined in the making ofthe consolidated return for the year.

.05 Section 1.1502–75(h)(2) providesthat if a group wishes to file a consoli-dated return for a taxable year, then aForm 1122 must be executed by each sub-sidiary. For taxable years beginning afterDecember 31, 2002, the group must attacheither executed Forms 1122 or unsignedcopies of the completed Forms 1122 to theconsolidated return. If the group submitsunsigned Forms 1122 with its return, itmust retain the signed originals in its re-cords in the manner required by § 1.6001–1(e). Form 1122 is not required for a tax-able year if a consolidated return was filed(or was required to be filed) by the groupfor the immediately preceding taxableyear.

SECTION 3. AUTOMATICDETERMINATION UNDER§ 1.1502–75(b)

.01 Pursuant to § 1.1502–75(b), if anaffiliated group satisfies the conditions de-


scribed in sections 3.02, 3.03, 3.04, and3.05 of this revenue procedure, it ishereby determined by the Commissionerthat a subsidiary that actually failed to filea Form 1122 (non-filing subsidiary) istreated as if it filed a Form 1122 and thusjoined in the making of a consolidatedreturn by the affiliated group.

.02 The affiliated group timely filedwhat purported to be a consolidated returnfor the taxable year, either (a) includingForm 851 with the affiliated group’s re-turn, or (b) providing some other clear andunequivocal indication on the return thatthe return was intended as a consolidatedreturn for the affiliated group, for exam-ple, checking of the appropriate box inItem A at the top of the tax return.

.03 The non-filing subsidiary was notprevented from joining in the filing of theconsolidated return by any applicable ruleof law, other than the failure to file Form1122 (for example, section 1504(a)(3) ofthe Internal Revenue Code, concerningthe five-year prohibition on a member thatdisaffiliated from a consolidated groupjoining in the filing of a consolidated re-turn by the affiliated group or by anotheraffiliated group with the same commonparent).

.04 A separate return was not filed bythe non-filing subsidiary for any period oftime included in the consolidated return,or any subsequent taxable year, other than(a) a separate return for a period in whichthe non-filing subsidiary’s income and de-ductions were not properly includible inthe affiliated group’s consolidated return,or (b) a partnership return, all the incomeand deductions of which were included onthe consolidated return as part of the in-come and deductions of the partners, all ofwhich were members of the affiliatedgroup.

.05 One of the following three condi-tions is met:

(1) The consolidated return did not in-clude a Form 1122 for the non-filing sub-sidiary due to a mistake of law or fact, orto inadvertence, provided that the affili-ated group believed that the non-filingsubsidiary was a member of the affiliatedgroup for the taxable year and includedthe non-filing subsidiary’s income and de-ductions in the consolidated return as ifthe non-filing subsidiary was a member ofthe affiliated group;

(2) The consolidated return did not in-clude a Form 1122 for the non-filing sub-sidiary due to a mistake of law or fact, orto inadvertence, provided that all of thenon-filing subsidiary’s income and deduc-tions were included on the consolidatedreturn as part of the income and deduc-tions of another member of the group. Forexample, the affiliated group believed thatthe non-filing subsidiary was disregardedas an entity separate from its owner forFederal income tax purposes or had for-mally ceased to exist pursuant to a mergeror liquidation into another member of thegroup; or

(3) The consolidated return did not in-clude a Form 1122 for the non-filing sub-sidiary because the affiliated group be-lieved that the non-filing subsidiary wastaxable as a partnership for Federal in-come tax purposes, provided that all of thenon-filing subsidiary’s income and deduc-tions were included on the consolidatedreturn as part of the income and deduc-tions of its partners.

SECTION 4. EFFECT ON OTHERDOCUMENTS

Rev. Proc. 2014–3, 2014–1 I.R.B. 111,is amplified.

SECTION 5. EFFECTIVE DATE

This revenue procedure is generally ef-fective March 24, 2014. A determinationletter may be issued with respect to a requestfor a determination letter postmarked or, ifnot mailed, received on or before March 24,2014. Requests for a determination letterpostmarked, or if not mailed, received, on orbefore March 24, 2014, that are not in sub-stantial compliance with Rev. Proc. 2014–1,2014–1 I.R.B.1 (or a successor revenue pro-cedure), will be considered as not post-marked or received on or before March 24,2014, and will be returned to the taxpayer.

SECTION 6. DRAFTINGINFORMATION

The principal author of this revenueprocedure is Ken Cohen of the Office ofAssociate Chief Counsel (Corporate). Forfurther information regarding this revenueprocedure contact Mr. Cohen on (202)317-6848 (not a toll-free number).

Maximum Vehicle Valuesfor 2014 for Use of VehicleCents-Per-Mile and Fleet-Average Valuation Rules

Notice 2014–11

This notice provides the maximum ve-hicle values for 2014 that taxpayers needto determine the value of personal use ofemployer-provided vehicles under thespecial valuation rules provided undersection 1.61–21 (d) and (e) of the IncomeTax Regulations.

MAXIMUM VEHICLE VALUES

The maximum value of employer-provided vehicles first made available toemployees for personal use in calendaryear 2014 for which the vehicle cents-per-mile valuation rule provided under Regu-lation section 1.61–21(e) may be applica-ble is $16,000 for a passenger automobileand $17,300 for a truck or van.

The maximum value of employer-provided vehicles first made available toemployees for personal use in calendaryear 2014 for which the fleet-average val-uation rule provided under Regulationsection 1.61–21(d) may be applicable is$21,300 for a passenger automobile and$22,600 for a truck or van.

EFFECTIVE DATE

This notice applies to employer pro-vided passenger automobiles first madeavailable to employees for personal use incalendar year 2014.

DRAFTING INFORMATION

The principal author of this notice isDon M. Parkinson of the Office of theDivision Counsel/Associate Chief Coun-sel (Tax Exempt & Government Entities).For further information on this notice con-tact Don Parkinson on (202) 317-4766(not a toll-free number).


Application of Section871(m) to Specified Equity-Linked Instruments

Notice 2014–14

I. Background

On December 5, 2013, a withdrawal ofnotice of proposed rulemaking, notice ofproposed rulemaking, and notice of publichearing were published in the FederalRegister at 78 FR 73128 (2013) (the“2013 proposed regulations”). The 2013proposed regulations proposed new rulesfor determining whether a transaction issubject to tax pursuant to section 871(m)of the Internal Revenue Code (“Code”).Generally, section 871(m)(1) providesthat a dividend equivalent is treated as adividend from sources within the UnitedStates for purposes of sections 871(a),881, 4948(a), and chapters 3 and 4. Theproposed regulations provide that a divi-dend equivalent includes any paymentpursuant to a specified notional principalcontract (“specified NPC”) or a specifiedequity-linked instrument (“specifiedELI”) that references the payment of adividend from an underlying security,each as defined in the 2013 proposed reg-ulations. An ELI, however, is only a spec-ified ELI under the 2013 proposed regu-lations if the long party acquired it on orafter March 5, 2014.

The Treasury Department and the In-ternal Revenue Service (the “Service”)have received comments recommendingthat an ELI issued prior to January 1,2016, not be treated as a specified ELI or,alternatively, that an ELI not be treated asa specified ELI if it is issued prior to thedate that the final regulations are pub-lished. Comments note that the 2013 pro-posed regulations significantly expandedthe scope of ELIs that would be subject totax pursuant to section 871(m). Com-ments further note that this expansion willcreate uncertainty in pricing transactionstoday and will not give market partici-pants sufficient time to implement the sys-tems necessary to track the informationrequired by the 2013 proposed regulationsby March 5, 2014.

II. Amendment to the Term “SpecifiedELI” in Final Regulations

When § 1.871–15(e) of the 2013 pro-posed regulations is finalized, the Trea-sury Department and the Service intend tolimit specified ELIs to ELIs issued on orafter 90 days after the date of publicationof the final regulations.

III. Effective Date

This Notice is effective March 4, 2014.

IV. Effect on Other Documents

This Notice announces the intention ofTreasury and the Service to modify Prop.Reg. § 1.871–15(e) as published in theFederal Register 78 FR 73128 (2013)when the Treasury Decision adoptingthose rules as final regulations is pub-lished in the Federal Register.

V. Request for Comments

The Treasury Department and the Ser-vice invite comments on the change to the2013 proposed regulations described inthis Notice. Comments on this Notice maybe submitted along with comments to the2013 proposed regulations. To providewritten or electronic comments, send sub-missions to: CC:PA:LPD:PR (REG–120282–10), Room 5203, Internal Reve-nue Service, P.O. Box 7604, Ben FranklinStation, Washington, DC 20044. Submis-sions may be hand-delivered Mondaythrough Friday between the hours of 8a.m. and 4 p.m. to CC:PA:LPD:PR(REG–120282–10), Courier’s Desk, Inter-nal Revenue Service, 1111 ConstitutionAvenue NW., Washington, DC, or sentelectronically, via the Federal eRulemak-ing Portal at http://www.regulations.gov(IRS REG–120282–10).

The principal authors of this Notice areD. Peter Merkel and Karen Walny of theOffice of Associate Chief Counsel (Inter-national). For further information regard-ing this notice call (202) 317-6938 (not atoll-free number).

Per Capita Distributions ofFunds Held in Trust by theSecretary of the Interior

Notice 2014–17

This notice provides interim guidanceconcerning the federal income tax treat-ment of per capita distributions made tomembers of Indian tribes from funds heldin trust by the Secretary of the Interior.

The Internal Revenue Service (Ser-vice) and the Treasury Department areissuing this notice to allow Indian tribes toreview the interim guidance and providecomments prior to the issuance of finalguidance. Comments may be submitted inwriting on or before September 17, 2014.Comments should be submitted to InternalRevenue Service, CC:PA:LPD:PR (No-tice 2014–17), Room 5203, P.O. Box7604, Ben Franklin Station, Washington,DC 20044, or electronically [email protected] include “Notice 2014–17” in thesubject line of any electronic communica-tions. Alternatively, comments may behand delivered between the hours of 8:00a.m. and 4:00 p.m. Monday to Friday toCC:PA:LPD:PR (Notice 2014–17), Cou-rier’s Desk, Internal Revenue Service,1111 Constitution Ave., NW, Washing-ton, DC. All comments will be availablefor public inspection and copying.

BACKGROUND

The Department of the Interior (DOI),primarily through the Office of SpecialTrustee (OST), is responsible for holdingin trust certain funds on behalf of individ-ual Indians and federally recognized In-dian tribes.

Current DOI regulations under 25C.F.R. §§ 115.700–701 provide that fundsmay be accepted by the Secretary of theInterior on behalf of federally recognizedIndian tribes and certain individual Indi-ans who have an interest in trust lands,trust resources, or trust assets. Funds ac-cepted on behalf of Indian tribes are de-posited into tribal “Trust Accounts” asdefined at 25 C.F.R. § 115.002. The OSThas the responsibility to manage the fundsand make them available to the tribe uponrequest.


Funds held in tribal Trust Accounts bythe DOI may be distributed per capita tomembers of the tribes. Prior to the enact-ment of the Per Capita Act, Pub. L. No.98–64, 97 Stat. 365, 25 U.S.C. §§ 117a–117c, in 1983, the DOI had the sole au-thority for making per capita distributionsout of tribal Trust Accounts. However, thePer Capita Act provided Indian tribes au-thority to make per capita distributionsdirectly to members of the tribe out of thetribe’s Trust Account.

CONSULTATION

In the spirit of Executive Order 13175,representatives of the Service and theTreasury Department consulted with triballeaders and members of Indian tribes con-cerning the federal income tax treatmentof per capita distributions made to Indiantribal members from funds held in tribalTrust Accounts. These consultations andconversations were extremely useful inpreparing this notice.

APPLICABLE PROVISIONS OFLAW

Section 61(a) of the Internal RevenueCode, 26 U.S.C. § 61, states that, exceptas otherwise provided by law, gross in-come means all income from whateversource derived, including but not limitedto compensation, gross income derivedfrom business, and dividends. Under 26U.S.C. § 61, Congress intends to tax allgains and undeniable accessions towealth, clearly realized, over which tax-payers have complete dominion. Commis-sioner v. Glenshaw Glass Co., 348 U.S.426 (1955), 1955–1 C.B. 207.

Indians are U.S. citizens subject to therequirement to pay income taxes. Squirev. Capoeman, 351 U.S. 1 (1956), 1956–1C.B. 605. There is no provision in theInternal Revenue Code that exempts anindividual from the payment of federalincome tax solely because he or she is anIndian. Therefore, exemption of Indiansfrom the payment of tax must deriveplainly from treaties or agreements withthe Indian tribes concerned or an act ofCongress. See Rev. Rul. 67–284, 1967–2C.B. 55.

The Per Capita Act provides authorityto Indian tribes to make per capita distri-butions to members of the tribe out of

funds held in a tribal Trust Account. Un-der 25 U.S.C. § 117a, funds subject to thatsection may be distributed by either theSecretary of the Interior or, at the requestof the governing body of the tribe andsubject to the approval of the Secretary ofthe Interior, the tribe. In practice, proceedsfrom trust assets or trust resources (bothdefined at 25 C.F.R. § 115.002) are de-posited into a tribal Trust Account for atribe and that tribe subsequently makes aper capita distribution using funds fromthat Trust Account.

The Indian Tribal Judgment Funds Useor Distribution Act, Pub. L. No. 93–134,87 Stat 466, 25 U.S.C. §§ 1401–1408,concerns the distribution of certain judg-ment funds to Indian tribes. Under 25U.S.C. § 117b(a), per capita distributionsmade pursuant to 25 U.S.C. § 117a aresubject to the provisions of 25 U.S.C.§ 1407. Pursuant to 25 U.S.C. § 1407,none of the funds that are distributed percapita or held in trust pursuant to a planapproved under 25 U.S.C. § 1401 et. seq,including all interest and investment in-come accrued on the funds while held intrust, are subject to federal income taxes.See also H.R. Rep. No. 98–230 at 3(1983), which provides that per capita dis-tributions of tribal trust revenue “shall besubject to the provisions of [25 U.S.C.§ 1407] with respect to tax exemptions.”However, per capita distributions to tribalmembers of “net revenues” from Indiangaming activity that are subject to theIndian Gaming Regulatory Act (net gam-ing revenues) are subject to federal in-come taxation and are subject to the in-formation reporting and withholdingrequirements of 26 U.S.C. §§ 6041 and3402(r). See 25 U.S.C. §§ 2701–2721 and25 C.F.R. Part 290. Under the IndianGaming Regulatory Act, net gaming rev-enues means “gross revenues of an Indiangaming activity less amounts paid out as,or paid for, prizes and total operating ex-penses, excluding management fees.” 25U.S.C. § 2703(9).

Under 25 C.F.R. § 115.703, the Secre-tary of the Interior accepts and depositsinto tribal Trust Accounts only funds fromsources listed in the table in 25 C.F.R.§ 115.702. The 25 C.F.R. § 115.702 tableprovides that the Secretary of the Interiorwill accept, among other payments, pay-ments resulting from money directly de-

rived from title conveyance or use of trustlands, payments resulting from penaltiesfor trespass on trust lands, and paymentsresulting from a final order from a court ofcompetent jurisdiction for a cause of ac-tion related to trust assets. The Secretaryof the Interior also accepts deposits offunds derived directly from trust lands,restricted fee lands, or trust resources. See25 C.F.R. § 115.702 for a full list of fundsthat the Secretary of the Interior acceptsand deposits into tribal Trust Accounts.

FEDERAL INCOME TAXTREATMENT OF PER CAPITADISTRIBUTIONS OF TRIBALTRUST ACCOUNT FUNDS

a. General Rule

Under 25 U.S.C. § 117b(a) and 25U.S.C. § 1407, per capita distributionsmade from funds the Secretary of the In-terior holds in a Trust Account for thebenefit of a tribe are generally excludedfrom the gross income of the members ofthe tribe receiving the per capita distribu-tions. For example, if proceeds from tim-ber sales, an agricultural lease, or a graz-ing permit are deposited into a tribe’sTrust Account and that tribe subsequentlymakes a per capita distribution usingfunds from the Trust Account, the percapita distributions are excluded from thetribal members’ gross income.

b. Exception

Distributions to tribal members from atribal Trust Account constitute gross in-come under 26 U.S.C. § 61 to the mem-bers of the tribe receiving the distributionsif a Trust Account is used to mischarac-terize taxable income as nontaxable percapita distributions. For example, distri-butions from a tribal Trust Account con-stitute gross income under 26 U.S.C. § 61if based on the facts and circumstances thedistributions are mischaracterized com-pensation to tribal members for their ser-vices, mischaracterized distributions ofbusiness profits, or mischaracterized gam-ing revenues.

The following examples illustrate situ-ations in which distributions from a tribalTrust Account are not treated as nontax-able per capita distributions and are in-cluded in gross income under 26 U.S.C.§ 61.


Example 1 – Mischaracterized CompensationB is a housing authority established by Tribe C,

a federally recognized Indian tribe. The Director andthe Assistant Director of B are both members ofTribe C. During each of the 2011, 2012, and 2013taxable years, the Director and the Assistant Directorare each paid bonuses in the amount of $15x. In the2014 taxable year, members of Tribe C’s TribalCouncil authorize per capita distributions out of thetribe’s Trust Account in the amount of $1x to everymember of the tribe and an additional $2x in percapita distributions to every elder in the tribe. Inaddition, the members of Tribe C’s Tribal Councilauthorize distributions out of the Trust Account tothe Director and Assistant Director in the amount of$15x each, instead of paying bonuses to the Directorand the Assistant Director. The distributions of $15xto the Director and the Assistant Director are mis-characterized compensation and, therefore, are in-cluded in their gross income under 26 U.S.C. § 61.

Example 2 – Mischaracterized Distributions ofBusiness Profits

Tribe D is a federally recognized Indian tribe. Agroup of Tribe D members own Corporation E, aninformation technology company that provides callcenter services. Corporation E’s headquarters is lo-cated on land held in trust by the Secretary of theInterior for the benefit of Tribe D. Tribe D chargesCorporation E rent at fair market value for its head-quarters. However, the lease agreement with Tribe Dincludes a provision whereby Corporation E depositsan amount approximating its net revenues into Tribe

D’s Trust Account, characterizing the revenue asadditional rent. Subsequently, members of Tribe D’sTribal Council authorize per capita distributions outof the Trust Account in an aggregate amount equal tothe purported “additional rent” to the group of TribeD members who own Corporation E. The distribu-tions of the mischaracterized business profits fromthe Trust Account constitute gross income under 26U.S.C. § 61 to the members receiving the distribu-tions.

Example 3 – Mischaracterized Gaming RevenuesTribe F is a federally recognized Indian tribe.

