Internal Revenue Bulletin 2014-13 (PDF rendition): IRS Revenue Procedures

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# Internal Revenue bulletin
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## HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied 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 foreign
financial institution (FFI) that has not agreed to provide the IRS
with certain information regarding its United States accounts.
Under FATCA, a U.S. withholding agent must also withhold tax
on certain payments to a nonfinancial foreign entity (NFFE) that
has not provided the withholding agent with information about
the 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 to
other persons. The text of the temporary regulations also
serves as the text of these proposed regulations.

### REG-134361-12, page 895.

Payors of payments of certain U.S. source income to foreign
persons are subject to comprehensive payee documentation,
information reporting, and tax withholding requirements under
sections 1441, 1442, and 1443 (contained in chapter 3 of
subtitle A of the Internal Revenue Code). These payments may
also be subject to comprehensive payee due diligence and
documentation, information reporting, and tax withholding
rules under chapter 4 (sections 1471-1474), Chapter 61, and
section 3406. Temporary regulations in TD 9658 provide
guidance coordinating and conforming the due diligence, infor-
mation reporting, and tax withholding rules under chapter 3
and 61 and section 3406 with the requirements under chapter
4. The text of the temporary regulations also serves as the text
of these proposed regulations.

### Notice 2014-11, page 880.

This notice provides the maximum vehicles values for use with
the special valuation rules under regulation section 1.61-21(d)
and (e) for 2014. These values are adjusted annually for inflation
by reference to the Consumer Price Index.

### Notice 2014-14, page 881.

This notice announces the intention of Treasury and the IRS to
modify the rule relating to specified ELIs when finalizing the
proposed regulations published in the Federal Register at 78
FR 73128 (2013) on December 5, 2013. Specifically, final
regulations will provide that the rules relating to specified
equity-linked instruments issued on or after 90 days of the date
of publication of final regulations.

### Rev. Proc. 2014-24, page 879.

Consolidated returns; failure to properly include
subsidiary. This revenue procedure provides a determination
by the Commissioner under § 1.1502-75(b) that if an affiliated
group satisfies the conditions described in the revenue proce-
dure, a subsidiary that actually failed to file a Form 1122 is
treated as if it filed such form and thus joined in the making of
a consolidated return by the affiliated group.

### Notice 2014-17, page 881.

The notice, as interim guidance, provides a general rule that
per capita distributions to members of Indian tribes made from
funds held in trust by the Secretary of the Interior ("Trust
Account") are excluded from the gross income of the members
of the tribe receiving the per capita distributions. It also pro-
vides an exception where distributions to tribal members from
a Trust Account will not be excluded from gross income under
26 U.S.C. § 61 to the members of the tribe receiving the
distributions if the Trust Account is used to mischaracterize
taxable 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.

Department of the Treasury
Internal Revenue Service

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### 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 foreign
financial institution (FFI) that has not agreed to provide the IRS
with certain information regarding its United States accounts.
Under FATCA, a U.S. withholding agent must also withhold tax
on certain payments to a nonfinancial foreign entity (NFFE) that
has not provided the withholding agent with information about
the NFFE's substantial United States owners. These regulations
revise and refine final FATCA regulations, TD 9610, and pro-
vide guidance to person making certain U.S. related payments
to FFIs and NFFEs, and payments by FFIs to other persons. TD
9657. Published: March 6, 2014.

### T.D. 9658, page 748.

Payors of payments of certain U.S. source income to foreign
person are subject to comprehensive payee documentation,
information reporting, and tax withholding requirements under
sections 1441, 1442, and 1443 (contained in chapter 3 of
subtitle A of the Internal Revenue Code). These payments may
also be subject to comprehensive payee due diligence and
documentation, information reporting, and tax withholding
rules under chapter 4 (section 1471-1474), chapter 61, and
section 3406. These regulations provide guidance coordinat-
ing and conforming the due diligence, information reporting,
and tax withholding rules under chapters 3 and 61 and section
3406 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 to
information 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 Protection
and Affordable Care Act. Section 6056 requires applicable
large employers, as defined in section 4980H, to report to the
IRS information about the health care coverage, if any, they
offered to full-time employees, in order to administer the em-
ployer shared responsibility provisions of section 4980H of the
Code. Section 6056 also requires applicable large employers
to furnish related statements to employees that employees
may use to determine whether, for each month of the calendar
year, they may claim on their individual tax returns a premium
tax credit under section 36B. These final regulations provide
for 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 requirements
under section 6056.

## ADMINISTRATIVE

### Notice 2014-11, page 880.

This notice provides the maximum vehicles values for use with
the special valuation rules under regulation section 1.61-21(d)
and (e) for 2014. These values are adjusted fro inflation and
must be adjusted annually be reference to the Consumer Price
Index.

Rev. Proc. 2014-24, page 879.

Consolidated returns; failure to properly include
subsidiary. This revenue procedure provides a determination
by the Commissioner under § 1.1502-75(b) that if an affiliated
group satisfies the conditions described in the revenue proce-
dure, a subsidiary that actually failed to file a Form 1122 is
treated as if it filed such form and thus joined in the making of
a 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 to
information reporting by persons that provide minimum essen-
tial coverage to individuals.

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## The IRS Mission

Provide America's taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.

## Introduction

The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.

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

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

Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, 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 unless
the 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 of
the Internal Revenue Code of 1986.

### Part II .- Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A, Tax
Conventions 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 these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the 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 for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published 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.

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## Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

26 CFR 1471: Regulations Relating to Information
Reporting by Foreign Financial Institutions and
Withholding on Certain Payments to Foreign Finan-
cial Institutions and Other Foreign Entities

T.D. 9657

DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1

Regulations Relating to
Information Reporting by
Foreign Financial
Institutions and Withholding
on Certain Payments to
Foreign Financial
Institutions and Other
Foreign 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 through
1474) of the Internal Revenue Code of
1986 (Code) regarding information re-
porting by foreign financial institutions
(FFIs) with respect to U.S. accounts and
withholding on certain payments to FFIs
and other foreign entities. These regula-
tions affect persons making certain U.S .-
related payments to FFIs and other foreign
entities and payments by FFIs to other
persons. 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 the
Bulletin.

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

FOR FURTHER INFORMATION
CONTACT: 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 amendments
to the Income Tax Regulations (CFR part
1\) under sections 1471 through 1474 of
the Code (commonly known as the For-
eign Account Tax Compliance Act, or
FATCA). On March 18, 2010, the Hiring
Incentives to Restore Employment Act of
2010, 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 requires
U.S. withholding agents to withhold tax
on certain payments to foreign financial
institutions (FFIs) that do not agree to
report certain information to the Internal
Revenue Service (IRS) regarding their
U.S. accounts, and on certain payments to
certain nonfinancial foreign entities
(NFFEs) that do not provide information
on their substantial United States owners
(substantial U.S. owners) to withholding
agents. On January 28, 2013, final regula-
tions (TD 9610) under chapter 4 were
published in the Federal Register (78 FR
5874\) and, on September 10, 2013, a cor-
rection to the final regulations was pub-
lished in the Federal Register (78 FR
55202\) (final regulations). The Treasury
Department and the IRS received numer-
ous comments in response to the final
regulations.

Following publication of the final reg-
ulations, the Treasury Department and the
IRS also issued additional guidance under
chapter 4. Notice 2013-43 (2013-31
I.R.B. 113) previews the revised timelines
for implementation of the FATCA re-
quirements (which are adopted by these
temporary regulations) and provides addi-
tional guidance concerning the treatment
of FFIs located in jurisdictions that have
signed intergovernmental agreements for
the implementation of FATCA (IGAs) but
have not yet brought those IGAs into
force. In particular, Notice 2013-43 clar-
ifies that a jurisdiction is treated as having
in effect an IGA if the jurisdiction is listed
on the Treasury website as a jurisdiction

that is treated as having an IGA in effect.
In general, the Treasury Department and
the IRS intend to include on this list ju-
risdictions that have signed but have not
yet brought into force an IGA. The list of
jurisdictions that are treated as having an
IGA in effect is available at the following
address:

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 changes
that the Treasury Department and IRS in-
tend to make to the final regulations and
publishes a draft of the agreement that an
FFI may enter into with the IRS in order to
satisfy its obligations under section 1471(b)
of the Code and be treated as a participating
FFI (FFI agreement). Revenue Procedure
2014-13 (2014-3 I.R.B. 419) provides the
final FFI agreement.

#### II. Regulatory Approach to Implementing Chapter 4

Chapter 4 grants the Secretary of the
Treasury broad regulatory authority to
prescribe rules and procedures relating to
the diligence, reporting and withholding
obligations under FATCA. The Treasury
Department and the IRS exercised this
authority by publishing final regulations
that provide specific operational guide-
lines for implementing FATCA in a man-
ner consistent with its policy objectives.
As described in the preamble to the final
regulations, the final regulations implement
the statute based on a risk-based approach
that is intended to address policy consider-
ations, eliminate unnecessary burdens, and
to the extent possible, build on existing
practices and obligations.

Following publication of the final reg-
ulations, the Treasury Department and the
IRS 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, the
Treasury Department and the IRS have
continued to work with affected parties to
develop rules that achieve an appropriate
balance between fulfilling the important
policy objectives of chapter 4 and mini-

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mizing the burdens imposed on stakehold-
ers. As part of this process, the Treasury
Department and the IRS have carefully
considered comments received in re-
sponse to the final regulations and have
met with stakeholders. While many of
these comments reiterate comments that
were received and considered prior to the
publication of the final regulations or sug-
gest changes to the final regulations that
are outside the scope of these temporary
regulations, a number of comments pro-
posed changes to the final regulations that
the Treasury Department and the IRS be-
lieve warrant inclusion in these temporary
regulations. The Treasury Department and
the IRS will accept comments and engage
with interested stakeholders in connection
with 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 final
regulations. To this end, these temporary
regulations take into account helpful com-
ments received and provide additional de-
tail and certainty regarding the scope of
obligations imposed under chapter 4. In
addition, these temporary regulations re-
flect changes made to the final regulations
to coordinate the chapter 4 regulations
with the temporary regulations published
under chapters 3 and 61 and section 3406
of the Code. Additionally, these tempo-
rary regulations contain modifications to
the final regulations to further harmonize
them with the IGAs. Several of the
changes made by these temporary regula-
tions were previewed in Notice 2013-69,
the draft FFI agreement, and certain of the
draft IRS forms released throughout 2013.

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

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

To address comments received and to
provide further clarification, these tempo-
rary regulations modify certain definitions
contained in the final regulations.

A. Direct reporting NFFE, sponsored
direct reporting NFFE, and sponsoring
entity

Comments requested an election pro-
viding NFFEs with the ability to report
information about their substantial U.S.
owners directly to the IRS rather than to
withholding agents. In response to these
comments and as previewed in Notice
2013-69, these temporary regulations
provide certain NFFEs with elections to
be treated as direct reporting NFFEs or
sponsored direct reporting NFFEs. A
NFFE that is treated as a direct reporting
NFFE or sponsored direct reporting NFFE
shall be treated as an excepted NFFE.
Accordingly, definitions have been added
for a direct reporting NFFE and a spon-
sored direct reporting NFFE, and the def-
inition of a sponsoring entity has been
modified. Conforming changes have also
been made throughout these temporary
regulations to implement these changes.

#### B. Excepted NFFE

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

#### C. Offshore obligation and offshore account

In response to comments stating that
the definition of offshore obligation in the
final regulations is unclear, and in order to
harmonize 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 offshore
obligation instead of offshore account).

These temporary regulations also remove
the definition of offshore account because
it is included in the definition of offshore
obligation under § 1.6049-5(c)(1).

#### D. Pre-FATCA Form W-8

These temporary regulations make a
clarifying change to the definition of pre-
FATCA Form W-8. The final regulations
define pre-FATCA Form W-8 as certain
Forms W-8 that do not contain chapter 4
statuses. However, the chapter 4 status of
a non-U.S. individual filing a Form W-8
is the same as his or her chapter 3 status.
Therefore, the definition in the final regu-
lations could be interpreted to mean that
any Form W-8 previously submitted by a
non-U.S. individual could not be treated
as a pre-FATCA Form W-8. These tem-
porary regulations modify the definition
of pre-FATCA Form W-8 to avoid this
result.

#### E. Standardized industry coding system

The final regulations define the term
standardized industry code to mean a
code that is part of a coding system that is
used to classify account holders by busi-
ness type for purposes other than tax pur-
poses and that is implemented by the
withholding agent by the later of January
1, 2012, or six months after the date the
withholding agent is formed or organized.
In response to comments, these temporary
regulations remove the term standardized
industry code and replace it with the term
standardized industry coding system. The
term standardized industry coding system
in these temporary regulations is substan-
tially similar to the term standardized in-
dustry code in the final regulations, except
that it focuses on a coding system used by
the withholding agent to classify account
holders, rather than a specific code that is
part of such a coding system. Addition-
ally, and in response to comments, with
respect to a preexisting obligation of an
entity, the preexisting obligation docu-
mentary evidence rules have been liberal-
ized by eliminating the requirement that
the classification of the payee's status be
recorded by the withholding agent by the
later of January 1, 2012, or six months
after the date the withholding agent is
formed or organized.

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##### F. Certain foreign insurance companies treated as U.S. persons

The final regulations treat a foreign
insurance company that is not licensed to
do business in any State and makes an
election under section 953(d) as a foreign
person. Comments requested that a for-
eign insurance company that has made an
election under section 953(d) be treated as
a 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 that
own a direct or indirect interest in it. As
previewed in Notice 2013-69, and in light
of the existing reporting requirements ap-
plicable to these entities, the temporary
regulations modify the definition of U.S.
person to include a foreign insurance
company that has made an election under
section 953(d) and that either is not a
specified insurance company or is a spec-
ified insurance company that is licensed to
do business in any State. In such cases, the
foreign insurance company will be re-
quired to continue to report on its owners
in accordance with its election under sec-
tion 953(d). A foreign insurance company
that has made an election under section
953(d) and that is a specified insurance
company that is not licensed to do busi-
ness in any State will continue to be
treated as a foreign person for purposes of
chapter 4.

#### G. Coordination of definitions

In response to comments requesting
clarification and in order to coordinate the
definitions in the final regulations with
the definitions in chapters 3 and 61 and
the FFI agreement, these temporary regu-
lations add definitions of backup with-
holding, branch, chapter 4 withholding
rate pool, exempt recipient, IGA, non-
exempt recipient, reportable payment, and
reporting Model 2 FFI and modify the
definition of a U.S. branch treated as a
U.S. person. In addition, the definitions of
financial institution, limited branch, lim-
ited FFI, and substantial U.S. owner are
modified to ensure coordination between
the FFI agreement and these temporary
regulations.

##### H. Harmonization with IGAs

These temporary regulations modify
the definition of nonreporting IGA FFI to
include (in addition to an FFI that is iden-
tified or treated as a nonreporting financial
institution pursuant to a Model 1 or Model
2 IGA that is not a registered deemed-
compliant FFI) an FFI that is a resident of,
located in, or established in a Model 1 or
Model 2 IGA jurisdiction, as the context
requires, and that meets the requirements
for certified deemed-compliant FFI status
under the temporary regulations. Certain
definitions (including the definition of re-
tirement plan under § 1.1471-6(f)) are
also modified to further harmonize these
temporary regulations and the IGAs.

##### III. Comments and Changes to

§ 1.1471-2-Requirement to Deduct and
Withhold Tax on Withholdable Payments
to Certain FFIs

##### A. Grandfathered obligations-definitions- material modification

Comments indicated that outstanding
life insurance contracts often contain a
provision permitting the substitution of an
insured 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 IRS
have determined that life insurance con-
tracts that have such a provision should
be eligible for grandfathered status until
the provision is invoked, but that any
change or substitution of the insured un-
der the contract should be treated as a
material modification such that grandfa-
thered status would no longer apply.
These temporary regulations modify the
final regulations accordingly.

#### B. Grandfathered obligations-determination by withholding agent of grandfathered treatment

The final regulations provide that a
withholding agent is required to treat a
modification of an obligation as material
if the withholding agent knows or has
reason 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 withholding
agent to determine whether there has been
a material modification of a grandfathered
obligation absent a disclosure from the
issuer of the obligation, and therefore that
the receipt of such a disclosure should be
the only instance in which a withholding
agent is required to treat a modification of
an obligation as material. In response to
these comments, the temporary regula-
tions modify the final regulations to pro-
vide that a withholding agent, other than
the issuer of the obligation (or an agent of
the issuer), is required to treat a modifi-
cation of an obligation as material only if
the withholding agent has actual knowl-
edge that a material modification has oc-
curred. One example of an event that will
cause a withholding agent to have actual
knowledge of a material modification is if
the withholding agent receives a disclosure
indicating that there has been or will be a
material modification to the obligation.

#### IV. Comments and Changes to § 1.1471-3-Identification of Payee

### A. Payee defined

1\. Exceptions-U.S. Intermediary or
Agent of a Foreign Person

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

2\. Exceptions-U.S. Branch of Certain
Foreign Banks or Foreign Insurance Com-
panies

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

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

#### B. Determination of payee's status- determination of whether the payment is made to a QI, WP, or WT

In order to harmonize the rules in chap-
ter 4 with those in chapters 3 and 61, these
temporary regulations clarify that, with
respect to a withholding agent's determi-
nation of whether a payment is made to a
QI, WP, or WT, a Form W-8IMY, "Cer-
tificate of Foreign Intermediary, Foreign
Flow-Through Entity, or Certain U.S.
Branches for United States Tax Withhold-
ing," provided by such entity must contain
the entity's QI-EIN, WP-EIN, or WT-EIN
(as applicable). In addition, QIs, WPs, and
WTs that have a GIIN must provide both
a QI-EIN, QP-EIN, or WT-EIN and the
GIIN to a withholding agent on the Form
W-8IMY.

C. Rules for reliably associating a
payment with a withholding certificate
or other appropriate documentation

1\. Requirements for Validity of
Certificates-Withholding Certificate of
an Intermediary, Flow-Through Entity,
or U.S. Branch (Form W-8IMY)-In
General

These temporary regulations clarify
that, 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 is
located outside of the FFI's country of
residence, the GIIN of the branch (or dis-
regarded entity) must be disclosed on the
withholding certificate. This change pro-
vides more detail on the use of GIINs
issued to branches or disregarded entities
of an FFI and that are used, in part, to
identify an FFI to withholding agents.

2\. Requirements for Validity of
Certificates-Withholding Certificate of
an Intermediary, Flow-Through Entity,
or U.S. Branch (Form W-8IMY)-
Withholding Statement-Special
Requirements for an FFI Withholding
Statement

Comments requested additional clarifi-
cation to the final regulations concerning

the requirements of an FFI withholding
statement, specifically with regard to the
use of a chapter 4 withholding rate pool
identified on an FFI withholding state-
ment to allocate a withholdable payment
(or portion of a withholdable payment) to
persons included within the chapter 4
withholding rate pool. Some of these clar-
ifications have already been previewed in
the draft FFI agreement, published in
Notice 2013-69, and the final FFI
agreement, published in Rev. Proc.
2014-13. These temporary regulations
provide 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 to
allocate withholdable payments to a
class of persons within a particular type
of chapter 4 withholding rate pool. For
example, if a participating FFI (includ-
ing a reporting Model 2 FFI) that is a
non-U.S. payor receives a withholdable
payment on behalf of an account holder
of a U.S. account, the participating FFI
may include the account holder in a
chapter 4 withholding rate pool of U.S.
payees provided on an FFI withholding
statement to the withholding agent to allo-
cate the payment (or portion thereof) to the
U.S. payee pool when the participating FFI
reports the account holder under § 1.1471-
4(d)(3) (Form 8966, "FATCA Report," re-
porting) or § 1.1471-4(d)(5) (election to
report on Form 1099). As a result, the par-
ticipating FFI need not provide payee spe-
cific information to the withholding agent
with respect to the account holder, even if
such information would typically be re-
quired under chapter 61, because it will be
reported to the IRS under chapter 4.

Additionally, reporting Model 1 FFIs
and reporting Model 2 FFIs (without re-
gard to whether such FFIs are U.S. or
non-U.S. payors) may include certain re-
calcitrant account holders in a chapter 4
withholding rate pool of U.S. payees
when such payments are not subject to
withholding under chapters 3 or 4 or to
backup withholding under section 3406
(for example, presumed U.S. non-exempt
recipients). This rule was added to provide
coordination between the various report-
ing regimes. For example, a reporting
Model 2 FFI may include an account
holder of a non-consenting U.S. account
in a chapter 4 withholding rate pool of

U.S. payees with respect to a withholdable
payment that is not subject to withholding
under chapters 3 or 4 or to backup with-
holding under section 3406 when the FFI
reports the account holder as described in
§ 1.1471-4(d)(6) for the year in which the
payment is made.

Finally, in order to clarify potential
ambiguities, and as previewed in the draft
and final FFI agreement, these temporary
regulations provide that an FFI withhold-
ing statement should indicate the portion
of the payment allocated to a pool of
recalcitrant account holders that hold dor-
mant accounts for which the FFI (and not
the withholding agent) will withhold in
escrow under the procedures described
in § 1.1471-4(b)(6). Additionally, a
participating FFI that elects to apply
backup withholding under § 1.1471-
4(b)(3)(iii) to a withholdable payment
that is also a reportable payment (as
described under chapter 61) must also
indicate the portion of the payment al-
located to each recalcitrant account
holder subject to backup withholding
under section 3406 and report such pay-
ment to the IRS on Form 1099. A par-
ticipating FFI will not be able to make
the election to backup withhold under
§ 1.1471-4(b)(3)(iii) unless it is able to
report on the payment and tax withheld
consistent with the rules under chapter
61 and section 3406.

3\. Requirements for Validity of
Certificates-Withholding Certificate of
an Intermediary, Flow-Through Entity,
or U.S. Branch (Form W-8IMY)-
Withholding Statement-Special
Requirements for a Chapter 4
Withholding Statement and Exempt
Beneficial Owner Withholding Statement

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

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4\. Applicable Rules for Withholding
Certificates, Written Statements, and
Documentary Evidence-Period of
Validity

Under chapter 4, withholding certifi-
cates are valid for three years, unless an
exception permits indefinite validity (until
a change in circumstances occurs). Bene-
ficial owner withholding certificates pro-
vided by certain entities qualify for indef-
inite validity if the certificate is furnished
with documentary evidence establishing
the entity's foreign status. Comments re-
quested that section 501(c) entities be ex-
cluded from the requirement to furnish
documentary evidence of foreign status as
it is an undue burden on such entities. The
Treasury Department and the IRS agree that
it is appropriate to exclude these entities
from the requirement to furnish documen-
tary evidence of foreign status. In response
to these comments and to coordinate with
the rules under chapter 3, these temporary
regulations cross-reference the rules for in-
definite validity of withholding certificates
for section 501(c) entities in § 1.1441-
1(e)(4)(ii)(B).

5\. Applicable Rules for Withholding
Certificates, Written Statements, and
Documentary Evidence-Electronic
Transmission of Withholding Certificate,
Written Statement, and Documentary
Evidence

The final regulations provide that a
withholding agent may accept withholding
certificates, written statements, and docu-
mentary evidence supporting a payee's
claim of chapter 4 status electronically if
the agent is able to verify the identity of
the sender as the person named on the
form. Comments requested that the veri-
fication rules be modified or eliminated to
reduce the burden on the withholding
agent. The Treasury Department and the
IRS agree with the comments, but have
determined that the electronic transmis-
sion requirements under chapter 4 should
match those to be revised under chapter 3
in consideration of these comments.
Therefore, these temporary regulations
modify the final regulations by cross-
referencing the electronic submission
rules in § 1.1441-1(e)(4)(iv)(C) which
have been modified to adopt the change in
a separate regulations package. These

temporary regulations also make similar
conforming changes to the final regula-
tions with respect to requirements for an
intermediary to electronically submit a
withholding statement with a withholding
certificate to a withholding agent.

6\. Applicable Rules for Withholding
Certificates, Written Statements, and
Documentary Evidence-Acceptable
Substitute Withholding Certificate-
Non-IRS Form for Individuals

In general, a withholding agent may
substitute its own form for an official
Form W-8 if the substitute form contains
provisions that are substantially similar to
the official form. The final regulations
provide that if a substitute form is used in
place of a W-8BEN for individuals, the
form 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 would
impose an undue burden on withholding
agents. In response to comments, these
temporary regulations remove the city of
birth requirement. After further consider-
ation, however, the temporary regulations
require that the substitute form must con-
tain the individual's date of birth, without
regard to whether a foreign tax identifica-
tion number is provided.

7\. Documentation Furnished on
Account-by-Account Basis unless
Exception Provided for Sharing
Documentation within Expanded
Affiliated Group-Preexisting Account

The Treasury Department and the IRS
received comments requesting that, for
preexisting accounts, a withholding agent
be allowed to rely on documentation held
at a branch of the withholding agent or a
branch of another expanded affiliated
group member even if the withholding
agent 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 consolidated
obligations in order to share documenta-
tion is too burdensome. These temporary
regulations modify the final regulations to
allow a withholding agent, with respect to
a preexisting account that it maintains, to
rely on documentation furnished by a

payee for a preexisting account held at
another branch of the withholding agent
or a branch of another expanded affiliated
group member solely to determine the
chapter 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 payee
and (ii) the withholding agent has no rea-
son to know that, when the documentation
is obtained by the withholding agent, the
documentation is unreliable or incorrect.

D. Documentation requirements to
establish payee's chapter 4 status

## 1. Reliance on Pre-FATCA Form W-8

The final regulations generally allow
the withholding agent to rely on a pre-
FATCA Form W-8 for international or-
ganizations. In order to clarify a potential
ambiguity and to conform with chapter 3,
these temporary regulations provide that
reliance on a pre-FATCA Form W-8 is
limited to international organizations as
defined under chapter 3 and under section
7701(a)(18).

## 2. Identification of U.S. Persons-In General

Under chapter 4, a withholding agent
must treat certain payees as U.S. persons.
In order to clarify a potential ambiguity,
these temporary regulations provide that
foreign branches of U.S. persons and FFIs
that have elected to be treated as U.S.
persons under section 953(d) (despite the
fact that such FFIs may not be U.S. per-
sons for other purposes of chapter 4)
should be treated as U.S. persons by a
withholding agent if the withholding
agent has a valid Form W-9, "Request for
Taxpayer Identification Number and Cer-
tification," from the payee or is required to
presume that the payee is a U.S. person.
This reduces burden because FFIs that
have elected to be treated as U.S. persons
under section 953(d) are generally treated
as U.S. persons under chapter 3 and would
need to provide a Form W-9 in connec-
tion with payments subject to chapter 3
withholding and reporting.

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## 3. Identification of U.S. Persons-Preexisting Obligations

The final regulations provide that a
withholding agent (other than a participat-
ing FFI or registered deemed-compliant
FFI) that makes a payment with respect to
a preexisting obligation may treat a payee
as a U.S. person if it previously reviewed
a Form W-9 or other documentation that
established that the payee is a U.S. person
and established that the payee is an ex-
empt recipient for purposes of chapter 61.
Comments from U.S. withholding agents
indicated that the burden of documenting
such payees that have previously been
classified as U.S. persons is both signifi-
cant and disproportionate to the benefits
of obtaining documentation of U.S. status.
In response to these comments, these tem-
porary regulations modify the final regu-
lations to allow withholding agents (other
than a participating FFI or registered
deemed-compliant FFI) to treat the payee
of a payment with respect to a preexisting
obligation as a U.S. person if the with-
holding agent has previously classified the
payee as a U.S. person for purposes of
chapters 3 or 61 and established (through
documentation or the application of the
rules in § 1.6049-4(c)(1)(ii)) that the
payee is an exempt recipient for purposes
of chapter 61.

### 4. Identification of Participating FFIs and Registered Deemed-Compliant FFIs

The final regulations generally provide
that a withholding agent may only treat a
payee as a participating FFI or registered
deemed-compliant FFI if the withholding
agent receives an appropriate withholding
certificate and a GIIN. The final regula-
tions also provide a transitional rule for
when withholding agents may treat pay-
ments made prior to January 1, 2017, with
respect to a preexisting obligation, as
made to a payee that is a participating FFI
or 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 consideration
and to coordinate with the rules under
chapters 3 and 61, these temporary regu-

lations modify the final regulations to pro-
vide that in such cases the payee must also
have provided the withholding agent with
a pre-FATCA Form W-8, as payees that
receive U.S. source FDAP income would
have already been required to provide a
withholding certificate to a withholding
agent. These temporary regulations fur-
ther clarify the final regulations such that,
when a participating FFI or a registered
deemed-compliant FFI has a branch (in-
cluding a disregarded entity of the FFI)
that is located outside of the FFI's country
of residence and receives the payment, the
GIIN 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 Direct
Reporting NFFE, and Identification of
an Excepted Inter-Affiliate FFI

These temporary regulations provide
that direct reporting NFFEs and sponsored
direct reporting NFFEs qualify as ex-
cepted NFFEs. Consistent with this
change, these temporary regulations add
to the final regulations identification rules
with respect to direct reporting NFFEs
and sponsored direct reporting NFFEs.
Additionally, under the final regulations, a
financial institution does not include cer-
tain foreign entities that are considered
excepted inter-affiliate FFIs. One of the
requirements for such an entity is that it
does not receive payments from, or hold
an account with, a withholding agent other
than a member of its expanded affiliated
group. Comments requested that such en-
tities be permitted to hold bank accounts
with certain non-U.S. persons outside of
the 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 hold
depository accounts to pay for expenses in
the country in which the FFI is operating
and that are maintained within the same
country. Accordingly, conforming changes
have also been made by these temporary
regulations to add identification rules with
respect to an excepted inter-affiliate FFI.
An identification rule was not necessary
under the final regulations because an ex-
cepted inter-affiliate FFI was not allowed

to hold an account with a withholding
agent other than a member of its expanded
affiliated group.

#### E. Standards of knowledge

##### 1. GIIN Verification

The final regulations provide that, un-
der certain circumstances, a withholding
agent has reason to know that a payee is
not a financial institution. To clarify a
potential ambiguity, these temporary reg-
ulations provide that a withholding agent
has reason to know that a withholdable
payment is being made to a limited branch
of a participating or registered deemed-
compliant FFI when it is directed to make
payment to an address of the FFI in a
jurisdiction other than the address of the
participating FFI or registered deemed-
compliant FFI (or branch of such FFI) that
is identified as the FFI (or branch of such
FFI) that is supposed to receive the pay-
ment. These temporary regulations fur-
ther provide special rules regarding a
direct reporting NFFE and a sponsored
direct reporting NFFE's claim of chap-
ter 4 status.

##### 2. Reason to Know

Under chapter 4, a withholding agent
may not rely on an FFI's claim of chapter
4 status if the withholding agent has rea-
son to know that such claim is unreliable
or incorrect. Under the final regulations,
the withholding agent is required to re-
view information used to satisfy AML due
diligence requirements in determining
whether a claim of chapter 4 status was
unreliable or incorrect. In response to
comments, these temporary regulations
modify the final regulations such that
when a withholding agent has classified a
person by business type for AML due
diligence or another regulatory purpose
(other than for a tax purpose) that requires
the withholding agent to periodically
monitor or update the classification, the
withholding agent will have reason to
know that information contained in its ac-
count files conflicts with the person's
claim of chapter 4 status only if the clas-
sification recorded by the withholding
agent is inconsistent with the chapter 4
status claimed. Comments also requested

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additional time to review the information
collected for AML due diligence because
it is typically gathered and stored by a
different department or division of the
withholding agent and is not linked to the
customers' account files. These temporary
regulations adopt this comment and allow
30 days to review information collected
for AML due diligence for new accounts.

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

### F. Presumptions regarding chapter 4 status of the person receiving the payment in the absence of documentation

The Treasury Department and the IRS
intend for the chapter 4 presumption rules
for determining the status of a person as
an individual or an entity and as U.S. or
foreign to be identical to the presumption
rules in chapters 3 and 61. To ensure
coordination of these rules, these tempo-
rary regulations modify the final regula-
tions by cross-referencing the presump-
tion rules under chapter 3, rather than
restating the rules in detail. This change
ensures coordination between the pre-
sumption rules in chapter 3 and chapter 4
in the event that the chapter 3 presumption
rules are modified.

V. Comments and Changes to § 1.1471-
4-FFI Agreement

### A. Withholding requirements

1\. Satisfaction of Withholding
Requirements-Election to Withhold
under Section 3406

As announced in Notice 2013-69,
these temporary regulations modify the
final 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 a
withholdable payment that is also a re-
portable payment to a recalcitrant account
holder is not required to apply backup
withholding under section 3406 if it with-
holds on the payment under chapter 4. A
reportable payment that is not subject to
withholding under chapter 4 remains
subject to backup withholding under sec-
tion 3406. Additionally, these temporary
regulations provide under § 1.1471-
4(b)(3)(iii) that a participating FFI may
satisfy its chapter 4 withholding obliga-
tions for a withholdable payment that is a
reportable payment made to a recalcitrant
account holder that is a U.S. non-exempt
recipient subject to backup withholding if
the participating FFI elects for backup
withholding under section 3406 to apply
(rather than withholding under chapter 4
with 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 the
payment and tax withheld consistent with
the rules under chapter 61 and section
3406.

### 2. Special Rule for Dormant Accounts

With respect to dormant accounts of
recalcitrant account holders, the final reg-
ulations permit a participating FFI to es-
crow amounts withheld under chapter 4
rather than deposit such amounts with the
IRS. To coordinate with the chapter 3 and
61 regulations which would have required
such amounts to be withheld upon, the
temporary regulations limit this allowance
to amounts not otherwise subject to with-
holding under chapter 3 or backup with-
holding under section 3406. In addition, a
participating FFI may not delegate its re-
sponsibility to escrow the withheld tax to

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

B. Due diligence for the identification
and documentation of account holders
and payees

1\. Identification and Documentation
Procedure for Preexisting Individual
Accounts-Specific Identification and
Documentation Procedures for
Preexisting Individual Accounts-U.S.
Indicia and Relevant Documentation
Rules-Documentation to be Retained
upon Identifying U.S. Indicia-Standing
Instructions to Pay Amounts

The final regulations provide a cure for
standing instructions to pay amounts to an
account maintained in the United States
for an account holder that differs from
the cure provided under chapter 3.
These temporary regulations modify the
final regulations to provide an option to
follow the chapter 3 rules by adding a
cross-reference to § 1.1441-7(b)(12).

2\. Identification and Documentation
Procedure for Preexisting Individual
Accounts-Specific Identification and
Documentation Procedures for
Preexisting Individual
Accounts-Exception for Preexisting
Individual Accounts Previously
Documented as Held by Foreign
Individuals

The final regulations provide that a
participating 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 is
not required to perform an electronic
search or enhanced review. Comments re-
quested that this exception be extended to
the identification and documentation per-
formed by an agent of a participating FFI
that is a U.S. payor. To address these
comments and to further coordinate be-
tween the IGAs and the regulations, these
temporary regulations modify the final
regulations to adopt this comment.

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## C. Account reporting

1\. Reporting Requirements In General-
Financial Institution Required to Report
an Account-Special Reporting of
Account Holders of Territory Financial
Institutions

Section 1.1471-4(d)(2)(ii)(B) provides
a special reporting rule for participating
FFIs that maintain an account held by a
territory financial institution acting as an
intermediary. 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 with
respect to the account holders of the ter-
ritory financial institution because such
entities 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 the
participating FFI to report under
§ 1.1471-4 with respect to each account
holder of the territory financial institution
that receives a withholdable payment (or
portion thereof) and that is a specified
U.S. person or substantial U.S. owner of a
foreign entity (indirect account holders).
The final regulations are ambiguous about
how a participating FFI could report on
these indirect account holders. To provide
more clarity with respect to the reporting
requirements and to provide additional
flexibility, the temporary regulations give
participating FFIs the option of reporting
on these indirect account holders on either
Form 8966 or Form 1099. Additionally,
these temporary regulations clarify the
scope of information that must be reported
by a participating FFI on Form 8966 or
Form 1099 with respect to account hold-
ers of a territory financial institution that
has not elected to be treated as a U.S.
person.

2\. Reporting Requirements In General-
Financial Institution Required to Report
an Account-Requirement to Identify
the GIIN of a Branch that Maintains an
Account

The final regulations provide that a
participating FFI may elect to comply
with its obligation to report under
§ 1.1471-4(d)(3) or § 1.1471-4(d)(5) on
a branch-by-branch basis. After further
consideration, 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 recalcitrant
accounts, or separately with respect to any
clearly identified group of accounts (such as
by line of business or the location of where
the account is maintained). Consistent
with the final regulations, a participating
FFI must include the GIIN assigned to
the participating FFI or its branch (in-
cluding a disregarded entity of the FFI),
as applicable, to identify the jurisdiction
of the FFI or branch (or disregarded
entity) that maintains the accounts sub-
ject to reporting.

3\. Reporting Requirements In General-
Financial Institution Required to Report
an Account-Reporting by Participating
FFIs and Registered Deemed-Compliant
FFIs (including QIs, WPs, WTs, and
Certain U.S. Branches Not Treated as
U.S. Persons) for Accounts of
Nonparticipating FFIs (Transitional)

The final regulations provide transitional
reporting requirements for a participating
FFI or registered deemed-compliant FFI
making a payment of a foreign reportable
amount to a nonparticipating FFI. Under
§ 1.1474-1(d)(4)(iii)(C) of the final regula-
tions, a participating FFI is required to
report the aggregate amount of foreign
reportable amounts paid to each payee
that is a nonparticipating FFI, even when
such payments are not associated with a
financial account. The final regulations
define foreign reportable amount as a pay-
ment of FDAP income that would be a
withholdable payment if paid by a U.S.
person. Comments requested changes and
clarification 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 of
modifying systems to comply with this
reporting rule. These temporary regula-
tions continue to provide transitional re-
porting rules, but, consistent with Notice
2013-69, modify it to address these com-
ments. First, the temporary regulations
clarify that reporting will be required only
with respect to nonparticipating FFIs that
maintain an account with the participating
FFI. Second, these temporary regulations
modify the definition of foreign reportable
amount to mean foreign source payments

as described in § 1.1471-4(d)(4)(iv) paid
to or with respect to each such account.
Third, the temporary regulations provide
that instead of reporting only foreign re-
portable amounts paid to such nonpartic-
ipating FFIs, a participating FFI may
report all payments made with respect to
the account (not only foreign reportable
amounts). Fourth, the temporary regula-
tions provide that, when a participating
FFI is prohibited under domestic law from
reporting on a specific payee basis without
consent from the nonparticipating FFI and
the participating FFI has been unable to
obtain such consent, it may report the
aggregate number of accounts held by all
such non-consenting nonparticipating
FFIs and the aggregate amount of foreign
reportable amounts paid with respect to
such accounts. These temporary regula-
tions also modify the final regulations to
provide that the information required un-
der the transitional reporting rule will be
provided on Form 8966, not Form
1042-S, "Foreign Person's U.S. Source
Income 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) and
renumber (d)(3)(iv) through (d)(3)(x).
These changes were previously announced
in Notice 2013-69 and are also included in
the final FFI agreement. Finally, the
temporary regulations require partici-
pating FFIs to retain account statements
for accounts maintained for such non-
participating FFIs.

4\. Reporting Requirements In General-
Special U.S. Account Reporting Rules
for U.S. Payors-Special Reporting Rule
for U.S. Payors Other Than U.S.
Branches

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

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

5\. Reporting Requirements in General-
Special U.S. Account Reporting Rules
for U.S. Payors-Special Reporting
Rules for U.S. Branches Not Treated as
U.S. Persons

The final regulations do not include a
rule for reporting by a U.S. branch of a
registered 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 its
reporting requirements under chapter 4
if it reports the information required un-
der chapter 61 with respect to account
holders of accounts that the U.S. branch
is required to treat as U.S. accounts or
accounts held by owner-documented
FFIs.

## 6. Reporting on Recalcitrant Account Holders-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 8966
with respect to recalcitrant account hold-
ers. An additional 90-day hardship exten-
sion may be provided in certain circum-
stances. These revisions are consistent
with the extensions of time already per-
mitted for filing Form 8966 with respect
to U.S. accounts.

## 7. Treatment of a Disregarded Entity

In response to comments and in order
to address a potential ambiguity in the
final regulations about whether a disre-
garded entity that is owned by an FFI is
treated as a branch of an FFI, these tem-
porary regulations clarify that the term
branch with respect to an FFI includes an
entity that is disregarded as an entity sep-
arate from the FFI. This clarification was
previewed in the draft FFI agreement
which was published in Notice 2013-69.
These temporary regulations make addi-
tional changes throughout the final regu-
lations to further clarify the treatment of a
disregarded entity when such an entity is
treated as a branch of an FFI. For exam-
ple, the GIIN verification procedures that
apply with respect to a branch of an FFI
also apply with respect to a disregarded
entity that is owned by an FFI. Addition-
ally, a disregarded entity that is owned by
an FFI may be treated as a limited branch
if the disregarded entity is unable to com-
ply with the terms of an FFI agreement
with respect to accounts that it maintains,
and the reason to know standards that
apply to withholdable payments made to a
branch of a participating or registered
deemed-compliant FFI also apply to with-
holdable payments made to a disregarded
entity that is owned by such an FFI.

## D. Expanded affiliated group requirements

The final regulations require that, in
general, each FFI within an expanded af-
filiated group must be either a participat-
ing FFI or a registered deemed-compliant
FFI. Comments noted that some FFIs
within an expanded affiliated group will
have the status of an exempt beneficial
owner and requested that the regulations
be modified to allow for such FFIs to be
excluded from this requirement. The tem-
porary regulations modify the final regu-
lations to adopt this comment.

### E. Verification-IRS review of compliance

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

additional information to determine an
FFI's compliance with the applicable FFI
agreement and to assist the IRS with its
review of account holder compliance with
tax reporting requirements.

### F. Event of default

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

#### VI. Comments and Changes to

§ 1.1471-5-Definitions Applicable to
Section 1471

##### A. U.S. accounts-account holder-in general; grantor trust

The definition of account holder in the
final regulations does not treat a grantor
trust as an account holder to the extent
that the grantor is treated as owning the
trust or all the assets in the trust under
sections 671 through 679, regardless of
whether the grantor is a U.S. or foreign
person. If such grantor is a foreign person
and 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 is
treated as having an interest in the portion
of the trust owned by the grantor. There-
fore, the specified U.S. person is not an
account holder and would not be reported
even though such U.S. person might be a

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substantial U.S. owner of the foreign
grantor trust. Further, for purposes of de-
termining whether a foreign grantor trust
has a substantial U.S. owner (and is a U.S.
account), the final regulations provide that
a substantial U.S. owner is any specified
U.S. person treated as owning any portion
of the grantor trust under sections 671
through 679, and a trust owned only by
U.S. grantors is not treated as having a
beneficiary that is a specified U.S. person.
Thus, in contrast to the account holder
rule, the test for determining a substantial
U.S. owner of a trust is made without
regard to the treatment of the settlor of the
trust as a foreign grantor under sections
671 through 679. In response to requests
for further clarification, these temporary
regulations remove the grantor trust rule
in the definition of account holder in the
final regulations so that the general rule
for treating an entity as an account holder
will apply to treat a grantor trust as the
account holder. Accordingly, a grantor
trust that holds an account must provide
documentation of its chapter 4 status as a
FFI or NFFE. This change harmonizes the
treatment of a grantor trust as an account
holder for purposes of the chapter 4 with-
holding provisions with the provisions in
chapters 3 and 61, which treat a grantor
trust, rather than the grantor, as the payee.

B. Financial accounts-value of interest
determined, directly or indirectly,
primarily by reference to assets that give
rise (or could give rise) to withholdable
payments, and return earned on the
interest (including upon a sale,
exchange, or redemption) determined,
directly or indirectly, primarily by
reference to one or more investment
entities or passive NFFEs

While financial accounts generally in-
clude equity or debt interests (other than
regularly traded interests) in investment
entities, financial accounts include only
certain enumerated categories of interests
in holding companies, treasury centers,
and other financial institutions. Among
the enumerated categories are certain eq-
uity and debt interests whose return or
value is determined, directly or indirectly,
primarily by reference to assets that give
rise (or could give rise) to withholdable
payments. The final regulations provide
that a debt interest is considered to have a

value determined primarily by reference
to such assets if the debt interest is se-
cured by the assets of a U.S. person. The
final regulations provide that an equity
interest is considered to have a value de-
termined primarily by reference to such
assets if the amount payable upon re-
demption of the equity interest is secured
primarily by assets that give rise (or could
give rise) to withholdable payments. A
similar provision under another enumer-
ated category treating certain interests in
holding companies and treasury centers
as financial accounts (see §§ 1.1471-
5(b)(1)(iii)(B)(2) and (3)) also applies to a
debt interest secured by the assets of one
or more investment entities described in
§§ 1.1471-5(e)(4)(i)(B) or (C) or one or
more passive NFFEs that are members of
the entity's expanded affiliated group
(collectively, the secured equity and debt
provisions).

Comments have suggested that these
provisions are overbroad because it is
questionable whether the value of, or re-
turn earned on, a debt or equity interest is
determined primarily by reference to as-
sets of a U.S. person solely because the
debt or equity interest is secured by such
assets. In response to these comments,
these temporary regulations modify the
final regulations by eliminating the se-
cured equity or debt provisions. The facts
and circumstances may nonetheless lead
to a conclusion that the value of a secured
equity or debt interest is determined, di-
rectly or indirectly, primarily by reference
to assets giving rise to withholdable pay-
ments (for example, when the amount
payable as interest on, or upon redemption
or retirement of, a debt interest is deter-
mined primarily by reference to the assets
securing the debt interest).

In addition, the final regulations pro-
vide that a debt interest is considered to
have a value determined, directly or indi-
rectly, primarily by reference to assets that
give rise to withholdable payments if
amounts payable as interest on, or upon
redemption or retirement of, the debt are
determined primarily by reference to the
profits or assets of a U.S. person. This
provision inadvertently did not address
whether debt interests with amounts pay-
able by reference to equity interests in a
U.S. person are debt interests whose re-
turn or value is determined primarily by

reference to assets that give rise (or could
give rise) to withholdable payments. To
correct this omission, the temporary reg-
ulations modify the final regulations to
include 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 the
definition of financial institution includes
a holding company or treasury center that
is part of an expanded affiliated group that
includes a depository institution, custodial
institution, insurance company, or invest-
ment entity. Comments noted that the def-
inition, with respect to an insurance com-
pany, should be limited to a specified
insurance company which is itself a finan-
cial institution. These temporary regula-
tions correct the final regulations to treat a
holding company or treasury center as a
financial institution if it is part of an ex-
panded affiliated group that includes a
specified insurance company.

2\. Holding Financial Assets for Others
as a Substantial Portion of its
Business-Income Attributable to
Holding Financial Assets and Related
Financial Services

The final regulations provide that an
entity is a custodial institution if at least
20 percent of the entity's gross income is
attributable to holding financial assets for
others and related financial services. The
final regulations define income attribut-
able to holding financial assets to include,
among other things, fees for providing
financial advice. As a result, an entity
could qualify as a custodial institution un-
der the final regulations even if the entity's
sole business is to provide financial advice
to clients and it does not conduct any
activities as a custodian or broker. Com-
ments indicated that this definition is
overly broad and could cause entities that
do not hold financial assets and therefore
have no financial accounts to be treated as
custodial institutions. In response, these
temporary regulations modify the final
regulations to define income attributable
to holding financial assets to include fees
for providing financial advice with respect

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

## 3. Investment Entity-Examples

The final regulations generally provide
that an investment entity includes an
entity whose gross income is primarily
attributable to investing, reinvesting, or
trading 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 that
a foreign introducing broker does not
manage an entity if it does not have dis-
cretionary authority to manage its clients'
assets. However, even though these facts
have been added to Examples 7 and 8, the
results in Examples 7 and 8 remain the
same. In Example 7, even when the intro-
ducing broker has discretionary authority
to act unilaterally on its client's behalf
with respect to its client's investments,
because the introducing broker is an indi-
vidual, the entity that she manages would
not 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 primarily
conducts as a business certain investment
related activities, the entity managed by
the introducing broker would be treated as
an investment entity under § 1.1471-
5(e)(4)(i)(B).

## 4. Exclusions-Excepted Nonfinancial Group Entities-In General

The final regulations provide that a
holding company, treasury center, or cap-
tive finance company will not qualify as
an excepted nonfinancial group entity if,
among other things, it is formed in con-
nection with or availed of certain arrange-
ments or investment vehicles. Comments
requested additional guidance on what it
means to be "formed in connection with
or availed of." The temporary regulations
modify the final regulations such that any
entity that existed at least six months prior
to its acquisition by an arrangement or
investment vehicle and which, prior to the
acquisition, regularly conducted activities
in the ordinary course of business will not
be considered to be formed in connection
with or availed of such an arrangement or

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

## 5. Exclusions-Excepted Nonfinancial Group Entities-Nonfinancial Group

For purposes of determining whether
an 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 the
determination is made. Comments re-
quested: (i) that this exclusion also be
applicable if the expanded affiliated group
has been in existence for less than three
years and (ii) that a group would qualify if
it meets the income test over an average of
three years (rather than having to meet the
test in each of the three preceding years).
The Treasury Department and the IRS
have determined that the exclusion should
be available to expanded affiliated groups
that have been in existence for less than
three years, and these temporary regula-
tions modify the final regulations accord-
ingly. The Treasury Department and the
IRS continue to believe, however, that
only expanded affiliated groups that meet
the income test in each year of the testing
period should qualify for the exclusion.

In order to provide further clarification
when determining the percentage of in-
come or assets of the group that produce
or are held for the production of passive
income, these temporary regulations also
modify the final regulations by excluding
transactions between members of the ex-
panded affiliated group. In addition, these
temporary regulations provide guidance
on measuring the value of such assets.

## 6. Exclusions-Excepted Nonfinancial Group Entities-Holding Company

Comments requested that, for purposes
of determining if a holding company is
part of an excepted nonfinancial group, a
trust or partnership that owns all the stock
of a common parent corporation of an
expanded affiliated group be eligible for
treatment as a holding company and mem-
ber of an excepted nonfinancial group.
Otherwise, such entities are not treated as
part of the expanded affiliated group and
cannot qualify for such exception. These
temporary regulations modify the final

regulations to allow a partnership or other
non-corporate entity to be treated as a
holding 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 of
the voting power and value of the stock of
one or more common parent corpora-
tion(s) of one or more expanded affiliated
group(s). If a partnership or other non-
corporate entity owns more than 50 per-
cent of the voting power and value of the
stock of two or more corporations and
each such corporation has its own subsid-
iaries such that it is the common parent
corporation of an expanded affiliated
group, each common parent corporation's
expanded affiliated group will be treated
as a separate such group for purposes of
applying the rules of this section unless
the non-corporate entity is treated as the
common parent entity of the entire ex-
panded affiliated group in accordance
with § 1.1471-5(i)(10).

## 7. Exclusions-Excepted Nonfinancial Group Entities-Treasury Center

Comments were received that the def-
inition of a treasury center in the final
regulations is too narrow in that an entity
that manages working capital but does not
otherwise invest or trade may not satisfy
this definition. For example, a group's
cash pooling entity may be in a net deficit
position and therefore may not be consid-
ered to be investing or trading in financial
assets. In addition, with respect to the
financing activities of such a vehicle, the
final regulations could be read to limit
situations in which an entity that is itself
equity funded can qualify as a treasury
center. In response to these comments, the
temporary regulations modify the final
regulations to clarify that an entity that
manages the working capital of an ex-
panded affiliated group (or any member
thereof) will not cease to qualify as a
treasury center solely because it has no
investments and does not trade in financial
assets. Further, the temporary regulations
clarify that equity-funded affiliates may
qualify as treasury centers.

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8\. Exclusions-Excepted Inter-Affiliate
FFI

Under the final regulations, a financial
institution does not include certain foreign
entities that are considered excepted inter-
affiliate FFIs. One of the requirements for
such an entity is that it does not receive
payments from, or hold an account with, a
withholding agent other than a member of
its expanded affiliated group. Comments
requested that such entities be permitted
to hold bank accounts with certain non-
U.S. persons outside of the expanded af-
filiated group. The temporary regulations
modify the final regulations to allow such
entities to hold depository accounts main-
tained in the country in which the entity is
operating to pay for expenses in that same
country.

### 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 by
the fund can only be sold through distrib-
utors that are participating FFIs, registered
deemed-compliant FFIs, nonregistering
local banks, or restricted distributors. In
response to comments, even though these
temporary regulations do not eliminate the
requirement of the restricted fund to ter-
minate its agreement with any distributor
that has a change in status that causes it to
no longer qualify to be a distributor and
redeem or transfer all debt and equity in-
terests of the FFI issued through that dis-
tributor, these temporary regulations do
remove the requirement that the restricted
fund certify to the IRS.

#### 2. Registered Deemed-Compliant FFIs- Qualified Credit Card Issuers and Servicers

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

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

#### 3. Registered Deemed-Compliant FFIs- Sponsored Investment Entities and Controlled Foreign Corporations

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

#### 4. Certified Deemed-Compliant FFIs- Nonregistering Local Bank

The final regulations provide that, in
order to be treated as a nonregistering
local bank, an FFI's business must consist
primarily of receiving deposits from and
making 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. In
addition, it may be unclear how the final
regulations 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 with
the IGAs, these temporary regulations
modify the final regulations such that a
credit union or similar cooperative credit
organization will be eligible for treatment
as 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 a
greater than five percent interest in such
credit union or cooperative credit organi-
zation. For purposes of determining what
unrelated means for retail customers of a
bank, as well as for purposes of aggregat-
ing the interests of related members of a
credit union or cooperative credit organi-
zation under the five percent test, the tem-
porary regulations provide that the rules
of section 267(b) apply.

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

Comments were received stating that
most securitization investment vehicles
could not meet the requirements in the
final regulations for a limited life debt
investment entity (LLDIE) to be treated as
certified deemed-compliant FFIs. To ac-
commodate industry practices and expand
the types of securitization vehicles that
will qualify as a LLDIE, these temporary
regulations make a number of significant
changes to the definition of LLDIE in the
final regulations. These changes include:
(i) removing the requirement that a LL-
DIE's organizational documents cannot
be amended without the consent of all of
its investors; (ii) clarifying that a LLDIE
issues debt or equity interests under a trust
indenture or similar agreement; (iii) ex-
tending the category so that it applies to a
LLDIE that issued all of its interests on or
before January 17, 2013 (for example, the
date that the final regulations were filed);
(iv) allowing a LLDIE to be treated as a
certified deemed-compliant FFI until the
LLDIE liquidates or terminates; (v) re-
moving the requirement that investors be
unrelated to each other; and (vi) expand-
ing the types of assets that the entity can
hold and still qualify as a LLDIE.

6\. Certified Deemed-Compliant FFIs-
Investment Advisors and Investment
Managers

In response to comments, and to coor-
dinate with the IGAs, these temporary
regulations add certain investment advi-
sors and investment managers that do not
maintain financial accounts as entities el-
igible for treatment as certified deemed-
compliant FFIs. Accordingly, these tem-
porary regulations also add identification
rules 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 related
or unrelated to describe a relationship be-
tween parties. Comments noted that the
final regulations do not define what is

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

### E. Expanded affiliated group

Comments requested that a LLDIE not
be considered a member of an expanded
affiliated group as a result of any member
of such expanded affiliated group owning
interests in such entity. These comments
indicated that because interests in these
entities are generally held through a clear-
ing organization, these entities often
would not be able to determine the iden-
tity of their investors. In addition, com-
ments noted the burden of monitoring
ownership changes for the purpose of de-
termining when to include or exclude a
LLDIE as a member of an expanded af-
filiated group, and the potential adverse
consequences to the rest of the group in
the event that any such entity is not prop-
erly included. Comments also stated that
the definition of expanded affiliated group
in the final regulations presents challenges
with respect to non-corporate entities that
are within a chain of commonly controlled
corporations. For example, the final regu-
lations do not clearly indicate whether
constructive ownership rules apply to de-
termine whether a non-corporate entity is
controlled by a member of the group. In
response to these comments, these tempo-
rary regulations modify the definition of
expanded affiliated group to exclude from
the group pre-existing LLDIEs (for exam-
ple, a LLDIE that issued all of its inter-
ests, and was in existence, on or before
January 17, 2013) and clarify the owner-
ship rules applicable to corporate and non-
corporate members of the group. These
temporary regulations also permit (but do
not require) a non-corporate entity to be
treated as the common parent entity of the
expanded affiliated group.

VII. Comments and Changes to Section
1.1471-6-Payments Beneficially
Owned by Exempt Beneficial Owners-
Foreign Central Bank of Issue

Comments were received stating that
the functions of a foreign central bank of

issue may be performed by an institution
other than a bank. In response to these
comments and in order to coordinate the
regulations with the IGAs, these tempo-
rary regulations modify the final regula-
tions to include an institution performing
such functions within the definition of a
foreign central bank of issue. In addition,
comments stated that a foreign central
bank of issue may earn income from cash
as well as securities. Accordingly, the
temporary regulations allow a foreign
central bank of issue to be a beneficial
owner with respect to income earned on
cash.

Comments also stated that some for-
eign central banks maintain depository ac-
counts solely for their employees. These
comments requested that such employee-
only accounts not be treated as accounts
held in connection with commercial activ-
ities. The Treasury Department and the
IRS believe there is a low risk of tax
evasion with respect to such employee
accounts, and that the burden on central
banks to register as an FFI for these ac-
tivities and provide documentation as in-
termediaries would be disproportionately
high. Therefore, the temporary regulations
modify the final regulations to exclude
maintaining such accounts from the defi-
nition of commercial activities.

### VIII. Comments and Changes to Section 1.1472-1-Withholding on NFFEs

### A. Exceptions-payments to an excepted NFFE-active NFFEs

Comments noted that fiscal year finan-
cial statements may not be used in deter-
mining whether an entity is an active
NFFE. These comments noted that prepar-
ing calendar year financial statements for
entities using non-calendar fiscal years
would cause significant burdens without
commensurate benefits. Therefore, these
comments suggested that an entity be able
to use either its calendar or fiscal year in
analyzing whether the entity meets the
active NFFE test. Comments further sug-
gested that an entity be allowed to use
financial statements based on foreign ac-
counting principles. These comments
have been adopted and these temporary
regulations modify the final regulations
accordingly.

### B. Exceptions-payments made to an excepted NFFE

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

### C. Exceptions-payments to an excepted NFFE-direct reporting NFFEs and sponsored direct reporting NFFEs

These temporary regulations provide
that excepted NFFE includes a NFFE that
is a direct reporting NFFE or sponsored
direct reporting NFFE. A direct reporting
NFFE is a NFFE that elects to report on
Form 8966 directly to the IRS certain in-
formation about its direct or indirect sub-
stantial U.S. owners (or it may be required
to certify on Form 8966, or in such other
manner as the IRS may prescribe, that it
does 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 a
financial account. A direct reporting
NFFE is required to register with the IRS
to obtain a GIIN and to agree to comply
with the provisions in the regulations re-
garding reporting information about its
substantial U.S. owners. In general, with-
holding agents and participating FFIs will
identify and document a direct reporting
NFFE in a manner similar to how with-
holding agents and participating FFIs will
document a participating FFI, including
by verifying that the GIIN of the direct
reporting NFFE is listed on the IRS FFI
List. Notwithstanding that a direct report-
ing NFFE will document itself to with-
holding agents and participating FFIs in a
manner similar to a participating FFI, it
will not be treated as a participating FFI
and will not enter into an FFI agreement.
Therefore, since the definition of excepted
NFFE includes a direct reporting NFFE,
an account held by a direct reporting
NFFE will not be treated as a U.S. account
and will not be reported to the IRS by a
participating FFI with which the direct
reporting NFFE has a financial account.

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

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rect reporting NFFE's behalf) information
about each sponsored direct reporting
NFFE's direct or indirect substantial U.S.
owners. These changes were previously
announced in Notice 2013-69 and were
made 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 bearing
debt obligations; gross proceeds
defined-payment of gross proceeds-
amount of gross proceeds

Under the final regulations, income
that is otherwise described as U.S. source
FDAP income does not include interest
accrued on the date of a sale or exchange
of an interest bearing debt obligation if the
sale occurs between two interest payment
dates. In order to harmonize this rule with
the rules in chapter 3, these temporary
regulations provide that this type of inter-
est is not excluded from U.S. source
FDAP income or gross proceeds if the
sale 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 withholdable
payments-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 withholdable
payments for certain non-intermediated
offshore payments of U.S. source FDAP
income prior to 2017. The Treasury De-
partment and the IRS intended to provide
that the exclusion does not apply to debt
or equity issued by a U.S. person in order
to prevent U.S. persons from exploiting
this exception by issuing debt or equity
interests through a foreign branch. To
clarify the issue, these temporary regula-
tions modify the final regulations such
that the exclusion does not apply to pay-
ments made with respect to debt or equity
issued by a U.S. person (excluding a de-
posit account maintained by a foreign
branch of a U.S. financial institution).

Comments indicated that because the
defined term payments with respect to an
offshore obligation is not used in the final
regulations, it is unclear whether, in order
for this exception to apply, all payments
must be made outside the U.S. To clarify,
these temporary regulations modify the
final regulations to use the defined term.

## 2. Insurance Brokers

Because the final regulations treat in-
surance brokers as intermediaries, the
transitional rule for offshore payments of
U.S. source FDAP income under the final
regulations does not apply to insurance
and reinsurance premiums paid to foreign
insurance companies by non-U.S. insur-
ance brokers. Comments were received
stating that the transitional rule should
apply to such premiums, because it ap-
plies to insurance premiums paid directly
by the insured. These temporary regula-
tions provide a transitional rule such that,
for purposes of the exception for offshore
payments, 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 withholdable
payments-collateral arrangements
prior to 2017 (transitional)

Comments requested relief from with-
holding on payments made by a secured
party with respect to collateral securing
one or more transactions under a collateral
arrangement between the secured party
and the counterparty. Comments indicated
that general industry practice is to com-
mingle collateral from all counterparties
in a single account held by the secured
party and that this practice does not permit
the identification of collateral to a partic-
ular counterparty. As a result, a secured
party is currently unable to determine
whether it is acting as an intermediary or
a principal with respect to some or all of
the payments made to the counterparty
based upon the secured party's right under
a collateral arrangement to sell or loan the
collateral to a third party. To allow the
industry time to develop the systems nec-
essary to make this determination, these
temporary regulations add a transitional
rule so that withholding on such payments

will begin on January 1, 2017, provided
that only a commercially reasonable
amount of collateral is held by the secured
party as part of the collateral arrangement.

D. Substantial U.S. owner-indirect
ownership of foreign entities-interests
owned 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 is
determined by aggregating interests held
by related persons, applying certain pro-
visions of the regulations under section
267 to determine whether such persons
are related. These temporary regulations
clarify that a person must have direct or
indirect ownership in the entity before the
aggregation rules apply, such that a sub-
stantial U.S. owner does not include an
individual with no ownership interest
other than an interest attributed to him
from a related person.

X. Changes and Comments to § 1.1474-
1-Liability for Withheld Tax and
Withholding Agent Reporting

A. Information returns for payment
reporting-filing requirement-in
general

The final regulations provide a general
statement that a withholding agent needs
to file a Form 1042-S to report a chapter
4 reportable amount, even though there
are exceptions to this rule, such as the
exception applicable to a participating FFI
that provides its withholding agent with
sufficient information for it to do the re-
porting. The final regulations have been
modified to qualify this language.

The final regulations also provide that
a recipient copy of the Form 1042-S may
include 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 for
the IRS to match the recipient copy of the
Form 1042-S to the copy filed with the
IRS. As previewed in the draft Form
1042-S instructions released on Novem-
ber 1, 2013, and to coordinate with the
regulations under chapter 3, these tempo-
rary regulations remove the allowance for

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withholding agents to include more than
one type of income or other payment on
the copy of the Form 1042-S furnished to
the recipient.

However, to allow sufficient time for
withholding agents to adapt to this change
to the final regulations, a withholding
agent will be permitted to include more
than one type of income or other payment
on the recipient copy of the Form 1042-S
for calendar year 2014. Starting with cal-
endar year 2015, the Form 1042-S and
accompanying instructions will require a
separate Form 1042-S for each type of
income or other payment.

## B. Information returns for payment reporting-filing requirement- recipient-defined; persons that are not recipients

For Form 1042-S reporting, the final
regulations provide that an excepted
NFFE that is not acting as an agent or
intermediary with respect to the payment
is the recipient of the payment in question.
However, if such entity is a flow-through
entity, it is not treated as a recipient on the
Form 1042-S for chapter 3 purposes. In
order to have a consistent definition of
recipient for chapters 3 and 4 reporting
purposes (because reporting for both
chapters is performed on a single Form
1042-S), these temporary regulations
modify the final regulations by providing
that an excepted or passive NFFE that is a
flow-through entity is not treated as a re-
cipient. Also, the final regulations have
been modified to remove the provision
indicating 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 its
reporting pools, which is reflected on
Form 1042-S. These temporary regula-
tions further remove the references to a
participating FFI, registered deemed-
compliant FFI, and U.S. branch that is not
treated as a U.S. person from the defini-
tion of persons that are not recipients.

C. Information returns for payment
reporting-amounts subject to
reporting-in general

These temporary regulations make a
correction to the definition of the term
chapter 4 reportable amount in § 1.1474-

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

D. Information returns for payment
reporting-method of reporting-
payments by U.S. withholding agents to
recipients-payments to participating
FFIs, deemed-compliant FFIs, and
certain QIs

Consistent with changes made by these
temporary regulations to clarify the chap-
ter 4 withholding rate pools, the final reg-
ulations are modified to clarify that a
withholding agent that receives an FFI
withholding statement from a participat-
ing FFI or registered deemed-compliant
FFI [must report with respect to each such
pool identified on the FFI withholding
statement] on a separate Form 1042-S
issued to the participating FFI, registered
deemed-compliant FFI, or QI (as applica-
ble) as the recipient with respect to each
such pool identified on an FFI withhold-
ing statement.

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

These temporary regulations add a co-
ordination rule for instances in which a
participating FFI withholds under chapter
4 on a payment made to a recalcitrant
account holder that is a U.S. non-exempt
recipient, and such payment is also a re-
portable amount subject to backup with-
holding. The rule is applicable to cases in
which the participating FFI does not elect
to withhold on the payment under section
3406.

#### XII. Future Guidance

### A. Verification requirements of sponsoring entities

Regulations describing the verification
requirements of sponsoring entities will
be proposed and issued separately from
these temporary regulations. Under the
proposed regulations, a sponsoring entity
will be required to make two separate
compliance certifications: one on behalf
of its sponsored FFI or sponsored direct
reporting 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 to
be treated as a direct reporting NFFE (as
applicable), and a second certification on
the sponsoring entity's own behalf with
respect to its compliance with the require-
ments of its status as a sponsoring entity.
In addition, the verification requirements
in the proposed regulations will allow the
IRS to request additional information
from a sponsoring entity, such as regard-
ing the information reported on the forms
filed with the IRS with respect to a spon-
sored FFI or sponsored direct reporting
NFFE in order to review such entities'
compliance with the requirements for
maintaining their status as a sponsored
FFI or sponsored direct reporting NFFE,
and to assist the IRS with its review of
account holder or substantial U.S. owner
compliance with tax reporting require-
ments.

## B. FFI agreement

Several changes made by these tempo-
rary regulations are not reflected in and
may 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 these
regulations. For instance, the rules regard-
ing an optional escrow by a participating
FFI of tax withheld on withholdable pay-
ments to dormant accounts held by recal-
citrant account holders are modified in
these temporary regulations. The FFI
agreement will be revised to reflect that
the tax withheld in escrow becomes due
90 days after the date that the account
ceases to be a dormant account, rather
than the date that is the earlier of 90 days
or the end of the calendar year following
the date that the account ceases to be a
dormant account.

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

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sections in § 1.1471-1(b). In addition, an
incorrect citation to § 1.6049-4(b)(6) will
be removed.

The FFI agreement will also be revised
to reflect a change to the reporting re-
quirements by participating FFIs that elect
to backup withhold under section 3406
rather than to withhold under chapter 4 on
a withholdable payment that is a report-
able payment made to a recalcitrant ac-
count holder that is a U.S. non-exempt
recipient subject to backup withholding.
These temporary regulations clarify that a
participating FFI may make the election to
apply backup withholding under section
3406 with respect to an account holder
only if it complies with the information
reporting rules under chapter 61 and sec-
tion 3406. Accordingly, various sections
of the FFI agreement will be modified to
reflect this change.

## Special Analyses

It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13653. Therefore, a regulatory assess-
ment is not required. It also has been
determined 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 of
provisions including §§ 1.1471-3, 1.1471-4,
1.1472-1, 1.1474-1, and 1.1474-6. In addi-
tion, these temporary regulations amend a
number of collections of information set
out in TD 9610. The IRS intends that the
information collection requirements of
these temporary regulations will be satis-
fied by filing Forms 8957, 8966, the W-8
series of forms, W-9, 1042, 1042-S, the
1099 series of forms, as well as income
tax returns (for example, Forms 1040 and
1120F) and Form 843 relating to refunds.
As a result, for purposes of the Paperwork
Reduction Act (44 U.S.C. 3507), the re-
porting burden associated with the collec-
tion of information in these temporary
regulations 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 displays
a valid control number.

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

Section 202 of the Unfunded Mandates
Reform Act of 1995, Public Law 104-4,
requires that an agency prepare a costs
and benefits analysis and a budgetary im-
pact statement before promulgating a rule
that may result in the expenditure by
State, local, and tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year. If a
budgetary impact statement is required,
section 205 of the Unfunded Mandates
Reform Act requires an agency to identify
and consider a reasonable number of reg-
ulatory alternatives before promulgating a
rule. The Treasury Department and the
IRS have determined that there is no fed-
eral mandate imposed by this rulemaking
that may result in the expenditure by
State, local, and tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year.

For the applicability of the Regulatory
Flexibility 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 rulemaking
published in the Proposed Rules section in
this issue of the Bulletin. Pursuant to sec-
tion 7805(f) of the Code, these regulations
have been submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on their impact
on small business.

## Drafting Information

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

* * * * *

## Amendments to the Regulations

Accordingly, 26 CFR part 1 is
amended as follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 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. 1471.

Section 1.1471-3 is also issued under
26 U.S.C. 1471.

Section 1.1471-4 is also issued under
26 U.S.C. 1471.

Section 1.1471-5 is also issued under
26 U.S.C. 1471.

Section 1.1471-6 is also issued under
26 U.S.C. 1471.

Section 1.1472-1 is also issued under
26 U.S.C. 1472.

Section 1.1473-1 is also issued under
26 U.S.C. 1473.

Section 1.1474-1 is also issued under
26 U.S.C. 1474.

Section 1.1474-6 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),

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(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 and
definitions.

* * * * *

(b) * * *

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

* * * * *

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

* * * * *

(20) [Reserved]. For further guidance,
see § 1.1471-1T(b)(20).

* * * * *

(23) [Reserved]. For further guidance,
see § 1.1471-1T(b)(23).

* * * * *

(31) [Reserved]. For further guidance,
see § 1.1471-1T(b)(31).

* * * * *

(35) [Reserved]. For further guidance,
see § 1.1471-1T(b)(35).

* * * * *

(41) [Reserved]. For further guidance,
see § 1.1471-1T(b)(41).

* * * * *

(43) [Reserved]. For further guidance,
see § 1.1471-1T(b)(43).

* * * * *

(48) [Reserved]. For further guidance,
see § 1.1471-1T(b)(48).

* * * * *

(50) [Reserved]. For further guidance,
see § 1.1471-1T(b)(50).

* * * * *

(67) [Reserved]. For further guidance,
see § 1.1471-1T(b)(67).

* * * * *

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

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

* * * * *

(81) [Reserved]. For further guidance,
see § 1.1471-1T(b)(81).

* * * * *

(83) [Reserved]. For further guidance,
see § 1.1471-1T(b)(83).

* * * * *

(88) [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)(98).

* * * * *

(100) [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)(105).

* * * * *

(113) [Reserved]. For further guidance,
see § 1.1471-1T(b)(113).

* * * * *

(115) [Reserved]. For further guidance,
see § 1.1471-1T(b)(115).

* * * * *

(123) [Reserved]. For further guidance,
see § 1.1471-1T(b)(123).

(124) [Reserved]. For further guidance,
see § 1.1471-1T(b)(124).

(125) [Reserved]. For further guidance,
see § 1.1471-1T(b)(125).

* * * * *

(128) [Reserved]. For further guidance,
see § 1.1471-1T(b)(128).

* * * * *

(135) [Reserved]. For further guidance,
see § 1.1471-1T(b)(135).

* * * * *

(141) [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 and
definitions (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 further
guidance, see § 1.1471-1(b)(1) through (6).

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

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

(9) [Reserved]. For further guidance,
see § 1.1471-1(b)(9).