Tribe F owns all of Corporation G, which owns andoperates a casino located on land held in trust by theSecretary of the Interior for the benefit of Tribe F.All of Corporation G’s gaming revenues are subjectto the Indian Gaming Regulatory Act. Corporation Gdistributes 50% of its net gaming revenues to TribeF. Under a lease agreement with Tribe F, Corpora-tion G deposits the remaining 50% of its net gamingrevenues into Tribe F’s Trust Account, characteriz-ing the deposits as rent for use of the land for thecasino. Subsequently, members of Tribe F’s TribalCouncil authorize per capita distributions to everymember of the tribe out of the net gaming revenuesthat are held in the Trust Account. The distributionsout of the Trust Account are mischaracterized gam-ing revenues. Because per capita distributions of netgaming revenues are subject to federal income tax-ation, the distributions constitute gross income under26 U.S.C. § 61 to the members of the tribe receivingthe distributions.

LIMITATION

This notice applies only to per capitadistributions made by the Secretary of theInterior or an Indian tribe out of a tribalTrust Account, as defined at 25 C.F.R.§ 115.002. This notice does not affect thefederal income taxation of distributionsmade from individual Indian trust ac-counts, from which per capita distribu-tions cannot be made. This notice alsodoes not affect the federal income taxationof and withholding from distributionsmade pursuant to a Revenue AllocationPlan under the Indian Gaming RegulatoryAct, Pub. L. No. 100–497, 102 Stat.2475, 25 U.S.C. §§ 2701–2721.

DRAFTING INFORMATION

The principal author of this notice isJames Martin of the Office of AssociateChief Counsel (Tax Exempt & Govern-ment Entities). For further information,please contact Mr. Martin at (202) 317-5800 (not a toll-free number).


Part IV. Items of General InterestNotice of proposedrulemaking by cross-reference to temporaryregulations and notice ofpublic hearing

REG–130967–13

Regulations Relating to InformationReporting by Foreign FinancialInstitutions and Withholding on CertainPayments to Foreign FinancialInstitutions and Other Foreign Entities


ACTION: Notice of proposed rulemakingby cross-reference to temporary regula-tions and notice of public hearing.

SUMMARY: In this issue of the Bulletin,the IRS and the Department of the Trea-sury (Treasury Department) are issuingfinal and temporary regulations that pro-vide guidance under chapter 4 of SubtitleA (sections 1471 through 1474) of theInternal Revenue Code of 1986 (Code).These regulations address reporting byforeign financial institutions (FFIs) withrespect to U.S. accounts and withholdingon certain payments to FFIs and otherforeign entities. The text of the temporaryregulations published in the Federal Reg-ister also serves as the text of these pro-posed regulations. This document alsoprovides notice of a public hearing onthese proposed regulations.

DATES: Written and/or electronic com-ments must be received by May 5, 2014.Outlines of topics to be discussed at thepublic hearing scheduled for June 24,2014, at 10 a.m. must be received by May5, 2014.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG–130967–13), room5203, Internal Revenue Service, PO Box7604, Ben Franklin Station, Washington,DC 20044. Submissions may be hand-delivered Monday through Friday be-tween the hours of 8:00 a.m. and 4:00p.m. to CC:PA:LPD:PR (REG–130967–13), Courier’s Desk, Internal RevenueService, 1111 Constitution Avenue, NW,

Washington, DC 20224, or sent electron-ically, via the Federal eRulemaking Portalat www.regulations.gov (IRS REG–130967–13). The public hearing will beheld in the IRS Auditorium, Internal Rev-enue Building, 1111 Constitution Avenue,NW, Washington, DC.

FOR FURTHER INFORMATIONCONTACT: Concerning the proposedregulations, Tara Ferris, Nancy Lee, Mi-chael Kaercher, or Kamela Nelan at (202)317-6942; concerning submission of com-ments, the hearing, and/or to be placed onthe building access list to attend the hear-ing, Oluwafunmilayo (Funmi) Taylor, at(202) 317-5179 (not toll-free numbers).


Background

Temporary regulations in this issue ofthe Bulletin amend the Income Tax Reg-ulations (26 CFR part 1) under chapter 4of Subtitle A of the Code. The temporaryregulations set forth rules relating to in-formation reporting by FFIs with respectto U.S. accounts and withholding on cer-tain payments to FFIs and other foreignentities. The temporary regulations reviseand refine final regulations (TD 9610) un-der chapter 4 that were published in theFederal Register (78 FR 5874) on Janu-ary 28, 2013, as corrected on September10, 2013 (78 FR 55202). The text of thetemporary regulations also serves as thetext of these proposed regulations. Thepreamble to the temporary regulations ex-plains the temporary regulations and theseproposed regulations.

Special Analyses

It has been determined that this noticeof proposed rulemaking is not a signifi-cant regulatory action as defined in Exec-utive Order 12866, as supplemented byExecutive Order 13653. Therefore, a reg-ulatory assessment is not required. It hasalso been determined that section 553(b)of the Administrative Procedure Act (5U.S.C. chapter 5) does not apply to theseregulations.

It is hereby certified that the collectionof information in this notice of proposedrulemaking will not have a significant

economic impact on a substantial numberof small business entities within the mean-ing of section 601(6) of the RegulatoryFlexibility Act (5 U.S.C. chapter 6). Al-though the Treasury Department and theIRS anticipate that a substantial number ofdomestic small business entities will beaffected by the collection of informationin this notice of proposed rulemaking, theTreasury Department and the IRS believethat the economic impact to these entitiesresulting from the information collectionrequirements will not be significant.

The domestic small business entitiesthat are subject to chapter 4 and the col-lection of information in this notice ofproposed rulemaking are those domesticbusiness entities that are payors of certainU.S. source income that are presently sub-ject to the information collection and re-porting rules under chapter 3. These do-mestic small business entities are requiredto be familiar with chapter 3’s informationcollection and reporting rules and forms inorder to determine a payee’s U.S. with-holding status and, based on that status,withhold and remit the proper amount oftax on payments of U.S. source FDAPincome. Small domestic business entitiesthat are payors of U.S. source incomehave developed and implemented internalreporting and information collection sys-tems under which the business entity sat-isfies its chapter 3 payee identification,withholding, and tax remittance require-ments.

The IRS intends to revise the presentchapter 3 reporting forms, with the revisedforms being used by a payor of U.S.source income to satisfy the payor’s obli-gations under chapters 3 and 4. As a re-sult, the information collection require-ments of this notice of proposedrulemaking build on reporting and infor-mation collection systems familiar to andcurrently used by payors of U.S. sourceFDAP income that are domestic smallbusiness entities. Because the informationcollection and reporting requirements ofchapter 4 and this notice of proposed rule-making build on existing chapter 3 infor-mation collection and reporting systemsof domestic small business entities mak-ing payments of U.S. source income toforeign persons, the information collec-


tion requirements of this notice of pro-posed rulemaking impose little additionalburden on those domestic entities. There-fore, a Regulatory Flexibility Analysis un-der the Regulatory Flexibility Act is notrequired.

Pursuant to section 7805(f) of theCode, this regulation has been submittedto the Chief Counsel for Advocacy of theSmall Business Administration for com-ment on its impact on small businesses.The IRS invites the public to comment onthis certification.

Comments and Public Hearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any written comments (asigned original and eight (8) copies) orelectronic comments that are submittedtimely to the IRS. The IRS and the Trea-sury Department request comments on allaspects of the proposed regulations. Allcomments will be available for public in-spection and copying.

A public hearing has been scheduledfor June 24, 2014, beginning at 10 a.m. inthe Auditorium, Internal Revenue Build-ing, 1111 Constitution Avenue, NW,Washington, DC. Due to building securityprocedures, visitors must enter at the Con-stitution Avenue entrance. In addition, allvisitors must present photo identificationto enter the building. Because of accessrestrictions, visitors will not be admittedbeyond the immediate entrance area morethan 30 minutes before the hearing starts.For information about having your nameplaced on the building access list to attendthe hearing, see the “FOR FURTHER IN-FORMATION CONTACT” section ofthis preamble.

The rules of 26 CFR 601.601(a)(3) ap-ply to the hearing. Persons who wish topresent oral comments at the hearing mustsubmit electronic or written comments, anoutline of the topics to be discussed, andthe time to be devoted to each topic. Sub-mit a signed original and eight (8) copiesor an electronic copy of the topics outlineby May 5, 2014. A period of 10 minuteswill be allotted to each person for makingcomments. An agenda showing the sched-uling of the speakers will be preparedafter the deadline for receiving outlineshas passed. Copies of the agenda will beavailable free of charge at the hearing.


The principal authors of these regula-tions are Tara Ferris, Nancy Lee, MichaelKaercher, and Kamela Nelan of the Officeof Associate Chief Counsel (Interna-tional). However, other personnel fromthe IRS and the Treasury Department par-ticipated in the development of these reg-ulations.

* * * * *

Proposed Amendments to theRegulations

Accordingly, 26 CFR part 1 is pro-posed to be amended as follows:



Authority: 26 U.S.C. 7805. * * *Section 1.1471–1 is also issued under










26 U.S.C. 1474.Par. 2. Section 1.1471–1 is amended

by:1. Removing paragraph (b)(81).2. Redesignating paragraphs (b)(115)

through (b)(142) as (b)(124) through(b)(151), paragraphs (b)(108) through(b)(114) as (b)(116) through (b)(122),paragraph (b)(107) as (b)(114), para-graphs (b)(82) through (b)(106) as (b)(88)through (b)(112), paragraphs (b)(75)through (b)(80) as (b)(82) through (b)(87),paragraphs (b)(62) through (b)(74) as(b)(68) through (b)(80), paragraphs(b)(39) through (b)(61) as (b)(44) through(b)(66), paragraphs (b)(28) through

(b)(38) as (b)(32) through (b)(42), para-graphs (b)(18) through (b)(27) as (b)(21)through (b)(30), paragraphs (b)(9)through (b)(17) as (b)(11) through (b)(19),and paragraphs (b)(7) and (b)(8) as (b)(8)and (b)(9).

3. Adding new paragraphs (b)(7),(b)(10), (b)(20), (b)(31), (b)(43), (b)(67),(b)(81), (b)(113), (b)(115), and (b)(123).

4. Revising paragraphs (b)(23),(b)(35), (b)(41), (b)(48), (b)(50), (b)(76),(b)(77), (b)(83), (b)(88), (b)(91), (b)(98),(b)(100), (b)(104)(i), (b)(104)(ii)(A)through (C), (b)(105), (b)(124), (b)(125),(b)(128), (b)(135) and (b)(141).


§ 1.1471–1 Scope of chapter 4 anddefinitions.

* * * * *(b) * * *(7) [The text of proposed § 1.1471–

1(b)(7) is the same as the text of § 1.1471–1T(b)(7) published elsewhere in this issueof the Bulletin].

* * * * *(10) [The text of proposed § 1.1471–

1(b)(10) is the same as the text of§ 1.1471–1T(b)(10) published elsewherein this issue of the Bulletin].



* * * * *(23) [The text of the proposed amend-

ment to § 1.1471–1(b)(23) is the same asthe text of § 1.1471–1T(b)(23) publishedelsewhere in this issue of the Bulletin].


1(b)(31) is the same as the text of§1.1471–1T(b)(31) published elsewherein this issue of the Bulletin].
















(77) [The text of the proposed amend-ment to § 1.1471–1(b)(77) is the same asthe text of § 1.1471–1T(b)(77) publishedelsewhere in this issue of the Bulletin].











* * * * *


* * * * *(104) * * * (i) [The text of the proposed

amendment to § 1.1471–1(b)(104)(i) isthe same as the text of § 1.1471–1T(b)(104)(i) published elsewhere in thisissue of the Bulletin].

(ii) * * *(A) [The text of the proposed amend-

ment to § 1.1471–1(b)(104)(ii)(A) is thesame as the text of § 1.1471–1T(b)(104)(ii)(A) published elsewhere inthis issue of the Bulletin].

(B) [The text of the proposed amend-ment to § 1.1471–1(b)(104)(ii)(B) is thesame as the text of § 1.1471–1T(b)(104)(ii)(B) published elsewhere inthis issue of the Bulletin].

(C) [The text of the proposed amend-ment to § 1.1471–1(b)(104)(ii)(C) is thesame as the text of § 1.1471–1T(b)(104)(ii)(C) published elsewhere inthis issue of the Bulletin].











ment to § 1.1471–1(b)(128) is the same as

the text of § 1.1471–1T(b)(128) publishedelsewhere in this issue of the Bulletin].





* * * * *Par. 3. In § 1.1471–2,a. Revise paragraphs (a)(1), (a)(2)(i),

(a)(2)(ii) introductory text, (a)(2)(iii)(A),and (a)(2)(v).

b. Remove the heading of paragraph(a)(4)(ii), and add introductory text toparagraph (a)(4)(ii).

c. Revise paragraphs (a)(4)(ii)(A),(a)(4)(ii)(B), (b)(2)(i)(A)(1), (b)(2)(ii)(A)(4),(b)(2)(ii)(B)(2), (b)(2)(iv), and (b)(4)(ii).

The revisions read as follows:

§ 1.1471–2 Requirement to deduct andwithhold tax on withholdable paymentsto certain FFIs.

(a) * * *(1) [The text of the proposed amend-

ment to § 1.1471–2(a)(1) is the same asthe text of § 1.1471–2T(a)(1) publishedelsewhere in this issue of the Bulletin].

(2) * * *(i) [The text of the proposed amend-

ment to § 1.1471–2(a)(2)(i) is the same asthe text of § 1.1471–2T(a)(2)(i) publishedelsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-ment to § 1.1471–2(a)(2)(ii) introductorytext is the same as the text of § 1.1471–2T(a)(2)(ii) published elsewhere in thisissue of the Bulletin].

(iii) * * *(A) [The text of the proposed amend-

ment to § 1.1471–2(a)(2)(iii)(A) is thesame as the text of § 1.1471–2T(a)(2)(iii)(A) published elsewhere inthis issue of the Bulletin].

* * * * *(v) [The text of the proposed amend-

ment to § 1.1471–2(a)(2)(v) is the same asthe text of § 1.1471–2T(a)(2)(v) publishedelsewhere in this issue of the Bulletin].

* * * * *(4) * * *


(ii) [The text of the proposed amend-ment to § 1.1471–2(a)(4)(ii) is the same asthe text of § 1.1471–2T(a)(4)(ii) pub-lished elsewhere in this issue of the Bul-letin].

(A) [The text of the proposed amend-ment to § 1.1471–2(a)(4)(ii)(A) is thesame as the text of § 1.1471–2T(a)(4)(ii)(A) published elsewhere inthis issue of the Bulletin].

(B) [The text of the proposed amend-ment to § 1.1471–2(a)(4)(ii)(B) is thesame as the text of § 1.1471–2T(a)(4)(ii)(B) published elsewhere inthis issue of the Bulletin].

* * * * *(b) * * *(2) * * *(i) * * *(A) * * *(1) [The text of the proposed amend-

ment to § 1.1471–2(b)(2)(i)(A)(1) is thesame as the text of § 1.1471–2T(b)(2)(i)(A)(1) published elsewhere inthis issue of the Bulletin].

* * * * *(ii) * * *(A) * * *(4) [The text of the proposed amend-

ment to § 1.1471–2(b)(2)(ii)(A)(4) is thesame as the text of § 1.1471–2T(b)(2)(ii)(A)(4) published elsewhere inthis issue of the Bulletin].

* * * * *(B) * * *(2) [The text of the proposed amend-

ment to § 1.1471–2(b)(2)(ii)(B)(2) is thesame as the text of § 1.1471–2T(b)(2)(ii)(B)(2) published elsewhere inthis issue of the Bulletin].

* * * * *(iv) [The text of the proposed amend-

ment to § 1.1471–2(b)(2)(iv) is the sameas the text of § 1.1471–2T(b)(2)(iv) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *(4) * * *(ii) [The text of the proposed amend-

ment to § 1.1471–2(b)(4)(ii) is the sameas the text of § 1.1471–2T(b)(4)(ii) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *Par. 4. Section 1.1471–3 is amended

by:

1. By adding paragraphs(c)(6)(ii)(B)(7), (c)(8)(v), (d)(5)(iii), and(d)(11)(x) through (xii).

2. By revising paragraphs (a)(3)(iii),(a)(3)(v) through (vi), (b)(3), (c)(3)(ii)(C)through (D), (c)(3)(iii)(A) introductorytext, (c)(3)(iii)(A)(5), (c)(3)(iii)(B)(1)through (4), (c)(5)(ii)(B), (c)(6)(ii)(B)(3),(c)(6)(ii)(B)(5) through (6), (c)(6)(ii)(C)(3)through (5), (c)(6)(ii)(E)(3), (c)(6)(iv),(c)(6)(v)(A) through (B), (c)(9)(ii)(B),(c)(9)(v), (d)(1), (d)(2)(i), (d)(2)(iii),(d)(4)(i) and (ii), (d)(4)(iii) introductorytext, (d)(4)(iii)(A)(1), (d)(4)(iv)(A),(d)(4)(iv)(C) through (D), (d)(4)(v),(d)(5)(i) through (ii), (d)(6)(vii)(A)(1),(d)(11)(viii)(A) introductory text,(d)(11)(viii)(C), (d)(12)(iii)(A) through(B), (e)(2) through (3), (e)(4) introductorytext, (e)(4)(i) through (iv), (e)(4)(v) intro-ductory text, (e)(4)(v)(B)(1) through (2),(e)(4)(vi)(B), (e)(4)(vii)(B), (e)(4)(viii)(A)(4),and (f)(1) through (9).


§ 1.1471–3 Identification of payee.

(a) * * *(3) * * *(iii) [The text of the proposed amend-

ment to § 1.1471–3(a)(3)(iii) is the sameas the text of § 1.1471–3T(a)(3)(iii) pub-lished elsewhere in this issue of the Bul-letin].


ment to § 1.1471–3(a)(3)(v) is the same asthe text of § 1.1471–3T(a)(3)(v) publishedelsewhere in this issue of the Bulletin].

(vi) [The text of the proposed amend-ment to § 1.1471–3(a)(3)(vi) is the sameas the text of § 1.1471–3T(a)(3)(vi) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *(b) * * *(3) [The text of the proposed amend-


* * * * *(c) * * *(3) * * *(ii) * * *(C) [The text of the proposed amend-

ment to § 1.1471–3(c)(3)(ii)(C) is the

same as the text of § 1.1471–3T(c)(3)(ii)(C) published elsewhere inthis issue of the Bulletin].

(D) [The text of the proposed amend-ment to § 1.1471–3(c)(3)(ii)(D) is thesame as the text of § 1.1471–3T(c)(3)(ii)(D) published elsewhere inthis issue of the Bulletin].

* * * * *(iii) * * *(A) [The text of the proposed amend-

ment to § 1.1471–3(c)(3)(iii)(A) introduc-tory text is the same as the text of§ 1.1471–3T(c)(3)(iii)(A) published else-where in this issue of the Bulletin].


ment to § 1.1471–3(c)(3)(iii)(A)(5) is thesame as the text of § 1.1471–3T(c)(3)(iii)(A)(5) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–3(c)(3)(iii)(B)(1) is thesame as the text of § 1.1471–3T(c)(3)(iii)(B)(1) published elsewhere inthis issue of the Bulletin].

(2) [The text of the proposed amend-ment to § 1.1471–3(c)(3)(iii)(B)(2) is thesame as the text of § 1.1471–3T(c)(3)(iii)(B)(2) published elsewhere inthis issue of the Bulletin].



* * * * *(5) * * *(ii) * * *(B) [The text of the proposed amend-

ment to § 1.1471–3(c)(5)(ii)(B) is thesame as the text of § 1.1471–3T(c)(5)(ii)(B) published elsewhere inthis issue of the Bulletin].

* * * * *(6) * * *(ii) * * *(B) * * *(3) [The text of the proposed amend-

ment to § 1.1471–3(c)(6)(ii)(B)(3) is the


same as the text of § 1.1471–3T(c)(6)(ii)(B)(3) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–3(c)(6)(ii)(B)(5) is thesame as the text of § 1.1471–3T(c)(6)(ii)(B)(5) published elsewhere inthis issue of the Bulletin].

(6) [The text of the proposed amend-ment to § 1.1471–3(c)(6)(ii)(B)(6) is thesame as the text of § 1.1471–3T(c)(6)(ii)(B)(6) published elsewhere inthis issue of the Bulletin].

(7) [The text of proposed § 1.1471–3(c)(6)(ii)(B)(7) is the same as the text of§ 1.1471–3T(c)(6)(ii)(B)(7) publishedelsewhere in this issue of the Bulletin].

(C) * * *(3) [The text of the proposed amend-

ment to § 1.1471–3(c)(6)(ii)(C)(3) is thesame as the text of § 1.1471–3T(c)(6)(ii)(C)(3) published elsewhere inthis issue of the Bulletin].

(4) [The text of the proposed amend-ment to § 1.1471–3(c)(6)(ii)(C)(4) is thesame as the text of § 1.1471–3T(c)(6)(ii)(C)(4) published elsewhere inthis issue of the Bulletin].

(5) [The text of the proposed amend-ment to § 1.1471–3(c)(6)(ii)(C)(5) is thesame as the text of § 1.1471–3T(c)(6)(ii)(C)(5) published elsewhere inthis issue of the Bulletin].

* * * * *(E) * * *(3) [The text of the proposed amend-

ment to § 1.1471–3(c)(6)(ii)(E)(3) is thesame as the text of § 1.1471–3T(c)(6)(ii)(E)(3) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–3(c)(6)(iv) is the sameas the text of § 1.1471–3T(c)(6)(iv) pub-lished elsewhere in this issue of the Bul-letin].

(v) * * *(A) [The text of the proposed amend-

ment to § 1.1471–3(c)(6)(v)(A) is thesame as the text of § 1.1471–3T(c)(6)(v)(A) published elsewhere inthis issue of the Bulletin].

(B) [The text of the proposed amend-ment to § 1.1471–3(c)(6)(v)(B) is thesame as the text of § 1.1471–

3T(c)(6)(v)(B) published elsewhere in thisissue of the Bulletin].

* * * * *(8) * * *(v) [The text of proposed § 1.1471–

3(c)(8)(v) is the same as the text of§ 1.1471–3T(c)(8)(v) published elsewherein this issue of the Bulletin].

(9) * * *(ii) * * *(B) [The text of the proposed amend-

ment to § 1.1471–3(c)(9)(ii)(B) is thesame as the text of § 1.1471–3T(c)(9)(ii)(B) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–3(c)(9)(v) is the same asthe text of § 1.1471–3T(c)(9)(v) publishedelsewhere in this issue of the Bulletin].

(d) * * *(1) [The text of the proposed amend-

ment to § 1.1471–3(d)(1) is the same asthe text of § 1.1471–3T(d)(1) publishedelsewhere in this issue of the Bulletin].


ment to § 1.1471–3(d)(2)(i) is the same asthe text of § 1.1471–3T(d)(2)(i) publishedelsewhere in this issue of the Bulletin].

* * * * *(iii) [The text of the proposed amend-

ment to § 1.1471–3(d)(2)(iii) is the sameas the text of § 1.1471–3T(d)(2)(iii) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *(4) * * *(i) [The text of the proposed amend-


(ii) [The text of the proposed amend-ment to § 1.1471–3(d)(4)(ii) is the sameas the text of § 1.1471–3T(d)(4)(ii) pub-lished elsewhere in this issue of the Bul-letin].

(iii) [The text of the proposed amend-ment to § 1.1471–3(d)(4)(iii) introductorytext is the same as the text of § 1.1471–3T(d)(4)(iii) published elsewhere in thisissue of the Bulletin].

(A) * * *(1) [The text of the proposed amend-

ment to § 1.1471–3(d)(4)(iii)(A)(1) is thesame as the text of § 1.1471–

3T(d)(4)(iii)(A)(1) published elsewhere inthis issue of the Bulletin].

* * * * *(iv) * * *(A) [The text of the proposed amend-

ment to § 1.1471–3(d)(4)(iv)(A) is thesame as the text of § 1.1471–3T(d)(4)(iv)(A) published elsewhere inthis issue of the Bulletin].

* * * * *(C) [The text of the proposed amend-

ment to § 1.1471–3(d)(4)(iv)(C) is thesame as the text of § 1.1471–3T(d)(4)(iv)(C) published elsewhere inthis issue of the Bulletin].

(D) [The text of the proposed amend-ment to § 1.1471–3(d)(4)(iv)(D) is thesame as the text of § 1.1471–3T(d)(4)(iv)(D) published elsewhere inthis issue of the Bulletin].

(v) [The text of the proposed amend-ment to § 1.1471–3(d)(4)(v) is the same asthe text of § 1.1471–3T(d)(4)(v) pub-lished elsewhere in this issue of the Bul-letin].



(ii) [The text of the proposed amend-ment to § 1.1471–3(d)(5)(ii) is the sameas the text of § 1.1471–3T(d)(5)(ii)(A) published elsewhere inthis issue of the Bulletin].

(iii) [The text of proposed § 1.1471–3(d)(5)(iii) is the same as the text of§ 1.1471–3T(d)(5)(iii) published else-where in this issue of the Bulletin].

(6) * * *(vii) * * *(A) * * *(1) [The text of the proposed amend-

ment to § 1.1471–3(d)(6)(vii)(A)(1) is thesame as the text of § 1.1471–3T(d)(6)(vii)(A)(1) published elsewherein this issue of the Bulletin].

* * * * *(11) * * *(viii) * * *(A) [The text of the proposed amend-

ment to § 1.1471–3(d)(11)(viii)(A) intro-ductory text is the same as the text of§ 1.1471–3T(d)(11)(viii)(A) publishedelsewhere in this issue of the Bulletin].

* * * * *


(C) [The text of the proposed amend-ment to § 1.1471–3(d)(11)(viii)(C) is thesame as the text of § 1.1471–3T(d)(11)(vii)(C) published elsewhere inthis issue of the Bulletin].

* * * * *(x) [The text of proposed § 1.1471–

3(d)(11)(x) is the same as the text of§ 1.1471–3T(d)(11)(x) published else-where in this issue of the Bulletin].

(xi) [The text of proposed § 1.1471–3(d)(11)(xi) is the same as the text of§ 1.1471–3T(d)(11)(xi) published else-where in this issue of the Bulletin].

(xii) [The text of proposed § 1.1471–3(d)(11)(xii) is the same as the text of§ 1.1471–3T(d)(11)(xii) published else-where in this issue of the Bulletin].

(12) * * *(iii) * * *(A) [The text of the proposed amend-

ment to § 1.1471–3(d)(12)(iii)(A) is thesame as the text of § 1.1471–3T(d)(12)(iii)(A) published elsewhere inthis issue of the Bulletin].

(B) [The text of the proposed amend-ment to § 1.1471–3(d)(12)(iii)(B) is thesame as the text of § 1.1471–3T(d)(12)(iii)(B) published elsewhere inthis issue of the Bulletin].

(e) * * *(2) [The text of the proposed amend-

ment to § 1.1471–3(e)(2) is the same asthe text of § 1.1471–3T(e)(2) publishedelsewhere in this issue of the Bulletin].

(3) [The text of proposed § 1.1471–3(e)(3) is the same as the text of § 1.1471–3T(e)(3) through (e)(3)(iv) published else-where in this issue of the Bulletin].

(4) [The text of the proposed amend-ment to § 1.1471–3(e)(4) introductory textis the same as the text of § 1.1471–3T(e)(4) introductory text published else-where in this issue of the Bulletin].

(i) through (iv) [The text of the pro-posed amendment to § 1.1471–3(e)(4)(i) through (iv) is the same as thetext of § 1.1471–3T(e)(4)(i) through(iv)(B)(2) published elsewhere in this is-sue of the Bulletin].

(v) [The text of the proposed amend-ment to § 1.1471–3(e)(4)(v) introductorytext is the same as the text of § 1.1471–3T(e)(4)(v) published elsewhere in thisissue of the Bulletin].

* * * * *(B) * * *

(1) [The text of the proposed amend-ment to § 1.1471–3(e)(4)(v)(B)(1) is thesame as the text of § 1.1471–3T(e)(4)(v)(B)(1) published elsewhere inthis issue of the Bulletin].

(2) [The text of the proposed amend-ment to § 1.1471–3(e)(4)(v)(B)(2) is thesame as the text of § 1.1471–3T(e)(4)(v)(B)(2) published elsewhere inthis issue of the Bulletin].

* * * * *(vi) * * *(B) [The text of the proposed amend-

ment to § 1.1471–3(e)(4)(vi)(B) is thesame as the text of § 1.1471–3T(e)(4)(vi)(B) published elsewhere inthis issue of the Bulletin].

(vii) * * *(B) [The text of the proposed amend-

ment to § 1.1471–3(e)(4)(vii)(B) is thesame as the text of § 1.1471–3T(e)(4)(vii)(B) published elsewhere inthis issue of the Bulletin].

(viii) * * *(A) * * *(4) [The text of the proposed amend-

ment to § 1.1471–3(e)(4)(viii)(A)(4) is thesame as the text of § 1.1471–3T(e)(4)(viii)(A)(4) published elsewherein this issue of the Bulletin].

* * * * *(f) * * *(1) through (9) [The text of the pro-

posed amendment to § 1.1471–3(f)(1) through (9) is the same as the textof § 1.1471–3T(f)(1) through (f)(9)(ii)published elsewhere in this issue of theBulletin].


by:1. Removing paragraph (d)(3)(v).2. Redesignating paragraphs (d)(3)(vi)

through (viii) as paragraphs (d)(3)(v)through (vii) and paragraph (d)(6)(vi) asparagraph (d)(6)(vii).

3. Adding paragraphs (b)(3)(i) through(iii), (d)(2)(ii)(F), (d)(2)(iii)(C), and(d)(6)(vi).

4. Revising paragraphs (a)(3), (b)(1)through (3), (b)(6), (c)(5)(iv)(B)(2)(vi),(c)(5)(iv)(E), (d)(1), (d)(2)(i), (d)(2)(ii)(A),(d)(2)(ii)(B)(2), (d)(2)(ii)(E), (d)(2)(iii)(A),(d)(2)(iii)(B) introductory text, (d)(3)(ii)(E),(d)(3)(iii)(F), (d)(5)(v) through(vi), (d)(7)(i),(d)(7)(ii)(A), (d)(7)(iii), (d)(7)(iv)(A) through(B), (d)(8), (d)(9) Example 3, Example 5, and

Example 7, (e)(1), (e)(2)(ii), (f)(4)(i)through(ii), (g)(1) introductory text,, (g)(1)(ii),and (g)(2).

5. By removing the heading of para-graph (d)(7) and adding introductory textto paragraph (d)(7).


§ 1.1471–4 FFI agreement.

(a) * * *(3) [The text of the proposed amend-

ment to § 1.1471–4(a)(3) is the same asthe text of § 1.1471–4T(a)(3) publishedelsewhere in this issue of the Bulletin].





(i) [The text of proposed § 1.1471–4(b)(3)(i) is the same as the text of§ 1.1471–4T(b)(3)(i) published elsewherein this issue of the Bulletin].

(ii) [The text of proposed § 1.1471–4(b)(3)(ii) is the same as the text of§ 1.1471–4T(b)(3)(ii) published else-where in this issue of the Bulletin].

(iii) [The text of proposed § 1.1471–4(b)(3)(iii) is the same as the text of§ 1.1471–4T(b)(3)(iii) published else-where in this issue of the Bulletin].



* * * * *(c) * * *(5) * * *(iv) * * *(B) * * *(2) * * *(vi) [The text of the proposed amend-

ment to § 1.1471–4(c)(5)(iv)(B)(2)(vi) isthe same as the text of § 1.1471–


4T(c)(5)(iv)(B)(2)(vi) published else-where in this issue of the Bulletin].

* * * * *(E) [The text of the proposed amend-

ment to § 1.1471–4(c)(5)(iv)(E) is thesame as the text of § 1.1471–4T(c)(5)(iv)(E) published elsewhere inthis issue of the Bulletin].

* * * * *(d) * * *(1) [The text of the proposed amend-





ment to § 1.1471–4(d)(2)(ii)(A) is thesame as the text of § 1.1471–4T(d)(2)(ii)(A) published elsewhere inthis issue of the Bulletin].

(B) * * *(2) [The text of the proposed amend-

ment to § 1.1471–4(d)(2)(ii)(B)(2) is thesame as the text of § 1.1471–4T(d)(2)(ii)(B)(2) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–4(d)(2)(ii)(E) is thesame as the text of § 1.1471–4T(d)(2)(ii)(E) published elsewhere inthis issue of the Bulletin].

(F) [The text of proposed § 1.1471–4(d)(2)(ii)(F) is the same as the text of§ 1.1471–4T(d)(2)(ii)(F) published else-where in this issue of the Bulletin].


ment to § 1.1471–4(d)(2)(iii)(A) is thesame as the text of § 1.1471–4T(d)(2)(iii)(A) published elsewhere inthis issue of the Bulletin].

(B) [The text of the proposed amend-ment to § 1.1471–4(d)(2)(iii)(B) introduc-tory text is the same as the text of§ 1.1471–4T(d)(2)(iii)(B) published else-where in this issue of the Bulletin].

* * * * *(C) [The text of proposed § 1.1471–

4(d)(2)(iii)(C) is the same as the text of§ 1.1471–4T(d)(2)(iii)(C) published else-where in this issue of the Bulletin].

(3) * * *(ii) * * *(E) [The text of the proposed amend-

ment to § 1.1471–4(d)(3)(ii)(E) is thesame as the text of § 1.1471–4T(d)(3)(ii)(E) published elsewhere inthis issue of the Bulletin].

(iii) * * *(F) [The text of the proposed amend-

ment to § 1.1471–4(d)(3)(iii)(F) is thesame as the text of § 1.1471–4T(d)(3)(iii)(F) published elsewhere inthis issue of the Bulletin].

* * * * *(5) * * *(v) [The text of the proposed amend-

ment to § 1.1471–4(d)(5)(v) is the sameas the text of § 1.1471–4T(d)(5)(v) pub-lished elsewhere in this issue of the Bul-letin].

(vi) [The text of the proposed amend-ment to § 1.1471–4(d)(5)(vi) is the sameas the text of § 1.1471–4T(d)(5)(vi) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *(6) * * *(vi) [The text of proposed § 1.1471–

4(d)(6)(vi) is the same as the text of§ 1.1471–4T(d)(6)(vi) published else-where in this issue of the Bulletin].


ment to § 1.1471–4(d)(7) introductorytext is the same as the text of § 1.1471–4T(d)(7) introductory text published else-where in this issue of the Bulletin].

(i) [The text of the proposed amend-ment to § 1.1471–4(d)(7)(i) is the same asthe text of § 1.1471–4T(d)(7)(i) publishedelsewhere in this issue of the Bulletin].


ment to § 1.1471–4(d)(7)(ii)(A) is thesame as the text of § 1.1471–4T(d)(7)(ii)(A) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–4(d)(7)(iii) is the sameas the text of § 1.1471–4T(d)(7)(iii) pub-lished elsewhere in this issue of the Bul-letin].

(iv) * * *(A) [The text of the proposed amend-

ment to § 1.1471–4(d)(7)(iv)(A) is thesame as the text of § 1.1471–

4T(d)(7)(iv)(A) published elsewhere inthis issue of the Bulletin].

(B) [The text of the proposed amend-ment to § 1.1471–4(d)(7)(iv)(B) is thesame as the text of § 1.1471–4T(d)(7)(iv)(B) published elsewhere inthis issue of the Bulletin].

(8) [The text of the proposed amend-ment to § 1.1471–4(d)(8) is the same asthe text of § 1.1471–4T(d)(8) publishedelsewhere in this issue of the Bulletin].

(9) * * *Example 3. [The text of the proposed amendment

to Example 3 of § 1.1471–4(d)(9) is the same as thetext of Example 3 of § 1.1471–4T(d)(9) publishedelsewhere in this issue of the Bulletin].

* * * * *Example 5. [The text of the proposed amendment


* * * * *Example 7. [The text of the proposed amendment


(e) * * *(1) [The text of the proposed amend-

ment to § 1.1471–4(e)(1) is the same asthe text of § 1.1471–4T(e)(1) publishedelsewhere in this issue of the Bulletin].

(2) * * *(ii) [The text of the proposed amend-

ment to § 1.1471–4(e)(2)(ii) is the sameas the text of § 1.1471–4T(e)(2)(ii) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *(f) * * *(4) * * *(i) [The text of the proposed amend-

ment to § 1.1471–4(f)(4)(i) is the same asthe text of § 1.1471–4T(f)(4)(i) publishedelsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-ment to § 1.1471–4(f)(4)(ii) is the same asthe text of § 1.1471–4T(f)(4)(ii) pub-lished elsewhere in this issue of the Bul-letin].

(g) * * *(1) [The text of the proposed amend-

ment to § 1.1471–4(g)(1) introductorytext is the same as the text of § 1.1471–4T(g)(1) introductory text published else-where in this issue of the Bulletin].

* * * * *(ii) [The text of the proposed amend-

ment to § 1.1471–4(g)(1)(ii) is the sameas the text of § 1.1471–4T(g)(1)(ii) pub-


lished elsewhere in this issue of the Bul-letin].


ment to § 1.1471–4(g)(2) is the same asthe text of § 1.1471–4T(g)(2) publishedelsewhere in this issue of the Bulletin].


by:1. By removing paragraphs (a)(3)(ii)

(b)(3)(v)(B)(3), and (b)(3)(vi)(B)(3).2. By redesignating paragraphs

(a)(3)(iii) through (a)(3)(vi) as paragraphs(a)(3)(ii) through (a)(3)(v) and paragraph(j) as paragraph (l).