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

(11) through (19) [Reserved]. For further
guidance, see § 1.1471-1(b)(11) through (19).

(20) Chapter 4 withholding rate pool.
The term chapter 4 withholding rate pool
means a pool identified on a chapter 4
withholding statement (as described in
§ 1.1471-3(c)(3)) provided by an interme-
diary or flow-through entity with respect
to a withholdable payment and that is al-
located to payees that are nonparticipating
FFIs. The term chapter 4 withholding rate
pool also includes, with respect to a pool
identified on an FFI withholding state-
ment provided by a participating FFI or
registered deemed-compliant FFI with re-
spect to a withholdable payment that is
allocated to a class of recalcitrant account
holders subject to withholding under
chapter 4 as described in § 1.1471-
4(d)(6)(i) (including a pool of account
holders to which the escrow procedures
for dormant accounts apply and U.S. per-
sons included in a U.S. payee pool to the
extent allowed and as described in
§ 1.1471-3(c)(3)(iii)(B)(2)(ii) and (iii)).

(21) through (22) [Reserved]. For further
guidance, see § 1.1471-1(b)(21) through (22).

(23) Consolidated obligations. The
term consolidated obligations means mul-
tiple obligations that a withholding agent
(including a withholding agent that is an
FFI) has chosen to treat as a single obli-
gation in order to treat the obligations as
preexisting obligations pursuant to para-
graph (b)(104)(ii) of this section or in
order to share documentation between
the obligations pursuant to § 1.1471-
3(c)(8). A withholding agent that has
opted 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 of
satisfying 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 value
of any of the obligations when applying

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any of the account thresholds applicable
to 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 consolidated
obligations, if a withholding agent has
reason to know that the chapter 4 status
assigned to the account holder or payee of
one of the consolidated obligations is in-
accurate, then it has reason to know that
the chapter 4 status assigned for all other
consolidated obligations of the account
holder or payee is inaccurate. Similarly, to
the extent that an account balance or value
is relevant for purposes of applying any
account threshold to one or more of the
consolidated obligations, the withholding
agent must aggregate the balance or value
of all such consolidated obligations.

(24) through (30) [Reserved]. For further
guidance, see § 1.1471-1(b)(24) through (30).

(31) Direct reporting NFFE. The term
direct reporting NFFE has the meaning set
forth in § 1.1472-1(c)(3).

(32) through (34) [Reserved]. For further
guidance, see § 1.1471-1(b)(32) through (34).

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

(36) through (40) [Reserved]. For further
guidance, see § 1.1471-1(b)(36) through (40).

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

(42) [Reserved]. For further guidance,
see § 1.1471-1(b)(42).

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

(44) through (47) [Reserved]. For further
guidance, see § 1.1471-1(b)(44) through (47).

(48) FFI agreement. The term FFI
agreement 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 is
entered into by an FFI (other than an FFI
that is a registered deemed-compliant FFI,
including a reporting Model 1 FFI) and
that has an effective date or renewal date
on or after June 30, 2014. The term FFI
agreement also includes a QI agreement
that is entered into by a foreign branch of
a U.S. financial institution (other than a
branch that is a reporting Model 1 FFI)
and that has an effective date or renewal
date on or after June 30, 2014.

(49) [Reserved]. For further guidance,
see § 1.1471-1(b)(49).

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

(51) through (66) [Reserved]. For further
guidance, see § 1.1471-1(b)(51) through (66).

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

(68) through (75) [Reserved]. For further
guidance, see § 1.1471-1(b)(68) through (75).

(76) Limited branch. The term limited
branch has the meaning set forth in
§ 1.1471-4(e)(2)(iii). With respect to a
reporting Model 2 FFI, a limited branch is
a branch of the reporting Model 2 FFI that
operates in a jurisdiction that prevents
such branch from fulfilling the require-
ments of a participating FFI or deemed-
compliant FFI, or that cannot fulfill the
requirements of a participating FFI or
deemed-compliant FFI due to the expira-
tion of the transitional rule for limited
branches under § 1.1471-4(e)(2)(v), and
for which the reporting Model 2 FFI
meets the terms of the applicable Model 2
IGA with respect to the branch.

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

the requirements of the applicable Model
2 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 term
non-exempt recipient means a person that
is not an exempt recipient.

(82) [Reserved]. For further guidance,
see § 1.1471-1(b)(82).

(83) Nonreporting IGA FFI. The term
nonreporting IGA FFI means an FFI that
is identified as a nonreporting financial
institution pursuant to a Model 1 IGA or
Model 2 IGA that is not a registered
deemed-compliant FFI, and an FFI that is a
resident of, or located or established in, a
Model 1 or Model 2 IGA jurisdiction, as the
context requires, and that meets the require-
ments for certified deemed-compliant FFI
status under § 1.1471-5(f)(2).

(84) through (87) [Reserved]. For further
guidance, see § 1.1471-1(b)(84) through (87).

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

(89) through (90) [Reserved]. For further
guidance, see § 1.1471-1(b)(89) through (90).

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

(92) through (97) [Reserved]. For further
guidance, see § 1.1471-1(b)(92) through (97).

(98) Payor. The term payor has the
meaning set forth in §§ 31.3406(a)-2 and
1.6049-1(a)(2) and generally includes a
withholding agent.

(99) [Reserved]. For further guidance,
see § 1.1471-1(b)(99).

(100) Person. The term person has the
meaning set forth in section 7701(a)(1)
and the regulations thereunder and in-
cludes an entity or arrangement that is an
insurance company. The term person also
includes, with respect to a withholdable
payment, a QI branch of a U.S. financial
institution.

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(101) through (103) [Reserved]. For
further guidance, see § 1.1471-1(b)(101)
through (103).

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

(i) The term preexisting obligation
means any account, instrument, contract,
debt, or equity interest maintained, exe-
cuted, or issued by the withholding agent
that is outstanding on June 30, 2014. With
respect to a withholding agent that is a
participating FFI, the term preexisting ob-
ligation means any account, instrument,
or contract (including any debt or equity
interest) maintained, executed, or issued
by the FFI that is outstanding on the ef-
fective date of the FFI agreement. With
respect to a withholding agent that is a
registered deemed-compliant FFI, a pre-
existing obligation means any account, in-
strument, or contract (including any debt
or equity interest) that is maintained, ex-
ecuted, or issued by the FFI prior to the
later of the date that the FFI registers as
a deemed-compliant FFI pursuant to
§ 1.1471-5(f)(1) and receives a GIIN or
the date the FFI is required to implement
its 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 also
holds with the withholding agent (or a
member of the withholding agent's ex-
panded affiliated group or sponsored FFI
group) an account, instrument, contract, or
equity interest that is a preexisting obliga-
tion under paragraph (b)(104)(i) of this
section;

(B) The withholding agent (and, as ap-
plicable, the member of the withholding
agent's expanded affiliated group or
sponsored FFI group) treats both of the
aforementioned obligations, and any
other 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 is
subject to AML due diligence, the with-
holding agent is permitted to satisfy such
AML due diligence for the obligation by
relying upon the AML due diligence per-
formed for the preexisting obligation de-
scribed in paragraph (b)(104)(i) of this
section.

(105) Pre-FATCA Form W-8. The
term pre-FATCA Form W-8 means a ver-
sion of a Form W-8 that was issued by
the IRS prior to 2013 (including an ac-
ceptable substitute form based on such
version) and that does not contain chapter
4 statuses but otherwise meets the require-
ments of § 1.1441-1(e)(1)(ii) applicable
to such certificate (or substitute form) and
has not expired, or a Form W-8 that was
issued prior to 2013 and furnished by an
individual to establish such individual's
foreign status but otherwise meets the re-
quirements of § 1.1441-1(e)(1)(ii) appli-
cable to such certificate and has not ex-
pired.

(106) through (112) [Reserved]. For
further guidance, see § 1.1471-1(b)(106)
through (112).

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

(114) [Reserved]. For further guidance,
see § 1.1471-1(b)(114).

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

(116) through (122) [Reserved]. For
further guidance, see § 1.1471-1(b)(116)
through (122).

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

(124) Sponsoring entity. The term
sponsoring entity means (i) an entity that
registers with the IRS and agrees to per-
form the due diligence, withholding, and
reporting obligations of one or more FFIs
pursuant to § 1.1471-5(f)(1)(i)(F) or
(f)(2)(iii); or (ii) an entity that registers
with the IRS and agrees to perform the
due diligence and reporting obligations of
one or more direct reporting NFFEs pur-
suant to § 1.1472-1(c)(5).

(125) Standardized industry coding
system. The term standardized industry
coding system means a coding system
used by the withholding agent or FFI to
classify account holders by business type
for purposes other than U.S. tax purposes
and 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.

(126) through (127) [Reserved]. For
further guidance, see § 1.1471-1(b)(126)
through (127).

(128) Substantial U.S. owner. The term
substantial U.S. owner or substantial
United States owner has the meaning set
forth in § 1.1473-1(b). In the case of a
reporting Model 2 FFI, in applying this
section with respect to a passive NFFE the
term substantial U.S. owner means a con-
trolling person as defined in the applica-
ble Model 2 IGA.

(129) through (134) [Reserved]. For
further guidance, see § 1.1471-1(b)(129)
through (134).

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

(136) through (140) [Reserved]. For
further guidance, see § 1.1471-1(b)(136)
through (140).

(141) U.S. person-(i) The term U.S.
person or United States person means a
person described in section 7701(a)(30),
the United States government (including
an agency or instrumentality thereof), a
State (including an agency or instrumen-
tality thereof), or the District of Columbia
(including an agency or instrumentality
thereof). The term U.S. person or United
States person also means a foreign insur-
ance company that has made an election
under section 953(d), provided that either
the foreign insurance company is not a
specified insurance company (as de-
scribed in § 1.1471-5(e)(1)(iv)) and is not
licensed to do business in any State, or the
foreign insurance company is a specified
insurance company and is licensed to do
business in any State.

(ii) The term U.S. person or United
States person does not include a foreign
insurance 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.

(142) through (151) [Reserved]. For
further guidance, see § 1.1471-1(b)(142)
through (151).

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

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(d) Expiration date. The applicability
of 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 to
paragraph (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 and
withhold tax on withholdable payments
to 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 and
withhold tax on withholdable payments
to certain FFIs (temporary).

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

(1) General rule of withholding. Under
section 1471(a), notwithstanding any ex-
emption from withholding under any
other provision of the Code or regulations,
a withholding agent must withhold 30 per-
cent of any withholdable payment made
after June 30, 2014, to a payee that is an
FFI unless either the withholding agent
can reliably associate the payment with
documentation 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 is
made under a grandfathered obligation
that is described in paragraph (b) of this
section or constitutes gross proceeds
from the disposition of such an obliga-
tion. A withholding agent that is making
a payment must determine who the
payee is under § 1.1471-3(a) with re-
spect to that payment and the chapter 4
status of such payee. See § 1.1471-3 for
requirements for determining the chap-
ter 4 status of a payee, including addi-
tional documentation requirements that
apply when a payment is made to an
intermediary or flow-through entity that
is not the payee. Withholding under this
section applies without regard to
whether the payee receives a withhold-
able payment as a beneficial owner or
as an intermediary. See paragraph
(a)(2)(iv) of this section for a descrip-
tion of the withholding requirements im-
posed on territory financial institutions
as withholding agents under chapter 4.
In the case of a withholdable payment to
a NFFE, a withholding agent is required

to determine whether withholding ap-
plies under section 1472 and § 1.1472-

1\. Except as otherwise provided in the
regulations 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 to
participating FFIs and deemed-compliant
FFIs that are NQIs, NWPs, or NWTs. A
withholding agent that, after June 30,
2014, makes a payment of U.S. source
FDAP income to a participating FFI or
deemed-compliant FFI that is an NQI re-
ceiving the payment as an intermediary, or
a 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 reliably
associate, 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 withholding
statement 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 to
withhold on a payment that it can
reliably associate with documentation
indicating that the payee is a U.S.
branch of a participating FFI that is
treated as a U.S. person under § 1.1441-
1(b)(2)(iv)(A).

(ii) Residual withholding responsibility
of intermediaries and flow-through enti-
ties. An intermediary or flow-through en-
tity that receives a withholdable payment
after June 30, 2014, is required to with-
hold on such payment to the extent re-
quired under chapter 4. Notwithstanding
the previous sentence, an intermediary or
flow-through entity is not required to
withhold if another withholding agent has
withheld 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 has
provided a valid intermediary withholding
certificate or flow-through withholding

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certificate and all of the information re-
quired by § 1.1471-3(c)(3)(iii), and it
does not know, and has no reason to
know, that another withholding agent
failed to withhold the correct amount. A
QI'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 for
U.S. source FDAP income. A withholding
agent is required to withhold with respect
to a payment, or portion of a payment, that
is U.S. source FDAP income subject to
withholding that is made after June 30,
2014, to a QI that has elected in accor-
dance with this paragraph to be withheld
upon, unless such withholding agent
also makes an election to be withheld
upon under this paragraph (a)(2)(iii)(A)
or is an FFI that may not accept primary
withholding responsibility for the pay-
ment. In such case, the withholding
agent must withhold 30 percent of the
portion 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 account
holders and nonparticipating FFIs. If no
such allocation information is provided,
the withholding agent must apply the
presumption rules of § 1.1471-3(f) to
determine the chapter 4 status of the
payee. A QI that is an FFI and that
makes the election to be withheld upon
with respect to a payment of U.S. source
FDAP income may not assume primary
withholding responsibility under chap-
ter 3 for that payment. Conversely, a QI
that is an FFI and that does not make the
election to be withheld upon with re-
spect to a payment of U.S. source FDAP
income is required to assume primary
withholding responsibility under chap-
ter 3 for that payment. The election to be
withheld upon is only available with
respect to a payment of U.S. source
FDAP income if-

(1) through (4) [Reserved]. For further
guidance, 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 foreign
branch of a U.S. financial institution.
Generally, a foreign branch of a U.S. fi-
nancial institution is a withholding agent
and is not an FFI. However, a QI branch
of a U.S. financial institution is both a
withholding agent and either a participat-
ing FFI or a registered deemed-compliant
FFI. 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 obligations
under either § 1.1471-4(b) and its FFI
agreement or § 1.1471-5(f). Similarly, a
foreign branch of a U.S. financial institu-
tion that is also a reporting Model 1 FFI is
both a withholding agent and a registered
deemed-compliant FFI. Accordingly, a
foreign branch of a U.S. financial institu-
tion that is a reporting Model 1 FFI must
withhold in accordance with this section
and § 1.1472-1(b). A foreign branch of a
U.S. financial institution that is not a QI is
not permitted to make an election to be
withheld upon.

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

(3) [Reserved]. For further guidance,
see § 1.1471-2(a)(3).

(4) [Reserved]. For further guidance,
see § 1.1471-2(a)(4).

(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 withholdable
payment made prior to July 1, 2016, with
respect to a preexisting obligation for
which a withholding agent does not have
documentation indicating the payee's sta-
tus as a nonparticipating FFI, the with-
holding agent is not required to withhold
under this section and section 1471(a) un-
less the payee is a prima facie FFI.

(B) Prima facie FFIs. If the payee is a
prima facie FFI, the withholding agent
must treat the payee as a nonparticipating
FFI beginning on January 1, 2015, until
the date the withholding agent obtains
documentation sufficient to establish a
different chapter 4 status of the payee. A
prima 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).

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

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

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

(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 July
1, 2014;

(2) through (3) [Reserved]. For further
guidance, see § 1.1471-2(b)(2)(i)(A)(2)
through (3).

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

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

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

(1) through (3) [Reserved]. For further
guidance, see § 1.1471-2(b)(2)(ii)(A)(1)
through (3).

(4) A life insurance contract under
which the entire contract value is payable
no later than upon the death of the indi-
vidual(s) insured under the contract but, in
the case of a life insurance contract that
contains a provision that permits the sub-
stitution of a new individual as the insured
under 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 demand
deposit, a deferred annuity contract, or an
annuity contract that permits a substitu-
tion of a new individual as the annuitant
under the contract);

(3) through (4) [Reserved]. For further
guidance, see § 1.1471-2(b)(2)(ii)(B)(3)
through (4).

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

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(iv) Material modification. In the case
of an obligation that constitutes indebted-
ness for U.S. tax purposes, a material
modification is any significant modifica-
tion of the debt instrument as defined in
§ 1.1001-3(e). For life insurance con-
tracts, a material modification includes
any substitution of the insured under the
contract. In all other cases, whether a
modification of an obligation is material is
determined 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).

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

(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 material
modification), a withholding agent, other
than the issuer of the obligation (or an
agent of the issuer), is required to treat a
modification of the obligation as material
only if the withholding agent has actual
knowledge thereof, such as in the event
the withholding agent receives a disclo-
sure indicating that there has been or will
be a material modification to such obliga-
tion. The issuer of the obligation (or an
agent of the issuer) that is a withholding
agent is required to treat a modification of
the obligation as material if the withhold-
ing agent knows or has reason to know
that a material modification has occurred
with respect to the obligation.

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

(c) [Reserved]. For further guidance,
see § 1.1471-2(c).

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

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) introductory
text, (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) * * *

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(i) [Reserved]. For further guidance,

(xii) [Reserved]. For further

guidance,

(f) * * *

see § 1.1471-3T(d)(2)(i).

see

§ 1.1471-3T(d)(11)(xii)

through

(1) [Reserved]. For further guidance,

* * * * *

(d)(11)(xii)(C).

see § 1.1471-3T(f)(1).

(iii) [Reserved]. For further guidance,

(12) * * *

(2) [Reserved]. For further guidance,

see § 1.1471-3T(d)(2)(iii).

(iii) * * *

see § 1.1471-3T(f)(2).

* * * * *

(A) [Reserved]. For further guidance,

(3) [Reserved]. For further guidance,

(4) * * *

see

§ 1.1471-3T(d)(12)(iii)(A).

see § 1.1471-3T(f)(3).

(i) [Reserved]. For further guidance,

(B) [Reserved]. For further

guidance,

(4) [Reserved]. For further guidance,

see § 1.1471-3T(d)(4)(i).

see

§ 1.1471-3T(d)(12)(iii)(B).

see § 1.1471-3T(f)(4).

(ii) [Reserved]. For further guidance,

(e) * * *

(5) [Reserved]. For further guidance,

see § 1.1471-3T(d)(4)(ii).

(2) [Reserved]. For further

guidance,

see § 1.1471-3T(f)(5).

(iii) [Reserved]. For further guidance,

see

§ 1.1471-3T(e)(2).

(6) [Reserved]. For further guidance,

see § 1.1471-3T(d)(4)(iii).

(3) [Reserved]. For further

guidance,

see § 1.1471-3T(f)(6).

(A) * * *

see

§ 1.1471-3T(e)(3).

(7) [Reserved]. For further guidance,

(1) [Reserved]. For further guidance,

(i) [Reserved]. For further

guidance,

see § 1.1471-3T(f)(7) through (f)(7)(ii).

see § 1.1471-3T(d)(4)(iii)(A)(1).

see

§ 1.1471-3T(e)(3)(i).

(i) [Reserved]. For further guidance,

* * * * *

(ii) [Reserved]. For further

guidance,

see § 1.1471-3T(f)(7)(i).

(iv) * * *

see

§ 1.1471-3T(e)(3)(ii).

(ii) [Reserved]. For further guidance,

(A) [Reserved]. For further guidance,

(iii) [Reserved]. For further

guidance,

see § 1.1471-3T(f)(7)(ii).

see § 1.1471-3T(d)(4)(iv)(A).

see

§ 1.1471-3T(e)(3)(iii).

(8) [Reserved]. For further guidance,

* * * * *

(iv) [Reserved]. For further

guidance,

see § 1.1471-3T(f)(8).

(C) [Reserved]. For further guidance,

see

§ 1.1471-3T(e)(3)(iv).

(9) [Reserved]. For further guidance,

see § 1.1471-3T(d)(4)(iv)(C).

(4) [Reserved]. For further

guidance,

see § 1.1471-3T(f)(9) through (f)(9)(ii).

(D) [Reserved]. For further guidance,

see

§ 1.1471-3T(e)(4).

* * * * *

see § 1.1471-3T(d)(4)(iv)(D).

(i) [Reserved]. For further

guidance,

Par. 7. Section 1.1471-3T is added to

(v) [Reserved]. For further guidance,

see

§ 1.1471-3T(e)(4)(i).

read as follows:

see § 1.1471-3T(d)(4)(v).

(ii) [Reserved]. For further guidance, see

(5) * * *

§

1.1471-3T(e)(4)(ii) through (e)(4)(ii)(B).

§ 1.1471-3T Identification of payee

(i) [Reserved]. For further guidance,

(A) [Reserved]. For further guidance,

(temporary).

see § 1.1471-3T(d)(5)(i).

see

§ 1.1471-3T(e)(4)(ii)(A).

(ii) [Reserved]. For further guidance,

(B) [Reserved]. For further

guidance,

(a) [Reserved]. For further guidance,

see § 1.1471-3T(d)(5)(ii) through

see

§ 1.1471-3T(e)(4)(ii)(B).

see § 1.1471-3(a).

(d)(5)(ii)(B).

(iii) [Reserved]. For further

guidance,

(1) through (2) [Reserved]. For further

(A) [Reserved]. For further guidance,

see

§ 1.1471-3T(e)(4)(iii).

guidance, see § 1.1471-3(a)(1) through (2).

see § 1.1471-3T(d)(5)(ii)(A).

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

(3) [Reserved]. For further guidance,

(B) [Reserved]. For further guidance,

§

1.1471-3T(e)(4)(iv through (e)(4)(iv)(B)(2).

see § 1.1471-3(a)(3).

see § 1.1471-3T(d)(5)(ii)(B).

(v) [Reserved]. For further

guidance,

(i) through (ii)(B) [Reserved]. For fur-

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

see

§ 1.1471-3T(e)(4)(v).

ther guidance, see § 1.1471-3(a)(3)(i)

§ 1.1471-3T(d)(5)(iii) through (d)(5)(iii)(B).

* * * * *

through (a)(3)(ii)(B).

(6) * * *

(B) * * *

(iii) U.S. intermediary or agent of a

(vii) * * *

(1) [Reserved]. For further guidance,

foreign person. A withholding agent that

(A) * * *

see

§ 1.1471-3T(e)(4)(v)(B)(1).

makes a withholdable payment to a U.S.

(1) [Reserved]. For further guidance,

(2) [Reserved]. For further

guidance,

person and has actual knowledge that the

see § 1.1471-3T(d)(6)(vii)(A)(1).

see

§ 1.1471-3T(e)(4)(v)(B)(2).

person receiving the payment is acting as

* * * * *

* * * * *

an intermediary or agent of a foreign per-

(11) * * *

(vi) * * *

son with respect to the payment must treat

(viii) * * *

(B) [Reserved]. For further guidance,

such foreign person, and not the interme-

(A) [Reserved]. For further guidance,

see

§ 1.1471-3T(e)(4)(vi)(B).

diary or agent, as the payee of such pay-

see § 1.1471-3T(d)(11)(viii)(A).

(vii) * * *

ment. Notwithstanding the previous sen-

* * * * *

(B) [Reserved]. For further

guidance,

tence, a withholding agent that makes a

(C) [Reserved]. For further guidance,

see

§ 1.1471-3T(e)(4)(vii)(B).

withholdable payment to a U.S. financial

see § 1.1471-3T(d)(11)(viii)(C).

* * * * *

institution or a U.S. insurance broker (to

* * * * *

(viii) * * *

the extent such withholdable payment is a

(x) [Reserved]. For further guidance,

(A) * * *

payment of premiums) that is acting as an

see § 1.1471-3T(d)(11)(x).

(4) [Reserved]. For further guidance,

intermediary or agent with respect to the

(xi) [Reserved]. For further guidance,

see

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

payment on behalf of one or more foreign

see § 1.1471-3T(d)(11)(xi).

persons may treat the U.S. financial insti-

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tution or U.S. insurance broker as the
payee if the withholding agent does not
have reason to know that the U.S. finan-
cial institution or U.S. insurance broker
will not comply with its obligations to
withhold under sections 1471 and 1472.

(iv) [Reserved]. For further guidance,
see § 1.1471-3(a)(3)(iv).

(v) Disregarded entity or limited
branch. Except as otherwise provided in
paragraph (a)(3)(v) through (vii) of this
section, a withholding agent that makes a
withholdable payment to an entity that is
disregarded for U.S. federal tax purposes
under § 301.7701-2(c)(2)(i) as an entity
separate from its single owner must treat
the single owner as the payee. The rules
under § 1.1471-3(d)(4) and (e)(3) apply
to determine the circumstances under
which a withholding agent may treat a
payment made to a disregarded entity
owned by an FFI as made to a payee that
is a participating FFI or registered
deemed-compliant FFI, and not as a
payment made to a payee that is a non-
participating FFI. A withholding agent
that makes a payment to a limited
branch (including an entity disregarded
as a separate entity from its owner if
such owner is an FFI and the disre-
garded entity is unable to comply with
the terms of an FFI agreement with re-
spect to accounts that it maintains) will
be required to treat the payment as being
made to a nonparticipating FFI.

(vi) U.S. branch of certain foreign
banks or foreign insurance companies. A
withholdable payment to a U.S. branch of
either a participating FFI or registered
deemed-compliant FFI is a payment to a
U.S. person if the U.S. branch is treated as
a U.S. person for purposes of § 1.1441-
1(b)(2)(iv). In such case the U.S. branch is
treated 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 a
U.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 a
participating 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 chapter
4 status (and not a Form W-9, "Request
for Taxpayer Identification Number and
Certification"). See also paragraph (f)(6)

of this section for the rules under which a
withholding agent can presume a payment
constitutes income that is effectively con-
nected with a U.S. trade or business. A
U.S. branch of either a participating FFI
or registered deemed-compliant FFI that
is treated as a U.S. person for purposes of
chapter 3 may not make an election to be
withheld upon, as described in section
1471(b)(3) and § 1.1471-2(a)(2)(iii), for
purposes 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 a
U.S. person to apply the due diligence
rules applicable to a U.S. withholding
agent in lieu of those otherwise applicable
to a participating FFI. See also § 1.1474-
1(i)(1) and (2) for the requirement of a
U.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 to
report as a U.S. person.

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

(b) [Reserved]. For further guidance,
see § 1.1471-3(b).

(1) through (2) [Reserved]. For further
guidance, see § 1.1471-3(b)(1) through (2).

(3) Determination of whether the pay-
ment is made to a QI, WP, or WT. A
withholding agent may treat the person
who receives a payment as a QI, WP, or
WT if the withholding agent can reliably
associate the payment with a valid Form
W-8IMY, as described in paragraph
(c)(3)(iii) of this section, that indicates
that the person who receives the payment
is a QI, WP, or WT, provides the person's
QI-EIN, WP-EIN, or WT-EIN, and the
person's GIIN, if applicable.

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

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

(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 further
guidance, see § 1.1471-3(c)(3)(ii)(A)
through (B).

(C) The person's entity classification
for 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 a
U.S. person) is valid for purposes of chap-
ter 4 only if it is furnished on a Form
W-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 for
the person named on the form, its validity
period has not expired, and it contains the
following information, statements, and
certifications-

(1) through (4) [Reserved]. For further
guidance, 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-compliant
FFI (including a U.S. branch of such an
entity, whether or not such branch is
treated as a U.S. person, and a QI, WP, or
WT that is a participating FFI or regis-
tered deemed-compliant FFI), and an EIN
in the case of a QI, WP, or WT. Addition-
ally, if a branch (other than a U.S. branch)
of a participating FFI or registered
deemed-compliant FFI outside of its
country of residence acts as an intermedi-
ary, the GIIN of such branch must be
provided on the withholding certificate. In
the case of a U.S. branch, the GIIN pro-
vided must be the GIIN assigned to the
participating FFI or registered deemed-
compliant FFI.

(6) through (12) [Reserved]. For further
guidance, 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 of
perjury statement provided on the with-
holding certificate applies to the withhold-
ing statement as well. The withholding
statement may be provided in any manner,

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and in any form, to which the person
submitting the form and the withholding
agent mutually agree, including elec-
tronically. A withholding statement may
be provided electronically only if it
meets 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 meet
its reporting and withholding obliga-
tions under chapter 4. A withholding
agent will be liable for tax, interest, and
penalties under § 1.1474-1(a) to the ex-
tent it does not follow the presumption
rules of paragraph (f) of this section for
any payment, or portion thereof, for
which a withholding statement is re-
quired and the withholding agent does
not have a valid withholding statement
prior to making a payment. A withhold-
ing agent that is making a payment for
which a withholding statement is also
required for purposes of chapter 3 may
only rely upon the withholding state-
ment if, in addition to providing the
information required by paragraph
(c)(3)(iii)(B) of this section, the with-
holding statement also includes all of
the information required for purposes of
chapter 3 and specifies the chapter 4
status of each payee or pool of payees
identified on the withholding statement
for purposes of chapter 3.

(2) Special requirements for an FFI
withholding statement.

(i) An FFI withholding statement may
include either payee-specific information
or pooled information that indicates the
portion of the payment allocable to a
chapter 4 withholding rate pool of U.S.
payees, each class of recalcitrant account
holders identified in § 1.1471-4(d)(6), or
a class of nonparticipating FFIs. If payee-
specific information is provided for pur-
poses of chapter 4 it must indicate both
the portion of the payment allocated to
each payee and each payee's chapter 4
status. A participating FFI that applies the
escrow procedures described in § 1.1471-
4(b)(6) for dormant accounts must also
indicate the portion of the payment allo-
cated to a chapter 4 withholding rate pool
of recalcitrant account holders that hold
dormant accounts for which the participat-
ing FFI (and not the withholding agent)
will withhold in escrow. The withholding
statement provided by a participating FFI

that applies the election to backup with-
hold under § 1.1471-4(b)(3)(iii) must
also indicate the portion of the reportable
payment that is a withholdable payment
allocated to each recalcitrant account
holders subject to backup withholding un-
der section 3406. See section 3406 for
when backup withholding is required, in-
cluding the exception to backup withhold-
ing under § 31.3406(g)-1(e). Regardless
of whether the FFI withholding statement
provides information on a pooled or
payee-specific basis, a withholding state-
ment provided by an FFI other than an FFI
acting as a WP, WT, or QI with respect to
the account must also identify each inter-
mediary or flow-through entity that re-
ceives the payment and such entity's
chapter 4 status and GIIN, when applica-
ble. An FFI withholding statement must
also include any other information that the
withholding agent or payor reasonably re-
quests in order to fulfill its obligations
under chapter 4, and chapters 3 and 61, if
applicable.

(ii) An FFI withholding statement pro-
vided by a reporting Model 2 FFI or a
reporting Model 1 FFI may indicate, with
respect to a withholdable payment, that
the payment is allocable to a chapter 4
withholding rate pool of U.S. payees,
which is comprised of account holders
that are not subject to withholding under
chapters 3 or 4 or to backup withholding
under section 3406 (for example, pre-
sumed U.S. non-exempt recipients) and
that are, with respect to a reporting Model
2 FFI, the holders of non-consenting U.S.
accounts as described in an applicable
IGA when the FFI reports the accounts in
one of the pools described in § 1.1471-
4(d)(6) for the year in which the payment
is made; or with respect to a reporting
Model 1 FFI, the holders of accounts that
have U.S. indicia for which appropriate
documentation sufficient to treat the ac-
counts as held by other than specified U.S.
persons has not been provided pursuant to
an applicable Model 1 IGA and the report-
ing Model 1 FFI reports the accounts as
U.S. reportable accounts pursuant to the
applicable Model 1 IGA for the year in
which the payment is made.

(iii) An FFI withholding statement pro-
vided by a participating FFI or registered
deemed-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 a
chapter 4 withholding rate pool of U.S.
payees (in addition to the U.S. payees
described in paragraph (c)(3)(iii)(B)(2)(ii)
of this section), which is comprised of
account holders that are not subject to
withholding under chapters 3 or 4 or to
backup withholding under section 3406
and that are, with respect to a participating
FFI (including a reporting Model 2 FFI),
account holders that hold U.S. accounts
(as defined in § 1.1471-1(b)(134) and an
applicable Model 2 IGA) that the FFI re-
ports as U.S. accounts pursuant to
§ 1.1471-4(d)(3) or (5) for the year in
which the payment is made; with respect
to a registered deemed-compliant FFI
(other than a reporting Model 1 FFI), ac-
count holders of U.S. accounts that the
FFI reports pursuant to the conditions of
its applicable deemed-compliant status
under § 1.1471-5(f)(1) for the year in
which the payment is made; or with
respect to a reporting Model 1 FFI, ac-
count holders of U.S. accounts that the
reporting Model 1 FFI reports as report-
able U.S. accounts pursuant to an appli-
cable Model 1 IGA, and which includes
the U.S. TINs of such account holders,
for the year in which the payment is
made.

(3) Special requirements for a chapter
4 withholding statement. A chapter 4
withholding statement must contain the
name, address, TIN (if any), entity type,
and chapter 4 status of each payee, the
amount allocated to each payee, a valid
withholding certificate or other appropri-
ate documentation sufficient to establish
the chapter 4 status of each payee, and
each intermediary or flow-through entity
that receives the payment on behalf of the
payee, in accordance with paragraph (d)
of this section, and any other information
the withholding agent reasonably requests
in order to fulfill its obligations under
chapter 4. Notwithstanding the prior sen-
tence, a chapter 4 withholding statement is
permitted to provide pooled allocation in-
formation with respect to payees that are
treated as nonparticipating FFIs. Addi-
tionally, if the payment is a reportable
amount under chapters 3 or 61, see the
provisions of those chapters for any addi-
tional information that may be required

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

(4) Special requirements for an exempt
beneficial owner withholding statement.
An exempt beneficial owner withholding
statement must include the name, address,
TIN (if any), entity type, and chapter 4
status of each exempt beneficial owner on
behalf of which the nonparticipating FFI
is receiving the payment, the amount of
the payment allocable to each exempt
beneficial owner, a valid withholding cer-
tificate or other documentation sufficient
to establish the chapter 4 status of each
exempt beneficial owner in accordance
with paragraph (d) of this section, and any
other information the withholding agent
reasonably requests in order to fulfill its
obligations 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 the
nonparticipating FFI receiving the pay-
ment. With respect to the amount of the
payment 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 further
guidance, see § 1.1471-3(c)(3)(iii)(C)
through (H).

(iv) through (v) [Reserved]. For further
guidance, see § 1.1471-3(c)(3)(iv)
through (v).

(4) [Reserved]. For further guidance,
see § 1.1471-3(c)(4).

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

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

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

(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 records
with respect to the payee that was deter-
mined based on documentation supplied
by the payee (or other person receiving
the payment) or a standardized industry
coding system and that was recorded by
the withholding agent consistent with its
normal business practices for AML or an-
other regulatory purpose (other than for
tax purposes), to the extent permitted by

paragraph (d) of this section and provided
there is no U.S. indicia associated with the
payee for which appropriate curing docu-
mentation has not been obtained as set
forth in paragraph (e) of this section; and

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

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

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

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

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

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

(1) through (2) [Reserved]. For further
guidance, see §1.1471-3(c)(6)(ii)(B)(1)
through (2).

(3) A beneficial owner withholding
certificate that is provided by an entity
described in paragraph (c)(6)(ii)(C)(2) of
this section (other than an entity described
in paragraph (c)(6)(ii)(C)(2)(iii) of this
section) and documentary evidence estab-
lishing the entity's foreign status when
both are provided together;

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

(5) A withholding certificate, written
statement, or documentary evidence fur-
nished by a foreign government, govern-
ment of a U.S. territory, foreign central
bank (including the Bank for International
Settlements), international organization,
or entity that is wholly owned by any such
entities;

(6) Documentary evidence that is not
generally renewed or amended (such as a
certificate 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 further
guidance, see § 1.1471-3(c)(6)(ii)(C)(1)
through (c)(6)(ii)(C)(2)(x).

(3) A withholding certificate or written
statement 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 an
owner-documented FFI, provided the ac-
count balance of all accounts held by such
owner-documented FFI with the with-
holding agent does not exceed $1,000,000
on the later of June 30, 2014, or the last
day of the calendar year in which the
account was opened, and the last day of
each subsequent calendar year preceding
the payment, applying the aggregation
principles of § 1.1471-5(b)(4)(iii), and
the owner-documented FFI does not have
any contingent beneficiaries or designated
classes 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 $1,000,000
on the later of June 30, 2014, or the last
day of the calendar year in which the
account was opened, and the last day of
each subsequent calendar year preceding
the payment, applying the aggregation
principles of § 1.1471-5(b)(4)(iii), and
the withholding agent does not know or
have reason to know that the entity has
any contingent beneficiaries or designated
classes 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 further
guidance, see § 1.1471-3(c)(6)(ii)(E)(1)
through (2).

(3) Withholding agent's obligation
with 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 or
documentation knows or has reason to
know 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 as
having the same chapter 4 status that it
had prior to the change in circumstances
until the earlier of 90 days from the date
that the certificate or documentation be-
came invalid due to the change in circum-
stances or the date that a new certificate or
new documentation is obtained. See, how-

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ever, § 1.1441-1(e)(4)(ii)(D) for require-
ments, including the requirement to with-
hold under chapters 3 or 61, applicable
when a change in circumstances occurs
for purposes of chapter 3 and the related
grace period allowed under § 1.1441-
1(b)(3)(iv). A withholding agent may rely
on a certificate without having to inquire
into possible changes of circumstances
that may affect the validity of the state-
ment, unless it knows or has reason to
know that circumstances have changed. A
withholding agent may require a new cer-
tificate or additional documentation at any
time prior to a payment, regardless of
whether the withholding agent knows or
has reason to know that any information
stated on the certificate or documentation
has changed.

(iii) through (iii)(B) [Reserved]. For
further guidance, see § 1.1471-3(c)(6)(iii)
through (c)(6)(iii)(B).

(iv) Electronic transmission of with-
holding certificate, written statement, and
documentary evidence. A withholding
agent may accept a withholding certificate
(including an acceptable substitute form),
a written statement, or other such form as
the IRS may prescribe, electronically in
accordance with the requirements set forth
in § 1.1441-1(e)(4)(iv)(B).

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

(A) In general. A withholding agent
may substitute its own form for an offi-
cial Form W-8 (or such other official
form as the IRS may prescribe). A sub-
stitute form will be acceptable if it con-
tains provisions that are substantially
similar to those of the official form, it
contains the same certifications relevant
to the transactions as are contained on the
official form and these certifications are
clearly set forth, and the substitute form
includes a signature-under-penalties-of-
perjury statement identical to the one on
the official form. The substitute form is
acceptable even if it does not contain all
of the provisions contained on the official
form, so long as it contains those provi-
sions that are relevant to the transaction
for which it is furnished. A withholding
agent may choose to provide a substitute
form that does not include all of the chap-
ter 4 statuses provided on the official ver-
sion but the substitute form must include
any chapter 4 status for which withhold-

ing may apply, such as the categories for
a nonparticipating FFI or passive NFFE.
A withholding agent that uses a substitute
form must furnish instructions relevant to
the substitute form only to the extent and
in the manner specified in the instructions
to the official form. A withholding agent
may use a substitute form that is written in
a language other than English and may
accept a form that is filled out in a lan-
guage other than English, but the with-
holding agent must make available an
English translation of the form and its
contents 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 is
not an acceptable substitute form provided
by the withholding agent, but only if the
withholding agent furnishes the person
with an acceptable substitute form within
five business days of receipt of an unac-
ceptable form from the person. In that
case, the substitute form is acceptable
only if it contains a notice that the with-
holding agent has refused to accept the
form submitted by the person and that the
person must submit the acceptable form
provided by the withholding agent in or-
der for the person to be treated as having
furnished the required withholding certif-
icate.

(B) Non-IRS form for individuals. A
withholding agent may also substitute its
own form for an official Form W-8BEN
(for individuals), regardless of whether
the substitute form is titled a Form W-8.
However, in addition to the name and
address of the individual that is the payee
or beneficial owner, the substitute form
must provide all countries in which the
individual 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 must
contain a signed and dated certification
made under penalties of perjury that the
information provided on the form is accu-
rate and will be updated by the individual
within 30 days of a change in circum-
stances that causes the form to become
incorrect. Notwithstanding the previous
sentence, the signed certification provided
on 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 may
be the same documentary evidence that is
used to support foreign status in the case
of a payee whose account has U.S. indicia
as described in paragraph (e) of this sec-
tion or § 1.1471-4(c)(4)(i)(A). The form
may also request other information re-
quired for purposes of tax or AML due
diligence in the United States or in other
countries.

(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).

(8) [Reserved]. For further guidance,
see § 1.1471-3(c)(8).

(i) through (iv) [Reserved]. For further
guidance, see § 1.1471-3(c)(8)(i) through (iv).

(v) Preexisting account. A withholding
agent may rely on documentation fur-
nished by a payee for a preexisting ac-
count held at another branch location of
the same withholding agent or at a branch
location of a member of the expanded
affiliated group of the withholding agent if
the withholding agent obtains and reviews
copies of such documentation supporting
the chapter 4 status designated for the
payee and the withholding agent has no
reason to know that, at the time the doc-
umentation is obtained by the withholding
agent, the documentation is unreliable or
incorrect. For example, the withholding
agent may not rely on documentation fur-
nished by a payee for a preexisting ac-
count held at another branch location of
the same withholding agent or at a branch
location of a member of the expanded
affiliated group of the withholding agent
if, based on information in the withhold-
ing agent's account records, the withhold-
ing agent has reason to know that such
documentation is unreliable or incorrect.

(9) [Reserved]. For further guidance,
see § 1.1471-3(c)(9).

(i) [Reserved]. For further guidance,
see § 1.1471-3(c)(9)(i).

(ii) [Reserved]. For further guidance,
see § 1.1471-3(c)(9)(ii).

(A) [Reserved]. For further guidance,
see § 1.1471-3(c)(9)(ii)(A).

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

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information it has for the entity and veri-
fied that such additional information does
not conflict with the chapter 4 status
claimed by the entity. For purposes of this
paragraph (c)(9)(ii)(B), a customer is re-
lated to a third-party data provider if they
have a relationship with each other that is
described in section 267(b).

(C) through (F) [Reserved]. For further
guidance, see § 1.1471-3(c)(9)(ii)(C)
through (F).

(iii) through (iv)(D) [Reserved]. For
further guidance, see § 1.1471-3(c)(9)(iii)
through (c)(9)(iv)(D).

(v) Reliance upon documentation for
accounts acquired in merger or bulk ac-
quisition for value. A withholding agent
that 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 (or
copies of valid documentation) collected
by the predecessor or transferor. In addi-
tion, a withholding agent that acquires an
account in a merger or bulk acquisition of
accounts for value, other than a related
party transaction, from a U.S. withholding
agent, a participating FFI that has com-
pleted all due diligence required under its
agreement with respect to the accounts
transferred, or a reporting Model 1 FFI
that has completed all due diligence re-
quired pursuant to the applicable Model 1
IGA, may also rely upon the predecessor's
or transferor's determination of the chap-
ter 4 status of an account holder for a
transition period of the lesser of six
months from the date of the merger or
until the acquirer knows that the claim of
status is inaccurate or a change in circum-
stances occurs. At the end of the transition
period, the acquirer will be permitted to
rely upon the predecessor's determination
as to the chapter 4 status of the account
holder only if the documentation that the
acquirer has for the account holder, in-
cluding documentation obtained from the
predecessor or transferor, supports the
chapter 4 status claimed. An acquirer that
discovers at the end of the transition pe-
riod that the chapter 4 status assigned by
the predecessor or transferor to the ac-
count holder was incorrect and, as a result,
has not withheld as it would have been
required to but for its reliance upon the
predecessor's determination, will be re-
quired to withhold on payments made af-

ter the transition period, if any, to the
account holder equal to the amount of tax
that should have been withheld during the
transition period but for the erroneous
classification as to the account holder's
status. For purposes of this paragraph
(c)(9)(v), a related party transaction is a
merger or sale of accounts in which either
the 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 (or
shareholders of the predecessor or trans-
feror) obtains a controlling interest in the
acquirer 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 an
additional allowance for a participating
FFI to rely upon the determination made
by another participating FFI as to the
chapter 4 status of an account obtained as
part of a merger or bulk acquisition for
value.

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

(1) Reliance on pre-FATCA Form
W-8. To establish a payee's status as a
foreign individual, foreign government,
government of a U.S. territory, or interna-
tional organization, a withholding agent
may rely upon a pre-FATCA Form W-8
in lieu of obtaining an updated version of
the withholding certificate. This reliance
is only available in the case of a payee that
is an international organization if such
payee is described under section
7701(a)(18). To establish the chapter 4
status of a payee that is not a foreign
individual, a foreign government, or an
international organization, a withholding
agent may, for payments made prior to
January 1, 2017, rely upon a pre-FATCA
Form W-8 in lieu of obtaining an updated
version of the withholding certificate if
the withholding agent has one or more
forms of documentary evidence described
in paragraphs (c)(5)(ii), as necessary, to
establish the chapter 4 status of the payee
and the withholding agent has obtained
any additional documentation or informa-
tion required for the particular chapter 4
status (such as withholding statements,
certifications as to owners, or required
documentation for underlying owners), as
set forth under the specific payee rules in
paragraphs (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-FATCA
Form 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 financial
institutions that are not the beneficial
owners of the payment, foreign central
banks (other than a foreign central bank
specifically identified as an exempt bene-
ficial owner under a Model 1 IGA or
Model 2 IGA), or international organiza-
tions not described under section
7701(a)(18).

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

(i) In general. A withholding agent
must treat a payee as a U.S. person, in-
cluding a payee that is a foreign branch of
a U.S. person (other than a branch that is
treated as a QI) or is an FFI that has
elected to be treated as a U.S. person for
tax purposes under section 953(d), if it has
a valid Form W-9 associated with the
payee or if it must presume the payee is a
U.S. person under the presumption rules
set forth in paragraph (f) of this section.
Consistent with the presumption rules in
paragraph (f)(3) of this section, a with-
holding agent must treat a payee that has
provided a valid Form W-9 as a specified
U.S. person unless the Form W-9 con-
tains a certification that the payee is other
than a specified U.S. person. Notwith-
standing the foregoing, a withholding
agent receiving a Form W-9 indicating
that the payee is other than a specified
U.S. person must treat the payee as a
specified U.S. person if the withholding
agent knows or has reason to know that
the payee's claim that it is other than a
specified U.S. person is incorrect. For ex-
ample, a withholding agent that receives a
Form W-9 from a payee that is an indi-
vidual would be required to treat the
payee as a specified U.S. person regard-
less of whether the Form W-9 indicates
that the payee is not a specified U.S. per-
son, because an individual that is a U.S.
person is not excepted from the definition
of 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-

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graphs (d)(2)(i) and (ii) of this section, a
withholding agent that makes a payment
with respect to a preexisting obligation
may treat a payee as a U.S. person if it has
a notation in its files that it has previously
reviewed a Form W-9 that established
that the payee is a U.S. person and has
retained the payee's TIN. A withholding
agent, other than a participating FFI or
registered deemed-compliant FFI, may
also treat a payee of a payment with re-
spect to a preexisting obligation as a U.S.
person if it has previously classified the
payee as a U.S. person for purposes of
chapters 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 exempt
recipient for purposes of chapter 61.

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

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

(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 a
payee as a participating FFI or registered
deemed-compliant FFI only if the with-
holding agent has a withholding certificate
identifying the payee as a participating
FFI, registered deemed-compliant FFI, or
branch thereof (including an entity that is
disregarded as an entity separate from the
FFI), and the withholding certificate con-
tains a GIIN for the payee that is verified
against the published IRS FFI list in the
manner described in paragraph (e)(3) of
this section (indicating when a withhold-
ing agent may rely upon a GIIN). For
payments made prior to January 1, 2016, a
registered deemed-compliant FFI that is a
sponsored FFI must provide the GIIN of
its sponsoring entity on the withholding
certificate if the sponsored FFI has not
obtained a GIIN. See paragraph (c)(3)(iii)
of this section for additional requirements
that apply to a valid withholding certifi-
cate provided by a participating FFI or
registered deemed-compliant FFI that is a
flow-through entity or is acting as an in-
termediary with respect to the payment, or
by a U.S. branch of a participating FFI or
registered deemed-compliant FFI (includ-
ing a U.S. entity that is disregarded as an
entity separate from the FFI).

(ii) Exception for payments made prior
to January 1, 2017, with respect to preex-
isting obligations (transitional). For pay-
ments made prior to January 1, 2017, with
respect to a preexisting obligation, a with-
holding agent may treat a payee as a
participating FFI or registered deemed-
compliant FFI, or branch thereof (includ-
ing an entity that is disregarded as an
entity separate from the FFI), if the payee
has provided the withholding agent with a
pre-FATCA Form W-8 and (either orally
or in writing) its GIIN and has indicated
whether it is a participating FFI or a reg-
istered deemed-compliant FFI (or whether
such branch or disregarded entity is
treated as a participating FFI or a regis-
tered deemed-compliant FFI), and the
withholding agent has verified the GIIN of
the FFI, branch, or disregarded entity, as
the 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 FDAP
income, with respect to an offshore obliga-
tion may treat a payee as a participating
FFI or registered deemed-compliant FFI,
or branch thereof (including an entity that
is disregarded as an entity separate from
the FFI), if the payee provides the with-
holding agent with its GIIN and states
whether the payee is a participating FFI or
a registered deemed-compliant FFI, and
the withholding agent verifies the GIIN in
the manner described in paragraph (e)(3)
of this section. A withholding agent that
makes a payment of U.S. source FDAP
income with respect to an offshore obli-
gation may treat the payee as a participat-
ing FFI or registered deemed-compliant
FFI, or branch thereof (including an entity
that is disregarded as an entity separate
from the FFI) if-

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

(1) A written statement that contains
the payee's GIIN, states that the payee is
the beneficial owner of the payment, and
indicates whether the payee is treated as a
participating 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 treat
a payee that is an FFI or branch of an FFI
(including an entity that is disregarded as
an 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 1
FFI and the country in which the payee is
a reporting Model 1 FFI, regardless of
whether the certificate contains a GIIN for
the 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 offshore
obligation, a withholding agent may treat
a payee as a reporting Model 1 FFI if the
payee informs the withholding agent that
the payee is a reporting Model 1 FFI and
provides the country in which the payee is
a reporting Model 1 FFI. In the case of a
payment of U.S. source FDAP income,
such payee must also provide a written
statement that it is the beneficial owner
and documentary evidence supporting the
payee's claim of foreign status (as de-
scribed in paragraph (c)(5)(i) of this sec-
tion).

(D) For payments made on or after
January 1, 2015, that do not constitute
U.S. source FDAP income, the withhold-
ing agent may continue to treat a payee as
a 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 the
manner described in paragraph (e)(3) of
this section.

(v) Reason to know. Except as other-
wise provided in this paragraph (d)(4), a
withholding certificate or written state-
ment pursuant to which the payee claims a
status as a participating FFI or registered
deemed-compliant FFI but does not pro-
vide the payee's GIIN or provides a GIIN
that does not appear on the current pub-
lished IRS FFI list will be invalid for
purposes of chapter 4 beginning on the
date that is 90 days after the date that
the claim is made by the payee. The payee
will be treated as an undocumented payee
beginning on the date that the form is
invalid, and will be subject to withholding
on payments made on or after that date

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until valid documentation (which includes
a confirmed GIIN under paragraph
(e)(3)(i) of this section) is provided. A
withholding agent that has withheld as
required in the previous sentence may ap-
ply reimbursement or set-off procedures,
as described in § 1.1474-2(a), if it is later
determined that the payee appeared on the
IRS FFI list as a participating FFI or reg-
istered deemed-compliant FFI at the time
of payment.

(5) [Reserved]. For further guidance,
see § 1.1471-3(d)(5).

(i) In general. Except as otherwise pro-
vided in this paragraph (d)(5), a withhold-
ing agent may treat a payee as a certified
deemed-compliant FFI, other than a spon-
sored, closely held investment vehicle, if
the withholding agent has a withholding
certificate that identifies the payee as a
certified deemed-compliant FFI, and the
withholding 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 on
the 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 certified
deemed-compliant FFI that is a flow-
through entity or is acting as an interme-
diary with respect to the payment, or by a
U.S. branch of a certified deemed-
compliant FFI.

(ii) Sponsored, closely held investment
vehicles - (A) In general. A withholding
agent may treat a payee as a sponsored,
closely held investment vehicle described
in § 1.1471-5(f)(2)(iii) if the withholding
agent can reliably associate the payment
with a withholding certificate that identi-
fies the payee as a sponsored, closely held
investment 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 manner
described in paragraph (e)(3) of this sec-
tion. In addition to the standards of knowl-
edge rules indicated in paragraph (e) of
this section, a withholding agent will have
reason to know that the payee is not a
sponsored, closely held investment vehi-
cle described in § 1.1471-5(f)(2)(iii) if its
AML due diligence indicates that the
payee 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 a
flow-through entity or is acting as an in-
termediary with respect to the payment, or
by 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 a
payee as a sponsored, closely held invest-
ment vehicle if it obtains a written state-
ment that indicates that the payee is a
sponsored, closely held investment vehi-
cle, and provides the sponsoring entity's
GIIN, which the withholding agent has
verified in the manner described in para-
graph (e)(3) of this section. In the case of
a payment of U.S. source FDAP income,
the written statement must also indicate
that the payee is the beneficial owner and
must be supplemented with documentary
evidence supporting the payee's claim of
foreign status (as described in paragraph
(c)(5)(i) of this section).

(iii) Investment advisors and invest-
ment managers.

(A) In general. A withholding agent
may treat a payee as an investment advi-
sor and investment manager described in
§ 1.1471-5(f)(2)(v) if the withholding
agent can reliably associate the payment
with a withholding certificate that identi-
fies the payee as an investment advisor
and investment manager. In addition to
the standards of knowledge rules indi-
cated in paragraph (e) of this section, a
withholding agent will have reason to
know that the payee is not an investment
advisor and investment manager de-
scribed in § 1.1471-5(f)(2)(v) if its AML
due diligence documentation indicates
that 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 a
payee as an investment advisor and in-
vestment manager described in § 1.1471-
5(f)(2)(v) if it obtains a written statement
that indicates that the payee is an invest-
ment advisor and investment manager. In
the case of a payment of U.S. source
FDAP income, the written statement must
also indicate that the payee is the benefi-
cial owner and must be supplemented
with documentary evidence supporting
the payee's claim of foreign status (as

described in paragraph (c)(5)(i) of this
section).

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

(i) through (vi) [Reserved]. For further
guidance, 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 respect
to an offshore obligation that has a bal-
ance or value not exceeding $1,000,000
on the later of June 30, 2014, or the last
day of the calendar year in which the
account was opened, and the last day of
each subsequent year preceding the pay-
ment, applying the aggregation principles
of § 1.1471-5(b)(4);

(2) through (5) [Reserved]. For further
guidance, 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]. For
further guidance, see § 1.1471-3(d)(7)
through (d)(10)(iii).

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

(i) through (vii)(B)(3) [Reserved]. For
further 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 prior
to January 1, 2017, with respect to preex-
isting obligations of $1,000,000 or less
(transitional). A withholding agent that
makes a payment prior to January 1, 2017,
with respect to a preexisting obligation
with a balance or value not exceeding
$1,000,000 on June 30, 2014, and Decem-
ber 31, 2015, applying the aggregation
principles of § 1.1471-5(b)(4)(iii), may
treat a payee as an excepted territory
NFFE described in § 1.1472-1(c)(1)(iii) if
the withholding agent-

(1) through (3) [Reserved]. For further
guidance, 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 offshore
obligations of $1,000,000 or less. A with-
holding agent that makes a payment with
respect to an offshore obligation that is

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also a preexisting obligation with a bal-
ance or value not exceeding $1,000,000
on June 30, 2014 (or the effective date of
the FFI agreement for a withholding agent
that is a participating FFI) and the last day
of each subsequent calendar year preced-
ing the payment, applying the aggregation
principles of § 1.1471-5(b)(4)(iii), may
rely upon its review conducted for AML
due diligence purposes to determine
whether the owners of the payee are bona
fide residents of the U.S. territory in
which the payee is organized, in lieu of
obtaining 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 to
such account, to the laws of a FATF-
compliant jurisdiction and has identified
the residence of the owners. The with-
holding agent relying upon this paragraph
(d)(11)(viii)(C) must still obtain a written
statement, documentary evidence (as pro-
vided in paragraph (d)(11)(viii)(B) of this
section), or preexisting account documen-
tary evidence (as described in paragraph
(c)(5)(ii)(B) of this section) establishing
that the payee is an entity other than a
depository institution, custodial institu-
tion, or specified insurance company or-
ganized in a U.S. territory.

(ix) through (ix)(C) [Reserved]. For
further guidance, see § 1.1471-3(d)(11)(ix)
through (d)(11)(ix)(C).

(x) Identifying a direct reporting
NFFE-(A) In general. A withholding
agent may treat a payment as having been
made to a direct reporting NFFE if it has
a withholding certificate that identifies the
payee as a direct reporting NFFE and the
withholding certificate contains a GIIN
for the payee that is verified against the
published IRS FFI list in the manner de-
scribed in paragraph (e)(3)(iii) of this sec-
tion (indicating when a withholding agent
may 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 a
direct reporting NFFE if the withholding
agent has-

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

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

(ii) A written statement that the payee
is a foreign entity that is not a financial
institution 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 reporting
NFFE and has verified the GIIN in the
manner described in paragraph (e)(3)(iii)
of this section.

(C) Special rule for preexisting off-
shore obligations. A withholding agent
that makes a payment with respect to an
offshore obligation that is also a preexist-
ing obligation may treat the payee as a
direct reporting NFFE if the withholding
agent has preexisting account documen-
tary evidence (as described in paragraph

(c)(5)(ii)(B) of this section) providing suf-
ficient information to determine that the
payee is a foreign entity that is not a
financial institution and it has received
(either orally or in writing) a GIIN from
the direct reporting NFFE and has verified
the 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 direct
reporting NFFE if it has a withholding
certificate that identifies the payee as a
sponsored direct reporting NFFE and the
withholding certificate includes the spon-
sored direct reporting NFFE's GIIN,
which the withholding agent has verified
against the published IRS FFI list in the
manner described in paragraph (e)(3)(iv)
of this section (indicating when a with-
holding agent may rely upon a GIIN). For
payments prior to January 1, 2016, a spon-
sored direct reporting NFFE may provide
the GIIN of its sponsoring entity on the
withholding certificate if the sponsored
direct reporting NFFE has not obtained 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 a
sponsored direct reporting NFFE if the
withholding agent has-

(1) A written statement that the payee
is a foreign entity that is a sponsored
direct reporting NFFE and, for a payment
of U.S. source FDAP income, documen-
tary evidence supporting the payee's
claim of foreign status (as described in
paragraph (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 GIIN
in the manner described in paragraph
(e)(3)(iv) of this section. For payments
prior to January 1, 2016, such requirement
may be fulfilled by receiving (either orally
or in writing) the GIIN of the sponsoring
entity to the extent that the sponsored di-
rect reporting NFFE has not obtained a
GIIN.

(xii) Identification of excepted inter-
affiliate FFI.

(A) In general. A participating FFI
may treat a payee as an excepted inter-
affiliate FFI described in § 1.1471-
5(e)(5)(iv) if it has obtained a withholding
certificate identifying the payee as such an
entity.

(B) Offshore obligations. A participat-
ing FFI that makes a payment with respect
to an offshore obligation may treat the
payment as made to an excepted inter-
affiliate FFI described in § 1.1471-
5(e)(5)(iv) if the participating FFI obtains
a written statement in which the payee
certifies that it is a foreign entity operating
as an excepted inter-affiliate FFI and that
it is a member of an expanded affiliated
group of participating FFIs or registered
deemed-compliant FFIs. In the case of a
payment of U.S. source FDAP income,
the written statement must also indicate
that the payee is the beneficial owner and
must be supplemented with documentary
evidence (as described in § 1.1471-
3(c)(5)(i)) that provides the participating
FFI 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 participating
FFI has reason to know that an entity is
not an excepted inter-affiliate FFI if it
makes any payments (other than a pay-
ment of bank deposit interest) to such
entity.

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

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(i) through (ii) [Reserved]. For further
guidance, 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 be
required to provide to the withholding
agent either a written certification (con-
tained on a withholding certificate or in a
written statement) that it does not have
any 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 respect
to a preexisting obligation with a balance or
value not exceeding $1,000,000 on June 30,
2014, and December 31, 2015, applying
the aggregation principles of § 1.1471-
5(b)(4)(iii), may rely upon its review con-
ducted for AML due diligence purposes to
identify any substantial U.S. owners of the
payee in lieu of obtaining the certification
or information required in paragraph
(d)(12)(iii)(A) of this section if the with-
holding agent is subject, with respect to
such obligation, to the laws of a FATF-
compliant jurisdiction and has identified
the residence of any controlling persons
(within the meaning of the withholding
agent's AML due diligence rules). A with-
holding agent that makes a payment with
respect to an offshore obligation that is
also a preexisting obligation with a bal-
ance or value not exceeding $1,000,000
on June 30, 2014, (or the effective date of
the FFI agreement for a withholding agent
that is a participating FFI) and the last day
of each subsequent calendar year preced-
ing the payment, applying the aggregation
principles of § 1.1471-5(b)(4)(iii), may
rely upon its review conducted for AML
due diligence purposes to identify any
substantial U.S. owners of the payee in lieu
of obtaining the certification or information
required in paragraph (d)(12)(iii)(A) of this
section if the withholding agent is sub-
ject, with respect to such obligation, to
the laws of a FATF-compliant jurisdic-
tion and has identified the residence of
any controlling persons (within the
meaning of the withholding agent's
AML 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 by
the IRS that a claim of status as a U.S.
person, a participating FFI, a deemed-
compliant FFI, or other entity entitled to a
reduced rate of withholding under section
1471 or 1472 is incorrect knows that such
a claim is incorrect beginning on the date
that is 30 days after the date the notice is
received.

### (3) GIIN verification.

(i) In general. A withholding agent that
has received a payee's claim of status
as a participating FFI or registered
deemed-compliant FFI, and that is re-
quired under paragraph (d)(4) of this
section to confirm that the FFI or branch
thereof (including an entity that is dis-
regarded as an entity separate from the
FFI) claiming status as a participating
FFI or registered deemed-compliant FFI
has a GIIN that appears on the published
IRS FFI list, has reason to know that
such payee is not such a financial insti-
tution if the payee's name (including a
name reasonably similar to the name the
withholding agent has on file for the
payee) and GIIN do not appear on the
most recently published IRS FFI list
within 90 days of the date that the claim
is made. For purposes of this paragraph
(e)(3)(i), the GIIN that the withholding
agent must confirm is, with respect to a
payee that is a participating FFI or reg-
istered deemed-compliant FFI, the GIIN
assigned to the FFI identifying its coun-
try of residence for tax purposes (or
place of organization if the FFI has no
country of residence) or, with respect to
a payment that is made to a branch of, or
an entity that is disregarded as an entity
separate from, a participating FFI or
registered deemed-compliant FFI lo-
cated outside of the FFI's country of
residence or organization, the GIIN as-
signed to the FFI identifying the country
in which the branch or disregarded en-
tity receiving the payment is located.
The withholding agent will have reason
to know that a withholdable payment is
made to a limited branch (including a
disregarded entity) of a participating or
registered deemed-compliant FFI when

it is directed to make the payment to an
address in a jurisdiction other than that
of the participating FFI or registered
deemed-compliant FFI (or branch of, or
disregarded entity wholly owned by,
such FFI) that is identified as the FFI (or
branch of, or disregarded entity wholly
owned by, such FFI) that is supposed to
receive the payment and for which the
FFI's GIIN is not confirmed as de-
scribed in the preceding sentence. For
example, if a participating FFI has iden-
tified Branch A, located in Jurisdiction
A, as its branch to receive withholdable
payments on a withholding certificate
described in § 1.1471-3(e)(3)(ii), but
subsequently directs the withholding
agent to make the payment to an address
of the FFI in Jurisdiction B, then the
withholding agent will have reason to
know that the payment is made to a
limited branch, unless the withholding
agent obtains documentation to treat the
payment to the address in Jurisdiction B
as made to a payee that is a participating
FFI or deemed-compliant FFI. An FFI
whose registration with the IRS as a
participating FFI or a registered
deemed-compliant FFI is in process but
has not yet received a GIIN may provide
a withholding agent with a Form W-8
claiming the chapter 4 status it applied
for and writing "applied for" in the box
for the GIIN. In such case, the withhold-
ing agent will have 90 days from the
date it receives the Form W-8 to obtain
a GIIN and to verify the accuracy of the
GIIN against the published IRS FFI list
before it has reason to know that the
payee is not a participating FFI or reg-
istered deemed-compliant FFI. If an FFI
is removed from the published IRS FFI
list, the withholding agent knows that
such FFI is not a participating FFI or
registered deemed-compliant FFI on the
earlier of the date that the withholding
agent discovers that the FFI has been
removed from the list or the date that is
one year from the date the FFI's GIIN
was actually removed from the list.

(ii) Special rules for reporting Model 1
FFIs. Prior to January 1, 2015, a with-
holding agent that receives an FFI's claim
of status as a reporting Model 1 FFI will
not be required to confirm that the FFI has
a GIIN that appears on the published IRS
FFI list. A withholding agent has reason to

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know that the FFI is not a reporting Model
1 FFI if the withholding agent does not
have a permanent residence address for
the FFI, or an address of the relevant
branch of the FFI, located in the country
in which the FFI claims to be a reporting
Model 1 FFI, or the withholding agent is
making a payment to a branch of the FFI
at an address in a country that does not
have in effect a Model 1 IGA.

(iii) Special rules for direct reporting
NFFEs. A withholding agent that has
received a payee's claim of status as a
direct reporting NFFE and that is re-
quired under paragraph (d)(11)(x) of
this section to confirm that the entity
claiming status as a direct reporting
NFFE has a GIIN that appears on the
published IRS FFI list, has reason to
know that such payee is not such a
NFFE if the payee's name (including a
name reasonably similar to the name
the withholding agent has on file for the
payee) and GIIN do not appear on the
most recently published IRS FFI list
within 90 days of the date that the claim
is made. A payee whose registration
with the IRS as a direct reporting NFFE
is in process but has not yet received a
GIIN may provide a withholding agent
with a Form W-8 claiming the chapter 4
status it applied for and writing "applied
for" in the box for the GIIN. In such
case, the withholding agent will have 90
days from the date it receives the Form
W-8 to verify the accuracy of the GIIN
against the published IRS FFI list before
it has reason to know that the payee is
not a direct reporting NFFE. If a direct
reporting NFFE is removed from the
published IRS FFI list, the withholding
agent knows that such NFFE is not a
direct reporting NFFE on the earlier of
the date that the withholding agent dis-
covers that the NFFE has been removed
from the list or the date that is one year
from the date the NFFE's GIIN was
actually removed from the list.

(iv) Special rules for sponsored direct
reporting NFFEs and sponsoring enti-
ties-(A) Sponsored direct reporting
NFFEs. A withholding agent that has re-
ceived a payee's claim of status as a spon-
sored direct reporting NFFE and that is
required under paragraph (d)(11)(xi) of
this section to confirm that the entity
claiming status as a sponsored direct re-

porting NFFE has a GIIN that appears on
the published IRS FFI list, has reason to
know that such payee is not such a
NFFE if its name (including a name
reasonably similar to the name the with-
holding agent has on file for the payee)
and GIIN do not appear on the most
recently published IRS FFI list within
90 days of the date that the claim is
made. A sponsored direct reporting
NFFE whose registration with the IRS
as a sponsored direct reporting NFFE is
in process but has not yet received a
GIIN may provide a withholding agent
with a Form W-8 claiming the chapter 4
status it applied for and writing "applied
for" in the box for the GIIN. In such
case, the withholding agent will have 90
days from the date it receives the Form
W-8 to verify the accuracy of the GIIN
against the published IRS FFI list before
it has reason to know that the payee is
not a sponsored direct reporting NFFE.
If a sponsored direct reporting NFFE is
removed from the published IRS FFI
list, the withholding agent knows that
such NFFE is not a sponsored direct
reporting NFFE on the earlier of the date
that the withholding agent discovers that
the sponsored entity has been removed
from the list or the date that is one year
from the date the sponsored entity's
GIIN was actually removed from the
list.

(B) Sponsoring entities (transitional
rule). For payments made prior to January
1, 2016, a withholding agent that has re-
ceived a payee's claim of status as a spon-
sored direct reporting NFFE has reason to
know that such payee is not such a NFFE
if the name of its sponsoring entity (in-
cluding a name reasonably similar to the
name the withholding agent has on file for
the sponsoring entity) and the GIIN of its
sponsoring entity do not appear on the
most recently published IRS FFI list
within 90 days of the date that the claim is
made. A sponsoring entity whose registra-
tion with the IRS is in process but has not
yet received a GIIN may provide a with-
holding agent with a Form W-8 claiming
the chapter 4 status it applied for and
writing "applied for" in the box for the
GIIN. In such case, the withholding agent
will have 90 days from the date it receives
the Form W-8 to verify the accuracy of
the GIIN against the published IRS FFI

list before it has reason to know that the
payee is not a sponsored direct reporting
NFFE. If the sponsoring entity of the
NFFE is removed from the published
IRS FFI list, the withholding agent
knows that such NFFE is not a spon-
sored direct reporting NFFE on the ear-
lier of the date that the withholding
agent discovers that the sponsoring en-
tity has been removed from the list or
the date that is one year from the date
the sponsoring entity's GIIN was actu-
ally removed from the list.

(4) Reason to know. A withholding
agent has reason to know that a claim of
chapter 4 status is unreliable or incorrect
if its knowledge of relevant facts or state-
ments contained in the withholding certif-
icate or other documentation is such that a
reasonably prudent person in the position
of the withholding agent would question
the claim being made. For an obligation
other than a preexisting obligation, a with-
holding agent has reason to know that a
person's claim of chapter 4 status is unre-
liable or incorrect if any information con-
tained in its account opening files or other
customer account files, including docu-
mentation collected for AML due dili-
gence purposes, conflicts with the chapter
4 status being claimed. A withholding
agent will not, however, have reason to
know that a person's claim of chapter 4
status is unreliable or incorrect based on
documentation collected for AML due dil-
igence purposes until the date that is 30
days after the obligation is created. In
addition to the specific standards of
knowledge set forth in this paragraph (e)
regarding a person's claim of chapter 4
status, a withholding agent is also required
to apply any specific standards of knowl-
edge applicable to the chapter 4 status
claimed as set forth in paragraph (d) of
this section. A withholding agent that has
obtained documentation to reliably asso-
ciate a payment to a foreign person under
paragraph (c) of this section has reason to
know that the person's claim of foreign
status is unreliable or incorrect only to the
extent provided in this paragraph (e)(4).
See also § 1.1441-1(e)(4)(ii)(D) for re-
quirements that apply when a change in
circumstances occurs for purposes of
chapter 3 and the related grace period
allowed under § 1.1441-1(b)(3)(iv). The
limits on reason to know for multiple ob-

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

(i) Reason to know regarding an enti-
ty's chapter 4 status. A withholding agent
has reason to know that a withholding
certificate, written statement, or documen-
tary evidence provided by or on behalf of
an entity is unreliable or incorrect if there
is information on the face of the documen-
tation or in the withholding agent's ac-
count files that conflicts with the entity's
claim regarding its chapter 4 status. For
example, a withholding agent has reason
to know that an entity's claim that it is an
excepted NFFE is unreliable or incorrect
if the withholding agent has obtained a
financial statement or credit report for
AML purposes that indicates that the en-
tity is engaged in business as a financial
institution. See also paragraph (e)(4) of
this section for the 30-day period before
a withholding agent has reason to know
a claim is unreliable or incorrect based
on AML information. Further, a with-
holding agent that has classified an en-
tity as engaged in a particular type of
business based on its records, such as
through the use of a standardized indus-
try coding system, has reason to know
that the chapter 4 status claimed by the
entity is unreliable or incorrect if the
entity'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 agent
has reason to know that a withholding
certificate provided by a person is unreli-
able or incorrect if the withholding certif-
icate is incomplete with respect to any
item on the certificate that is relevant to
the claims made by the person, the with-
holding certificate contains any informa-
tion that is inconsistent with the person's
claim, the withholding agent has other
account information that is inconsistent
with the person's claim, or the withhold-
ing certificate lacks information necessary
to establish entitlement to an exemption
from withholding for chapter 4 purposes.
Except as otherwise provided in this para-

graph (e)(4)(ii)(A), a withholding agent
that has obtained a withholding certificate
to reliably associate a payment to a for-
eign person under paragraph (c) of this
section has reason to know that the per-
son's claim of foreign status is unreliable
or 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 the
U.S. indicia has not been obtained in ac-
cordance with § 1.1441-7(b) within 90
days of when the U.S. indicia was first
identified by the withholding agent. See
also § 1.1441-1(e)(4)(ii)(D) for require-
ments that apply when a change in cir-
cumstances occurs for purposes of chapter
3 and the related grace period allowed
under § 1.1441-1(b)(3)(iv). A withhold-
ing agent that relies on an agent to review
and maintain a withholding certificate is
considered to know or have reason to
know the facts within the knowledge of
the agent.