3. By adding paragraphs(f)(1)(i)(F)(3)(vii), (f)(1)(i)(F)(3)(viii),(f)(2)(v), (j), and (k).

4. By revising paragraphs (a)(3)(i),(a)(4)(i), (b)(1)(iii)(B)(2), (b)(3)(iv),(b)(3)(v)(A),(b)(3)(v)(B)(1) through (2),(b)(3)(vi), (c), (e)(1)(v)(A), (e)(3)(ii),(e)(4)(v) Example 7 through Example 8,(e)(5)(i)(A)(3), (e)(5)(i)(B) introductorytext, (e)(5)(i)(B)(1), (e)(5)(i)(C),(e)(5)(i)(D)(1)(iv) through (v), (e)(5)(iv)(B),(f)(1)(i)(A)(6), (f)(1)(i)(B)(1), (f)(1)(i)(B)(3),(f)(1)(i)(C)(2), (f)(1)(i)(D)(4) through (6),(f)(1)(i)(D)(7) introductory text, (f)(1)(i)(E),(f)(1)(i)(F)(1)(ii), (f)(1)(i)(F)(3)(v) through(vi), (f)(1)(i)(F)(5), (f)(1)(ii)(B), (f)(2) intro-ductory text, (f)(2)(i)(B), (f)(2)(iii) through(iv), (f)(4)(i), (g)(3)(i)(D), and (i).


§ 1.1471–5 Definitions applicable tosection 1471.

(a) * * *(3) * * *(i) [The text of the proposed amend-




* * * * *(b) * * *(1) * * *(iii) * * *(B) * * *

(2) [The text of the proposed amend-ment to § 1.1471–5(b)(1)(iii)(B)(2) is thesame as the text of § 1.1471–5T(b)(1)(iii)(B)(2) published elsewhere inthis issue of the Bulletin].

* * * * *(3) * * *(iv) [The text of the proposed amend-

ment to § 1.1471–5(b)(3)(iv) is the sameas the text of § 1.1471–5T(b)(3)(iv) pub-lished elsewhere in this issue of the Bul-letin].

(v) * * *(A) [The text of the proposed amend-

ment to § 1.1471–5(b)(3)(v)(A) is thesame as the text of § 1.1471–5T(b)(3)(v)(A) published elsewhere inthis issue of the Bulletin].

(B) * * *(1) [The text of the proposed amend-

ment to § 1.1471–5(b)(3)(v)(B)(1) is thesame as the text of § 1.1471–5T(b)(3)(v)(B)(1) published elsewhere inthis issue of the Bulletin].

(2) [The text of the proposed amend-ment to § 1.1471–5(b)(3)(v)(B)(2) is thesame as the text of § 1.1471–5T(b)(3)(v)(B)(2) published elsewhere inthis issue of the Bulletin].

(vi) [The text of the proposed amend-ment to § 1.1471–5(b)(3)(vi) is the sameas the text of § 1.1471–5T(b)(3)(vi) through (b)(3)(vi)(B)(2) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *(c) [The text of the proposed amend-

ment to § 1.1471–5(c) is the same as thetext of § 1.1471–5T(c) published else-where in this issue of the Bulletin].

* * * * *(e) * * *(1) * * *(v) * * *(A) [The text of the proposed amend-

ment to § 1.1471–5(e)(1)(v)(A) is thesame as the text of § 1.1471–5T(e)(1)(v)(A) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–5(e)(3)(ii) is the same asthe text of § 1.1471–5T(e)(3)(ii) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *

(4) * * *(v) * * *Example 7. [The text of the proposed amendment

to Example 7of § 1.1471–5(e)(4)(v) is the same asthe text of Example 7 of § 1.1471–5T(e)(4)(v) pub-lished elsewhere in this issue of the Bulletin].

Example 8. [The text of the proposed amendmentto Example 8 of § 1.1471–5(e)(4)(v) is the same asthe text of Example 8 of § 1.1471–5T(e)(4)(v) pub-lished elsewhere in this issue of the Bulletin].

* * * * *(5) * * *(i) * * *(A) * * *(3) [The text of the proposed amend-

ment to § 1.1471–5(e)(5)(i)(A)(3) is thesame as the text of § 1.1471–5T(e)(5)(i)(A)(3) published elsewhere inthis issue of the Bulletin].

(B) [The text of the proposed amend-ment to § 1.1471–5(e)(5)(i)(B) introduc-tory text is the same as the text of§ 1.1471–5T(e)(5)(i)(B) published else-where in this issue of the Bulletin].

(1) [The text of the proposed amend-ment to § 1.1471–5(e)(5)(i)(B)(1) is thesame as the text of § 1.1471–5T(e)(5)(i)(B)(1) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–5(e)(5)(i)(C) is the sameas the text of § 1.1471–5T(e)(5)(i)(C) published elsewhere in thisissue of the Bulletin].

(D) * * *(1) * * *(iv) [The text of the proposed amend-

ment to § 1.1471–5(e)(5)(i)(D)(1)(iv) isthe same as the text of § 1.1471–5T(e)(5)(i)(D)(1)(iv) published elsewherein this issue of the Bulletin].

(v) [The text of the proposed amend-ment to § 1.1471–5(e)(5)(i)(D)(1)(v) isthe same as the text of § 1.1471–5T(e)(5)(i)(D)(1)(v) published elsewherein this issue of the Bulletin].

* * * * *(iv) * * *(B) [The text of the proposed amend-

ment to § 1.1471–5(e)(5)(iv)(B) is thesame as the text of § 1.1471–5T(e)(5)(iv)(B) published elsewhere inthis issue of the Bulletin].

* * * * *(f) * * *(1) * * *(i) * * *


(A) * * *(6) [The text of the proposed amend-

ment to § 1.1471–5(f)(1)(i)(A)(6) is thesame as the text of § 1.1471–5T(f)(1)(i)(A)(6) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–5(f)(1)(i)(B)(1) is thesame as the text of § 1.1471–5T(f)(1)(i)(B)(1) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–5(f)(1)(i)(B)(3) is thesame as the text of § 1.1471–5T(f)(1)(i)(B)(3) published elsewhere inthis issue of the Bulletin].

(C) * * *(2) [The text of the proposed amend-

ment to § 1.1471–5(f)(1)(i)(C)(2) is thesame as the text of § 1.1471–5T(f)(1)(i)(C)(2) published elsewhere inthis issue of the Bulletin].

* * * * *(D) * * *(4) [The text of the proposed amend-

ment to § 1.1471–5(f)(1)(i)(D)(4) is thesame as the text of § 1.1471–5T(f)(1)(i)(D)(4) published elsewhere inthis issue of the Bulletin].

(5) [The text of the proposed amend-ment to § 1.1471–5(f)(1)(i)(D)(5) is thesame as the text of § 1.1471–5T(f)(1)(i)(D)(5) published elsewhere inthis issue of the Bulletin].

(6) [The text of the proposed amend-ment to § 1.1471–5(f)(1)(i)(D)(6) is thesame as the text of § 1.1471–5T(f)(1)(i)(D)(6) published elsewhere inthis issue of the Bulletin].

(7) [The text of the proposed amend-ment to § 1.1471–5(f)(1)(i)(D)(7) intro-ductory text is the same as the text of§ 1.1471–5T(f)(1)(i)(D)(7) introductorytext published elsewhere in this issue ofthe Bulletin].


ment to § 1.1471–5(f)(1)(i)(E) is the sameas the text of § 1.1471–5T(f)(1)(i)(E) through (f)(1)(i)(E)(2) pub-lished elsewhere in this issue of the Bul-letin].

(F) * * *(1) * * *

(ii) [The text of the proposed amend-ment to § 1.1471–5(f)(1)(i)(F)(1)(ii) is thesame as the text of § 1.1471–5T(f)(1)(i)(E)(1)(ii) published elsewherein this issue of the Bulletin].

* * * * *(3) * * *(v) [The text of the proposed amend-

ment to § 1.1471–5(f)(1)(i)(F)(3)(v) is thesame as the text of § 1.1471–5T(f)(1)(i)(F)(3)(v) published elsewherein this issue of the Bulletin].

(vi) [The text of proposed § 1.1471–5(f)(1)(i)(F)(3)(vi) is the same as the textof § 1.1471–5T(f)(1)(i)(F)(3)(vi) pub-lished elsewhere in this issue of the Bul-letin].

(vii) [The text of proposed § 1.1471–5(f)(1)(i)(F)(3)(vii) is the same as the textof § 1.1471–5T(f)(1)(i)(F)(3)(vii) pub-lished elsewhere in this issue of the Bul-letin].

(viii) [The text of proposed § 1.1471–5(f)(1)(i)(F)(3)(viii) is the same as the textof § 1.1471–5T(f)(1)(i)(F)(3)(viii) pub-lished elsewhere in this issue of the Bul-letin].


ment to § 1.1471–5(f)(1)(i)(F)(5) is thesame as the text of § 1.1471–5T(f)(1)(i)(F)(5) published elsewhere inthis issue of the Bulletin].

(ii) * * *(B) [The text of the proposed amend-

ment to § 1.1471–5(f)(1)(ii)(B) is thesame as the text of § 1.1471–5T(f)(1)(ii)(B) published elsewhere in thisissue of the Bulletin].


ment to § 1.1471–5(f)(2) introductory textis the same as the text of § 1.1471–5T(f)(2) published elsewhere in this issueof the Bulletin].

(i) * * *(B) [The text of the proposed amend-

ment to § 1.1471–5(f)(2)(i)(B) is the sameas the text of § 1.1471–5T(f)(2)(i)(B) pub-lished elsewhere in this issue of the Bul-letin].


ment to § 1.1471–5(f)(2)(iii) is the sameas the text of § 1.1471–5T(f)(2)(iii) through (f)(2)(iii)(E) pub-


(iv) [The text of the proposed amend-ment to § 1.1471–5(f)(2)(iv) is the sameas the text of § 1.1471–5T(f)(2)(iv) through (f)(2)(iv)(F) pub-lished elsewhere in this issue of the Bul-letin].

(v) [The text of proposed § 1.1471–5(f)(2)(v) is the same as the text of§ 1.1471–5T(f)(2)(v) published elsewherein this issue of the Bulletin].


ment to § 1.1471–5(f)(4)(i) is the same asthe text of § 1.1471–5T(f)(4)(i) publishedelsewhere in this issue of the Bulletin].

* * * * *(g) * * *(3) * * *(i) * * *(D) [The text of the proposed amend-

ment to § 1.1471–5(g)(3)(i)(D) is thesame as the text of § 1.1471–5T(g)(3)(i)(D) published elsewhere in thisissue of the Bulletin].

* * * * *(i) [The text of proposed § 1.1471–

5(i) is the same as the text of § 1.1471–5T(i) through (i)(10) published elsewherein this issue of the Bulletin].

(j) [The text of proposed § 1.1471–5(j) is the same as the text of § 1.1471–5T(j) published elsewhere in this issue ofthe Bulletin].

(k) [The text of proposed § 1.1471–5(k) is the same as the text of § 1.1471–5T(k) published elsewhere in this issue ofthe Bulletin].

* * * * *Par. 7. Section 1.1471–6 is amending

by revising paragraphs (d)(1), (d)(4),(f)(2)(iii)(B) through (C), (f)(3)(ii)through (iii), (f)(5) through (6), (g), and(h)(2) to read as follows:

§ 1.1471–6 Payments beneficially ownedby exempt beneficial owners.

* * * * *(d) * * *(1) [The text of the proposed amend-


* * * * *



* * * * *(f) * * *(2) * * *(iii) * * *(B) [The text of the proposed amend-

ment to § 1.1471–6(f)(2)(iii)(B) is thesame as the text of § 1.1471–6T(f)(2)(iii)(B) published elsewhere inthis issue of the Bulletin].

(C) [The text of the proposed amend-ment to § 1.1471–6(f)(2)(iii)(C) is thesame as the text of § 1.1471–6T(f)(2)(iii)(C) published elsewhere inthis issue of the Bulletin].


ment to § 1.1471–6(f)(3)(ii) is the same asthe text of § 1.1471–6T(f)(3)(ii) pub-lished elsewhere in this issue of the Bul-letin].

(iii) [The text of the proposed amend-ment to § 1.1471–6(f)(3)(iii) is the sameas the text of § 1.1471–6T(f)(3)(iii) pub-lished elsewhere in this issue of the Bul-letin].


ment to § 1.1471–6(f)(5) is the same asthe text of § 1.1471–6T(f)(5) publishedelsewhere in this issue of the Bulletin].

(6) [The text of the proposed amend-ment to § 1.1471–6(f)(6) is the same asthe text of § 1.1471–6T(f)(6) publishedelsewhere in this issue of the Bulletin].

* * * * *(g) [The text of the proposed amend-

ment to § 1.1471–6(g) is the same as thetext of § 1.1471–6T(g) published else-where in this issue of the Bulletin].

(h) * * *(2) [The text of the proposed amend-

ment to § 1.1471–6(h)(2) is the same asthe text of § 1.1471–6T(h)(2) introduc-tory text through (h)(2)(iii) publishedelsewhere in this issue of the Bulletin].


by:1. By redesignating paragraph (f) as

paragraph (h).

2. By adding paragraphs (c)(1)(vi)through (vii), (c)(3) through (5), (f), and(g).

3. By revising paragraphs (b)(1) intro-ductory text, (b)(2), (c)(1) introductorytext, (c)(1)(i) introductory text, (c)(1)(ii)through (iii), (c)(1)(iv) introductory text,(c)(1)(iv)(C), (c)(1)(v), (c)(2), and (d)(1)through (2).


§ 1.1472–1 Withholding on NFFEs.





(c) * * *(1) [The text of the proposed amend-

ment to § 1.1472–1(c)(1) is the same asthe text of § 1.1472–1T(c)(1) publishedelsewhere in this issue of the Bulletin].

(i) [The text of the proposed amend-ment to § 1.1472–1(c)(1)(i) introductorytext is the same as the text of § 1.1472–1T(c)(1)(i) published elsewhere in this is-sue of the Bulletin].

(ii) [The text of the proposed amend-ment to § 1.1472–1(c)(1)(ii) is the same asthe text of § 1.1472–1T(c)(1)(ii) pub-lished elsewhere in this issue of the Bul-letin].

(iii) [The text of the proposed amend-ment to § 1.1472–1(c)(1)(iii) is the sameas the text of § 1.1472–1T(c)(1)(iii) pub-lished elsewhere in this issue of the Bul-letin].

(iv) [The text of the proposed amend-ment to § 1.1472–1(c)(1)(iv) introductorytext is the same as the text of § 1.1472–1T(c)(1)(iv) published elsewhere in thisissue of the Bulletin].


ment to § 1.1472–1(c)(1)(iv)(C) is thesame as the text of § 1.1472–1T(c)(1)(iv)(C) published elsewhere inthis issue of the Bulletin].

(v) [The text of the proposed amend-ment to § 1.1472–1(c)(1)(v) is the same asthe text of § 1.1472–1T(c)(1)(v) publishedelsewhere in this issue of the Bulletin].

(vi) [The text of proposed § 1.1472–1(c)(1)(vi) is the same as the text of§ 1.1472–1T(c)(1)(vi) published else-where in this issue of the Bulletin].

(vii) [The text of proposed § 1.1472–1(c)(1)(vii) is the same as the text of§ 1.1472–1T(c)(1)(vii) published else-where in this issue of the Bulletin].

(2) [The text of the proposed amend-ment to § 1.1472–1(c)(2) is the same asthe text of § 1.1472–1T(c)(2) publishedelsewhere in this issue of the Bulletin].

(3) [The text of proposed § 1.1472–1(c)(3) is the same as the text of § 1.1472–1T(c)(3) published elsewhere in this issueof the Bulletin].






* * * * *(f) [The text of proposed § 1.1472–

1(f) is the same as the text of § 1.1472–1T(f) published elsewhere in this issue ofthe Bulletin].

(g) [The text of proposed § 1.1472–1(g) is the same as the text of § 1.1472–1T(g) published elsewhere in this issue ofthe Bulletin].


by:1. Adding new paragraph (a)(4)(vii).2. Revising paragraphs (a)(2)(vi),

(a)(3)(iii)(B)(4), (a)(4)(vi), (a)(5)(i)through (vi), and (b)(2)(v).

The addition and revisions read as fol-lows:


§ 1.1473–1 Section 1473 definitions.

(a) * * *(2) * * *(vi) [The text of the proposed amend-

ment to § 1.1473–1(a)(2)(vi) is the sameas the text of § 1.1473–1T(a)(2)(vi) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *(3) * * *(iii) * * *(B) * * *(4) [The text of the proposed amend-

ment to § 1.1473–1(a)(3)(iii)(B)(4) is thesame as the text of § 1.1473–1T(a)(3)(iii)(B)(4) published elsewhere inthis issue of the Bulletin].

* * * * *(4) * * *(vi) [The text of the proposed amend-

ment to § 1.1473–1(a)(4)(vi) is the sameas the text of § 1.1473–1T(a)(4)(vi) pub-lished elsewhere in this issue of the Bul-letin].

(vii) [The text of proposed § 1.1473–1(a)(4)(vii) is the same as the text of§ 1.1473–1T(a)(4)(vii) published else-where in this issue of the Bulletin].



(ii) [The text of the proposed amend-ment to § 1.1473–1(a)(5)(ii) is the same asthe text of § 1.1473–1T(a)(5)(ii) pub-lished elsewhere in this issue of the Bul-letin].

(iii) [The text of the proposed amend-ment to § 1.1473–1(a)(5)(iii) is the sameas the text of § 1.1473–1T(a)(5)(iii) pub-lished elsewhere in this issue of the Bul-letin].

(iv) [The text of the proposed amend-ment to § 1.1473–1(a)(5)(iv) is the sameas the text of § 1.1473–1T(a)(5)(iv) pub-lished elsewhere in this issue of the Bul-letin].

(v) [The text of the proposed amend-ment to § 1.1473–1(a)(5)(v) is the same asthe text of § 1.1473–1T(a)(5)(v) publishedelsewhere in this issue of the Bulletin].

(vi) [The text of the proposed amend-ment to § 1.1473–1(a)(5)(vi) is the sameas the text of § 1.1473–1T(a)(5)(vi) pub-


* * * * *(b) * * *(2) * * *(v) [The text of the proposed amend-

ment to § 1.1473–1(b)(2)(v) is the same asthe text of § 1.1473–1T(b)(2)(v) pub-lished elsewhere in this issue of the Bul-letin].

* * * * *Par. 10. Section 1.1474–1 is amended:1. By removing paragraphs

(d)(1)(ii)(A)(1)(ix), (d)(3)(iii), and(i)(1)(iv) through (v).

2. By redesignating paragraphs(d)(1)(ii)(A)(1)(x) through (xii) as(d)(1)(ii)(A)(1)(ix) through (xi), and para-graphs (d)(3)(iv) through (x) as (d)(3)(iii)through (ix).

3. By revising paragraphs (d)(1)(i),(d)(1)(ii)(A)(1)(viii) through (ix),(d)(1)(ii)(B)(1)(i), (d)(1)(ii)(B)(1)(vi)through (vii), (d)(1)(ii)(B)(1)(ix),(d)(2)(i), (d)(4)(i)(B), (d)(4)(i)(E),(d)(4)(ii)(B), (d)(4)(iii), (i)(1) introduc-tory text, (i)(1)(i) through (iii), (i)(2) in-troductory text, and (i)(2)(iii).


§ 1.1474–1 Liability for withheld taxand withholding agent reporting.

* * * * *(d) * * *(1) * * *(i) [The text of the proposed amend-


(ii) * * *(A) * * *(1) * * *(viii) [The text of the proposed amend-

ment to § 1.1474–1(d)(1)(ii)(A)(1)(viii) isthe same as the text of § 1.1474–1T(d)(1)(ii)(A)(1)(viii) published else-where in this issue of the Bulletin].

(ix) [The text of the proposed amend-ment to § 1.1474–1(d)(1)(ii)(A)(1)(ix) isthe same as the text of § 1.1474–1T(d)(1)(ii)(A)(1)(ix) published else-where in this issue of the Bulletin].

* * * * *(B) * * *(1) * * *

(i) [The text of the proposed amend-ment to § 1.1474–1(d)(1)(ii)(B)(1)(i) isthe same as the text of § 1.1474–1T(d)(1)(ii)(B)(1)(i) published elsewherein this issue of the Bulletin].

* * * * *(vi) [The text of the proposed amend-

ment to § 1.1474–1(d)(1)(ii)(B)(1)(vi) isthe same as the text of § 1.1474–1T(d)(1)(ii)(B)(1)(vi) published elsewherein this issue of the Bulletin].

(vii) [The text of the proposed amend-ment to § 1.1474–1(d)(1)(ii)(B)(1)(vii) isthe same as the text of § 1.1474–1T(d)(1)(ii)(B)(1)(vii) published else-where in this issue of the Bulletin].

* * * * *(ix) [The text of the proposed amend-

ment to § 1.1474–1(d)(1)(ii)(B)(1)(ix) isthe same as the text of § 1.1474–1T(d)(1)(ii)(B)(1)(ix) published elsewherein this issue of the Bulletin].


ment to § 1.1474–1(d)(2)(i) is the same asthe text of § 1.1474–1T(d)(2)(i) through(d)(2)(i)(C) published elsewhere in thisissue of the Bulletin].

* * * * *(4) * * *(i) * * *(B) [The text of the proposed amend-

ment to § 1.1474–1(d)(4)(i)(B) is thesame as the text of § 1.1474–1T(d)(4)(i)(B) published elsewhere in thisissue of the Bulletin].


ment to § 1.1474–1(d)(4)(i)(E) is thesame as the text of § 1.1474–1T(d)(4)(i)(E) published elsewhere in thisissue of the Bulletin].

(ii) * * *(B) [The text of the proposed amend-

ment to § 1.1474–1(d)(4)(ii)(B) is thesame as the text of § 1.1474–1T(d)(4)(ii)(B) published elsewhere inthis issue of the Bulletin].

(C) [The text of the proposed amend-ment to § 1.1474–1(d)(4)(ii)(C) is thesame as the text of § 1.1474–1T(d)(4)(ii)(C) published elsewhere inthis issue of the Bulletin].

(iii) * * *[The text of the proposed amendment

to § 1.1474–1(d)(4)(iii) is the same as the


text of § 1.1474–1T(d)(4)(iii) through(d)(4)(iii)(C) published elsewhere in thisissue of the Bulletin].

* * * * *(i) * * *(1) [The text of the proposed amend-

ment to § 1.1474–1(i)(1) introductory textis the same as the text of § 1.1474–1T(i)(1) published elsewhere in this issueof the Bulletin].

(i) [The text of the proposed amend-ment to § 1.1474–1(i)(1)(i) is the same asthe text of § 1.1474–1T(i)(1)(i) publishedelsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-ment to § 1.1474–1(i)(1)(ii) is the same asthe text of § 1.1474–1T(i)(1)(ii) publishedelsewhere in this issue of the Bulletin].

(iii) [The text of the proposed amend-ment to § 1.1474–1(i)(1)(iii) is the sameas the text of § 1.1474–1T(i)(1)(iii) pub-lished elsewhere in this issue of the Bul-letin].

(2) [The text of the proposed amend-ment to § 1.1474–1(i)(2) introductory textis the same as the text of § 1.1474–1T(i)(2) published elsewhere in this issueof the Bulletin].


ment to § 1.1474–1(i)(2)(iii) is the sameas the text of § 1.1474–1T(i)(2)(iii) pub-lished elsewhere in this issue of the Bul-letin].


by:1. Revising paragraph (b)(1).2. Redesignating paragraph (f) as para-

graph (g).3. Adding new paragraph (f).The revision and addition read as fol-

lows:

1.1474–6 Coordination of chapter 4with other withholding provisions.



* * * * *(f) [The text of proposed § 1.1474–

6(f) is the same as the text of § 1.1474–

6T(f) published elsewhere in this issue ofthe Bulletin].

* * * * *

John DalrympleDeputy Commissioner for Services and

Enforcement


Notice of proposedrulemaking by cross-reference to temporaryregulations and notice ofpublic hearing

Withholding of Tax on CertainU.S. Source Income Paid toForeign Persons and Revisionof Information Reporting andBackup WithholdingRegulations

REG–134361–12


ACTION: Notice of proposed rulemakingby cross-reference to temporary regula-tions and notice of public hearing.

SUMMARY: In this issue of the Bulletin,the IRS is issuing temporary regulations(TD 9658) that provide revise certain pro-visions of the final regulations regardingwithholding of tax on certain U.S. sourceincome paid to foreign persons, informa-tion reporting and backup withholdingwith respect to payments made to certainU.S. persons, portfolio interest treatmentfor nonresident alien individuals and for-eign corporations, and requirements forcertain claims for refund or credit of in-come tax made by foreign persons. Thetext of the temporary regulations pub-lished of the Bulletin also serves as thetext of these proposed regulations. Thisdocument also provides notice of publichearing on these proposed regulations.

DATES: Written and/or electronic com-ments must be received by May 5, 2014.Outlines of topics to be discussed at the

public hearing scheduled for June 24,2014 at 10 a.m. must be received by May5, 2014.

ADDRESS: Send submissions to: CC:PA:LPD:PR (REG–134361–12), room 5203,Internal Revenue Service, PO Box 7604,Ben Franklin Station, Washington, DC20044. Submissions may be hand-delivered Monday through Friday be-tween the hours of 8:00 a.m. and 4:00p.m. to CC:PA:LPD:PR (REG–134361–12), Courier’s Desk, Internal RevenueService, 1111 Constitution Avenue, NW,Washington, DC 20224, or sent electron-ically, via the Federal eRulemaking Portalat www.regulations.gov (IRS REG–134361–12). The public hearing will beheld in the IRS Auditorium, Internal Rev-enue Building, 1111 Constitution Avenue,NW, Washington, DC.

FOR FURTHER INFORMATIONCONTACT: John Sweeney, (202) 622-3840 (not a toll-free number).


Background

Temporary regulations in this issue ofthe Bulletin amend the Income Tax Reg-ulations (26 CFR part 1) relating to sec-tions 871, 1441, 1461, 6041, 6042, 6045,and 6049 of the Internal Revenue Code(Code), the Employment Tax Regulations(26 CFR part 31) under section 3406 ofthe Code, and the Procedure and Admin-istration Regulations (26 CFR part 301)under section 6402 of the Code. The tem-porary regulations set forth rules relatingto the coordination of withholding andreporting requirements under chapter 4 ofthe Code with withholding and reportingrequirements under chapter 3, reportingrequirements under chapter 61, andbackup withholding requirements undersection 3406. The temporary regulationsalso provide guidance regarding claimsfor credit or refund of chapter 4 withhold-ing under § 301.6402–3(e). The tempo-rary regulations also amend § 1.871–14 toreflect certain changes to the proceduresfor interest to qualify as portfolio interest.The text of the temporary regulations alsoserves as the text of these proposed regu-lations. The preamble to the temporaryregulations explains the temporary regu-lations and these proposed regulations.


Special Analyses

It has been determined that this noticeof proposed rulemaking is not a signifi-cant regulatory action as defined in Exec-utive Order 12866, as supplemented byExecutive Order 13653. Therefore, a reg-ulatory assessment is not required. It hasalso been determined that section 553(b)of the Administrative Procedure Act (5U.S.C. chapter 5) does not apply to theseregulations.

It is hereby certified that the collectionof information in this notice of proposedrulemaking will not have a significanteconomic impact on a substantial numberof small entities within the meaning ofsection 601(6) of the Regulatory Flexibil-ity Act (5 U.S.C. chapter 6.

The domestic small business entitiesthat are subject to the collections of infor-mation in this notice of proposed rulemak-ing are those domestic business entitiesthat are payors of certain U.S. source in-come to foreign persons. These domesticsmall business entities are subject to com-prehensive rules under chapter 3 to iden-tify the proper treatment of payee for pur-poses of that chapter’s informationreporting and tax withholding purposes.The domestic small business entities sub-ject to the collections of information inthis notice of proposed rulemaking arealso subject to comprehensive informationreporting and tax withholding rules underchapters 4 and 61 with respect to pay-ments of certain U.S. source income sub-ject to information reporting and tax re-porting under chapter 3. These payors arealso subject to information and reportingrules under section 3406.

Payors of payments that are subject tothe information reporting and withholdingregimes under chapters 3, 4, and 61, andsection 3406 play an important role inU.S. tax compliance by providing infor-mation about payments made to, and in-come earned by, U.S. and foreign taxpay-ers. This notice of proposed rulemakingcoordinates the information collection andreporting requirements of chapters 3 and61 and section 3406 applicable to domes-tic small business entities that are payorsof certain U.S. source income with theinformation collection and reporting re-quirements of chapter 4 that are applicableto those same domestic small business

entities. This notice of proposed rulemak-ing establishes a more integrated set ofinformation reporting and tax withholdingrules applicable to a domestic small busi-ness entity making a payment of U.S.source income that is otherwise the case.

The integrated set of information re-porting and withholding rules set out inthis notice of proposed rulemaking thatwill apply to domestic small business en-tities paying U.S. source income to for-eign persons reduce burdens otherwiseplaced on these entities, including remov-ing duplicative reporting obligations thatwould otherwise apply. In addition, thisnotice of proposed rulemaking conformsthe due diligence, withholding, and re-porting rules under chapters 3, 4, and 61,and section 3406 to the extent appropriatein light of the separate objectives of eachchapter or section, thereby reducing bur-dens that would otherwise apply to do-mestic small business entities makingpayments of U.S. source income to for-eign persons.

Although the Treasury Department andthe IRS anticipate that a substantial num-ber of domestic small entities will be af-fected by the collection of information inthis notice of proposed rulemaking, theTreasury Department and the IRS believethat the economic impact to these entitiesresulting from the information collectionrequirements will not be significant.Therefore, a Regulatory Flexibility Anal-ysis under the Regulatory Flexibility Actis not required. Pursuant to section7805(f) of the Code, this regulation hasbeen submitted to the Chief Counsel forAdvocacy of the Small Business Admin-istration for comment on its impact onsmall businesses. The Internal RevenueService invites the public to comment onthis certification.

Comments and Public Hearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any written comments (asigned original and eight (8) copies) orelectronic comments that are submittedtimely to the IRS. The IRS and the Trea-sury Department request comments on allaspects of the proposed regulations. Allcomments will be available for public in-spection and copying.

A public hearing has been scheduledfor June 24, 2014, beginning at 10 a.m. inthe Auditorium, Internal Revenue Build-ing, 1111 Constitution Avenue, NW,Washington, DC. Due to building securityprocedures, visitors must enter at the Con-stitution Avenue entrance. In addition, allvisitors must present photo identificationto enter the building. Because of accessrestrictions, visitors will not be admittedbeyond the immediate entrance area morethan 30 minutes before the hearing starts.For information about having your nameplaced on the building access list to attendthe hearing, see the “FOR FURTHER IN-FORMATION CONTACT” section ofthis preamble.

The rules of 26 CFR 601.601(a)(3) ap-ply to the hearing. Persons who wish topresent oral comments at the hearing mustsubmit electronic or written comments, anoutline of the topics to be discussed, andthe time to be devoted to each topic. Sub-mit a signed original and eight (8) copiesor an electronic copy of the topics outlineby May 5, 2014. A period of 10 minuteswill be allotted to each person for makingcomments. An agenda showing the sched-uling of the speakers will be preparedafter the deadline for receiving outlineshas passed. Copies of the agenda will beavailable free of charge at the hearing.


The principal authors of these regula-tions are John Sweeney, Joshua Rabon,Subin Seth, and Nancy Lee of the Officeof Associate Chief Counsel (Interna-tional). However, other personnel fromthe IRS and the Treasury Department par-ticipated in the development of these reg-ulations.

* * * * ** * * * ** * * * *

Proposed Amendments to theRegulations

Accordingly, 26 CFR parts 1, 31, and301 are proposed to be amended as fol-lows:



Authority: 26 U.S.C. 7805 * * *


Par. 2. Section 1.871–14 is amended byrevising paragraphs (b), (c)(2) introduc-tory text, (c)(2)(i) through (iv), (c)(3)(i),(c)(4), (e)(1), and (i) to read as follows:

§ 1.871–14 Rules relating to repeal oftax on interest of nonresident alienindividuals and foreign corporationsreceived from certain portfolio debtinvestments.

* * * * *(b) [The text of the proposed amend-

ment to § 1.871–14(b) is the same as thetext of § 1.871–14T(b) published else-where in this issue of the Bulletin.]

(c) * * *(2) [The text of the proposed amend-

ment to § 1.871–14(c)(2) is the same asthe text of § 1.871–14T(c)(2) publishedelsewhere in this issue of the Bulletin.]

(i) through (iv) [The text of the pro-posed amendment to § 1.871–14(c)(2)(i) through (iv) is the same as thetext of § 1.871–14T(c)(2)(i) through (iv)published elsewhere in this issue of theBulletin.]


ment to § 1.871–14(c)(3)(i) is the same asthe text of § 1.871–14T(c)(3)(i) publishedelsewhere in this issue of the Bulletin.]



* * * * *(e) * * *(1) [The text of the proposed amend-

ment to § 1.871–14(e)(1) is the same asthe text of § 1.871–14T(e)(1) publishedelsewhere in this issue of the Bulletin.]

* * * * *(i) [The text of the proposed amend-

ment to § 1.871–14(i) is the same as thetext of § 1.871–14T(i) published else-where in this issue of the Bulletin.]


1. Revising paragraphs (a), (b)(1),(b)(2)(i), (b)(2)(iii)(A), (b)(2)(iv)(A), and(b)(2)(iv)(B)(2) and (3).

2. Adding paragraph (b)(2)(iv)(B)(4).3. Revising paragraphs (b)(2)(iv)(C)

and (E), (b)(2)(vi), (b)(2)(vii)(B)(1) and(2), (b)(2)(vii)(C)(1) and (2),

(b)(2)(vii)(D)(1) and (2), (b)(2)(vii)(E)(1)and (2), (b)(2)(vii)(F), (b)(3)(i),(b)(3)(ii)(A) through (C), (b)(3)(iii) intro-ductory text, (b)(3)(iii)(A), (b)(3)(iii)(D),(b)(3)(iv) introductory text, (B)(3)(iv)(A),(b)(3)(v)(B), (b)(3)(vi), (b)(3)(vii),(b)(3)(ix)(A), (b)(3)(x), (b)(4) introduc-tory text, and (b)(4)(i).

4. Adding paragraph (b)(5)(ix).5. Revising paragraphs (b)(6), (b)(7)(i)

introductory text, (b)(7)(i)(A) through(C), (b)(7)(ii), (b)(7)(iv), (b)(7)(v), (c) in-troductory text, (c)(2), (c)(5), (c)(10),(c)(12), (c)(16), (c)(17), (c)(25), and(c)(28) through (30).

6. Adding paragraphs (c)(31 through(56).

7. Revising paragraphs (d)(4),(e)(1)(ii)(A)(2) and (3), (e)(2)(ii),(e)(3)(ii) introductory text, (e)(3)(ii)(A),and (e)(3)(ii)(C) and (D).

8. Adding paragraph (e)(3)(ii)(E).9. Revising paragraphs (e)(3)(iii) intro-

ductory text, (e)(3)(iii)(A), and(e)(3)(iii)(C) and (D).

10. Adding paragraph (e)(3)(iii)(E).11. Revising paragraphs (e)(3)(iv)(A)

through (C), (e)(3)(iv)(D)(1) through (6),(e)(3)(iv)(E), (e)(3)(v), (e)(4) introductorytext, (e)(4)(i), (e)(4)(ii)(A), (e)(4)(ii)(B)(1)through (6), and (e)(4)(ii)(B)(8).

12. Adding paragraphs (e)(4)(ii)(B)(9)through (12).

13 Revising paragraphs (e)(4)(ii)(C),(e)(4)(ii)(D), (e)(4)(iii), (e)(4)(iv)(A),(e)(4)(iv)(C), (e)(4)(v), (e)(4)(vi),(e)(4)(vii) introductory text,(e)(4)(vii)(A), (e)(4)(vii)(F), and(e)(4)(vii)(H).

14. Adding paragraph (e)(4)(vii)(I).15. Revising paragraph (e)(4)(viii)(B).16. Adding paragraph (e)(4)(viii)(C).17 Revising paragraphs (e)(4)(ix) and

(e)(5).18. Adding paragraph (f)(3).The revisions and additions read as fol-

lows:

§ 1.1441–1 Requirement for thededuction and withholding of tax onpayments to foreign persons.

(a) [The text of the proposed amend-ment to § 1.1441–1(a) is the same as thetext of § 1.1441–1T(a) published else-where in this issue of the Bulletin.]

(b) * * *

(1) [The text of the proposed amend-ment to § 1.1441–1(b)(1) is the same asthe text of § 1.1441–1T(b)(1) publishedelsewhere in this issue of the Bulletin.]


ment to § 1.1441–1(b)(2)(i) is the same asthe text of § 1.1441–1T(b)(2)(i) publishedelsewhere in this issue of the Bulletin.]

* * * * *(iii) * * *(A) [The text of the proposed amend-

ment to § 1.1441–1(b)(2)(iii)(A) is thesame as the text of § 1.1441–1T(b)(2)(iii)(A) published elsewhere inthis issue of the Bulletin.]

* * * * *(iv) * * *(A) [The text of the proposed amend-

ment to § 1.1441–1(b)(2)(iv)(A) is thesame as the text of § 1.1441–1T(b)(2)(iv)(A) published elsewhere inthis issue of the Bulletin.]

(B) * * *(2) through (4) [The text of the pro-

posed amendment to § 1.1441–1(b)(2)(iv)(B)(2)through (4) is the sameas the text of § 1.1441–1T(b)(2)(iv)(B)(2) through (4) publishedelsewhere in this issue of the Bulletin.]

(C) [The text of the proposed amend-ment to § 1.1441–1(b)(2)(iv)(C) is thesame as the text of § 1.1441–1T(b)(2)(iv)(C) published elsewhere inthis issue of the Bulletin.]


ment to § 1.1441–1(b)(2)(iv)(E) is thesame as the text of § 1.1441–1T(b)(2)(iv)(E) published elsewhere inthis issue of the Bulletin.]


ment to § 1.1441–1(b)(2)(vi) is the sameas the text of § 1.1441–1T(b)(2)(vi) pub-lished elsewhere in this issue of the Bul-letin.]