(B) Withholding certificate provided by
an FFI. A withholding agent that ob-
tains a withholding certificate to reliably
associate a payment to a participating
FFI, a registered deemed-compliant FFI,
a sponsoring entity, or a sponsored FFI
does not need to apply the standards
of knowledge described in § 1.1441-
7(b)(5) if it has confirmed the FFI's
GIIN on the current published IRS FFI
list, in the manner described under para-
graph (e)(3) of this section, within 90
days of receipt of the withholding cer-
tificate.

(iii) Reason to know applicable to writ-
ten statements. A withholding agent must
apply the standards of knowledge applica-
ble to withholding certificates, as set forth
in paragraph (e)(4)(ii) of this section, to
determine whether it has reason to know
that a written statement is unreliable or
incorrect in terms of establishing a per-
son's claim of foreign status. The rules
under paragraph (e)(4)(ii) shall be applied
by substituting the term written statement
for withholding certificate.

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

(A) In general. A withholding agent
may 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 is
provided in person by an individual and
the photograph or signature on the docu-
mentary evidence does not match the ap-
pearance or signature of the person pre-
senting the document. A withholding
agent may not treat documentary evidence
as valid if the documentary evidence con-
tains information that is inconsistent with
the person's claim as to its chapter 4
status, the withholding agent has other
account information that is inconsistent
with the person's chapter 4 status, or the
documentary evidence lacks informa-
tion necessary to establish the person's
chapter 4 status. Additionally, a with-
holding agent that has obtained docu-
mentary evidence to reliably associate a
payment to a foreign person under para-
graph (c) of this section has reason to
know that the person's claim of foreign
status is unreliable or incorrect only if
there 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 been
obtained in accordance with § 1.1441-
7(b) within 90 days of when the U.S. indicia
was 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 applicable
to certain types of documentary evidence
-(1) Financial statement. A withholding
agent that obtains a financial statement for
purposes of establishing that a foreign
payee meets a certain asset threshold has
reason to know that the chapter 4 status
claimed is unreliable or incorrect only if
the total assets shown on the financial
statement for the payee, and if relevant the
payee's expanded affiliated group, are not
within the permissible thresholds, or the
footnotes to the financial statement indi-
cate that the payee is not a foreign entity
or is not a type of FFI eligible for the
chapter 4 status claimed. A withholding
agent that obtains a financial statement for
purposes of establishing that the payee is
an active NFFE will be required to review
the balance sheet and income statement to
determine whether the payee meets the
income and asset thresholds set forth in

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§ 1.1472-1(c)(1)(iv) and the footnotes of
the financial statement for an indication
that the payee is not a foreign entity or is
a financial institution. A withholding
agent that obtains a financial statement for
purposes of establishing a chapter 4 status
for a payee that does not require the payee
to meet an asset or income threshold will
be required to review only the footnotes to
the financial statement to determine
whether the financial statement supports
the claim of chapter 4 status. A withhold-
ing agent that is not relying upon a finan-
cial statement to establish the chapter 4
status of the payee (for example because it
has other documentation that establishes
the 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 the
financial statement in the course of its
account opening or other procedures.

(2) Organizational documents. A with-
holding agent that obtains organizational
documents for a payee solely for the pur-
pose of supporting the chapter 4 status
claimed by the entity will only be required
to review the document sufficiently to es-
tablish that the entity is a foreign person
and that the purposes for which the entity
was formed and its basic activities appear
to be of a type consistent with the chapter
4 status claimed, unless otherwise speci-
fied in paragraph (d) of this section. A
withholding 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 review
the document to the extent needed to
establish that the entity is a foreign per-
son, that the requirements applicable to
the particular chapter 4 status are met, and
that the document was executed, but will
not be required to review the remainder of
the document.

(v) Specific standards of knowledge
applicable when only documentary evi-
dence is a code or classification described
in paragraph (c)(5)(ii)(B) of this section.
A withholding agent may not rely upon a
classification described in paragraph
(c)(5)(ii)(B) of this section or a standard-
ized industry coding system to treat an
entity as having a foreign status if there
are U.S. indicia described in paragraph
(e)(4)(v)(A) of this section associated
with 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 in
paragraphs (e)(4)(v)(A)(1) through (4) of
this section associated with the entity, the
withholding agent may treat the entity as a
foreign person only if the withholding
agent obtains a withholding certificate for
the entity and one form of documentary
evidence, described in paragraph (c)(5) of
this section, that establishes the entity's
status as a foreign person (such as a cer-
tificate of incorporation).

(2) If there are U.S. indicia described in
paragraphs (e)(4)(v)(A)(1) through (4) of
this section associated with the entity and
the withholding agent is making a pay-
ment with respect to an offshore obliga-
tion, the withholding agent may also
treat the entity as a foreign person if the
withholding agent obtains a withholding
certificate for the entity and the with-
holding agent treats the entity as foreign
for purposes of foreign tax reporting. A
withholding agent will treat an entity as
foreign for purposes of foreign tax re-
porting only if the withholding agent
classifies the entity as a resident of the
country in which the obligation is main-
tained, the withholding agent is required
to report a payment made to the entity
annually on a tax information statement
that is filed with the tax authority of the
country in which the account is main-
tained as part of that country's resident
reporting requirements, and that country
has a tax information exchange agree-
ment or income tax treaty in effect with
the 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 or
flow-through entities. A withholding
agent that receives documentation from a

participating FFI or registered deemed-
compliant FFI that is not the payee must
apply the requirements of paragraph
(e)(4)(vi)(A) of this section, except that
the withholding agent may rely upon the
chapter 4 status provided by the partici-
pating FFI or registered deemed-
compliant FFI in the withholding state-
ment unless the withholding agent has
information that conflicts with the chapter
4 status provided. If underlying documen-
tation is provided for the payee and infor-
mation in the documentation or in the
withholding agent's records conflicts with
the chapter 4 status claimed, the withhold-
ing agent has reason to know that the
chapter 4 status claimed is unreliable or
incorrect. A withholding agent is not,
however, required to verify information
contained in documentation provided by
an intermediary or flow-through entity
that is a participating FFI or registered
deemed-compliant FFI that is not facially
incorrect and is not required to obtain
supporting documentation for the payee in
addition to a withholding certificate unless
the withholding agent obtains such docu-
mentation for purposes of chapters 3 or 61
or unless the withholding agent knows
that the review conducted by the partici-
pating FFI or registered deemed-
compliant FFI for purposes of chapter 4
was not adequate. For example, a with-
holding agent that receives a withholding
statement from a participating FFI that is
an intermediary stating that the payee is a
registered deemed-compliant FFI is only
required to determine that any withhold-
ing certificate provided for the payee con-
tains a GIIN and that the GIIN does not
appear to be facially invalid (for example,
because it does not contain the correct
amount of digits), but is not subject to the
requirements set forth in paragraph (e)(3)
of this section. Similarly, a withholding
agent that receives from a participating
FFI that is a partnership a withholding
statement claiming that the payee is an
active NFFE has reason to know that the
claim is unreliable or incorrect if it re-
ceives a withholding statement that con-
tains a U.S. address for the payee unless
the partnership also provides a copy of
documentation 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

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documentation sufficient to cure the U.S.
indicia in the manner set forth in para-
graph (e) of this section has been obtained
and provides details of such documenta-
tion, such as the type of documentation
and an identification number of the person
contained 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 the
limits on reason to know described in
§ 1.1441-7(b)(3)(ii) for a person that the
withholding agent has previously docu-
mented for purposes of chapters 3 or 61
(applied without regard to the fact that
section 1441 generally applies to report-
able amounts under chapter 3 and without
regard to whether the person was so doc-
umented before July 1, 2014). A with-
holding agent that applies the limits on
reason to know described in § 1.1441-
7(b)(3)(ii) must, however, review for U.S.
indicia any additional documentation
upon which the withholding agent is rely-
ing to determine the chapter 4 status of the
person, 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 further
guidance, 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 individual
described in one of the paragraphs
(e)(4)(viii)(A)(1) through (3) of this sec-
tion;

(B) through (D) [Reserved]. For further
guidance, see § 1.1471-3(e)(4)(viii)(B)
through (D).

(5) through (6) [Reserved]. For further
guidance, see § 1.1471-3(e)(5) through (6).

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

(1) In general. A withholding agent
that cannot, prior to the payment, reliably
associate (within the meaning of para-
graph (c) of this section) the payment with
valid 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. or
foreign person and such person's other
relevant characteristics (for example, as a
nonparticipating FFI). Paragraph (f)(2) of
this section provides the presumption
rules with respect to classification as an
individual or entity. Paragraph (f)(3) of
this section provides the presumption
rules to determine a payee's U.S. or for-
eign status. Paragraph (f)(4) of this section
provides the presumption rules with re-
spect to an entity's chapter 4 status. Para-
graph (f)(5) of this section provides the
presumption rules with respect to an in-
termediary or flow-through entity. Para-
graph (f)(6) of this section provides the
presumption rules with respect to effec-
tively connected income paid to a U.S.
branch of a payee. Paragraph (f)(7) of this
section provides the presumption rules
that apply to a payment made to joint
payees. Paragraph (f)(8) of this section
provides rules for how a payee may rebut
the presumptions described in this para-
graph (f). Paragraph (f)(9) of this section
provides the consequences to a withhold-
ing agent that fails to withhold in accor-
dance with the presumptions set forth in
this paragraph (f) or that has actual knowl-
edge or reason to know facts that are
contrary to the presumptions set forth in
this paragraph (f).

(2) Presumptions of classification as
an individual or entity and entity as the
beneficial owner. A withholding agent
that cannot reliably associate a payment
with a valid withholding certificate, or
that has received valid documentary ev-
idence (as described in paragraph (c)(5)
of this section), but cannot determine a
payee's status as an individual or an
entity from the documentary evidence,
must apply the presumption rules of
§ 1.1441-1(b)(3)(ii) to determine the
payee's classification as an individual,
trust, partnership, corporation, interme-
diary, or flow-through entity. Addition-
ally, a withholding agent that receives
valid documentary evidence with re-
spect to an entity must apply the rules
under § 1.1441-1(b)(3)(ii) to determine
when it may treat such entity as a ben-
eficial owner.

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

tary evidence from which it is possible to
determine the payee's U.S. or foreign sta-
tus, it must apply the presumption rules of
§ 1.1441-1(b)(3)(iii) to determine the
U.S. or foreign status of the payee (sub-
stituting the term withholdable payment
for the term payment). In the case of a
payment that a withholding agent can re-
liably associate with valid documentation
that indicates the payment is made to a
U.S. person but does not indicate whether
the person is a specified U.S. person, the
payment will be presumed made to a spec-
ified U.S. person unless the withholding
agent 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 the
person 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 Bank
or a foreign equivalent).

(4) Presumption of chapter 4 status for
a foreign entity. If a withholding agent
cannot reliably associate a valid with-
holding certificate or valid documentary
evidence sufficient to determine the
chapter 4 status of the entity receiving
payment under paragraph (d) of this sec-
tion (for example, as a participating FFI,
nonparticipating FFI, or NFFE), it must
presume that the entity is a nonpartici-
pating FFI.

(5) Presumption of chapter 4 status of
payee with respect to a payment to an
intermediary or flow-through entity. If a
withholding agent makes a payment to a
foreign flow-through entity or intermedi-
ary, including a payment that it is required
to treat as made to such an entity under
paragraphs (f)(2) and (3) of this section,
and cannot reliably associate such pay-
ment with valid documentation under
paragraph (c) of this section, the withhold-
ing agent must presume that the payment
is made to a nonparticipating FFI.

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

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EIN from the U.S. branch (either orally or
in writing). A U.S. branch is described in
this paragraph (f)(6) if it is a U.S. branch
of a foreign bank subject to regulatory
supervision by the Federal Reserve Board
or a U.S. branch of a foreign insurance
company required to file an annual state-
ment on a form approved by the National
Association of Insurance Commissioners
with the Insurance Department of a State,
a Territory, or the District of Columbia. A
payment is treated as made to a U.S.
branch of a foreign bank or foreign insur-
ance company if the payment is credited
to an account maintained in the United
States in the name of a U.S. branch of the
foreign person, or the payment is made to
an address in the United States where the
U.S. branch is located and the name of the
U.S. branch appears on documents (in
written or electronic form) associated with
the payment (for example, the check
mailed or letter addressed to the branch).

(7) Joint payees - (i) In general. If a
withholding agent makes a payment to
joint payees and cannot reliably associate
the payment with valid documentation
from each payee but all of the joint payees
appear to be individuals, then the payment
is 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 be
treated as made to a nonparticipating FFI.
However, if one of the joint payees pro-
vides a Form W-9 in accordance with the
procedures described in §§ 31.3406(d)-
1 through 31.3406(d)-5, the payment shall
be treated as made to that payee.

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

(8) Rebuttal of presumptions. A payee
may rebut the presumptions described in
paragraphs (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 presumptions
and of actual knowledge or reason to
know otherwise - (i) In general. Except
as otherwise provided in this paragraph
(f)(9), a withholding agent that withholds
on a payment under section 1471 or 1472
in accordance with the presumptions set
forth in this paragraph (f) shall not be
liable for withholding under this section
even if it is later established that the payee
has a chapter 4 status other than the status
presumed. A withholding agent that fails
to report and withhold in accordance with
the presumptions described in paragraphs
(f)(2) through (7) of this section with re-
spect to a payment that it cannot reliably
associate with valid documentation shall
be liable for tax, interest, and penalties.
See § 1.1474-1(a) for the extent of a
withholding agent's liability for failing to
withhold in accordance with the presump-
tions described in this paragraph (f).

(ii) Actual knowledge or reason to
know that amount of withholding is
greater than is required under the pre-
sumptions or that reporting of the pay-
ment is required. Notwithstanding the
provisions of paragraph (f)(9)(i) of this
section, a withholding agent that knows or
has reason to know that the status or char-
acteristics of the person are other than
what is presumed under this paragraph (f)
may not rely on the presumptions de-
scribed in this paragraph (f) to the extent
that, if it determined the status of the
person 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 amount
greater than would be the case if it relied
on the presumptions described in this
paragraph (f). In such a case, the with-
holding agent must rely on its knowledge
or reason to know rather than on the pre-
sumptions set forth in this paragraph (f).
Failure to do so shall result in liability for
tax, interest, and penalties to the extent
described in § 1.1474-1(a).

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

(h) Expiration date. The applicability
of 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, 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 text
to paragraph (d)(7).

The additions and revisions read as fol-
lows:

§ 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)(1).

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

(3) [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) * * *

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(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).

(8) [Reserved]. For further guidance,
see § 1.1471-4T(d)(8).

(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).

(a) [Reserved]. For further guidance,
see § 1.1471-4(a).

(1) through (2) [Reserved]. For further
guidance, see § 1.1471-4(a)(1) through (2).

(3) Reporting. A participating FFI is
required to report the information de-
scribed in paragraph (d) of this section
annually with respect to U.S. accounts
under section 1471(c) and accounts held
by recalcitrant account holders. A partic-
ipating FFI must also comply with the
filing requirements described in
§ 1.1474-1(c) and (d) to report payments
that are chapter 4 reportable amounts paid
to recalcitrant account holders and non-
participating FFIs (including the transi-
tional reporting of foreign reportable
amounts 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 an
account as required under paragraph (d)
of this section must close or transfer
such account within a reasonable period
of time as described in paragraph (i) of
this section.

(4) through (7) [Reserved]. For further
guidance, see § 1.1471-4(a)(4) through (7).

(b) [Reserved]. For further guidance,
see § 1.1471-4(b).

(1) In general. Except as otherwise
provided in a Model 2 IGA, a participat-
ing FFI is required to deduct and withhold
a tax equal to 30 percent of any withhold-
able payment made by such participating
FFI to an account held by a recalcitrant
account holder or to a nonparticipating
FFI after June 30, 2014, to the extent
required under paragraph (b)(3) of this
section. See paragraph (b)(2) of this sec-
tion for rules for a participating FFI to
identify the payee of a payment in order to
determine whether withholding is re-
quired under this paragraph (b). See para-
graph (b)(4) of this section for the extent
of a participating FFI's requirement to
deduct and withhold tax on a foreign pass-
thru payment made by such participating
FFI to an account held by a recalcitrant
account holder or to a nonparticipating
FFI. See paragraph (b)(5) of this section
for the rules for withholding on payments
to limited branches and limited FFIs. See
paragraph (b)(6) for the special allowance
to set aside in escrow amounts withheld
with respect to dormant accounts. See
paragraph (b)(7) of this section for the
withholding 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 terms
withholdable payment and foreign pass-
thru payment that applies to any payment
made under a grandfathered obligation or
the gross proceeds from the disposition of
such an obligation. See § 1.1474-
1(d)(4)(iii) for the requirement of partici-
pating FFIs to report payments that are
chapter 4 reportable amounts. See
§ 1.1474-6 for the coordination of with-
holding on payments under this paragraph
(b) with the other withholding provisions
under the Code.

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(2) Withholding determination. Except
as otherwise provided under § 1.1471-
2 and, with respect to certain preexisting
accounts, under paragraph (c) of this sec-
tion, a participating FFI is required to
determine whether withholding applies at
the time a payment is made by reliably
associating the payment with valid docu-
mentation described in paragraph (c) of
this section for the payee of the payment.
For a payment made to an account, if the
account is held by one or more individu-
als, the payee is each individual account
holder. For a payment made to an account
held by an entity, except as otherwise
provided in § 1.1471-3(a)(3), the payee is
the account holder. If the participating FFI
makes a withholdable payment to a payee
that is an entity and the payment is made
with respect to an obligation that is not an
account, except as otherwise provided in
§ 1.1471-3(a)(3), the payee is the person
to whom the payment is made. See
§ 1.1473-1(a) to determine when a pay-
ment is made in the case of a withholdable
payment. If a participating FFI cannot re-
liably associate a payment (or any portion
of a payment) with valid documentation,
the rules described in paragraph (c) of this
section shall apply to determine the chap-
ter 4 status of the account holder (and
payee if other than the account holder).
Notwithstanding the foregoing, a partici-
pating FFI may establish after the date of
payment 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 that
complies with the withholding obligations
of this paragraph (b) with respect to ac-
counts held by recalcitrant account hold-
ers and payees that are nonparticipating
FFIs shall be deemed to satisfy its with-
holding obligations under sections
1471(a) and 1472 with respect to such
account 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 section
1471(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 as
part of a withholding certificate described
in § 1.1471-3(c)(3)(iii) will generally not
be required to withhold under paragraph
(b)(1) of this section. See § 1.1471-
2(a)(2)(ii), however, for the circumstances
under which a participating FFI that is an
NQI, NWP, or NWT has a residual with-
holding responsibility. See also § 1.1471-
3(c)(9)(iii)(B) for the circumstances under
which a participating FFI that is a broker
has a residual withholding responsibility
as an intermediary of the payment and
may also be liable for any underwithhold-
ing that occurs. See § § 1.1471-2(a) and
1.1472-1(a)(2)(i) and the QI, WP, or WT
agreement 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 section
3406. A participating FFI may elect to
satisfy its withholding obligation under
paragraph (b)(1) of this section with re-
spect to recalcitrant account holders that
are also U.S. non-exempt recipients sub-
ject to backup withholding under section
3406 receiving withholdable payments, to
the extent that the payments also consti-
tute reportable payments, by applying
withholding under section 3406 at the
backup withholding rate to such withhold-
able payments. A participating FFI may
make the election described in this para-
graph only if it complies with the infor-
mation reporting rules under chapter 61
and section 3406. Nothing in this para-
graph relieves a participating FFI of its
requirement to backup withhold under
section 3406 with respect to reportable
payments that are not also withholdable
payments. See § 1.1474-6(f) for the gen-
eral rule that satisfying withholding re-
quirements under chapter 4 will satisfy
backup withholding requirements under
section 3406 for a payment that is both a
withholdable payment and a reportable
payment.

(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 to
withholding under chapter 3 or backup
withholding 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, in
lieu of depositing the tax withheld, set
aside the amount withheld in escrow until
the date that the account ceases to be a
dormant account. In such case, the tax
withheld becomes due 90 days following
the date that the account ceases to be a
dormant account if the account holder
does not provide the documentation re-
quired under paragraph (c) of this section
or becomes refundable to the account
holder if the account holder provides the
documentation required under paragraph
(c) of this section establishing that with-
holding does not apply. A participating
FFI that maintains a dormant account of a
recalcitrant account holder and that elects
to escrow withheld tax pursuant to this
paragraph (b)(6) may not delegate the re-
sponsibility to escrow withheld tax to the
withholding 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 the
jurisdiction in which the participating FFI
(or branch thereof) operates, the partici-
pating FFI is no longer required to deposit
with the IRS the amount held in escrow
with respect to the account. See paragraph
(d)(6)(ii) of this section for the definition
of dormant account.

(7) [Reserved]. For further guidance,
see § 1.1471-4(b)(7).

(c) [Reserved]. For further guidance,
see § 1.1471-4(c).

(1) through (4)(iii)(B) [Reserved]. For
further guidance, see § 1.1471-4(c)(1)
through (c)(4)(iii)(B).

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

(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).

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

(vi) Standing instructions to pay
amounts. If information required to be
reviewed with respect to the account con-
tains standing instructions to pay amounts
from the account to an account maintained
in the United States for an account holder,
the participating FFI must retain a record
of a withholding certificate and either a
form of documentary evidence described
in § 1.1471-3(c)(5)(i)(A) through (C) or a
written reasonable explanation (as defined
in § 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]. For
further 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 as
held 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 a
foreign 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 under
chapter 61, is not required to perform the
electronic 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 such
account. Additionally, a participating FFI
with a U.S. payor as its paying agent is not
required to perform the electronic search
described in paragraph (c)(5)(iv)(C) of
this section or the enhanced review de-
scribed in paragraph (c)(5)(iv)(D)(3) of
this section for an account for which its
paying 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. The
participating FFI is required, however, to
perform the relationship manager inquiry
described 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), a
participating 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 retained
a record of the documentation required
under chapter 61 to establish the foreign
status of an individual and the account
received a reportable payment as defined
under section 3406(b) in any prior year
that was properly reported in that year. In
the 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 has
met the relevant documentation and re-
porting requirements of its agreement
with respect to an account holder that re-
ceived a reportable amount in any year in
which its agreement was in effect.

(6) through (7) [Reserved]. For further
guidance, see § 1.1471-4(c)(6) through (7).

(d) [Reserved]. For further guidance,
see § 1.1471-4(d).

(1) Scope of paragraph. This para-
graph (d) provides rules addressing the
information reporting requirements appli-
cable to participating FFIs with respect to
U.S. accounts, accounts held by owner-
documented FFIs, and recalcitrant ac-
count holders. Paragraph (d)(2) of this
section describes the accounts subject to
reporting under this paragraph (d), and
specifies 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 to
be reported and the manner of reporting
by a participating FFI under section
1471(c)(1) with respect to a U.S. account
or an account held by an owner-
documented FFI. Paragraph (d)(4) of this
section 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 to
report its U.S. accounts and accounts held
by owner-documented FFIs under section
1471(c)(2) and the information required to
be reported under such election. Para-
graph (d)(6) of this section provides rules
for a participating FFI to report its recal-
citrant account holders. Paragraph (d)(7)
of this section provides special transi-
tional reporting rules applicable to reports
due in 2015 and 2016. Paragraph (d)(8) of
this 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 a
financial institution to file the information
required under this paragraph (d) on mag-
netic media.

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

(i) Accounts subject to reporting. Sub-
ject to the rules of paragraph (d)(7) of this
section, a participating FFI shall report by
the time and in the manner prescribed in
paragraph (d)(3)(vi) of this section, the
information described in paragraph (d)(3)
of this section with respect to accounts
maintained at any time during each calen-
dar year for which the participating FFI is
responsible 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 as
U.S. accounts by the end of such calendar
year pursuant to a change in circum-
stances during such year as described in
paragraph (c)(2)(iii) of this section. Alter-
natively, a participating FFI may elect to
report under paragraph (d)(5) of this sec-
tion with respect to such accounts for each
calendar year. With respect to accounts
held by recalcitrant account holders, a par-
ticipating FFI is required to report with
respect to each calendar year under para-
graph (d)(6) of this section and not under
paragraph (d)(3) or (5) of this section. For
separate reporting requirements of partic-
ipating FFIs with respect to foreign re-
portable amounts and for transitional
rules for participating FFIs to report cer-
tain foreign reportable amounts paid to
accounts held by nonparticipating FFIs,
see § 1.1471-4(d)(2)(ii)(F).

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

(A) In general. Except as otherwise
provided 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 of
paragraph (d)(2)(iii), (d)(3), or (d)(5) of
this section (as applicable) for each calen-
dar year. Except as otherwise provided in
paragraph (d)(2)(ii)(C) of this section, a
participating FFI is responsible for report-
ing accounts held by recalcitrant account

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holders that it maintains in accordance
with the requirements of paragraph (d)(6)
of this section. A participating FFI is not
required to report the information required
under paragraph (d)(6) of this section with
respect to an account held by a recalcitrant
account holder of another participating
FFI even if that other participating FFI
holds the account as an intermediary on
behalf of such account holder and regard-
less of whether the participating FFI is
required to report payments made to the
recalcitrant account holder of such other
FFI 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 institution
does not agree to be treated as a U.S.
person with respect to a withholdable pay-
ment, the participating FFI must report
with respect to each specified U.S. person
or substantial U.S. owner of an entity that
is treated as a passive NFFE with respect
to which the territory financial institution
acts as an intermediary and provides the
participating FFI with the information and
documentation required under § 1.1471-
3(c)(3)(iii)(G). The participating FFI shall
be treated as having satisfied these report-
ing requirements if it reports with respect
to each such specified U.S. person or sub-
stantial U.S. owner of a passive NFFE
either-

(i) The information required by chapter
61 and described in paragraph (d)(5)(ii) or
(d)(5)(iii) of this section (except account
number); or

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

(C) through (D) [Reserved]. For further
guidance, see § 1.1471-4(d)(2)(ii)(C)
through (D).

(E) Requirement to identify the GIIN of
a branch that maintains an account. A
participating FFI may report under para-
graph (d)(3) or (d)(5) of this section either
with respect to all of its U.S. accounts and
recalcitrant accounts, or separately with
respect to any clearly identified group of
accounts (such as by line of business or
the location of where the account is main-
tained). A participating FFI shall include
the GIIN assigned to the participating FFI

or its branches to identify the jurisdiction
of the FFI or branch that maintains the
accounts subject to reporting under para-
graph (d)(3) or (d)(5) of this section. Ad-
ditionally, a participating FFI shall file
with the IRS the information required to
be reported on accounts that it maintains
in accordance with the forms and their
accompanying instructions provided by
the IRS. For the definition of a branch
that applies for purposes of this para-
graph (d), see paragraph (e)(2)(ii) of this
section.

(F) Reporting by participating FFIs
and registered deemed-compliant FFIs
(including QIs, WPs, WTs, and certain
U.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 or
registered deemed-compliant FFI (includ-
ing a QI, WP, WT, or U.S. branch of a
participating 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 limited
branch and limited FFI treated as a non-
participating FFI), the participating FFI or
registered deemed-compliant FFI must re-
port on Form 8966 the name and address
of the nonparticipating FFI, and the aggre-
gate amount of foreign source payments,
as described in paragraph (d)(4)(iv) of this
section, paid to or with respect to each
such account (foreign reportable amount)
for each of the calendar years 2015 and
2016. If, however, the participating FFI is
prohibited under domestic law from re-
porting on a specific payee basis without
consent from the nonparticipating FFI ac-
count holder and the participating FFI has
not been able to obtain such consent, the
participating FFI may instead report the
aggregate number of accounts held by
such non-consenting nonparticipating
FFIs and the aggregate amount of foreign
reportable amounts paid with respect to
such accounts, as described in paragraph
(d)(4)(iv) of this section, during the cal-
endar year. A participating FFI may, in
lieu of reporting only foreign reportable
amounts, report all income, gross pro-
ceeds, and redemptions (irrespective of
the source) paid to the nonparticipating
FFI's account by the participating FFI
during the calendar year. In addition, the

participating FFI must retain the account
statements related to such nonparticipat-
ing FFI accounts. See paragraphs
(d)(6)(iv), (v), (vi) and (vii) of this section
for rules relating to reporting on recalci-
trant account holders. Form 8966 shall be
filed electronically with the IRS on or
before March 31 of the year following the
end of the calendar year to which the form
relates.

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

(A) Special reporting rule for U.S.
payors other than U.S. branches. Partici-
pating FFIs that are U.S. payors (other
than U.S. branches) shall be treated as
having satisfied the chapter 4 reporting
requirements described in paragraph
(d)(2)(i) of this section with respect to
accounts that the participating FFI is re-
quired to treat as U.S. accounts, or ac-
counts held by owner-documented FFIs, if
the participating FFI reports with respect
to 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) of
this section. However, such participating
FFI that is required to report on such
accounts under chapter 61 is not relieved
of 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 satisfied
the reporting requirements described in
paragraph (d)(2)(i) of this section if it
reports under-

(1) through (4) [Reserved]. For further
guidance, 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. A
U.S. branch of a registered deemed-
compliant FFI or limited FFI that is not
treated as a U.S. person shall be treated as
having satisfied the reporting require-
ments described in paragraph (d)(2)(i) of
this section if it reports the information
described in paragraph (d)(2)(iii)(B)(1)
through (4) of this section with respect to
account holders of accounts that the U.S.
branch is required to treat as U.S. ac-

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counts or accounts held by owner-
documented FFIs.

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

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

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

(A) through (D) [Reserved]. For further
guidance, see § 1.1471-4(d)(3)(ii)(A)
through (D).

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

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

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

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

(iv) through (iv)(F) [Reserved]. For
further 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).

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

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

(5) [Reserved]. For further guidance,
see § 1.1471-4(d)(5).

(i) through (iv) [Reserved]. For further
guidance, see § 1.1471-4(d)(5)(i) through
(d)(5)(iv).

(v) Time and manner of making the
election. A participating FFI (or one or
more branches of the participating FFI)
may make the election described in this
paragraph (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 election
under this paragraph (d)(5) either with
respect to all of its U.S. accounts and
recalcitrant accounts or, separately, with

respect to any clearly identified group of
accounts (such as by line of business or
the 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 any
clearly identified group of accounts) by
reporting the information described in
paragraph (d)(3) of this section beginning
on the first reporting date with respect to
the calendar year that follows the calendar
year for which it last reports an account
under this paragraph (d)(5).

(vii) [Reserved]. For further guidance,
see § 1.1471-4(d)(5)(vii).

(6) [Reserved]. For further guidance,
see § 1.1471-4(d)(6).

(i) through (v) [Reserved]. For further
guidance, see § 1.1471-4(d)(6)(i) through (v).

(vi) Extensions in filing. The IRS shall
grant an automatic 90-day extension of
time in which to file Form 8966. Form
8809, "Request for Extension of Time to
File Information Returns," (or such other
form as the IRS may prescribe) must be
used to request such extension of time and
must be filed no later than the due date of
Form 8966. Under certain hardship con-
ditions, the IRS may grant an additional
90-day extension. A request for extension
due to hardship must contain a statement
of the reasons for requesting the extension
and such other information as the forms or
instructions may require.

(vii) [Reserved]. For further guidance,
see § 1.1471-4(d)(6)(vii).

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

(i) In general. If the effective date of
the FFI agreement of a participating FFI is
on 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 (or
that it is otherwise required to report un-
der paragraph (d)(2)(ii) of this section)
during the 2014 and 2015 calendar years
in accordance with paragraph (d)(7)(ii) or
(iii) of this section.

(ii) [Reserved]. For further guidance,
see § 1.1471-4(d)(7)(ii).

(A) Reporting with respect to the 2014
calendar year. With respect to accounts
maintained during the 2014 calendar
year-

(1) through (3) [Reserved]. For further
guidance, see § 1.1471-4(d)(7)(ii)(A)(1)
through (3).

(B) [Reserved]. For further guidance,
see § 1.1471-4(d)(7)(ii)(B).

(1) through (2) [Reserved]. For further
guidance, 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 FFI
that 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 calendar
year. With respect to its 2015 calendar year,
a participating FFI is required to report all of
the information required to be reported un-
der paragraphs (d)(5)(i) through (iii) of this
section but may exclude from such report-
ing amounts reportable under section 6045.

(iv) [Reserved]. For further guidance,
see § 1.1471-4(d)(7)(iv).

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

(B) Special determination date and
timing for reporting with respect to the
2014 calendar year. With respect to the
2014 calendar year, a participating FFI
must report under paragraph (d)(3) or (5)
of this section on all accounts that are
identified and documented under para-
graph (c) of this section as U.S. accounts
or accounts held by owner-documented
FFIs as of December 31, 2014, (or as of
the date an account is closed if the account
is closed prior to December 31, 2014) if
such account was outstanding on July 1,
2014. Reporting for the 2014 calendar
year shall be filed with the IRS on or
before 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 with
paragraph (d)(2)(iii) of this section may
report all or a portion of its U.S. accounts
and accounts held by owner-documented
FFIs in accordance with the dates other-

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

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

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

Example 1. [Reserved]. For further guidance, see

§ 1.1471-4(d)(9), Example 1.

Example 2. [Reserved]. For further guidance, see
§ 1.1471-4(d)(9), Example 2.

Example 3. U.S. owned foreign entity. FC, a
passive NFFE, holds a custodial account with PFFI1,
a participating FFI. U, a specified U.S. person, owns
3% of the only class of stock of FC. Q, another
specified U.S. person, owns 12% of the only class of
stock of FC. U is not a substantial U.S. owner of FC.
See § 1.1473-1(b). Q is a substantial U.S. owner of
FC and FC identifies her as such to PFFI1. PFFI1
does not elect to report under paragraph (d)(5) of this
section. PFFI1 must complete and file the reporting
form described in paragraph (d)(3)(v) of this section
and 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 4. [Reserved]. For further guidance, see
§ 1.1471-4(d)(9), Example 4.

Example 5. Owner-documented FFI. DC, an
owner-documented FFI under § 1.1471-3(d)(6), holds
a custodial account with PFFI1, a participating
FFI. U, a specified U.S. person, owns 3% of the
only class of stock of DC. Q, another specified
U.S. person, owns 12% of the only class of stock
of DC. Both U and Q are persons identified in
§ 1.1471-3(d)(6)(iv)(A)(1) and DC identifies U
and Q to PFFI1 and otherwise provides to PFFI1
all of the information required to be reported with
respect to DC. PFFI1 must complete and file a
form 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 6. [Reserved]. For further guidance, see
§ 1.1471-4(d)(9), Example 6.

Example 7. Sponsored FFI. DC2 is an FFI that
has agreed to have a sponsoring entity, PFFI1, fulfill
DC2's chapter 4 responsibilities under § 1.1471-
5(f)(2)(iii). U, a specified U.S. person, holds an
equity interest in DC2 that is a financial account
under § 1.1471-5(b)(3)(iii). PFFI1 must complete
and file a form described in paragraph (d)(3)(v) of
this section with regard to U's account on behalf of
DC2. See paragraph (d)(2)(ii)(C) of this section.

(e) [Reserved]. For further guidance,
see § 1.1471-4(e).

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

graphs (e)(2) and (e)(3) of this section,
each FFI that is a member of an expanded
affiliated group must have the chapter 4
status of a participating FFI, deemed-
compliant FFI, or exempt beneficial
owner as a condition for any member of
such group to obtain the status of a par-
ticipating FFI or registered deemed-
compliant FFI. Accordingly, except as
otherwise provided in published guidance,
each FFI other than a certified deemed-
compliant FFI or exempt beneficial owner
in an expanded affiliated group must sub-
mit a registration form to the IRS in such
manner as the IRS may prescribe request-
ing an FFI agreement, registered deemed-
compliant status, or limited FFI status as a
condition for any member to become a
participating FFI or registered deemed-
compliant FFI. Except as provided in
paragraph (e)(2) of this section, each FFI
other than a certified deemed-compliant
FFI or exempt beneficial owner that is a
member of such group must also agree to
all of the requirements for the status for
which it applies with respect to all ac-
counts maintained at all of its branches,
offices, and divisions. For the withholding
requirements of a participating FFI with
respect to its limited branches and its af-
filiates that are limited FFIs, see paragraph
(b)(5) of this section. Notwithstanding the
foregoing, an FFI (or branch thereof) that
is treated as a participating FFI or a
deemed-compliant FFI pursuant to a
Model 1 IGA or Model 2 IGA will main-
tain such status provided that it meets the
terms for such status pursuant to such
agreement.

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

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

(A) through (C) [Reserved]. For further
guidance, see § 1.1471-4(e)(2)(i)(A)
through (C).

(ii) Branch defined. For purposes of
this section, a branch is a unit, business, or
office of an FFI that is treated as a branch
under the regulatory regime of a country
or that is otherwise regulated under the
laws of a country as separate from other
offices, units, or branches of the FFI and
also includes an entity that is disregarded
as 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, or
office of an FFI located in a country in
which it is resident, and a unit, business,
or office of an FFI located in the country
in 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 located
in a single country, shall be treated as a
single branch and may use the same GIIN.
An account will be treated as maintained
by a branch or disregarded entity if the
rights and obligations of the account
holder and the participating FFI with re-
gard to such account (including any assets
held in the account) are governed by the
laws of the country of the branch or dis-
regarded entity.

(iii) through (v) [Reserved]. For further
guidance, see § 1.1471-4(e)(2)(iii) through
(v).

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

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

(1) through (3)(iv)(C) [Reserved]. For
further 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, based
upon the information reporting forms de-
scribed in paragraphs (d)(3)(v), (d)(5)(vii),
or (d)(6)(iv) of this section filed with the
IRS for each calendar year, may request
additional information with respect to the
information reported on the forms or may
request the account statements described in
paragraph (d)(4)(v) of this section. The IRS
may request additional information to deter-
mine an FFI's compliance with its FFI
agreement and to assist the IRS with its
review of account holder compliance with
tax reporting requirements.

(ii) Inquiries regarding substantial
non-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 each
calendar year, the certifications made by
the responsible officer described in para-
graph (f)(3) of this section, or any other
information related to the participating
FFI's compliance with its FFI agreement,
the IRS determines in its discretion that
the participating FFI may not have sub-

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stantially complied with the requirements
of its FFI agreement, the IRS may request
from the responsible officer (or designee)
information necessary to verify the partic-
ipating FFI's compliance with the FFI
agreement. The IRS may request, for ex-
ample, a description or copy of the partic-
ipating FFI's policies and procedures for
fulfilling the requirements of the FFI
agreement, a description of the participat-
ing FFI's procedures for conducting its
periodic review, or a copy of any written
reports documenting the findings of such
review in order to evaluate the sufficiency
of the participating FFI's compliance pro-
gram and review of such program. The
IRS may also request the performance of
specified review procedures by a person
(including an external auditor or third-
party consultant) that the IRS identifies as
competent to perform such procedures
given the facts and circumstances sur-
rounding the FFI's potential failure to
comply with the FFI agreement. The IRS
may make these requests to a sponsoring
entity with respect to any sponsored FFI.

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

(1) Defined. An event of default occurs
if a participating FFI fails to perform ma-
terial obligations required with respect to
the due diligence, verification, withhold-
ing, or reporting requirements of the FFI
agreement or if the IRS determines that
the participating FFI has failed to substan-
tially comply with the requirements of the
FFI agreement. An event of default also
includes the occurrence of the follow-
ing-

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

(ii) Failure to significantly reduce, over
a period of time, the number of account
holders or payees that the participating
FFI is required to treat as recalcitrant ac-
count holders or nonparticipating FFIs, as
a result of the participating FFI failing to
comply with the due diligence procedures
for the identification and documentation
of account holders and payees, as set forth
in 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 default
specifying the event of default. The IRS
will request that the participating FFI
remediate the event of default within a
specified time period. The participating
FFI must respond to the notice of default
and provide information responsive to
an IRS request for information or state
the reasons why the participating FFI
does not agree that an event of default
has occurred. Taking into account the
terms of any applicable Model 2 IGA, if
the participating FFI does not provide a
response 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 or
notice of termination by written request
to the Deputy Commissioner (Interna-
tional), LB&I.

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

(h) through (j) [Reserved]. For further
guidance, see § 1.1471-4(h) through (j).

(k) Expiration date. The applicability
of 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).

The additions and revisions read as fol-
lows:

§ 1.1471-5 Definitions applicable to
section 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) * * *

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(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)(5).

(6) [Reserved]. For further guidance,
see § 1.1471-5T(f)(1)(i)(D)(6).

(7) [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).
* * * * *

(5) [Reserved]. For further guidance,
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 to
section 1471 (temporary).

(a) [Reserved]. For further guidance,
see § 1.1471-5(a).

(1) through (2) [Reserved]. For further
guidance, see § 1.1471-5(a)(1) through (2).

(3) [Reserved]. For further guidance,
see § 1.1471-5(a)(3).

(i) In general. Except as otherwise pro-
vided in this paragraph (a)(3), the account
holder is the person listed or identified as
the holder or owner of the account with
the FFI that maintains the account, regard-
less of whether such person is a flow-
through entity. Thus, for example, except
as otherwise provided in paragraph
(a)(3)(ii) of this section, if a trust (includ-
ing a simple or grantor trust) or an estate
is listed as the holder or owner of a finan-
cial account, the trust or estate is the ac-
count holder, rather than its owners or
beneficiaries. Similarly, except as other-
wise provided in this paragraph (a)(3), if a
partnership is listed as the holder or owner
of a financial account, the partnership is
the account holder, rather than the part-
ners in the partnership. In the case of an
account held by an entity that is disre-
garded for U.S. federal tax purposes under
§ 301.7701-2(c)(2)(i), the account shall
be treated as held by the person owning
such entity. With respect to an account
held by an exempt beneficial owner, such
account is treated as held by an exempt
beneficial owner only when all payments
made to such account would be treated as
made to an exempt beneficial owner. See
§ 1.1471-6(h) for when a payment de-
rived from certain commercial activities is
not treated as made to an exempt benefi-
cial owner.

(ii) [Reserved]. For further guidance,
see § 1.1471-5(a)(3)(ii).

(iii) [Reserved]. For further guidance,
see § 1.1471-5(a)(3)(iii).

(iv) [Reserved]. For further guidance,
see § 1.1471-5(a)(3)(iv).

(v) [Reserved]. For further guidance,
see § 1.1471-5(a)(3)(v).

(4) [Reserved]. For further guidance,
see § 1.1471-5(a)(4).

(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 this
paragraph (a)(4)(i), the term U.S. account
shall not include any depository account
maintained by such financial institution
during a calendar year if the account is
held solely by one or more individuals
and, with respect to each holder of such
account, the aggregate balance or value of
all depository accounts held by each such
individual does not exceed $50,000 as of
the end of the calendar year or on the date

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the account is closed. For rules for deter-
mining the account balance or value, see
paragraphs (a)(3)(iii) and (b)(4) of this
section.

(ii) [Reserved]. For further guidance,
see § 1.1471-5(a)(4)(ii).

(iii) [Reserved]. For further guidance,
see § 1.1471-5(a)(4)(iii).

(b) [Reserved]. For further guidance,
see § 1.1471-5(b).

(1) [Reserved]. For further guidance,
see § 1.1471-5(b)(1).

(i) through (ii) [Reserved]. For further
guidance, see § 1.1471-5(b)(1)(i) through (ii).

(iii) [Reserved]. For further guidance,
see § 1.1471-5(b)(1)(iii).

(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 is
determined, directly or indirectly, primar-
ily by reference to one or more investment
entities described in paragraph
(e)(4)(i)(B) or (C) of this section or one or
more passive NFFEs that are members of
the entity's expanded affiliated group (as
determined under paragraph (b)(3)(vi) of
this section);

(3) through (4) [Reserved]. For further
guidance, 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).

(3) [Reserved]. For further guidance,
see § 1.1471-5(b)(3).

(i) through (iii) [Reserved]. For further
guidance, see § 1.1471-5(b)(3)(i) through
(b)(3)(iii)(B)(3).

(iv) Regularly traded on an established
securities market. To determine if debt or
equity interests described in paragraph
(b)(1)(iii) of this section are regularly
traded, the principles of § 1.1472-
1(c)(1)(i)(A)(2)(i) and (ii) shall apply with
respect to the interests, and the principles
of § 1.1472-1(c)(1)(i)(B)(1) shall apply
for this purpose in the case of an initial
public offering of such interests. See
§ 1.1472-1(c)(1)(i)(C) for the definition

of an established securities market. For
purposes of paragraph (b)(1)(iii) of this
section, an interest is not regularly traded
on an established securities market if the
holder 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 shall
not apply to the extent a holder's interest
is registered prior to July 1, 2014, on the
books of the investment entity.

(v) [Reserved]. For further guidance,
see § 1.1471-5(b)(3)(v).

(A) Equity interest. The value of an
equity interest is determined, directly or
indirectly, primarily by reference to assets
that give rise (or could give rise) to with-
holdable payments if the return earned on
such interest (including upon a sale, ex-
change, or redemption) is determined pri-
marily by reference to profits or assets of
a 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 person
or 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 or
more investment entities or passive
NFFEs.

(A) Equity interest. The return earned
on an equity interest is determined, di-
rectly or indirectly, primarily by reference
to one or more investment entities de-
scribed in paragraph (e)(4)(i)(B) or (C) of
this section or passive NFFEs that are
members 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 equity
interests in, one or more investment enti-
ties described in paragraph (e)(4)(i)(B) or
(C) of this section or passive NFFEs that
are members of the entity's expanded af-
filiated group.

(B) Debt interest. The return earned on
a debt interest is determined, directly or
indirectly, primarily by reference to one or

more investment entities described in
paragraph (e)(4)(i)(B) or (C) of this sec-
tion or passive NFFEs that are members
of the entity's expanded affiliated group
if-

(1) Debt is convertible into equity in-
terests in one or more investment entities
described in paragraph (e)(4)(i)(B) or (C)
of this section or passive NFFEs that are
members 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 to
profits or assets of, or equity interests in,
one or more investment entities described
in paragraph (e)(4)(i)(B) or (C) of this
section or passive NFFEs that are mem-
bers of the entity's expanded affiliated
group.

(vii) [Reserved]. For further guid-
ance, see § 1.1471-5(b)(3)(vii) through
(b)(3)(vii)(D)(3).

(4) through (5) [Reserved]. For further
guidance, see § 1.1471-5(b)(4) through (5).

(c) U.S. owned foreign entity. The term
U.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 definition
of foreign entity for purposes of chapter 4.
For the requirements applicable to deter-
mining direct and indirect ownership in an
entity, see § 1.1473-1(b)(2).

(d) [Reserved]. For further guidance,
see § 1.1471-5(d).

(e) [Reserved]. For further guidance,
see § 1.1471-5(e).

(1) [Reserved]. For further guidance,
see § 1.1471-5(e)(1).

(i) through (iv) [Reserved]. For further
guidance, 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 affiliated
group 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).

(3) [Reserved]. For further guidance,
see § 1.1471-5(e)(3).

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(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 to
holding financial assets and related finan-
cial services means custody, account
maintenance, and transfer fees; commis-
sions and fees earned from executing and
pricing securities transactions; income
earned from extending credit to customers
with respect to financial assets held in
custody by the entity (or acquired through
such extension of credit); income earned
on the bid-ask spread of financial assets;
fees for providing financial advice with
respect to financial assets held in (or po-
tentially to be held in) custody by the
entity; and fees for clearance and settle-
ment services.

(iii) [Reserved]. For further guidance,
see § 1.1471-5(e)(3)(iii).

(4) [Reserved]. For further guidance,
see § 1.1471-5(e)(4).

(i) through (iv) [Reserved]. For further
guidance, 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]. For
further guidance, see § 1.1471-5(e)(4)(v), Example
1 through Example 6.

Example 7. Individual introducing broker. IB, an
individual introducing broker, primarily conducts a
business of providing advice to clients, has discre-
tionary authority to manage clients' assets, and uses
the services of a foreign entity to conduct and exe-
cute trades on behalf of clients. IB provides services
as an investment advisor and manager to Entity, a
foreign corporation. Entity has earned 50% or more
of its gross income for the past three years from
investing, reinvesting, or trading in financial assets.
Because IB is an individual, notwithstanding that IB
primarily 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 an
investment entity under paragraph (e)(4)(i)(B) of
this section because Entity is managed by IB, an
individual.

Example 8. Entity introducing broker. IB, a for-
eign entity introducing broker, primarily conducts a
business of providing advice to clients, has discre-
tionary authority to manage clients' assets, and uses
the services of a foreign entity to conduct and exe-
cute trades on behalf of clients. IB provides its
services as an investment advisor and manager to
Entity, a foreign corporation. Entity has earned 50%
or more of its gross income for the past three years
from investing, reinvesting, or trading in financial
assets. Because IB is an entity that primarily con-
ducts certain investment-related activities, IB is an

investment entity under paragraph (e)(4)(i)(A) of
this section. Further, Entity is an investment entity
under paragraph (e)(4)(i)(B) of this section because
it 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.

(5) [Reserved]. For further guidance,
see § 1.1471-5(e)(5).

(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 further
guidance, see § 1.1471-5(e)(5)(i)(A)(1)
through (2).

(3) The entity does not hold itself out
as (and was not formed in connection with
or availed of by) an arrangement or in-
vestment vehicle that is a private equity
fund, 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 to
treat the interests in those companies as
capital assets held for investment pur-
poses. For purposes of determining
whether an entity was formed in connec-
tion with or availed of by such an arrange-
ment or investment vehicle, any entity that
existed at least six months prior to its
acquisition by such arrangement or invest-
ment vehicle and that, prior to the acqui-
sition, regularly conducted activities in the
ordinary course of business will not be
considered to have been formed in con-
nection with or availed of by the arrange-
ment or investment vehicle, in the absence
of other facts suggesting the existence of
an investment strategy described in the
prior sentence.

(B) Nonfinancial group. An expanded
affiliated group defined in § 1.1471-
5(i)(2) is a nonfinancial group if, taking
into account the application of this sec-
tion-

(1) For the three-year period (or the
period during which the expanded affili-
ated group has been in existence, if
shorter) ending on December 31 of the
year preceding the year in which the de-
termination is made, no more than 25 per-
cent of the gross income of the expanded
affiliated group (excluding income de-
rived by any member that is an entity
described in paragraph (e)(5)(ii) or (iii) of
this section and income derived from
transactions 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 of
the gross income of the expanded affili-
ated group is derived by members of the
expanded affiliated group that are FFIs
(excluding income derived from transac-
tions between members of the expanded
affiliated group or by any member of the
expanded affiliated group that is a certi-
fied deemed-compliant FFI); and no more
than 25 percent of the value of assets held
by the expanded affiliated group (exclud-
ing assets held by a member that is an
entity described in paragraph (e)(5)(ii) or
(iii) of this section and assets resulting
from transactions between related mem-
bers of the expanded affiliated group) are
assets that produce or are held for the
production of passive income; and

(2) [Reserved]. For further guidance,
see § 1.1471-5(e)(5)(i)(B)(2).

(C) Holding company. For purposes of
this paragraph (e)(5)(i), an entity is a hold-
ing company if its primary activity con-
sists of holding (directly or indirectly) all
or part of the outstanding stock of one or
more members of its expanded affiliated
group. 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 of
the voting power and value of the stock of
one or more common parent corpora-
tion(s) of one or more expanded affiliated
group(s). If a partnership or other non-
corporate entity owns more than 50 per-
cent of the voting power and value of the
stock of more than one common parent
corporation of an expanded affiliated
group, each common parent corporation's
expanded affiliated group will be treated
as a separate expanded affiliated group for
purposes of applying the rules of this sec-
tion unless a non-corporate entity is
treated as the common parent entity of the
expanded affiliated group in accordance
with § 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 further
guidance, see § 1.1471-5(e)(5)(i)(D)(1)(i)
through (iii).

(iv) Managing the working capital of
the expanded affiliated group (or any

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member thereof) such as by pooling the
cash balances of affiliates (including both
positive and deficit cash balances) or by
investing or trading in financial assets
solely for the account and risk of such
entity or any member of its expanded af-
filiated group; or

(v) Acting as a financing vehicle for the
expanded affiliated group (or any member
thereof).

(2) [Reserved]. For further guidance,
see § 1.1471-5(e)(5)(i)(D)(2).

(i) through (ii) [Reserved]. For further
guidance, 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 further
guidance, 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 the
country in which the entity is operating to
pay for expenses in that country) with or
receive payments from any withholding
agent other than a member of its expanded
affiliated group;

(C) through (D) [Reserved]. For further
guidance, 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).

(6) [Reserved]. For further guidance,
see § 1.1471-5(e)(6).

(f) [Reserved]. For further guidance,
see § 1.1471-5(f).

(1) [Reserved]. For further guidance,
see § 1.1471-5(f)(1).

(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 further
guidance, see § 1.1471-5(f)(1)(i)(A)(1)
through (5).

(6) By the later of June 30, 2014, or the
date it registers as a deemed-compliant
FFI, the FFI implements policies and pro-
cedures, consistent with those set forth for
a participating FFI under § 1.1471-
4(c), to monitor whether the FFI opens or
maintains 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 a
resident when the account was opened but
subsequently ceases to be a resident), an
entity controlled or beneficially owned (as
determined 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 or
organized, or a nonparticipating FFI. Such
policies and procedures must provide that
if any such account is discovered, the FFI
will close such account, transfer such ac-
count to a participating FFI, reporting
Model 1 FFI, or U.S. financial institution,
or withhold and report on such account as
would be required under § 1.1471-
4(b) and (d) if the FFI were a participating
FFI.

(7) through (9) [Reserved]. For further
guidance, 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 the
date it registers with the IRS pursuant to
paragraph (f)(1)(ii) of this section, the FFI
implements policies and procedures to en-
sure that within six months of opening a
U.S. account or an account held by a
recalcitrant account holder or a nonpartic-
ipating FFI, the FFI either transfers such
account to an affiliate that is a participat-
ing FFI, reporting Model 1 FFI, or U.S.
financial institution, closes the account, or
becomes 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 the
date it registers with the IRS pursuant to
paragraph (f)(1)(ii) of this section, the FFI
implements policies and procedures to en-
sure that it identifies any account that be-
comes a U.S. account or an account held
by a recalcitrant account holder or a non-
participating FFI due to a change in cir-
cumstances. Within six months of the date
on which the FFI first has knowledge or
reason to know of the change in the ac-
count holder's chapter 4 status, the FFI
transfers any such account to an affiliate
that is a participating FFI, reporting
Model 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 debt
interests in the FFI in excess of $50,000,
of any direct equity interests in the FFI
(for example the holders of its units or
global certificates), and of any other ac-
count holder of the FFI is a participating
FFI, a registered deemed-compliant FFI, a
retirement plan described in § 1.1471-
6(f), a non-profit organization described in
paragraph (e)(5)(vi) of this section, a U.S.
person that is not a specified U.S. person,
a nonreporting IGA FFI, or an exempt
beneficial owner. Notwithstanding the
prior sentence, an FFI will not be prohib-
ited from qualifying as a qualified collec-
tive investment vehicle solely because it
has issued interests in bearer form pro-
vided that the FFI ceased issuing interests
in such form after December 31, 2012,
retires all such interests upon surrender,
and establishes policies and procedures to
redeem or immobilize all such interests
prior to January 1, 2017, and that prior to
payment the FFI documents the account
holder in accordance with the procedures
set forth in § 1.1471-4(c) applicable to
accounts other than preexisting accounts
and agrees to withhold and report on such
accounts 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 disregard
equity interests owned by specified U.S.
persons acquired with seed capital within
the meaning of paragraph (i)(4) of this
section if the specified U.S. person is de-
scribed in paragraph (i)(3)(i) and (ii) of
this section (substituting the term U.S.
person for the terms FFI and member),
and the specified U.S. person neither has
held, nor intends to hold, such interest for
more 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 further
guidance, see § 1.1471-5(f)(1)(i)(D)(1)
through (3).

(4) The FFI ensures that by the later of
December 31, 2014, or six months after
the date the FFI registers as a deemed-
compliant FFI, each agreement that gov-
erns the distribution of its debt or equity
interests prohibits sales and other transfers

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of debt or equity interests in the FFI (other
than interests that are both distributed by
and held through a participating FFI) to
specified U.S. persons, nonparticipating
FFIs, or passive NFFEs with one or more
substantial U.S. owners. In addition, by
that date, the FFI's prospectus and all
marketing materials must indicate that
sales and other transfers of interests in the
FFI to specified U.S. persons, nonpartici-
pating FFIs, or passive NFFEs with one or
more substantial U.S. owners are prohib-
ited unless such interests are both distrib-
uted by and held through a participating
FFI.

(5) The FFI ensures that by the later of
December 31, 2014, or six months after
the date the FFI registers as a deemed-
compliant FFI, each agreement entered
into by the FFI that governs the distribu-
tion of its debt or equity interests requires
the distributor to notify the FFI of a
change in the distributor's chapter 4 status
within 90 days of the change. The FFI
must, with respect to any distributor that
ceases to qualify as a distributor identified
in paragraph (f)(1)(i)(D)(3) of this section,
terminate its distribution agreement with
the distributor, or cause the distribution
agreement to be terminated, within 90
days of the notification of the distributor's
change in status and, with respect to all
debt and equity interests of the FFI issued
through that distributor, redeem those in-
terests, convert those interests to direct
holdings in the fund, or cause those inter-
ests to be transferred to another distributor
identified in paragraph (f)(1)(i)(D)(3) of
this section within six months of the dis-
tributor's change in status.

(6) With respect to any of the FFI's
preexisting direct accounts that are held
by the beneficial owner of the interest in
the FFI, the FFI reviews those accounts in
accordance with the procedures (and time
frames) described in § 1.1471-4(c) appli-
cable to preexisting accounts to identify
any U.S. account or account held by a
nonparticipating FFI. Notwithstanding the
previous sentence, the FFI will not be
required 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 prospectus
contained an explicit prohibition of the
issuance and/or sale of shares to U.S. en-
tities and U.S. resident individuals. An

FFI will not be required to review the
account of any investor that purchased its
interest in bearer form until the time of
payment, but at such time will be required
to document the account in accordance
with 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 date
the FFI registers as a deemed-compliant
FFI, the FFI will be required to certify to
the IRS either that it did not identify any
U.S. account or account held by a nonpar-
ticipating FFI as a result of its review or,
if any such accounts were identified, that
the FFI will either redeem such accounts,
transfer such accounts to an affiliate or
other FFI that is a participating FFI, re-
porting Model 1 FFI, or U.S. financial
institution, or withhold and report on such
accounts 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 the
date that it registers as a deemed-
compliant FFI, the FFI implements the
policies and procedures described in
§ 1.1471-4(c) to ensure that it either-

(i) through (ii) [Reserved]. For further
guidance, 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 and
servicers. 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 it
is an issuer or servicer of credit cards that
accepts deposits, on its own behalf or, in
the case of a servicer, on behalf of a credit
card issuer, only when a customer makes
a payment in excess of a balance due with
respect to the credit card account and the
overpayment is not immediately returned
to the customer.

(2) By the later of June 30, 2014, or the
date it registers as a deemed-compliant
FFI, the FFI implements policies and pro-
cedures to either prevent a customer de-
posit in excess of $50,000 or to ensure that
any customer deposit in excess of $50,000
is refunded to the customer within 60
days. For this purpose, a customer deposit
does not refer to credit balances to the
extent 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 act
as 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).

(3) [Reserved]. For further guidance,
see § 1.1471-5(f)(1)(i)(F)(3).

(i) through (iv) [Reserved]. For further
guidance, see § 1.1471-5(f)(1)(i)(F)(3)(i)
through (iv).

(v) Identifies the FFI in all reporting
completed on the FFI's behalf to the extent
required 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 certification
required 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.

(4) [Reserved]. For further guidance,
see § 1.1471-5(f)(1)(i)(F)(4).

(5) A sponsoring entity is not liable for
any failure to comply with the obligations
contained in paragraph (f)(1)(i)(F)(3) of
this section unless the sponsoring entity is
a withholding agent that is separately lia-
ble for the failure to withhold on or report
with respect to a payment made to the
sponsored FFI. A sponsored FFI will re-
main liable for any failure of its sponsor-
ing entity to comply with the obligations
contained in paragraph (f)(1)(i)(F)(3) of
this section that the sponsoring entity has
agreed to undertake on behalf of the FFI,
even if the sponsoring entity is also a
withholding agent and is itself separately
liable for the failure to withhold on or
report with respect to a payment made to
the 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).

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(A) [Reserved]. For further guidance,
see § 1.1471-5(f)(1)(ii)(A).

(B) Have its responsible officer certify
every three years to the IRS, either indi-
vidually or collectively for the FFI's ex-
panded affiliated group, that all of the
requirements for the deemed-compliant
category claimed by the FFI have been
satisfied since the later of the date the FFI
registers as a deemed-compliant FFI or
June 30, 2014;

(C) through (D) [Reserved]. For further
guidance, 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 means
an FFI described in any of paragraphs
(f)(2)(i) through (v) of this section that has
certified as to its status as a deemed-
compliant FFI by providing a withholding
agent 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 a
nonreporting FFI under a Model 1 IGA
and a nonreporting FFI treated as a certi-
fied deemed-compliant FFI under a Model
2 IGA. A certified deemed-compliant FFI
is not required to register with the IRS.

(i) [Reserved]. For further guidance,
see § 1.1471-5(f)(2)(i).

(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 and
making loans to, with respect to a bank,
retail customers that are unrelated to such
bank and, with respect to a credit union or
similar cooperative credit organization,
members, provided that no such member
has a greater than 5 percent interest in
such credit union or cooperative credit
organization. For purposes of this para-
graph (f)(2)(i)(B), a customer is related to
a bank if the customer and the bank have
a relationship described in section 267(b).
For purposes of determining whether a
member has a greater than 5 percent in-
terest in a credit union or cooperative
credit organization, the member must ag-
gregate the ownership or beneficial inter-
ests in the credit union or cooperative
credit organization that are owned or held
by a related member. A member of a

credit union or cooperative credit organi-
zation is related to another member if the
relationship of such members is described
in section 267(b).

(C) through (F) [Reserved]. For further
guidance, 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 investment
vehicles. Subject to the provisions of para-
graph (f)(2)(iii)(F) of this section, an FFI
is described in this paragraph (f)(2)(iii) if
it meets the requirements described in
paragraphs (f)(2)(iii)(A) through (D) of
this section.

(A) The FFI is an FFI solely because it
is an investment entity and is not a QI,
WP, or WT.

(B) A participating FFI, reporting
Model 1 FFI, or U.S. financial institution
agrees to fulfill all due diligence, with-
holding, and reporting responsibilities that
the FFI would have assumed if it were a
participating FFI.

(C) Twenty or fewer individuals own
all of the debt and equity interests in the
FFI (disregarding debt interests owned
by U.S. financial institutions, participat-
ing FFIs, registered deemed-compliant
FFIs, and certified deemed-compliant
FFIs and equity interests owned by an
entity if that entity owns 100 percent of
the equity interests in the FFI and is
itself a sponsored FFI under this para-
graph (f)(2)(iii)).

(D) The sponsoring entity complies
with 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 other
requirements that the FFI would have
been required to perform if it were a par-
ticipating FFI and retains documentation
collected with respect to the FFI for a
period of six years;

(3) The sponsoring entity identifies the
FFI in all reporting completed on the
FFI'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 certification
required 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 had
its status as a sponsor revoked.

(E) The IRS may revoke a sponsoring
entity's status as a sponsoring entity with
respect to all sponsored FFIs if there is a
material failure by the sponsoring entity to
comply with its obligations under this
paragraph (f)(2)(iii)(E) with respect to any
sponsored FFI. A sponsoring entity is not
liable for any failure to comply with the
obligations contained in this paragraph
(f)(2)(iii)(E) unless the sponsoring entity
is a withholding agent that is separately
liable for the failure to withhold on or
report with respect to the payment made
to the sponsored FFI. A sponsored FFI
will remain liable for any failure of its
sponsoring entity to comply with the ob-
ligations contained in this paragraph
(f)(2)(iii)(E) that the sponsoring entity has
agreed to undertake on behalf of the FFI,
even if the sponsoring entity is also a
withholding agent and is itself separately
liable for the failure to withhold on or
report with respect to a payment made to
the 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 in
this paragraph (f)(2)(iv) if the FFI is the
beneficial owner of the payment (or of
payments made with respect to the ac-
count) and the FFI meets the following
requirements.

(A) The FFI is an investment entity
that issued one or more classes of debt or
equity interests to investors pursuant to a
trust indenture or similar agreement and
all of such interests were issued on or
before January 17, 2013.

(B) The FFI was in existence as of
January 17, 2013, and has entered into a
trust indenture or similar agreement that
requires the FFI to pay to investors hold-
ing substantially all of the interests in the
FFI, no later than a set date or period
following the maturity of the last asset
held by the FFI, all amounts that such
investors are entitled to receive from the
FFI.

(C) The FFI was formed and operated
for the purpose of purchasing or acquiring
specific types of debt instruments or inter-

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ests therein and holding those assets sub-
ject to reinvestment only under prescribed
circumstances to maturity.

(D) Substantially all of the assets of the
FFI consist of debt instruments or inter-
ests therein.

(E) All payments made to the investors
of the FFI (other than holders of a de
minimis interest) are either cleared
through a clearing organization or custo-
dial institution that is a participating FFI,
reporting Model 1 FFI, or U.S. financial
institution or made through a transfer
agent that is a participating FFI, reporting
Model 1 FFI, or U.S. financial institution.

(F) The FFI's trustee or fiduciary is not
authorized through a fiduciary duty or oth-
erwise to fulfill the obligations of a par-
ticipating FFI under § 1.1471-4 and no
other person has the authority to fulfill the
obligations of a participating FFI under
§ 1.1471-4 on behalf of the FFI.

(v) Investment advisors and investment
managers. An FFI is described in this
paragraph (f)(2)(v) if the FFI meets the
following requirements:

(A) The FFI is a financial institution
solely because it is described in § 1.1471-
5(e)(4)(i)(A).

(B) The FFI does not maintain finan-
cial accounts.

(3) [Reserved]. For further guidance,
see § 1.1471-5(f)(3).

(i) [Reserved]. For further guidance,
see § 1.1471-5(f)(3)(i).

(ii) [Reserved]. For further guidance,
see § 1.1471-5(f)(3)(ii).

(A) through (E) [Reserved]. For further
guidance, see § 1.1471-5(f)(3)(ii)(A)
through (E).

(4) [Reserved]. For further guidance,
see § 1.1471-5(f)(4).

(i) The distributor provides investment
services to at least 30 customers unrelated
to each other and fewer than half of the
distributor's customers are related to each
other. For purposes of this paragraph
(f)(4)(i), customers are related to each
other if they have a relationship with each
other described in section 267(b).

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

(g) [Reserved]. For further guidance,
see § 1.1471-5(g).

(1) through (2) [Reserved]. For further
guidance, see § 1.1471-5(g)(1) through
(g)(2)(iv).

(3) [Reserved]. For further guidance,
see § 1.1471-5(g)(3).

(i) [Reserved]. For further guidance,
see § 1.1471-5(g)(3)(i).

(A) through (C) [Reserved]. For further
guidance, see § 1.1471-5(g)(3)(i)(A)
through (C).

(D) Preexisting accounts that become
high-value accounts. With respect to a
calendar year beginning after December 31,
2015, an account holder that is described in
paragraph (g)(2) of this section and that
holds a preexisting account that a participat-
ing FFI identifies as a high-value account
pursuant to § 1.1471-4(c)(5)(iv)(D) will be
treated 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 the
account is identified as a high-value account
or 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).

(4) [Reserved]. For further guidance,
see § 1.1471-5(g)(4).

(h) [Reserved]. For further guidance,
see § 1.1471-5(h) through (h)(2).

(i) Expanded affiliated group- Scope
of paragraph. This paragraph (i) defines
the term expanded affiliated group for
purposes of chapter 4. For the require-
ments of a participating FFI with respect
to members of its expanded affiliated
group 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 is
defined in accordance with the principles
of section 1504(a) to mean one or more
chains of members connected through
ownership by a common parent entity if
the common parent entity directly owns
stock or other equity interests meeting the
requirements of paragraph (i)(4) of this
section 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 a
corporation shall be treated as the com-
mon parent entity of an expanded affili-

ated group, unless the taxpayer elects to
follow the approach described in para-
graph (i)(10).

(3) Member of expanded affiliated
group. The term member of an expanded
affiliated group means a corporation or
any entity other than a corporation (such
as a partnership or trust) with respect to
which the ownership requirements of
paragraph (i)(4) of this section are met,
regardless of whether such entity is a U.S.
person or a foreign person, but excluding
corporations 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) are
met if-

(i) Corporations. For purposes of para-
graph (i)(2) of this section, a corporation
(except the common parent entity) will be
considered owned by another member en-
tity or by the common parent entity if
more than 50 percent of the total voting
power of the stock of such corporation
and more than 50 percent of the total
value of the stock of such corporation is
owned directly by one or more other
members 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 in
section 1504(a)(4).

(B) Valuation. For purposes of section
1471(e) and this section, all shares of
stock within a single class are considered
to have the same value in determining the
ownership percentage. Thus, control pre-
miums and minority blockage discounts
within a single class are not taken into
account.

(ii) Partnerships. For purposes of para-
graph (i)(2) of this section, a partnership
will be considered owned by another
member entity (including the common
parent entity) if more than 50 percent (by
value) of the capital or profits interest in
the partnership is owned directly by one
or 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 entity
or by the common parent entity if more
than 50 percent (by value) of the benefi-
cial interest in such trust is owned directly

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by one or more other members of the
group (including the common parent en-
tity). A beneficial interest in a trust in-
cludes an interest held by an entity treated
as a grantor or other owner of the trust
under sections 671 through 679 and a ben-
eficial trust interest.

(5) Treatment of warrants, options,
and obligations convertible into equity for
determining ownership. For purposes of
paragraph (i)(4) of this section, ownership
of warrants, options, obligations convert-
ible into the equity of a corporation or
entity other than a corporation, and other
similar interests is not considered for pur-
poses of determining whether an entity is
a member of an expanded affiliated group,
except as follows:

(i) Ownership of a warrant, option, ob-
ligation convertible into stock, or other
similar instrument creating an interest in a
corporation will be considered for pur-
poses of paragraph (i)(4) of this section to
the extent that the common parent or
member of the expanded affiliated group
that holds such instrument also maintains
voting rights with respect to such corpo-
ration. However, interests described in
§ 1.1504-4(d)(2) will not be treated as
options.

(ii) Ownership of a warrant, option,
obligation convertible into an equity inter-
est, or other similar instrument creating an
interest in a corporation or entity other
than a corporation will be considered for
purposes of paragraph (i)(4) of this sec-
tion to the extent that such instrument is
reasonably certain to be exercised, based
on all of the facts and circumstances and
in accordance with the principles set forth
in § 1.1504-4(g).

(6) Exception for FFIs holding certain
capital investments. Notwithstanding
paragraphs (i)(2) and (i)(4) of this section,
an investment entity will not be consid-
ered a member of an expanded affiliated
group as a result of a contribution of seed
capital by a member of such expanded
affiliated group if-

(i) The member that owns the invest-
ment entity is an FFI that is in the business
of providing seed capital to form invest-
ment entities, the interests in which it in-
tends to sell to investors that do not have
a relationship with each other described in
section 267(b);

(ii) The investment entity is created in
the ordinary course of such other FFI's
business described in paragraph (i)(6)(i)
of this section;

(iii) As of the date the FFI acquired the
equity interest, any equity interest in the
investment entity in excess of 50 percent
of the total value of the stock of the in-
vestment entity is intended to be held by
such other FFI (including ownership by
other members of such other FFI's ex-
panded affiliated group) for no more than
three years from the date on which such
other FFI first acquired an equity interest
in the investment entity; and

(iv) In the case of an equity interest that
has been held by such other FFI for over
three years from the date referenced in
paragraph (i)(6)(iii) of this section, the
aggregate value of the equity interest held
by such other FFI and the equity interests
held by other members of its expanded
affiliated group is 50 percent or less of the
total value of the stock of the investment
entity.

(7) Seed capital. For purposes of this
paragraph (i), the term seed capital means
an initial capital contribution made to an
investment entity that is intended as a
temporary investment and is deemed by
the manager of the entity to be necessary
or appropriate for the establishment of the
entity, 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 to
return ratio, or similar purposes.