(vii) * * *(B) * * *(1) and (2) [The text of the proposed

amendment to § 1.1441–1(b)(2)(vii)(B)(2) is the same as the textof § 1.1441–1T(b)(2)(vii)(B)(2) publishedelsewhere in this issue of the Bulletin.]

(C) * * *(1) and (2) [The text of the proposed

amendment to § 1.1441–1(b)(2)(vii)(C)(1)


and (2) is the same as the text of § 1.1441–1T(b)(2)(vii)(C)(1) and (2) published else-where in this issue of the Bulletin.]

(D) * * *(1) and (2) [The text of the proposed

amendment to § 1.1441–1(b)(2)(vii)(D)(1)and (2) is the same as the text of § 1.1441–1T(b)(2)(vii)(D)(1) and (2) published else-where in this issue of the Bulletin.]

(E) * * *(1) and (2) [The text of the proposed

amendment to § 1.1441–1(b)(2)(vii)(E)(1)and (2) is the same as the text of § 1.1441–1T(b)(2)(vii)(E)(1) and (2) published else-where in this issue of the Bulletin.]

(F) [The text of the proposed amend-ment to § 1.1441–1(b)(2)(vii)(F) is thesame as the text of § 1.1441–1T(b)(2)(vii(F) published elsewhere inthis issue of the Bulletin.]



(ii) * * *(A) through (C) [The text of the pro-

posed amendment to § 1.1441–1(b)(3)(ii)(A) through (C) is the same asthe text of § 1.1441–1T(b)(3)(ii)(A)through (C) published elsewhere in thisissue of the Bulletin.]

(iii) [The text of the proposed amend-ment to § 1.1441–1(b)(3)(iii) is the sameas the text of § 1.1441–1T(b)(3)(iii) pub-lished elsewhere in this issue of the Bul-letin.]

(A) [The text of the proposed amend-ment to § 1.1441–1(b)(3)(iii)(A) is thesame as the text of § 1.1441–1T(b)(3)(iii)(A) published elsewhere inthis issue of the Bulletin.]

(1) [The text of the proposed amend-ment to § 1.1441–1(b)(3)(iii)(A)(1) is thesame as the text of § 1.1441–1T(b)(3)(iii)(A)(1) published elsewhere inthis issue of the Bulletin.]

* * * * *(iii) through (v) [The text of the pro-

posed amendment to § 1.1441–1(b)(3)(iii)(A)(1)(iii) through (v) is thesame as the text of § 1.1441–1T(b)(3)(iii)(A)(1)(iii) through (v) pub-lished elsewhere in this issue of the Bul-letin.]

(2) [The text of the proposed amend-ment to § 1.1441–1(b)(3)(iii)(A)(2) is the

same as the text of § 1.1441–1T(b)(3)(iii)(A)(2) published elsewhere inthis issue of the Bulletin.]

* * * * *(D) [The text of the proposed amend-

ment to § 1.1441–1(b)(3)(iii)(D) is thesame as the text of § 1.1441–1T(b)(3)(iii)(D) published elsewhere inthis issue of the Bulletin.]


ment to § 1.1441–1(b)(3)(iv) is the sameas the text of § 1.1441–1T(b)(3)(iv) pub-lished elsewhere in this issue of the Bul-letin.]

(A) [The text of the proposed amend-ment to § 1.1441–1(b)(3)(iv)(A) is thesame as the text of § 1.1441–1T(b)(3)(iv)(A) published elsewhere inthis issue of the Bulletin.]

* * * * *(v) * * *(B) [The text of the proposed amend-

ment to § 1.1441–1(b)(3)(v)(B) is thesame as the text of § 1.1441–1T(b)(3)(v)(B) published elsewhere inthis issue of the Bulletin.]

(vi) [The text of the proposed amend-ment to § 1.1441–1(b)(3)(vi) is the sameas the text of § 1.1441–1T(b)(3)(vi) pub-lished elsewhere in this issue of the Bul-letin.]

(vii) [The text of the proposed amend-ment to § 1.1441–1(b)(3)(vii) is the sameas the text of § 1.1441–1T(b)(3)(vii) pub-lished elsewhere in this issue of the Bul-letin.]

* * * * *(ix) * * *(A) [The text of the proposed amend-

ment to § 1.1441–1(b)(3)(ix)(A) is thesame as the text of § 1.1441–1T(b)(3)(ix)(A) published elsewhere inthis issue of the Bulletin.]

* * * * *(x) [The text of the proposed amend-

ment to § 1.1441–1(b)(3)(x) is the same asthe text of § 1.1441–1T(b)(3)(x) pub-lished elsewhere in this issue of the Bul-letin.]


(i) [The text of the proposed amend-ment to § 1.1441–1(b)(4)(i) is the same as

the text of § 1.1441–1T(b)(4)(i) publishedelsewhere in this issue of the Bulletin.]

* * * * *(5) * * *(ix) [The text of the proposed amend-

ment to § 1.1441–1(b)(5)(ix) is the sameas the text of § 1.1441–1T(b)(5)(ix) pub-lished elsewhere in this issue of the Bul-letin.]




(A) through (C) [The text of the proposedamendment to § 1.1441–1(b)(7)(i)(A)through (C) is the same as the text of§ 1.1441–1T(b)(7)(i)(A) through (C) pub-lished elsewhere in this issue of the Bul-letin.]

* * * * *(ii) [The text of the proposed amend-

ment to § 1.1441–1(b)(7)(ii) is the sameas the text of § 1.1441–1T(b)(7)(ii) pub-lished elsewhere in this issue of the Bul-letin.]

* * * * *(iv) and (v) [The text of the proposed

amendment to § 1.1441–1(b)(7)(iv) and(v) is the same as the text of § 1.1441–1T(b)(7)(iv) and (v) published elsewherein this issue of the Bulletin.]

* * * * *(c) [The text of the proposed amend-

ment to § 1.1441–1(c) is the same as thetext of § 1.1441–1T(c) published else-where in this issue of the Bulletin.]







* * * * *


(12) [The text of the proposed amend-ment to § 1.1441–1(c)(12) is the same asthe text of § 1.1441–1T(c)(12) publishedelsewhere in this issue of the Bulletin.]

* * * * *(16) and (17) [The text of the proposed

amendment to § 1.1441–1(c)(16) and (17)is the same as the text of § 1.1441–1T(c)(16) and (17) published elsewhere inthis issue of the Bulletin.]



* * * * *(28) through (56) [The text of the pro-

posed amendment to § 1.1441–1(c)(28) through (56) is the same as thetext of § 1.1441–1T(c)(28) through (56)published elsewhere in this issue of theBulletin.]


ment to § 1.1441–1(d)(4) is the same asthe text of § 1.1441–1T(d)(4) publishedelsewhere in this issue of the Bulletin.]

(e) * * *(1) * * *(ii) * * *(A) * * *(2) and (3) [The text of the proposed

amendment to § 1.1441–1(e)(1)(ii)(A)(2) and(3) is the same as the text of § 1.1441–1T(e)(1)(ii)(A)(2) and (3) published elsewherein this issue of the Bulletin.]


ment to § 1.1441–1(e)(2)(ii) is the same asthe text of § 1.1441–1T(e)(2)(ii) pub-lished elsewhere in this issue of the Bul-letin.]



(A) [The text of the proposed amend-ment to § 1.1441–1(e)(3)(ii)(A) is thesame as the text of § 1.1441–1T(e)(3)(ii)(A) published elsewhere inthis issue of the Bulletin.]

* * * * *(C) through (E) [The text of the pro-

posed amendment to § 1.1441–

1(e)(3)(ii)(C) ) is the same as the text of§ 1.1441–1T(e)(3)(ii)(C) ) published else-where in this issue of the Bulletin.]through (E

(iii) [The text of the proposed amend-ment to § 1.1441–1(e)(3)(iii) is the sameas the text of § 1.1441–1T(e)(3)(iii) pub-lished elsewhere in this issue of the Bul-letin.]

(A) [The text of the proposed amend-ment to § 1.1441–1(e)(3)(iii)(A) is thesame as the text of § 1.1441–1T(e)(3)(iii)(A) published elsewhere inthis issue of the Bulletin.]

* * * * *(C) through (E) [The text of the pro-

posed amendment to § 1.1441–1(e)(3)(iii)(C) through (E) is the same asthe text of § 1.1441–1T(e)(3)(iii)(C)through (E) published elsewhere in thisissue of the Bulletin.]

(iv) * * *(A) through (C) [The text of the proposed

amendment to § 1.1441–1(e)(3)(iv)(A)through (C) is the same as the text of§ 1.1441–1T(e)(3)(iv)(A) through (C)published elsewhere in this issue of theBulletin.]

(D) * * *(1) [The text of the proposed amend-

ment to § 1.1441–1(e)(3)(iv)(D)(1) is thesame as the text of § 1.1441–1T(e)(3)(iv)(D)(1) published elsewhere inthis issue of the Bulletin.]

(2) [The text of the proposed amend-ment to § 1.1441–1(e)(3)(iv)(D)(2) is thesame as the text of § 1.1441–1T(e)(3)(iv)(D)(2) published elsewhere inthis issue of the Bulletin.]

(i) and (ii) [The text of the proposedamendment to § 1.1441–1(e)(3)(iv)(D)(2)(i)and (ii) is the same as the text of§ 1.1441–1T(e)(3)(iv)(D)(2)(i) and (ii)published elsewhere in this issue of theBulletin.]

(3) through (6) [The text of the proposedamendment to § 1.1441–1(e)(3)(iv)(D)(3)through (6) is the same as the text of§ 1.1441–1T(e)(3)(iv)(D)(3) through (6)published elsewhere in this issue of the Bul-letin.]


ment to § 1.1441–1(e)(3)(iv)(E) is thesame as the text of § 1.1441–1T(e)(3)(iv)(E) published elsewhere inthis issue of the Bulletin.]

(v) [The text of the proposed amend-ment to § 1.1441–1(e)(3)(v) is the same asthe text of § 1.1441–1T(e)(3)(v) publishedelsewhere in this issue of the Bulletin.]


ment to § 1.1441–1(e)(4) is the same asthe text of § 1.1441–1T(e)(4) publishedelsewhere in this issue of the Bulletin.]

(i) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(i) is the same asthe text of § 1.1441–1T(e)(4)(i) publishedelsewhere in this issue of the Bulletin.]


ment to § 1.1441–1(e)(4)(ii)(A) is thesame as the text of § 1.1441–1T(e)(4)(ii)(A) published elsewhere inthis issue of the Bulletin.]

(B) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(ii)(B) is thesame as the text of § 1.1441–1T(e)(4)(ii)(B) published elsewhere inthis issue of the Bulletin.]

* * * * *(8) through (12) [The text of the pro-

posed amendment to § 1.1441–1() is thesame as the text of § 1.1441–1T() pub-lished elsewhere in this issue of theBulletin.]e)(4)(ii)(B)(8) through (12)

(C) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(ii)(C) is thesame as the text of § 1.1441–1T(e)(4)(ii)(C) published elsewhere inthis issue of the Bulletin.]

(D) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(ii)(D) is thesame as the text of § 1.1441–1T(e)(4)(ii)(D) published elsewhere inthis issue of the Bulletin.]

(1) through (3) [The text of the proposedamendment to § 1.1441–1(e)(4)(ii)(D)(1)through (3). is the same as the text of§ 1.1441–1T(e)(4)(ii)(D)(1) through (3).published elsewhere in this issue of theBulletin.]

(iii) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(iii) is the sameas the text of § 1.1441–1T(e)(4)(iii) pub-lished elsewhere in this issue of the Bul-letin.]

(iv) * * *(A) [The text of the proposed amend-

ment to § 1.1441–1(e)(4)(iv)(A) is thesame as the text of § 1.1441–1T(e)(4)(iv)(A) published elsewhere inthis issue of the Bulletin.]



ment to § 1.1441–1(e)(4)(iv)(C) is thesame as the text of § 1.1441–1T(e)(4)(iv)(C) published elsewhere inthis issue of the Bulletin.]

(v) through (vii) [The text of the pro-posed amendment to § 1.1441–1(e)(4)(v) through (vii) is the same as thetext of § 1.1441–1T(e)(4)(v) through (vii)published elsewhere in this issue of theBulletin.]

(A) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(vii)(A) is thesame as the text of § 1.1441–1T(e)(4)(vii)(A) published elsewhere inthis issue of the Bulletin.]

* * * * *(F) [The text of the proposed amend-

ment to § 1.1441–1(e)(4)(vii)(F) is thesame as the text of § 1.1441–1T(e)(4)(vii)(F) published elsewhere inthis issue of the Bulletin.]

* * * * *(H) through (I) [The text of the proposed

amendment to § 1.1441–1(e)(4)(vii)(H)through (I) is the same as the text of§ 1.1441–1T(e)(4)(vii)(H) through (I)published elsewhere in this issue of theBulletin.]

(viii) * * *(B) and (C) [The text of the proposed

amendment to § 1.1441–1(e)(4)(viii)(B)and (C) is the same as the text of§ 1.1441–1T(e)(4)(viii)(B) and (C) pub-lished elsewhere in this issue of the Bul-letin.]

(ix) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(ix) is the sameas the text of § 1.1441–1T(e)(4)(ix) pub-lished elsewhere in this issue of the Bul-letin.]

(5) [The text of the proposed amend-ment to § 1.1441–1(e)(4)(5) is the same asthe text of § 1.1441–1T(e)(5) publishedelsewhere in this issue of the Bulletin.]

(f) [The text of the proposed amend-ment to § 1.1441–1(f) is the same as thetext of § 1.1441–1T(f) published else-where in this issue of the Bulletin.]

Par. 4. Section 1.1441–3 is amended byrevising paragraphs (a), (c)(4)(i), and (d),and adding paragraph (j) to read as fol-lows:

§ 1.1441–3 Determination of amounts tobe withheld.


* * * * *(c) * * *(4) * * *(i) [The text of the proposed amend-


* * * * *(d) * * ** * * * *(j) [The text of the proposed amend-

ment to § 1.1441–3(j) is the same as thetext of § 1.1441–3T(j) published else-where in this issue of the Bulletin.]

Par. 5. Section 1.1441–4 is amendedby revising paragraphs (a)(2)(ii), (b)(2)(i),(b)(2)(iii), (b)(2)(v), and (b)(3), and add-ing paragraphs (g)(3) and (h) to read asfollows:

§ 1.1441–4 Exemptions fromwithholding for certain effectivelyconnected income and other amounts.

(a) * * *(2) * * *(ii) [The text of the proposed amend-

ment to § 1.1441–4(a)(2)(ii) is the sameas the text of § 1.1441–4T(a)(2)(ii)(A) through (B) publishedelsewhere in this issue of the Bulletin.]

* * * * *(b) * * *(2) * * *(i) [The text of the proposed amend-



ment to § 1.1441–4(b)(2)(iii) is the sameas the text of § 1.1441–4T(b)(2)(iii) pub-lished elsewhere in this issue of the Bul-letin.]




* * * * *(g) * * *(3) [The text of the proposed amend-

ment to § 1.1441–4(g)(3) is the same asthe text of § 1.1441–4T(g)(3) publishedelsewhere in this issue of the Bulletin.]

(h) [The text of the proposed amend-ment to § 1.1441–4(h) is the same as thetext of § 1.1441–4T(g)(3) published else-where in this issue of the Bulletin.]


1. Revising paragraph (b)(2)(iii).2. Adding paragraph (b)(2)(vi).3. Revising (c)(1)(i) introductory text,

(c)(1)(i)(C), and (c)(1)(iv).4. Adding paragraph (c)(1)(v).5. Revising paragraphs (c)(2)(i)

through (iii), (c)(2)(iv)(A) and (B),(c)(3)(i) and (ii), (c)(3)(iii)(A), (c)(3)(iv)and (v), and (d)(2) through (4).

6. Adding paragraph (e)(3)(iii).7. Revising paragraphs (e)(5)(i) and

(ii), (e)(5)(iii)(A), (e)(5)(iv) and (v),(e)(6)(ii), and (f).

8. Adding paragraph (g)(3).The revisions and additions read as fol-

lows:

§ 1.1441–5 Withholding on payments topartnerships, trusts, and estates.

* * * * *(b) * * *(2) * * *(iii) [The text of the proposed amend-




(c) * * *(1) * * *(i) [The text of the proposed amend-


* * * * *


(C) [The text of the proposed amend-ment to § 1.1441–5(c)(1)(i)(C) is the sameas the text of § 1.1441–5T(c)(1)(i)(C)published elsewhere in this issue of theBulletin.]


amendment to § 1.1441–5(c)(1)(iv) and (v)is the same as the text of § 1.1441–5T(c)(1)(iv) and (v) published elsewherein this issue of the Bulletin.]

(2) * * *(i) through (iii) [The text of the pro-

posed amendment to § 1.1441–5(c)(2)(i) through (iii) is the same as thetext of § 1.1441–5T(c)(2)(i) through (iii)published elsewhere in this issue of theBulletin.]

(iv) * * *(A) and (B) [The text of the proposed

amendment to § 1.1441–5(c)(2)(iv)(A)and (B) is the same as the text of§ 1.1441–5T(c)(2)(iv)(A) and (B) pub-lished elsewhere in this issue of the Bul-letin.]

* * * * *(3) * * *(i) and (ii) [The text of the proposed

amendment to § 1.1441–5(c)(3)(i) and (ii)is the same as the text of § 1.1441–5T(c)(3)(i) and (ii) published elsewhere inthis issue of the Bulletin.]


ment to § 1.1441–5(c)(3)(iii)(A) is thesame as the text of § 1.1441–5T(c)(3)(iii)(A) published elsewhere inthis issue of the Bulletin.]


amendment to § 1.1441–5(c)(3)(iv) and(v) is the same as the text of § 1.1441–5T(c)(3)(iv) and (v) published elsewherein this issue of the Bulletin.]

(d) * * *(2) through (4) [The text of the pro-

posed amendment to § 1.1441–5(d)(2) through (4) is the same as the textof § 1.1441–5T(d)(2) through (4) pub-lished elsewhere in this issue of the Bul-letin.]

(e) * * *(3) * * *(iii) [The text of the proposed amend-

ment to § 1.1441–5(e)(3)(iii) is the sameas the text of § 1.1441–5T(e)(3)(iii) pub-

lished elsewhere in this issue of the Bul-letin.]

* * * * *(5) * * *(i) and (ii) [The text of the proposed

amendment to § 1.1441–5(e)(5)(i) and (ii)is the same as the text of § 1.1441–5T(e)(5)(i) and (ii) published elsewhere inthis issue of the Bulletin.]


ment to § 1.1441–5(e)(5)(iii)(A) is the sameas the text of § 1.1441–5T(e)(5)(iii)(A)published elsewhere in this issue of theBulletin.]


amendment to § 1.1441–5(e)(5)(iv) and(v) is the same as the text of § 1.1441–5T(e)(5)(iv) and (v) published elsewherein this issue of the Bulletin.]