(8) Anti-abuse rule. A change in own-
ership, voting rights, or the form of an
entity that results in an entity meeting or
not meeting the ownership requirements
described in paragraph (i)(4) of this sec-
tion will be disregarded for purposes of
determining whether an entity is a mem-
ber of an expanded affiliated group if the
change is pursuant to a plan a principal
purpose of which is to avoid reporting or
withholding that would otherwise be re-
quired under any chapter 4 provision. For
purposes of this paragraph (i)(8), a change
in voting rights includes a separation of
voting rights and value.

(9) Exception for limited life debt in-
vestment entities. Notwithstanding para-
graphs (i)(2) and (i)(4) of this section, an
entity that meets the requirements of

§ 1.1471-5(f)(2)(iv), including the re-
quirements to have been in existence as of
January 17, 2013, and to have issued in-
terests in the entity on or before January
17, 2013, will not be considered a member
of an expanded affiliated group as a result
of any member of such expanded affili-
ated group owning interests in such entity.

(10) Partnerships, trusts, and other
non-corporate entities. For purposes of
determining the composition of an ex-
panded affiliated group, an entity other
than a corporation may elect to be treated
as the common parent entity. Taxpayers
following this approach may not, in a later
year, follow the rule described in para-
graph (i)(2) without the approval of the
Commissioner. 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(1).

(m) Expiration date. The applicability
of 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 as
follows:

§ 1.1471-6 Payments beneficially owned
by 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).

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(iii) [Reserved]. For further guidance,
see § 1.1471-6T(f)(3)(iii).

* * * * *

(5) [Reserved]. For further guidance,
see § 1.1471-6T(f)(5).

(6) [Reserved]. For further guidance,
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 beneficially
owned by exempt beneficial owners
(temporary).

(a) through (c) [Reserved]. For further
guidance, see § 1.1471-6(a) through (c)(3).

(d) [Reserved]. For further guidance,
see § 1.1471-6(d).

(1) In general. Solely for purposes of
this section and except as provided in
paragraph (h) of this section, the term
foreign central bank of issue means an
institution that is by law or government
sanction the principal authority, other than
the government itself, issuing instruments
intended to circulate as currency. Such an
institution is generally the custodian of the
banking reserves of the country under
whose law it is organized.

(2) through (3) [Reserved]. For further
guidance, see § 1.1471-6(d)(2) through (3).

(4) Income on certain transactions.
Solely for purposes of determining
whether an entity is an exempt beneficial
owner of a payment under this paragraph
(d), a foreign central bank of issue is a
beneficial owner with respect to income
earned on cash and securities, including
cash and securities held as collateral or
securities held in connection with a secu-
rities lending transaction, held by the for-
eign central bank of issue in the ordinary
course of its operations as a central bank
of issue.

(e) [Reserved]. For further guidance,
see § 1.1471-6(e).

(f) [Reserved]. For further guidance,
see § 1.1471-6(f).

(1) [Reserved]. For further guidance,
see § 1.1471-6(f)(1).

(2) [Reserved]. For further guidance,
see § 1.1471-6(f)(2).

(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 than
transfers 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 Model
2 IGA, or from other retirement funds
described in this paragraph (f) or in an
applicable Model 1 or Model 2 IGA) from
the sponsoring employers;

(C) Distributions or withdrawals from
the fund are allowed only upon the occur-
rence of specified events related to retire-
ment, disability, or death (except rollover
distributions to accounts described in
§ 1.1471-5(b)(2)(i)(A) (referring to retire-
ment and pension accounts), to retirement
and pension accounts described in an ap-
plicable Model 1 or Model 2 IGA, or to
other retirement funds described in this
paragraph (f) or in an applicable Model 1
or Model 2 IGA), or penalties apply to
distributions or withdrawals made before
such specified events; or

(D) [Reserved]. For further guidance,
see § 1.1471-6(f)(2)(iii)(D).

(3) [Reserved]. For further guidance,
see § 1.1471-6(f)(3).

(i) [Reserved]. For further guidance,
see § 1.1471-6(f)(3)(i).

(ii) The fund is sponsored by one or
more 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 of
assets 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 and
pension accounts), or retirement and pen-
sion accounts described in an applicable
Model 1 or Model 2 IGA) are limited by
reference 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).

(4) [Reserved]. For further guidance,
see § 1.1471-6(f)(4).

(5) Investment vehicles exclusively for
retirement funds. A fund established ex-
clusively to earn income for the benefit of
one or more retirement funds described in
paragraphs (f)(1) through (5) of this sec-
tion or in an applicable Model 1 or Model
2 IGA, accounts described in § 1.1471-
5(b)(2)(i)(A) (referring to retirement and
pension accounts), or retirement and pen-
sion accounts described in an applicable
Model 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) of
this section or an exempt beneficial owner
(other than a fund that qualifies as an
exempt beneficial owner) described in an
applicable Model 1 or Model 2 IGA to
provide retirement, disability, or death
benefits to beneficiaries or participants
that are current or former employees of
the exempt beneficial owner (or persons
designated by such employees), or that are
not current or former employees, but the
benefits provided to such beneficiaries or
participants are in consideration of per-
sonal services performed for the exempt
beneficial owner.

(7) [Reserved]. For further guidance,
see § 1.1471-6(f)(7).

(g) Entities wholly owned by exempt
beneficial owners. A person is described
in this paragraph (g) if it is an FFI solely
because it is an investment entity, each
direct holder of an equity interest in the
investment entity is an exempt beneficial
owner described in paragraph (b), (c), (d),
(e), (f), or (g) of this section or an exempt
beneficial owner described in an applica-
ble Model 1 or Model 2 IGA, and each
direct holder of a debt interest in the in-
vestment entity is either a depository in-
stitution (with respect to a loan made to
such entity), an exempt beneficial owner
described in paragraph (b), (c), (d), (e),
(f), or (g) of this section, or an exempt
beneficial owner described in an applica-
ble Model 1 or Model 2 IGA.

(h) [Reserved]. For further guidance,
see § 1.1471-6(h).

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(1) [Reserved]. For further guidance,
see § 1.1471-6(h)(1).

(2) Limitation. Paragraph (h)(1) of this
section will not apply to a foreign central
bank of issue as described in paragraph
(d) if-

(i) The entity undertakes commercial
financial activity described in paragraph
(h)(1) of this section solely for or at the
direction of other exempt beneficial
owners and such commercial financial
activity is consistent with the purposes
of the entity;

(ii) The entity has no outstanding debt
that would be a financial account under
§ 1.1471-5(b)(1)(iii)(C); and

(iii) The entity only maintains financial
accounts that are depository accounts for
current or former employees of the entity
(and the spouses and children of such em-
ployees) or financial accounts for exempt
beneficial owners.

(i) [Reserved]. For further guidance,
see § 1.1471-6(i).

(j) Expiration date. The applicability of
this 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) introductory
text, (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).

The additions and revisions read as fol-
lows:

§ 1.1472-1 Withholding on NFFEs.

* * * * *

(b) * * *

(1) [Reserved]. For further guidance,
see § 1.1472-1T(b)(1).

* * * * *

(2) [Reserved]. For further guidance,
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)(3).

(4) [Reserved]. For further guidance,
see § 1.1472-1T(c)(4).

(5) [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).

(a) [Reserved]. For further guidance,
see § 1.1472-1(a).

(b) [Reserved]. For further guidance,
see § 1.1472-1(b).

(1) In general. Except as otherwise
provided 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 an
excepted NFFE or an exempt beneficial
owner), § 1.1471-2(a)(4)(i) (providing an
exception to withholding if the with-
holding agent lacks control, custody, or
knowledge), § 1.1471-2(a)(4)(vii) (pro-
viding an exception to withholding for
payments made to an account held with
or equity interests traded through a
clearing organization with FATCA-
compliant membership), or § 1.1471-

2(a)(4)(viii) (providing an exception to
withholding for payments to certain ex-
cepted accounts), a withholding agent
must 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 facie
FFI and for which a withholding agent
does not have documentation indicating
the payee's status as a passive NFFE
when the NFFE has failed to provide the
owner certification as required under
§ 1.1471-3(d)(12)(iii), the withholding
agent is not required to withhold under
this section or report under § 1.1474-
1(i)(2) (describing the reporting obliga-
tions of withholding agents with respect to
NFFEs).

(c) [Reserved]. For further guidance,
see § 1.1472-1(c).

(1) Payments to an excepted NFFE. A
withholding 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 to
a payee that is an excepted NFFE. For
purposes of this paragraph, the term ex-
cepted NFFE means a payee that the with-
holding agent may treat as a NFFE that is
a QI, WP, or WT. Additionally, the term
excepted NFFE means, with respect to the
payment, a NFFE described in paragraphs
(c)(1)(i) through (vii) of this section to the
extent the withholding agent may treat the
NFFE as the beneficial owner of the pay-
ment.

(i) Publicly traded corporation. A
NFFE is described in this paragraph
(c)(1)(i) if it is a corporation the stock of
which is regularly traded on one or more
established securities markets for the cal-
endar year.

(A) through (C) [Reserved]. For further
guidance, see § 1.1472-1(c)(1)(i)(A) through
(c)(1)(i)(C)(3).

(ii) Certain affiliated entities related to
a publicly traded corporation. A NFFE is
described in this paragraph (c)(1)(ii) if it
is a corporation that is a member of the
same expanded affiliated group (as de-

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fined in § 1.1471-5(i)) as a corporation
described in paragraph (c)(1)(i) of this
section.

(iii) Certain territory entities. A NFFE
is described in this paragraph (c)(1)(iii) if
it is a territory entity that is directly or
indirectly wholly owned by one or more
bona fide residents of the U.S. territory
under the laws of which the entity is or-
ganized. The term bona fide resident of a
U.S. territory means an individual who
qualifies as a bona fide resident under
section 937(a) and § 1.937-1.

(iv) Active NFFEs. A NFFE is de-
scribed in this paragraph (c)(1)(iv) if it is
an entity (an active NFFE) and less than
50 percent of its gross income for the
preceding taxable year (i.e., calendar or
fiscal) is passive income and less than 50
percent of the weighted average percent-
age of assets (tested quarterly) held by it
are assets that produce or are held for the
production 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 further
guidance, see § 1.1472-1(c)(1)(iv)(A)
through (c)(1)(B)(2)(ii).

(C) Methods of measuring assets. For
purposes of this paragraph (c)(1)(iv), the
value of a NFFE's assets is determined
based on the fair market value or book
value of the assets that is reflected on the
NFFE's balance sheet (as determined un-
der either a U.S. or an international finan-
cial accounting standard).

(v) Excepted nonfinancial entities. A
NFFE is described in this paragraph
(c)(1)(v) if it is an entity described in
§ 1.1471-5(e)(5) (referring to holding
companies, treasury centers, and captive
finance companies that are members of a
nonfinancial group; start-up companies;
entities that are liquidating or emerging
from bankruptcy; and non-profit organiza-
tions).

(vi) Direct reporting NFFEs. A NFFE
is described in this paragraph (c)(1)(vi) if
it meets the requirements described in
§ 1.1472-1(c)(3) to be treated as a direct
reporting NFFE.

(vii) Sponsored direct reporting
NFFEs. 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 reporting
NFFE.

(2) Payments made to an exempt ben-
eficial owner. A withholding agent is not
required to withhold on a withholdable
payment (or portion thereof) under section
1472(a) and paragraph (b) of this section
if the withholding agent may treat the
payment as made to an exempt beneficial
owner.

(3) Definition of direct reporting
NFFE. A direct reporting NFFE means a
NFFE that elects to report information
about its direct or indirect substantial U.S.
owners to the IRS and meets the following
requirements-

(i) The NFFE must register on Form
8957, "FATCA Registration," (or such
other form as the IRS may prescribe) with
the IRS to obtain a GIIN pursuant to the
procedures prescribed by the IRS;

(ii) The NFFE must report directly to
the IRS on Form 8966, "FATCA Report,"
(or such other form as the IRS may pre-
scribe) the following information for each
calendar year (or, may be required by the
IRS to certify on Form 8966, or in such
other manner as the IRS may prescribe,
that the NFFE has no substantial U.S.
owners):

(A) The name, address, and TIN of
each substantial U.S. owner (as defined in
§ 1.1473-1(b)) of such NFFE;

(B) The total of all payments made to
each substantial U.S. owner (including the
gross amounts paid or credited to the sub-
stantial U.S. owner with respect to such
owner's equity interest in the NFFE dur-
ing the calendar year, which include pay-
ments in redemption or liquidation (in
whole 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 described
in § 1.1471-5(b)(4) (substituting the term
equity for the terms account and financial
account);

(D) The name, address, and GIIN of
the NFFE, and

(E) Any other information as required
by Form 8966 (or such other form as the
IRS may prescribe) and its accompanying
instructions;

(iii) The NFFE must obtain a written
certification (contained on a withholding
certificate or in a written statement) from

each person that would be treated as a
substantial U.S. owner of the NFFE if
such person were a specified U.S. person.
Such written certification must indicate
whether the person is a substantial U.S.
owner of the NFFE, and if so, the name,
address and TIN of the person. If the
NFFE has reason to know that such writ-
ten certification is unreliable or incorrect,
it must contact the person and request a
revised written certification. If no revised
written certification is received, the NFFE
must 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 to
know that such a written certification is
unreliable or incorrect if the certification
is inconsistent with information in the
NFFE's possession, including information
that the NFFE provides to a financial in-
stitution in order for the financial institu-
tion to meet its AML or other account
identification due diligence procedures
with respect to the NFFE's account, infor-
mation that is publicly available, and U.S.
indicia as described in § 1.1441-7(b) and
for which appropriate documentation suf-
ficient to cure the U.S. indicia in the man-
ner set forth in § 1.1441-7(b)(8) has not
been obtained.

(iv) The NFFE must keep records that
it produces in the ordinary course of its
business that summarize the activity (in-
cluding the gross amounts described in
paragraph (c)(3)(ii)(B) that are paid or
credited to each of its substantial U.S.
owners) relating to its transactions with
respect to the equity of the NFFE held by
each of its substantial U.S. owners for any
calendar year in which the owner was
required to be reported under paragraph
(c)(3)(ii) of this section. The records must
be retained for the longer of six years or
the retention period under the NFFE's
normal business procedures. A NFFE may
be required to extend the six year reten-
tion period if the IRS requests such an
extension prior to the expiration of the six
year period;

(v) The NFFE must respond to requests
made by the IRS for additional informa-
tion with respect to any substantial U.S.
owner that is subject to reporting by the
NFFE or with respect to the records de-
scribed in paragraphs (c)(3)(iii) or (iv) of
this section;

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(vi) The NFFE must make a periodic
certification to the IRS within each six-
month period following the end of each
certification period relating to its compli-
ance with respect to the election described
in paragraphs (c)(3) and (4) of this sec-
tion. The first certification period begins
on the date a GIIN is issued and ends at
the close of the third full calendar year
following that date. Each subsequent cer-
tification period is the three calendar year
period following the close of the previous
certification period. The certification will
require an officer of the NFFE to certify to
the following statements-

(A)(1) The NFFE has not had any
events 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 such
failures from recurring; and

(B) With respect to any failure to report
to the extent required under paragraph
(c)(3)(ii), the NFFE has corrected such
failure by filing the appropriate informa-
tion returns; and

(vii) The NFFE has not had its status as
a direct reporting NFFE revoked by the
IRS.

(4) Election to be treated as a direct
reporting NFFE-(i) Manner of making
election. A NFFE may elect to be treated
as a direct reporting NFFE by registering
on Form 8957 (or such other form as the
IRS may prescribe) with the IRS to obtain
a GIIN pursuant to the procedures pre-
scribed by the IRS.

(ii) Effective date of election. The elec-
tion is effective upon the issuance of a
GIIN to the NFFE.

(iii) Revocation of election by NFFE.
The election may not be revoked by the
NFFE without the consent of the Commis-
sioner. The NFFE must notify its sponsor-
ing entity (if applicable) and all relevant
withholding agents if it revokes its elec-
tion.

(iv) Revocation of election by Commis-
sioner. The election may be revoked by
the Commissioner upon an event of de-
fault described in paragraph (v) of this
section.

(v) Event of default. An event of de-
fault occurs if a direct reporting NFFE
fails to perform any of the obligations
described in (c)(3)(i) through (vi) of this

section. An event of default also includes
any misrepresentation of a material fact to
the 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 to
the NFFE a notice of default specifying
the event of default. The IRS will request
that the NFFE remediate the event of de-
fault within a specified time period. The
NFFE must respond to the notice of de-
fault and provide information responsive
to an IRS request for information or state
the reasons why the NFFE does not agree
that an event of default has occurred. If
the NFFE does not provide a response
within the specified time period, the IRS
may, at its sole discretion, deliver a notice
to the NFFE that its election to be treated
as a direct reporting NFFE has been re-
voked. A NFFE may request, within 90
days of receipt, reconsideration of a notice
of default or notice of revocation by writ-
ten request to the Deputy Commissioner
(International), LB&I.

(vii) Remediation of event of default. A
NFFE will be permitted to remediate an
event of default to the extent it agrees with
the IRS on a remediation plan. The IRS
may, as part of a remediation plan, require
additional information from the NFFE.

(5) Election by a direct reporting
NFFE to be treated as a sponsored direct
reporting NFFE.

(i) Definition of sponsored direct re-
porting NFFE. A NFFE is a sponsored
direct reporting NFFE if the NFFE is a
direct reporting NFFE and if another en-
tity, other than a nonparticipating FFI, has
agreed with the NFFE to act as its spon-
soring entity, as described in paragraph
(c)(5)(ii) of this section.

(ii) Requirements for sponsoring entity
of a sponsored direct reporting NFFE. A
sponsoring entity meets the requirements
of this paragraph (c)(5)(ii) if the sponsor-
ing entity-

(A) Is authorized to act on behalf of the
NFFE;

(B) Has registered with the IRS as a
sponsoring entity;

(C) Has registered the NFFE with the
IRS as a sponsored direct reporting NFFE;

(D) Agrees to perform, on behalf of the
NFFE, all due diligence, reporting, and
other requirements that the NFFE would

have been required to perform as a direct
reporting NFFE;

(E) Identifies the NFFE in all reporting
completed on the NFFE's behalf;

(F) Complies with the certification and
other 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 as
a sponsoring entity is revoked, if it other-
wise ceases to be the sponsoring entity of
any of its sponsored direct reporting
NFFEs (for example, if the sponsored di-
rect reporting NFFE changes sponsors), or
if the status of any of its sponsored direct
reporting NFFEs has been revoked.

(iii) Revocation of status as sponsoring
entity. The IRS may revoke a sponsoring
entity's status as a sponsoring entity with
respect to all sponsored direct reporting
NFFEs if there is a material failure by the
sponsoring entity to comply with its obli-
gations under paragraph (c)(5)(ii) of this
section with respect to any sponsored di-
rect reporting NFFE.

(iv) Liability of sponsoring entity. A
sponsoring 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 NFFE
will remain liable for all of its chapter 4
obligations without regard to any failure
of its sponsoring entity to comply with the
obligations contained in paragraph
(c)(5)(ii) of this section that the sponsor-
ing entity has agreed to undertake on be-
half of the NFFE.

(d) [Reserved]. For further guidance,
see § 1.1472-1(d).

(1) In general. For purposes of this
section, except in the case of a payee that
is a QI, WP, or WT, a withholding agent
may 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 withholdable
payment as beneficially owned by an ex-
cepted NFFE (other than a QI, WP, or
WT) if the withholding agent can reliably
associate the payment with valid docu-
mentation to determine the payee's status
as an excepted NFFE under the rules of
§ 1.1471-3(d).

(2) Payments made to a NFFE that is a
QI, WP, or WT. A withholding agent may

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treat the payee of a withholdable payment
as a NFFE that is a QI, WP, or WT if the
withholding agent can reliably associate
the payment with valid documentation to
determine the payee's status as such under
the 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 of
this section expires on February 28, 2017.

Par. 16. Section 1.1473-1 is amended by
revising 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) to
read 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).

(a) [Reserved]. For further guidance,
see § 1.1473-1(a).

(1) [Reserved]. For further guidance,
see § 1.1473-1(a)(1) through (a)(1)(ii).

(2) [Reserved]. For further guidance,
see § 1.1473-1(a)(2).

(i) through (v) [Reserved]. For fur-
ther guidance, see § 1.1473-1(a)(2)(i)
through (v).

(vi) Special rule for sales of interest
bearing debt obligations. Income that is
otherwise described as U.S. source FDAP
income in paragraphs (a)(2)(i) through (v)
of this section does not include an amount
of interest accrued on the date of a sale or
exchange of an interest bearing debt obli-
gation if the sale occurs between two in-
terest payment dates and is not part of a
plan 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).

(3) [Reserved]. For further guidance,
see § 1.1473-1(a)(3).

(i) through (ii) [Reserved]. For further
guidance, see § 1.1473-1(a)(3)(i) through
(a)(3)(ii)(C).

(iii) [Reserved]. For further guidance,
see § 1.1473-1(a)(3)(iii).

(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 further
guidance, see § 1.1473-1(a)(3)(iii)(B)(1)
through (3).

(4) In the case of a sale of an obligation
described in paragraph (a)(2)(vi), gross
proceeds includes any interest accrued be-
tween interest payment dates other than an
amount 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).

(4) [Reserved]. For further guidance,
see § 1.1473-1(a)(4).

(i) through (v) [Reserved]. For further
guidance, see § 1.1473-1(a)(4)(i) through (v).

(vi) Offshore payments of U.S. source
FDAP 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. source
FDAP income and made by a person that
is not acting as an intermediary or as a WP
or WT with respect to the payment. The
exception 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 entity
that 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 payments
made with respect to debt or equity is-
sued by a U.S. person (excluding inter-
est payments made by a foreign branch
of a U.S. financial institution with re-
spect to depository accounts it maintains
for retail customers). For purposes of
this 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 include
a person acting as an insurance broker
with respect to premiums.

(vii) Collateral arrangements prior to
2017 (transitional). A payment made
prior to January 1, 2017, by a secured
party with respect to collateral securing
one or more transactions under a collateral
arrangement, provided that only a com-
mercially reasonable amount of collateral
is held by the secured party as part of the
collateral arrangement. For purposes of
this paragraph (a)(4)(vii), the term trans-
action generally includes a debt instrument,
a derivative financial instrument (including
a notional principal contract, future, for-
ward, and option), and any securities lend-
ing transaction, sale-repurchase transac-
tion, margin loan, or substantially similar
transaction that is subject to a collateral
arrangement.

(5) [Reserved]. For further guidance,
see § 1.1473-1(a)(5).

(i) In general. This paragraph (a)(5)
provides special rules for a flow-through
entity, complex trust, or estate to deter-
mine when such entity must treat a pay-
ment of U.S. source FDAP income that is

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also a withholdable payment as having
been 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 paid
to a partner under rules similar to the rules
prescribing when withholding is required
for 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 paid
to a beneficiary of a simple trust under
rules similar to the rules prescribing
when withholding is required for chap-
ter 3 purposes as described in § 1.1441-
5(b)(2)(ii).

(iv) Complex trusts and estates. An
amount of U.S. source FDAP income that
is also a withholdable payment is treated
as being paid to a beneficiary of a com-
plex trust or estate under rules similar to
the rules prescribing when withholding is
required 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 grantor
trust, a person treated as an owner of all or
a portion of such trust is treated as having
been paid such income by the trust at the
time it is received by or credited to the
trust 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, and
U.S. source FDAP income that is also a
withholdable payment is treated as being
paid to the partner or beneficiary at the
time the income is paid to the partnership
or trust, respectively.

(vii) [Reserved]. For further guidance,
see § 1.1473-1(a)(5)(vii).

(6) [Reserved]. For further guidance,
see § 1.1473-1(a)(6).

(7) [Reserved]. For further guidance,
see § 1.1473-1(a)(7).

(b) [Reserved]. For further guidance,
see § 1.1473-1(b).

(1) [Reserved]. For further guidance,
see § 1.1473-1(b)(1) through (b)(1)(iii)(B).

(2) [Reserved]. For further guidance,
see § 1.1473-1(b)(2).

(i) through (iv) [Reserved]. For fur-
ther guidance, see § 1.1473-1(b)(2)(i)
through (iv).

(v) Interests owned or held by a related
person. For purposes of determining
whether a specified U.S. person is a sub-
stantial U.S. owner in a foreign entity
described 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 any
such interest in the foreign entity owned
or held, directly or indirectly, by a related
person. For purposes of the preceding sen-
tence, a related person is a person or
spouse 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 further
guidance, see § 1.1473-1(c) through (f).

(g) Expiration date. The applicability
of 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).

The additions and revisions read as fol-
lows:

§ 1.1474-1 Liability for withheld tax
and 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).

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** * * *

(iii) [Reserved]. For further guidance,
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 tax
and withholding agent reporting
(temporary).

(a) through (c) [Reserved]. For further
guidance, see § 1.1474-1(a) through
(c)(3).

(d) [Reserved]. For further guidance,
see § 1.1474-1(d).

(1) [Reserved]. For further guidance,
see § 1.1474-1(d)(1).

(i) In general. Except as otherwise pro-
vided in paragraph (d)(4) of this section or
in the instructions to Form 1042-S, every
withholding agent must file an informa-
tion return on Form 1042-S, "Foreign
Person's U.S. Source Income Subject to
Withholding," (or such other form as the
IRS may prescribe) to report to the IRS
chapter 4 reportable amounts as described
in paragraph (d)(2)(i) of this section that
were paid to a recipient during the preced-
ing calendar year. Except as otherwise
provided 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 pools
of a participating FFI or registered
deemed-compliant FFI), a separate Form
1042-S must be filed with the IRS for
each recipient of an amount subject to
reporting under paragraph (d)(2)(i) of this
section 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 prepared
in such manner as the form and its accom-
panying instructions prescribe. One copy
of the Form 1042-S shall be filed with the
IRS on or before March 15 of the cal-
endar year following the year in which
the amount subject to reporting was
paid, with a transmittal form as provided
in the instructions to the form. With-
holding certificates, certifications, docu-
mentary evidence, or other statements or
documentation provided to a withhold-
ing agent are not required to be attached
to the form. A copy of the Form 1042-S
must be furnished to the recipient for

whom the form is prepared (or any other
person, as required under this paragraph
or the instructions to the form) and to
any intermediary or flow-through entity
described in paragraph (d)(3)(vii) of this
section on or before March 15 of the
calendar year following the year in
which the amount subject to reporting
was paid. The withholding agent must
retain a copy of each Form 1042-S for
the period of limitations on assessment
and collection applicable to the tax re-
portable on the Form 1042 to which the
Form 1042-S relates (determined as set
forth in paragraph (c)(1) of this section).
See paragraph (d)(4)(iii) of this section
for the additional reporting require-
ments of participating FFIs and deemed-
compliant FFIs.

(ii) [Reserved]. For further guidance,
see § 1.1474-1(d)(1)(ii).

(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 further
guidance, see § 1.1474-1(d)(1)(ii)(A)(1)(i)
through (vii).

(viii) An excepted NFFE and passive
NFFE that also is not a flow-through en-
tity and that is not acting as an agent or
intermediary with respect to the payment;

(ix) A foreign person that is a partner or
beneficiary in a flow-through entity that is
a NFFE (looking through a partner or ben-
eficiary that is a foreign intermediary or
flow-through entity);

(x) through (xi) [Reserved]. For further
guidance, see § 1.1474-1(d)(1)(ii)(A)(1)(x)
through (xi).

(2) through (3) [Reserved]. For further
guidance, see § 1.1474-1(d)(1)(ii)(A)(2)
through (3).

(B) [Reserved]. For further guidance,
see § 1.1474-1(d)(1)(ii)(B).

(1) [Reserved]. For further guidance,
see § 1.1474-1(d)(1)(ii)(B)(1).

(i) A certified deemed-compliant FFI
that is an NQI, NWP, or NWT and that
fails to provide its withholding agent with
sufficient information to allocate the pay-
ment to its account holders and payees;

(ii) through (v) [Reserved]. For further
guidance, see § 1.1474-1(d)(1)(ii)(B)(1)(ii)
through (v).

(vi) An account holder or payee of a
nonparticipating FFI except to the extent

described in paragraph (d)(1)(ii)(A)(1)(x)
of this section for an exempt beneficial
owner;

(vii) Except as provided in paragraph
(d)(1)(ii)(A)(1) of this section, an entity
that 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 excepted
NFFE that is a flow-through entity or acts
as an intermediary;

(2) through (3) [Reserved]. For further
guidance, see § 1.1474-1(d)(1)(ii)(B)(2)
through (3).

(2) [Reserved]. For further guidance,
see § 1.1474-1(d)(2).

(i) In general. Subject to paragraph
(d)(2)(iii) of this section, the term chapter
4 reportable amount means each of the
following amounts reportable on a Form
1042-S for purposes of chapter 4-

(A) An amount of a withholdable pay-
ment that is subject to withholding under
chapter 4 paid after June 30, 2014;

(B) An amount of a withholdable pay-
ment of U.S. source FDAP income that is
also reportable on Form 1042-S under
§ 1.1461-1(c)(2)(i); or

(C) A foreign passthru payment subject
to 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).

(4) [Reserved]. For further guidance,
see § 1.1474-1(d)(4).

(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. withholding
agent that makes a payment of a chapter 4
reportable amount to a participating FFI
or deemed-compliant FFI that is an NQI,
NWP, or NWT must complete a Form
1042-S treating such FFI as the recipient.
With respect to a payment of U.S. source
FDAP income made to a participating FFI
or registered deemed-compliant FFI that
is an NQI, NWP, or NWT or QI that elects
to be withheld upon under section
1471(b)(3) and from whom the withhold-

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ing agent receives an FFI withholding
statement allocating the payment (or por-
tion of the payment) to a chapter 4 with-
holding rate pool, a U.S. withholding
agent must complete a separate Form
1042-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 an
FFI withholding statement, described in
§ 1.1471-3(c)(3)(iii)(B)(2). If, however, a
participating FFI, deemed-compliant FFI,
or QI (as applicable) has made an election
under § 1.1471-4(b)(3)(iii), for the por-
tion of the payment that the FFI allocates
to each recalcitrant account holder that is
subject to backup withholding under sec-
tion 3406, the withholding agent must re-
port on Form 1099 the amount of the
payment and tax withheld in accordance
with 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 of
U.S. source FDAP income made to a par-
ticipating FFI or registered deemed-
compliant FFI that is an NQI, NWP, or
NWT. See also § 1.1471-2(a)(2)(iii) in
the case of payments made to a QI. See
§ 1.1461-1(c)(4)(A) for the extent to
which reporting is required under that sec-
tion for U.S. source FDAP income that is
reportable on Form 1042-S under chapter
3 and not subject to withholding under
chapter 4, in which case the U.S. with-
holding agent must report in the manner
described under § 1.1461-1(c)(4)(ii) and
paragraph (d)(4)(ii)(A) of this section. See
paragraph (d)(4)(ii)(A) of this section for
reporting rules applicable if participating
FFIs or deemed-compliant FFIs provide
specific payee information for reporting to
the recipient of the payment for Form
1042-S reporting purposes. See paragraph
(d)(4)(iii) of this section for the residual
reporting responsibilities of an NQI,
NWP, or NWT that is an FFI.

(C) through (D) [Reserved]. For further
guidance, 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 of
chapter 4 reportable amounts to an ex-
cepted or passive NFFE shall complete
Forms 1042-S treating the NFFE as the
recipient, except when the NFFE is a
flow-through entity or acting as an inter-

mediary and the partner or beneficiary is
treated as the payee. In cases in which the
chapter 4 reportable amount is also an
amount of U.S. source FDAP income
reportable on Form 1042-S (described
in § 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.

(ii) [Reserved]. For further guidance,
see § 1.1474-1(d)(4)(ii).

(A) [Reserved]. For further guidance,
see § 1.1474-1(d)(4)(ii)(A).

(B) Nonparticipating FFI that is a
flow-through entity or intermediary. If a
withholding agent makes a payment of a
chapter 4 reportable amount to a nonpar-
ticipating FFI that it is required to treat as
an intermediary with regard to a payment
or as a flow-through entity under rules
described in § 1.1471-3(c)(3)(iii), and ex-
cept as otherwise provided in paragraph
(d)(1)(ii)(A)(1)(x) of this section (relating
to an exempt beneficial owner), the with-
holding agent must report the recipient
of the payment as an unknown recipient
and report the nonparticipating FFI as
provided in paragraph (d)(4)(ii)(A) of
this section for an entity not treated as a
recipient.

(C) Disregarded entities. If a U.S.
withholding agent makes a payment to a
disregarded entity and receives a valid
withholding certificate or other documen-
tary evidence from the person that is the
single owner of such disregarded entity,
the withholding agent must file a Form
1042-S treating the single owner as the
recipient in accordance with the instruc-
tions to the Form 1042-S.

(iii) Reporting by participating FFIs
and deemed-compliant FFIs (including
QIs, 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 under
section 1471(b)(3)) and § 1.1471-
4(d)(2)(ii)(F) (relating to transitional
payee-specific reporting for payments to
nonparticipating FFIs), a participating FFI
or deemed-compliant FFI (including a QI,
WP, WT, or U.S. branch of a participating
FFI that is not treated as a U.S. person)
that makes a payment that is a chapter 4
reportable amount to a recalcitrant ac-
count holder or nonparticipating FFI must
complete a Form 1042-S to report such

payments. A participating FFI or regis-
tered deemed-compliant FFI (including a
QI, 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 of
its recalcitrant account holders and payees
that are nonparticipating FFIs. With re-
spect to recalcitrant account holders, the
FFI 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 income
code. Except as otherwise provided in
§ 1.1471-4(d)(2)(ii)(F), with respect to
payees that are nonparticipating FFIs, the
FFI may report in pools consisting of one
or more nonparticipating FFIs that fall
within a particular income code and
within a particular status code described
in the instructions to Form 1042-S. Alter-
natively, a participating FFI or registered
deemed-compliant FFI (including a QI,
WP, WT, or U.S. branch of a participating
FFI that is not treated as a U.S. person)
may (and a certified deemed-compliant
FFI is required to) perform payee-specific
reporting to report a chapter 4 reportable
amount paid to a recalcitrant account
holder or a nonparticipating FFI when
withholding was applied (or should have
applied) to the payment.

(B) Special reporting requirements of
participating FFIs, deemed-compliant
FFIs, 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), a
participating FFI or deemed-compliant
FFI that is an NQI, NWP, NWT (includ-
ing a U.S. branch of a participating FFI
that is not treated as a U.S. person), or an
FFI that has made an election under sec-
tion 1471(b)(3) and has provided suffi-
cient information to its withholding agent
to withhold and report the payment is not
required to report the payment on Form
1042-S as described in paragraph
(d)(4)(iii)(A) of this section if the pay-
ment is made to a nonparticipating FFI or
recalcitrant account holder and its with-
holding agent has withheld the correct
amount of tax on such payment and cor-
rectly reported the payment on a Form
1042-S. Such FFI is required to report a
payment, however, when the FFI knows,
or has reason to know, that less than the
required amount has been withheld by
the withholding agent on the payment or

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the withholding agent has not correctly
reported the payment on Form 1042-S. In
such case, the FFI must report on Form
1042-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 whether
withholdable payments are made to such
accounts.

(C) Reporting by a U.S. branch of a
participating FFI or registered deemed-
compliant FFI treated as a U.S. person. A
U.S. branch of a participating FFI or reg-
istered deemed-compliant FFI that is treated
as a U.S. person must report amounts paid
to recipients on Forms 1042-S in the same
manner as a U.S. withholding agent under
paragraph (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 further
guidance, see § 1.1474-1(e) through (h).

(i) [Reserved]. For further guidance,
see § 1.1474-1(i).

(1) Reporting by certain withholding
agents with respect to owner-documented
FFIs.

(i) Beginning on July 1, 2014, if a with-
holding agent (other than an FFI reporting
accounts held by owner-documented FFIs
under § 1.1471-4(d)) makes a withhold-
able payment to an entity account holder
or payee of an obligation and the with-
holding agent treats the entity as an
owner-documented FFI under § 1.1471-
3(d)(6), the withholding agent is required
to report for July 1 through December 31,
2014, with respect to each specified U.S.
person that has a direct or indirect debt or
equity interest in such entity the informa-
tion described in paragraph (i)(1)(iii) of
this section.

(ii) Beginning in calendar year 2015, if a
withholding agent (other than an FFI report-
ing accounts held by owner-documented
FFIs under § 1.1471-4(d) makes during a
calendar year a payment of a chapter 4 re-
portable amount to an entity account
holder or payee of an obligation and the
withholding agent treats the entity as an
owner-documented FFI under § 1.1471-
3(d)(6), the withholding agent is required
to report for such calendar year with re-

spect to each specified U.S. person that
has a direct or indirect debt or equity
interest in such entity the information
described in paragraph (i)(1)(iii) of this
section.

(iii) The information that a withholding
agent (other than an FFI reporting ac-
counts held by owner-documented FFIs
under § 1.1471-4(d)) is required to report
under paragraphs (i)(1)(i) and (i)(1)(ii) of
this section must be made on Form 8966
(or such other form as the IRS may pre-
scribe) and filed on or before March 31 of
the calendar year following the year in
which the withholdable payment was
made. The report must contain the follow-
ing information-

(A) The name of the owner-documented
FFI;

(B) The name, address, and TIN of
each specified U.S. person identified in
§ 1.1471-3(d)(6)(iv)(A)(1) and (2);

(C) For the period from July 1 through
December 31, 2014, the total of all pay-
ments made to the owner-documented FFI
and with respect to payments made after
the 2014 calendar year the total of all
payments made to the owner-documented
FFI during the calendar year;

(D) The account balance or value of the
account held by the owner-documented
FFI; and

(E) Any other information required on
Form 8966 and its accompanying instruc-
tions provided for purposes of such re-
porting.

(2) Reporting by certain withholding
agents with respect to U.S. owned foreign
entities that are NFFEs. Beginning on
July 1, 2014, in addition to the reporting
on Form 1042-S required under para-
graph (d)(4)(i)(E) of this section, a with-
holding agent (other than an FFI reporting
accounts held by NFFEs under § 1.1471-
4(d)) that receives information about any
substantial U.S. owners of a NFFE that is
not an excepted NFFE as defined in
§ 1.1472-1(c) shall file a report with the
IRS for the period from July 1 through
December 31, 2014, and in each subse-
quent calendar year with respect to any
substantial 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 of
the calendar year following the year in
which the withholdable payment was

made. The IRS shall grant an automatic
90-day extension of time in which to file
Form 8966. Form 8809, "Request for Ex-
tension of Time to File Information Re-
turns," (or such other form as the IRS may
prescribe) must be used to request such
extension of time and must be filed no
later than the due date of Form 8966.
Under certain hardship conditions, the
IRS may grant an additional 90-day ex-
tension. A request for extension due to
hardship must contain a statement of the
reasons for requesting the extension and
such other information as the form or in-
structions may require. The report must
contain 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, 2014
through December 31, 2014, the total of
all payments made to the NFFE and, with
respect to payments made after the 2014
calendar year, the total of all payments
made to the NFFE during the calendar
year; 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).

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

Par. 20. Section 1.1474-6 is amended
by revising paragraph (b)(1), by redesig-
nating paragraph (f) as (g), and by adding
new paragraph (f) to read as follows:

### § 1.1474-6 Coordination of chapter 4 with other withholding provisions.

* * * * *

(b) * * *

(1) [Reserved]. For further guidance,
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:

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§ 1.1474-6T Coordination of chapter 4
with other withholding provisions
(temporary).

(a) [Reserved]. For further guidance,
see § 1.1474-6(a).

(b) [Reserved]. For further guidance,
see § 1.1474-6(b).

(1) In general. In the case of a with-
holdable payment that is both subject to
withholding under chapter 4 and is an
amount subject to withholding under
§ 1.1441-2(a), a withholding agent may
credit the withholding applied under chap-
ter 4 against its liability for any tax due
under sections 1441, 1442, or 1443. See
§ 1.1474-1(c) and (d) for the income tax
return and information return reporting re-
quirements that apply in the case of a
payment that is a withholdable payment
subject to withholding under chapter 4
that is also an amount subject to withhold-
ing under § 1.1441-2(a).

(2) through (3) [Reserved]. For further
guidance, see § 1.1474-6(b)(2) through (3).

(c) through (e) [Reserved]. For further
guidance, see § 1.1474-6(c) through (e).

(f) Coordination with section 3406. A
participating FFI that makes a withhold-
able payment that is also a reportable pay-
ment (as defined in the relevant sections
of chapter 61) to a recalcitrant account
holder that is a U.S. non-exempt recipient
is not required to withhold under section
3406 if it withholds on the payment at a
30-percent rate in accordance with its
withholding obligations under chapter 4.
See, however, § 1.1471-4(b)(3)(iii) for
the election to withhold on recalcitrant
account holders that are non-exempt U.S.
recipients under section 3406 instead of
withholding under chapter 4.

(g) [Reserved]. For further guidance,
see § 1.1474-6(g).

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

John Dalrymple
Deputy Commissioner for Services and
Enforcement.

Approved February 14, 2014.

Mark J. Mazur
Assistant 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 Federal
Register for March 6, 2014, 79 F.R. 12812)

## Section 1441 .- Withholding of tax on nonresident aliens

T.D. 9658

DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 1, 31, and 301

Withholding of Tax on Certain U.S.
Source Income Paid to Foreign Persons,
Information Reporting and Backup
Withholding on Payments Made to
Certain U.S. Persons, and Portfolio
Interest Treatment

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Final and temporary regulations.

SUMMARY: This document contains fi-
nal and temporary regulations that revise
certain provisions of the final regulations
regarding withholding of tax on certain
U.S. source income paid to foreign per-
sons, information reporting and backup
withholding with respect to payments
made to certain U.S. persons, portfolio
interest paid to nonresident alien individ-
uals and foreign corporations, and the as-
sociated requirements governing collec-
tion, refunds, and credits of withheld
amounts under these rules. The revisions
are necessary to coordinate these regula-
tions with the documentation, withhold-
ing, and reporting provisions included in
regulations regarding information report-
ing by foreign financial institutions (FFIs)
with respect to U.S. accounts and with-
holding on certain payments to FFIs and
other foreign entities under chapter 4 of
Subtitle A of the Internal Revenue Code
(Code). The temporary regulations also
revise certain provisions of the final reg-
ulations relating to the statutory exemp-
tion for portfolio interest in light of
amendments to the statute. Moreover,
these temporary regulations remove cer-
tain transitional documentation rules from
the regulations relating to withholding of
tax on certain U.S. source income paid to
foreign persons. These temporary regula-

tions affect persons making payments of
U.S. source income to foreign persons,
persons making payments to certain U.S.
persons subject to reporting, and foreign
persons making claims for refund or credit
of income tax withheld or claiming the
exclusion from tax provided for portfolio
interest. The text of these temporary reg-
ulations also serves as the text of the pro-
posed regulations (REG-134361-12) set
forth in the Proposed Rules section in this
issue of the Bulletin.

DATES: Effective date: These regulations
are 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 INFORMATION
CONTACT: John Sweeney, (202) 317-
6942 (not a toll-free number).

## SUPPLEMENTARY INFORMATION: Background

This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) under sections 871, 1441, 1461,
6041, 6042, 6045, and 6049 of the Code,
the Employment Tax Regulations (26
CFR part 31) under section 3406 of the
Code, and the Procedure and Administra-
tion Regulations (26 CFR part 301) under
section 6402 of the Code. These tempo-
rary regulations are necessary to coordi-
nate the final regulations under chapters 3
and 61 with the final regulations under
chapter 4. Certain of the revisions to the
final regulations under chapters 3 and 61
contained in these temporary regulations
were 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 the
Treasury Department published final and
temporary regulations (TD 8734) in the

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Federal Register (62 FR 53387) dealing
with the withholding of tax under sections
1441, 1442, and 1443 (contained in chap-
ter 3 of Subtitle A of the Code) on certain
U.S. source income paid to foreign per-
sons, the related tax deposit and reporting
requirements under section 1461, and the
statutory exemptions for portfolio interest
under sections 871(h) and 881(c) (1997
final regulations). In addition, the 1997
final regulations finalized changes that
were included in proposed regulations ap-
plicable to the reporting provisions of sec-
tions 6041, 6042, 6044, 6045, and 6049
under chapter 61 of the Code. On May 22,
2000, the IRS and the Treasury Depart-
ment published final regulations (TD
8881) in the Federal Register (65 FR
32152) amending certain provisions of the
1997 final regulations under sections
1441, 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) and
881(a), foreign persons are subject to tax
at a 30-percent rate on the gross amount of
certain payments of U.S. source fixed or
determinable annual or periodical (FDAP)
income, which includes, among other
things, interest, dividends, and other sim-
ilar types of investment income, unless the
beneficial owner of the payment is entitled
to 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 collected
through a withholding tax imposed at
source pursuant to chapter 3 and the reg-
ulations under chapter 3. The chapter 3
regulations provide comprehensive rules
for withholding agents to identify the
proper treatment of a payee for informa-
tion reporting and withholding tax pur-
poses based on documentation provided
by the payee. The regulations under chap-
ter 3 generally allow withholding agents
to rely on a withholding certificate (for
example, Form W-8BEN, "Certificate of
Foreign Status of Beneficial Owner for
United States Tax Withholding") fur-
nished by a payee that certifies the payee's
status as a foreign person, and whether
such person is entitled to a reduction in or

exemption from withholding. The chapter
3 regulations recognize that foreign inter-
mediaries and flow-through entities that
receive U.S. source FDAP income pay-
ments on behalf of their customers, part-
ners, or beneficiaries may have privacy
and competitiveness concerns about shar-
ing beneficial ownership information with
other intermediaries (or chains of interme-
diaries) and competing financial institu-
tions. Accordingly, the chapter 3 regula-
tions permit certain types of foreign
persons to assume primary withholding
and reporting responsibility with respect
to 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 return
on Form 1042, "Annual Withholding Tax
Return for U.S. Source Income of Foreign
Persons," to report amounts that are actu-
ally withheld under chapter 3, or that
would have been withheld but for an ap-
plicable exception, and, with respect to
each recipient, to file an information re-
turn on Form 1042-S, "Foreign Person's
U.S. Source Income Subject to Withhold-
ing," to report each recipient's identifying
information, the amount paid, and tax
withheld, if any. A copy of Form 1042-S
generally is required to be furnished to the
recipient. The withholding and informa-
tion reporting rules under chapter 3 facil-
itate the compliance of foreign persons
with 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 their
worldwide income, regardless of source,
and irrespective of whether such U.S. per-
sons reside within or without the United
States. Generally, under chapter 61, a
payor 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, generally
U.S. individuals, partnerships, estates, and
trusts) using the appropriate form in the
1099 series (Form 1099) and furnish a
copy to the payee. The scope of payments
subject 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 well
as controlled foreign corporations within
the meaning of section 957(a)) or non-
U.S. payor (which is a payor other than a
U.S. payor). For a U.S. payor, payments
subject to reporting generally include cer-
tain gross income, such as dividends and
interest (including short-term original is-
sue discount and bank deposit interest),
from U.S. and non-U.S. sources, and gross
proceeds from, among other things, the
disposition of certain securities through a
broker. 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 income
and gross proceeds from broker transac-
tions.

Similar to the chapter 3 information
reporting and withholding regime, the
chapter 61 regime provides comprehen-
sive rules for a payor to identify the
proper treatment of a payee for informa-
tion reporting purposes, which generally
are based on documentation or informa-
tion about the payee. Additionally, a
payor that does not have sufficient infor-
mation with respect to a payee to satisfy
its reporting obligations under chapter 61,
such as a U.S. taxpayer identification
number (TIN), may be required to backup
withhold on a payment made to the payee
at the statutory backup withholding rate
(currently 28 percent) under section 3406.

A payor must file an annual income tax
return on Form 945, "Annual Return of
Withheld Federal Income Tax," to report
amounts withheld under section 3406. A
payor must also file a Form 1099 to report
payments made to a U.S. non-exempt re-
cipient and any amounts withheld under
section 3406. A copy of the Form 1099
must be furnished to the payee.

These information reporting rules as-
sist U.S. taxpayers in complying with
their income tax obligations. The infor-
mation reported under chapter 61 and
section 3406 is also an integral part of
IRS compliance efforts to identify U.S.
taxpayers who fail to properly report
income.

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### 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 Subtitle
A, comprised of sections 1471 through
1474 (commonly known as FATCA).
Chapter 4 generally requires withhold-
ing agents to withhold 30 percent on
withholdable 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 not
agree to report certain information to the
IRS regarding their U.S. accounts (as
defined in § 1.1471-1(b)(134), which
generally includes accounts held by
specified U.S. persons and U.S. owned
foreign 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-financial
foreign entities (passive NFFEs, as de-
fined in § 1.1471-1(b)(94)) that do not
provide information on their substantial
U.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 include
FFIs that maintain U.S. accounts. In or-
der to avoid withholding tax under chap-
ter 4, FFIs generally must agree to
perform prescribed due diligence proce-
dures to identify the chapter 4 status of
their account holders, report information
on U.S. accounts, and, in certain cir-
cumstances, withhold tax on certain ac-
count holders. Chapter 4 also imposes
on withholding agents certain withhold-
ing, documentation, and information re-
porting requirements with respect to
withholdable payments made to passive
NFFEs. Amounts withheld under chap-
ter 4 generally may be credited against
the U.S. income tax liability of the ben-
eficial owner of the payment to which
the withholding is attributable, or re-
funded to the extent there is an overpay-
ment of tax.

On February 15, 2012, the IRS and the
Treasury Department published a notice
of 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, 2012-47
IRB 561 (November 19, 2012) which an-
nounced the intention to amend certain
provisions of the proposed chapter 4 reg-
ulations in final regulations. On January
28, 2013, the IRS and the Treasury De-
partment published final regulations under
chapter 4 (TD 9610) in the Federal Reg-
ister (78 FR 5874), and on September 10,
2013, published correcting amendments
to these regulations (78 FR 55202) (final
chapter 4 regulations). The final chapter 4
regulations include comprehensive due
diligence, withholding, and reporting re-
quirements for withholding agents and
FFIs that were to begin on January 1,
2014. On July 12, 2013, the IRS and the
Treasury Department published Notice
2013-43, 2013-31 I.R.B. 113, which an-
nounced, among other things, that with-
holding agents generally will be required
to 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 Model
2 FFIs) under the agreement described in
§ 1.1471-4 (FFI agreement) will begin
after June 30, 2014. On October 29, 2013,
the IRS and the Treasury Department pub-
lished Notice 2013-69 containing a draft
of the FFI agreement, which an FFI may
enter into with the IRS in order to be
treated as a participating FFI that is gen-
erally exempt from FATCA withholding
under chapter 4. Notice 2013-69 also pre-
viewed some of the changes to the final
regulations that, among other things,
would coordinate the information report-
ing and backup withholding rules in chap-
ter 61 and section 3406 with the rules
under chapter 4. On January 13, 2014, the
IRS and the Treasury Department pub-
lished the final FFI agreement in Revenue
Procedure 2014-13. In addition, tempo-
rary regulations (temporary chapter 4
regulations) amending the final chapter 4
regulations are being published contem-
poraneously with these temporary regula-
tions. The temporary chapter 4 regulations
amend and revise the final chapter 4 reg-
ulations, in part, to coordinate with these
temporary regulations.

To address situations where foreign
law would prevent an FFI from report-
ing directly to the IRS the information

required by chapter 4, the Treasury De-
partment, in collaboration with certain
foreign governments, developed two
alternative model intergovernmental
agreements (IGAs) that facilitate the ef-
fective and efficient implementation of
FATCA 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 an
agreement with the United States based
on the first model (Model 1 IGA) gen-
erally agrees to adopt rules to require all
relevant 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 rules
specified in the agreement and to report
the information required under FATCA
for 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 the
second model (Model 2 IGA) agrees to
direct all relevant FFIs located in the
jurisdiction (reporting Model 2 FFIs, as
defined in § 1.1471-1(b)(115)) to follow
the terms of an FFI Agreement by re-
porting information about U.S. accounts
directly to the IRS in a manner consis-
tent with the final chapter 4 regulations,
except as expressly modified by the
Model 2 IGA. Under a Model 2 IGA,
the information reported to the IRS di-
rectly by FFIs is supplemented by
government-to-government exchange of
information in order to overcome legal
impediments to direct FFI reporting
with respect to account holders that re-
fuse to consent to having their informa-
tion reported.

Under the final chapter 4 regulations, a
participating FFI (including a reporting
Model 2 FFI) generally is required to re-
port information on U.S. accounts to the
IRS on Form 8966, "FATCA Report,"
including the account number, certain
payment information, and account bal-
ance and, in the case of an account held by
a U.S. person, the U.S. person's name,
address, and TIN, or, in the case of an
account held by a U.S. owned foreign
entity, the name of the entity and the
name, address, and TIN of each substan-

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tial U.S. owner. With respect to accounts
held by a U.S. person, an FFI may instead
elect to satisfy its chapter 4 reporting ob-
ligations by electing to report on Form
1099 the information required under chap-
ter 61, as modified to include the account
number. A payor that makes the election
must report under chapter 61 as if it were
a U.S. payor and each holder of a U.S.
account was a U.S. citizen and without
regard to whether a payment was made on
the account.

Chapter 4 also requires withholding
agents 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 not
currently required to be furnished to the
account holder or passive NFFE. Addi-
tionally, a withholding agent that with-
holds on a payment under chapter 4
generally is required to file an annual
income tax return on Form 1042 to re-
port the payment and amount of tax
withheld, and an information return on
Form 1042-S to report, with respect to
each recipient or pool, the payment and
amount of tax withheld. A copy of Form
1042-S generally is required to be fur-
nished to the recipient, except in cases
where the chapter 4 rules allow pooled
reporting on Form 1042-S.

The information reporting regime im-
plemented under the final chapter 4 reg-
ulations and the IGAs will enhance IRS
compliance efforts by enlisting the FFIs,
which are in the best position to provide
information on their accounts, to report
on offshore accounts held by U.S. per-
sons and by passive foreign entities with
substantial U.S. owners. Like the Form
1099 reporting that already occurs pri-
marily with respect to domestic ac-
counts, this new information reporting
will help the IRS identify U.S. taxpayers
that may have failed to properly report
and pay taxes on income earned or hid-
den offshore. This new enforcement tool
will also strengthen the integrity of the
U.S. voluntary tax compliance system
by reassuring compliant taxpayers that
the IRS will be able to enforce our tax
laws on those who would attempt to
avoid paying their fair share of taxes
through the use of offshore accounts or
offshore entities.

## Explanation of Provisions

I. Overview of Changes to Coordi-
nate Chapter 4 (Including Information
Reporting Provided by FFIs under an
IGA) with the Regulations under Chap-
ters 3 and 61

Payors of payments that are subject to
the information reporting and withholding
regimes under chapters 3, 4, and 61 and
section 3406 play an important role in
U.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 provide
guidance 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 preexisting
regimes under chapters 3 and 61 were
already coordinated to establish an inte-
grated set of rules that enabled payors to
identify payments and payees subject to
reporting and to determine which of the
two 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 provide
comprehensive rules for withholding
agents and FFIs with respect to the iden-
tification of payees and account holders,
withholding, and information reporting.
The IGAs similarly set forth a framework
for FFIs to identify account holders and
determine which accounts must be re-
ported as U.S. accounts. These temporary
regulations provide guidance coordinating
the requirements under chapters 3 and 61
and section 3406 with the requirements
under chapter 4 in order to develop a more
integrated set of rules that reduces bur-
dens (including certain duplicative infor-
mation reporting obligations) and con-
forms the due diligence, withholding, and
reporting rules under these provisions to
the 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 these
temporary regulations revise the final reg-
ulations under chapters 3 and 61 and sec-
tion 3406 in order to coordinate with the
final chapter 4 regulations.

### A. Identification of Payee Status

The documentation requirements (in-
cluding the applicable presumption
rules in the absence of documentation)
for withholding agents, participating
FFIs (including reporting Model 2 FFIs),
and registered deemed-compliant FFIs (as
defined in § 1.1471-1(b)(111), which in-
cludes reporting Model 1 FFIs) under the
final chapter 4 regulations or an appli-
cable IGA differ in certain respects from
the corresponding documentation re-
quirements for withholding agents under
the final chapter 3 regulations for deter-
mining when chapter 3 withholding is

required, and from the documentation
requirements of payors and middlemen
under the final chapter 61 regulations
for determining when payments are
made to persons for which reporting is
required. These temporary regulations
remove inconsistencies in the documen-
tation requirements (including inconsis-
tencies regarding presumption rules in
the absence of valid documentation)
based, in part, on stakeholder comments
to the final chapter 4 regulations. Exam-
ples of such coordination rules, dis-
cussed in greater detail in sections II and
III later in this preamble, include rules
that conform the requirements of a valid
withholding certificate by requiring that
a global intermediary identification
number (GIIN) be included on the form
if the payee is an FFI (when applicable);
provide for indefinite validity periods
for certain withholding certificates and
extended periods of validity for certain
documentation; conform the rules for
electronic transmission of withholding
certificates and statements; coordinate
rules regarding the required content of a
withholding statement provided by an
FFI or flow-through entity; revise the
presumption rules applicable to joint ac-
counts; and provide uniform limits on
when a withholding agent will be treated
as having reason to know of a payee's
U.S. or foreign status.

### B. Information Reporting with Respect to U.S. Persons

The final chapter 4 regulations re-
quire participating FFIs (including re-
porting Model 2 FFIs) and, when appli-

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cable, registered deemed-compliant
FFIs, but excluding reporting Model 1
FFIs, to report their U.S. accounts on
Form 8966, irrespective of the type of
payments made to the account holders.
This reporting and similar reporting re-
ceived pursuant to Model 1 IGAs may in
some cases be duplicative of the infor-
mation required to be reported on Form
1099 for payments made to the same
account holders if they are U.S. non-
exempt recipients under chapter 61. As
discussed in the Background section of
this preamble, FFIs may be able to mit-
igate this duplication by electing to sat-
isfy their chapter 4 reporting obligations
with respect to such accounts by report-
ing on Form 1099 the information re-
quired under chapter 61, as modified to
include certain information required un-
der chapter 4. This election, however, is
not expected to relieve burden for FFIs
that are required to report on U.S. ac-
counts pursuant to local laws imple-
menting a Model 1 IGA. As previewed
in Notice 2013-69, in order to further
reduce burdens and mitigate instances of
duplicative reporting under chapters 4
and 61 and based, in part, on stakeholder
comments requesting relief, these tem-
porary regulations provide that non-U.S.
payors that are also participating FFIs
(including reporting Model 2 FFIs) or
registered deemed-compliant FFIs (in-
cluding reporting Model 1 FFIs) are ex-
cepted from the requirement to report on
payments made to accounts held by U.S.
non-exempt recipients under chapter 61
to the extent the payor reports on the
account under chapter 4 or an applicable
IGA.

These temporary regulations do not
provide a similar exception to reporting
under chapter 61 for U.S. payors that are
FFIs required to report under chapter 4.
While some of the information reported
on Form 8966 and Form 1099 may over-
lap, there are also significant differ-
ences. Most notably, the requirement
under chapter 61 to furnish a copy of
Form 1099 to the payee facilitates vol-
untary compliance, and there is no
equivalent requirement for payee state-
ments under chapter 4. Moreover, U.S.
payors generally have well-established
systems for reporting and are subject to
reporting on a broader range of pay-

ments under chapter 61 than non-U.S.
payors. In light of these differences, the
benefits of chapter 61 reporting by U.S.
payors to the voluntary compliance sys-
tem outweigh the reduction in burden
that would be achieved by eliminating
this reporting for U.S. payors that report
on the same account under chapter 4 or
an applicable IGA.

These temporary regulations do pro-
vide a limited exception to reporting un-
der chapter 61 for both U.S. payors and
for non-U.S. payors that are FFIs re-
quired to report under chapter 4 or an
applicable IGA with respect to pay-
ments that are not subject to withhold-
ing under chapter 3 or section 3406 and
that are made to an account holder that
is a presumed (but not known) U.S. non-
exempt recipient. FFIs that are required
to 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 be
U.S. persons for whom the recipient
copy of Form 1099 would be relevant to
facilitate voluntary compliance. As a re-
sult, the IRS and the Treasury Depart-
ment believe that reporting under chap-
ter 61 should be eliminated on payments
to account holders who are presumed
U.S. non-exempt recipients and for
whom there is FATCA reporting.

These temporary regulations also pro-
vide a new exception from reporting un-
der chapter 61 that will generally benefit
U.S. persons acting as stock transfer
agents or paying agents of certain passive
foreign investment companies (PFICs).
This exception is based, in part, on com-
ments suggesting ways to reduce dupli-
cative reporting with respect to PFIC
shareholders without significantly im-
pacting taxpayer compliance. Com-
ments indicated that, due to the manner
in which shareholders of PFICs are
taxed under sections 1291 through 1298,
the current Form 1099 reporting per-
formed by transfer agents or paying
agents of a PFIC generally does not
assist taxpayers in properly reporting
PFIC income on their tax returns, al-
though it could remind taxpayers that
they may have had a taxable event with
respect to the PFIC. In light of the lim-

ited benefit of such 1099 reporting and
the burden reduction that would result
from its elimination, the IRS and the
Treasury Department have concluded
that this reporting should be eliminated
to the extent the PFIC will report infor-
mation with respect to the payment (or
the account to which the payment is
made) under chapter 4 or an applicable
IGA.

### C. Withholding

In certain cases, the payments subject
to withholding under chapter 4 are also
payments that could be subject to either
withholding under chapter 3 or backup
withholding under section 3406. These
temporary regulations provide rules to ad-
dress the potential for overwithholding to
ensure that payments are not subject to
withholding under both chapters 3 and 4,
or under both chapter 4 and section 3406.
Additionally, as previewed in Notice
2013-69, these temporary regulations
also allow participating FFIs (including
reporting Model 2 FFIs) and registered
deemed-compliant FFIs to satisfy their
chapter 4 withholding requirements by
electing to continue to perform backup
withholding under section 3406 at the
statutory backup withholding rate (28 per-
cent) in certain circumstances. A partici-
pating FFI (including a reporting Model 2
FFI) or registered deemed-compliant FFI
may make the election to continue to ap-
ply backup withholding under section
3406 only if it complies with the require-
ments of chapter 61 and section 3406 with
respect to the payment. Thus, for example,
if an FFI is unable to report the informa-
tion required with respect to a payment
because local law prohibits payee specific
reporting without the consent of the ac-
count holder and such consent is not
given, the FFI cannot elect to report under
chapter 61 or apply backup withholding
with respect to such payment. When avail-
able, the election allows payors that have
preexisting backup withholding systems
to continue to perform backup withhold-
ing under such systems rather than to
switch between withholding systems un-
der chapter 4 and section 3406.

In addition to amending and revising
the regulations under chapters 3 and 61
and section 3406 to coordinate with the

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final chapter 4 regulations, other revi-
sions are included in the temporary reg-
ulations. For example, these temporary
regulations amend the regulations under
section 871 (and make conforming
changes to the withholding requirements
of the regulations under section 1441) in
response to the HIRE Act's repeal of
section 163(f)(2)(B) with respect to
registration-required obligations and
amendment of section 871(h)(2), the
regulations under which provided when
interest with respect to obligations not
in registered form and targeted to for-
eign markets qualified as deductible in-
terest and portfolio interest.

II. Changes to Chapter 3 Withholding
Provisions

#### A. U.S. agent of a foreign person

Under § 1.1441-1(b)(2)(ii) of the final
regulations, a withholding agent making a
payment to a U.S. person, and who has
actual knowledge that the U.S. person re-
ceives the payment on behalf of a foreign
person, must treat the payment as made to
the foreign person, unless the U.S. person
is a financial institution (as defined in
§ 1.165-12(c)(1)(iv)) and the withholding
agent has no reason to believe the finan-
cial institution will not comply with its
obligation to withhold. A similar payee
provision is included in the chapter 4 reg-
ulations. These temporary regulations
revise the scope of U.S. persons that are
financial institutions under § 1.1441-
1(b)(2)(ii) and that the withholding agent
may treat as payees by defining the term
financial institution consistent with the
chapter 4 definition of a financial institu-
tion, which, in addition to depository and
custodial institutions, includes certain in-
vestment entities and certain insurance
companies.

### B. U.S. branch treated as a U.S. person

For purposes of the withholding re-
quirements of chapter 3, a U.S. branch of
a regulated foreign bank or foreign insur-
ance company (including a territory finan-
cial institution) may agree to be treated as
a U.S. person if it meets the requirements
of § 1.1441-1(b)(2)(iv) of the final regu-
lations. Under the chapter 4 regulations, a
U.S. branch of an FFI may be treated as

a U.S. person only if it is also a branch of
a participating FFI (including a reporting
Model 2 FFI) or registered deemed-
compliant FFI (including a reporting
Model 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 new
requirement in § 1.1441-1(b)(2)(iv) that a
U.S. branch of an FFI must be a branch of
a participating FFI or registered deemed-
compliant FFI in order for it to be treated
as a U.S. person for purposes of chapter 3.
In addition, these temporary regulations
clarify that a territory financial institution
that is a flow-through entity receiving a
payment 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 on
behalf of third-parties). These temporary
regulations also provide a requirement
that if a U.S. branch is treated as a U.S.
person for purposes of chapter 3, it must
also be treated as a U.S. person for pur-
poses of chapter 4. Moreover, as a result
of the account documentation require-
ments in the chapter 4 regulations that
apply to a participating FFI (including a
reporting Model 2 FFI) that is not treated
as a U.S. person, these temporary regula-
tions provide that a U.S. branch that
agrees to be treated as a U.S. person must
be treated as a U.S. person with respect to
all withholding agents from which it re-
ceives payments.

Under § 1.1441-1(b)(2)(iv)(B)(3) of
the final regulations, a withholding agent
that makes a payment to a U.S. branch of
a foreign person must treat the payment as
a payment to a foreign person of income
effectively connected with a U.S. trade or
business if it cannot reliably associate the
payment with a withholding certificate
from the branch or with other documen-
tation from another person. These tempo-
rary regulations add a requirement that a
withholding agent obtain an employment
identification number (EIN) from a U.S.
branch before it may treat a payment to
the branch as effectively connected in-
come. For payments to which this pre-
sumption does not apply because no EIN
is provided, these temporary regulations
require that the withholding agent treat the
payment as made to a foreign person of
income that is not effectively connected

with the conduct of a trade or business in
the United States. Further, these tempo-
rary regulations include a similar provi-
sion under § 1.1441-4 that requires a
withholding agent to obtain an EIN from a
U.S. branch in order to presume the pay-
ment to the branch is effectively con-
nected income. The requirement to obtain
an EIN from a U.S. branch is consistent
with the requirements under chapter 4.

### C. Other payees (authorized foreign agents)

Under § 1.1441-1(b)(2)(vi) of the final
regulations, an authorized foreign agent
(as described in § 1.1441-7(c)(2) of the
final regulations) of a withholding agent is
treated as a payee. The chapter 4 regula-
tions do not have a special provision to
treat a foreign agent of a withholding
agent as a payee with respect to payments
it collects on behalf of the withholding
agent. See § 1.1474-1(a)(3). Accord-
ingly, these temporary regulations remove
the rules under § 1.1441-1(b)(2)(vi) that
treat an authorized foreign agent as a
payee, consistent with chapter 4, and the
person to whom the authorized agent (as
defined in § 1.1441-7(c)(2) of these tem-
porary regulations) is making the payment
on behalf of the withholding agent is
treated as a payee by applying the payee
rules under § 1.1441-1(b)(2) to such per-
son. A series of other revisions have been
made by these temporary regulations with
respect to the use of authorized agents
consistent with chapter 4 and are dis-
cussed throughout this preamble. In par-
ticular, see section II.S of this preamble
for a description of changes to a withhold-
ing agent's use of an authorized agent.

### D. Reliable association with documentation

Section 1.1441-1(b)(2)(vii)(A) of the
final regulations generally describes the
situations in which a withholding agent
can reliably associate a payment with
valid documentation to determine when
withholding applies. Sections 1.1441-
1(b)(2)(vii)(B) through (b)(2)(vii)(F) of
the final regulations provide special
rules for situations in which a withhold-
ing agent can reliably associate a pay-
ment with documentation for a payment

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made to a foreign intermediary (includ-
ing a qualified intermediary). These
temporary regulations revise § 1.1441-
1(b)(2)(vii)(B) through (b)(2)(vii)(F)
and the examples under those sections
consistent with the documentation and
withholding requirements of chapter 4.

With respect to nonqualified interme-
diaries, these temporary regulations re-
vise the rules for reliable association to
allow a withholding agent to associate a
withholdable payment with a chapter 4
withholding rate pool (as defined in
§ 1.1441-1(c)(48)) consistent with the
reliable association requirements of
withholding statements provided by
nonqualified intermediaries for chapter
4 purposes. Accordingly, these tempo-
rary regulations provide that a withhold-
ing agent need not associate a payment
with documentation for payees included
in any chapter 4 withholding rate pool.
These temporary regulations also revise
the examples relating to when a with-
holding agent can reliably associate
payments to nonqualified intermediaries
with valid documentation and clarify
that each example refers to a payment
that is not a withholdable payment under
chapter 4. These temporary regulations
add an example under § 1.1441-
1(e)(3)(iv)(C) that illustrates the re-
quirements of a withholding statement
provided by a nonqualified intermediary
for a withholdable payment under chap-
ter 4 that is also a payment subject to
withholding under chapter 3.

With respect to qualified intermediar-
ies, these temporary regulations revise the
rules for reliable association to allow a
withholding agent to associate a withhold-
able payment with a chapter 4 withholding
rate pool (in addition to the withholding
rate pools provided for chapter 3 pur-
poses) consistent with the reliable asso-
ciation requirements of withholding
statements provided by qualified inter-
mediaries for chapter 4 purposes. Under
the revised rule, a withholding agent
may reliably associate a payment with a
chapter 4 withholding rate pool of U.S.
payees in a case in which the qualified
intermediary does not assume primary
Form 1099 and backup withholding re-
sponsibilities. A withholding agent that
makes a payment to a qualified interme-
diary that does not elect to assume pri-

mary Form 1099 and backup withhold-
ing responsibilities must continue to
reliably associate the payment to the
qualified intermediary with Forms W-9,
"Request for Taxpayer Identification
Number and Certification," for each
U.S. non-exempt recipient not included
in a chapter 4 withholding rate pool of
U.S. payees on whose behalf the quali-
fied intermediary is receiving the pay-
ment. The revised rule further provides
that a withholding agent that makes a
payment to a qualified intermediary that
assumes primary Form 1099 and backup
withholding responsibilities and pri-
mary withholding responsibility for pur-
poses of both chapters 3 and 4 need not
obtain any withholding statement from
the qualified intermediary. These tem-
porary regulations also add an example
in § 1.1441-1(e)(5)(v)(D) to illustrate
when a withholding agent can reliably
associate payments made to qualified in-
termediaries providing chapter 4 with-
holding rate pools with respect to a
withholdable payments under chapter 4.

### E. Presumption rules and joint payees

Section 1.1441-1(b)(3) of the final reg-
ulations provides presumption rules for
withholding agents that apply in the ab-
sence of valid documentation and pro-
vides that a payment made to an exempt
recipient (as determined based on the
indicia of such status described in
§ 1.6049-4(c)(1)(ii) or similar provi-
sion under chapter 61 for a payment
other than interest) generally is pre-
sumed made to a U.S. person unless one
of the indicia of foreign status described
in § 1.1441-1(b)(3)(iii)(A) is present.
These temporary regulations modify
what constitutes indicia of foreign status
for purposes of the presumption rule
applicable to exempt recipients. In par-
ticular, these temporary regulations pro-
vide that references to the terms corpo-
ration or company in the name of the
payee are not indications that the payee
is an entity included on the list of per
se corporations under § 301.7701-
2(b)(8)(i) for purposes of treating the
payee as a foreign person. These tempo-
rary regulations also remove the term a
payment made outside the U.S. under
new § 1.1441-1(b)(3)(iii)(A)(1)(iv) and

replace it with the term a payment made
with respect to an offshore obligation.
These temporary regulations further co-
ordinate the regulations under chapters
3 and 61 with the regulations under
chapter 4 by making a similar change to
the 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 with
chapter 4 to provide that a payment that is
also a withholdable payment under chap-
ter 4 made to specified classes of exempt
recipients (that is, generally those without
an apparent U.S. status) will be presumed
made 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 July
1, 2014, to be held by a U.S. exempt
recipient. 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 an
obligation.

These temporary regulations also
modify the presumption rules applicable
to payments made to certain payees to
coordinate with presumptions that apply
under the chapter 4 regulations. These
temporary regulations modify § 1.1441-
1(b)(3)(iii) to coordinate with the pre-
sumptions under § 1.1471-3(f) for with-
holding agents making withholdable
payments subject to the presumption
rules of § 1.1441-1(b)(3) and chapter 4.
Section 1.1441-1(b)(3)(iii) of the tem-
porary regulations provides that in the
case of a withholdable payment under
chapter 4, a withholding agent must ap-
ply the presumption rules under
§ 1.1471-3(f) to determine the payee's
status for chapter 4 purposes. Further-
more, § 1.1441-1(b)(3)(v)(B) provides
that a withholding agent making a with-
holdable payment to a foreign interme-
diary should apply the presumption
rules of § 1.1471-3(f)(5) to determine
whether withholding applies under
chapter 4 (instead of applying the pre-
sumption rules in § 1.1441-1(b)(3)). For
example, if a withholding agent makes a
withholdable payment to a foreign inter-
mediary and cannot reliably associate
the payment with documentation for a

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payee, the withholding agent must apply
the presumption rule of § 1.1471-
3(f)(5) to treat the unidentified payee as
a nonparticipating FFI (as defined in
§ 1.1471-1(b)(82)) and withhold on the
payment at a 30-percent rate under
chapter 4. Accordingly, no withholding
or reporting under chapter 3 would be
required to apply with respect to the
payment.

Consistent with the chapter 4 presump-
tion rules, these temporary regulations
also provide that if a withholding agent
makes a withholdable payment to joint
payees and one or more of the payees does
not appear, by name or other information
in the account file, to be an individual,
then the payment will be presumed to be
made to a nonparticipating FFI. See
§ 1.1471-3(f)(7).

### F. Grace period

Under § 1.1441-1(b)(3)(iv) of the final
regulations, 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 an
undocumented foreign person, and with-
hold under chapter 3, while waiting for
new documentation. The chapter 4 regu-
lations allow a withholding agent to ap-
ply a 90-day grace period following a
change in circumstances during which
the withholding agent may rely on the
payee's claimed chapter 4 status. These
temporary regulations do not provide a
similar allowance for chapter 3 purposes
to avoid potential deficits in withholding
that could apply during the grace period
allowed under chapter 4 because of the
different objectives between chapters 3
and 4. These temporary regulations re-
move the requirement that a withholding
agent withhold on payments during the
grace period when a form is received
by facsimile since these temporary reg-
ulations also provide that such forms
may be generally relied upon under
§ 1.1441-1(e)(4)(iv)(C).

### G. Exemptions from chapter 3 withholding

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 from
the withholding exemptions that apply
for purposes of chapter 4, these tempo-
rary regulations add language to clarify
that the exemptions specified under
§ 1.1441-1(b)(4) apply only for pur-
poses of chapter 3 and that withholding
under chapter 4 may still apply. In ad-
dition, these temporary regulations add
the applicable sunset dates to the de-
scriptions of payments that are portfolio
interest to coordinate with the elimina-
tion of portfolio interest treatment for
foreign-targeted bearer obligations un-
der section 502 of the HIRE Act (for
obligations issued after March 18, 2012)
and the elimination of portfolio interest
treatment for foreign-targeted registered
obligations under § 1.871-14(e) for ob-
ligations issued on or after January 1,
2016.

#### H. Establishing foreign status under chapter 61

These temporary regulations add sec-
tion 6050W to the list of provisions refer-
enced in § 1.1441-1(b)(5) for which the
foreign status of a payee may be estab-
lished for chapter 61 purposes based on
the documentation provided for chapter 3
purposes.

#### I. Curing late or incomplete documentation

Section 1.1441-1(b)(2) of the final reg-
ulations provides that a withholding agent
must reliably associate a payment with
documentation by the date of the pay-
ment. Notwithstanding the general rule
under § 1.1441-1(b)(2), § 1.1441-
1(b)(7) of the final regulations allows a
withholding agent to rely on documen-
tation obtained after the date of a pay-
ment to avoid liability for underwith-
holding during the period that the
withholding agent had no documenta-
tion. The final regulations also specify
that the IRS may require a withholding
agent to obtain additional documenta-
tion, however, when the IRS determines
that delays in obtaining the documenta-
tion affect its reliability. The chapter 4

regulations specify the documentation
that must be obtained by a withholding
agent after the date of a payment to
determine 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 for
documentation obtained after the date of
the payment (including documentation
to support a claim for treaty benefits).
These temporary regulations also add a
provision consistent with the chapter 4
regulations that permits a withholding
agent to cure a withholding certificate
containing inconsequential errors with
respect to a claim of status for chapter 3
purposes.

#### 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 the
definitions 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 term
financial institution in § 1.1441-1(c)(5) is
amended to be consistent the term finan-
cial institution in the chapter 4 regula-
tions.

Second, these temporary regulations
also add new terms that are referenced for
chapter 3 purposes. These terms are added
to § 1.1441-1(c) of these temporary reg-
ulations in order to help navigate the reg-
ulations and to reflect more completely
the terms used throughout these regula-
tions. Finally, these temporary regulations
also add new definitions adopted from
chapter 4 that are relevant for chapter 3
purposes. For example, § 1.1441-
1(c)(48) of these temporary regulations
incorporates the term chapter 4 withhold-
ing rate pool (modified as appropriate for
chapter 3 purposes with respect to the
chapter 4 withholding rate pool of U.S.
payees) in order to provide for situations
in which intermediaries may provide
withholding statements to withholding
agents that include these pools rather than
the documentation otherwise required for
chapter 3 purposes.

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### K. Withholding certificates

#### 1. Beneficial Owner Withholding Certificate

Section 1.1441-1(e)(2)(ii) of the final
regulations provides the requirements of
a valid beneficial owner withholding
certificate. For a payment made to an
entity that is a beneficial owner of a
withholdable payment, these temporary
regulations provide that the withholding
certificate must also include the chapter
4 status of the entity on the same form to
coordinate with the requirements of the
certification provided for chapter 4 pur-
poses.

### 2. Withholding Certificate Provided by a Qualified Intermediary or Nonqualified Intermediary

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 regulations
amend these sections to include the in-
formation required for purposes of chap-
ter 4 with respect to a QI or an NQI that
receives a withholdable payment. Addi-
tionally, these temporary regulations
add a requirement that a QI or an NQI
certify its chapter 4 status and provide
its GIIN (if applicable) on the withhold-
ing certificate. A GIIN will be required,
for example, when a QI or an NQI is
also a participating FFI (including a re-
porting Model 2 FFI) or a registered
deemed-compliant FFI (including a re-
porting Model 1 FFI). These temporary
regulations also require a QI or an NQI
to certify that it is fulfilling its reporting
obligations under chapter 4 with respect
to any U.S. persons included in a chap-
ter 4 withholding rate pool of U.S. pay-
ees on a withholding statement provided
to the withholding agent.

### 3. Withholding Certificate Provided by a U.S. Branch or Territory Financial Institution

As discussed in section II.B of this
preamble, 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 by
these temporary regulations consistent
with the chapter 4 regulations. To fur-
ther coordinate with chapter 4, these
temporary 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 treated
as a U.S. branch under § 1.1441-
1(b)(2)(iv)) that is not the beneficial
owner of the income, as well as the
requirements for when a withholding
agent may treat the branch as a U.S.
person. For example, a U.S. branch of
an FFI will be required to provide a
GIIN on the withholding certificate to
certify to its chapter 4 status in order to
be 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 its
EIN on a withholding certificate in order
to be treated as a U.S. person.

### 4. Who May Sign Withholding Certificates

The chapter 4 regulations provide ex-
amples in § 1.1471-3(c)(6)(i) of persons
authorized to sign a withholding certifi-
cate. To clarify the persons authorized to
sign a withholding certificate for chapter 3
purposes consistent with the chapter 4
regulations, these temporary regulations
incorporate into § 1.1441-1(e)(4)(i) the
examples of persons described in
§ 1.1471-3(c)(6)(i). The list of persons
authorized to sign a withholding certifi-
cate includes an officer or director of a
corporation, a partner of a partnership, a
trustee of a trust, an executor of an estate,
any foreign equivalent of the foregoing
titles, and any other person authorized in
writing to sign documentation on behalf
of the individual or entity named on the
certificate.

### 5. Period of Validity of Withholding Certificates

Section 1.1441-1(e)(4)(ii)(A) of the fi-
nal regulations provides that a withhold-
ing certificate or documentary evidence
generally remains valid until the last day
of the third calendar year following the

year in which the withholding certificate
is signed or documentary evidence is pro-
vided to the withholding agent, or until a
change in circumstances makes any infor-
mation on the withholding certificate in-
correct.

Under certain circumstances described
in § 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 knows
or has reason to know of a change in
circumstances that makes any information
on the withholding certificate incorrect.
These circumstance include when a with-
holding agent obtains a TIN for a payee
and reports a payment to the payee annu-
ally on Form 1042-S, as well as withhold-
ing certificates provided by certain foreign
entities 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 appropriate
cases to coordinate the chapter 3 regula-
tions with the chapter 4 regulations and
expand the circumstances under which a
withholding agent may treat documenta-
tion as having indefinite validity for chap-
ter 3 purposes. These temporary regula-
tions also provide that certain types of
documentary evidence may remain valid
for purposes of establishing a payee's for-
eign status for a longer period if the doc-
umentary evidence contains an expiration
date that is beyond the three-year period,
in which case the documentary evidence
will remain valid until the expiration date.
Because of the changes to the rules for
indefinite validity, these temporary regu-
lations remove and replace the allowance
that permits a withholding agent to treat a
withholding certificate with a TIN as be-
ing valid indefinitely provided that the
withholding agent reports a payment each
year on a Form 1042-S with respect to the
person 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 agents
will be obtaining documentation for pre-
existing accounts for both chapter 4 and
chapter 3 purposes, these temporary reg-
ulations provide that a withholding cer-
tificate or documentary evidence that
would otherwise expire under § 1.1441-

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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 this
preamble, under § 1.1441-1(e)(4)(ii)(D)
of the final regulations, a withholding
agent may no longer rely on a withholding
certificate or documentation when the
withholding agent knows or has reason to
know of a change in circumstances that
makes the withholding certificate or doc-
umentation incorrect. The regulations un-
der chapter 4 adopt a similar requirement
for documentation provided for chapter 4
purposes and further provide that an inter-
mediary (including a U.S. branch or terri-
tory financial institution not treated as
a U.S. person) that becomes aware of a
change in circumstances with respect to a
person for whom it furnishes documenta-
tion to a withholding agent must notify the
withholding agent within 30 days of the
date the intermediary knows or has rea-
son to know of the change in circum-
stances. Consistent with the chapter 4
regulations, these temporary regulations
revise § 1.1441-1(e)(4)(ii)(D) to adopt
this 30-day requirement.

### 7. Retention of Withholding Certificates or Documentary Evidence

Section 1.1441-1(e)(4)(iii) of the final
regulations requires a withholding agent
to 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 section
1461. This paragraph is amended to be
consistent with retention requirements ap-
plicable to a withholding agent under
chapter 4 by permitting a withholding
agent 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 other
means (such as microfiche) provided that
the withholding agent is able to a produce
a hard copy of the form or document and
maintains a record of the receipt of the
document. For documentary evidence,
this paragraph cross references the reten-

tion requirements provided in § 1.6049-
5(c)(1) (as amended by these temporary
regulations), which coordinate with chap-
ter 4 by permitting a withholding agent to
retain a photocopy of the documentary
evidence.

### 8. Electronic and Other Transmission of Forms and Documentation

The chapter 4 regulations required a
withholding agent to authenticate the
identity of a person furnishing a with-
holding certificate or documentary evi-
dence in the form of a facsimile or
scanned documentation. In response to
comments, these temporary regulations
do not incorporate this requirement.
These temporary regulations instead
provide that a withholding agent may
rely on a signed form or a document
received by facsimile or scanned and
sent by e-mail unless the withholding
agent knows that the person transmitting
the form or documentary evidence is not
authorized to do so. This rule is intended
to apply to a withholding agent that
does not receive the document as part
of a system established by a withholding
agent described in § 1.1441-1(e)(4)(iv)(B),
the requirements for which are unchanged
by these temporary regulations except for
a provision clarifying that the IRS may
provide written guidance to its examiners
regarding the requirements acceptable for
the system. This same rule applies for
chapter 4 purposes under a revision made
by the temporary chapter 4 regulations (to
cross-reference this paragraph).

### 9. Substitute Certification Forms

A withholding agent may substitute its
own certification form for an official Form
W-8 or Form 8233, "Exemption From
Withholding on Compensation for Inde-
pendent (and Certain Dependent) Personal
Services 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 a
substitute form written and completed in
a language other than English, provided
that an English translation is available

upon request. In addition, these tempo-
rary regulations clarify that, consistent
with the current regulations, a substitute
form may omit provisions that are not
relevant to the transaction or purpose for
which the form is furnished, and specif-
ically provide that a substitute form
need not contain a chapter 4 status for a
payee when the withholding agent is not
required to determine a payee's chapter
4 status. See § 1.1471-3(c)(6)(v). Al-
though the chapter 4 regulations also
allow a withholding agent to rely on a
non-IRS form in lieu of Forms W-8 or
substitute forms for a payee who is an
individual, this provision is not incorpo-
rated into these temporary regulations
for chapter 3 purposes. The IRS and the
Treasury Department have determined
that 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 Withholding Certificate

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 withholding
agent to treat the withholding certificate as
valid for purposes of chapter 3, such as a
withholding certificate provided for pur-
poses of claiming treaty benefits (other
than treaty benefits with respect to pub-
licly traded securities) or a withholding
certificate provided by a beneficial owner
claiming the income is effectively con-
nected with a U.S. trade or business. To
update these circumstances to reflect guid-
ance issued for purposes of chapter 3 after
the effective date of the current regula-
tions, these temporary regulations add to
the list of withholding certificates requir-
ing a TIN a withholding certificate pro-
vided by a withholding foreign trust or by
an entity acting as a qualified securities
lender 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 exception
from the TIN requirement for a with-
holding certificate on which a beneficial

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owner claims treaty benefits and instead
provides its foreign TIN, as an alterna-
tive to providing a U.S. TIN for this
purpose.

### 11. Coordinated Account Information Systems

Section 1.1441-1(e)(4)(ix) of the final
regulations generally requires a withhold-
ing agent that is a financial institution to
obtain documentation (including with-
holding certificates) on an account-by-
account basis subject to certain excep-
tions. Section 1.1441-1(e)(4)(ix)(A) of
the final regulations allows a withholding
agent to rely on documentation provided
by a customer for another account held at
the same branch location. If the accounts
are not located at the same branch loca-
tion, § 1.1441-1(e)(4)(ix)(A) of the final
regulations allows a withholding agent to
rely on documentation for an account held
at another branch location of the with-
holding agent or a related person provided
that the withholding agent and related per-
son are part of the same universal account
system 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 final
chapter 4 regulations require that the with-
holding agent treat the accounts as con-
solidated obligations, a requirement not
described 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 and
shared account systems, the final chapter 4
regulations require that the withholding
agent and the branch with which it is
sharing information be part of the same
expanded affiliated group (rather than be
related persons as under the final regula-
tions). In addition, the final chapter 4 reg-
ulations require a withholding agent to
produce upon request any documentation
upon which it relies for purposes of deter-
mining the status of the payee and clarify
that a withholding agent is liable for any
underwithholding attributable to failing to
assign the correct status to the payee
based on the available information. Fi-
nally, although the final chapter 4 regula-

tions do not require a withholding agent to
document how and when it accesses the
shared account system, the withholding
agent is required to be able to obtain a
copy of the documentation.

To provide consistent standards for
when withholding agents may share
documentation for purposes of both
chapters 3 and 4, these temporary regu-
lations delete the existing text of
§ 1.1441-1(e)(4)(ix) and replace it with
a cross-reference to the requirements for
documentation sharing in the final chap-
ter 4 regulations. These temporary
regulations also replace § 1.1441-
1(e)(4)(ix)(A)(4) with the rule under the
chapter 4 regulations for documentation
collected by an agent of the withholding
agent. The revised requirements apply
to a shared account system other than a
shared account system in use by a with-
holding agent as of July 1, 2014. Section
1.1441-1(e)(4)(ix)(B) allows for a sin-
gle withholding certificate for shares in
multiple mutual funds that have a com-
mon investment advisor or common
principal underwriter with respect to
shares owned or acquired in any of the
funds. The chapter 4 regulations address
this issue to achieve a similar result
through the general principal-agent rule
of § 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 a
withholding certificate for each account
that allow a withholding agent to rely on a
certification from a U.S. broker stating
that the broker holds beneficial owner
withholding certificates of payees for
which the broker acts as an agent with
respect to any readily tradable instrument.
The final chapter 4 regulations also pro-
vide a similar exception that permits a
withholding agent to rely on a certifica-
tion from a qualified intermediary in
addition to a U.S. broker. To coordinate
with the final chapter 4 regulations,
these temporary regulations add a pro-
vision allowing a withholding agent to
rely for chapter 3 purposes on a similar
certification from a qualified intermedi-
ary that receives a payment from the
withholding agent.

With respect to accounts acquired in
mergers and bulk acquisitions for value,

these temporary regulations add a new
§ 1.1441-1(e)(4)(ix)(D) to clarify that a
withholding agent may rely on valid doc-
umentation collected by a predecessor or
transferor, consistent with the rule that
applies for purposes of chapter 4. Also
consistent with the chapter 4 regulations,
these temporary regulations allow a with-
holding agent that acquires accounts in a
merger or bulk acquisition for value from
an unrelated person to rely on the prede-
cessor's or transferor's determination of
an account holder's chapter 3 status for
a transition period of six months, subject
to certain requirements that apply at the
end of the transition period. However,
this provision is modified to require the
predecessor or transferor to be a U.S.
withholding agent or qualified interme-
diary rather than a participating FFI as
provided in the chapter 4 regulations in
light of the different purposes of chap-
ters 3 and 4.

Finally, the final chapter 4 regulations
allow a withholding agent to rely upon
documentation collected by a third-party
data provider in order to establish the
chapter 4 status of an entity. The IRS and
the Treasury Department do not believe
that this allowance is appropriate for pur-
poses of chapter 3 and instead expect
withholding agents to utilize the other
document sharing provisions discussed
earlier in this section II.K.11. However,
see § 1.1441-7 of these temporary regu-
lations for rules permitting a withholding
agent (acting as a principal) to rely on
documentation collected by an agent, sub-
ject to the qualification that as principal it
remains liable for its agent's performance.

### L. Withholding statement of a nonqualified intermediary

#### 1. General Requirements Other than Alternative Procedures

Section 1.1441-1(e)(3)(iv) of the final
regulations describes the requirements of
a withholding statement provided by an
NQI (NQI withholding statement) to a
withholding agent with respect to re-
portable amounts (including amounts
subject to chapter 3 withholding). This
provision is amended by these tempo-
rary regulations to coordinate with the
chapter 4 requirements for withholding

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statements when an NQI receives a
withholdable payment by permitting the
NQI to include chapter 4 withholding
rate pools on the statement in lieu of
payee-specific information. To coordi-
nate with the chapter 4 requirements for
reporting on Form 1042-S, this provi-
sion is further modified to require an
NQI receiving a withholdable payment
to provide on the withholding statement
the chapter 4 status of each payee that is
a foreign person not included in a chap-
ter 4 withholding rate pool.

For reportable amounts received by an
NQI (including reportable amounts that
are not withholdable payments under
chapter 4), the requirements for an NQI
withholding statement are modified to
specify when an NQI may provide to a
withholding agent a withholding state-
ment that includes an allocation of the
payment to a chapter 4 withholding rate
pool of U.S. payees in lieu of providing
Forms W-9 for each U.S. non-exempt re-
cipient and identifying each such recipient
on the statement. For this purpose, an NQI
that is a participating FFI or registered
deemed-compliant FFI may include a U.S.
payee in the pool to the extent permitted
under § 1.6049-4(c)(iii), which coordi-
nates with the allowance for when an NQI
that has reporting obligations under chap-
ter 4 need not also report under chapter 61
with respect to a payment.

These temporary regulations also add
an example to illustrate when a withhold-
ing agent can reliably associate a with-
holdable payment with a chapter 4 with-
holding statement that allocates the
payment (or portion of the payment) to
one or more chapter 4 withholding rate
pools.

### 2. Alternative Procedures for an NQI Withholding Statement

An NQI generally is required to pro-
vide payee-specific information (treat-
ing a chapter 4 withholding rate pool as
a payee) to a withholding agent at the
time of payment, as described in section
II.L.1 of this preamble. However, the
alternative procedures described in
§ 1.1441-1(e)(3)(iv)(D) of the final reg-
ulations permit an NQI to provide a
withholding agent with pooled informa-
tion (by withholding rate) prior to re-

ceiving the payment if the NQI will
provide information sufficient to allo-
cate the payment to specific payees by
January 31 of the year following the
payment. These temporary regulations
retain the alternative procedures but ex-
pand the circumstances under which the
procedures may be used in order to co-
ordinate with when a chapter 4 with-
holding rate pool may be included on a
withholding statement provided by an
NQI. Section 1.1441-1(e)(3)(iv)(D) of
the final regulations is modified in the
case of an NQI receiving a reportable
amount that is also a chapter 4 withhold-
able payment to permit the NQI to in-
clude payees that are nonparticipating
FFIs or recalcitrant account holders in-
cludable in a chapter 4 withholding rate
pool in a single withholding rate pool
that includes payees subject to with-
holding under chapter 3 at a 30-percent
rate for reporting to a withholding agent.
Similarly, payees includable in a chapter
4 withholding rate pool of U.S. payees
may be included in a zero-percent rate
pool with other payees to which no
withholding applies. Thus, an NQI may
provide withholding rate pools under al-
ternative procedures irrespective of
whether withholding is applied under
chapter 3 or chapter 4 or when withhold-
ing is excepted under chapters 3 and 4
and section 3406.

Because of the allowance to include
payees in withholding rate pools under the
alternative procedures for purposes of
both chapters 3 and 4, these temporary
regulations add a provision that, in ad-
dition to the allocation information re-
quired to be provided by the NQI for
each payee for chapter 3 purposes by
January 31 following the year of the
payment, the NQI must provide the
withholding agent with sufficient infor-
mation to allocate the income to each
applicable chapter 4 withholding rate
pool and may treat each such pool as a
payee for the purpose of determining
whether 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 shall
be allocated to an undocumented payee

in accordance with the presumption
rules, and these temporary regulations
add a reference to the presumption rule
in § 1.1471-3(f)(5) for a case in which
an NQI fails to allocate a withholdable
payment in the time prescribed.

### 3. Electronic Transmission of NQI Withholding Statement

As discussed in section II.K.8 of this
preamble, these temporary regulations
provide new procedures allowing the elec-
tronic transmission of withholding certif-
icates and documentary evidence. Section
1.1441-1(e)(3)(iv)(B) is amended to pro-
vide that a withholding statement may
also be transmitted by e-mail or facsimile
under the same procedures provided in
§ 1.1441-1(e)(4)(iv)(C) for withholding
certificates and documentary evidence
when the statement is not provided as part
of a system established by the NQI or
withholding agent.

#### M. Qualified intermediaries

##### 1. In General

Section 1.1441-1(e)(5) of the final reg-
ulations provides rules for entering into a
qualified intermediary agreement (QI
agreement) with the IRS, generally de-
scribes the requirements of the QI agree-
ment, provides the requirements of a QI
withholding statement, and establishes the
persons eligible to enter into the QI agree-
ment. Consistent with the intent of chapter
4 that a QI's reporting of U.S. account
holders 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 order
to enter into a QI agreement, a QI that is
an FFI must assume the chapter 4 re-
porting obligations of a participating
FFI (including a reporting Model 2 FFI),
registered deemed-compliant FFI (in-
cluding a reporting Model 1 FFI), or an
FFI treated as certified deemed-
compliant pursuant an applicable IGA
and that is subject to due diligence and
reporting requirements with respect to
its accounts similar to those of regis-
tered deemed-compliant FFIs under the
chapter 4 regulations. Under this new
requirement, a QI will be required to

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report its U.S. accounts without regard
to whether the QI designates the account
as an account covered by the QI agree-
ment (as applicable under the current QI
agreement). Subject to IRS approval, an
NFFE may also become a QI for pur-
poses of presenting claims of benefits
under an income tax treaty on behalf of
its shareholders or when acting as an
intermediary for persons other than its
shareholders.

Section 1.1441-1(e)(5)(iii) of these
temporary regulations reflects changes to
the requirements of the QI agreement.
Specifically, these temporary regula-
tions provide that the QI agreement will
provide the requirements for a QI acting
as a qualified securities lender with re-
spect to the payment of U.S. source sub-
stitute dividends. Moreover, to provide
compliance procedures generally similar
to those applicable to a participating FFI
under chapter 4, the QI agreement will
provide that the QI must establish pro-
cedures to ensure compliance with its
agreement, arrange for a periodic re-
view, and provide certain factual infor-
mation to the IRS. Furthermore, in ap-
propriate cases, the IRS may require that
an approved auditor perform review
procedures concerning the QI's compli-
ance with its QI agreement in addition to
the review procedures performed under
the periodic review. In such a case, the
IRS may conduct a review of the audi-
tor's findings.

##### 2. Assumption of Primary Withholding Responsibility

The current regulations provide that a
QI may assume the primary obligation
to withhold, deposit, and report amounts
under chapter 3 or under chapter 61 and
section 3406 (or under both chapters 3
and 61, including backup withholding
under section 3406). These temporary
regulations coordinate with chapter 4
with respect to both a QI's chapter 3 and
chapter 61 requirements. First, to coor-
dinate with the withholding require-
ments of chapter 4, a QI assuming pri-
mary withholding responsibility under
chapter 3 with respect to an account will
also be required to assume such respon-
sibility for purposes of chapter 4 with
respect to the account. Second, a QI that

is an FFI may represent on a withhold-
ing certificate provided to a withholding
agent that it assumes primary chapter 61
reporting and section 3406 responsibil-
ity for an account that it maintains if the
QI complies with its obligations as a
participating FFI (including a reporting
Model 2 FFI) or registered deemed-
compliant FFI (including a reporting
Model 1 FFI) under the chapter 4 regu-
lations or an applicable IGA. See
§ 1.6049-4(c)(4)(i) and (c)(4)(ii) of
these temporary regulations for when an
FFI that reports an account under chap-
ter 4 is not required to report a payment
made to the account under chapter 61.

##### 3. Withholding Statement Provided by a QI

Section 1.1441-1(e)(5)(v) of the final
regulations provides the requirements of a
withholding statement provided by a QI.
These temporary regulations permit a QI
that assumes primary reporting and with-
holding responsibility under chapters 3, 4,
and 61 and section 3406 to provide an
intermediary withholding certificate with-
out attaching a withholding statement (in-
cluding under the circumstances described
above when a QI reports under chapter
4). However, if a QI does not assume
primary reporting and withholding re-
sponsibility under chapters 3 and 4 or
under chapter 61 and section 3406, then
the 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 rate
pool of U.S. payees to the extent per-
mitted for a NQI when the QI does not
assume primary chapter 61 reporting
and backup withholding responsibilities.
See section II.L.1 of this preamble.

These temporary regulations modify
the requirements for a withholding
statement provided by a QI with respect
to a withholdable payment. These tem-
porary regulations permit pooled infor-
mation (for each chapter 3 withholding
rate pool by applicable chapter 4 exemp-
tion code based on Form 1042-S and the
related instructions) with respect to for-
eign payees subject to withholding un-
der chapter 3 and not subject to chapter
4 withholding. For payments to which
chapter 4 withholding applies, these

temporary regulations permit a QI that
is an FFI to report chapter 4 withholding
rate pools for nonparticipating FFIs and
recalcitrant account holders on an FFI
withholding statement (as described in
1.1471-3(c)(3)(iii)(B)(2)), and, for a QI
other than an FFI, permit the QI to pro-
vide a chapter 4 withholding statement
to report payees that are nonparticipat-
ing FFIs in a chapter 4 withholding rate
pool. The revised QI agreement will fur-
ther provide the circumstances in which
a QI may provide a chapter 4 withhold-
ing rate pool on a withholding state-
ment, including a chapter 4 withholding
rate pool provided to the QI by another
intermediary or flow-through entity.

### 4. Electronic Transmission of QI Withholding Statement

These temporary regulations provide
the same allowances for the electronic
transmission of a QI withholding state-
ment as for an NQI withholding state-
ment. See section II.L.3 of this preamble
regarding the electronic transmission of
an NQI withholding statement.

#### N. Coordination of § 1.1441-3 with chapter 4 withholding

Section 1.1441-3 of the final regula-
tions provides rules for determining the
amount to be withheld for purposes of
section 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 chapter
4 withholdable payment and an amount
subject to withholding under chapter 3, a
withholding 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 to
withhold under chapter 3 to the extent that
it has withheld under chapter 4). The co-
ordination rule cross references § 1.1474-
6(b)(1), which allows a withholding agent
to credit withholding applied on a pay-
ment under chapter 4 against any tax lia-
bility due under chapter 3 with respect to
such payment, and cross references
§ 1.1474-6(b)(2) for determining when
withholding is considered applied by a
withholding agent.

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These temporary regulations do not,
however, include provisions specifically
addressing 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 a
proposed regulatory framework to address
potential overwithholding that may occur
in such transactions and provides transi-
tion rules applicable until the issuance of
regulations to ensure that the withholding
does not exceed 30 percent in the aggre-
gate. Under the transition rules, a with-
holding agent that is obligated to make a
substitute dividend payment pursuant to a
securities lending transaction may pre-
sume that U.S. tax has been paid in an
amount equal to the amount implied by
the net payment received by the withhold-
ing agent provided certain conditions are
satisfied, including that the withholding
agent does not know or have reason to
know 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 to
apply this presumption absent information
on whether the net payment resulted from
taxes withheld under chapter 3 or chapter
4. The IRS will, however, treat a with-
holding agent as having reason to know
that the tax was not withheld and depos-
ited or paid to the extent that (i) the with-
holding agent knows that withholding was
applied under chapter 4 to a dividend or
substitute dividend paid to a nonpartici-
pating FFI (which may be the withholding
agent) that is entitled to a refund of the
tax, and (ii) the nonparticipating FFI par-
ticipated in such transaction with a pur-
pose of reducing the aggregate amount
of gross basis tax that would have oth-
erwise been due had it not participated
in the series of transactions. See section
1474(b)(2).

Section 1.1441-3(c)(4) of the final reg-
ulations provides rules that coordinate
withholding under section 1441 (or 1442
or 1443) with withholding under section
1445 on distributions by U.S. real prop-
erty holding companies and real estate
investment trusts. Under these temporary
regulations, the coordination rules also ap-
ply to distributions made by qualified in-
vestment entities (as defined under section
897(h)(4)). These temporary regulations
also 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 must
apply the withholding provisions of chap-
ter 4 before determining whether with-
holding is required under chapter 3 (and,
therefore, will not need to withhold under
this 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 amount
of income to make a reasonable estimate
of the amount from U.S. sources or of the
taxable amount and place a corresponding
amount in escrow until the amount from
U.S. sources or the taxable amount can be
determined. To coordinate with the chap-
ter 4 regulations, this rule is modified to
state that a withholding agent may retain
30 percent of a payment of an undeter-
mined amount of income in escrow until
the earlier of the date that the amount
from U.S. sources or the taxable amount
can be determined or one year from the
date the amount is placed in escrow. Upon
such date, the withholding becomes due
or, to the extent that withholding under
chapter 3 has been determined not to ap-
ply, the escrowed amount must be paid to
the payee.

##### O. Presumption rule for payments to U.S. branches and removal of transitional 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 connected
with the conduct of a trade or business
within the United States. A presumption
rule under the final regulations allows a
withholding agent to treat a payment of
income as effectively connected income
when it is made to a U.S. branch of a
foreign bank or foreign insurance com-
pany described in § 1.1441-2(b)(iv)(A).
These temporary regulations revise the
presumption 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 of
effectively connected income. In addi-
tion, these temporary regulations re-
move the transitional documentation

provisions that applied to payments
made before January 1, 2001.

##### P. Coordination of § 1.1441-5 with chapter 4 withholding and removal of transitional documentation rules

These temporary regulations revise
§ 1.1441-5 to coordinate with the doc-
umentation, withholding, and reporting
requirements of chapter 4 that apply to
U.S. and foreign partnerships, trusts,
and estates, and they remove a transition
rule applicable to withholding certifi-
cates.

Section 1.1441-5(b) of the final regu-
lations prescribes withholding rules for
U.S. partnerships, trusts, and estates with
respect 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 a
payment of U.S. source FDAP income
that is a withholdable payment subject
to chapter 4 withholding must apply the
special rules included in the final chap-
ter 4 regulations for determining when
an amount that is a chapter 4 withhold-
able payment is treated as paid to a
partner, beneficiary, or owner. These
temporary regulations also cross refer-
ence the general rule coordinating with-
holding under chapter 3 with withhold-
ing under chapter 4 to clarify that, for
payments included in the gross income
of a partner, beneficiary, or owner, a
withholding agent must apply the with-
holding provisions of chapter 4 before
determining whether withholding is re-
quired under chapter 3 (and, therefore,
does not need to withhold under this
section when withholding is applied un-
der chapter 4).

Sections 1.1441-5(c) and (e) of the
final regulations include requirements
for withholding agents to determine the
status of a payee of a payment made to
a foreign partnership or to a foreign
simple or grantor trust, including the
requirements for withholding certifi-
cates and withholding statements pro-
vided by such entities, the requirements
for determining when reduced withhold-
ing applies with respect to payments
made to such entities, and the presump-
tion rules that apply in the absence of

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reliable documentation. These tempo-
rary regulations amend § 1.1441-
5(c) and (e) to include revised rules for
determining the status of a partner, ben-
eficiary, or owner as a payee of a pay-
ment (and when reduced withholding
applies). These temporary regulations
also amend § 1.1441-5(c) and (e) con-
sistent with the allowance in the chapter
4 regulations for both nonqualified and
qualified intermediaries that are foreign
partnerships or trusts to provide with-
holding statements that report chapter 4
withholding rate pools instead of spe-
cific payee information. In addition,
these temporary regulations amend
§ 1.1441-5(c) and (e) to coordinate
withholding under chapter 3 with with-
holding applied under chapter 4 on pay-
ments made to foreign partnerships and
trusts by permitting a withholding agent
that has withheld on a withholdable pay-
ment made to the partnership or trust
under chapter 4 to not also withhold on
the payment under chapter 3. The part-
nership or trust is also not required to
withhold with respect to a partner, ben-
eficiary, or owner if withholding under
chapter 4 was applied by a withholding
agent 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 the
requirements applicable to these entities
under the final chapter 4 regulations by
requiring WPs and WTs to assume chap-
ter 4 withholding responsibilities (in ad-
dition to their chapter 3 withholding re-
sponsibilities) with respect to their
partners, beneficiaries, and owners. The
temporary regulations also add the re-
quirement that a WP or WT that is an
FFI obtain status as a participating FFI,
registered deemed-compliant FFI, or an
FFI treated as a deemed-compliant FFI
under an applicable IGA that is subject
to due diligence and reporting require-
ments with respect to its accounts sim-
ilar to those applicable to a registered
deemed-compliant FFI under § 1.1471-
5(f)(1). The requirements for withhold-
ing certificates provided by WPs and
WTs are amended by these temporary

regulations to provide that an FFI that is
a WP or WT receiving a withholdable
payment must include its chapter 4 sta-
tus and GIIN (if applicable) on the cer-
tificate, in addition to its WP-EIN or
WT-EIN. The temporary regulations
also reference certain compliance-
related provisions that will be included
in 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 are
amended by these temporary regulations
consistent with the chapter 4 presump-
tion rules that apply to a withholdable
payment made to a partnership or trust.
Section 1.1441-5(e)(6)(ii) of the final
regulations is also amended to provide a
revised presumption rule for determin-
ing the classification of a foreign trust.
The current presumption rule generally
provides that a withholding agent may
presume a foreign entity to be a complex
trust when it cannot determine the status
of the trust. Under the revised rule, a
withholding agent that has the U.S. TIN
and U.S. address for the settlor of a trust
must presume such trust to be a U.S.
grantor trust when the settlor is a U.S.
person. In such a case, the withholding
agent would issue an applicable Form
1099 to the U.S. settlor rather than with-
hold and report the payment under the
requirements of chapter 3.

These temporary regulations remove
the transition rule in § 1.1441-5(g)(2), for
withholding certifications obtained before
January 1, 2001.

Q. Coordination with chapter 4
withholding for payments subject to
reduced withholding under an income
tax treaty

Section 1.1441-6 of the final regula-
tions specifies the conditions under
which withholding under sections 1441,
1442, and 1443 on a payment to a for-
eign person may be applied at a reduced
rate under the terms of an applicable
income tax treaty. These temporary reg-
ulations add certain provisions to this
section to coordinate with withholding
and documentation retention require-
ments applicable under the final chapter
4 regulations.

First, the allowance for reduced with-
holding at source under § 1.1441-6 of
the final regulations is revised to state
that even if the requirements of this
section are met, withholding under
chapter 4 may still apply to payments
that are withholdable payments. Second,
for payments to fiscally transparent en-
tities, language is added to indicate that
a withholding agent must apply the rules
of chapter 4 to determine the payee of a
withholdable payment for purposes of
determining its withholding obligations
under chapter 4. This provision clarifies
that even when the interest holders of a
fiscally transparent entity are eligible for
reduced withholding under an applica-
ble treaty, chapter 4 withholding may
still apply to a payment made to such
entity depending on its chapter 4 status.
Finally, based on comments received,
the rules regarding the maintenance of
documentary evidence for purposes of
this section are revised to clarify that a
withholding agent maintains the re-
viewed documents by retaining the orig-
inal, certified copy, or photocopy of
such documents, without regard to
whether the withholding agent notes the
person who reviewed the documenta-
tion. The revised rule conforms to the
documentation-maintenance require-
ments applicable under the final chapter
4 regulations and the new rules in these
temporary regulations for maintaining
documentary evidence under § 1.6049-
5(c).

#### R. U.S. TIN requirement and removal of transitional documentation rules

For payments of certain types of in-
come, § 1.1441-6 of the final regulations
provides 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 the
certificate contains the beneficial owner's
U.S. TIN. These temporary regulations re-
vise this rule to allow a withholding agent
to rely on a withholding certificate that
contains the beneficial owner's foreign
TIN issued by a country with which the
United States has in effect an income tax
treaty or tax information exchange agree-
ment. The Treasury and the IRS believe
that, in such cases, a foreign TIN is an

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effective alternative to a U.S. TIN for
purposes of supporting a claim for treaty
benefits with respect to income for which
a TIN is required. In addition, these tem-
porary regulations remove the transitional
documentation provisions that applied to
payments made before January 1, 2001.

S. Coordination of § 1.1441-7 with
chapter 4 withholding

Section 1.1441-7 of the final regula-
tions provides general provisions regard-
ing when a withholding agent has reason
to know that it cannot rely on a claim of
status for chapter 3 purposes. These tem-
porary regulations revise § 1.1441-7, pri-
marily to coordinate with the standards
of knowledge applicable to withholding
agents and participating FFIs for purposes
of determining the foreign status of a
payee under chapter 4.

Section 1.1441-7(b)(3) of the final reg-
ulations provides reason to know stan-
dards for financial institutions, which
limit when a withholding agent that is a
financial institution has a reason to know
that documentation is unreliable or incor-
rect to when certain U.S. indicia are asso-
ciated with the account holder based on
the 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 AML
due diligence (as defined under § 1.1471-
1(b)(4)), but provide that a withholding
agent will not be considered to have rea-
son to know that documentation collected
for AML due diligence conflicts with the
account holder's claim until the date that
is 30 days after the obligation is executed
(or the account is opened, in the case of an
obligation 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 has
previously documented a preexisting ob-
ligation for purposes of chapter 3 or chap-
ter 61 before July 1, 2014 will not be
required to review such documentation or
the account information associated with
the 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 if
there is a change in circumstances, the
withholding agent will then have reason to
know as of the date of the review or
change in circumstances that the docu-
mentation is unreliable or incorrect and
that it must cure such U.S. indicia in order
to continue to treat the account holder as a
foreign person. This rule therefore pro-
vides withholding agents a transition pe-
riod to address new U.S. indicia, such as a
U.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 scope
of review by a withholding agent that is a
financial institution of withholding certif-
icates and documentary evidence, and are
revised to incorporate the same U.S. indi-
cia referenced in the final chapter 4 regu-
lations and the same cures specified in
those regulations in order for a withhold-
ing agent to continue to treat a payee as a
foreign 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 direct
account holder is unreliable or incorrect
for establishing foreign status and is re-
vised to add new U.S. indicia for this
purpose. The new indicia are a withhold-
ing agent's classification of the account
holder as a U.S. person in the withholding
agent's account files and a current tele-
phone number for the person in the United
States (and no telephone number for the
person outside of the United States). The
cures to treat a payee as a foreign person
notwithstanding these indicia conform to
the cures provided under chapter 4 and
are the same cures that are applicable
to a U.S. address. Specifically, § 1.1441-
7(b)(5)(i)(A) and (b)(5)(i)(B) are revised
to adopt the chapter 4 definition of docu-
mentary evidence required to treat a payee
as a foreign person notwithstanding U.S.
indicia. For a payment made with respect
to an offshore obligation, these temporary reg-
ulations modify § 1.1441-7(b)(5)(i)(A)(2) to
coordinate with the chapter 4 cure rules
pertaining to participating FFIs (including
reporting Model 2 FFIs) by adding that a
withholding agent may treat an account
holder as a foreign person if the withhold-

ing agent obtains documentary evidence
establishing foreign status, even if the
documentary evidence contains a U.S.
address.

These temporary regulations add
§ 1.1441-7(b)(5)(ii) to provide that a
withholding agent has reason to know
that a withholding certificate claiming
foreign status provided by an individual
is unreliable or incorrect if the withhold-
ing agent has an unambiguous indica-
tion of a place of birth for the individual
in the United States. Section 1.1441-
7(b)(5)(ii) is consistent with the chapter
4 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 a
reporting Model 2 FFI) to cure a U.S.
place of birth in order to treat an account
holder 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 allow
documentary evidence establishing for-
eign status as an alternative to providing a
reasonable explanation to cure standing
instructions with respect to an offshore
obligation directing the withholding agent
to pay amounts to an address or an ac-
count maintained in the United States.
Similarly, for purposes of an account
holder's claim for treaty benefits,
§ 1.1441-7(b)(6)(iii) is revised to add
documentary evidence establishing resi-
dence in a treaty country as a cure for
standing instructions provided with re-
spect to an offshore obligation directing
the withholding agent to pay amounts to
an address or an account maintained out-
side the country in which the account
holder claims benefits under an income
tax treaty.

Section 1.1441-7(b)(8) of the final reg-
ulations provides the standards of knowl-
edge applicable to documentary evidence
used to establish a payee's foreign status.
Under § 1.1441-7(b)(8) of the final regu-
lations, a withholding agent may not rely
on documentary evidence to treat a payee
as a foreign person if the withholding
agent has U.S. indicia for the payee. These
temporary regulations revise § 1.1441-
7(b)(8)(ii), consistent with the chapter 4
regulations, to include as U.S. indicia: (i)
a classification in the withholding agent's

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account files that the recipient is a U.S.
person, and (ii) a current telephone num-
ber for the person in the United States as
part of the withholding agent's customer
information, provided that the customer
information does not include a tele-
phone number for the person outside of
the United States. In addition, these tem-
porary regulations revise § 1.1441-
7(b)(8)(iii) to add a U.S. place of birth as
U.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 a
foreign 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 final
regulations) and (b)(9)(ii), which treat
standing instructions to pay amounts to an
address or account maintained in the
United States or outside of a treaty coun-
try as U.S. indicia, to coordinate with the
chapter 4 regulations by allowing the ac-
count holder to cure the U.S. indicia by
providing a valid beneficial owner with-
holding certificate to establish foreign sta-
tus or residence in a treaty country (as
applicable).

These temporary regulations add
§ 1.1441-7(b)(11) to provide limits on
reason to know for withholding agents
that are financial institutions in the case of
multiple obligations belonging to a single
person, which limits are consistent with
those provided in the chapter 4 regula-
tions. Also, in response to comments
seeking clarification, § 1.1441-7(b)(12) is
added to define what constitutes a reason-
able explanation supporting a claim of
foreign status (which also applies under
the chapter 4 regulations).

Section 1.1441-7(c) of the final regu-
lations provides that a withholding agent
may designate an agent to fulfill its obli-
gations under chapter 3. These temporary
regulations revise § 1.1441-7(c) to har-
monize with the chapter 4 regulations for
the requirements of a withholding agent's
use of an agent to fulfill its withholding
obligations. The revised rules allow a
withholding agent to appoint an agent (in-
cluding a foreign person) if there is a
written agreement between the withhold-
ing agent and the person acting as agent,
the books and records of the agent are
available to the withholding agent, and the

agent files Form 8655, "Reporting Agent
Authorization," with the IRS if the agent
(including any sub-agent) is acting as a
reporting agent for purposes of filing
Form 1042 or making tax deposits and
payments. These rules replace the rules
that pertained to authorized foreign
agents, which required that the foreign
agent's books and records be available to
the IRS for examination and that the with-
holding agent notify the IRS of its ap-
pointment of a foreign agent. Under the
new rules, the withholding agent remains
liable for the acts of its agent (including a
foreign agent) and thus the withholding
agent, rather than its agent, is required to
substantiate its compliance with its with-
holding obligations.

#### T. Coordination of § 1.1461-1 with chapter 4 withholding

Section 1.1461-1(b) of the final regu-
lations provides requirements for making
an income tax return on Form 1042 for
income paid that the withholding agent is
required to report on an information return
on Form 1042-S. These temporary regu-
lations revise § 1.1461-1(b) consistent
with chapter 4 to allow a withholding
agent to file a single Form 1042 to report
amounts under chapters 3 and 4.

Section 1.1461-1(c)(1)(i) of the final
regulations provides requirements regard-
ing the manner in which withholding
agents report information about payments
made to foreign persons for purposes of
chapter 3. This section states that the
Form 1042-S shall be prepared in such
manner as the form and accompanying
instructions prescribe. The instructions to
Form 1042-S (as previewed in draft form
on November 1, 2013) are being revised
to 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 to
include more than one type of income or
other payment on a recipient copy of the
Form 1042-S. To allow sufficient time for
withholding agents to adapt to these re-
quirements, however, a withholding agent
will be permitted to include more than one
type of income or other payment on the
recipient copy of the Form 1042-S for
calendar year 2014. Starting with calendar
year 2015, the Form 1042-S and accom-

panying instructions will require a sepa-
rate Form 1042-S for each type of income
or other payment.

Section 1.1461-1(c)(1)(ii) of the final
regulations lists categories of persons that
are treated as recipients with respect to
amounts subject to chapter 3 reporting and
other categories of persons that are not
treated 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) territory
financial 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 are
participating FFIs (including reporting
Model 2 FFIs) or registered deemed-
compliant FFIs (including reporting
Model 1 FFIs) with respect to a chapter 4
withholding rate pool of U.S. payees; and
(iii) participating FFIs (including report-
ing Model 2 FFIs) or registered deemed-
compliant FFIs (including reporting
Model 1 FFIs) that are recipients of with-
holdable payments under § 1.1474-
1(d)(1)(ii)(A)(1)(iii). These temporary
regulations amend § 1.1461-1(c)(1)(ii)
consistent with chapter 4 to treat as per-
sons that are not recipients: (i) payees
included in chapter 3 and chapter 4 with-
holding rate pools; (ii) authorized foreign
agents (to coordinate with revised rules
for authorized agents under § 1.1441-
7(c) of these temporary regulations); (iii)
NQIs and flow-through entities unless
they are FFIs treated as recipients under
§ 1.1474-1(d)(1)(ii)(A)(1)(iii) (because
they have identified the payment as allo-
cable to a chapter 4 withholding rate
pool); and (iv) certain territory financial
institutions 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 provides
that, with respect to the reporting of a
chapter 4 reportable amount, a withhold-
ing agent must report the chapter 4 status
of 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 information
required 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 3
status code. The chapter 3 status codes are

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listed in the instructions to Form 1042-S
for calendar year 2014 and, with respect to
an entity, the chapter 3 status code is
generally the entity's classification for
U.S. tax purposes. These temporary regu-
lations also revise § 1.1461-1(b)(3)(iii) to
require that, in the case of a payment
subject to withholding under chapter 3 but
not subject to withholding under chapter
4, a withholding agent must report the
basis for exempting the payment from
withholding under chapter 4. The instruc-
tions to Form 1042-S for calendar year
2014 will add chapter 4 exemption codes
to Form 1042-S for this purpose.

These temporary regulations also add
provisions in § 1.1461-1(c)(4)(i) and
(c)(4)(ii) to coordinate the reporting re-
quirements for payments to intermediaries
and flow-through entities when a with-
holding agent is provided information for
a chapter 4 withholding rate pool. Also,
§ 1.1461-1(c)(4)(i)(D) is removed by
these temporary regulations to coordinate
with the removal of the rules pertaining to
authorized foreign agents in § 1.1441-7 of
these temporary regulations.

Section 1.1461-1(c)(5) of the final reg-
ulations provides the magnetic media fil-
ing requirements for withholding agents
filing Forms 1042-S. These temporary
regulations revise this rule for financial
institutions consistent with chapter 4 to
require financial institutions to file infor-
mation reports on magnetic media without
regard to whether the financial institution
files 250 or more information returns an-
nually. See § 301.1474-1(a).

### III. Changes to Information Reporting Provisions Under Chapter 61

### A. General coordination of information reporting under § 1.6049-4 with chapter 4

Section 1.6049-4 of the final regula-
tions provides rules for determining
whether an information return is required
under section 6049 for a payment of in-
terest or for certain original issue discount
(OID) and includes definitions of terms
used for purposes of section 6049 and
other sections of chapter 61.

1\. Exceptions to Reporting Under
§ 1.6049-4(c)(4) to Coordinate with
Information Reporting under FATCA

Section 1.6049-4(c) of the final regu-
lations provides exceptions with respect to
whether an information return is required
with respect to a payment of interest or
certain OID. These temporary regulations
add a new exception in § 1.6049-
4(c)(4)(i) for a non-U.S. payor that is also
a participating FFI (including a reporting
Model 2 FFI) or a registered deemed-
compliant FFI (including a reporting
Model 1 FFI) that reports an account
holder of a U.S. account pursuant to the
requirements 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 account
as a U.S. account, see the FFI agreement
for participating FFIs (including reporting
Model 2 FFIs), § 1.1471-5(f)(1) for reg-
istered deemed-compliant FFIs, and the
applicable Model 1 IGA for reporting
Model 1 FFIs.

These temporary regulations also add a
new exception in § 1.6049-4(c)(4)(ii) for
a participating FFI (including a reporting
Model 2 FFI) or registered deemed-
compliant FFI (including a reporting
Model 1FFI), regardless of whether the
FFI is a U.S. payor or non-U.S. payor,
from the requirement to report a payment
of interest for the year in which the inter-
est is paid. The exception applies if the
account holder of an account maintained
by the FFI receives a payment of interest
that is not subject to withholding under
chapter 3 or backup withholding under
section 3406 and either the FFI reports the
account consistent with the pools de-
scribed in § 1.1471-4(d)(6) (referring to
recalcitrant account pools) or, in the case
of a reporting Model 1 FFI, the account
holder has not provided information suf-
ficient for the FFI to confirm the U.S. or
non-U.S. status of the account holder and
the FFI treats and reports the account as a
U.S. reportable account under an applica-
ble IGA. This new exception to reporting
may apply to payments made by an FFI to
an account holder that it must presume to
be a U.S. non-exempt recipient if the pay-
ment is not subject to withholding under
chapter 3 and is not subject to backup
withholding under section 3406 because

the amount is paid outside the United
States 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, on
a withholding statement provided to a
payor, allocate an interest payment to a
U.S. non-exempt recipient within a pool
(referred to as a "U.S. payee pool"), in
lieu of providing payee-specific informa-
tion with respect to each U.S. non-exempt
recipient, for purposes of applying the ex-
ceptions described in paragraphs
§ 1.6049-4(c)(4)(i) and (c)(4)(ii). These
temporary regulations provide that a par-
ticipating FFI (including a reporting
Model 2 FFI) or registered deemed-
compliant FFI (including a reporting
Model 1 FFI) may allocate a payment to a
chapter 4 withholding rate pool of U.S.
payees on an applicable withholding state-
ment to the extent the FFI is excepted
from 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 subject
to withholding under chapter 4.

The coordination rules in § 1.6049-
4(c)(4) that provide an exception from the
requirement to report information with re-
spect to certain account holders of an FFI
also apply for purposes of information
reporting under sections 6041, 6042, and
6045.

2\. Additions and Revisions to
Definitions in § 1.6049-4(f) Related to
Interest Reporting Under §§ 1.6049-
4 and 1.6049-5

Section 1.6049-4(f) of the final regu-
lations provides definitions that apply for
purposes of section 6049 and that are also
relevant for other sections of chapter 61.
These temporary regulations amend cer-
tain of the definitions and add additional
definitions to coordinate with terms used
under chapter 4. First, these temporary
regulations add to § 1.6049-4(f) the
terms 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

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(IGA) to coordinate and provide helpful
cross-references to navigate these rules.

Second, these temporary regulations
add the term offshore obligation, which
includes accounts of banks and other fi-
nancial institutions and obligations (other
than such accounts) maintained outside
the United States, in § 1.6049-5(c)(1) (as
discussed in section III.D of this pream-
ble).

Finally, these temporary regulations
add to § 1.6049-4(f)(16) the term paid
and received outside the United States.
The definition of paid and received out-
side the United States is relevant for pur-
poses of determining the circumstances
under which (i) a payment of interest from
non-U.S. sources is reportable by a non-
U.S. payor, (ii) the exception to backup
withholding under § 31.3406(g)-1(e) ap-
plies with respect to a payment of interest,
and (iii) an agent of a payee (other than a
U.S. middleman) is excluded from report-
ing a payment of interest on an obligation
described in § 1.6049-5(b)(10). This new
term is largely based on the description of
amounts paid outside the United States in
§ 1.6049-5(e) of the final regulations.
Section 1.6049-5(e) (as modified by these
temporary regulations) describes when a
payment is made outside the United
States, which is relevant for determining
cases in which a payor may rely upon
documentary evidence in lieu of an appli-
cable withholding certificate to establish a
payee's foreign status for a payment made
with respect to an offshore obligation.

The new definition of an amount paid
and received outside the United States un-
der § 1.6049-4(f)(16) also applies for
purposes of information reporting rules
under sections 6041 and 6042 and for
determining whether the exception to
backup withholding under section 3406
applies to payments reportable under sec-
tions 6041 and 6042 and to gross proceeds
reportable under section 6045.

B. Further coordination of interest
reporting under § 1.6049-5(b) with
chapter 4

Section 1.6049-5(b) of the final regu-
lations describes payments that are not
treated as interest or OID for purposes of
section 6049. Accordingly, payments de-
scribed in § 1.6049-5(b) of the final reg-

ulations are not subject to reporting under
section 6049. These temporary regula-
tions modify the rule for payments with
respect to foreign intermediaries (which
has been renumbered as new § 1.6049-
5(b)(15)) and add a new exception in
§ 1.6049-5(b)(14) for certain payments
that a payor or middleman can reliably
associate with documentation or certain
other information provided by a foreign
intermediary or flow-through entity.

1\. Exception to Reporting Interest
Payments Made to Foreign Intermediary
or Flow-Through Entity Under New
§ 1.6049-5(b)(14)

These temporary regulations add a new
exception from reporting in § 1.6049-
5(b)(14). The exception applies to pay-
ments made by a payor or middleman that
can be reliably associated with documen-
tation to treat the payments as made to a
foreign intermediary or flow-through en-
tity, provided that the payor or middleman
has obtained a withholding statement
from the foreign intermediary or flow-
through entity allocating the payment (or
portion thereof) to a chapter 4 withholding
rate pool or to specific payees to which
withholding under chapter 4 applies. This
exception for payments made to a chapter
4 withholding rate pool coordinates with
the requirements under the chapter 4 reg-
ulations describing the circumstances un-
der which a withholding agent may, with
respect 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 the
payment to a chapter 4 withholding rate
pool 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 pool
of nonparticipating FFIs, instead of re-
quiring payee-specific information with
respect 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 may
reliably associate a payment with a chap-
ter 4 withholding rate pool of U.S. payees
on a withholding statement provided by
an 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 reporting
Model 2 FFI) or a registered deemed-
compliant FFI (including a reporting
Model 1 FFI) (by applying the due dili-
gence requirements described in
§ 1.1471-3(d)(4)).

The exception to reporting added by
these temporary regulations in § 1.6049-
5(b)(14) shall also apply for purposes of
information reporting under sections 6041
and 6042.

2\. Exception to Reporting Interest
Payments Made by a Foreign
Intermediary Under Renumbered
§ 1.6049-5(b)(15)

These temporary regulations renumber
the exception from reporting that was in-
cluded in § 1.6049-5(b)(14) of the final
regulations as new § 1.6049-5(b)(15) for
a foreign intermediary (or a U.S. branch
not treated as a U.S. person under
§ 1.1441-1(b)(2)(iv)) receiving a payment
from a payor, if the intermediary furnishes
to the payor or middleman the information
required for the payor or middleman to
report the payment under section 6049.
This exception does not apply to a foreign
intermediary that knows that the payments
are required to be reported by the payor or
middleman under § 1.6049-4 and were
not so reported. These temporary regula-
tions also clarify that a territory financial
institution 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 from
which it is receiving a payment to report.
These temporary regulations incorporate
by cross-reference the exception from re-
porting provided in § 1.6049-4(c)(4) (re-
ferring to rules that exempt certain FFIs
that are non-U.S. payors from reporting
under chapter 61 if the payments are made
to account holders that will be reported by
the FFI and, in narrower circumstances,
rules that exempt certain FFIs that are
U.S. or non-U.S. payors from reporting
under chapter 61 on certain presumed
U.S. non-exempt recipients), such that an
intermediary need not report under this
paragraph if the payment is not required to
be reported under § 1.6049-4(c)(4).

The exception to reporting in
§ 1.6049-5(b)(15) also applies for pur-

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poses of information reporting under sec-
tions 6041, 6042, and 6045. (For a discus-
sion of the applicable exemptions from
reporting under sections 6041, 6042, and
6045 for certain FFIs that report informa-
tion about their account holders under
chapter 4 or an applicable IGA, see the
discussion of the coordination rules under
§ 1.6049-4(c)(4) in section III.A.1 of this
preamble.)

### C. Exceptions to reporting for certain payments made on behalf of a PFIC

These temporary regulations add two
new exceptions to reporting that apply to
paying agents and stock transfer agents
making certain payments on behalf of a
corporation described in section 1297(a)
(a passive foreign investment company or
PFIC). The first exception relates to divi-
dend payments made by a paying agent on
behalf of a PFIC as described in § 1.6042-
2(a)(1)(i)(B). The second exception re-
lates to certain payments made by a stock
transfer agent with respect to a redemp-
tion of PFIC stock as described in
§ 1.6045-1(c)(3)(xiv). Both exceptions
apply if the agent (that is, the paying agent
or stock transfer agent, as applicable) sat-
isfies four requirements. First, the agent
must obtain, for each year that the agent
relies on this exception, a written state-
ment from the PFIC that states that the
corporation is described in section
1297(a). This written certification from
the PFIC must be signed by an officer of
the corporation, and the agent must have
no 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 (including
a reporting Model 2 FFI) or a reporting
Model 1 FFI in accordance with the re-
quirements of § 1.1471-3(d)(4) (as if, for
purposes of that section, the paying agent
or stock transfer agent were a withholding
agent and as if the PFIC were a payee).
Third, the agent must obtain, before the
year the payment would otherwise be re-
ported, a written certification representing
that the PFIC will report information with
respect to the payment (or the account to
which the payment is made) as required
by its reporting obligations under chapter
4 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 all
payments reportable under sections 6041
or 6045 that are made during the year for
which the agent knows the PFIC is not
reporting such information. Finally, the
agent must not also be acting in its capac-
ity as a custodian, nominee, or other agent
of the payee (that is, the PFIC share-
holder).

### D. Reliance on documentary evidence under § 1.6049-5(c)

Section 1.6049-5(c) of the final regu-
lations provides rules for determining
whether a payor may rely upon documen-
tary evidence instead of a withholding
certificate for purposes of determining a
payee's status under section 6049, pre-
scribes the types of documentation that
constitutes documentary evidence for this
purpose, and describes the requirements
for maintaining the documentary evi-
dence. To provide consistency between
the documentation standards applicable to
withholding agents in determining
whether withholding applies under chap-
ters 3 and 4, or an applicable IGA, these
temporary regulations revise the final reg-
ulations in several respects.

1\. Modification to § 1.6049-5(c)(1) and
Coordinating Change to § 1.6045-1(g)

Section 1.6049-5(c)(1) of the final reg-
ulations provides that a payor may rely on
documentary evidence described in
§ 1.6049-5(c)(1) (which may include, but
is not limited to, a certificate of residence
issued by an appropriate tax official of the
foreign government or other official doc-
uments issued by an authorized govern-
mental body) for payments made outside
the United States to an offshore account.
These temporary regulations modify this
rule 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 determining
whether a payor may rely upon documen-
tary evidence with respect to a payment
made outside the United States. These
temporary regulations define an offshore
obligation that is not an account of a bank
or other financial institution as, among

other things, an obligation with respect to
which the payor is either engaged in busi-
ness as a broker or dealer in securities or
a financial institution defined in § 1.1471-
5(e). Thus, these temporary regulations
expand the circumstances in which docu-
mentary evidence may be relied upon by,
among other things, allowing for the use
of documentary evidence beyond pay-
ments made to accounts of banks and
other financial institutions and allowing
for the use of documentary evidence by a
withholding agent consistent with chapter 4.

Second, the use of documentary evi-
dence is further expanded as a result of
changes made by these temporary regula-
tions to the description of payment outside
the United States under § 1.6049-
5(e), which eliminates the requirement for
payors to monitor whether certain U.S.
connections are present as a condition for
using documentary evidence (see section
III.F of this preamble for a description of
changes to § 1.6049-5(e)).

Third, these temporary regulations
modify the types of documentation that
qualify 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 the
same as those in the chapter 4 regulations.

Fourth, the requirements for payors to
maintain documentary evidence under
§ 1.6049-5(c)(1) of the final regulations
are also modified by these temporary reg-
ulations to be consistent with the require-
ments for maintaining documentary evi-
dence applicable to withholding agents in
the chapter 4 regulations.

In addition, § 1.6049-5(c)(1) of the fi-
nal regulations includes a rule providing
that a payor of broker proceeds described
in § 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 effect
the sale outside the United States. Because
reporting of gross proceeds is governed by
section 6045 and not section 6049, these
temporary regulations remove this rule
from § 1.6049-5(c)(1) and add a cross-
reference to a revised rule that is provided
in § 1.6045-1(g)(1)(i) addressing the cir-
cumstances under which a broker paying
gross proceeds may determine a payee's
status using documentary evidence. The
revised rule under § 1.6045-5(c)(1) de-

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fines a sale effected outside the United
States as a sale with respect to which a
broker completes the acts necessary to
effect the sale outside of the United States
provided that no office of the same broker
within the United States negotiated the
sale with the customer or received instruc-
tions with respect to the sale from the
customer. The revised rule also removes
the limitations on the use of documentary
evidence described in § 1.6045-
1(g)(3)(iii)(B) of the final regulations, ex-
cept in circumstances in which the broker
completes the acts necessary to effect to
sale at an office of the same broker in the
United States.

Finally, consistent with § 1.1441-
1(e)(3)(iii), these temporary regulations
clarify that documentary evidence is per-
mitted to be used with respect to payments
made to a foreign intermediary (in addi-
tion to a foreign partnership or foreign
trust), regardless of whether the obligation
with respect to which the payment is made
is maintained outside the United States.

The new definition of the term offshore
obligation in § 1.6049-5(c)(1) also ap-
plies for purposes of information report-
ing under sections 6041 and 6042.

### 2. Modifications to Documentation Standards Under § 1.6049-5(c)(4)

Section 1.6049-5(c)(4) of the final reg-
ulations provides special documentation
rules for certain offshore accounts main-
tained at a bank or other financial institu-
tion, which modify the documentation
standards of § 1.6049-5(c)(1) of the final
regulations for payments that are not sub-
ject to withholding under chapter 3 and
are not payments of certain U.S. source
short-term OID or bank deposit interest
paid to foreign intermediaries and flow-
through entities. These temporary regula-
tions in § 1.6049-5(c)(4) retain the mod-
ified documentation standards in
paragraph § 1.6049-5(c)(1) for such pay-
ments and provide additional allowances
for 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 for
participating FFIs (including reporting
Model 2 FFIs) to identify their account
holders. In particular, these temporary
regulations allow a payor that is a partic-

ipating FFI (including a reporting Model 2
FFI) or registered deemed-compliant FFI
to establish a payee's status based on
identification by a third-party credit
agency to the extent permitted in
§ 1.1471-4(c)(4)(ii). A payor that is a re-
porting Model 1 FFI or reporting Model 2
FFI may rely upon documentation or a
certification establishing a payee's status
under an applicable IGA. A payor that is
an FFI may also rely on a written state-
ment (as defined in § 1.1471-
1(b)(150)) to establish a payee's foreign
status in circumstances in which the state-
ment is allowed to be used by the FFI to
establish the chapter 4 status of the payee
without documentary evidence under the
chapter 4 regulations. Consistent with the
provision in the chapter 4 regulations that
permits reliance on documentary evidence
without a definitive renewal period for
payments made with respect to offshore
obligations, these temporary regulations
provide the same treatment for documen-
tation permitted to be relied upon by a
payor under § 1.6049-5(c)(4). Thus, a
payor may rely upon documentation under
§ 1.6049-5(c)(4) if the payor does not
have for the payee any of the indicia of
U.S. status described in § 1.1471-
3(c)(6)(ii)(C)(1) until the payor knows or
has reason to know of a change in circum-
stances. Finally, these temporary regula-
tions allow a payor to maintain a record of
documentary evidence instead of retaining
the actual documentation reviewed, which
is consistent with the rules for a partici-
pating FFI under chapter 4.

#### E. Coordination of chapter 4 with presumption rules under § 1.6049-5(d)

Section 1.6049-5(d) of the final regu-
lations provides general requirements for
identifying payees (referencing the rele-
vant requirements of § 1.1441-1) and pre-
sumptions that apply in the absence of
valid documentation for determining the
status of a payee as a U.S. or foreign
person for purposes of reporting under
section 6049.

#### 1. Payee Identification

In general, § 1.6049-5(d)(1) of the fi-
nal regulations provides that a payee of a
payment that is otherwise reportable un-

der section 6049 is identified pursuant to
certain provisions that apply to identify
the payee for purposes of chapter 3, with
two exceptions that apply to payments
that are not subject to withholding under
chapter 3. The first exception modifies the
treatment of a payment made to a U.S.
agent by treating any such payment as a
payment made to a U.S. payee (even if the
U.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 a
foreign bank or of a foreign insurance
company by treating the payment as made
to a foreign payee, regardless of the fact
that the U.S. branch is treated as a U.S.
person for payments of amounts subject to
withholding and is a U.S. payor.

The temporary regulations modify
these two exceptions to be consistent with
the rules under chapter 4 by clarifying that
these exceptions also do not apply with
respect to amounts that are withholdable
payments. The chapter 4 regulations pro-
vide that withholdable payments made to
U.S. agents and intermediaries and certain
U.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 to
a U.S. agent, and they clarify that the
second exception applies to payments
made to a territory financial institution
that 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 foreign
insurance company treated as a U.S. per-
son under that section).

#### 2. Presumptions in the Absence of Documentation 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 the
final regulations incorporates the pre-
sumption rules of § § 1.1441-1(b)(3) and
1.1441-5(d) and (e)(6) (general presump-
tion rules) to determine the classification
and other relevant characteristics of the
payee if a payment cannot be reliably as-
sociated with valid documentation. The
chapter 61 regulations incorporate these
rules regardless of whether a payment is
subject to withholding under chapter 3.
The presumption rule for payments with

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respect to offshore obligations provided
under the general presumption rules does
not apply to a payment that is not subject
to withholding under chapter 3.

These temporary regulations modify
this exception (which would not apply the
general presumption rules to a payment
that is not subject to withholding under
chapter 3) in the case of a withholdable
payment made to a payee that is an entity
by applying the presumption rule for pay-
ments with respect to offshore obligations
under § 1.1441-1(b)(3)(iii)(D) and
(b)(3)(vii)(B) regardless of whether the
payment is an amount subject to withhold-
ing under chapter 3. This avoids conflict-
ing presumptions under chapters 4 and 61
given 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 a
new presumption rule that applies to a
payment that is not subject to withholding
under chapter 3 made to a payee that is an
individual with respect to an offshore ob-
ligation. This new presumption rule will
limit the cases in which individuals are
presumed U.S. non-exempt recipients to
cases 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 final
regulations provides a 90-day grace pe-
riod during which a payor may treat an
account as held by a foreign person if
certain indications of foreign status are
present to avoid reporting under chapter
61 and backup withholding under section
3406. The chapter 61 regulations also pro-
vide rules for determining when the grace
period begins, depending on whether an
account is a new or preexisting account of
the payor. These temporary regulations
retain the 90-day grace period in
§ 1.6049-5(d)(2)(ii) without modification
but expand the types of accounts that will
be treated as existing accounts to include
accounts 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 subject
to withholding under chapter 3.

c. Joint owners under § 1.6049-5(d)(2)(iii)

These temporary regulations modify
the presumption rule with respect to with-
holdable payments made to joint owners
of a joint account consistent with the pre-
sumption rule described in § 1.1471-
3(f)(7). Thus, in the case of an amount
that is a withholdable payment made to a
joint account, the payment is presumed
made to a foreign payee that is a nonpar-
ticipating FFI if any joint payee does not
appear to be an individual. This modifica-
tion creates consistency between the pre-
sumption rules applicable under chapters
4 and 61 with respect to withholdable
payments made to joint accounts.

The joint account holder presumption
rule 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 final
regulations provides a presumption rule
for determining whether a payment of an
amount subject to withholding under
chapter 3 may be treated as made to a
foreign intermediary or flow-through en-
tity by cross-references to the applicable
presumption rules under § § 1.1441-
1(b)(3) and 1.1441-5(d) and (e)(6). These
temporary regulations add a cross-
reference to the chapter 4 regulations for
an amount that is a withholdable payment
under 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 regulations
clarify that the presumption rule under
§ 1.6049-5(d)(3)(ii), applicable to pay-
ments not subject to withholding under
chapter 3, does not apply to amounts that
are withholdable payments under chapter
4, consistent with the presumption rule
under chapter 4.

The chapter 61 regulations also pro-
vide a presumption rule for payments of
certain U.S. source short-term interest or
OID and bank deposit interest paid to a
foreign intermediary or flow-through en-
tity that treats the payment as made to a
U.S. non-exempt recipient. These tempo-
rary regulations under § 1.6049-

5(d)(3)(iii) remove bank deposit interest
from the existing rule to make it consis-
tent with the chapter 4 presumption rule
applicable to withholdable payments
(which includes such interest) made to a
foreign intermediary or flow-through en-
tity. See § 1.1471-3(f)(5) (treating the
payment as made to a nonparticipating
FFI). These temporary regulations also
provide that this presumption rule is not
required to be applied with respect to a
payment of U.S. source short-term OID
allocated on a withholding statement to a
chapter 4 withholding rate pool of U.S.
payees by an intermediary or flow-
through entity receiving the payment that
the payor documents to be a participating
FFI (including a reporting Model 2 FFI)
or registered deemed-compliant FFI (in-
cluding a reporting Model 1 FFI) under
the 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 in
which an amount is considered paid out-
side the United States for purposes of,
among other things, determining whether
a payor may rely upon documentary evi-
dence under § 1.6049-5(c)(1) of the final
regulations 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 does
not have certain specified connections
with the United States (U.S. connections),
such as a U.S. mailing address for the
payee. See § 1.6049-5(e)(1)(i) through
(e)(1)(ii) and (e)(2) through (e)(4) of the
final regulations. These temporary regula-
tions retain the requirement that a payor or
middleman complete the acts necessary to
effect payment outside the United States,
but remove the other U.S. connections
described in § 1.6049-5(e) of the final
regulations for the purpose of being al-
lowed to use documentary evidence under
§ 1.6049-5(c). This modification reduces
burdens by eliminating the need for a
payor or middleman to monitor whether
these 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

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discussion of the documentary evidence
rule in § 1.6049-5(c), see section III.D of
this 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 of
the term paid and received outside the
United States under § 1.6049-4(f)(16) (as
discussed in section III.A of this pream-
ble).

IV. Other Changes With Respect to
Backup Withholding Under Section 3406,
Claims for Refund or Credit Under Sec-
tion 6402, and Repeal of Portfolio Interest
Treatment for Certain Obligations Under
Section 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 with
respect to certain reportable payments and
provides an exception to backup with-
holding for such payments if they are
made outside the United States to payees
other than known U.S. persons or are pay-
ments to which withholding under chapter
3 has been applied. The final regulations
also provide the same exception for pay-
ments to which the documentary evidence
rule under § 1.6049-5(c) applies. These
temporary regulations modify this excep-
tion (consistent with the changes made by
these temporary regulations in
§ § 1.6049-4 and 1.6049-5) so that it
applies to a reportable payment that is
paid and received outside the United
States (as defined in § 1.6049-
4(f)(16)) with respect to an offshore obli-
gation (or a sale effected outside the
United States).