* * * * *(f) [The text of the proposed amend-

ment to § 1.1441–5(f) is the same as thetext of § 1.1441–5T(f) published else-where in this issue of the Bulletin.]

(g) * * *(3) [The text of the proposed amend-

ment to § 1.1441–5(g)(3) is the same asthe text of § 1.1441–5T(g) published else-where in this issue of the Bulletin.]

Par. 7. Section 1.1441–6 is amendedby revising paragraphs (a), (b)(1),(b)(2)(i), (b)(2)(iv), and (c)(1), and addingparagraph (i)(3) to read as follows:

§ 1.1441–6 Claim of reducedwithholding under an income tax treaty.


(b) * * *(1) [The text of the proposed amend-

ment to § 1.1441–6(b)(1) is the same asthe text of § 1.1441–6T(b)(1) publishedelsewhere in this issue of the Bulletin.]


ment to § 1.1441–6(b)(2)(i) is the same as

the text of § 1.1441–6T(b)(2)(i) publishedelsewhere in this issue of the Bulletin.]



* * * * *(c) * * *(1) [The text of the proposed amend-


* * * * *(i) * * *(3) [The text of the proposed amend-

ment to § 1.1441–6(h) is the same as thetext of § 1.1441–6T(h) published else-where in this issue of the Bulletin.]

Par. 8. Section 1.1441–7 is amended byrevising paragraphs (b), (c), and (f)(2)(ii),and adding paragraph (h) to read as fol-lows:

§ 1.1441–7 General provisions relatingto withholding agents.

* * * * *(b) [The text of the proposed amend-

ment to § 1.1441–7(b) is the same as thetext of § 1.1441–7T(b) published else-where in this issue of the Bulletin.]

(c) [The text of the proposed amend-ment to § 1.1441–7(c) is the same as thetext of § 1.1441–7T(c) published else-where in this issue of the Bulletin.]

* * * * *(f) * * *(2) * * *(ii) [The text of the proposed amend-

ment to § 1.1441–7(f)(2)(ii) is the same asthe text of § 1.1441–7T(f)(2)(ii) publishedelsewhere in this issue of the Bulletin.]

* * * * *(h) [The text of the proposed amend-

ment to § 1.1441–7(g) is the same as thetext of § 1.1441–7T(h) published else-where in this issue of the Bulletin.]

Par. 9. Section 1.1461–1 is amended byrevising paragraphs (b)(1), (c)(1)(i),(c)(1)(ii), (c)(2)(ii)(E), (c)(2)(ii)(H),(c)(2)(ii)(I), (c)(3)(i), (c)(3)(iii), (c)(4)(i),(c)(4)(ii)(A), (c)(4)(iv) and (v), (c)(5), and(i) to read as follows:


§ 1.1461–1 Payments and returns of taxwithheld.



* * * * *(c) * * *(1) * * *(i) [The text of the proposed amend-


(ii) [The text of the proposed amend-ment to § 1.1461–1(c)(1)(ii) is the same asthe text of § 1.1461–1T(c)(1)(ii) pub-lished elsewhere in this issue of the Bul-letin.]


ment to § 1.1461–1(c)(2)(ii)(E) is thesame as the text of § 1.1461–1T(c)(2)(ii)(E) published elsewhere in thisissue of the Bulletin.]

* * * * *(H) and (I) [The text of the proposed

amendment to § 1.1461–1(c)(2)(ii)(H) and (I) is the same as thetext of § 1.1461–1T(c)(2)(ii)(H) and (I)published elsewhere in this issue of theBulletin.]




ment to § 1.1461–1(c)(3)(iii) is the sameas the text of § 1.1461–1T(c)(3)(iii) pub-lished elsewhere in this issue of the Bul-letin.]




ment to § 1.1461–1(c)(4)(ii)(A) is thesame as the text of § 1.1461–

1T(c)(4)(ii)(A) published elsewhere inthis issue of the Bulletin.]


ment to § 1.1461–1(c)(4)(iv) through (v)is the same as the text of § 1.1461–1T(c)(4)(iv) through (v) published else-where in this issue of the Bulletin.]



* * * * *(i) [The text of the proposed amend-

ment to § 1.1461–1(i) is the same as thetext of § 1.1461–1T(i) published else-where in this issue of the Bulletin.]

Par. 10. Section 1.1461–2 is amendedby revising paragraphs (a)(2)(i), (a)(4),and (d) to read as follows:

§ 1.1461–2 Adjustments foroverwithholding or underwithholding oftax.

(a) * * *(2) * * *(i) * * ** * * * *(4) [The text of the proposed amend-

ment to § 1.1461–2(a)(4) is the same asthe text of § 1.1461–2T(a)(4) publishedelsewhere in this issue of the Bulletin.]

* * * * *(d) [The text of the proposed amend-

ment to § 1.1461–2(d) is the same as thetext of § 1.1461–2T(a)(4) published else-where in this issue of the Bulletin.]

Par. 11. Section 1.6041–1 is amendedby revising paragraphs (d)(5)(i) and (ii)and (j) to read as follows:

§ 1.6041–1 Return of information as topayments of $600 or more.

* * * * *(d) * * *(5) * * *(i) [The text of the proposed amend-

ment to § 1.6041–1(d)(5)(i) is the same asthe text of § 1.6041–1T(d)(5)(i) publishedelsewhere in this issue of the Bulletin.]

(ii) [The text of the proposed amend-ment to § 1.6041–1(d)(5)(ii) is the sameas the text of § 1.6041–1T(d)(5)(ii) pub-

lished elsewhere in this issue of the Bul-letin.]

* * * * *(j) [The text of the proposed amend-

ment to § 1.6041–1(j) is the same as thetext of § 1.6041–1T(j) published else-where in this issue of the Bulletin.]

Par. 12. Section 1.6041–4 is amendedby revising paragraphs (a)(1) through (3),adding paragraph (a)(7), and revisingparagraphs (b) and (d) to read as follows:

§ 1.6041–4 Foreign-related items andother exceptions.

(a) * * *(1) through (3) [The text of the pro-

posed amendment to § 1.6041–4(a)(1) through (3) is the same as the textof § 1.6041–4T(a)(1) through (3) pub-lished elsewhere in this issue of the Bul-letin.]


ment to § 1.6041–4(a)(7) is the same asthe text of § 1.6041–4T(a)(7) publishedelsewhere in this issue of the Bulletin.]

(b) [The text of the proposed amend-ment to § 1.6041–4(b) is the same as thetext of § 1.6041–4T(b) published else-where in this issue of the Bulletin.]

* * * * *(d) [The text of the proposed amend-

ment to § 1.6041–4(d) is the same as thetext of § 1.6041–4T(d) published else-where in this issue of the Bulletin.]

Par. 13. Section 1.6042–2 is amendedby revising paragraph (a)(1)(i) and addingparagraph (f) to read as follows:

§ 1.6042–2 Returns of information as todividends paid.

(a) * * *(1) * * *(i) [The text of the proposed amend-

ment to § 1.6042–2(a)(1)(i) is the same asthe text of § 1.6042–2T(a)(1)(i) through(a)(1)(i)(B)(4) published elsewhere in thisissue of the Bulletin.]

* * * * *(f) [The text of the proposed amend-

ment to § 1.6042–2(f) is the same as thetext of § 1.6042–2T(f) published else-where in this issue of the Bulletin.]

Par. 14. Section 1.6042–3 is amendedby revising paragraphs b)(1)(iii),


(b)(1)(iv), (b)(1)(vi), (b)(3), and (b)(5) toread as follows:

§ 1.6042–3 Dividends subject toreporting.

* * * * *(b) * * *(1) * * *(iii) [The text of the proposed amend-


(iv) [The text of the proposed amend-ment to § 1.6042–3(b)(1)(iv) is the sameas the text of § 1.6042–3T(b)(1)(iv) pub-lished elsewhere in this issue of the Bul-letin.]








by revising paragraph (c)(3)(ii), addingparagraphs (c)(3)(xiv) and (xv), and revis-ing paragraphs (g)(1)(i), (g)(3)(iv), (g)(4),and (g)(5)(ii) to read as follows:

§ 1.6045–1 Returns of information ofbrokers and barter exchanges.

* * * * *(c) * * *(3) * * *(ii) [The text of the proposed amend-

ment to § 1.6045–1(c)(3)(ii) is the same asthe text of § 1.6045–1T(c)(3)(ii) through(c)(3)(ii)(B) published elsewhere in thisissue of the Bulletin.]

* * * * *(xiv) [The text of the proposed amend-

ment to § 1.6045–1(c)(3)(xiv) is the sameas the text of § 1.6045–1T(c)(3)(xiv)

through (c)(3)(xiv)(D) published else-where in this issue of the Bulletin.]

(xv) [The text of the proposed amend-ment to § 1.6045–1(c)(3)(xv) is the sameas the text of § 1.6045–1T(c)(3)(xv) pub-lished elsewhere in this issue of the Bul-letin.]

* * * * *(g) * * *(1) * * *(i) [The text of the proposed amend-

ment to § 1.6045–1(g)(1)(i) is the same asthe text of § 1.6045–1T(g)(1)(i) publishedelsewhere in this issue of the Bulletin.]

* * * * *(3) * * *(iv) [The text of the proposed amend-

ment to § 1.6045–1(g)(3)(iv) is the sameas the text of § 1.6045–1T(g)(3)(iv) pub-lished elsewhere in this issue of the Bul-letin.]

(4) [The text of the proposed amend-ment to § 1.6045–1(g)(4) is the same asthe text of § 1.6045–1T(g)(4) publishedelsewhere in this issue of the Bulletin.]


ment to § 1.6045–1(g)(5)(ii) is the sameas the text of § 1.6045–1T(g)(5)(ii) pub-lished elsewhere in this issue of the Bul-letin.]


by:1. Revising paragraph (b)(1)2. Adding paragraph (c)(4).3. Revising paragraphs (f)(3) and

(f)(4)(ii).4. Adding paragraphs (f)(5) through

(16), and (h).The revisions and additions read as fol-

lows:

§ 1.6049–4 Return of information as tointerest paid and original issue discountincludible in gross income afterDecember 31, 1982.



* * * * *(c) * * *

(4) [The text of the proposed amend-ment to § 1.6049–4(c)(4) is the same asthe text of § 1.6049–4T(c)(4) through(c)(4)(iv) published elsewhere in this is-sue of the Bulletin.]

* * * * *(f) * * *(3) [The text of the proposed amend-

ment to § 1.6049–4(f)(3) is the same asthe text of § 1.6049–4T(f)(3) publishedelsewhere in this issue of the Bulletin.]


ment to § 1.6049–4(f)(4)(ii) is the sameas the text of § 1.6049–4T(f)(4)(ii) pub-lished elsewhere in this issue of the Bul-letin.]

(5) through (16) [The text of the pro-posed amendment to § 1.6049–4(f)(5)through (16) is the same as the text of§ 1.6049–4T(f)(5) through (f)(16)(iv)published elsewhere in this issue of theBulletin.]

* * * * *(h) [The text of the proposed amend-

ment to § 1.6049–4(h) is the same as thetext of § 1.6049–4T(h) published else-where in this issue of the Bulletin.]

Par. 17. Section 1.6049–5 is amendedby revising paragraphs b)(6) through(b)(8), (b)(10)(i) through (b)(11)(ii)(A),(b)(12), (b)(14) and (15), (c)(1) through(4), (c)(5)(i)(F), (c)(6), (d)(1), (d)(2)(d)(3)(i) through (d)(3)(iii)(A), and (d)(4),(e), and (g) to read as follows:

§ 1.6049–5 Interest and original issuediscount subject to reporting afterDecember 31, 1982.





* * * * *(10)(i) [The text of the proposed

amendment to § 1.6049–5(b)(10)(i) is the


same as the text of § 1.6049–5T(b)(10)(i) published elsewhere in thisissue of the Bulletin.]

(ii) [The text of the proposed amend-ment to § 1.6049–5(b)(10)(ii) is the sameas the text of § 1.6049–5T(b)(10)(ii) pub-lished elsewhere in this issue of the Bul-letin.]


(i) [The text of the proposed amend-ment to § 1.6049–5(b)(11)(i) is the sameas the text of § 1.6049–5T(b)(11)(i) pub-lished elsewhere in this issue of the Bul-letin.]

(ii)(A) [The text of the proposedamendment to § 1.6049–5(b)(11)(ii)(A) isthe same as the text of § 1.6049–5T(b)(11)(ii)(A) published elsewhere inthis issue of the Bulletin.]






* * * * *(c) * * *(1) [The text of the proposed amend-

ment to § 1.6049–5(c)(1) is the same asthe text of § 1.6049–5T(c)(1) through(c)(1)(iv) published elsewhere in this is-sue of the Bulletin.]



(4) [The text of the proposed amend-ment to § 1.6049–5(c)(4) is the same asthe text of § 1.6049–5T(c)(4) through(c)(4)(iv) published elsewhere in this is-sue of the Bulletin.]

(5) * * *

(i) * * *(F) [The text of the proposed amend-

ment to § 1.6049–5(c)(5)(i)(F) is the sameas the text of § 1.6049–5T(c)(5)(i)(F) published elsewhere in thisissue of the Bulletin.]







(ii) [The text of the proposed amend-ment to § 1.6049–5(d)(2)(ii) is the sameas the text of § 1.6049–5T(d)(2)(ii) pub-lished elsewhere in this issue of the Bul-letin.]

(iii) [The text of the proposed amend-ment to § 1.6049–5(d)(2)(iii) is the sameas the text of § 1.6049–5T(d)(2)(iii) pub-lished elsewhere in this issue of the Bul-letin.]



(ii) [The text of the proposed amend-ment to § 1.6049–5(d)(3)(ii) is the sameas the text of § 1.6049–5T(d)(3)(ii) pub-lished elsewhere in this issue of the Bul-letin.]

(iii) [The text of the proposed amend-ment to § 1.6049–5(d)(3)(iii) is the sameas the text of § 1.6049–5T(d)(3)(iii) pub-lished elsewhere in this issue of the Bul-letin.]

(A) [The text of the proposed amend-ment to § 1.6049–5(d)(3)(iii)(A) is thesame as the text of § 1.6049–5T(d)(3)(iii)(A) published elsewhere inthis issue of the Bulletin.]



(e) * * *

(1) [The text of the proposed amend-ment to § 1.6049–5(e)(1) is the same asthe text of § 1.6049–5T(e)(1) publishedelsewhere in this issue of the Bulletin.]





* * * * *(g) * * *(2) [The text of the proposed amend-

ment to § 1.6049–5(g)(2) is the same asthe text of § 1.6049–5T(g)(2) publishedelsewhere in this issue of the Bulletin.]

PART 31—EMPLOYMENT TAXESAND COLLECTION OF INCOMETAX AT SOURCE


Authority: 26 U.S.C. 7805 * * *Par. 19. Section 31.3406(g)–1 is

amended by revising paragraph (e) to readas follows:

§ 31.3406(g)–1 Exception for paymentsto certain payees and certain otherpayments.

* * * * *(e) [The text of the proposed amend-

ment to § 31.3406(g)–1(e) is the same asthe text of § 31.3406(g)–1T(e) publishedelsewhere in this issue of the Bulletin.]

* * * * *Par. 20. Section 31.3406(h)–2 is

amended by revising paragraph (a)(3)(i)and adding paragraph (i) to read as fol-lows:

§ 31.3406(h)–2 Special rules.

(a) * * *(3) * * *


(i) [The text of the proposed amend-ment to § 31.3406(h)–2(a)(3)(i) is thesame as the text of § 31.3406(h)–2T(a)(3)(i) published elsewhere in this is-sue of the Bulletin.]

* * * * *


Par. 21. The authority citation for part301 is amended by adding an entry innumerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 22. Section 301.6402–3 isamended by revising paragraphs (e) and(f) to read as follows:

§ 301.6402–3 Special rules applicable toincome tax.

* * * * *(e) [The text of the proposed amend-

ment to § 301.6402–3(e) is the same asthe text of § 301.6402–3T(e) publishedelsewhere in this issue of the Bulletin.]

(f) [The text of the proposed amend-ment to § 301.6402–3(f) is the same as the

text of § 301.6402–3T(f) published else-where in this issue of the Bulletin.]

* * * * *

John DalyrmpleDeputy Commissioner for Services and

Enforcement.



Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe theeffect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position isbeing extended to apply to a variation ofthe fact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds thatthe same principle also applies to B, theearlier ruling is amplified. (Compare withmodified, below).

Clarified is used in those instanceswhere the language in a prior ruling isbeing made clear because the languagehas caused, or may cause, some confu-sion. It is not used where a position in aprior ruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previously pub-lished ruling and points out an essentialdifference between them.

Modifiedis used where the substance ofa previously published position is beingchanged. Thus, if a prior ruling held that aprinciple applied to A but not to B, and thenew ruling holds that it applies to both A

and B, the prior ruling is modified becauseit corrects a published position. (Comparewith amplified and clarified, above).

Obsoleteddescribes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly used ina ruling that lists previously published rul-ings that are obsoleted because of changesin laws or regulations. A ruling may alsobe obsoleted because the substance hasbeen included in regulations subsequentlyadopted.

Revokeddescribes situations where theposition in the previously published rulingis not correct and the correct position isbeing stated in a new ruling.

Supersededdescribes a situation wherethe new ruling does nothing more thanrestate the substance and situation of apreviously published ruling (or rulings).Thus, the term is used to republish underthe 1986 Code and regulations the sameposition published under the 1939 Codeand regulations. The term is also usedwhen it is desired to republish in a singleruling a series of situations, names, etc.,that were previously published over a pe-riod of time in separate rulings. If the newruling does more than restate the sub-

stance of a prior ruling, a combination ofterms is used. For example, modified andsuperseded describes a situation where thesubstance of a previously published rulingis being changed in part and is continuedwithout change in part and it is desired torestate the valid portion of the previouslypublished ruling in a new ruling that isself contained. In this case, the previouslypublished ruling is first modified and then,as modified, is superseded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further namesin subsequent rulings. After the originalruling has been supplemented severaltimes, a new ruling may be published thatincludes the list in the original ruling andthe additions, and supersedes all prior rul-ings in the series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome ofcases in litigation, or the outcome of aService study.

AbbreviationsThe following abbreviations in currentuse and formerly used will appear in ma-terial published in the Bulletin.

A—Individual.Acq.—Acquiescence.B—Individual.BE—Beneficiary.BK—Bank.B.T.A.—Board of Tax Appeals.C—Individual.C.B.—Cumulative Bulletin.CFR—Code of Federal Regulations.CI—City.COOP—Cooperative.Ct.D.—Court Decision.CY—County.D—Decedent.DC—Dummy Corporation.DE—Donee.Del. Order—Delegation Order.DISC—Domestic International Sales Corporation.DR—Donor.E—Estate.EE—Employee.E.O.—Executive Order.ER—Employer.