In addition, these temporary regula-
tions do not require backup withholding
under section 3406 for certain payments
with respect to which withholding under
chapter 4 has been applied, regardless of
whether the payee is a known U.S. person
to prevent duplicative withholding with
respect to the same payment.

B. Claims for credit or refund of
chapter 4 withholding under
§ 301.6402-3(e)

Section 6402 provides authority for the
Secretary to make a credit or refund of an

overpayment, and § 301.6402-3(e) of the
final regulations provides the general re-
quirements applicable to a claim for credit
or refund of income tax made by a non-
resident alien individual or foreign corpo-
ration, including a claim for amounts
withheld under chapter 3. These tempo-
rary regulations modify these rules to also
apply to claims for refund or credit of
amounts withheld under chapter 4. Similar
to the request for a claim for refund or
credit of an amount withheld under chap-
ter 3, these temporary regulations provide
that, for an overpayment of tax that re-
sulted from withholding under chapter 4, a
taxpayer must attach a copy of the Form
1042-S to the income tax return on which
the claim for refund or credit is made.
These temporary regulations eliminate,
however, the requirement that the Form
1042-S include the TIN of the recipient in
order for the claim to be valid. In addition,
these temporary regulations clarify that
the "other statement" that a taxpayer may
attach in lieu of the Form 1042-S or Form
8805, "Foreign Partner's Information
Statement of Section 1446 Withholding
Tax," is a statement described in
§ 1.1446-3(d)(2). Finally, to coordinate
claims under chapter 3 with those under
chapter 4, which permits a participating
FFI (including a reporting Model 2 FFI) to
file a collective claim for refund for
amounts withheld under chapter 4 with
respect to its account holders, these tem-
porary regulations provide that no claim
for refund or credit may be made by a
taxpayer for an amount repaid to the tax-
payer pursuant to a collective refund
claim filed by a participating FFI (includ-
ing a reporting Model 2 FFI).

C. Repeal of portfolio interest treatment
for foreign-targeted obligations under
§ 1.871-14

Section 1.871-14 of the final regula-
tions provides procedures for interest to
qualify as portfolio interest under section
871(h)(2) or section 881(c). Section 502
of the HIRE Act, among other things,
repealed section 163(f)(2)(B) with respect
to obligations that are not issued in regis-
tered form. In response to the elimination
of the foreign targeting rules by the HIRE
Act, the IRS and Treasury Department
issued Notice 2012-20, 2012-13 IRB 574

(March 26, 2012), which clarified the cir-
cumstances in which an obligation held in
a 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 of
interest paid with respect to foreign-
targeted registered obligations under
§ 1.871-14(e) as portfolio interest. Notice
2012-20 was amplified by Notice 2013-
43, 2013-31 IRB 113 (July 29, 2013),
which further postpones the elimination of
the allowance for foreign-targeted regis-
tered obligations to apply to obligations
issued before July 1, 2014. In response to
comments, these temporary regulations
provide an additional transitional exten-
sion until January 1, 2016, for the portfo-
lio interest treatment of foreign-targeted
registered obligations issued before that
date in order to afford the time for foreign
institutions to become qualified interme-
diaries in accordance with the forthcom-
ing amendment of the qualified interme-
diary agreement and governing revenue
procedure. Because of the continuing ap-
plicability of Notice 2012-20 (as ampli-
fied), these temporary regulations do not
revise the requirements for determining
whether an obligation is in registered form
under § 5f.103-1(c). Instead, these tempo-
rary regulations include updated citations
to sections 871(h)(2)(A) and (B) and
881(c)(2)(A) and (B) for the applicable
sunset dates of obligations issued in non-
registered form and of foreign-targeted
registered obligations and include provi-
sions to coordinate the exception from
withholding for portfolio interest with the
withholding requirements of chapter 4. In
addition, § 1.871-14(c)(2) of the final reg-
ulations describes cases in which a U.S.
person will be considered to have received
a statement that meets the requirements of
section 871(h)(5), which permits receipt
of the statement by an authorized foreign
agent (as described in § 1.1441-
7(c)(2)) of a U.S. person. To further co-
ordinate with revisions made by these
temporary 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 regulations
update references in § 1.871-14(c)(2) to
remove the term authorized foreign agent
and replace it with the term authorized
agent.

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The IRS and the Treasury Department
intend to issue additional amendments to
this and other regulatory provisions af-
fected by section 502 of the HIRE Act (for
example, the definition of an obligation in
registered form) in separate published
guidance and seek comments on the re-
quirements that should apply under such
amendments. Until such guidance is is-
sued, taxpayers may continue to rely on
Notice 2012-20 to treat an obligation as
an 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 a
return of information for each sale by a
customer of the broker if the broker ef-
fects the sale in the ordinary course of a
trade or business in which the broker
stands ready to effect sales to be made by
others. Exceptions to the reporting re-
quirement of § 1.6045-1(c)(2) of the final
regulations 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 is
considered to be an exempt foreign person
under § 1.6045-1(g). Example 8 in
§ 1.6045-1(g)(4) of the final regulations
deals with the sale of an obligation pay-
able 183 days or less from the date of
original issue. These temporary regula-
tions remove Example 8 from the final
regulations because the sale of a short-
term obligation is generally no longer sub-
ject to reporting under section 6045, and
former Example 9 is renumbered to be
Example 8.

## Special Analyses

It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13653. Therefore, a regulatory assess-
ment is not required. It also has been
determined 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
temporary regulations is contained in a
number 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 these
temporary regulations will be imple-
mented through use of the W-8 series of
forms, Form W-9, Form 1042, Form
1042-S, the 1099 series of forms, and
Form 8966, as well as certain income tax
returns (for example, Forms 1040, 1040-
NR, and 1120F) and Form 843 relating to
refunds. As a result, for purposes of the
Paperwork Reduction Act (44 U.S.C.
3507), the reporting burden associated
with the collection of information in these
temporary regulations will be reflected in
the information collection burden and
OMB control 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 displays
a valid OMB control number.

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

Section 202 of the Unfunded Mandates
Reform Act of 1995, Public Law 104-4,
requires that an agency prepare a costs
and benefits analysis and a budgetary im-
pact statement before promulgating a rule
that may result in the expenditure by
State, local, and tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year. If a
budgetary impact statement is required,
section 205 of the Unfunded Mandates
Reform Act requires an agency to identify
and consider a reasonable number of reg-
ulatory alternatives before promulgating a
rule. The Treasury Department and the
IRS have determined that there is no fed-
eral mandate imposed by this rulemaking
that may result in the expenditure by
State, local, and tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year.

For the applicability of the Regulatory
Flexibility 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 rulemaking
published in the Proposed Rules section in
this issue of the Bulletin. Pursuant to sec-

tion 7805(f) of the Internal Revenue Code,
these regulations have been submitted to
the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on their impact on small business.

## Drafting Information

The principal authors of these regula-
tions are John Sweeney, Joshua Rabon,
Subin Seth, and Nancy Lee of the Office
of Associate Chief Counsel (Interna-
tional). However, other personnel from
the 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, and
301 are amended as follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read in part 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 of
the 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 of
tax on interest of nonresident alien
individuals and foreign corporations
received from certain portfolio debt
investments.

* * * * *

(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).
* * * * *

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(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 of
tax on interest of nonresident alien
individuals and foreign corporations
received from certain portfolio debt
investments (temporary).

(a) [Reserved]. For further guidance,
see § 1.871-14(a).

(b) Rules concerning obligations in
bearer form before March 19, 2012-(1)
In general. Interest (including original is-
sue discount) with respect to an obligation
in bearer form is portfolio interest within
the meaning of section 871(h)(2)(A) or
881(c)(2)(A) only if it is paid with respect
to an obligation issued after July 18, 1984,
and issued before March 19, 2012, that is
described in section 163(f)(2)(B), as in
effect prior to the amendment by section
502 of the Hiring Incentives to Restore
Employment Act of 2010 (HIRE Act),
Public Law 111-147, and the regulations
under that section and an exception under
section 871(h) or 881(c) does not apply.
Any obligation that is not in registered
form as defined in paragraph (c)(1)(i) of
this section is an obligation in bearer
form.

(2) Coordination with withholding and
reporting rules. For an exemption from
withholding 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 may
apply to withholdable payments (as de-
fined in § 1.1471-4(b)(145)) made on or
after July 1, 2014, with respect to an
agreement or instrument that is not treated
as an obligation outstanding before March
19, 2012. For purposes of the preceding
sentence, the terms obligation and out-
standing are described in § 1.1471-
2(b)). See also § 1.1471-4(d)(6) for the
reporting 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)). For
rules relating to an exemption from Form
1099 reporting and backup withholding
under 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 purposes
of paragraph (c)(1)(ii)(C) of this section, a
U.S. person will be considered to have
received a statement that meets the re-
quirements of section 871(h)(5) if either it
complies with one of the procedures de-
scribed in this paragraph (c)(2) and does
not have actual knowledge or reason to
know that the beneficial owner is a U.S.
person or it complies with the procedures
described in paragraph (d) or (e) of this
section (to the extent applicable).

(i) The U.S. person (or its authorized
agent described in § 1.1441-7(c)(2)) can
reliably associate the payment with docu-
mentation upon which it can rely to treat
the 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) for
rules regarding reliable association with
documentation.

(ii) The U.S. person (or its authorized
agent described in § 1.1441-7(c)(2)) can
reliably associate the payment with a
withholding 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 person
claiming to be a withholding foreign trust.

(iii) The U.S. person (or its authorized
agent described in § 1.1441-7(c)(2)) can
reliably associate the payment with a
withholding certificate described in
§ 1.1441-1(e)(3)(ii) from a person repre-
senting to be a qualified intermediary that
has assumed primary withholding respon-
sibility for the payment in accordance
with § 1.1441-1(e)(5)(iv) or a qualified
intermediary that has provided a with-
holding statement that meets the require-
ments of § 1.1441-1(e)(5)(v)(C) or that
includes the payment in a withholding rate

pool for payments excepted from with-
holding.

(iv) The U.S. person (or its authorized
agent described in § 1.1441-7(c)(2)) can
reliably associate the payment with a
withholding certificate described in
§ 1.1441-1(e)(3)(v) from a person claim-
ing to be a U.S. branch of a foreign bank
or of a foreign insurance company that is
described in § 1.1441-1(b)(2)(iv)(A) or a
U.S. branch designated in accordance
with § 1.1441-1(b)(2)(iv)(E).

(3) Time for providing certificate or
documentary evidence-(i) General rule.
Interest on a registered obligation shall
qualify as portfolio interest if the with-
holding certificate or documentary evi-
dence that must be provided is furnished
before expiration of the beneficial owner's
period of limitation for claiming a refund
of tax with respect to such interest. See,
however, § 1.1441-1(b)(7) for conse-
quences to a withholding agent that makes
a payment without withholding even
though it cannot reliably associate the
payment with the documentation prior to
the payment. If a withholding agent with-
holds an amount under chapter 3 of the
Code because it cannot reliably associate
the payment with the documentation for
the beneficial owner on the date of pay-
ment, the beneficial owner may neverthe-
less claim the benefit of an exemption
from tax under this section by claiming a
refund or credit for the amount withheld
based upon the procedures described in
§ § 1.1464-1 and 301.6402-3(e) of this
chapter. See § 1.1474-5 and § 301.6402-
3(e) for the allowance and requirements
for a refund with respect to an amount
(including a payment of interest) that was
withheld upon under chapter 4 of the
Code. In the alternative, adjustments to
any amount of overwithheld tax may be
made under the procedures described in
§ 1.1461-2(a) for a payment withheld
upon under chapter 3 of the Code or in
§ 1.1474-2 for a payment withheld upon
under chapter 4 of the Code.

(ii) [Reserved]. For further guidance,
see § 1.871-14(c)(3)(ii).

(4) Coordination with withholding and
reporting rules. For an exemption from
withholding under section 1441 with re-
spect to obligations described in this para-
graph (c)(4), see § 1.1441-1(b)(4)(i). For
rules applicable to withholding certifi-

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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 cannot
reliably 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). For
rules relating to reporting on Forms 1042
and 1042-S, see § 1.1461-1(b) and (c).
For rules relating to an exemption from
Form 1099 reporting and backup with-
holding under section 3406, see section
6049 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 under
sections 1471 and 1472 that may apply
notwithstanding the exemption for pay-
ments of portfolio interest under section
1441, 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 text
through (d)(3)(iv).

(e) Foreign-targeted registered obliga-
tions-(1) General rule. The statement
described in paragraph (c)(1)(ii) of this
section is not required with respect to in-
terest paid on an obligation issued before
January 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 paid
by a U.S. person, a withholding foreign
partnership, 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 the
United States, provided that the registered
owner is a financial institution described
in section 871(h)(5)(B). In that case, the
U.S. person otherwise required to deduct
and withhold tax may treat the interest as
portfolio interest if it does not have actual
knowledge that the beneficial owner is a
United States person and if it receives the
certificate described in paragraph (e)(3)(i)
of this section from a financial institution
or member of a clearing organization,
which member is the beneficial owner of
the 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 this
section.

(2) through (i)(2) [Reserved]. For fur-
ther guidance, see § 1.871- (12).
14(e)(2) through (i)(2).

(3) Effective/applicability date. The
rules of paragraphs (b)(2), (c)(3)(i), and
(c)(4) of this section apply to payments of
interest made after June 30, 2014. (For
payments of interest made before July 1,
2014, see paragraphs (b)(2), (c)(3)(i), and
(c)(4) of this section as in effect prior to
February 28, 2017.)

(j) Expiration date. The applicability of
this section expires on or before February
28, 2017.

Par. 4. Section 1.1441-1 is amended
by:

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

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 the
deduction and withholding of tax on
payments 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).

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(3) * * *

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

* * * * *

(iii) [Reserved]. For further guidance,
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 further
guidance, 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)(5).

* * * * *

(10) [Reserved]. For further guidance,
see § 1.1441-1T(c)(10).

* * * * *

(12) [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).

* * * * *

(25) [Reserved]. For further guidance,
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)(2).

(3) [Reserved]. For further guidance,
see § 1.1441-1T(e)(3)(iv)(D)(3).

(4) [Reserved]. For further guidance,
see § 1.1441-1T(e)(3)(iv)(D)(4).

(5) [Reserved]. For further guidance,
see § 1.1441-1T(e)(3)(iv)(D)(5).

(6) [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) [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)(9).

(10) [Reserved]. For further guidance,
see § 1.1441-1T(e)(4)(ii)(B)(10).

(11) [Reserved]. For further guidance,
see § 1.1441-1T(e)(4)(ii)(B)(11).

(12) [Reserved]. For further guidance,
see § 1.1441-1T(e)(4)(ii)(B)(12).

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(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 the
deduction and withholding of tax on
payments to foreign persons
(temporary).

(a) Purpose and scope. This section,
§ § 1.1441-2 through 1.1441-9, and
1.1443-1 provide rules for withholding
under sections 1441, 1442, and 1443
when a payment is made to a foreign
person. This section provides definitions
of terms used in chapter 3 of the Internal
Revenue Code (Code) and regulations
thereunder. It prescribes procedures to de-
termine whether an amount must be with-
held under chapter 3 of the Code and
documentation that a withholding agent

may rely upon to determine the status of a
payee or a beneficial owner as a U.S.
person or as a foreign person and other
relevant characteristics of the payee that
may affect a withholding agent's obliga-
tion to withhold under chapter 3 of the
Code and the regulations thereunder. Spe-
cial procedures regarding payments to for-
eign persons that act as intermediaries are
also provided. Section 1.1441-2 defines
the income subject to withholding under
section 1441, 1442, and 1443 and the reg-
ulations under these sections. Section
1.1441-3 provides rules regarding the
amount subject to withholding and rules
for coordinating withholding under this
section with withholding under section
1445 and under chapter 4 of the Code.
Section 1.1441-4 provides exemptions
from withholding for, among other things,
certain income effectively connected with
the conduct of a trade or business in the
United States, including certain compen-
sation for the personal services of an in-
dividual. Section 1.1441-5 provides rules
for withholding on payments made to
flow-through entities and other similar ar-
rangements. Section 1.1441-6 provides
rules 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 rules
governing 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 payments
to a foreign government, an international
organization, a foreign central bank of
issue, or the Bank for International Settle-
ments. Sections 1.1441-9 and 1.1443-1
provide rules for relying on claims of ex-
emption from withholding for payments
to foreign tax exempt organizations and
foreign private foundations.

(b) General rules of withholding-(1)
Requirement to withhold on payments to
foreign persons. A withholding agent
must withhold 30-percent of any payment
of an amount subject to withholding made
to a payee that is a foreign person unless it
can reliably associate the payment with
documentation upon which it can rely to
treat the payment as made to a payee that
is a U.S. person or as made to a beneficial
owner that is a foreign person entitled to a
reduced rate of withholding. However, a
withholding agent making a payment to a

foreign person need not withhold where
the foreign person assumes responsibility
for withholding on the payment under
chapter 3 of the Code and the regulations
thereunder as a qualified intermediary (see
paragraph (e)(5) of this section), as a U.S.
branch of a foreign person (see paragraph
(b)(2)(iv) of this section), as a withholding
foreign partnership (see § 1.1441-
5(c)(2)(i)), or as a withholding foreign
trust (see § 1.1441-5(e)(5)(v)). Withhold-
ing is also not required under this section
when withholding under chapter 4 was
applied to the payment. See § 1.1441-
3(a)(2). This section (dealing with general
rules of withholding and claims of foreign
or U.S. status by a payee or a beneficial
owner), and § § 1.1441-4, 1.1441-5,
1.1441-6, 1.1441-8, 1.1441-9, and
1.1443-1 provide rules for determining
whether documentation is required as a
condition 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 upon
which a withholding agent may rely in
order to reduce such rate. Paragraph (b)(2)
of this section prescribes the rules for de-
termining who the payee is, the extent to
which a payment is treated as made to a
foreign payee, and reliable association of
a payment with documentation. Paragraph
(b)(3) of this section describes the appli-
cable presumptions for determining the
payee's status as U.S. or foreign and the
payee's other characteristics (i.e., as an
owner or intermediary, as an individual,
partnership, corporation, etc.). Paragraph
(b)(4) of this section lists the types of
payments for which the 30-percent with-
holding rate may be reduced. Because the
treatment of a payee as a U.S. or a foreign
person also has consequences for pur-
poses of making an information return
under the provisions of chapter 61 of the
Code and for withholding under other pro-
visions of the Code, such as sections
3402, 3405 or 3406, paragraph (b)(5) of
this section lists applicable provisions out-
side chapter 3 of the Code that require
certain payees to establish their foreign
status (for example, in order to be exempt
from information reporting). Paragraph
(b)(6) of this section describes the with-
holding obligations of a foreign person
making a payment that it has received in
its capacity as an intermediary. Paragraph

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(b)(7) of this section describes the liability
of a withholding agent that fails to with-
hold at the required 30-percent rate in the
absence 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 section
deals with determining the status of the
payee when the payment is jointly owned.
See paragraph (c)(6) of this section for a
definition 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 the
definition of a payment and when it is
considered made. Except as otherwise
provided, the provisions of this section
apply only for purposes of determining a
withholding agent's obligation to with-
hold under chapter 3 of the Code and the
regulations 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 payee
is the person to whom a payment is made,
regardless of whether such person is the
beneficial owner of the amount (as defined
in paragraph (c)(6) of this section). A for-
eign payee is a payee who is a foreign
person. A U.S. payee is a payee who is a
U.S. person. Generally, the determination
by a withholding agent of the U.S. or
foreign status of a payee and of its other
relevant 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 withholding
certificate that is a Form W-8 or a Form
8233 (indicating foreign status of the
payee or beneficial owner) or a Form W-9
(indicating U.S. status of the payee). The
provisions 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 applicable
presumptions in the absence of documen-
tation, apply only to payments of amounts
subject to withholding under chapter 3 of
the Code (within the meaning of
§ 1.1441-2(a)). However, for a payment
that is both an amount subject to with-
holding under chapter 3 and a withhold-
able payment under chapter 4, first apply
the rules of § 1.1471-3 for determining
the payee of a withholdable payment un-

der chapter 4 and applicable presumptions
in the absence of documentation applica-
ble to such payments. See also § 1.6049-
5(d) for payments of amounts that are not
subject to withholding under chapter 3 of
the Code (or the regulations thereunder)
but that may be reportable under provi-
sions of chapter 61 of the Code (and the
regulations thereunder). See paragraph (d)
of this section for documentation upon
which the withholding agent may rely in
order to treat the payee or beneficial
owner as a U.S. person. See paragraph (e)
of this section for documentation upon
which the withholding agent may rely in
order to treat the payee or beneficial
owner as a foreign person. For applicable
presumptions of status in the absence of
documentation, see paragraph (b)(3) of
this 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.

(ii) [Reserved]. For further guidance,
see § 1.1441-1(b)(2)(ii).

(iii) Payments to wholly-owned enti-
ties-(A) Foreign-owned domestic entity.
A payment to a wholly-owned domestic
entity that is disregarded for federal tax
purposes under § 301.7701-2(c)(2) of this
chapter as an entity separate from its
owner and whose single owner is a for-
eign person shall be treated as a payment
to the owner of the entity, subject to the
provisions of paragraph (b)(2)(iv) of this
section. For purposes of this paragraph
(b)(2)(iii)(A), a domestic entity means a
person 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 be
treated as a corporation. For example, a
limited liability company, A, organized
under the laws of the State of Delaware,
opens an account at a U.S. bank. Upon
opening of the account, the bank requests
A to furnish a Form W-9 as required
under section 6049(a) and the regulations
under that section. A does not have an
election in effect under § 301.7701-
3(c)(1)(i) of this chapter and, therefore, is
not treated as an organization taxable as a
corporation, including for purposes of the
exempt recipient provisions in § 1.6049-
4(c)(1). If A has a single owner and the
owner is a foreign person (as defined in
paragraph (c)(2) of this section), then A
may not furnish a Form W-9 because it
may not represent that it is a U.S. person

for purposes of the provisions of chapters
3, 4, and 61 of the Code, and section 3406.
Therefore, A must furnish a Form W-8
with the name, address, and taxpayer
identifying number (TIN) (if required) of
the foreign person who is the single owner
in the same manner as if the account were
opened directly by the foreign single
owner. See § § 1.894-1T(d) and 1.1441-
6(b)(2) for special rules where the entity's
owner 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 insurance
companies -(A) U.S. branch treated as a
U.S. person in certain cases. A payment
to a U.S. branch of a foreign person is a
payment to a foreign person. However, a
U.S. branch of a participating FFI, regis-
tered deemed compliant FFI or NFFE that
is described in this paragraph
(b)(2)(iv)(A) may agree to be treated as a
U.S. person for purposes of withholding
on specified payments to the U.S. branch.
See § 1.1471-3(d) for rules regarding how
a withholding agent may determine the
chapter 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 respect
to all other withholding agents, including
when 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. branch
is treated as a payee that is a U.S. person.
Notwithstanding the preceding sentence, a
withholding agent making a payment to a
U.S. branch treated as a U.S. person under
this paragraph (b)(2)(iv)(A) shall not treat
the branch as a U.S. person for purposes
of reporting the payment made to the
branch. Therefore, a payment to such U.S.
branch shall be reported on Form 1042-S
under § 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 amount
as defined in § 1.1471-1(b)(16). Further, a
U.S. branch that is treated as a U.S. person
under this paragraph (b)(2)(iv)(A) shall
not 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

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W-8IMY as provided in paragraph
(e)(3)(v) of this section and not a Form
W-9. An agreement to treat a U.S. branch
as a U.S. person must be evidenced by a
U.S. branch withholding certificate de-
scribed in paragraph (e)(3)(v) of this sec-
tion furnished by the U.S. branch to the
withholding agent. A U.S. branch de-
scribed in this paragraph (b)(2)(iv)(A) is
any U.S. branch of a foreign bank subject
to regulatory supervision by the Federal
Reserve Board or a U.S. branch of a for-
eign insurance company required to file an
annual statement on a form approved by
the National Association of Insurance
Commissioners with the Insurance De-
partment of a State, a Territory, or the
District 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 as
a U.S. person under this paragraph
(b)(2)(iv)(A) (see §601.601(d)(2) of this
chapter). See § 1.6049-5(c)(5)(vi) for the
treatment of U.S. branches as U.S. payors
if they make a payment that is subject to
reporting under chapter 61 of the Internal
Revenue Code. Also see § 1.6049-
5(d)(1)(ii) for the treatment of U.S.
branches as foreign payees under chapter
61 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 the
withholding agent when no agreement is
in effect to treat the U.S. branch as a U.S.
person for such payment, to the extent the
withholding agent can reliably associate
the payment with such certificates or doc-
umentation;

(3) As a payment to a foreign person of
income that is effectively connected with
the conduct of a trade or business in the
United States if the withholding agent has
obtained an EIN for the branch and cannot
reliably associate the payment with a
withholding 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 of
income that is not effectively connected
with the conduct of a trade or business in
the United States if the withholding agent
has not obtained an EIN for the branch
and cannot reliably associate the payment
with a withholding certificate from the
U.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) of
this section shall be treated as a separate
person for purposes of section 1441(a)
and all other provisions of chapters 3 and
4 of the Internal Revenue Code and the
regulations 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 furnish
under paragraph (e)(3)(v) of this section)
for any payment that it receives as such.
Thus, the U.S. branch shall be responsible
for withholding on the payment in accor-
dance with the provisions under chapters
3 and 4 of the Internal Revenue Code and
the regulations thereunder and other ap-
plicable withholding provisions of the In-
ternal Revenue Code. For this purpose, it
shall obtain and retain documentation
from payees or beneficial owners of the
payments that it receives as a U.S. person
in the same manner as if it were a separate
entity. For example, if a U.S. branch re-
ceives a payment on behalf of its home
office and the home office is a qualified
intermediary, the U.S. branch must obtain
a qualified intermediary withholding cer-
tificate described in paragraph (e)(3)(ii) of
this section from its home office. In addi-
tion, a U.S. branch that has not provided
documentation to the withholding agent
for a payment that is, in fact, not effec-
tively connected income is a withholding
agent with respect to that payment. See
paragraph (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 are
not described in paragraph (b)(2)(iv)(A)
of this section to the extent permitted by

the IRS. Any such branch must establish
that its situation is analogous to that of a
U.S. branch described in paragraph
(b)(2)(iv)(A) of this section. In the alter-
native, the branch must establish that the
withholding and reporting requirements
under chapter 3 of the Code and the reg-
ulations thereunder impose an undue ad-
ministrative burden and that the collection
of the tax imposed by section 871(a) or
881(a) on the foreign person (or its mem-
bers in the case of a foreign partnership)
will not be jeopardized by the exemption
from withholding. Generally, an undue
administrative burden will be found to
exist in a case where the person entitled to
the income, such as a foreign insurance
company, receives from the withholding
agent income on securities issued by a
single corporation, some of which is, and
some of which is not, effectively con-
nected with conduct of a trade or business
within the United States and the criteria
for determining the effective connection
are unduly difficult to apply because of
the 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 person
entitled to the income complies with such
other requirements as may be imposed by
the IRS and unless the IRS is satisfied that
the collection of the tax on the income
involved will not be jeopardized by the
exemption from withholding. The IRS
may prescribe such procedures as are nec-
essary to make these determinations (see
§ 601.601(d)(2) of this chapter).

(v) [Reserved]. For further guidance,
see § 1.1441-1(b)(2)(v).

(vi) Other payees. A payment to a per-
son described in § 1.6049-4(c)(1)(ii) that
the withholding agent would treat as a
payment to a foreign person without ob-
taining documentation for purposes of in-
formation reporting under section 6049 (if
the payment were interest) is treated as a
payment to a foreign payee for purposes
of chapter 3 of the Code and the regula-
tions thereunder (or to a foreign beneficial
owner to the extent provided in paragraph
(e)(1)(ii)(A) (6) or (7) of this section).
Further, a payment that the withholding
agent can reliably associate with docu-
mentary evidence described in § 1.6049-
5(c)(1) relating to the payee is treated as a
payment to a foreign payee. See § 1.1441-

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5(b)(1) and (c)(1) for payee determina-
tions for payments to partnerships. See
§ 1.1441-5(e) for payee determinations
for payments to foreign trusts or foreign
estates.

(vii) [Reserved]. For further guidance,
see § 1.1441-1(b)(2)(vii) introductory
text and (b)(2)(vii)(A).

(B) Special rules applicable to a with-
holding certificate from a nonqualified in-
termediary or flow-through entity-(1) In
the case of a payment made to a nonquali-
fied intermediary, a flow-through entity
(as defined in paragraph (c)(23) of this
section), or a U.S. branch described in
paragraph (b)(2)(iv) of this section (other
than a U.S. branch that is treated as a U.S.
person), a withholding agent can reliably
associate the payment with valid docu-
mentation only to the extent that, prior to
the payment, the withholding agent can
allocate the payment to a valid nonquali-
fied intermediary, flow-through, or U.S.
branch withholding certificate (and a
withholding certificate provided by a non-
participating FFI with respect to a portion
of a payment that is a withholdable pay-
ment allocated to an exempt beneficial
owner as described in § 1.1471-
3(c)(3)(iii)(B)(4)); the withholding agent
can reliably determine how much of the
payment relates to valid documentation
provided by a payee as determined under
paragraph (c)(12) of this section (i.e., a
person that is not itself an intermediary,
flow-through entity, or U.S. branch); and
the withholding agent has sufficient infor-
mation to report the payment on Form
1042-S or Form 1099, if reporting is re-
quired. See, however, paragraph (e)(3)(iv)
of this section for when a nonqualified
intermediary may report payees to the
withholding agent in a chapter 4 withhold-
ing rate pool, in which case a withholding
agent need not associate the portion of the
payment attributable to such payees with
documentation from each such payee. See
also paragraph (e)(3)(iii) of this section
for 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-through
withholding certificate (including the re-
quirements for a withholding certificate
associated with a withholdable payment).

Thus, a payment cannot be reliably asso-
ciated with valid documentation provided
by a payee to the extent such documenta-
tion is lacking or unreliable, or to the
extent that information required to allo-
cate and report all or a portion of the
payment to each payee is lacking or unre-
liable. If a withholding certificate attached
to an intermediary, U.S. branch, or flow-
through withholding certificate is another
intermediary, U.S. branch, or flow-
through withholding certificate, the rules
of this paragraph (b)(2)(vii)(B) apply by
treating the share of the payment allocable
to the other intermediary, U.S. branch, or
flow-through entity as if the payment were
made directly to such other entity. See
paragraph (e)(3)(iv)(D) of this section for
rules permitting information allocating a
payment to documentation to be received
after the payment is made.

(2) The rules of paragraph
(b)(2)(vii)(B)(1) of this section are illus-
trated by the following examples. Each
example illustrates a payment that is not a
withholdable payment and, therefore, nei-
ther the chapter 4 status of the NQI nor
payee specific documentation is required
to be provided to the withholding agent
(and no withholding applies under chapter
4 on each payment). See paragraph
(e)(3)(iv)(C) of this section for the re-
quirements of a withholding statement
provided by a nonqualified intermediary
that receives a withholdable payment and
for an example illustrating the require-
ments of an NQI providing a withholding
statement to a withholding agent for a
withholdable payment.

Example 1. WA, a withholding agent, makes a
payment of U.S. source interest with respect to a
grandfathered obligation as described in § 1.1471-
2(b) (and thus the payment is not a withholdable
payment) to NQI, an intermediary that is a nonquali-
fied intermediary. NQI provides a valid intermediary
withholding certificate under paragraph (e)(3)(iii) of
this section. NQI does not, however, provide valid
documentation from the persons on whose behalf it
receives the interest payment, and, therefore, the
interest payment cannot be reliably associated with
valid documentation provided by a payee. WA must
apply the presumption rules of paragraph (b)(3)(v) of
this section to the payment.

Example 2. The facts are the same as in Example
1, except that NQI does attach valid beneficial owner
withholding 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 owner
withholding certificate. The interest payment cannot
be reliably associated with valid documentation from
a payee and WA must apply the presumption rules of
paragraph (b)(3)(v) of this section to the payment.
See, however, paragraph (e)(3)(iv)(D) of this section
providing for alternative procedures that allow a
nonqualified intermediary to provide allocation in-
formation after a payment is made.

Example 3. The facts are the same as in Example
2, except that NQI provides allocation information
associated with its intermediary withholding certifi-
cate indicating that 25% of the interest payment is
allocable to A and 25% to B. NQI does not provide
any allocation information regarding the remaining
50% of the payment. WA may treat 25% of the
payment as made to A and 25% as made to B. The
remaining 50% of the payment cannot be reliably
associated with valid documentation from a payee,
however, since NQI did not provide information
allocating the payment. Thus, the remaining 50% of
the payment is subject to the presumption rules of
paragraph (b)(3)(v) of this section.

Example 4. WA makes a payment of U.S. source
interest to NQI1, an intermediary that is not a qual-
ified intermediary. NQI1 provides WA with a valid
nonqualified intermediary withholding certificate as
well valid beneficial owner withholding certificates
from A and B and a valid nonqualified intermediary
withholding certificate from NQI2. NQI2 has pro-
vided valid beneficial owner documentation from C
sufficient to establish C's status as a foreign person.
Based on information provided by NQI1, WA can
allocate 20% of the interest payment to A, and 20%
to B. Based on information that NQI2 provided
NQI1 and that NQI1 provides to WA, WA can
allocate 60% of the payment to NQI2, but can only
allocate one half of that payment (30%) to C. There-
fore, WA cannot reliably associate the remainder of
the payment made to NQI2 (30% of the total pay-
ment) with valid documentation and must apply the
presumption 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 qualified
intermediary that does not assume pri-
mary withholding responsibility-(1) If a
payment is made to a qualified intermedi-
ary that does not assume primary with-
holding responsibility under chapter 3 of
the Internal Revenue Code or primary
Form 1099 reporting and backup with-
holding responsibility under chapter 61
and section 3406 of the Internal Revenue
Code for the payment, a withholding
agent can reliably associate the payment
with valid documentation only to the ex-
tent that, prior to the payment, the with-
holding agent has received a valid quali-
fied intermediary withholding certificate
described in paragraph (e)(3)(ii) of this
section and the withholding agent can re-
liably determine the portion of the pay-
ment that relates to a chapter 3 withhold-

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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) as
defined in paragraph (c)(48) of this sec-
tion, or a pool attributable to U.S. exempt
recipients. In the case of a withholding
rate pool attributable to a U.S. non-
exempt recipient, a payment cannot be
reliably 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 of
the form, the name, address, and TIN, if
available, of the U.S. person) and suffi-
cient information for the withholding
agent to report the payment on Form
1099. See, however, paragraph
(e)(5)(v)(C)(3) of this section for alterna-
tive procedures for allocating payments
among U.S. non-exempt recipients and
paragraphs (e)(5)(iv)(C)(1) and (2) of this
section for when a chapter 4 withholding
rate pool of U.S. payees may be provided
by 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 a
payment of U.S. source dividends that is a withhold-
able payment to QI. QI provides WA with a valid
qualified intermediary withholding certificate on
which it indicates that it does not assume primary
withholding responsibility under chapters 3 and 4 or
primary Form 1099 reporting and backup withhold-
ing responsibility under chapter 61 and section 3406.
QI does not provide any information allocating the
dividend to withholding rate pools. WA cannot reli-
ably associate the payment with valid payee docu-
mentation and therefore must apply the presumption
rules applicable to a withholdable payment under
§ 1.1471-3(f)(5) to determine the status of the payee
for purposes of chapter 4. See Example 2 for an
application of the presumption rules under § 1.1471-
3(f).

Example 2. WA makes a payment of U.S. source
dividends 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. QI
has obtained valid documentation from A and B
establishing their entitlement to a 15% rate of tax on
U.S. source dividends under an income tax treaty. C
is a U.S. person that is an exempt recipient as defined
in paragraph (c)(20) of this section. D and E are U.S.
non-exempt recipients who have provided Forms
W-9 to QI. A, B, C, D, and E are each entitled to
20% of the dividend payment. QI provides WA with
a valid qualified intermediary withholding certificate
as described in paragraph (e)(3)(ii) of this section

with which it associates the Forms W-9 from D and
E. QI associates the following allocation information
with its qualified intermediary withholding certifi-
cate: 40% of the payment is allocable to the 15%
chapter 3 withholding rate pool, and 20% is allocable
to each of D and E. QI does not provide any alloca-
tion information regarding the remaining 20% of the
payment. WA cannot reliably associate 20% of the
payment with valid documentation and, therefore,
must apply the presumption rules applicable to a
withholdable payment. Because QI is receiving a
withholdable payment as an intermediary, under
paragraph (b)(3)(iii) of this section WA must apply
the presumption rule of § 1.1471-3(f)(5) to treat the
portion 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 tax
under chapter 4. See § 1.1441-3(a)(2) permitting
WA to credit the amount withheld under chapter 4
against the liability for tax due on the payment under
section 1441. The 40% of the payment allocable to
the 15% withholding rate pool, and the portion of the
payments allocable to D and E are payments that can
be reliably associated with documentation.

(D) Special rules applicable to a with-
holding certificate provided by a qualified
intermediary that assumes primary with-
holding responsibility under chapter 3 of
the Internal Revenue Code-(1) In the
case of a payment made to a qualified
intermediary that assumes primary with-
holding responsibility under chapter 3 of
the Internal Revenue Code with respect to
that payment (but does not assume pri-
mary Form 1099 reporting and backup
withholding responsibility under chapter
61 of the Internal Code and section 3406),
a withholding agent can reliably associate
the payment with valid documentation
only to the extent that, prior to the pay-
ment, the withholding agent has received
a valid qualified intermediary withholding
certificate and the withholding agent can
reliably determine the portion of the pay-
ment that relates to the withholding rate
pool for which the qualified intermediary
assumes primary withholding responsibil-
ity and the portion of the payment attrib-
utable to withholding rate pools for each
U.S. non-exempt recipient for whom the
qualified intermediary has provided a
Form W-9 (or, in absence of the form, the
name, address, and TIN, if available, of
the U.S. non-exempt recipient). See para-
graph (e)(5)(iv) of this section (requiring a
qualified intermediary assuming primary
withholding responsibility under chapter 3
to 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 payments
made to U.S. persons that are not exempt
recipients and paragraphs (e)(5)(v)(C)(1)
and (2) of this section for when a qualified
intermediary may provide a chapter 4
withholding rate pool of U.S. payees to a
withholding agent instead of documenta-
tion with respect to each U.S. non-exempt
recipient.

(2) Examples. The following examples
illustrate 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-exempt
recipients when a qualified intermediary
that is an FFI reports a U.S. account under
chapter 4.

Example 1. WA makes a payment of U.S. source
interest that is a withholdable payment to QI, a
qualified intermediary that is an NFFE. QI provides
WA with a withholding certificate that indicates that
QI will assume primary withholding responsibility
under chapters 3 and 4 of the Internal Revenue Code
with respect to the payment. In addition, QI attaches
a Form W-9 from A, a U.S. non-exempt recipient, as
defined in paragraph (c)(21) of this section, and
provides the name, address, and TIN of B, a U.S.
person that is also a non-exempt recipient but who
has not provided a Form W-9. QI associates a with-
holding statement with its qualified intermediary
withholding certificate indicating that 10% of the
payment is attributable to A, and 10% to B, and that
QI will assume primary withholding responsibility
for chapters 3 and 4 with respect to the remaining
80% of the payment. WA can reliably associate the
entire payment with valid documentation. Although
under the presumption rule of paragraph (b)(3)(v) of
this section, an undocumented person receiving U.S.
source interest is generally presumed to be a foreign
person, WA has actual knowledge that B is a U.S.
non-exempt recipient and therefore must report the
payment on Form 1099 and backup withhold on the
interest payment under section 3406.

Example 2. The facts are the same as in Example
1, except that no information has been provided for
the 20% of the payment that is allocable to A and B.
Thus, QI has accepted withholding responsibility for
80% of the payment, but has provided no informa-
tion for the remaining 20%. In this case, 20% of the
payment cannot be reliably associated with valid
documentation, and, under paragraph (b)(3)(iii) of
this 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 qualified
intermediary that assumes primary Form
1099 reporting and backup withholding
responsibility but not primary withholding
under chapter 3-(1) If a payment is
made to a qualified intermediary that as-
sumes primary Form 1099 reporting and

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backup withholding responsibility for the
payment (but does not assume primary
withholding responsibility under chapters
3 and 4 of the Internal Revenue Code), a
withholding agent can reliably associate
the payment with valid documentation
only to the extent that, prior to the pay-
ment, the withholding agent has received
a valid qualified intermediary withholding
certificate and the withholding agent can
reliably determine the portion of the pay-
ment that relates to a withholding rate
pool or pools provided as part of the qual-
ified intermediary's withholding state-
ment and the portion of the payment for
which the qualified intermediary assumes
primary Form 1099 reporting and backup
withholding responsibility. See paragraph
(e)(5)(v)(C)(2) of this section for when a
qualified intermediary may include a
chapter 4 withholding rate pool on a with-
holding statement provided to a withhold-
ing agent with respect to a withholdable
payment.

(2) The following example illustrates
the rules of paragraph (b)(2)(vii)(D)(1) of
this section:

Example. WA, a withholding agent, makes a
payment of U.S. source dividends that is a withhold-
able payment to QI, a qualified intermediary and
participating FFI. QI has provided WA with a valid
qualified intermediary withholding certificate. QI
states on its withholding statement accompanying
the certificate that it assumes primary Form 1099
reporting and backup withholding responsibility but
does not assume primary withholding responsibility
under chapters 3 and 4 of the Internal Revenue Code.
QI represents that 15% of the dividend is subject to
a 30% rate of withholding, 75% of the dividend is
subject to a 15% rate of withholding. QI represents
that it assumes primary Form 1099 reporting and
backup withholding for the remaining 10% of the
payment, and therefore need not provide a chapter 4
withholding rate pool with respect to this portion of
the payment or documentation with respect to U.S.
non-exempt recipients. The entire payment can be
reliably associated with valid documentation.

(F) Special rules applicable to a with-
holding certificate provided by a qualified
intermediary that assumes primary with-
holding responsibility under chapter 3
and primary Form 1099 reporting and
backup withholding responsibility and a
withholding certificate provided by a
withholding foreign partnership or a with-
holding foreign trust. If a payment is
made 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 withholding
responsibility under chapter 61 and sec-
tion 3406 of the Internal Revenue Code
for the payment, a withholding agent can
reliably associate a payment with valid
documentation provided that it receives a
valid qualified intermediary withholding
certificate as described in paragraph
(e)(3)(ii) of this section. In the case of a
payment made to a withholding foreign
partnership or a withholding foreign trust,
the withholding agent can reliably associ-
ate the payment with valid documentation
to the extent it can associate the payment
with a valid withholding certificate de-
scribed in § 1.1441-5(c)(2)(iv) or in
§ 1.1441-5(e)(5)(v) (respectively). See
paragraph (e)(5)(iv) of this section, pro-
viding that a qualified intermediary as-
suming primary withholding responsibil-
ity under chapter 3 must also assume
primary withholding responsibility under
chapter 4 with respect to a withholdable
payment.

(3) Presumptions regarding payee's
status in the absence of documentation-(i)
General rules. A withholding agent that
cannot, prior to the payment, reliably as-
sociate (within the meaning of paragraph
(b)(2)(vii) of this section) a payment of an
amount subject to withholding (as de-
scribed in § 1.1441-2(a)) with valid doc-
umentation may rely on the presumptions
of this paragraph (b)(3) to determine the
status of the person receiving the payment
as a U.S. or a foreign person and the
person's other relevant characteristics (for
example, as an owner or intermediary, as
an individual, trust, partnership, or corpo-
ration). The determination of withholding
and reporting requirements applicable to
payments to a person presumed to be a
foreign person is governed only by the
provisions of chapters 3 and 4 of the Code
and the regulations thereunder. For the
determination of withholding and report-
ing requirements applicable to payments
to a person presumed to be a U.S. person,
see chapter 61 of the Code, section 3402,
3405, or 3406, and, with respect to the
reporting requirements of a participating
FFI or registered deemed-compliant FFI,
see chapter 4 of the Code and the related
regulations. A presumption that a payee is
a foreign payee is not a presumption that
the payee is a foreign beneficial owner.
Therefore, the provisions of this para-

graph (b)(3) have no effect for purposes of
reducing the withholding rate if associat-
ing the payment with documentation of
foreign beneficial ownership is required as
a condition for such rate reduction. See
paragraph (b)(3)(ix) of this section for
consequences to a withholding agent that
fails to withhold in accordance with the
presumptions set forth in this paragraph
(b)(3) or if the withholding agent has ac-
tual knowledge or reason to know of facts
that are contrary to the presumptions set
forth in this paragraph (b)(3). See para-
graph (b)(2)(vii) of this section for rules
regarding the extent to which a withhold-
ing agent can reliably associate a payment
with documentation.

(ii) Presumptions of classification as
individual, corporation, partnership, etc .-
(A) In general. A withholding agent that
cannot reliably associate a payment with a
valid withholding certificate or that has
received valid documentary evidence un-
der §§ 1.1441-1(e)(1)(ii)(A)(2) and
1.6049-5(c)(1) or (4) but cannot deter-
mine a payee's classification from the
documentary evidence must apply the
rules 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 presumed
to have a certain status under the provi-
sions of this paragraph (b)(3)(ii) does not
mean that it is excused from furnishing
documentation if documentation is other-
wise required to obtain a reduced rate of
withholding under this section. For exam-
ple, if, for purposes of this paragraph
(b)(3)(ii), a payee is presumed to be a
tax-exempt organization based on
§ 1.6049-4(c)(1)(ii)(B), the withholding
agent cannot rely on this presumption to
reduce the rate of withholding on pay-
ments to such person (if such person is
also presumed to be a foreign person un-
der paragraph (b)(3)(iii)(A) of this sec-
tion) because a reduction in the rate of
withholding for payments to a foreign tax-
exempt organization generally requires
that a valid Form W-8 described in
§ 1.1441-9(b)(2) be furnished to the with-
holding agent.

(B) No documentation provided. If the
withholding agent cannot reliably associ-
ate a payment with a valid withholding
certificate or valid documentary evidence,
it must presume that the payee is an indi-

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vidual, a trust, or an estate, if the payee
appears to be such person (for example,
based on the payee's name or information
in the customer file). In the absence of
reliable indications that the payee is an
individual, trust, or an estate, the withhold-
ing agent must presume that the payee is a
corporation 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 of
the paragraphs under § 1.6049-4(c)(1)(ii)(B)
through (Q) without the need to furnish
documentation. If the withholding agent
cannot treat a payee as a person described
in § 1.6049-4(c)(1)(ii)(A)(1) through
(Q), then the payee shall be presumed to
be a partnership. If such a partnership is
presumed to be foreign, it is not the ben-
eficial owner of the income paid to it. See
paragraph (c)(6) of this section. If such a
partnership is presumed to be domestic, it
is a U.S. non-exempt recipient for pur-
poses of chapter 61 of the Internal Reve-
nue Code.

(C) Documentary evidence furnished
for offshore obligation. If the withholding
agent 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 documentary
evidence does not establish the entity's
classification as a corporation, trust, es-
tate, or partnership, the withholding agent
may presume (in the absence of actual
knowledge otherwise) that the entity is the
type of person enumerated under
§ 1.6049-4 (c)(1)(ii)(B) through (Q) if it
can be so treated under any one of those
paragraphs without the need to furnish
documentation. If the withholding agent
cannot treat a payee as a person described
in § 1.6049-4(c)(1)(ii)(B) through (Q),
then the payee shall be presumed to be a
corporation unless the withholding agent
knows, or has reason to know, that the
entity is not classified as a corporation for
U.S. tax purposes. If a payee is, or is
presumed to be, a corporation under this
paragraph (b)(3)(ii)(C) and a foreign per-
son under paragraph (b)(3)(iii) of this sec-
tion, a withholding agent shall not treat
the payee as the beneficial owner of in-
come if the withholding agent knows, or
has reason to know, that the payee is not
the beneficial owner of the income. For
this purpose, a withholding agent will

have reason to know that the payee is not
a beneficial owner if the documentary ev-
idence indicates that the payee is a bank,
broker, intermediary, custodian, or other
agent, 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 if
the foreign person provides a statement, in
writing 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 the
income.

(iii) Presumption of U.S. or foreign
status. A payment that the withholding
agent cannot reliably associate with doc-
umentation is presumed to be made to a
U.S. person, except as otherwise provided
in 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 agent
must treat a payee that is presumed or
known to be a trust but for which the
withholding agent cannot determine the
type of trust in accordance with the pre-
sumptions specified in § 1.1441-
5(e)(6)(ii). In the case of a payment that is
a withholdable payment, a withholding
agent must apply the presumption rule
under § 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 payee
is an exempt recipient (as determined un-
der the provisions of § 1.6049-4(c)(1)(ii)
in the case of interest, or under similar
provisions under chapter 61 of the Code
applicable to the type of payment in-
volved, but not including a payee that the
withholding agent may treat as a foreign
intermediary in accordance with para-
graph (b)(3)(v) of this section), the payee
is presumed to be a foreign person and not
a U.S. person-

(i) If the withholding agent has actual
knowledge of the payee's employer iden-
tification number and that number begins
with the two digits "98";

(ii) If the withholding agent's commu-
nications with the payee are mailed to an
address in a foreign country;

(iii) If the name of the payee indicates
that the entity is the type of entity that is
on the per se list of foreign corporations

contained in § 301.7701-2(b)(8)(i) of this
chapter (other than a name which contains
the designation "corporation" or "com-
pany");

(iv) If the payment is made with respect
to an offshore obligation (as defined in
paragraph (c)(37) of this section); or

(v) Only with respect to an account
opened after July 1, 2014, if the withhold-
ing agent has a telephone number for the
person 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 payment
that is also a withholdable payment made
to an entity determined to be an exempt
recipient under § 1.6049-4(c)(1)(ii)(A)(1),
(F), (G), (H), (M), (O), (P), or (Q) in the
case of interest (or under similar provi-
sions in chapter 61 applicable to the type
of income) shall be presumed made to a
foreign 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 this
section for all payments with respect to an
obligation. The provisions of this para-
graph (b)(3)(iii)(A)(2) will not apply,
however, to a withholdable payment made
with respect to a preexisting obligation to
a payee that the withholding agent deter-
mined prior to July 1, 2014 to be a U.S.
exempt recipient.

(B) and (C) [Reserved]. For further
guidance, see § 1.1441-1(b)(3)(iii)(B)
and (C).

(D) Payments with respect to offshore
obligations. A payment is presumed made
to a foreign payee if the payment is made
outside the United States (as defined in
§ 1.6049-5(e)) with respect to an offshore
obligation (as defined in paragraph (c)(37)
of this section) and the withholding agent
does not have actual knowledge that the
payee 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 agent
may choose to apply the provisions of
§ 1.6049-5(d)(2)(ii) regarding a 90-day
grace period for purposes of this para-
graph (b)(3) (by applying the term with-

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holding agent instead of the term payor) to
amounts described in § 1.1441-6(c)(2)
and to amounts covered by a Form 8233
described in § 1.1441-4(b)(2)(ii). Thus,
for these amounts, a withholding agent
may choose to treat the payee as a foreign
person and withhold under chapter 3 of
the Internal Revenue Code (and the regu-
lations thereunder) while awaiting docu-
mentation. For purposes of determining
the rate of withholding under this section,
the withholding agent must withhold at
the unreduced 30-percent rate at the time
that the amounts are credited to an ac-
count. For reporting of amounts credited
both before and after the grace period, see
§ 1.1461-1(c)(4)(i)(A). The following ad-
justments shall be made at the expiration
of the grace period:

(A) If, at the end of the grace period,
the documentation is not furnished in the
manner required under this section and the
account holder is presumed to be a U.S.
non-exempt recipient, then backup with-
holding only applies to amounts credited
to the account after the expiration of the
grace period. Amounts credited to the ac-
count during the grace period shall be
treated as owned by a foreign payee and
adjustments must be made to correct any
underwithholding on such amounts in the
manner 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 text
and (b)(3)(v)(A).

(B) Beneficial owner documentation or
allocation information is lacking or unre-
liable. Except as otherwise provided in
this paragraph (b)(3)(v)(B), any portion of
a payment that the withholding agent may
treat as made to a foreign intermediary
(whether a nonqualified or a qualified in-
termediary) but that the withholding agent
cannot treat as reliably associated with
valid documentation under the rules of
paragraph (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 withhold
30 percent from any payment of an
amount subject to withholding. If a with-
holding certificate attached to an interme-
diary certificate is another intermediary
withholding certificate or a flow-through
withholding certificate, the rules of this

paragraph (b)(3)(v)(B) (or § 1.1441-
5(d)(3) or (e)(6)(iii)) apply by treating the
portion of the payment allocable to the
other intermediary or flow-through entity
as if it were made directly to the other
intermediary or flow-through entity. Any
payment 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 that
are not subject to withholding under chap-
ter 3. However, in the case of a payment
that is a withholdable payment made to a
foreign intermediary, the presumption
rules 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 to
a 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 be
treated 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 agent
makes a payment to joint payees and can-
not reliably associate a payment with
valid documentation from all payees, the
payment is presumed made to an uniden-
tified U.S. person. If, however, a with-
holding agent makes a payment that is a
withholdable payment and any joint payee
does not appear, by its name and other
information contained in the account file,
to be an individual, then the entire amount
of the payment will be treated as made to
an undocumented foreign person. See
paragraph (b)(3)(iii) of this section for
presumption rules that apply in the case of
a 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)-5
of this chapter, the payment shall be
treated as made to that payee. See
§ 31.3406(h)-2 of this chapter for rules to
determine the relevant payee if more than
one Form W-9 is provided. For purposes
of applying this paragraph (b)(3), the
grace period rules in paragraph (b)(3)(iv)

of this section shall apply only if each
payee meets the conditions described in
paragraph (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 reliably
associate a payment with valid documen-
tation from all payees, the payment is
presumed made to an unknown foreign
payee if the payment is made outside the
United 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 presumptions
and of actual knowledge or reason to
know otherwise-(A) General rule. Ex-
cept as otherwise provided in paragraph
(b)(3)(ix)(B) of this section, a withholding
agent that withholds on a payment under
section 3402, 3405 or 3406 in accordance
with the presumptions set forth in this
paragraph (b)(3) shall not be liable for
withholding under this section even if it is
later established that the beneficial owner
of the payment is, in fact, a foreign per-
son. Similarly, a withholding agent that
withholds on a payment under this section
in accordance with the presumptions set
forth in this paragraph (b)(3) shall not be
liable for withholding under section 3402
or 3405 or for backup withholding under
section 3406 even if it is later established
that the payee or beneficial owner is, in
fact, a U.S. person. A withholding agent
that, instead of relying on the presump-
tions described in this paragraph (b)(3),
relies on its own actual knowledge to
withhold a lesser amount, not withhold, or
not report a payment, even though report-
ing of the payment or withholding a
greater amount would be required if the
withholding 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 section
1461 and the regulations under that sec-
tion. See paragraph (b)(7) of this section
for provisions regarding such liability if
the withholding agent fails to withhold in
accordance with the presumptions de-
scribed in this paragraph (b)(3).

(B) [Reserved]. For further guidance,
see § 1.1441-1(b)(3)(ix)(B).

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(x) Examples. The provisions of this
paragraph (b)(3) are illustrated by the fol-
lowing examples:

Example 1. A withholding agent, W, makes a
payment of U.S. source interest with respect to a
grandfathered obligation as described in § 1.1471-
2(b) (and thus the payment is not a withholdable
payment) to person X, Inc. with respect to an ac-
count W maintains for X, Inc. outside the United
States. 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 payment
to an exempt recipient that is not a withholdable
payment, W must presume that X, Inc. is a foreign
person (because the payment is made with respect to
an offshore obligation). However, W knows that X,
Inc. is a U.S. person who is an exempt recipient. W
may not rely on its actual knowledge to not withhold
under this section. If W's knowledge is, in fact,
incorrect, W would be liable for tax, interest, and, if
applicable, penalties, under section 1461. W would
be permitted to reduce or eliminate its liability for
the tax by establishing, in accordance with paragraph
(b)(7) of this section, that the tax is not due or has
been 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 amount
that 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, that
its actual knowledge was, in fact, correct and that no
tax or a lesser amount of tax was due.

Example 2. A withholding agent, W, makes a
payment of U.S. source interest with respect to a
grandfathered obligation as described in § 1.1471-
2(b) (and thus the payment is not a withholdable
payment) to Y who does not qualify as an exempt
recipient 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 is
a U.S. person who is not an exempt recipient for
purposes of section 6049. However, W knows that Y
is a foreign person. W may not rely on its actual
knowledge to withhold under this section rather than
backup 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 section
3403. If W's actual knowledge is, in fact, correct, W
may nevertheless be liable for tax, interest, or pen-
alties under section 3403 for the amount that W
should have withheld based upon the presumptions.
Paragraph (b)(7) of this section does not apply to
provide relief from liability under section 3403.

Example 3. A withholding agent, W, makes a
payment of U.S. source dividends to X, Inc. with
respect to an account that X, Inc. opened with W
after June 30, 2014. W cannot reliably associate the
payment to X, Inc. with documentation but may treat
X, Inc. as an exempt recipient for purposes of this
section applying the rules of § 1.6042-
3(b)(1)(vii). However, because the dividend pay-
ment is a withholdable payment and W did not
determine the chapter 3 status of X, Inc. before July

1, 2014, W may treat X, Inc. as a U.S. person that is
an exempt recipient only if W obtains documentary
evidence 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 plan
administrator who makes pension payments to per-
son X with a mailing address in a foreign country
with which the United States has an income tax
treaty in effect. Under that treaty, the type of pension
income paid to X is taxable solely in the country of
residence. The plan administrator has a record of X's
U.S. social security number. W has no actual knowl-
edge or reason to know that X is a foreign person. W
may rely on the presumption of paragraph
(b)(3)(iii)(C) of this section in order to treat X as a
U.S. person. Therefore, any withholding and report-
ing requirements for the payment are governed by
the provisions of section 3405 and the regulations
under that section.

(4) List of exemptions from, or reduced
rates of, withholding under chapter 3 of
the Code. A withholding agent that has
determined that the payee is a foreign
person for purposes of paragraph (b)(1) of
this section must determine whether the
payee is entitled to a reduced rate of with-
holding under section 1441, 1442, or
1443. This paragraph (b)(4) identifies
items for which a reduction in the rate of
withholding may apply and whether the
rate reduction is conditioned upon docu-
mentation being furnished to the with-
holding agent. Documentation required
under this paragraph (b)(4) is documenta-
tion that a withholding agent must be able
to associate with a payment upon which it
can rely to treat the payment as made to a
foreign person that is the beneficial owner
of the payment in accordance with para-
graph (e)(1)(ii) of this section. This para-
graph (b)(4) also cross-references other
sections 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 with
effectively connected income, that cross-
references § 1.1441-4(a); see paragraph
(b)(4)(xv) of this section, dealing with
exemptions from, or reductions of, with-
holding under an income tax treaty, that
cross-references § 1.1441-6. This para-
graph (b)(4) is not an exclusive list of
items to which a reduction of the rate of
withholding may apply and, thus, does not
preclude an exemption from, or reduction
in, the rate of withholding that may oth-
erwise be allowed under the regulations
under the provisions of chapter 3 of the
Code for a particular item of income iden-

tified in this paragraph (b)(4). The exclu-
sions and limitations specified in this
paragraph (b)(4) apply for purposes of
chapter 3. Additional withholding and
documentation requirements may apply to
withholding agents under chapter 4 with
respect to payments that are withholdable
payments. 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 exempted
from 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 from
withholding under section 1441(a). See
§ 1.871-14 for regulations regarding port-
folio interest and section 1441(c)(9) for
the exemption from withholding for port-
folio interest. Documentation establishing
foreign status is required for interest on an
obligation in registered form to qualify as
portfolio 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 described
in § 1.871-14(e)(2) (and issued before
January 1, 2016), see § 1.871-14(e) (3)
and (4) and, in particular, § 1.871-
14(e)(4)(i)(A) and (ii)(A) regarding when
the withholding agent must receive the
documentation. The documentation fur-
nished for purposes of qualifying interest
as portfolio interest serves as the basis for
the withholding exemption for purposes
of this section and establishing foreign
status for purposes of section 6049. See
§ 1.6049-5(b)(8). Documentation estab-
lishing foreign status is not required for
qualifying interest on an obligation in
bearer form described in § 1.871-
14(b)(1) (and issued before March 19,
2012) as portfolio interest. However, in
certain cases, documentation for portfolio
interest on a bearer obligation may have to
be furnished in order to establish foreign
status for purposes of the information re-
porting provisions of section 6049 and
backup 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]. For
further guidance, see § 1.1441-1(b)(5)(i)
through (viii).

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(ix) Payments to a foreign person that
are governed by section 6050W (dealing
with 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 payments
by 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 territory
financial 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 withholding
agent has not withheld the full amount
required) and report such payment under
chapter 3 of the Internal Revenue Code
and the regulations thereunder except as
otherwise provided in this paragraph
(b)(6). A nonqualified intermediary, U.S.
branch, or territory financial institution
described in paragraph (b)(2)(iv) of this
section (other than a U.S. branch or terri-
tory financial institution that is treated as a
U.S. person) shall not be required to with-
hold or report if it has provided a valid
nonqualified intermediary withholding
certificate or a U.S. branch withholding
certificate, it has provided all of the infor-
mation required by paragraph (e)(3)(iv) of
this section (withholding statement), and
it does not know, and has no reason to
know, that another withholding agent
failed to withhold the correct amount or
failed to report the payment correctly un-
der § 1.1461-1(c). The withholding re-
quirement of a nonqualified intermediary
under the previous sentence also excludes
a case in which withholding under chapter
4 was applied by a withholding agent on
the payment. See § 1.1441-3(a)(2) (coor-
dinating withholding under chapter 3 with
withholding applied under chapter 4 of the
Code). A qualified intermediary's obliga-
tions to withhold and report shall be de-
termined in accordance with its qualified
intermediary withholding agreement.

(ii) Examples. The following examples
illustrate the rules of paragraph (b)(6)(i)
of this section and coordinate rules for
withholding that apply under chapter 4
with those that apply under chapter 3. See
also paragraph (e)(3)(iv)(C) of this section
for 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, and
E, each of whom owns U.S. securities that generate
U.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, on
which FB certifies its status as a participating FFI
(such that withholding under chapter 4 does not
apply), 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 of
withholding under an income tax treaty. C, D, and E
claim no reduced rate of withholding. FB provides a
withholding statement that meets all of the require-
ments of paragraph (e)(3)(iv) of this section, includ-
ing information allocating 20% of each dividend
payment to each of A, B, C, D, and E. FB does not
have actual knowledge or reason to know that
USWA did not withhold the correct amounts or
report the dividends on Forms 1042-S to each of A,
B, C, D, and E. FB is not required to withhold or to
report the dividends to A, B, C, D, and E.

Example 2. The facts are the same as in Example
1, except that FB did not provide any information for
USWA to determine how much of the dividend
payments were made to A, B, C, D, and E. Because
USWA could not reliably associate the dividend
payments with documentation under paragraph
(b)(2)(vii) of this section with respect to a payment
that is a withholdable payment, USWA applied the
presumption rule of § 1.1471-3(f)(5) and withheld
30% from all dividend payments under chapter 4 and
filed a Form 1042-S reporting the payment to an
account holder of FB that is a non-participating FFI.
FB is deemed to know that USWA did not report the
payment to A, B, C, D, and E because it did not
provide all of the information required on a with-
holding statement under paragraph (e)(3)(iv) of this
section (that is, allocation information). Although
FB is not required to withhold on the payment under
this section because the full 30% withholding was
imposed by USWA, it is required to report the pay-
ments on Forms 1042-S to A, B, C, D, and E. FB's
intentional failure to do so will subject it to inten-
tional disregard penalties under sections 6721 and
6722.

(7) Liability for failure to obtain doc-
umentation timely or to act in accordance
with applicable presumptions- (i) Gen-
eral rule. A withholding agent that cannot
reliably associate a payment with valid
documentation on the date of payment and
that does not withhold under this section,
or withholds at less than the 30-percent
rate prescribed under section 1441(a) and
paragraph (b)(1) of this section, is liable
under section 1461 for the tax required to
be withheld under chapter 3 of the Code
and the regulations thereunder, without
the 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 in
paragraph (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) to
treat the payment as effectively connected
income;

(B) The withholding agent can demon-
strate to the satisfaction of the district
director or the Assistant Commissioner
(International) that the proper amount of
tax, if any, was in fact paid to the IRS;

(C) No documentation is required un-
der section 1441 or this section in order
for 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 been
satisfied. Proof of payment of tax may be
established for purposes of paragraph
(b)(7)(i)(B) of this section on the basis of
a Form 4669 (or such other form as the
IRS 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 on
the income. Proof that a reduced rate of
withholding was, in fact, appropriate un-
der the provisions of chapter 3 of the Code
and the regulations thereunder may also
be established after the date of payment
by the withholding agent on the basis of a
valid withholding certificate or other ap-
propriate documentation furnished after
that date that was effective as of the date
of payment. A withholding certificate fur-
nished after the date of payment will be
considered effective as of the date of the
payment if the certificate contains a
signed affidavit (either at the bottom of
the form or on an attached page) that
states that the information and representa-
tions contained on the certificate were ac-
curate as of the time of the payment. A
certificate obtained within 30 days after
the date of the payment will not be con-
sidered to be unreliable solely because it
does not contain an affidavit. However, in
the case of a withholding certificate of an
individual received more than a year after
the date of payment, the withholding
agent will be required to obtain, in addi-
tion to the withholding certificate and af-

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fidavit, documentary evidence, as de-
scribed in § 1.1471-3(c)(5)(i), that
supports the individual's claim of foreign
status or documentary evidence described
in § 1.1441-6(c)(4)(i) to support any
treaty claim made on the certificate. In the
case of a withholding certificate of an
entity received more than a year after the
date of payment, the withholding agent
will be required to obtain, in addition to
the 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 claim
made on the certificate. If documentation
other than a withholding certificate is sub-
mitted from a payee more than a year after
the date of payment, the withholding
agent will be required to obtain from the
payee a withholding certificate and affida-
vit supporting the claim of chapter 3 status
as of the time of the payment. See
§ 1.1471-3(c)(7)(ii) for additional re-
quirements that may apply under chapter
4 for documentation obtained after the
date of payment of a withholdable pay-
ment.

(iii) [Reserved]. For further guidance,
see § 1.1441-1(b)(7)(iii).

(iv) Special rule for determining valid-
ity of withholding certificate containing
inconsequential errors. A withholding
agent may treat a withholding certificate
as valid when the certificate includes an
error described as an inconsequential error
in § 1.1471-3(c)(7)(i) for which the with-
holding agent obtains documentation suf-
ficient for supporting a payee's claim of
status as a foreign person or, for a payee
that is an entity, its classification to the
extent permitted under § 1.1471-
3(c)(7)(i). For example, if the country of
residence is abbreviated in an ambiguous
way on a beneficial owner withholding
certificate 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 obtained
documentary evidence supporting that the
beneficial 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 further
guidance, see § 1.1441-1(b)(8) and (9).

(c) Definitions. The following defini-
tions apply for purposes of sections 1441
through 1443, 1461, and regulations under
those sections. For definitions of terms
used in these regulations that are defined
under sections 1471 through 1474, see
subparagraphs (43) through (56) of this
paragraph.

(1) [Reserved]. For further guidance,
see § 1.1441-1(c)(1).

(2) Foreign and U.S. person. The term
foreign person means any person that is
not a U.S. person, including a QI branch
of a U.S. financial institution (as defined
in § 1.1471-1(b)(109). Such a branch con-
tinues to be a U.S. payor for purposes of
chapter 61 of the Internal Revenue Code.
See § 1.6049-5(c)(4). A U.S. person is a
person described in section 7701(a)(30),
the U.S. government (including an agency
or instrumentality thereof), a State (in-
cluding an agency or instrumentality
thereof), or the District of Columbia (in-
cluding an agency or instrumentality
thereof).

(3) and (4) [Reserved]. For further
guidance, see § 1.1441-1(c)(3) and (4).

(5) Financial institution and foreign
financial institution (FFI). The term finan-
cial institution means a person described
in § 1.1471-5(e). The term foreign finan-
cial institution or FFI has the meaning set
forth in § 1.1471-5(d).

(6) through (9) [Reserved]. For further
guidance, see § 1.1441-1(c)(6) through
(9).

(10) Chapter 3 of the Code (or chapter
3). For purposes of the regulations under
sections 1441, 1442, and 1443, any refer-
ence to chapter 3 of the Code (or chapter
3) shall not include references to sections
1445 and 1446, unless the context indi-
cates otherwise.

(11) [Reserved]. For further guidance,
see § 1.1441-1(c)(11).

(12) Payee. For purposes of chapter 3
of the Internal Revenue Code, the term
payee of a payment is determined under
paragraph (b)(2) of this section, § 1.1441-
5(c)(1) (relating to partnerships), and
§ 1.1441-5(e)(2) and (3) (relating to trusts
and 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 primary
withholding responsibility) are not payees
if they are acting as intermediaries and not
the beneficial owner of income. In addi-
tion, a flow-through entity (other than a
withholding foreign partnership, with-
holding foreign trust, or qualified interme-
diary that assumes primary withholding
responsibility) is not a payee unless the
income is (or is deemed to be) effectively
connected with the conduct of a trade or
business in the United States. See
§ 1.6049-5(d)(1) for rules to determine
the payee for purposes of chapter 61 of the
Internal Revenue Code. See § § 1.1441-
1(b)(3), 1.1441-5(d), and (e)(6) and
§ 1.6049-5(d)(3) for presumption rules
that apply if a payee's identity cannot be
determined on the basis of valid documen-
tation. For purposes of chapter 4, the term
payee 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 term
withholding certificate means a Form
W-8 described in paragraph (e)(2)(i) of
this section (relating to foreign beneficial
owners), 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-through
entities), a Form 8233 described in
§ 1.1441-4(b)(2), a Form W-9 as de-
scribed in paragraph (d) of this section, a
statement described in § 1.871-14(c)(2)(v)
(relating to portfolio interest), or any other
certificates that under the Internal Reve-
nue Code or regulations certifies or estab-
lishes the status of a payee or beneficial
owner as a U.S. or a foreign person.

(17) Documentary evidence; other ap-
propriate documentation. The terms doc-
umentary evidence or other appropriate
documentation refer to documentary evi-
dence that may be provided for payments
made outside the United States with re-
spect to offshore obligations in accor-
dance with § 1.6049-5(c)(1) or any other
evidence that under the Internal Revenue
Code or regulations certifies or establishes
the status of a payee or beneficial owner
as 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)

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and (4) (relating to chapter 61 reporting).
Also see § 1.1441-4(a)(3)(ii) regarding
documentary 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 foreign
complex trust is a foreign trust other than
a foreign simple trust or foreign grantor
trust.

(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 foreign
partnership is a foreign partnership that is
not a withholding foreign partnership, as
defined 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 States
or U.S. territory. For purposes of the reg-
ulations under chapters 3 and 61 of the
Internal Revenue Code, the term posses-
sions of the United States or U.S. territory
means Guam, American Samoa, the
Northern Mariana Islands, Puerto Rico, or
the 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 known
as a federal tax identification number) de-
scribed in § 301.6109-1(a)(1)(i).

(33) Flow-through withholding certifi-
cate. The term flow-through withholding
certificate means a Form W-8IMY sub-
mitted by a foreign partnership, foreign
simple trust, or foreign grantor trust.

(34) Foreign payee. The term foreign
payee means any payee other than a U.S.
payee.

(35) Intermediary withholding certifi-
cate. The term intermediary withholding
certificate means a Form W-8IMY sub-
mitted by an intermediary.

(36) Nonwithholding foreign trust (or
NWT). The term nonwithholding foreign
trust or NWT means a foreign trust as
defined in section 7701(a)(31)(B) that is a
simple trust or grantor trust and is not a
withholding foreign trust.

(37) Payment with respect to an off-
shore obligation. The term payment with
respect to an offshore obligation means a
payment made outside of the United
States, 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 on
the type of payment).

(38) Permanent residence address. The
term permanent residence address is the
address in the country of which the person
claims to be a resident for purposes of that
country's income tax. In the case of a
withholding certificate furnished in order
to claim a reduced rate of withholding
under an income tax treaty, the residence
must be determined in the manner pre-
scribed under the applicable treaty. See
§ 1.1441-6(b). The address of a financial
institution with which the person main-
tains an account, a post office box, or an
address used solely for mailing purposes
is not a permanent residence address un-
less such address is the only permanent
address used by the person and appears as
the 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 address
is not a permanent residence address. If
the person is an individual who does not
have a tax residence in any country, the
permanent address is the place at which
the person normally resides. If the person
is an entity and does not have a tax resi-
dence in any country, then the permanent
residence address of the entity is the place
at which the person maintains its principal
office.

(39) Standing instructions to pay
amounts. The term standing instructions
to pay amounts has the meaning set forth
in § 1.1471-1(b)(126).

(40) Territory financial institution. The
term territory financial institution has the
meaning set forth in § 1.1471-1(b)(130).

(41) TIN. The term TIN means the tax
identifying number assigned to a person
under section 6109.

(42) Withholding foreign trust (or WT).
The term withholding foreign trust (or
WT) 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 pool
has the meaning described in paragraph
(e)(5)(v)(C)(1) of this section.

(45) Chapter 3 status. The term chapter
3 status refers to the attributes of a payee
relevant for determining the rate of with-
holding with respect to a payment made to
the payee for purposes of chapter 3.

(46) Chapter 4 of the Code (or chapter
4). The term chapter 4 of the Code (or
chapter 4) means sections 1471 through
1474 and the regulations thereunder.

(47) Chapter 4 status. The term chapter
4 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, a
restricted distributor, an exempt beneficial
owner, a nonparticipating FFI, a territory
financial institution, an excepted NFFE, or
a passive NFFE.

(48) Chapter 4 withholding rate pool.
The term chapter 4 withholding rate pool
has the meaning set forth § 1.1471-
1(b)(20). For when a withholding state-
ment may include a chapter 4 withholding
rate pool of U.S. payees for purposes of
this section and § 1.1441-5, however, see
paragraph (e)(3)(iv)(A) of this section (for
a withholding statement provided by a
nonqualified intermediary) or paragraph
(e)(5)(v)(C)(2) of this section (for a with-
holding statement provided by a qualified
intermediary).

(49) Deemed-compliant FFI. The term
deemed-compliant FFI means an FFI that
is treated, pursuant to section 1471(b)(2)
and § 1.1471-5(f), as meeting the require-
ments of section 1471(b). The term
deemed-compliant FFI also includes a QI
branch of a U.S. financial institution that
is a reporting Model 1 FFI.

(50) GIIN (or Global Intermediary
Identification Number). The term GIIN or
Global Intermediary Identification Num-
ber means the identification number that is
assigned to a participating FFI or regis-
tered deemed-compliant FFI. The term
GIIN or Global Intermediary Identifica-
tion Number also includes the identifica-
tion number assigned to a reporting Model
1 FFI (as defined in § 1.1471-1(b)(114))
for purposes of identifying such entity to

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withholding agents. All GIINs will appear
on the IRS FFI list.

(51) NFFE. The term NFFE or non-
financial foreign entity has the meaning
set forth in § 1.1471-1(b)(80).

(52) Nonparticipating FFI. The term
nonparticipating FFI means an FFI other
than a participating FFI, a deemed-
compliant FFI, or an exempt beneficial
owner.

(53) Participating FFI. The term par-
ticipating FFI has the meaning set forth in
§ 1.1471-1(b)(91).

(54) Preexisting obligation. The term
preexisting obligation has the meaning set
forth in § 1.1471-1(b)(104).

(55) Registered deemed-compliant
FFI. The term registered deemed- compli-
ant FFI has the meaning set forth in
§ 1.1471-5(f)(1).

(56) Withholdable payment. The term
withholdable payment has the meaning set
forth in § 1.1473-1(a).

(d) [Reserved]. For further guidance,
see § 1.1441-1(d) introductory text
through (d)(3).

(4) When a payment to an intermediary
or flow-through entity may be treated as
made to a U.S. payee. A withholding
agent that makes a payment to an inter-
mediary (whether a qualified intermediary
or 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 treat
the payment as made to a U.S. payee to
the extent that, prior to the payment, the
withholding agent can reliably associate
the payment with a Form W-9 described
in paragraph (d)(2) or (3) of this section
attached to a valid intermediary, flow-
through, or U.S. branch withholding cer-
tificate described in paragraph (e)(3)(i) of
this 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 that
evidences 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 as
made to a U.S. payee only if it complies
with the electronic confirmation proce-
dures described in paragraph (e)(4)(v) of
this section, if required, and it has not
been notified by the IRS that any of the

information on the withholding certificate
or other documentation is incorrect or un-
reliable. In the case of a Form W-9 that is
required to be furnished for a reportable
payment that may be subject to backup
withholding, the withholding agent may
be notified in accordance with section
3406(a)(1)(B) and the regulations under
that section. See applicable procedures
under section 3406(a)(1)(B) and the reg-
ulations under that section for payors who
have been notified with regard to such a
Form W-9. Withholding agents who have
been notified in relation to other Forms
W-9, including under section 6724(b)
pursuant to section 6721, may rely on the
withholding certificate or other documen-
tation only to the extent provided under
procedures 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 outside
the United States (within the meaning of
§ 1.6049-5(e)) with respect to an offshore
obligation (within the meaning of para-
graph (c)(37) of this section) and the with-
holding agent can reliably associate the
payment with documentary evidence de-
scribed in §§ 1.1441-6(c)(3) or (4), or
1.6049-5(c)(1) relating to the beneficial
owner;

(3) That the withholding agent can re-
liably associate the payment with a valid
qualified intermediary withholding certif-
icate, as described in paragraph (e)(3)(ii)
of this section, and the qualified interme-
diary has provided sufficient information
for the withholding agent to allocate the
payment to a chapter 3 withholding rate
pool;

(4) through (7) [Reserved]. For further
guidance, 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 text
through (e)(2)(i).

(ii) Requirements for validity of certif-
icate. A beneficial owner withholding cer-
tificate is valid for purposes of a payment
of an amount subject to chapter 3 with-
holding only if it is provided on a Form
W-8, or a Form 8233 in the case of per-

sonal services income described in
§ 1.1441-4(b) or certain scholarship or
grant amounts described in § 1.1441-
4(c) (or a substitute form described in
paragraph (e)(4)(vi) of this section or such
other form as the IRS may prescribe). A
Form W-8 is valid only if its validity
period has not expired, it is signed under
penalties of perjury by the beneficial
owner, and it contains all of the informa-
tion required on the form. The required
information is the beneficial owner's
name, permanent residence address (as
defined in § 1.1441-1(c)(55)), TIN (if re-
quired), a certification that the person is
not a U.S. citizen (if the person is an
individual) or a certification of the country
under the laws of which the beneficial
owner is created, incorporated, or gov-
erned (if a person other than an individ-
ual), the classification of the entity, and
such other information as may be required
by the regulations under section 1441 or
by the form or accompanying instructions
in addition to, or in lieu of, the informa-
tion described in this paragraph (e)(2)(ii)
(including when a foreign TIN and an
individual's date of birth are required). A
beneficial owner withholding certificate
must also include the chapter 4 status of a
beneficial owner that is an entity receiving
a withholdable payment in order to be
valid. See paragraph (e)(4)(vii) of this sec-
tion for circumstances in which a TIN is
required 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. A
qualified intermediary shall provide a
qualified intermediary withholding certif-
icate for withholdable payments or report-
able amounts received by the qualified
intermediary. See paragraph (e)(3)(vi) of
this section for the definition of reportable
amount. A qualified intermediary with-
holding certificate is valid only if it is
furnished on a Form W-8, an acceptable
substitute form, or such other form as the
IRS may prescribe, it is signed under pen-
alties of perjury by a person with authority
to sign for the qualified intermediary, its
validity has not expired, and it contains
the following information, statement, and
certifications-

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(A) The name, permanent residence
address, qualified intermediary employer
identification number (QI-EIN), and the
country under the laws of which the inter-
mediary is created, incorporated, or gov-
erned. For a withholding certificate pro-
vided with respect to a withholdable
payment or associated with a withholding
statement allocating the payment to a
chapter 4 withholding rate pool of U.S.
payees, the withholding certificate must
also include the chapter 4 status of the
qualified intermediary (which, if the qual-
ified intermediary is an FFI, it must be a
participating FFI, a registered deemed-
compliant FFI, or an FFI treated as a
deemed-compliant FFI under an applica-
ble IGA that is subject to due diligence
and reporting requirements with respect to
its U.S. accounts similar to those applica-
ble to a registered deemed-compliant FFI
under § 1.1471-5(f)(1), and its GIIN (if
applicable). However, a qualified interme-
diary withholding certificate may include
a chapter 4 status of limited FFI as defined
in § 1.1471-1(b)(77) through December
31, 2015. See paragraph (e)(5)(ii) for the
chapter 4 status required of a qualified
intermediary. A qualified intermediary
that 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 intermediary
withholding certificate, if it is acting as an
intermediary, and should use the taxpayer
identification number( if any) and GIIN (if
applicable) 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 qualified
intermediary has provided, or will pro-
vide, a withholding statement as required
by paragraph (e)(5)(v) of this section;

(D) A certification that the qualified
intermediary is fulfilling its reporting ob-
ligations under chapter 4 with respect to
any payees included in the U.S. payee
pool 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 by
the form or accompanying instructions in
addition to, or in lieu of, the information
and certifications described in this para-

graph (e)(3)(ii) or paragraph (e)(3)(v) of
this section. See paragraph (e)(5)(v) of
this section for the requirements of a with-
holding statement associated with the
qualified intermediary withholding certif-
icate.

(iii) Intermediary withholding certifi-
cate from a nonqualified intermediary. A
nonqualified intermediary shall provide a
nonqualified intermediary withholding
certificate for reportable amounts received
by the nonqualified intermediary. See
paragraph (e)(3)(vi) of this section for the
definition 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 acceptable
substitute form, or such other form as the
IRS may prescribe, it is signed under pen-
alties of perjury by a person authorized to
sign for the nonqualified intermediary, it
contains the information, statements, and
certifications described in this paragraph
(e)(3)(iii) and paragraph (e)(3)(iv) of this
section, its validity has not expired, and it
contains the withholding certificates and
other appropriate documentation for all
persons to whom the certificate relates are
associated with the certificate. Withhold-
ing certificates and other appropriate doc-
umentation consist of beneficial owner
withholding 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) of
this 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) and
1.6049-5(c)(1), and any other documen-
tation or certificates applicable under
other provisions of the Internal Revenue
Code or regulations that certify or estab-
lish the status of the payee or beneficial
owner as a U.S. or a foreign person. If a
nonqualified intermediary is acting on be-
half of another nonqualified intermediary
or a flow-through entity, then the non-
qualified intermediary must associate with
its own withholding certificate the other
nonqualified intermediary withholding
certificate or the flow-through withhold-
ing certificate and separately identify all
of the withholding certificates and other
appropriate documentation that are asso-
ciated with the withholding certificate of

the other nonqualified intermediary or
flow-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 the
original documentation for the same time
period that the copy is required to be
retained by the withholding agent under
paragraph (e)(4)(iii) of this section and
must provide it to the withholding agent
upon request. For purposes of this para-
graph (e)(3)(iii), a valid intermediary
withholding certificate also includes a
statement described in § 1.871-
14(c)(2)(v) furnished for interest to qual-
ify as portfolio interest for purposes of
sections 871(h) and 881(c). The informa-
tion and certifications required on a Form
W-8 described in this paragraph
(e)(3)(iii) are as follows-

(A) The name and permanent resident
address 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-8
allocating a payment to a chapter 4 with-
holding rate pool of U.S. payees), GIIN (if
applicable), and the country under the
laws 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 intermediary
withholding certificate is used to transmit
withholding certificates or other appropri-
ate documentation for more than one per-
son on whose behalf the nonqualified in-
termediary is acting, a withholding
statement associated with the Form W-8
that provides all the information required
by paragraph (e)(3)(iv) of this section;

(D) A certification that the nonquali-
fied intermediary is fulfilling its reporting
obligations under chapter 4 with respect to
any payees included in the U.S. payee
pool when the nonqualified intermediary
provides an FFI withholding statement de-
scribed in § 1.1471-3(c)(3)(iii)(B)(2) that
allocates a payment to payees in such a
pool; and

(E) Any other information, certifica-
tions, or statements as may be required by
the form or accompanying instructions in

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addition to, or in lieu of, the information,
certifications, and statements described in
this paragraph (e)(3)(iii) or paragraph
(e)(5)(iv) of this section.

(iv) Withholding statement provided by
nonqualified intermediary-(A) In gen-
eral. A nonqualified intermediary shall
provide a withholding statement required
by this paragraph (e)(3)(iv) to the extent
the nonqualified intermediary is required
to furnish, or does furnish, documentation
for payees on whose behalf it receives
reportable amounts (as defined in para-
graph (e)(3)(vi) of this section) or to the
extent it otherwise provides the documen-
tation of such payees to a withholding
agent. A nonqualified intermediary, how-
ever, that is subject to withholding under
chapter 4 due to its chapter 4 status as a
nonparticipating FFI need not provide a
withholding 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 information
regarding persons for whom it collects
reportable amounts unless it has actual
knowledge that any such person is a U.S.
non-exempt recipient as defined in para-
graph (c)(21) of this section. Information
regarding 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 prohibits
the disclosure of the identity of an account
holder of a nonqualified intermediary or
financial information relating to such ac-
count holder. A nonqualified intermediary
is not required to provide information on a
withholding statement regarding U.S.
non-exempt recipients, provided that the
nonqualified intermediary is a participat-
ing FFI (including a reporting Model 2
FFI) or registered deemed-compliant FFI
(including a reporting Model 1 FFI) that
identifies on the withholding statement the
portion of a payment allocable to a chap-
ter 4 withholding rate pool of U.S. payees
to 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 the
requirements of an entity to identify itself
as a participating FFI or registered
deemed-compliant FFI to a withholding
agent for purposes of chapter 4. Although

a nonqualified intermediary is not re-
quired to provide documentation and
other information required by this para-
graph (e)(3)(iv) for persons other than
U.S. non-exempt recipients not included
in a chapter 4 withholding rate pool of
U.S. payees, a withholding agent that does
not receive documentation and such infor-
mation must apply the presumption rules
of paragraph (b) of this section,
§ § 1.1441-5(d) and (e)(6), 1.6049-5(d),
and 1.1471-3(f)(5) (for a withholdable
payment) or the withholding agent shall
be liable for tax, interest, and penalties. A
withholding agent must apply the pre-
sumption rules even if it is not required
under chapter 61 of the Internal Revenue
Code to obtain documentation to treat a
payee as an exempt recipient and even
though it has actual knowledge that the
payee is a U.S. person. For example, if a
nonqualified intermediary receives a pay-
ment that is not a withholdable payment
and fails to provide a withholding agent
with a Form W-9 for an account holder
that is a U.S. exempt recipient that is not
included in a chapter 4 withholding rate
pool of U.S. payees to the extent permit-
ted in this paragraph (e)(3)(iv)(A), the
withholding agent must presume (even if
it has actual knowledge that the account
holder is a U.S. exempt recipient) that the
account 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 for
applicable presumptions. Therefore, the
withholding agent must withhold 30 per-
cent from the payment even though if a
Form W-9 had been provided, no with-
holding or reporting on the payment at-
tributable to a U.S. exempt recipient
would apply. Further, a nonqualified in-
termediary that fails to provide the docu-
mentation and the information under this
paragraph (e)(3)(iv) for another withhold-
ing agent to report the payments on Forms
1042-S (including under the requirements
of § 1.1474-1(d)(2) for a payment of a
chapter 4 reportable amount) and Forms
1099 is not relieved of its responsibility to
file information returns. See paragraph
(b)(6) of this section. Therefore, unless
the nonqualified intermediary itself files
such returns and provides copies to the
payees, it shall be liable for penalties un-
der sections 6721 (failure to file informa-

tion returns), and 6722 (failure to furnish
payee statements), including the penalties
under those sections for intentional failure
to file information returns. In addition,
failure to provide either the documenta-
tion or the information required by this
paragraph (e)(3)(iv) results in a payment
not being reliably associated with valid
documentation. Therefore, the beneficial
owners of the payment are not entitled to
reduced rates of withholding and if the
full amount required to be held under the
presumption rules is not withheld by the
withholding agent, the nonqualified inter-
mediary must withhold the difference be-
tween the amount withheld by the with-
holding agent and the amount required to
be withheld. Failure to withhold shall re-
sult in the nonqualified intermediary being
liable for tax under section 1461, interest,
and penalties, including penalties under
section 6656 (failure to deposit) and sec-
tion 6672 (failure to collect and pay over
tax).

(B) General requirements. A withhold-
ing statement must be provided prior to
the payment of a reportable amount and
must contain the information specified in
paragraph (e)(3)(iv)(C) of this section.
The statement must be updated as often as
required to keep the information in the
withholding statement correct prior to
each subsequent payment. The withhold-
ing statement forms an integral part of the
withholding certificate provided under
paragraph (e)(3)(iii) of this section, and
the penalties of perjury statement pro-
vided on the withholding certificate shall
apply to the withholding statement. The
withholding statement may be provided in
any manner the nonqualified intermediary
and the withholding agent mutually agree,
including electronically. If the withhold-
ing statement is provided electronically as
part 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 the
withholding agent is the information sent
by the nonqualified intermediary and all
occasions of user access that result in the
submission or modification of the with-
holding statement information must be re-
corded. In addition, the electronic system
must be capable of providing a hard copy
of all withholding statements provided by

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the nonqualified intermediary. A with-
holding statement may otherwise be trans-
mitted by a nonqualified intermediary via
e-mail or facsimile to a withholding agent
under the requirements specified in para-
graph (e)(4)(iv)(C) of this section (substi-
tuting the term withholding statement for
the term Form W-8 or the term docu-
ment, as applicable). A withholding agent
will be liable for tax, interest, and penal-
ties in accordance with paragraph (b)(7)
of this section to the extent it does not
follow the presumption rules of paragraph
(b)(3) of this section or § § 1.1441-
5(d) and (e)(6), and 1.6049-5(d) for any
payment of a reportable amount, or por-
tion thereof, for which it does not have a
valid withholding statement prior to mak-
ing a payment. , A withholding agent may
not treat as valid an allocation of a pay-
ment to a chapter 4 withholding rate pool
of 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 withholding
agent 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 2
FFI) or registered deemed-compliant FFI
(including a reporting Model 1 FFI) by
applying the rules of § 1.1471-3(d)(4).

(C) Content of withholding statement.
The withholding statement provided by a
nonqualified intermediary must contain
the 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 withholding
statement 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 person
from whom documentation has been re-
ceived by the nonqualified intermediary
and provided to the withholding agent and
whether 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. exempt
recipient, and U.S. non-exempt recipient.
In the case of a foreign person, the state-
ment must indicate whether the foreign
person is a beneficial owner or an inter-
mediary, flow-through entity, U.S.
branch, or territory financial institution
described in paragraph (b)(2)(iv) of this
section and include the type of recipient,
based on recipient codes applicable for
chapter 3 purposes used for filing Forms
1042-S, if the foreign person is a recipient
as defined in § 1.1461-1(c)(1)(ii).

(ii) The withholding statement must al-
locate each payment, by income type, to
every payee required to be reported on the
withholding statement for whom docu-
mentation has been provided (including
U.S. exempt recipients except as provided
in paragraph (e)(3)(iv)(A) of this section).
Any payment that cannot be reliably as-
sociated with valid documentation from a
payee shall be treated as made to an un-
known payee in accordance with the pre-
sumption rules of paragraph (b) of this
section and § § 1.1441-5(d) and (e)(6)
and 1.6049-5(d). For this purpose, a type
of income is determined by the types of
income required to be reported on Forms
1042-S or 1099, as appropriate. Notwith-
standing the preceding sentence, deposit
interest (including original issue discount)
described in section 871(i)(2)(A) or
881(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 the
extent it is required to be reported on
Form 1099 or Form 1042-S. See
§ 1.6049-8 (regarding reporting of bank
deposit interest to certain foreign per-
sons). If a payee receives income through
another nonqualified intermediary, flow-
through entity, or U.S. branch or territory
financial institution described in para-
graph (e)(2)(iv) of this section (other than
a U.S. branch or territory financial insti-
tution treated as a U.S. person), the with-
holding statement must also state, with
respect to the payee, the name, address,
and TIN, if known, of the other nonquali-
fied intermediary or U.S. branch from
which the payee directly receives the pay-
ment or the flow-through entity in which
the payee has a direct ownership interest.

If another nonqualified intermediary,
flow-through entity, or U.S. branch fails to
allocate a payment, the name of the non-
qualified intermediary, flow-through en-
tity, or U.S. branch that failed to allocate
the payment shall be provided with re-
spect to such payment.

(iii) If a payee is identified as a foreign
person, the nonqualified intermediary
must specify the rate of withholding to
which the payee is subject, the payee's
country of residence and, if a reduced rate
of withholding is claimed, the basis for
that reduced rate (e.g., treaty benefit, port-
folio interest, exempt under section
501(c)(3), 892, or 895). The allocation
statement must also include the taxpayer
identification numbers of those foreign
persons for whom such a number is re-
quired under paragraph (e)(4)(vii) of this
section or § 1.1441-6(b)(1) (regarding
claims for treaty benefits for which a TIN
is provided unless a foreign tax identify-
ing number described in § 1.1441-
6(b)(1) is provided). In the case of a claim
of treaty benefits, the nonqualified inter-
mediary's withholding statement must
also state whether the limitation on bene-
fits and section 894 statements required by
§ 1.1441-6(c)(5) have been provided, if
required, in the beneficial owner's Form
W-8 or associated with such owner's
documentary evidence.

(iv) The withholding statement must
also contain any other information the
withholding agent reasonably requests in
order to fulfill its obligations under chap-
ter 3, chapter 61 of the Internal Revenue
Code, 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 with
respect to a reportable amount that is a
withholdable payment. For such a pay-
ment, the requirements applicable to a
withholding 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 (when
required for chapter 4 purposes under
§ 1.1471-3(d)) of each other intermediary
or flow-through entity that is a foreign

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person and that receives the payment ex-
cluding an intermediary or flow-through
entity that is an account holder of or in-
terest holder in a withholding foreign part-
nership, withholding foreign trust, or
qualified intermediary;

(ii) If the nonqualified intermediary
that is a participating FFI or registered
deemed-compliant FFI provides a with-
holding statement described in § 1.1471-
3(c)(3)(iii)(B)(2) (describing an FFI with-
holding statement), the withholding
statement may include chapter 4 with-
holding rate pools with respect to the por-
tions of the payment allocated to nonpar-
ticipating FFIs and recalcitrant account
holders (to the extent permitted on an FFI
withholding statement described in that
paragraph) in lieu of providing specific
payee information with respect to such
persons 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 intermediary
provides 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 may
include chapter 4 withholding rate pools
with respect to the portions of the pay-
ment allocated to nonparticipating FFIs;
and

(iv) For a payment allocated to a payee
that is a foreign person (other than a per-
son included in a chapter 4 withholding
rate pool described in paragraphs
(e)(3)(iv)(C)(2)(ii) and (iii) of this sec-
tion) that is reported on a withholding
statement described in § 1.1471-
3(c)(3)(iii)(B)(2) or (3), the withholding
statement must include the chapter 4 sta-
tus of the payee and, for a payee other
than an individual, the recipient code for
chapter 4 purposes used for filing Form
1042-S.

(3) Example. This example illustrates the princi-
ples of paragraph (e)(3)(iv)(C) of this section. WA
makes a withholdable payment of U.S. source divi-
dends to NQI, a nonqualified intermediary. NQI pro-
vides WA with a valid intermediary withholding
certificate under paragraph (e)(3)(iii) of this section
that includes NQI's certification of its status for
chapter 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 withholding
rate pool of recalcitrant account holders of NQI for
purposes of chapter 4 and allocates 80% of the
payment equally to A and B, individuals that are

account holders of NQI. NQI also provides WA with
valid beneficial owner withholding certificates from
A and B establishing their status as foreign persons
entitled to a 15% rate of withholding under an ap-
plicable income tax treaty. Because NQI has certified
its status as a participating FFI, withholding under
chapter 4 is not required with respect to NQI. See
§ 1.1471-2(a)(4). Based on the documentation NQI
provided to WA with respect to A and B, WA can
reliably associate the payment with valid documen-
tation on the portion of the payment allocated to
them and, because the payment is a withholdable
payment, may rely on the allocation of the payment
for NQI's recalcitrant account holders in a chapter 4
withholding rate pool in lieu of payee information
with respect to such account holders. See paragraph
(e)(3)(iv)(C)(2) of this section for the special rules
for a withholding statement provided by a nonquali-
fied intermediary for a withholdable payment. Also
see § 1.1471-2(a) for WA's withholding require-
ments under chapter 4 with respect to the portion of
the payment allocated to NQI's recalcitrant account
holders 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) In
general. Under the alternative procedures
of 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 the
alternative procedure of this paragraph
(e)(3)(iv)(D), the nonqualified intermedi-
ary must inform the withholding agent on
a statement associated with its nonquali-
fied intermediary withholding certificate
that it is using the procedure under this
paragraph (e)(3)(iv)(D) and the withhold-
ing agent must agree to the procedure. If
the requirements of the alternative proce-
dure are met, a withholding agent, includ-
ing the nonqualified intermediary using
the procedures, can treat the payment as
reliably associated with documentation
and, therefore, the presumption rules of
paragraph (b)(3) of this section and
§§ 1.1441-5(d) and (e)(6) and 1.6049-
5(d) do not apply even though information
allocating the payment to each payee has
not 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 the
requirements 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 withholding
agent with information allocating pay-
ments of reportable amounts to U.S. non-
exempt recipients prior to the payment
being made by the withholding agent.

(2) Withholding rate pools-(i) In gen-
eral. In place of the information required
in 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 withholding
rate pool information prior to the payment
of a reportable amount. The withholding
statement must contain all other informa-
tion required by paragraph (e)(3)(iv)(C) of
this section. Further, each payee listed in
the withholding statement must be as-
signed to an identified withholding rate
pool. To the extent a nonqualified inter-
mediary is required to, or does provide,
documentation, the alternative procedures
do not relieve the nonqualified intermedi-
ary from the requirement to provide doc-
umentation prior to the payment being
made. Therefore, withholding certificates
or other appropriate documentation and
all information required by paragraph
(e)(3)(iv)(C) of this section (other than
allocation information) must be provided
to a withholding agent before any new
payee receives a reportable amount. In
addition, the withholding statement must
be updated by assigning a new payee to a
withholding rate pool prior to the payment
of a reportable amount. A withholding
rate pool is a payment of a single type of
income, determined in accordance with
the categories of income used to file Form
1042-S, that is subject to a single rate of
withholding. A withholding rate pool may
be established by any reasonable method
to which the nonqualified intermediary
and a withholding agent agree (e.g., by
establishing a separate account for a sin-
gle withholding rate pool, or by dividing a
payment made to a single account into
portions allocable to each withholding
rate pool). The nonqualified intermediary
shall determine withholding rate pools
based on valid documentation or, to the
extent a payment cannot be reliably asso-
ciated with valid documentation, the pre-
sumption rules of paragraph (b)(3) of this
section and § § 1.1441-5(d) and (e)(6)
and 1.6049-5(d).

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(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) of
this section with respect to the withhold-
ing rate pools permitted for the alternative
procedures described in paragraph
(e)(3)(iv)(D)(1) of this section in the case
of a reportable amount that is a withhold-
able payment or for a payment for which
an FFI withholding statement is provided
by the nonqualified intermediary. In the
case of a withholdable payment, a non-
qualified intermediary may include
amounts allocable to a chapter 4 reporting
pool (other than a U.S. payee pool) in a
30-percent rate pool together with a with-
holding rate pool for amounts subject to
chapter 3 withholding at the 30-percent
rate. For the amount of the payment allo-
cable to a U.S. payee pool on an FFI
withholding statement, a nonqualified in-
termediary may include such an amount in
a withholding rate pool with the amount
of 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. To
the extent that a nonqualified intermediary
allocates 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 before
receiving the payment and is not required
to provide documentation with respect to
the payees included in such pool. The
nonqualified intermediary shall determine
the chapter 4 withholding rate pools per-
mitted to be used under this paragraph
(e)(3)(iv)(D)(2)(ii) in accordance with the
nonqualified intermediary's applicable
chapter 4 status and under § 1.1471-
3(c)(3)(iii)(B)(2) (for an FFI withholding
statement) or (3) (for a chapter 4 with-
holding statement). Additionally, the non-
qualified intermediary shall identify those
payees to which withholding under chap-
ter 4 applies that are not included in a
chapter 4 reporting pool (including payees
that could be included in a chapter 4 with-
holding rate pool for whom the nonquali-
fied intermediary chooses to provide
payee specific information).

(3) Allocation information. The non-
qualified intermediary must provide the
withholding agent with sufficient informa-
tion to allocate the income in each with-

holding rate pool to each payee (including
U.S. exempt recipients or any chapter 4
withholding rate pool identified by the
withholding agent under paragraph
(c)(3)(iv)(D)(2)(ii) of this section) within
the pool no later than January 31 of the
year following the year of payment. Any
payments that are not allocated to payees
for whom documentation has been pro-
vided or a chapter 4 withholding rate pool
referred to in the previous sentence shall
be allocated to an undocumented payee in
accordance with the presumption rules of
paragraph (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 withholdable
payment for chapter 4 purposes). Notwith-
standing the preceding sentence, deposit
interest (including original issue discount)
described in section 871(i)(2)(A) or
881(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 paid
to 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 to
the 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 the
taxable year following the calendar year
for which allocation information was not
given and any subsequent taxable year.
Further, the alternative procedures shall
be unavailable for any other withholding
rate pool (other than a chapter 4 withhold-
ing rate pool as otherwise permitted) even
though allocation information was given
for 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 of
paragraph (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 withholdable
payment for chapter 4 purposes), unless
the nonqualified intermediary provides all

of the information, including information
sufficient to allocate the payment to each
specific payee or chapter 4 withholding
rate pool (as permitted), required by para-
graph (e)(3)(iv)(A) through (C) of this
section prior to the payment. A nonquali-
fied intermediary must allocate at least 90
percent of the income required to be allo-
cated for each withholding rate pool as
required under this paragraph
(e)(3)(iv)(D)(4) or the nonqualified inter-
mediary will be treated as having failed to
provide allocation information for pur-
poses of this paragraph (e)(3)(iv)(D). For
purposes of the allocation, a nonqualified
intermediary is required to identify by
January 31 the portion of the payment that
is allocated to each chapter 4 withholding
rate pool (rather than the payees included
in each such pool). See paragraph
(e)(3)(iv)(D)(7) of this section for liability
for 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 providing
the required allocation information to the
withholding agent no later than February
14 following the calendar year of pay-
ment. If the withholding agent receives
the allocation information by that date, it
may apply the adjustment procedures of
§ 1.1461-2 (or of § 1.1474-2 for an
amount withheld under chapter 4) to any
excess withholding for payments made on
or after February 1 and on or before Feb-
ruary 14. Any nonqualified intermediary
that fails to cure by February 14, may
request the ability to use the alternative
procedures of this paragraph (e)(3)(iv)(D)
by submitting a request, in writing, to the.
The request must state the reason that the
nonqualified intermediary did not comply
with the alternative procedures of this
paragraph (e)(3)(iv)(D) and steps that the
nonqualified intermediary has taken, or
will take, to ensure that no failures occur
in the future. If the IRS determines that
the alternative procedures of this para-
graph (e)(3)(iv)(D) may apply, a determi-
nation to that effect will be issued by the
IRS to the nonqualified intermediary.

(6) Form 1042-S reporting in case of
allocation failure. If a nonqualified inter-
mediary fails to provide allocation infor-
mation by February 14 following the year

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of payment for a withholding rate pool,
the withholding agent must file Forms
1042-S for payments made to each payee
in that pool (other than U.S. exempt re-
cipients) in the prior calendar year by pro
rating the payment to each payee (includ-
ing U.S. exempt recipients) listed in the
withholding statement for that withhold-
ing rate pool, treating as a payee for this
purpose each chapter 4 withholding rate
pool identified by the nonqualified inter-
mediary under paragraph
(e)(3)(iv)(D)(2)(ii) of this section. If the
nonqualified intermediary fails to allocate
10 percent or less of an amount required
to 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 this
section and § § 1.1441-5(d) and (e)(6),
1.6049-5(d), and § 1.1471-3(f)(5) (for a
withholdable payment for chapter 4 pur-
poses). The portion of the payment that
can be allocated to specific recipients, as
defined in § 1.1461-1(c)(1)(ii), shall be
reported to each recipient in accordance
with 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 may
notify 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 agent
receives such a notice, it must commence
withholding under this section or chapter
4 (if applicable) in accordance with the
presumption rules of paragraph (b)(3) of
this section and § § 1.1441-5(d) and
(e)(6), 1.6049-5(d), and1.1471-3(f)(5)
(for a withholdable payment for chapter 4
purposes) unless the nonqualified interme-
diary, U.S. branch, or flow-through entity
complies with the procedures in para-
graphs (e)(3)(iv)(A) through (C) of this
section. In addition, the IRS may notify a
withholding agent, in appropriate circum-
stances, that it must apply the presumption
rules of paragraph (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 with-

holdable payment for chapter 4 purposes)
to payments made to a nonqualified inter-
mediary, a U.S. branch, or a flow-through
entity even if the nonqualified intermedi-
ary, U.S. branch or flow-through entity
provides allocation information prior to
the payment. A withholding agent that
receives a notice under this paragraph
(e)(3)(iv)(E) must commence withholding
in accordance with the presumption rules
within 30 days of the date of the notice.
The IRS may withdraw its prohibition
against using the alternative procedures of
paragraph (e)(3)(iv)(D) of this section, or
its requirement to follow the presumption
rules, if the nonqualified intermediary,
U.S. branch, or flow-through entity can
demonstrate to the satisfaction of the IRS
that it is capable of complying with the
rules 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 certificate
provided by a U.S. branch (including a
territory financial institution) described in
paragraph (b)(2)(iv) of this section that is
not the beneficial owner of the income.
The withholding certificate is provided
with respect to reportable amounts and
must state that such amounts are not ef-
fectively connected with the conduct of a
trade or business in the United States. The
withholding certificate must either trans-
mit the appropriate documentation for the
persons for whom the branch receives the
payment (i.e., as an intermediary) or be
provided as evidence of its agreement
with the withholding agent to be treated as
a U.S. person with respect to any payment
associated with the certificate. A U.S.
branch withholding certificate is valid
only if it is furnished on a Form W-8, an
acceptable substitute form, or such other
form as the IRS may prescribe, it is signed
under penalties of perjury by a person
authorized to sign for the branch, its va-
lidity has not expired, and it contains the
information, statements, and certifications
described in this paragraph (e)(3)(v). If
the certificate is furnished to transmit
withholding 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 nonqualified
intermediary. If the certificate is furnished
pursuant to an agreement to treat the U.S.
branch or territory financial institution as
a U.S. person (which agreement must be
for purposes of chapter 4 in addition to
this section in the case of a payment that is
a withholdable payment), the information
and certifications required on the with-
holding certificate are limited to the fol-
lowing-

(A) The name of the territory financial
institution 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 provided
by a U.S. branch, a certification that the
person of which the branch is a part is a
participating FFI or registered deemed-
compliant FFI;

(B) A certification that the payments
associated with the certificate are not ef-
fectively connected with the conduct of its
trade or business in the United States;

(C) The EIN of the territory financial
institution or branch;

(D) The GIIN of the FFI of which the
U.S. branch is a part, if applicable; and

(E) Any other information, certifica-
tions, or statements as may be required by
the form or accompanying instructions in
addition to, or in lieu of, the information
and 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 in
this paragraph (e)(4) describe procedures
applicable to withholding certificates on
Form W-8 or Form 8233 (or a substitute
form) or documentary evidence furnished
to establish foreign status. These provi-
sions do not apply to Forms W-9 (or their
substitutes). For corresponding provisions
regarding Form W-9 (or a substitute
form), see section 3406 and the regula-
tions under that section.

(i) Who may sign the certificate. A
withholding certificate (including an ac-
ceptable substitute) may be signed by any
person authorized to sign a declaration
under penalties of perjury on behalf of the
person whose name is on the certificate as
provided in section 6061 and the regula-

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tions under that section (relating to who
may sign generally for an individual, es-
tate, or trust, which includes certain
agents who may sign returns and other
documents), section 6062 and the regula-
tions under that section (relating to who
may sign corporate returns), and section
6063 and the regulations under that sec-
tion (relating to who may sign partnership
returns). A person authorized to sign a
withholding certificate includes an officer
or director of a corporation, a partner of a
partnership, a trustee of a trust, an execu-
tor of an estate, any foreign equivalent of
the former titles, and any other person that
has been provided written authorization
by the individual or entity named on the
certificate to sign documentation on such
person's behalf.

(ii) Period of validity-(A) General
rule. Except as provided otherwise in
paragraphs (e)(4)(ii)(B) and (C) of this
section and this paragraph (e)(4)(ii)(A), a
withholding 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 portfolio
interest 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 the
withholding certificate is signed [or the
day that a change in circumstances occurs
that makes any information on the certif-
icate incorrect]. For example, a withhold-
ing certificate signed on September 30,
2015, remains valid through December
31, 2018, unless circumstances change
that make the information on the form no
longer correct. Documentary evidence de-
scribed in § 1.1441-6(c)(3) or (4) or
§ 1.6049-5(c)(1) shall remain valid until
the last day of the third calendar year
following 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. Documentary
evidence described in § 1.6049-
5(c)(1) provided to establish a payee's
foreign status that contains an expiration
date may, however, be treated as valid
until that expiration date if doing so would
provide a longer period of validity than
the three-year period. Additionally, a
withholding certificate or documentary
evidence with a period of validity that is
valid 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. Notwithstanding
the validity periods prescribed by this
paragraph (e)(4)(ii)(A) and paragraphs
(e)(4)(ii)(B) and (C) of this section, a
withholding certificate and documentary
evidence will cease to be valid if a change
in circumstances makes the information
on the documentation incorrect.

(B) Indefinite validity period. Notwith-
standing paragraph (e)(4)(ii)(A) of this
section, the following certificates (or parts
of certificates) and documentary evidence
described in paragraphs (e)(4)(ii)(B)(1)
through (11) of this section shall remain
valid until the a change in circumstances
makes the information on the documentation
incorrect under paragraph (e)(4)(ii)(D)(3).
See, however, § 1.1471-3(c)(6)(ii) for
when a withholding certificate or docu-
mentary evidence remains valid (or is sub-
ject to renewal) when also provided with
respect to a withholdable payment made
to an entity (including an intermediary)
for purposes of whether a withholding
agent may continue to rely on the entity's
claim of chapter 4 status. Additionally, the
provisions of paragraphs (e)(4)(ii)(B)(1),
(2), and (12) of this section do not apply to
documentary evidence or a withholding
certificate furnished prior to July 1, 2014.

(1) A beneficial owner withholding
certificate (other than the portion of the
certificate making a claim for treaty ben-
efits) and documentary evidence support-
ing a claim of foreign status when both are
provided together by an individual claim-
ing foreign status if the withholding agent
does not have a current U.S. residence
address or U.S. mailing address for the
payee, does not have one or more current
U.S. telephone numbers that are the only
telephone numbers the withholding agent
has for the payee, and, for a payment
described in § 1.6049-5(c)(1), the with-
holding agent has not been provided
standing instructions to make a payment
to an account in the United States for the
obligation.

(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 an
entity supporting the entity's claim of for-
eign status.

(3) A beneficial owner withholding
certificate provided by an entity claiming
status as a tax-exempt entity under section
501(c) that is not a foreign private foun-
dation under section 509, provided that
the withholding agent reports at least one
payment 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 not
including the withholding certificates,
documentary evidence, statements or
other information associated with the cer-
tificate.

(5) A certificate described in paragraph
(e)(3)(iii) of this section (a nonqualified
intermediary certificate), but not including
the withholding certificates, documentary
evidence, statements or other information
associated 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 provided
by 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 provided
by 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 from
a person representing to be a withholding
foreign partnership).

(10) A certificate described in
§ 1.1441-5(c)(3)(iii) (a withholding cer-
tificate from a nonwithholding foreign
partnership) 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 person
representing to be an integral part of a
foreign government (within the meaning
of § 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

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(12) Documentary evidence that is not
generally renewed or amended (such as a
certificate of incorporation).

(C) Withholding certificate for effec-
tively connected income. Notwithstanding
paragraph (e)(4)(ii)(B) of this section, the
period of validity of a withholding certif-
icate furnished to a withholding agent to
claim a reduced rate of withholding for
income that is effectively connected with
the conduct of a trade or business within
the United States shall be limited to the
three-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 in
circumstances affecting the correctness of
the 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 in
circumstances only if such change affects
the person's claim of chapter 3 status.
Thus, for example, a change of address is
not a change in circumstances with re-
spect to a claim of only foreign status
under this paragraph (e)(4)(ii)(D) if the
change is to another address outside the
United States, but is a change in circum-
stances if the change is to an address in
the U.S.

(2) Obligation to notify a withholding
agent of a change in circumstances. If a
change in circumstances makes any infor-
mation on a certificate or other documen-
tary evidence incorrect, then the person
whose name is on the certificate or other
documentation must inform the withhold-
ing agent within 30 days of the change
and furnish a new certificate or new doc-
umentary evidence. If an intermediary (in-
cluding a U.S. branch or territory financial
institution 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 from
whom it collects a payment is no longer
valid because of a change in the circum-
stances of the person who issued the cer-
tificate or furnished the other appropriate
documentation, then the intermediary or
flow-through entity must notify the person
from whom it collects the payment of the
change of circumstances within 30 days of
the date that it knows or has reason to

know of the change in circumstances. It
must also obtain a new withholding cer-
tificate or new appropriate documentation
to replace the existing certificate or docu-
mentation the validity of which has ex-
pired due to the change in circumstances
to continue to treat the person who pro-
vided the certificate or documentary evi-
dence under its claimed chapter 3 status.

(3) Withholding agent's obligation
with 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 may
affect the validity of the statement, unless
it knows or has reason to know that cir-
cumstances have changed, as permitted
under paragraph (e)(4)(viii) of this sec-
tion. A withholding agent is required to
notify any person providing documentary
evidence (in lieu of a withholding certifi-
cate) of the person's obligation to notify
the withholding agent of a change in cir-
cumstances. However, a withholding
agent may choose to apply the provisions
of paragraph (b)(3)(iv) of this section re-
garding the 90-day grace period as of that
date while awaiting a new certificate or
documentation or while seeking informa-
tion regarding changes, or suspected
changes, in the person's circumstances. A
withholding agent may also require a new
certificate at any time prior to a payment,
even though the withholding agent has no
actual knowledge or reason to know that
any information stated on the certificate
has changed.

(iii) Retention of documentation. A
withholding agent must retain each with-
holding certificate and other documenta-
tion for purposes of this section for as
long 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 a
withholding certificate or documentary
evidence that is an original, certified copy,
or a scanned document (as described in
paragraph (e)(4)(iv)(C) of this section). A
withholding agent may also retain a with-
holding certificate by other means (such
as microfiche) that allows a reproduction
of the document provided that the with-
holding agent has recorded its receipt of a
form described in the preceding sentence
and is able to a produce a hard copy of the
form. See § 1.6049-5(c)(1) for the re-

quirements for maintaining documentary
evidence that also apply for purposes of
determining a payee's U.S. or foreign sta-
tus for purposes of chapter 3.

(iv) Electronic transmission of infor-
mation-(A) In general. A withholding
agent 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 the
Internal Revenue Service may prescribe.
The system must meet the requirements
described in paragraph (e)(4)(iv)(B) of
this section. See paragraph (e)(iv)(4)(C)
of this section for other cases in which a
Form W-8 (or other documentation) may
be furnished electronically.

(B) [Reserved]. For further guidance,
see § 1.1441-1(e)(4)(iv)(B).

(C) Forms and documentary evidence
received by facsimile or e-mail. A with-
holding agent may rely upon an otherwise
valid Form W-8 (or documentary evi-
dence) received by facsimile or a form or
document scanned and received electron-
ically, such as, for example, an image
embedded in an e-mail or as a Portable
Document Format (.pdf) attached to an
e-mail. A withholding agent may not rely
on a form or document received by such
means, however, if the withholding agent
knows that the form or document was
transmitted to the withholding agent by a
person not authorized to do so by the
person required to execute the form. A
withholding agent may establish other
procedures to authenticate and verify a
form or document sent by such means and
may reject any form or document that fails
to satisfy the requirements of such proce-
dures.

(v) Additional procedures for certifi-
cates provided electronically. The IRS
may prescribe procedures in a revenue
procedure (see § 601.601(d)(2) of this
chapter) or may issue other appropriate
guidance (including a written directive for
revenue agents) to further prescribe the
conditions by which the IRS will deter-
mine that a system developed by a with-
holding agent to permit beneficial owners
and payees to provide Forms W-8 elec-
tronically satisfies the requirements of
paragraph (e)(4)(iv)(B) of this section.

(vi) Acceptable substitute form. A
withholding agent may substitute its own
form instead of an official Form W-8 or

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8233 (or such other official form as the
IRS may prescribe). Such a substitute for
an official form will be acceptable if it
contains provisions that are substantially
similar to those of the official form, it
contains the same certifications relevant to
the transactions as are contained on the
official form and these certifications are
clearly set forth, and the substitute form
includes a signature-under-penalties-of-
perjury statement identical to the one
stated on the official form. The substitute
form is acceptable even if it does not
contain all of the provisions contained on
the official form, so long as it contains
those provisions that are relevant to the
transaction for which it is furnished (in-
cluding those required for purposes of
chapter 4). For example, a withholding
agent that pays no income for which treaty
benefits are claimed may develop a sub-
stitute form that is identical to the official
form, except that it does not include in-
formation regarding claims of benefits un-
der an income tax treaty. Similarly, a
withholding agent that is not required to
determine the chapter 4 status of a payee
providing a form may develop a substitute
form that does not contain chapter 4 sta-
tuses. A withholding agent who uses a
substitute form must furnish instructions
relevant to the substitute form only to the
extent and in the manner specified in the
instructions to the official form. A with-
holding agent may use a substitute form
that is written in a language other than
English and may accept a form that is
filled out in a language other than English,
but the withholding agent must make
available an English translation of the
form and its contents to the IRS upon
request. A withholding agent may refuse
to accept a certificate from a payee or
beneficial owner (including the official
Form W-8 or 8233) if the certificate pro-
vided is not an acceptable substitute form
provided by the withholding agent, but
only if the withholding agent furnishes the
payee or beneficial owner with an accept-
able substitute form within 5 business
days of receipt of an unacceptable form
from the payee or beneficial owner. In that
case, the substitute form is acceptable
only if it contains a notice that the with-
holding agent has refused to accept the
form submitted by the payee or beneficial
owner and that the payee or beneficial

owner must submit the acceptable form
provided by the withholding agent in or-
der for the payee or beneficial owner to be
treated as having furnished the required
withholding certificate.

(vii) Requirement of taxpayer identify-
ing number. A TIN must be stated on a
withholding certificate when required by
this paragraph (e)(4)(vii) for the withhold-
ing certificate to be valid for purposes of
this section. A TIN is required to be stated
on-

(A) A withholding certificate on which
a beneficial owner is claiming the benefit
of a reduced rate under an income tax
treaty (other than for amounts described in
§ 1.1441-6(c)(2) or amounts for which a
foreign tax identifying number has been
provided, as described in § 1.1441-
6(c)(2));

(B) through (E) [Reserved]. For further
guidance, see § 1.1441-1(e)(4)(vii)(B)
through (E).

(F) A withholding certificate from a
person representing to be a withholding
foreign 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 a
person representing to be a U.S. branch or
territory financial institution described in
paragraph (b)(2)(iv) of this section; and

(I) A withholding certificate provided
by an entity acting as a qualified securities
lender, as defined for purposes of chapter
3, with respect to a substitute dividend
paid in a securities lending or similar
transaction.

(viii) [Reserved]. For further guidance,
see § 1.1441-1(e)(4)(viii) introductory
text and (e)(4)(viii)(A).

(B) Status of payee as an intermediary
or as a person acting for its own account.
A withholding agent may rely on the type
of certificate furnished as indicative of the
payee's status as an intermediary or as an
owner, unless the withholding agent has
actual knowledge or reason to know oth-
erwise. For example, a withholding agent
that receives a beneficial owner withhold-
ing certificate from a foreign financial in-
stitution may treat the institution as the
beneficial owner, unless it has information
in 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 numbers
that do not correspond to accounts main-
tained by the withholding agent for such
person or names of one or more persons
other than the person submitting the with-
holding certificate). If the financial insti-
tution also acts as an intermediary, the
withholding agent may request that the
institution furnish two certificates, i.e., a
beneficial owner certificate described in
paragraph (e)(2)(i) of this section for the
amounts that it receives as a beneficial
owner, and an intermediary withholding
certificate described in paragraph (e)(3)(i)
of this section for the amounts that it
receives as an intermediary. In the ab-
sence of reliable representation or infor-
mation regarding the status of the payee as
an owner or as an intermediary, see para-
graph (b)(3)(v)(A) for applicable pre-
sumptions.

(C) Reliance on a prior version of a
withholding certificate. Upon the issuance
by the IRS of an updated version of a
withholding certificate, a withholding
agent may continue to accept the prior
version of the withholding certificate for
six months after the revision date shown
on the updated withholding certificate, un-
less the IRS has issued guidance that in-
dicates otherwise, and may continue to
rely upon a previously signed prior ver-
sion of the withholding certificate until its
period of validity expires.

(ix) Certificates to be furnished to
withholding agent for each obligation un-
less exception applies. Unless otherwise
provided in paragraphs (e)(4)(ix)(A)
through (D) of this section, a withholding
agent that is a financial institution with
which a customer may open an account
shall obtain a withholding certificate or
documentary evidence on an obligation-
by-obligation basis and may not rely upon
such documentation collected by another
person or another branch of the withhold-
ing agent.

(A) Exception for certain branch or
account systems or system maintained by
agent. A withholding agent may rely on a
withholding certificate or documentary
evidence furnished by a customer as part
of a single branch system, universal ac-
count system, or shared account system
described in § 1.1471-3(c)(8) (substitut-
ing the term chapter 3 status for chapter 4
status each place it appears in that para-

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graph). Furthermore, a withholding agent
may rely on a shared documentation sys-
tem maintained by an agent as described
in § 1.1471-3(c)(9)(i) (also substituting
the term chapter 3 status for chapter 4
status each place it appears in that para-
graph).

(B) Reliance on certification provided
by introducing brokers-(1) In general. A
withholding agent may rely on the certi-
fication of a broker indicating the broker's
determination 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 this
section or other appropriate documenta-
tion for that beneficial owner with respect
to 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 this
section) that is acting as the agent of a
beneficial owner. A withholding agent
may also rely on a certification described
in the preceding sentence that is provided
by a qualified intermediary that makes
payments to beneficial owners that it re-
ceives from the withholding agent. The
certification 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 to
use this paragraph (e)(4)(ix)(B), that bro-
ker will be solely responsible for applying
the 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's
failure to apply such rules. See § 1.1471-
3(c)(9)(iii) for a similar allowance that
applies to a broker's determination of a
payee's chapter 4 status for purposes of
chapter 4. For purposes of this paragraph
(e)(4)(ix)(B), the term broker means a
person treated as a broker under § 1.6045-
1(a).

(2) Example. The following example
illustrates 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 to
a 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 of
income 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 is
a foreign beneficial owner, CB provides SCO with
information required under paragraphs (e)(3)(iv)(B)
and (C) of this section that is necessary to apply the
correct rate of withholding and to file Forms 1042-S.
SCO may use the representations and beneficial
owner information provided by CB to determine the
proper amount of withholding and to file Forms
1042-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 and
certifications provided between principals
and agents-(1) Withholding agent as
agent. A withholding agent may rely upon
documentation and certifications provided
by a principal for purposes of determining
a payee's chapter 3 status only if the prin-
cipal is a U.S. withholding agent, a qual-
ified intermediary (when acting as such
for determining a payee's status), or a
withholding foreign partnership or with-
holding foreign trust with respect to a
partner, owner, or beneficiary in the en-
tity. Thus an agent (such as a paying agent
or transfer agent) may not rely upon a
certification provided by a principal that is
a participating FFI but is not also a qual-
ified intermediary, withholding foreign
partnership, or withholding foreign trust
for purposes of this section, even though it
may rely on the certification when pro-
vided solely for purposes of chapter 4
under § 1.1471-3(c)(9)(iv).

(2) Withholding agent as principal. A
withholding agent may also rely on doc-
umentation collected by an agent of the
withholding agent in order to fulfill its
chapter 3 obligations because such agent's
actions are imputed to the principal (the
withholding agent). For example, a with-
holding agent may contract an agent to
collect Forms W-8 from account holders,
but the withholding agent remains liable
for any tax liability resulting from a fail-
ure of the agent to comply with the re-
quirements of chapter 3.

(D) Reliance upon documentation for
accounts acquired in merger or bulk ac-
quisition for value. A withholding agent
that 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 (or
copies of valid documentation) collected
by the predecessor or transferor for deter-
mining the chapter 3 status of an account
holder of such an account. In addition, a

withholding agent that acquires an ac-
count in a merger or bulk acquisition of
accounts for value, other than a related
party transaction, from a U.S. withholding
agent (or a qualified intermediary when
the withholding agent is also a qualified
intermediary) may also rely upon the pre-
decessor's or transferor's determination of
the account holder's chapter 3 status for a
transition period of the lesser of six
months from the date of the merger or
until the acquirer knows that the claim of
entity classification and status is inaccu-
rate or a change in circumstances occurs
with respect to the account. At the end of
the transition period, the acquirer will be
permitted to rely upon the predecessor's
determination as to the chapter 3 status of
the account holder only if the documenta-
tion that the acquirer has for the account
holder, including documentation obtained
from the predecessor or transferor, sup-
ports the status claimed. An acquirer that
discovers at the end of the transition pe-
riod that the chapter 3 status assigned by
the predecessor or transferor to the ac-
count holder was incorrect and has not
withheld as it would have been required to
but for its reliance upon the predecessor's
determination, will be required to with-
hold on future payments, if any, made to
the account holder the amount of tax that
should have been withheld during the
transition period but for the erroneous
classification as to the account holder's
status. For purposes of this paragraph
(e)(4)(ix)(D), a related party transaction is
a merger or sale of accounts in which the
acquirer is in the same expanded affiliated
group, within the meaning of § 1.1471-
5(i)(2), as the predecessor or transferor
either prior to or after the merger or ac-
quisition or the predecessor or transferor
(or shareholders of the predecessor or
transferor) obtain a controlling interest in
the acquirer or in a newly formed entity
created for purposes of the merger or ac-
quisition. See § 1.1471-3(c)(v) for a sim-
ilar reliance rule that applies for purposes
of 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 intermediary
withholding certificate to a withholding
agent. The withholding certificate pro-
vides certifications on behalf of other per-

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sons for the purpose of claiming and ver-
ifying reduced rates of withholding under
section 1441 or 1442 and for the purpose
of reporting and withholding under other
provisions of the Internal Revenue Code,
such as the provisions under chapters 4
and 61 and section 3406 (and the regula-
tions under those provisions). Furnishing
such a certificate is in lieu of transmitting
to a withholding agent withholding certif-
icates or other appropriate documentation
for the persons for whom the qualified
intermediary 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 certificates
or other appropriate documentation from
beneficial owners, payees, or interest
holders pursuant to its agreement with the
IRS, it is generally not required to attach
such documentation to the intermediary
withholding certificate. Notwithstanding
the preceding sentence a qualified inter-
mediary must provide a withholding agent
with the Forms W-9, or disclose the
names, addresses, and taxpayer identify-
ing numbers, if known, of those U.S. non-
exempt recipients for whom the qualified
intermediary receives reportable amounts
(within the meaning of paragraph
(e)(3)(vi) of this section) to the extent
required in the qualified intermediary's
agreement with the IRS and except as
otherwise 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 a
withholding agreement with the IRS and
such person is-

(A) A foreign financial institution that
is a participating FFI (including a report-
ing Model 2 FFI), a registered deemed-
compliant FFI (including a reporting
Model 1 FFI), or an FFI treated as a
deemed-compliant FFI under an applica-
ble IGA that is subject to due diligence
and reporting requirements with respect to
its U.S. accounts similar to those applica-
ble to a registered deemed-compliant FFI
under § 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 that
is either a reporting Model 1 FFI or agrees
to the reporting requirements applicable to
a participating FFI with respect to its U.S.
accounts;

(C) A foreign corporation for purposes
of presenting claims of benefits under an
income tax treaty on behalf of its share-
holders to the extent permitted to act as a
qualified intermediary by the IRS; or

(D) Any other person acceptable to the
IRS.

(iii) Withholding agreement-(A) In
general. The IRS may, upon request, enter
into a withholding agreement with a for-
eign person described in paragraph
(e)(5)(ii) of this section pursuant to such
procedures as the IRS may prescribe in
published guidance (see § 601.601(d)(2)
of this chapter). Under the withholding
agreement, a qualified intermediary shall
generally be subject to the applicable
withholding and reporting provisions ap-
plicable to withholding agents and payors
under chapters 3, 4, and 61 of the Internal
Revenue Code, section 3406, the regula-
tions under those provisions, and other
withholding provisions of the Internal
Revenue 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 qualified
intermediary that is an FFI, require the
qualified intermediary to satisfy the doc-
umentation, withholding, and reporting
obligations required of a participating FFI
or registered deemed-compliant FFI (in-
cluding a reporting Model 1 FFI as de-
fined in § 1.1471-1(b)(114)) with respect
to each branch of the qualified intermedi-
ary other than a U.S. branch that is treated
as a U.S. person under paragraph
(b)(2)(iv)(A) of this section. The agree-
ment will specify the type of certifications
and documentation upon which the qual-
ified intermediary may rely to ascertain
the classification (e.g., corporation or part-
nership), status (i.e., U.S. or foreign and
chapter 4 status) of beneficial owners and
payees who receive reportable amounts
and reportable payments collected by the
qualified intermediary for purposes of
chapters 3 and 61, section 3406, and, if
necessary, entitlement to the benefits of a
reduced rate under an income tax treaty.

The agreement shall specify if, and to
what extent, the qualified intermediary
may 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 return
filing and information reporting require-
ments are modified so that, in appropriate
cases, the qualified intermediary may re-
port payments to the IRS on an aggregated
basis, without having to disclose the iden-
tity of beneficial owners and payees.
However, the qualified intermediary may
be required to provide to the IRS the name
and address of those foreign customers
who benefit from a reduced rate under an
income tax treaty pursuant to the qualified
intermediary arrangement for purposes of
verifying entitlement to such benefits, par-
ticularly under an applicable limitation on
benefits provision. Under the agreement, a
qualified intermediary may agree to act as
an acceptance agent to perform the duties
described in § 301.6109-1(d)(3)(iv)(A) of
this chapter. The agreement may specify
the manner in which applicable proce-
dures for adjustments for underwithhold-
ing and overwithholding, including refund
procedures, apply in the context of a qual-
ified intermediary arrangement and the
extent to which applicable procedures
may be modified. In particular, a with-
holding agreement may allow a qualified
intermediary to claim refunds of over-
withheld amounts. The agreement shall
specify the manner in which the qualified
intermediary may deal with payments to
other intermediaries and flow-through en-
tities and the obligations of a qualified
intermediary that acts as a qualified secu-
rities lender with respect to payments of
substitute dividends under chapters 3 and
4. In addition, the agreement shall specify
the manner in which the IRS will verify
compliance with the agreement, including
the time and manner for which a qualified
intermediary will be required to certify to
the IRS regarding its compliance with the
agreement (including its performance of a
periodic review) and the types of informa-
tion required to be disclosed as part of the
certification. In appropriate cases, the IRS
may require review procedures be per-
formed by an approved auditor (in addi-
tion to those performed as part of the
periodic review) and may conduct a re-
view of the auditor's findings. The agree-

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ment may include provisions for the as-
sessment and collection of tax in the event
that failure to comply with the terms of
the agreement results in the failure by the
withholding agent or the qualified inter-
mediary to withhold and deposit the re-
quired amount of tax. Further, the agree-
ment may specify the procedures by
which amounts withheld are to be depos-
ited, if different from the deposit proce-
dures under the Internal Revenue Code
and applicable regulations. To determine
whether to enter a qualified intermediary
withholding agreement and the terms of
any particular withholding agreement, the
IRS will consider the type of local know-
your-customer laws and practices to
which the entity is subject, as well as the
extent and nature of supervisory and reg-
ulatory control exercised under the laws
of the foreign country over the foreign
entity.

(iv) Assignment of primary withhold-
ing responsibility. Any person who meets
the definition of a withholding agent un-
der § 1.1441-7(a) (for payments subject
to 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 deposit
any amount withheld under § § 1.1461-
1(a) and 1.1474-1(b) and to make the
returns prescribed by § § 1.1461-1(b) and
(c), and by 1.1474-1(c), and (d). Under its
qualified intermediary agreement, a qual-
ified intermediary agreement may, how-
ever, inform a withholding agent from
which it receives a payment that it will
assume the primary obligation to with-
hold, deposit, and report amounts under
chapters 3 and 4 of the Internal Revenue
Code and/or under chapter 61 of the In-
ternal Revenue Code and section 3406.
For assuming withholding obligations as
described in the previous sentence, a qual-
ified intermediary that assumes primary
withholding responsibility for payments
made to an account under chapter 3 is also
required to assume primary withholding
responsibility under chapter 4 for pay-
ments made to the account that are with-
holdable payments. Additionally, a quali-
fied intermediary may represent that it
assumes chapter 61 reporting and section
3406 obligations for a payment when the
qualified intermediary reports the pay-
ment (or the account to which the pay-

ment is made) as part of its applicable
U.S. account reporting requirements as a
participating FFI or registered deemed-
compliant FFI. If a withholding agent
makes a payment of an amount subject to
withholding under chapter 3, a reportable
payment (as defined in section 3406(b)),
or a withholdable payment to a qualified
intermediary that represents to the with-
holding agent that it has assumed primary
withholding responsibility for the pay-
ment, the withholding agent is not re-
quired to withhold on the payment. The
withholding agent is not required to deter-
mine that the qualified intermediary
agreement actually performs its primary
withholding responsibilities. A qualified
intermediary that assumes primary with-
holding responsibility under chapters 3
and 4 or primary reporting and backup
withholding responsibility under chapter
61 and section 3406 is not required to
assume primary withholding responsibil-
ity for all accounts it has with a withhold-
ing agent but must assume primary with-
holding responsibility for all payments
made to any one account that it has with
the withholding agent.

(v) Withholding statement-(A) In
general. A qualified intermediary must
provide each withholding agent from
which it receives reportable amounts as a
qualified intermediary with a written
statement (the withholding statement)
containing the information specified in
paragraph (e)(5)(v)(B) of this section. A
withholding 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. The
qualified intermediary agreement will re-
quire the qualified intermediary to include
information in its withholding statement
relating to withholdable payments for pur-
poses of withholding under chapter 4 as
described in paragraph (e)(5)(v)(C)(2) of
this section. The withholding statement
forms an integral part of the qualified in-
termediary's qualified intermediary with-
holding certificate and the penalties of
perjury statement provided on the with-
holding certificate shall apply to the with-
holding statement as well. The withhold-
ing statement may be provided in any
manner, 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 must
satisfy the requirements described in para-
graph (e)(3)(iv) of this section (applicable
to a withholding statement provided by a
nonqualified intermediary). The withhold-
ing statement shall be updated as often as
necessary for the withholding agent to
meet its reporting and withholding obliga-
tions under chapters 3, 4, and 61 and
section 3406. For purposes of this section,
a withholding agent will be liable for tax,
interest, and penalties in accordance with
paragraph (b)(7) of this section to the ex-
tent it does not follow the presumption
rules 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, for
which it does not have a valid withholding
statement prior to making a payment.

(B) Content of withholding statement.
The withholding statement must contain
sufficient information for a withholding
agent to apply the correct rate of with-
holding on payments from the accounts
identified on the statement and to properly
report such payments on Forms 1042-S
and Forms 1099, as applicable. The with-
holding statement must-

(1) Designate those accounts for which
the qualified intermediary acts as a quali-
fied intermediary;

(2) Designate those accounts for which
qualified intermediary assumes primary
withholding responsibility under chapter 3
and chapter 4 of the Code and/or primary
reporting 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 securities
lender with respect to a substitute divi-
dend paid in a securities lending or similar
transaction; and

(4) Provide information regarding
withholding rate pools, as described in
paragraph (e)(5)(v)(C) of this section.

(C) Withholding rate pools-(1) In
general. 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 primary
reporting and backup withholding respon-
sibility under chapter 61 and section 3406
with respect to a payment, a qualified in-
termediary shall provide as part of its

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withholding statement the chapter 3 with-
holding rate pool information that is re-
quired for the withholding agent to meet
its withholding and reporting obligations
under chapters 3 and 61 of the Internal
Revenue Code and section 3406. See,
however, paragraph (e)(5)(v)(C)(2) of this
section for when a qualified intermediary
may provide a chapter 4 withholding rate
pool (as described in paragraph (c)(48) of
this section) with respect to a payment
that is a withholdable payment. A chapter
3 withholding rate pool is a payment of a
single type of income, determined in ac-
cordance with the categories of income
reported on Form 1042-S that is subject to
a single rate of withholding paid to a
payee that is a foreign person and for
which withholding under chapter 4 does
not apply except as otherwise provided in
this paragraph (e)(5)(v)(C)(1). A chapter 3
withholding rate pool may be established
by any reasonable method on which the
qualified intermediary and a withholding
agent 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 into
portions 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. exempt
recipients or may include such accounts in
a chapter 3 withholding rate pool to which
withholding 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 rate
pool contained on the withholding state-
ment (subdividing a chapter 3 withholding
rate pool into sub-pools as necessary
based on the applicable chapter 4 exemp-
tion code). To the extent a qualified inter-
mediary does not assume primary report-
ing and backup withholding responsibility
under 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-exempt
recipient account holder that the qualified
intermediary has disclosed to the with-
holding agent unless the qualified inter-
mediary uses the alternative procedures in
paragraph (e)(5)(v)(C)(3) of this section
or the account holder is a payee that the
qualified intermediary is permitted to in-

clude in a chapter 4 withholding rate pool
of U.S. payees. A qualified intermediary
may include a chapter 4 withholding rate
pool of U.S. payees on a withholding
statement by applying the rules under
paragraph (e)(3)(iv)(A) of this section (by
substituting "qualified intermediary" for
"nonqualified intermediary") with respect
to an account that it maintains (as de-
scribed in § 1.1471-5(b)(5)) for the payee
of the payment. A qualified intermediary
shall determine withholding rate pools
based on valid documentation that it ob-
tains under its withholding agreement
with the IRS, or if a payment cannot be
reliably associated with valid documenta-
tion, under the applicable presumption
rules. If a qualified intermediary has an
account holder that is another intermedi-
ary (whether a qualified intermediary or a
nonqualified intermediary) or a flow-
through entity, the qualified intermediary
may combine the account holder informa-
tion provided by the other intermediary or
flow-through entity with the qualified in-
termediary's direct account holder infor-
mation to determine the qualified interme-
diary's chapter 3 withholding rate pools
and each of the qualified intermediary's
chapter 4 withholding rate pools to the
extent provided in the agreement de-
scribed in (e)(5)(iii) of this section.

(2) Withholding rate pool requirements
for 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 with
respect 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 described
in § 1.1471-3(c)(3)(iii)(B)(2) (describing
an FFI withholding statement), the with-
holding statement may include chapter 4
withholding rate pools with respect to the
portions of the payment allocated to recal-
citrant account holders and nonparticipat-
ing FFIs (to the extent permitted ) in lieu
of reporting chapter 3 withholding rate
pools with respect to such persons as de-

scribed in paragraph (e)(5)(v)(C)(1) of
this section); or

(ii) If the qualified intermediary pro-
vides a withholding statement described
in § 1.1471-3(c)(3)(iii)(B)(3) (describing
a chapter 4 withholding statement), the
withholding statement may include a
chapter 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 its
agreement with the IRS, a qualified inter-
mediary may, by mutual agreement with a
withholding agent, establish a single zero
withholding rate pool that includes U.S.
non-exempt recipient account holders for
whom the qualified intermediary has pro-
vided Forms W-9 prior to the withholding
agent paying any reportable payments, as
defined in the qualified intermediary
agreement, and a separate withholding
rate pool (subject to 28-percent withhold-
ing, or other applicable statutory back-up
withholding tax rate) that includes only
U.S. non-exempt recipient account hold-
ers for whom a qualified intermediary has
not provided Forms W-9 prior to the
withholding agent paying any reportable
payments. If a qualified intermediary
chooses the alternative procedure of this
paragraph (e)(5)(v)(C)(3), the qualified in-
termediary must provide the information
required by its qualified intermediary
agreement to the withholding agent no
later than January 15 of the year following
the year in which the payments are paid.
Failure to provide such information will
result in the application of penalties to the
qualified intermediary under sections
6721 and 6722, as well as any other ap-
plicable penalties, and may result in the
termination of the qualified intermediary's
withholding agreement with the IRS. A
withholding agent shall not be liable for
tax, interest, or penalties for failure to
backup withhold or report information un-
der chapter 61 of the Internal Revenue
Code due solely to the errors or omissions
of the qualified intermediary. If a qualified
intermediary 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 withholding
agent shall report the unallocated amount
paid from the withholding rate pool to an
unknown recipient, or otherwise in accor-

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dance with the appropriate Form 1099 and
the instructions accompanying the form.

(D) Example. The following example illustrates
the application of paragraph (e)(5)(v)(C) for a qual-
ified intermediary providing chapter 4 withholding
rate pools on an FFI withholding statement provided
to a withholding agent. WA makes a payment of
U.S. source interest that is a withholdable payment
to QI, a qualified intermediary that is an FFI and a
non-U.S. payor (as defined in § 1.6049-5(c)(5)), and
A 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 A
and B. A has provided WA with a Form W-9, but B
has not provided WA with a Form W-9. QI assumes
primary withholding responsibility under chapters 3
and 4 with respect to the payment, 80-percent of
which is allocable to foreign payees who are account
holders 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 into
the agreement described in paragraph (e)(5)(iii) of
this section). Provided that QI reports A's account as
a U.S. account under the requirements referenced in
the preceding sentence, QI is not required to provide
WA with a Form W-9 from A and may instead
include A in a chapter 4 withholding rate pool of
U.S. payees, allocating 10% of the payment to this
pool. See § 1.6049-4(c)(4)(iii) concerning when re-
porting under section 6049 for a payment of interest
is not required when an FFI that is a non-U.S. payor
reports an account holder receiving the payment
under its chapter 4 requirements. With respect to B,
the interest payment is subject to backup withhold-
ing under section 3406. Because B is a recalcitrant
account holder of QI for withholdable payments and
because QI assumes primary chapter 4 withholding
responsibility, however, QI may include the portion
of the payment allocated to B with the remaining
80% of the payment for which QI assumes primary
withholding responsibility. WA can reliably associ-
ate the full amount of the payment based on the
withholding statement and does so regardless of
whether WA knows B is a U.S. non-exempt recipient
that is receiving a portion of the payment. See
§ 31.3406(g)-1(e) (providing exemption to backup
withholding when withholding was applied under
chapter 4).

(f) [Reserved]. For further guidance,
see § 1.1441-1(f)(1) and (2).

(3) Effective/applicability date. This
section applies to payments made after
June 30, 2014. (For payments made after
December 31, 2000, and before July 1,
2014, see this section as in effect and
contained in 26 CFR part 1, as revised
April 1, 2013.)

(g) Expiration date. The applicability
of this section expires on February 28,
2017.

Par. 6. Section 1.1441-3 is amended by
revising paragraphs (a), (c)(4)(i), and (d)
and adding paragraph (j) to read as fol-
lows:

§ 1.1441-3 Determination of amounts to
be withheld.

(a) [Reserved]. For further guidance,
see § 1.1441-3T(a).

* * * * *

(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 amounts
to be withheld (temporary).

(a) General rule-(1) Withholding on
gross 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 income
subject to withholding that is paid to a
foreign person. The gross amount of in-
come subject to withholding may not be
reduced by any deductions, except to the
extent that one or more personal exemp-
tions are allowed as provided under
§ 1.1441-4(b)(6).