ERISA—Employee Retirement Income Security Act.EX—Executor.F—Fiduciary.FC—Foreign Country.FICA—Federal Insurance Contributions Act.FISC—Foreign International Sales Company.FPH—Foreign Personal Holding Company.F.R.—Federal Register.FUTA—Federal Unemployment Tax Act.FX—Foreign corporation.G.C.M.—Chief Counsel’s Memorandum.GE—Grantee.GP—General Partner.GR—Grantor.IC—Insurance Company.I.R.B.—Internal Revenue Bulletin.LE—Lessee.LP—Limited Partner.LR—Lessor.M—Minor.Nonacq.—Nonacquiescence.O—Organization.P—Parent Corporation.PHC—Personal Holding Company.PO—Possession of the U.S.PR—Partner.PRS—Partnership.

PTE—Prohibited Transaction Exemption.Pub. L.—Public Law.REIT—Real Estate Investment Trust.Rev. Proc.—Revenue Procedure.Rev. Rul.—Revenue Ruling.S—Subsidiary.S.P.R.—Statement of Procedural Rules.Stat.—Statutes at Large.T—Target Corporation.T.C.—Tax Court.T.D.—Treasury Decision.TFE—Transferee.TFR—Transferor.T.I.R.—Technical Information Release.TP—Taxpayer.TR—Trust.TT—Trustee.U.S.C.—United States Code.X—Corporation.Y—Corporation.Z—Corporation.

Bulletin No. 2014–13 March 24, 2014i

Numerical Finding List1

Bulletins 2014–1 through 2014–13

Announcements

2014-1, 2014-2 I.R.B. 3932014-2, 2014-4 I.R.B. 4482014-4, 2014-7 I.R.B. 5232014-05, 2014-6 I.R.B. 5072014-06, 2014-6 I.R.B. 5082014-07, 2014-6 I.R.B. 5082014-08, 2014-6 I.R.B. 5082014-09, 2014-6 I.R.B. 5082014-10, 2014-6 I.R.B. 5082014-11, 2014-6 I.R.B. 5082014-12, 2014-6 I.R.B. 5092014-13, 2014-10 I.R.B. 620

Notices

2014-1, 2014-2 I.R.B. 2702014-2, 2014-3 I.R.B. 4072014-3, 2014-3 I.R.B. 4082014-4, 2014-2 I.R.B. 2742014-5, 2014-2 I.R.B. 2762014-6, 2014-2 I.R.B. 2792014-7, 2014-4 I.R.B. 4452014-8, 2014-5 I.R.B. 4522014-9, 2014-5 I.R.B. 4552014-10, 2014-9 I.R.B. 6052014-11, 2014-13 I.R.B. 8802014-12, 2014-9 I.R.B. 6062014-13, 2014-10 I.R.B. 6162014-14, 2014-13 I.R.B. 8812014-17, 2014-13 I.R.B. 881

Proposed Regulations

REG-154890-03, 2014-6 I.R.B. 504REG-159420-04, 2014-2 I.R.B. 374REG-144468-05, 2014-6 I.R.B. 474REG-119305-11, 2014-8 I.R.B. 524REG-140974-11, 2014-3 I.R.B. 438REG-121534-12, 2014-6 I.R.B. 473REG-122706-12, 2014-11 I.R.B. 647REG-134361-12, 2014-13 I.R.B. 895REG-136984-12, 2014-2 I.R.B. 378REG-113350-13, 2014-3 I.R.B. 440REG-130967-13, 2014-13 I.R.B. 884REG-141036-13, 2014-7 I.R.B. 516REG-143172-13, 2014-2 I.R.B. 383

Revenue Procedures

2014-1, 2014-1 I.R.B. 12014-2, 2014-1 I.R.B. 902014-3, 2014-1 I.R.B. 1112014-4, 2014-1 I.R.B. 1252014-5, 2014-1 I.R.B. 1692014-6, 2014-1 I.R.B. 198

Revenue Procedures—Continued

2014-7, 2014-1 I.R.B. 2382014-8, 2014-1 I.R.B. 2422014-9, 2014-2 I.R.B. 2812014-10, 2014-2 I.R.B. 2932014-11, 2014-3 I.R.B. 4112014-12, 2014-3 I.R.B. 4152014-13, 2014-3 I.R.B. 4192014-14, 2014-2 I.R.B. 2952014-15, 2014-5 I.R.B. 4562014-16, 2014-9 I.R.B. 6062014-17, 2014-12 I.R.B. 6612014-18, 2014-7 I.R.B. 5132014-19, 2014-10 I.R.B. 6192014-20, 2014-9 I.R.B. 6142014-21, 2014-11 I.R.B. 6412014-22, 2014-11 I.R.B. 6462014-23, 2014-12 I.R.B. 6852014-24, 2014-13 I.R.B. 879

Revenue Rulings

2014-1, 2014-2 I.R.B. 2632014-2, 2014-2 I.R.B. 2552014-3, 2014-2 I.R.B. 2592014-4, 2014-5 I.R.B. 4492014-6, 2014-7 I.R.B. 5102014-8, 2014-11 I.R.B. 624

Treasury Decisions

9649, 2014-2 I.R.B. 2659650, 2014-3 I.R.B. 3949651, 2014-4 I.R.B. 4419652, 2014-12 I.R.B. 6559653, 2014-6 I.R.B. 4609654, 2014-6 I.R.B. 4619655, 2014-9 I.R.B. 5419656, 2014-11 I.R.B. 6269657, 2014-13 I.R.B. 6879658, 2014-13 I.R.B. 7489659, 2014-12 I.R.B. 6539660, 2014-13 I.R.B. 8429661, 2014-13 I.R.B. 855

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2013–27 through 2013–52 is in Internal Revenue Bulletin2013–52, dated December 23, 2013.

March 24, 2014 Bulletin No. 2014–13ii

Finding List of Current Actions onPreviously Published Items1

Bulletins 2014–1 through 2014–13

Announcements:

2007-44Modified byAnn. 2014-4, 2014-7 I.R.B. 523

2011-49Modified byAnn. 2014-4, 2014-7 I.R.B. 523

Notices:

2006-109Modified byNotice 2014-4, 2014-2 I.R.B. 274

2009-78Superseded byT.D. 9654 2014-6 I.R.B. 461

2013-17Amplified byNotice 2014-1, 2014-2 I.R.B. 270

Revenue Procedures:

2003-49Modified and superseded byRev. Proc. 2014-14, 2014-2 I.R.B. 295

2011-4Modified byRev. Proc. 2014-17, 2014-12 I.R.B. 661


2011-14Clarified byRev. Proc. 2014-16, 2014-9 I.R.B. 606


2011-44Modified and Superseded byRev. Proc. 2014-11, 2014-3 I.R.B. 411



Revenue Procedures—Continued:


2012-19Superseded byRev. Proc. 2014-16, 2014-9 I.R.B. 606













2013-24Obsoleted byRev. Proc. 2014-23, 2014-12 I.R.B. 685

Revenue Procedures—Continued:

2013-27Obsoleted byRev. Proc. 2014-23, 2014-12 I.R.B. 685

2013-32Superseded in part byRev. Proc. 2014-1, 2014-1 I.R.B. 1, andRev. Proc. 2014-3, 2014-1 I.R.B. 111

2014-1Amplified byRev. Proc. 2014-18, 2014-7 I.R.B. 513

2014-1 I.R.B. 111Amplified byRev. Proc. 2014-24, 2014-13 I.R.B. 879

2014-3Amplified byRev. Proc. 2014-18, 2014-7 I.R.B. 513

2014-3 I.R.B 111Amplified byRev. Proc. 2014-24, 2014-13 I.R.B. 879


Proposed Regulations:

209054-87A portion withdrawn byREG-113350-13 2014-3 I.R.B. 440

Revenue Rulings:

2005-48 (2005-2 CB 259)Obsoleted byT.D. 9659 2014-12 I.R.B. 653

1A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2013–27 through 2013–52 is in Internal Revenue Bulletin 2013–52, dated December 23,2013.

Bulletin No. 2014–13 March 24, 2014iii

INDEXInternal Revenue Bulletins 2014–1 through2014–13

The abbreviation and number in parenthesis following the indexentry refer to the specific item; numbers in roman and italic typefollowing the parentheses refer to the Internal Revenue Bulletin inwhich the item may be found and the page number on which itappears.

Key to Abbreviations:Ann AnnouncementCD Court DecisionDO Delegation OrderEO Executive OrderPL Public LawPTE Prohibited Transaction ExemptionRP Revenue ProcedureRR Revenue RulingSPR Statement of Procedural RulesTC Tax ConventionTD Treasury DecisionTDO Treasury Department Order

ADMINISTRATIVEConsolidated returns; failure to properly include subsidiary

(RP 24) 13, 879Extension of time to file estate tax return to elect portability of a

deceased spousal unused exclusion amount under section2010(c)(5)(A). (RP 18) 7, 513

Method change procedures for dispositions of tangible deprecia-ble property (RP 17) 12, 661

Maximum Vehicle Values for which the special valuation rulesof regulations section 1.61–21(d) and (e) may be used (Notice11) 13, 880

Minimum essential coverage, information reporting (TD 9660)13, 842

EMPLOYEE PLANSDefinition of a substantial risk of forfeiture (TD 9659) 12, 653Domestic areas in which the Service will not issue letter rulings

or determination letters (RP 3) 1, 111Excepted benefits (REG–143172–13) 2, 383Final rules to implement the 90-day waiting period limitation

(TD 9656) 11, 626Letter rulings:

And determination letters:Areas which will not be issued from Associate Chief

Counsel and Division counsel (TE/GE) (RP 3) 1, 111Exemption application determination letter rulings under

sections 501 and 521 (RP 9) 1, 281And general information letters; procedures (RP 4) 1, 125User fees, request for letter rulings (RP 8) 1, 242

Letter rulings and general information letters (RP 4) 1, 125Letter rulings or determination letters (RP 1) 1, 1

EMPLOYEE PLANS—Cont.Proposed rules to clarify length of reasonable and bona fide

employment-based orientation period, consistent with the 90-day waiting period limitation (REG–122706–12) 11, 647

Qualification, determination letters (RP 6) 1, 198Qualified plans:

Discrimination (Notice 5) 2, 276Opinion letters (Ann 4) 7, 523Determination Letters (RP 19) 10, 619

Qualified retirement plans covered compensation, permitted dis-parity (RR 3) 2, 259

Regulations:26 CFR 54.9815–2708, amended; REG–122706–12) 11, 647

Rulings and determination letters, user fees (RP 8) 1, 242Technical advice memorandum or TAM (RP 2) 1, 90Technical advice procedures (RP 5) 1, 169Full funding limitations, weighted average interest rates, segment

rates for:January 2014 (Notice 8) 5, 452

Weighted average interest ratesSegment rates for February 2014 (Notice 13) 10, 616

EMPLOYMENT TAXDomestic areas in which the Service will not issue letter rulings

or determination letters (RP 3) 1, 111Employment tax liability of agents authorized under section 3504

(TD 9649) 2, 265Letter rulings or determination letters (RP 1) 1, 1Regulations:

26 CFR 1.83–3 is revised; definition of a substantial risk offorfeiture (TD 9659) 12, 653

26 CFR 54.9815–2708, amended; REG–122706–12) 11, 64726 CFR 54,9801–1, thru–6, amended; 26 CFR 54.9802–1,

amended; 26 CFR 54.9815–2708, added; 26 CFR54.9831–1, amended (TD 9656) 11, 626

Technical Advice Memorandum (TAM) (RP 2) 1, 90

ESTATE TAXDomestic areas in which the Service will not issue letter rulings

or determination letters (RP 3) 1, 111Extension of time to file estate tax return to elect portability of a

deceased spousal unused exclusion amount under section2010(c)(5)(A) (RP 18) 7, 513

Letter rulings or determination letters (RP 1) 1, 1Technical Advice Memorandum (TAM) (RP 2) 1, 90

EXCISE TAXDomestic areas in which the Service will not issue letter rulings

or determination letters (RP 3) 1, 111Final rules to implement the 90-day waiting period limitation

(TD 9656) 11, 626Information reporting by applicable large employers on health

insurance coverage offered under employer-sponsored plans(TD 9661) 13, 855

March 24, 2014 Bulletin No. 2014–13iv

EXCISE TAX—Cont.Interim guidance regarding supporting organizations (Notice 4)

2, 274Letter rulings or determination letters (RP 1) 1, 1Proposed rules to clarify length of reasonable and bona fide

employment-based orientation period, consistent with the 90-day waiting period limitation (REG–122706–12) 11, 647

Regulations:26 CFR 54.9815–2708, amended; REG–122706–12) 11, 64726 CFR 54,9801–1, thru–6, amended; 26 CFR 54.9802–1,

amended; 26 CFR 54.9815–2708, added; 26 CFR54.9831–1, amended (TD 9656) 11, 626

Technical Advice Memorandum (TAM) (RP 2) 1, 90

EXEMPT ORGANIZATIONSDomestic areas in which the Service will not issue letter rulings

or determination letters (RP 3) 1, 111Form 990 Revenue Procedure update to revoke Revenue Proce-

dure 79–6 (RP 22) 11, 646Interim guidance regarding supporting organizations (Notice 4)

2, 274Letter rulings:

And determination letters:Areas which will not be issued from Associate Chief

Counsel and Division counsel (TE/GE) (RP 3) 1, 111Exemption application determination letter rulings under

sections 501 and 521 (RP 9) 1, 281And general information letters; procedures (RP 4) 1, 125User fees, request for letter rulings (RP 8) 1, 242

Letter rulings (RP 10) 2, 293; (RP 9) 2, 281Letter rulings or determination letters (RP 1) 1, 1Proposed procedures for charitable hospitals to correct and dis-

close failures to meet section 501(r) (Notice 3) 3, 408Reliance on proposed regulations for tax-exempt hospitals (No-

tice 2) 3, 407Rulings and determination letters, user fees (RP 8) 1, 242Technical Advice Memorandum (TAM) (RP 2) 1, 90Technical advice procedures (RP 5) 1, 169

INCOME TAXAdequate disclosure revenue procedure (RP 15) 5, 456Allocation of section 47 credits by a partnership to its partners

(RP 12) 3, 415Allocation of section 752 recourse liabilities among related par-

ties (REG–136984–12) 2, 378Amount of the life insurance reserves taken into account under

§ 807 of the Internal Revenue Code for variable contracts (RR7) 9, 539

Areas in which rulings will not be issued; Associate ChiefCounsel (International) (RP 7) 1, 238

Basis in assets of tax exempt trusts (REG–154890–03) 6, 504Bond premium carryforward (TD 9653) 6, 460Cafeteria plans, FSA reimbursements, and HSA contribution

limits for same-sex spouses (Notice 1) 2, 2702014 Census Count (Notice 12) 9, 606

INCOME TAX—Cont.Contribution of built-in lost property to a partnership; mandatory

basis adjustments in the event of a substantial built-in loss orsubstantial basis reduction; modification of basis allocationrules (REG–144468–05) 6, 474

Current refunding of Recovery Zone facility bonds (Notice 9) 5,455

Declaratory judgement suits (Ann 5) 6, 507; (Ann 6) 6, 508;(Ann 7) 6, 508; (Ann 8) 6, 508; (Ann 9) 6, 508; (Ann 10) 6,508; (Ann 12) 6, 509

Definition of a substantial risk of forfeiture (TD 9659) 12, 653Definitions applicable to U.S. persons owning interests in passive

foreign investment companies (REG–113350–13) 3, 440Depreciation deduction, limitations on certain automobiles (RP

21) 11, 641Determination of ownership in a passive foreign investment

company; annual filing requirements for shareholders of pas-sive foreign investment companies; filing requirements forconstructive owners in certain foreign corporations (REG–140974–11) 3, 438; (TD 9650) 3, 394

Determining stock ownership for purposes of whether an entity isa surrogate foreign corporation (TD 9654) 6, 461; (REG–121534–12) 6, 473

Discharge of indebtedness secured by real property (RP 20) 9,614

Disciplinary actions involving attorneys, certified public accoun-tants, enrolled agents, and enrolled actuaries (Ann 13) 10, 620

Domestic areas in which the Service will not issue letter rulingsor determination letters (RP 3) 1, 111

Equity-linked instruments and dividend equivalents (Notice 14)13, 881

FATCA financial institution registration update (Ann 1) 2, 393Interest:

Investment:Federal short-term, mid-term, and long-term rates for:

January 2014 (RR 1) 2, 263February 2014 (RR 6) 7, 510March 2014 (RR 8) 11, 624

Final FFI agreement for participating FFI and reporting Model 2FFI (RP 13) 3, 419

Guidance regarding resinstatement following auto revocation oftax-exempt status under section 6033(j) (RP 11) 3, 411

Income tax treatment of per capita payments made from fundsheld in trust by the Secretary of the Interior (Notice 17) 13, 881

Information reporting by foreign financial institutions and with-holding on payments to foreign financial institutions and otherforeign entities (REG–130967–13) 13, 884

Information reporting by foreign financial institutions and with-holding on payments to foreign financial institutions and otherforeign entities (TD 9657) 13, 687

Intra-group gross receipts (REG–159420–04) 2, 374Insurance tax, insurance companies, interest rate tables (RR 4) 5,

449Letter rulings or determination letters (RP 1) 1, 1Low-Income Housing Credit (Notice 15) 12, 661

Bulletin No. 2014–13 March 24, 2014v

INCOME TAX—Cont.Maximum Vehicle Values for which the special valuation rules

of regulations section 1.61–21(d) and (e) may be used (Notice11) 13, 880

Method change procedures for dispositions of tangible deprecia-ble property (RP 17) 12, 661

Minimum essential coverage, information reporting (TD 9660)13, 842

Principal residence, treatment of National Mortgage Settlementpayments (RR 2) 2, 255

Qualified census tracts (RP 14) 2, 295Regarding disguised sales, generally (REG–119305–11) 8, 524Regulations:

26 CFR 1.83–3 is revised; definition of a substantial risk offorfeiture (TD 9659) 12, 653

26 CFR 1.263A–0, thru–3, amended; 1.471–3 amended; (TD9652) 12, 655

Revocations, exempt organization (Ann 11) 6, 508Sales-bases royalties and vendor allowances (TD 9652) 12, 655Shared responsibility for employers regarding health coverage

(TD 9655) 9, 541Shared responsibility payment for not maintaining minimum

essential coverage (REG–141036–13) 7, 516Tangible property regulations method change guidance (RP 16)

9, 606Technical Advice Memorandum (TAM) (RP 2) 1, 90Transition relief for the tax credit for employee health insurance

expenses of certain small employers (Notice 6) 2, 279Transition relief under section 5000A for certain individuals

without minimum essential coverage (Notice 10) 9, 605Withholding of tax on certain U.S. source income paid to foreign

persons and revision of information reporting and backupwithholding regulations (REG–134361–12) 13, 895

Withholding of tax on certain U.S. source income paid to foreignpersons and revision of information reporting and backupwithholding regulations (TD 9658) 13, 748

March 24, 2014 Bulletin No. 2014–13vi

INTERNAL REVENUE BULLETINThe Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue

Bulletins are available at www.irs.gov/irb/.

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2008–2 edition.

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purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.

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