(2) Coordination with chapter 4. A
withholding agent making a payment that
is both a withholdable payment and an
amount subject to withholding under
§ 1.1441-2(a) and that has withheld tax as
required under chapter 4 from such pay-
ment, is not an amount required to be
withheld under this section notwithstand-
ing paragraph (a) (1) of this section. See
§ 1.1474-6(b)(1) for the allowance for a
withholding agent to credit withholding
applied under chapter 4 against its liability
for tax due under sections 1441, 1442, or
1443, and see § 1.1474-6(b)(1) for the
rule allowing a withholding agent to credit
withholding applied under chapter 4
against 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. If
the withholdable payment is not required
to be withheld upon under chapter 4, then
the withholding agent must apply the pro-

visions of § 1.1441-1 to determine
whether withholding is required under
sections 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 a
corporation that was a USRPHC at any
time during the five-year period ending on
the date of distribution) with respect to
stock that is a U.S. real property interest
under section 897(c) or from a Real Estate
Investment Trust (REIT) or other entity
that is a qualified investment entity (QIE)
under section 897(h)(4) with respect to its
stock is subject to the withholding provi-
sions under section 1441 (or section 1442
or 1443) and section 1445. A USRPHC
making a distribution shall be treated as
satisfying 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 all
the distributions made during the taxable
year. However, the USRPHC may change
the applicable withholding procedure
from year to year. For rules regarding
distributions by REITs and other entities
that are QIEs, see paragraph (c)(4)(i)(C)
of this section. To the extent withholding
under sections 1441, 1442, or 1443 ap-
plies under this paragraph (c)(4)(i) to any
portion of a distribution that is a withhold-
able payment, see paragraph (a)(2) for
rules coordinating withholding under
chapter 4.

(A) Withholding under section 1441.
The USRPHC may choose to withhold on
a distribution only under section 1441 (or
1442 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 an
income tax treaty applies to the distribu-
tion by the USRPHC, then the applicable
rate of withholding on the distribution
shall be no less than 10-percent, unless the
applicable treaty specifies an applicable
lower rate for distributions from a USR-

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PHC, in which case the lower rate may
apply.

(B) Withholding under both sections
1441 and 1445. As an alternative to the
procedure described in paragraph
(c)(4)(i)(A) of this section, a USRPHC
may choose to withhold under both sec-
tions 1441 (or 1442 or 1443) and 1445
under the procedures set forth in this para-
graph (c)(4)(i)(B). The USRPHC must
make a reasonable estimate of the portion
of the distribution that is a dividend under
paragraph (c)(2)(ii)(A) of this section, and
must-

(1) Withhold under section 1441 (or
1442 or 1443) on the portion of the dis-
tribution that is estimated to be a dividend
under 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 the
distribution or on such smaller portion
based 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 under
section 1441 (or 1442 or 1443) on the
portion of a distribution from a REIT or
other entity that is a QIE that is not des-
ignated (for REITs) or reported (for reg-
ulated investment companies that are
QIEs) as a capital gain dividend, a return
of basis, or a distribution in excess of a
shareholder's adjusted basis in the stock
of the REIT or QIE that is treated as a
capital gain under section 301(c)(3). A
distribution in excess of a shareholder's
adjusted basis in the stock of the REIT or
QIE is, however, subject to withholding
under section 1445, unless the interest in
the 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, withholding
is required under section 1445 on the por-
tion of the distribution designated (for
REITs) or reported (for regulated invest-
ment companies that are QIEs) as a capital
gain 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.

(ii) [Reserved]. For further guidance,
see § 1.1441-3(c)(4)(ii).

(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 does
not know at the time of payment the
amount that is subject to withholding be-
cause the determination of the source of
the income or the calculation of the
amount of income subject to tax depends
upon facts that are not known at the time
of payment, then the withholding agent
must withhold an amount under § 1.1441-
1 based on the entire amount paid that is
necessary to ensure that the tax withheld
is not less than 30 percent (or other appli-
cable percentage) of the amount that could
be from sources within the United States
or income subject to tax. See § 1.1471-
2(a)(5) for similar rules under chapter 4
that apply to payments made to payees
that are entities. The amount so withheld
shall not exceed 30 percent of the amount
paid. With respect to a payment described
in paragraph (d)(1) or (2) of this section,
the withholding agent may elect to retain
30 percent of the payment to hold in es-
crow until the earlier of the date that the
amount of income from sources within the
United States or the taxable amount can
be determined or one year from the date
the amount is placed is in escrow, at
which time the withholding becomes due
under § 1.1441-1, or, to the extent that
withholding is not required, the escrowed
amount must be paid to the payee.

(2) Withholding on certain gains. Ab-
sent actual knowledge or reason to know
otherwise, a withholding agent may rely
on a claim regarding the amount of gain
described in § 1.1441-2(c) if the benefi-
cial owner withholding certificate, or
other appropriate withholding certificate,
states the beneficial owner's basis in the
property giving rise to the gain. In the
absence of a reliable representation on a
withholding certificate, the withholding
agent must withhold an amount under
§ 1.1441-1 that is necessary to assure that
the tax withheld is not less than 30 percent
(or other applicable percentage) of the
recognized gain. For this purpose, the rec-
ognized gain is determined without regard
to any deduction allowed by the Code
from the gains. The amount so withheld
shall not exceed 30 percent of the amount
payable by reason of the transaction giv-
ing rise to the recognized gain. See
§ 1.1441-1(b)(8) regarding adjustments in
the case of overwithholding.

(e) through (i) [Reserved]. For further
guidance, 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 to
payments made after June 30, 2014. (For
payments made after December 31, 2000,
see this section as in effect and contained
in 26 CFR part 1 revised April 1, 2013.)

(2) Expiration date. The applicability
of this section expires on February 28,
2017.

Par. 8. Section 1.1441-4 is amended
by revising paragraphs (a)(2)(ii), (b)(2)(i),
(b)(2)(iii), (b)(2)(v), and (b)(3) and adding
paragraphs (g)(3) and (h) to read as fol-
lows:

§ 1.1441-4 Exemptions from
withholding for certain effectively
connected 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 from
withholding for certain effectively
connected income and other amounts
(temporary).

(a)(1) through (a)(2)(i) [Reserved]. For
further guidance, see § 1.1441-4(a)
through (a)(2)(i).

(ii) Special rules for U.S. branches of
foreign persons-(A) U.S. branches of

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certain foreign banks or foreign insurance
companies. A payment to a U.S. branch
described in § 1.1441-1(b)(2)(iv)(B)(3) is
presumed to be effectively connected with
the conduct of a trade or business in the
United States without the need to furnish a
certificate if the withholding agent obtains
an 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 no
certificate is furnished but the income is
not, in fact, effectively connected income,
then the branch must withhold whether
the payment is collected on behalf of other
persons or on behalf of another branch of
the same entity. See § 1.1441-1(b)(2)(iv)
and (b)(6) for general rules applicable to
payments 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 extent
provided in a determination letter from the
IRS.

(3) [Reserved]. For further guidance,
see § 1.1441-4(a)(3).

(b)(1) [Reserved]. For further guid-
ance, see § 1.1441-4(b)(1).

(2) Manner of obtaining withholding
exemption under tax treaty-(i) In gen-
eral. In order to obtain the exemption
from withholding by reason of a tax
treaty, provided by paragraph (b)(1)(iv) of
this section, a nonresident alien individual
must submit a withholding certificate (de-
scribed in paragraph (b)(2)(ii) of this sec-
tion) to each withholding agent from
whom amounts are to be received. A sep-
arate withholding certificate must be filed
for each taxable year of the alien individ-
ual. If the withholding agent is satisfied
that an exemption from withholding is
warranted (see paragraph (b)(2)(iii) of this
section), the withholding certificate shall
be accepted in the manner set forth in
paragraph (b)(2)(iv) of this section. The
exemption from withholding becomes ef-
fective for payments made at least ten
days after a copy of the accepted with-
holding certificate is forwarded to the IRS.
The withholding agent may rely on an
accepted withholding certificate only if
the IRS has not objected to the certificate.
For purposes of this paragraph (b)(2)(i),
the IRS will be considered to have not
objected to the certificate if it has not

notified the withholding agent within a
10-day period beginning from the date
that the withholding certificate is for-
warded to the IRS pursuant to paragraph
(b)(2)(v) of this section. After expiration
of the 10-day period, the withholding
agent may rely on the withholding certif-
icate retroactive to the date of the first
payment covered by the certificate. The
fact that the IRS does not object to the
withholding certificate within the 10-day
period provided in this paragraph (b)(2)(i)
shall not preclude the IRS from examining
the withholding agent at a later date with
respect to facts that the withholding agent
knew or had reason to know regarding the
payment and eligibility for a reduced rate
and that were not disclosed to the IRS as
part of the 10-day review process.

(ii) [Reserved]. For further guidance,
see § 1.1441-4(b)(2)(ii).

(iii) Review by withholding agent. The
exemption from withholding provided by
paragraph (b)(1)(iv) of this section shall
not apply unless the withholding agent
accepts (in the manner provided in para-
graph (b)(2)(iv) of this section) the state-
ment on Form 8233, "Exemption From
Withholding on Compensation for Inde-
pendent (and Certain Dependent) Personal
Services of a Nonresident Alien Individ-
ual," (or successor form) supplied by the
nonresident alien individual. Before ac-
cepting the statement, the withholding
agent must examine the statement. If the
withholding agent knows or has reason to
know that any of the facts or assertions on
Form 8233 may be false or that the eligi-
bility of the individual's compensation for
the exemption cannot be readily deter-
mined, the withholding agent may not ac-
cept the statement on Form 8233 and is
required to withhold under this section. If
the withholding agent accepts the state-
ment and subsequently finds that any of
the facts or assertions contained on Form
8233 may be false or that the eligibility of
the individual's compensation for the ex-
emption can no longer be readily deter-
mined, then the withholding agent shall
promptly so notify the IRS by letter, and
the withholding agent is not relieved of
liability to withhold on any amounts still
to be paid. If the withholding agent is
notified by the IRS that the eligibility of
the 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 this
paragraph (b)(2) are illustrated by the fol-
lowing examples.

Example 1. C, a nonresident alien individual,
submits Form 8233 to W, a withholding agent. The
statement on Form 8233 does not include all the
information required by paragraph (b)(2)(ii) of this
section. Therefore, W has reason to know that he or
she 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, is
performing services for W, a withholding agent. W
has accepted a statement on Form 8233 submitted by
D, according to the provisions of this section. W
receives notice from the Internal Revenue Service
that the eligibility of D's compensation for a with-
holding exemption is in doubt. Therefore, W has
reason to know that the eligibility of the compensa-
tion for a withholding exemption cannot be readily
determined, as of the date W receives the notifica-
tion, and W must withhold tax under section 1441 on
amounts paid after receipt of the notification.

Example 3. E, a nonresident alien individual,
submits Form 8233 to W, a withholding agent for
whom E is to perform personal services. The state-
ment contains all the information requested on Form
8233. E claims an exemption from withholding
based on a personal exemption amount computed on
the number of days E will perform personal services
for W in the United States. If W does not know or
have reason to know that any statement on the Form
8233 is false or that the eligibility of E's compensa-
tion for the withholding exemption cannot be readily
determined, W can accept the statement on Form
8233 and exempt from withholding the appropriate
amount 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 of
each Form 8233 that is accepted under
paragraph (b)(2)(iv) of this section to the
IRS within five days of such acceptance.
The withholding agent shall retain a copy
of 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 a
trade or business within the United States
may be wholly or partially exempted from
the withholding required by § 1.1441-1 if
an agreement is reached between the IRS
and the alien individual with respect to the
amount of withholding required. Such
agreement shall be available in the cir-
cumstances and in the manner set forth by
the Internal Revenue Service, and shall be
effective for payments covered by the

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agreement that are made after the agree-
ment is executed by all parties. The alien
individual must agree to timely file an
income tax return for the current taxable
year.

(b)(4) through (g)(2) [Reserved]. For
further guidance, see § 1.1441-
4(b)(4) through (g)(2).

(g)(3) Effective/applicability date. This
section applies to payments made after
June 30, 2014. (For payments made after
December 31, 2000, see this section as in
effect and contained in 26 CFR part 1
revised April 1, 2013.)

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

Par. 10. Section 1.1441-5 is amended
by:

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 to
partnerships, 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 to
partnerships, trusts, and estates
(temporary).

(a) through (b)(2)(ii) [Reserved]. For
further 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 trust
described in section 651(a) (see paragraph
(b)(2)(ii) of this section) or sections 671
through 679 (see paragraph (b)(2)(iv) of
this section) (a U.S. complex trust) is re-
quired to withhold under chapter 3 of the
Internal Revenue Code (Code) as a with-
holding agent on the distributable net in-
come includible in the gross income of a
foreign beneficiary to the extent the dis-
tributable net income consists of an
amount subject to withholding (as defined
in § 1.1441-2(a)) that is, or is required to
be, distributed currently. The U.S. com-
plex trust shall withhold when a distribu-
tion is made to a foreign beneficiary. The
trust may use the same procedures regard-
ing an estimate of the amount subject to
withholding as a U.S. simple trust under
paragraph (b)(2)(ii) of this section. To the
extent an amount subject to withholding is
required to be, but is not actually distrib-
uted, the U.S. complex trust must with-
hold on the foreign beneficiary's allocable
share at the time the income is required to
be 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 net
income includible in the gross income of a
foreign beneficiary to the extent the dis-
tributable net income consists of an
amount subject to withholding (as defined
in § 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, those
procedures apply to an estate that has a
taxable year other than a calendar year
only if the estate files an amended return
on Form 1042 for the calendar year in
which the distribution was made and pays
the underwithheld tax and interest within
60 days after the close of the taxable year
in 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 an
amount under chapter 4 with respect to a
partner, beneficiary or owner, the partner-
ship, trust, or estate must apply the rules
described in § 1.1473-1(a)(5) to deter-
mine when it must withhold on the

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amount under chapter 4. In a case in
which withholding applies under chapter
4 to such an amount, see § 1.1441-
3(a)(2) to coordinate with withholding
that otherwise applies to such an amount
under this paragraph (b).

(c) Foreign partnerships-(1) Deter-
mination of payee. (i) Payments treated as
made to partners. Except as otherwise
provided in paragraph (c)(1)(ii) or (iv) of
this section, the payees of a payment to a
person that the withholding agent may
treat as a nonwithholding foreign partner-
ship under paragraph (c)(3)(i) or (d)(2) of
this section are the partners (looking
through partners that are foreign interme-
diaries or flow-through entities) as fol-
lows-

(A) and (B) [Reserved]. For further
guidance, see § 1.1441-5(c)(1)(i)(A) and
(B).

(C) If the withholding agent can reli-
ably associate a partner's distributive
share 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. branch
certificate 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 manner
as if the partner's distributive share of the
payment had been paid directly to such
intermediary or U.S. branch or territory
financial 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 for
payments made to foreign partnerships. A
withholding agent that makes a payment
of U.S. source FDAP income to a foreign
partnership that is a withholdable payment
to which withholding under chapter 4 ap-
plies must apply the rules described in
§ 1.1473-1(a)(5)(vi) to determine when
the payment is treated as made to a partner
in the partnership for purposes of chapter
4. In a case in which withholding applies
under 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 this
paragraph (c) with respect to the amount
of the payment included in the gross in-

come of a partner. For when a withholding
agent 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 the
pool, see § 1.1441-1(e)(3)(iv)(C)(2) (sub-
stituting the term nonwithholding foreign
partnership 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. Each
example assumes that all payments are not
withholdable 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 a
payment of U.S. source interest to FP that is not a
withholdable payment. FP has provided USWH with
a valid nonwithholding foreign partnership certifi-
cate, as described in paragraph (c)(3)(iii) of this
section, with which it associates a beneficial owner
withholding certificate from FC and a Form W-9,
"Request for Taxpayer Identification Number and
Certification," from USP together with the withhold-
ing statement required by paragraph (c)(3)(iv) of this
section. USWH can reliably associate the payment of
interest with the withholding certificates from FC
and 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 Example
1, except that FP1, a nonwithholding foreign part-
nership, is a partner in FP rather than USP. FP1 has
two partners, A and B, both foreign persons. FP
provides 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 certificate
from FC and a nonwithholding foreign partnership
certificate from FP1. In addition, foreign beneficial
owner withholding certificates from A and B are
associated 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 reliably
associate the interest payment with the withholding
certificates provided by FC, A, and B. Therefore,
under paragraph (c)(1)(i) of this section, the payees
of the interest payment are FC, A, and B.

Example 3. USWH makes a payment of U.S.
source dividends to WFP, a withholding foreign
partnership, that is not a withholdable payment.
WFP has two partners, FC1 and FC2, both foreign
corporations. USWH can reliably associate the pay-
ment with a valid withholding foreign partnership
withholding certificate from WFP. Therefore, under
paragraph (c)(1)(ii)(A) of this section, WFP is the
payee of the interest.

Example 4. USWH makes a payment of U.S.
source royalties that is not a withholdable payment
to FP, a foreign partnership. USWH can reliably
associate 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 a
trade or business in the United States. Therefore,
under paragraph (c)(1)(ii)(B) of this section, FP is
the 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 foreign
partnership 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 to
its partners. A withholding agent that can
reliably associate a payment with a certif-
icate described in paragraph (c)(2)(iv) of
this section may treat the person to whom
it makes the payment as a withholding
foreign partnership for purposes of with-
holding under chapters 3 and 4 of the
Code, information reporting under chapter
61 of the Code, backup withholding under
section 3406, and withholding under other
provisions of the Code. Furnishing such a
certificate is in lieu of transmitting to a
withholding agent withholding certificates
or other appropriate documentation for its
partners. Although the withholding for-
eign partnership generally will be required
to obtain withholding certificates or other
appropriate documentation from its part-
ners pursuant to its agreement with the
IRS, it will generally not be required to
attach such documentation to its withhold-
ing foreign partnership withholding certif-
icate to the extent it is permitted to act as
a 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 partnership
to act as a qualified intermediary under
§ 1.1441-1(e)(5)(ii)(D) with respect to its
partners in appropriate circumstances.

(ii) Withholding agreement. The IRS
may, upon request, enter into a withhold-
ing agreement with a foreign partnership
pursuant to such procedures as the IRS
may prescribe in published guidance (see
§ 601.601(d)(2) of this chapter). Under
the withholding agreement, a foreign part-
nership shall generally be subject to the
applicable 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

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Code, section 3406, the regulations under
those provisions, and other withholding
provisions of the Code, except to the ex-
tent provided under the agreement. Under
the agreement, a foreign partnership may
agree to act as an acceptance agent to
perform 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 will
require the partnership to assume the re-
quirements of a participating FFI, a regis-
tered deemed-compliant FFI, or an FFI
treated as a deemed-compliant FFI under
an applicable IGA that is subject to due
diligence and reporting requirements with
respect to its U.S. accounts similar to
those applicable to a registered deemed-
compliant FFI under § 1.1471-5(f)(1).
The agreement may specify the manner in
which applicable procedures for adjust-
ments for underwithholding and overwith-
holding, including refund procedures, ap-
ply to the withholding foreign partnership
and its partners and the extent to which
applicable procedures may be modified. In
particular, a withholding agreement may
allow a withholding foreign partnership to
claim refunds of overwithheld amounts on
behalf of its customers. In addition, the
agreement must specify the manner in
which the IRS will verify the partner-
ship's compliance with its agreement, in-
cluding the requirements for a periodic
review of the partnership's compliance
with the agreement and the procedures for
the partnership to certify to its compliance
with the agreement. A withholding for-
eign partnership must file a return on
Form 1042, "Annual Withholding Tax
Return for U.S. Source Income of Foreign
Persons," and information returns on
Form 1042-S, "Foreign Person's U.S.
Source Income Subject to Withholding."
The withholding foreign partnership
agreement may also require a withholding
foreign partnership to file a partnership
return under section 6031(a) and partner
statements under 6031(b), including for
each U.S. partner to the extent required in
the agreement. Additionally, a partnership
that is an FFI will be required to file Form
8966, "FATCA Report," to the extent pro-
vided in the agreement.

(iii) Withholding responsibility. A
withholding foreign partnership must as-

sume primary withholding responsibility
under both chapters 3 and 4 of the Code.
It is not required to provide information to
the withholding agent regarding each part-
ner's distributive share of the payment
(including a withholdable payment). The
withholding foreign partnership will be
responsible for reporting the payments un-
der § 1.1461-1(c), § 1.1474-1(d), and
chapter 61 of the Code and filing Form
1042 (to the extent required in the agree-
ment). A withholding agent making a pay-
ment to a withholding foreign partnership
is not required to withhold any amount
under chapters 3 and 4 of the Code on the
payment unless it has actual knowledge or
reason to know that the foreign partner-
ship is not acting as a withholding foreign
partnership with respect to the payment or
has not withheld to the extent required.
The withholding foreign partnership shall
withhold the payments under the same
procedures 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 of
determining the partner's status, the pro-
visions of paragraph (d)(4) of this section
shall apply.

(iv) [Reserved]. For further guidance,
see § 1.1441-5(c)(2)(iv).

(A) The name, permanent residence
address (as described in § 1.1441-
1(e)(2)(ii)), the employer identification
number of the partnership, the country
under the laws of which the partnership is
created or governed, and, for a withhold-
ing certificate furnished for a partnership
receiving a withholdable payment, the
chapter 4 status of the partnership (and
GIIN of the partnership, if applicable);

(B) A certification that the partnership
is a withholding foreign partnership
within the meaning of paragraph (c)(2)(i)
of this section, and, for a partnership that
is an FFI receiving a withholdable pay-
ment, a certification that the partnership is
acting as a participating FFI, a registered
deemed-compliant FFI, or a nonreporting
IGA 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 foreign
partnership status. A withholding agent
may treat a person as a nonwithholding

foreign partnership if it receives from that
person a nonwithholding foreign partner-
ship withholding certificate as described
in paragraph (c)(3)(iii) of this section. A
withholding agent that does not receive a
nonwithholding foreign partnership with-
holding certificate, or does not receive a
valid withholding certificate, from an en-
tity it knows, or has reason to know, is a
foreign partnership, must apply the pre-
sumption rules of § § 1.1441-1(b)(3) and
1.6049-5(d) and paragraphs (d) and (e)(6)
of this section. In addition, to the extent a
withholding agent cannot, prior to a pay-
ment, reliably associate the payment with
valid documentation from a payee that is
associated with the nonwithholding for-
eign partnership withholding certificate or
has insufficient information to report the
payment on Form 1042-S or Form 1099,
to the extent reporting is required, the
withholding agent must apply the pre-
sumption rules. See § 1.1441-
1(b)(2)(vii)(A) and (b)(2)(vii)(B) for rules
regarding reliable association. See, how-
ever, § 1.1441-1(e)(3)(iv)(C)(2) for when
a withholding agent may reliably associ-
ate a withholdable payment with a chapter
4 withholding rate pool in lieu of obtain-
ing documentation for each payee in-
cluded in the pool (substituting the term
nonwithholding foreign partnership for
the term nonqualified intermediary). See
also § 1.1441-1(e)(3)(iv)(A) for when a
withholding agent may reliably associate
a payment with a chapter 4 withholding
rate 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 the
manner in which a withholding agent may
rely on a claim of reduced withholding
when making a payment to a nonwith-
holding foreign partnership. To the extent
that a withholding agent treats a payment
to a nonwithholding foreign partnership as
a payment to the nonwithholding foreign
partnership's partners (whether direct or
indirect) in accordance with paragraph
(c)(1)(i) of this section, it may rely on a
claim for reduced withholding by the part-
ner if, prior to the payment, the withhold-
ing agent can reliably associate the pay-

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ment (within the meaning of § 1.1441-
1(b)(2)(vii)) with a valid withholding
certificate or other appropriate documen-
tation from the partner that establishes
entitlement to a reduced rate of withhold-
ing. A withholding certificate or other ap-
propriate documentation that establishes
entitlement 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 a
foreign person and a beneficial owner,
determined under the provisions of
§ 1.1441-1(c)(6)), a Form W-9 described
in § 1.1441-1(d) (for a partner claiming to
be a U.S. payee), a withholding foreign
partnership withholding certificate de-
scribed in paragraph (c)(2)(iv) of this sec-
tion, or a withholding statement allocating
the payment to a chapter 4 withholding
rate pool of U.S. payees. For when the
withholding agent can reliably associate
the payment with a chapter 4 withholding
rate pool, see paragraph (c)(3)(i) of this
section. See also § 1.1441-3(a)(2) (coor-
dinating withholding under chapter 3
when withholding under chapter 4 is ap-
plied to a payment). Unless a nonwith-
holding foreign partnership withholding
certificate is provided for income claimed
to be effectively connected with the con-
duct of a trade or business in the United
States, a claim must be presented for each
portion of the payment that represents an
item of income includible in the distribu-
tive share of a partner as required under
paragraph (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 appropriate
documentation are associated. Where the
nonwithholding foreign partnership with-
holding certificate is provided for income
claimed to be effectively connected with
the conduct of a trade or business in the
United States under paragraph (c)(3)(iii)(D)
of this section, the claim may be presented
without having to identify any partner's
distributive share of the payment.

(iii) [Reserved]. For further guidance,
see § 1.1441-5(c)(3)(iii).

(A) The name, permanent residence
address (as described in § 1.1441-

1(e)(2)(ii)), the employer identification
number of the partnership, if any, the
country under the laws of which the part-
nership is created or governed, and the
chapter 4 status of the partnership (for a
nonwithholding foreign partnership re-
ceiving a withholdable payment or pro-
viding a withholding statement associated
with the Form W-8 allocating a payment
to a chapter 4 withholding rate pool of
U.S. payees), and the GIIN of the partner-
ship (if applicable);

(B) through (E) [Reserved]. For further
guidance, see § 1.1441-5(c)(3)(iii)(B)
through (c)(3)(iii)(E).

(iv) Withholding statement provided by
nonwithholding foreign partnership and
coordination with chapter 4. The provi-
sions of § 1.1441-1(e)(3)(iv) (regarding a
withholding statement) shall apply to a
nonwithholding foreign partnership by
substituting the term nonwithholding for-
eign partnership for the term nonqualified
intermediary, including when a nonwith-
holding foreign partnership may provide
to a withholding agent a withholding
statement that includes a chapter 4 with-
holding rate pool in lieu of information
with respect to each partner that is a payee
of 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 amount
subject 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 regulations
thereunder except as otherwise provided
in this paragraph (c)(3)(v). A nonwith-
holding foreign partnership shall not be
required to withhold and report if it has
provided a valid nonwithholding foreign
partnership withholding certificate, it has
provided all of the information required
by paragraph (c)(3)(iv) of this section
(withholding statement), and it does not
know, and has no reason to know, that
another withholding agent failed to with-
hold the correct amount or failed to report
the payment correctly under § 1.1461-
1(c). A nonwithholding foreign partner-
ship is also not required to withhold and
report under this paragraph (c)(3) to the
extent that withholding under chapter 4
was applied to a payment that is includible
in the gross income of a partner in the

partnership. See also § 1.1441-3(a)(2) for
coordination rules when withholding un-
der chapter 4 has been applied to a with-
holdable payment. A withholding foreign
partnership's obligations to withhold and
report shall be determined in accordance
with its withholding foreign partnership
agreement.

(d)(1) [Reserved]. For further guid-
ance, see § 1.1441-5(d)(1).

(2) Determination of partnership status
as U.S. or foreign in the absence of doc-
umentation. In the absence of a valid rep-
resentation of U.S. partnership status in
accordance with paragraph (b)(1) of this
section or of foreign partnership status in
accordance with paragraph (c)(2)(i) or
(c)(3)(i) of this section, the withholding
agent shall determine the classification of
the payee under the presumptions set forth
in § 1.1441-1(b)(3)(ii). If the withholding
agent treats the payee as a partnership
under § 1.1441-1(b)(3)(ii), the withhold-
ing agent shall apply the presumptions set
forth in § 1.1441-1(b)(3)(iii) to determine
whether to treat the partnership as a U.S.
person or foreign person. For rules regard-
ing reliable association with a withholding
certificate from a domestic or a foreign
partnership, see § 1.1441-1(b)(2)(vii).

(3) Determination of partners' status
in the absence of certain documentation.
If a nonwithholding foreign partnership
has provided a nonwithholding foreign
partnership withholding certificate under
paragraph (c)(3)(iii) of this section that
would be valid except that the withhold-
ing agent cannot reliably associate all or a
portion 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 of
the payment for which documentation has
not been received. See § 1.1441-
1(b)(2)(vii)(A) and (B) for rules regarding
reliable association. The presumption rule
of this paragraph (d)(3) also applies to a
person that is presumed to be a foreign
partnership under the rule of paragraph
(d)(2) of this section. Any portion of a
payment that the withholding agent can-
not treat as reliably associated with valid
documentation from a partner may be pre-
sumed made to a foreign payee. As a
result, any payment of an amount subject
to withholding is subject to withholding at

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a rate of 30 percent. Any payment that is
presumed to be made to an undocumented
foreign payee must be reported on Form
1042-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 rule
for determining the payee's chapter 4 sta-
tus to determine whether withholding un-
der chapter 4 applies to the payment.

(4) Determination by a withholding
foreign partnership of the status of its
partners. Except as otherwise provided in
the agreement described in paragraph
(c)(2) of this section, a withholding for-
eign partnership shall determine whether
the partners or some other persons are the
payees of the partners' distributive shares
of any payment made by a withholding
foreign partnership by applying the rules
of § 1.1441-1(b)(2), paragraph (c)(1) of
this section (in the case of a partner that is
a foreign partnership), and paragraph
(e)(3) of this section (in the case of a
partner that is a foreign estate or a foreign
trust). 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 cannot
reliably 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 for
payments made to foreign simple trusts
and foreign grantor trusts. A withholding
agent that makes a payment of U.S. source
FDAP income to a foreign simple trust or
foreign grantor trust that is a withholdable
payment to which withholding under
chapter 4 applies must apply the rules
described in § 1.1473-1(a)(5)(vi) to deter-
mine when the payment is treated as made
to a beneficiary or owner of the trust for
purposes of chapter 4. In a case in which
withholding applies under chapter 4 to a
withholdable payment made to a foreign
simple 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 the
payment included in the gross income of
the payee of the payment. For when a

withholding agent may reliably associate
a withholdable payment with a chapter 4
withholding rate pool in lieu of obtaining
documentation for each payee include in
the pool, see § 1.1441-1(e)(3)(iv)(C)(2)
(substituting the term nonwithholding for-
eign trust for the term nonqualified inter-
mediary).

(4) [Reserved]. For further guidance,
see § 1.1441-5(e)(4).

(5) Foreign simple trust and foreign
grantor trust-(i) Reliance on claim of
foreign simple trust or foreign grantor
trust status. A withholding agent may
treat a person as a foreign simple trust or
foreign grantor trust if it receives from
that person a foreign simple trust or for-
eign grantor trust withholding certificate
as described in paragraph (e)(5)(iii) of this
section. A withholding agent must apply
the presumption rules of § § 1.1441-
1(b)(3) and 1.6049-5(d) and paragraphs
(d) and (e)(6) of this section to the extent
it cannot, prior to the payment, reliably
associate a payment (within the meaning
of § 1.1441-1(b)(2)(vii)) with a valid for-
eign simple trust or foreign grantor trust
withholding certificate, it cannot reliably
determine how much of the payment re-
lates to valid documentation provided by a
payee (e.g., a person that is not itself a
nonqualified intermediary, flow-through
entity, or U.S. branch) associated with the
foreign simple trust or foreign grantor
trust withholding certificate, or it does not
have sufficient information to report the
payment 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) for
when a withholding agent may reliably
associate a withholdable payment with a
chapter 4 withholding rate pool in lieu of
obtaining documentation for each payee
included in a pool (substituting the term
nonwithholding foreign trust for the term
nonqualified intermediary). See also
§ 1.1441-1(e)(3)(iv)(A) for when a with-
holding agent may reliably associate a
payment with a chapter 4 withholding rate
pool 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 or
owners. This paragraph (e)(5)(ii) de-
scribes the manner in which a withholding
agent may rely on a claim of reduced

withholding when making a payment to a
foreign simple trust or foreign grantor
trust. To the extent that a withholding
agent treats a payment to a foreign simple
trust or foreign grantor trust as a payment
to payees other than the trust in accor-
dance with paragraph (e)(3)(i) of this sec-
tion, it may rely on a claim for reduced
withholding by a beneficiary or owner if,
prior to the payment, the withholding
agent 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 that
establishes entitlement to a reduced rate of
withholding. A withholding certificate or
other appropriate documentation that es-
tablishes entitlement to a reduced rate of
withholding 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 or
owner claiming to be a foreign person and
a beneficial owner, determined under the
provisions of § 1.1441-1(c)(6)), a Form
W-9 described in § 1.1441-1(d) (for a
beneficiary or owner claiming to be a U.S.
payee), a withholding foreign partnership
withholding certificate described in para-
graph (c)(2)(iv) of this section, or a with-
holding statement allocating the payment
to a chapter 4 withholding rate pool of
U.S. payees. For when the withholding
agent can reliably associate the payment
with a chapter 4 withholding rate pool, see
paragraph (c)(3)(i) of this section. See
also § 1.1441-3(a)(2) (coordinating with-
holding under chapter 3 when withholding
under chapter 4 is applied to a withhold-
able payment). Unless a foreign simple
trust or foreign grantor trust withholding
certificate is provided for income treated
as income effectively connected with the
conduct of a trade or business in the
United States, a claim must be presented
for 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 appropriate
documentation are associated. Where the
foreign simple trust or foreign grantor
trust withholding certificate is provided
for income that is treated as effectively

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connected with the conduct of a trade or
business in the United States under para-
graph (e)(5)(iii)(D) of this section, the
claim may be presented without having to
identify any beneficiary's or grantor's dis-
tributive share of the payment.

(iii) [Reserved]. For further guidance,
see § 1.1441-5(e)(5)(iii).

(A) The name, permanent residence
address (as described in § 1.1441-
1(e)(2)(ii)), the employer identification
number, if required, of the trust, the coun-
try under the laws of which the trust is
created, the chapter 4 status of the trust
(for a nonwithholding foreign trust receiv-
ing a withholdable payment or providing a
withholding statement associated with the
Form W-8 allocating a payment to a
chapter 4 withholding rate pool of U.S.
payees), and the GIIN of the trust (if ap-
plicable);

(B) through (E) [Reserved]. For further
guidance, see § 1.1441-5 (e)(5)(iii)(B)
through (e)(5)(iii)(E).

(iv) Withholding statement provided by
a foreign simple trust or foreign grantor
trust. The provisions of § 1.1441-
1(e)(3)(iv) (regarding a withholding state-
ment) shall apply to a foreign simple trust
or foreign grantor trust by substituting the
term foreign simple trust or foreign
grantor trust for the term nonqualified in-
termediary, including when a withholding
statement provided by a foreign simple
trust or foreign grantor trust may include a
chapter 4 withholding rate pool in lieu of
information with respect to each owner or
beneficiary that is a payee of a payment.

(v) Withholding foreign trusts. The IRS
may enter an agreement with a foreign
trust to treat the trust or estate as a with-
holding foreign trust. Such an agreement
shall generally follow the same principles
as an agreement with a withholding for-
eign partnership under paragraph (c)(2)(ii)
of this section. A withholding agent may
treat a payment to a withholding foreign
trust in the same manner the withholding
agent would treat a payment (including a
withholdable payment) to a withholding
foreign partnership. The IRS may also
enter an agreement to treat a trust as a
qualified intermediary in appropriate cir-
cumstances. See § 1.1441-1(e)(5)(ii)(D).
For a withholding foreign trust that is an
FFI and that receives withholdable pay-
ments on behalf of its owners or benefi-

ciaries, the agreement will require the
withholding foreign trust to assume the
requirements of either a participating FFI,
registered deemed-compliant FFI, or an
FFI treated as a deemed-compliant FFI
under an applicable IGA that is subject to
due diligence and reporting requirements
with respect to its U.S. accounts similar to
those 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. or
foreign trust or estate in the absence of
documentation. In the absence of valid
documentation 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 a
trust or estate under paragraph (e)(4) or
(e)(5)(iii) of this section, the withholding
agent shall determine the classification of
the payee based upon the presumptions set
forth in § 1.1441-1(b)(3)(ii). If, based
upon those presumptions, the withholding
agent classifies the payee as a trust or
estate, the withholding agent shall apply
the presumptions set forth in § 1.1441-
1(b)(3)(iii) to determine whether the trust
or estate is a U.S. person or foreign per-
son. An undocumented payee presumed to
be a foreign trust shall be presumed to be
a foreign complex trust. If a withholding
agent 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 foreign
grantor trust, the withholding agent shall
presume that the trust is a foreign complex
trust. Notwithstanding the preceding sen-
tence, in the case of a foreign trust with a
settlor that is a U.S. person and for which
a withholding agent has both a U.S. ad-
dress and TIN, the withholding agent shall
presume that the trust is a grantor trust
when it cannot determine the status of the
trust as a simple trust, complex trust, or
grantor trust. See § 1.1471-3(f)(4) and (5)
to determine the status of the payee for
purposes of chapter 4.

(iii) [Reserved]. For further guidance,
see § 1.1441-5(e)(6)(iii).

(f) Failure to receive withholding cer-
tificate timely or to act in accordance with
applicable presumptions. See applicable
procedures described in § 1.1441-

1(b)(7) in the event the withholding agent
does not hold an appropriate withholding
certificate or other appropriate documen-
tation at the time of payment or fails to
rely 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 a
withholdable 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 further
guidance, see § 1.1441-5(g)(1) and (2).

(g)(3) Effective/applicability date. This
section applies to payments made after
June 30, 2014. (For payments made after
December 31, 2000, and before July 1,
2014, see this section as in effect and
contained in 26 CFR part 1, as revised
April 1, 2013.)

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

Par. 12. Section 1.1441-6 is amended
by revising paragraphs (a), (b)(1),
(b)(2)(i), (b)(2)(iv), (c)(1) and adding
paragraph (i)(3) to read as follows:

§ 1.1441-6 Claim of reduced
withholding under an income tax treaty.

(a) [Reserved]. For further guidance,
see § 1.1441-6T(a).

(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 reduced
withholding under an income tax treaty
(temporary).

(a) In general. The rate of withholding
on a payment of income subject to with-
holding may be reduced to the extent pro-
vided under an income tax treaty in effect

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between the United States and a foreign
country. Most benefits under income tax
treaties are to foreign persons who reside
in the treaty country. In some cases, ben-
efits are available under an income tax
treaty to U.S. citizens or U.S. residents or
to residents of a third country. See para-
graph (b)(5) of this section for claims of
benefits by U.S. persons. If the require-
ments of this section are met, the amount
withheld from the payment may be re-
duced at source to account for the treaty
benefit. See, however, § 1.1471-2(a) and
§ 1.1472-1(b) for when withholding at
source on a withholdable payment may
not be reduced to account for a treaty
benefit and the beneficial owner of the
payment may need to file a claim for
refund 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 an
income 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 any
payment to a foreign person is eligible for
reduction under the terms of an income
tax treaty only to the extent that such
payment is treated as derived by a resident
of an applicable treaty jurisdiction, such
resident is a beneficial owner, and all
other requirements for benefits under the
treaty are satisfied. See section 894 and
the regulations under section 894 to deter-
mine whether a resident of a treaty coun-
try derives the income. Absent actual
knowledge or reason to know otherwise, a
withholding agent may rely on a claim
that a beneficial owner is entitled to a
reduced rate of withholding based upon an
income tax treaty if, prior to the payment,
the withholding agent can reliably associ-
ate the payment with a beneficial owner
withholding 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 section
made 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 of
payments made outside the United States

and § 1.6049-5(c)(1) for the definition of
an offshore obligation. For purposes of
this paragraph (b)(1), a beneficial owner
withholding certificate described in
§ 1.1441-1(e)(2)(i) contains information
necessary to support the claim for a treaty
benefit only if it includes the beneficial
owner'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 of
residence and such country has with the
United States an income tax treaty or in-
formation exchange agreement in effect)
and the representations that the beneficial
owner derives the income under section
894 and the regulations under section 894,
if required, and meets the limitation on
benefits provisions of the treaty, if any.
The withholding certificate must also con-
tain any other representations required by
this 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, the
information and certifications described in
this section. Absent actual knowledge or
reason to know that the claims are incor-
rect (applying the standards of knowledge
in § 1.1441-7(b)), a withholding agent
may rely on the claims made on a with-
holding certificate or on documentary ev-
idence. A withholding agent may also rely
on 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 determine
whether the appropriate statements re-
garding section 894 and limitation on ben-
efits have been provided in connection
with documentary evidence. The Internal
Revenue 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 grant
benefits under an income tax treaty. See
§ 1.1441-1(e)(4)(viii) regarding reliance
on a withholding certificate by a withhold-
ing agent. The provisions of § 1.1441-
1(b)(3)(iv) dealing with a 90-day grace
period shall apply for purposes of this
section.

(2) Payment to fiscally transparent en-
tity-(i) In general. If the person claiming
a reduced rate of withholding under an
income tax treaty is an interest holder of

an entity that is considered to be fiscally
transparent (as defined in the regulations
under section 894) by the interest holder's
jurisdiction with respect to an item of in-
come, then, with respect to such income
derived by that person through the entity,
the entity shall be treated as a flow-
through entity and may provide a flow-
through withholding certificate with
which the withholding certificate or other
documentary evidence of the interest
holder that supports the claim for treaty
benefits is associated. In the case of a
payment 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 when
withholding at source may apply to the
payment based on the status of the payee
notwithstanding a claim for treaty benefits
made under this paragraph (b)(2) by an
interest holder in the payee. In such a
case, the interest holder may file a claim
for refund of the overwithheld amount of
tax. For purposes of this paragraph
(b)(2)(i), interest holders do not include
any direct or indirect interest holders that
are themselves treated as fiscally transpar-
ent entities with respect to that income by
the interest holder's jurisdiction. See
§ 1.1441-1(c)(23) and (e)(3)(i) for the
definition of flow-through entity and flow-
through withholding certificate. The entity
may provide a beneficial owner withhold-
ing certificate, or beneficial owner docu-
mentation, with respect to any remaining
portion of the income to the extent the
entity is receiving income and is not
treated as fiscally transparent by its own
jurisdiction. Further, the entity may claim
a reduced rate of withholding with respect
to the portion of a payment for which it is
not treated as fiscally transparent if it
meets all the requirements to make such a
claim and, in the case of treaty benefits, it
provides the documentation required by
paragraph (b)(1) of this section. If dual
claims, as described in paragraph
(b)(2)(iii) of this section, are made, mul-
tiple withholding certificates may have to
be furnished. Multiple withholding certif-
icates may also have to be furnished if the
entity receives income for which a reduc-
tion of withholding is claimed under a
provision of the Internal Revenue Code
(e.g., portfolio interest) and income for

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which a reduction of withholding is
claimed under an income tax treaty.

(ii) and (iii) [Reserved]. For further
guidance, see § 1.1441-6(b)(2)(ii) and
(iii).

(iv) Examples. The following examples
illustrate the rules of paragraph (b)(2) of
this section. Each of the following exam-
ples describes a payment of U.S. source
royalties, 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 withholdable
payments). Thus, withholding under chap-
ter 4 shall not apply with respect to the
U.S. source royalties in any of the follow-
ing examples:

Example 1. (i) Facts. Entity E is a business
organization formed under the laws of country Y.
Country Y has an income tax treaty with the United
States. The treaty contains a limitation on benefits
provision. E receives U.S. source royalties from
withholding agent W and claims a reduced rate of
withholding under the U.S .- Y tax treaty on its own
behalf (rather than on behalf of its interest holders).
E furnishes a beneficial owner withholding certifi-
cate described in paragraph (b)(1) of this section that
represents that E is a resident of country Y (within
the meaning of the U.S .- Y tax treaty), is the benefi-
cial owner of the income, derives the income under
section 894 and the regulations under section 894,
and is not precluded from claiming benefits by the
treaty's limitation on benefits provision.

(ii) Analysis. Absent actual knowledge or reason
to 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 as
under Example 1, except that one of E's interest
holders, H, is an entity organized in country Z. The
U.S .- Z tax treaty reduces the rate on royalties to zero
whereas the rate on royalties under the U.S .- Y tax
treaty applicable to E is 5%. H is not fiscally trans-
parent under country Z's tax law with respect to such
income. H furnishes a beneficial owner withholding
certificate to E that represents that H derives, within
the meaning of section 894 and the regulations under
section 894, its share of the royalty income paid to E
as a resident of country Z, is the beneficial owner of
the royalty income, and is not precluded from claim-
ing treaty benefits by virtue of the limitation on
benefits provision in the U.S .- Z treaty. E furnishes to
W a flow-through withholding certificate described
in § 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 H
claims as its distributive share of the royalty income.
E also furnishes to W a beneficial owner withholding
certificate for itself for the portion of the payment
that H does not claim as its distributive share.

(ii) Analysis. Absent actual knowledge or reason
to know otherwise, W may rely on the documenta-
tion furnished by E to treat the royalty payment to a
single 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 its
option, grant dual treatment, that is, a reduced rate of
zero percent under the U.S .- Z treaty on the portion of
the royalty payment that H claims to derive as a
resident of country Z and a reduced rate of 5% under
the U.S .- Y treaty for the balance. However, under
paragraph (b)(2)(iii) of this section, W may, at its
option, treat E as the only relevant person deriving
the royalty and grant benefits under the U.S .- Y treaty
only.

Example 3. (i) Facts. E is a business organization
formed under the laws of country X. Country X has
an income tax treaty with the United States. E has
two interest holders, H1, organized in country Y, and
H2, organized in country Z. E receives from W, a
U.S. withholding agent, a payment of U.S. source
royalties and interest, with respect to an obligation
issued before July 1, 2014, that is eligible for the
portfolio interest exception under sections 871(h)
and 881(c), provided W receives the appropriate
beneficial owner statement required under section
871(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 fiscally
transparent with respect to items of income under the
regulations under section 894. Under the U.S .- X
income tax treaty, royalties are subject to a 5% rate
of withholding. Country Y, H1's country of organi-
zation, treats E as fiscally transparent with respect to
items of income under section 894 and H1 as not
fiscally 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's
country of organization, treats E as not fiscally trans-
parent under section 894 with respect to items of
income. E provides W with a flow-through beneficial
owner withholding certificate with which it associ-
ates a beneficial owner withholding certificate from
H1. Hl's withholding certificate states that H1 is a
resident of country Y, derives the royalty income
under section 894, meets the applicable limitations
on benefits provisions of the U.S .- Y treaty, and is the
beneficial owner of the income. The withholding
statement attached to E's flow-through withholding
certificate allocates one-half of the royalty payment
to H1. E also provides W with a beneficial owner
withholding certificate for the interest income and
the remaining one-half of the royalty income. The
withholding certificate states that E is a resident of
country X, derives the royalty income under section
894, meets the limitation on benefits provisions of
the U.S .- X treaty, and is the beneficial owner of the
income.

(ii) Analysis. Absent actual knowledge or reason
to know that the claims are incorrect, W may treat
one-half of the royalty derived by E as subject to a
5% withholding rate and one-half of the royalty as
derived by H1 and subject to no withholding. Fur-
ther, it may treat all of the interest as being paid to E
and as qualifying for the portfolio interest exception.
W can, at its option, treat the entire royalty as paid to
E and subject it to withholding at a 5% rate of
withholding. In that case, H1 would be entitled to
claim a refund with respect to its one-half of the
royalty.

(3) and (4) [Reserved]. For further
guidance, see § 1.1441-6(b)(3) and (4).

(c) Exemption from requirement to fur-
nish a taxpayer identifying number and
special documentary evidence rules for
certain income-(1) General rule. In the
case of income described in paragraph
(c)(2) of this section, a withholding agent
may rely on a beneficial owner withhold-
ing certificate described in paragraph
(b)(1) of this section without regard to the
requirement that the withholding certifi-
cate include the beneficial owner's tax-
payer identifying number. In the case of a
payment of income not described in para-
graph (c)(2) of this section, a withholding
agent may rely on a withholding certifi-
cate that includes the beneficial owner's
foreign taxpayer identifying number de-
scribed in paragraph (b)(1) of this section
instead of the beneficial owner's taxpayer
identifying number. In the case of pay-
ments of income described in paragraph
(c)(2) of this section made outside the
United States (as defined in § 1.6049-
5(e)) with respect to an offshore obliga-
tion (as defined in § 1.6049-5(c)(1)), a
withholding agent may, as an alternative
to a withholding certificate described in
paragraph (b)(1) of this section, rely on a
certificate 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 agent
has reviewed and maintains in its records
in accordance with § 1.1441-1(e)(4)(iii).
In the case of a payment to a person other
than an individual, the certificate of resi-
dence or documentary evidence must be
accompanied by the statements described
in paragraphs (c)(5)(i) and (ii) of this sec-
tion regarding limitation on benefits and
whether the amount paid is derived by
such person or by one of its interest hold-
ers. The withholding agent maintains the
reviewed documents by retaining the orig-
inal, certified copy, or photocopy (micro-
fiche, electronic scan, or similar means of
electronic storage) of such documents.
With respect to documentary evidence,
the withholding agent must also note in its
records the date on which the documents
were received and reviewed. This para-
graph (c)(1) shall not apply to amounts
that are exempt from withholding based
on a claim that the income is effectively
connected with the conduct of a trade or
business in the United States.

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(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 made
after June 30, 2014. (For payments made
after 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 as
in effect and contained in 26 CFR part 1
revised April 1, 2013.)

(j) Expiration date. The applicability of
this section expires on February 28, 2017.

Par. 14. Section 1.1441-7 is amended
by revising paragraphs (b), (c), and
(f)(2)(ii) and adding paragraph (h) to read
as follows:

§ 1.1441-7 General provisions relating
to 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,
see § 1.1441-7T(h).

Par. 15. Section 1.1441-7T is added to
read as follows:

§ 1.1441-7T General provisions relating
to withholding agents (temporary).

(a) [Reserved]. For further guidance,
see § 1.1441-7(a).

(b) Standards of knowledge-(1) In
general. A withholding agent must with-
hold at the full 30-percent rate under sec-
tion 1441, 1442, or 1443(a) or at the full
4-percent rate under section 1443(b) if it
has actual knowledge or reason to know
that a claim of U.S. status or of a reduced
rate of withholding under section 1441,
1442, or 1443 is unreliable or incorrect. A
withholding agent shall be liable for tax,
interest, and penalties to the extent pro-
vided under sections 1461 and 1463 and
the regulations under those sections if it

fails to withhold the correct amount de-
spite its actual knowledge or reason to
know the amount required to be withheld.
For purposes of the regulations under sec-
tions 1441, 1442, and 1443, a withholding
agent may rely on information or certifi-
cations contained in, or associated with, a
withholding certificate or other documen-
tation furnished by or for a beneficial
owner or payee unless the withholding
agent has actual knowledge or reason to
know that the information or certifications
are incorrect or unreliable and, if based on
such knowledge or reason to know, it
should withhold (under chapter 3 of the
Code or another withholding provision of
the Code) an amount greater than would
be the case if it relied on the information
or certifications, or it should report (under
chapter 3 of the Code or under another
provision of the Code) an amount that
would not otherwise be reportable if it
relied on the information or certifications.
See § 1.1441-1(e)(4)(viii) for applicable
reliance rules. A withholding agent that
has received notification by the Internal
Revenue Service (IRS) that a claim of
U.S. status or of a reduced rate is incorrect
has actual knowledge beginning on the
date that is 30 calendar days after the date
the notice is received. A withholding
agent that fails to act in accordance with
the 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 liable
for tax, interest, and penalties. See
§ 1.1441-1(b)(3)(ix) and (7). In the case
of a withholding agent making a with-
holdable payment to a payee that the with-
holding agent is required to treat as a
foreign entity, see § 1.1471-3(e) for stan-
dards of knowledge and § § 1.1471-2 and
1.1472-1(b) for withholding that may ap-
ply under chapter 4.

(2) Reason to know. A withholding
agent shall be considered to have reason
to know if its knowledge of relevant facts
or 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 withholding
agent would question the chapter 3 claims
made. For an obligation that is a preexist-
ing obligation, a withholding agent will
have reason to know that a chapter 3 claim
made by the holder of the obligation (ac-
count holder) is unreliable or incorrect if

any information contained in its account
opening files or other files pertaining to
the obligation (account information), in-
cluding documentation collected for pur-
poses of AML due diligence (as defined
under § 1.1471-1(b)(4)), conflicts with
the account holder's claim. A withholding
agent will not, however, be considered to
have reason to know that a person's chap-
ter 3 claim is unreliable or incorrect based
on documentation collected for AML due
diligence until the date that is 30 days
after the obligation is executed (or the
account is opened for an obligation that is
an account with a financial institution).

(3) Financial institutions-limits on
reason 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 are
defined in § 1.1441-1(c)(16), (17) and
(18). Except as otherwise provided in
paragraphs (b)(4) through (9) of this sec-
tion, a withholding agent that is an FFI
under § 1.1471-5(e), an insurance com-
pany (without regard to whether such
company is a specified insurance com-
pany), or a broker or dealer in securities
that maintains an account for a beneficial
owner (a direct account holder) has reason
to know that documentation provided by
the direct account holder is unreliable or
incorrect only if one or more of the cir-
cumstances described in paragraphs (b)(4)
through (9) of this section exist. If a direct
account holder has provided documenta-
tion that is unreliable or incorrect under
the rules of paragraph (b)(4) through (9)
of this section, the withholding agent may
require new documentation. Alternatively,
the withholding agent may rely on the
documentation originally provided if the
rules of paragraphs (b)(4) through (9) of
this section permit such reliance based on
additional statements and documentation
obtained by the withholding agent from
the beneficial owner. Paragraph (b)(10) of
this section provides rules regarding rea-
son to know for withholding agents that
receive beneficial owner documentation
from persons (indirect account holders)
that have an account relationship with, or
an ownership interest in, a direct account
holder of the withholding agent. Para-
graph (b)(11) of this section provides lim-
itations on a withholding agent's reason to

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know for multiple obligations held by the
same person. Paragraph (b)(12) of this
section defines a reasonable explanation
provided by an individual with respect to
the individual's claim of foreign status.
For rules regarding reliance on Form
W-9, see § 31.3406(g)-3(e)(2) of this
chapter. 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 status
and § 1.1471-3(f) for presumption rules
that apply when the claim of chapter 4
status is unreliable or incorrect.

(ii) Limits on reason to know for pre-
existing obligations. With respect to a pre-
existing obligation, a withholding agent
that has documented the foreign status of
the direct account holder for purposes of
chapter 3 or chapter 61 before July 1,
2014 may continue to rely on such docu-
mentation. If, however, the withholding
agent reviews documentation for an indi-
vidual account holder claiming foreign
status that contains a U.S. place of birth
(as described in paragraph (b)(5)(ii) of
this section) or if the withholding agent is
notified 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 as
having experienced a change in circum-
stances under § 1.1441-1(e)(4)(ii)(D) as
of the date that the withholding agent re-
views the documentation or receives the
notification, and the withholding agent
will then have reason to know that the
documentation 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 withholding
certificates-(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 is
unreliable or incorrect if the withholding
certificate is incomplete with respect to
any item on the certificate that is relevant
to the claims made by the direct account
holder, the withholding certificate con-
tains any information that is inconsistent
with the direct account holder's claim, the
withholding agent has account informa-
tion that is inconsistent with the direct
account holder's claim, or the withholding

certificate lacks information necessary to
establish entitlement to a reduced rate of
withholding. For purposes of establishing
a direct account holder's status as a for-
eign person or resident of a treaty country
a withholding certificate shall be consid-
ered unreliable or inconsistent with an ac-
count holder's claims only if it is not
reliable under the rules of paragraphs
(b)(5) and (6) of this section. A withhold-
ing agent that relies on an agent to review
and maintain a withholding certificate is
considered to know or have reason to
know the facts within the knowledge of
the agent.

(ii) Examples. The rules of paragraph
(b)(4) of this section are illustrated by the
following examples:

Example 1. F, a foreign person that has a direct
account 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 a
reduced rate of withholding on U.S. source divi-
dends (which is a withholdable payment). F resides
in a treaty country that has a limitation on benefits
provision in its income tax treaty with the United
States. The withholding certificate includes a certi-
fication of F's status for chapter 4 purposes to except
the payment from withholding under chapter 4, but
does not contain a statement regarding limitations on
benefits or deriving the income under section 894 as
required by § 1.1441-6(b)(1). USB cannot rely on
the withholding certificate to grant a reduced rate of
withholding for chapter 3 purposes because it is
incomplete with respect to the claim made by F.

Example 2. F, a foreign person and entity that has
a direct account relationship with USB, a broker that
is a U.S. person, provides USB with a withholding
certificate for the purpose of claiming the portfolio
interest exception under section 881(c) with respect
to interest paid on an obligation issued before July 1,
2014. The payment of interest is not a withholdable
payment under § 1.1471-2(b) (referring to payments
made with respect to grandfathered obligations),
and, therefore, withholding does not apply to the
payment under chapter 4. See § 1.1441-3(c)(4)(i) for
rules coordinating withholding under chapters 3 and
4. F indicates on its withholding certificate, however,
that it is a partnership. USB may not treat F as a
beneficial owner of the interest for purposes of the
portfolio interest exception because F has indicated
on its withholding certificate that it is a foreign
partnership, and such entity classification is incon-
sistent with its claim as a beneficial owner.

(5) Withholding certificate-establish-
ment of foreign status. A withholding
agent has reason to know that a beneficial
owner withholding certificate (as defined
in § 1.1441-1(e)(2)) provided by a direct
account holder is unreliable or incorrect
for purposes of establishing the account
holder'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. A
withholding certificate is unreliable or in-
correct if the withholding agent has clas-
sified the person as a U.S. person in its
account information, the withholding cer-
tificate has a current permanent residence
address (as defined in § 1.1441-
1(e)(2)(ii)) in the United States, the with-
holding certificate has a current mailing
address 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 the
withholding agent of a new residence or
mailing address in the United States
(whether or not provided on a withholding
certificate). A withholding agent also has
reason to know that a withholding certif-
icate provided by a person is unreliable or
incorrect if the withholding agent has a
current telephone number for the account
holder in the United States and has no
telephone number for the account holder
outside of the United States. When any of
the 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 account
holder's foreign status if it may do so
under the provisions of paragraph
(b)(5)(i)(A) or (B) of this section.

(A) A withholding agent may treat a
direct account holder as a foreign person
if the beneficial owner withholding certif-
icate has been provided by an individual
and-

(1) The withholding agent has in its
possession or obtains documentary evi-
dence establishing foreign status (as de-
scribed in § 1.1471-3(c)(5)(i)) that does
not contain a U.S. address and the indi-
vidual provides the withholding agent
with a reasonable explanation, in writing,
supporting the claim of foreign status (as
defined in paragraph (b)(12) of this sec-
tion);

(2) For a payment made outside the
U.S. with respect to an offshore obligation
(as described in § 1.6049-5(c)(1)), the
withholding agent has in its possession or
obtains documentary evidence establish-
ing foreign status (as described in

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§ 1.1471-3(c)(5)(i)), that does not contain
a U.S. address;

(3) For a payment made with respect to
an offshore obligation (with offshore ob-
ligation defined as in § 1.6049-
5(c)(1)), the withholding agent classifies
the individual as a resident of the country
in which the obligation is maintained, the
withholding agent is required to report a
payment made to the individual annually
on a tax information statement that is filed
with the tax authority of the country in
which the office is located as part of that
country's resident reporting requirements,
and that country has a tax information
exchange agreement or income tax treaty
in effect with the United States; or

(4) For a case in which the withholding
agent classified the account holder as a
U.S. person in its account information, the
withholding agent has in its possession or
obtains documentary evidence described
in § 1.1471-3(c)(5)(i)(B) evidencing citi-
zenship in a country other than the United
States.

(B) A withholding agent may treat a
direct account holder as a foreign person
if the beneficial owner withholding certif-
icate has been provided by an entity that
the withholding agent does not know, or
does not have reason to know, is a flow-
through entity and-

(1) The withholding agent has in its
possession or obtains documentation es-
tablishing foreign status (as described in
§ 1.1471-3(c)(5)(i) and as applicable to
entities) that substantiates that the entity is
actually organized or created under the
laws of a foreign country; or

(2) For a payment made with respect to
an offshore obligation (with offshore ob-
ligation defined as in § 1.6049-5(c)(1)),
the withholding agent classifies the entity
as a resident of the country in which the
account is maintained, the withholding
agent is required to report a payment
made to the entity annually on a tax in-
formation statement that is filed with the
tax authority of the country in which the
office is located as part of that country's
resident reporting requirements, and that
country has a tax information exchange
agreement or income tax treaty in effect
with the United States.

(ii) U.S. place of birth. A withholding
agent has reason to know that a withhold-
ing certificate claiming foreign status pro-

vided by a direct account holder that is an
individual is unreliable or incorrect if the
withholding agent has, either on accom-
panying documentation or as part of its
account information, an unambiguous in-
dication of a place of birth for the indi-
vidual in the United States. A withholding
agent may treat the individual as a foreign
person, notwithstanding the U.S. place of
birth, if the withholding agent has in its
possession or obtains documentary evi-
dence described in § 1.1471-3(c)(5)(i)(B)
evidencing citizenship in a country other
than the United States and either a copy of
the individual's Certificate of Loss of Na-
tionality of the United States or a reason-
able written explanation of the account
holder's renunciation of U.S. citizenship
or the reason the account holder did not
obtain U.S. citizenship at birth.

(iii) Standing instructions with respect
to offshore obligations. A beneficial
owner withholding certificate is unreliable
or incorrect if it is provided with respect
to an offshore obligation (as defined in
§ 1.6049-5(c)(1)) of a direct account
holder that has provided standing instruc-
tions to pay amounts to an address or an
account 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 a
reasonable explanation in writing that
supports its foreign status or documentary
evidence establishing foreign status de-
scribed in § 1.1471-3(c)(5)(i).

(6) Withholding certificate-claim of
reduced rate of withholding under treaty.
A withholding agent has reason to know
that a withholding certificate (other than
Form W-9) provided by a direct account
holder is unreliable or incorrect for pur-
poses of establishing that the account
holder is a resident of a country with
which the United States has an income tax
treaty if it is described in paragraphs
(b)(6)(i) through (iii) of this section.

(i) Permanent residence address. A
beneficial owner withholding certificate is
unreliable or incorrect if the permanent
residence address on the beneficial owner
withholding certificate is not in the coun-
try whose treaty is invoked, or the direct
account holder notifies the withholding
agent of a new permanent residence ad-
dress that is not in the treaty country. A
withholding 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 the
permanent residence address outside the
treaty country (e.g., the address is the ad-
dress of a branch of the beneficial owner
located outside the treaty country in which
the entity is a resident) or the withholding
agent has in its possession or obtains doc-
umentary evidence described in § 1.1471-
3(c)(5)(i) that establishes residency in a
treaty country.

(ii) Mailing address. A beneficial
owner withholding certificate is unreliable
or incorrect if the permanent residence
address on the withholding certificate is in
the applicable treaty country but the with-
holding certificate contains a mailing ad-
dress outside the treaty country or the
withholding agent has a current mailing
address as part of its account information
for the direct account holder that is out-
side the treaty country. A mailing address
that is a P.O. Box, in-care-of address, or
address at a financial institution (if the
financial institution is not a beneficial
owner) shall not preclude a withholding
agent from treating the account holder as a
resident of a treaty country if such address
is in the treaty country. If a withholding
agent has a mailing address (whether or
not contained on the withholding certifi-
cate) outside the applicable treaty country,
the withholding agent may nevertheless
treat a direct account holder as a resident
of an applicable treaty country if-

(A) The withholding agent has in its
possession or obtains documentary evi-
dence described in § 1.1471-3(c)(5)(i)
supporting the account holder's claim of
residence in the applicable treaty country
(and the additional documentation does
not contain an address outside the treaty
country);

(B) The withholding agent has in its
possession, or obtains, documentation that
establishes that the direct account holder
is an entity organized in a treaty country
(or an entity managed and controlled in a
treaty country, if the applicable treaty so
requires);

(C) The withholding agent knows that
the address outside the applicable treaty
country (other than a P.O. box, or in-
care-of address) is a branch of the account

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holder that is an entity that is a resident of
the applicable treaty country; or

(D) The withholding agent obtains a
written statement from the direct account
holder that reasonably establishes entitle-
ment to treaty benefits.

(iii) Standing instructions. A beneficial
owner withholding certificate is unreliable
or incorrect to establish entitlement to a
reduced rate of withholding under an in-
come tax treaty if the direct account
holder has standing instructions to pay
amounts directing the withholding agent
to pay amounts from its account to an
address or an account outside the treaty
country 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) establishing
the account holder's residence in the ap-
plicable treaty country.

(7) Documentary evidence. A with-
holding agent shall not treat documentary
evidence provided by a direct account
holder as valid if the documentary evi-
dence does not reasonably establish the
identity 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 holder
that is a natural person and the photograph
or signature on the documentary evidence,
if any, does not match the appearance or
signature of the person presenting the doc-
ument. A withholding agent shall not rely
on documentary evidence to reduce the
rate of withholding that would otherwise
apply 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 is
inconsistent 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 with
the direct account holder's claim, or the
documentary evidence lacks information
necessary to establish entitlement to a re-
duced rate of withholding. For example, if
a direct account holder provides docu-
mentary evidence to claim treaty benefits
and the documentary evidence establishes
the direct account holder's status as a for-
eign person and a resident of a treaty
country, but the account holder fails to
provide the treaty statements required by

§ 1.1441-6(c)(5), the documentary evi-
dence does not establish the direct account
holder's entitlement to a reduced rate of
withholding. For purposes of establishing
a direct account holder's status as a for-
eign person or resident of a country with
which the United States has an income tax
treaty, documentary evidence shall be
considered unreliable or incorrect only if
it 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 withholding
agent has reason to know that documen-
tary evidence is unreliable or incorrect for
purposes of establishing the direct account
holder's status as a foreign person if the
documentary evidence is described in
paragraphs (b)(8)(i), (ii), (iii), or (iv) of
this section.

(i) Documentary evidence received
prior to January 1, 2001. A withholding
agent shall not treat documentary evi-
dence provided by a direct account holder
before January 1, 2001, as valid for pur-
poses of establishing the account holder's
status as a foreign person if it has actual
knowledge that the account holder is a
U.S. person or if it has a mailing or resi-
dence address for the account holder in
the United States. If a withholding agent
has an address for the direct account
holder in the United States, the withhold-
ing agent may nevertheless treat the ac-
count holder as a foreign person if it can
so treat the account holder under the rules
of paragraph (b)(8)(ii) of this section. See,
however, paragraph (b)(3)(ii) of this sec-
tion regarding changes in circumstances
with respect to preexisting obligations.

(ii) Documentary evidence received af-
ter December 31, 2000. A withholding
agent shall not treat documentary evi-
dence provided by an account holder after
December 31, 2000, as valid for purposes
of establishing the direct account holder's
foreign status if the withholding agent
does not have a permanent residence ad-
dress for the account holder. Documentary
evidence is also unreliable or incorrect to
establish a direct account holder's status
as a foreign person if the withholding
agent has classified the account holder as
a U.S. person in its account information, if
the withholding agent has a current mail-
ing or permanent residence address
(whether or not on the documentation) for

the direct account holder in the United
States, the direct account holder notifies
the withholding agent of a new residence
or mailing address in the United States, or
if the withholding agent has a current tele-
phone number for the account holder in
the United States and has no telephone
number for the account holder outside of
the United States. Notwithstanding the
foregoing, a withholding agent may rely
on documentary evidence as establishing
the direct account holder's foreign status
if it may do so under the provisions of
paragraph (b)(8)(ii)(A) or (B) of this sec-
tion.

(A) Treatment of individual's foreign
status. A withholding agent may treat a
direct account holder that is an individual
as a foreign person even if it has any of
the U.S. indicia described in paragraph
(b)(8)(ii) of this section for the account
holder if-

(1) The withholding agent has in its
possession 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 in
writing supporting the account holder's
foreign status;

(2) The withholding agent obtains a
valid beneficial owner withholding certif-
icate on Form W-8 and the Form W-8
contains a permanent residence address
outside the United States and a mailing
address outside the United States (or if a
mailing address is inside the United States
the account holder provides a reasonable
explanation in writing supporting the ac-
count holder's foreign status); or

(3) For a payment made with respect to
an 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 in
which the obligation is maintained, the
withholding agent is required to report a
payment made to the individual annually
on a tax information statement that is filed
with the tax authority of the country in
which the office is located as part of that
country's resident reporting requirements,
and that country has a tax information
exchange agreement or income tax treaty
in effect with the United States.

(B) Presumption of entity's foreign sta-
tus. A withholding agent may treat a direct

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account holder that is an entity (other than
a flow-through entity) as a foreign person
even if it has any of the U.S. indicia
described in paragraph (b)(8)(ii) of this
section for the account holder in the
United States if-

(1) The withholding agent has in its
possession 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 actually
organized or created under the laws of a
foreign country;

(2) The withholding agent obtains a
valid beneficial owner withholding certif-
icate on Form W-8 and the Form W-8
contains a permanent residence address
outside the United States and a mailing
address outside the United States (or if a
mailing address is inside the United States
the account holder provides additional
documentary evidence sufficient to estab-
lish the account holder's foreign status);
or

(3) For a payment made with respect to
an offshore obligation (with offshore ob-
ligation defined as in § 1.6049-5(c)(1)),
the withholding agent classifies the entity
as a resident of the country in which the
account is maintained, the withholding
agent is required to report a payment
made to the entity annually on a tax in-
formation statement that is filed with the
tax authority of the country in which the
office is located as part of that country's
resident reporting requirements, and that
country has a tax information exchange
agreement or income tax treaty in effect
with the United States.

(iii) U.S. place of birth. A withholding
agent has reason to know that documen-
tary evidence provided by a direct account
holder to support an individual's foreign
status is unreliable or incorrect if the with-
holding agent has, either on the documen-
tary evidence or as part of its account
information, an unambiguous place of
birth for the individual in the United
States. A withholding agent may treat the
individual 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 United
States 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 a
foreign person if the withholding agent
obtains a valid beneficial owner withhold-
ing certificate on Form W-8 from the
individual that establishes the account
holder's foreign status, documentary evi-
dence described in § 1.1471-3(c)(5)(i)(B)
evidencing citizenship in a country other
than the United States, and a reasonable
written 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 respect
to offshore obligations. Documentary ev-
idence is unreliable or incorrect if it is
provided with respect to an offshore obli-
gation (as defined in § 1.6049-5(c)(1)) of
a direct account holder that has provided
the withholding agent with standing in-
structions to pay amounts to an address or
an account maintained in the United
States. The withholding agent may treat
the direct account holder as a foreign per-
son, however, if the account holder pro-
vides either a reasonable explanation in
writing that supports its foreign status or a
valid beneficial owner withholding certif-
icate claiming foreign status.

(9) Documentary evidence-claim of
reduced rate of withholding under treaty.
A withholding agent has reason to know
that documentary evidence is unreliable or
incorrect for purposes of establishing that
a direct account holder is a resident of a
country with which the United States has
an income tax treaty if it is described in
paragraph (b)(9)(i) or (ii) of this section.

(i) Permanent residence address and
mailing address. Documentary evidence
is unreliable or incorrect if the withhold-
ing agent has a current mailing or current
permanent residence address for the direct
account holder (whether or not on the
documentary evidence) that is outside the
applicable 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 current
permanent residence address for the direct
account holder outside the applicable
treaty country, the withholding agent may
nevertheless treat a direct account holder
as a resident of an applicable treaty coun-
try if the withholding agent-

(A) Has in its possession or obtains
additional documentary evidence de-
scribed in § 1.1471-3(c)(5)(i) supporting
the direct account holder's claim of resi-
dence in the applicable treaty country (and
the documentary evidence does not con-
tain an address outside the applicable
treaty country, a P.O. box, an in-care-of
address, or the address of a financial in-
stitution);

(B) Has in its possession or obtains
documentary evidence described in
§ 1.1471-3(c)(5)(i) that establishes the di-
rect account holder is an entity organized
in a treaty country (or an entity managed
and controlled in a treaty country, if the
applicable treaty so requires); or

(C) Obtains a valid beneficial owner
withholding certificate on Form W-8 that
contains a permanent residence address
and a mailing address in the applicable
treaty country.

(ii) Standing instructions. Documen-
tary evidence is unreliable or incorrect if
the direct account holder has provided the
withholding agent with standing instruc-
tions to pay amounts to an address or an
account maintained outside the treaty
country unless the direct account holder
provides a reasonable explanation, in writ-
ing, establishing the direct account hold-
er's residence in the applicable treaty
country, 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 documentation
from a payee through a nonqualified in-
termediary, a flow-through entity, or a
U.S. branch (including a territory financial
institution) described in § 1.1441-
1(b)(2)(iv) (other than a U.S. branch or
territory financial institution that is treated
as a U.S. person) has reason to know that
the documentation is unreliable or incor-
rect if a reasonably prudent person in the
position of a withholding agent would
question the claims made. This standard
requires, but is not limited to, a withhold-
ing agent's compliance with the rules of
paragraphs (b)(10)(i) through (iii).

(i) The withholding agent must review
the withholding statement described in
§ 1.1441-1(e)(3)(iv) and may not rely on
information in the statement to the extent
the information does not support the

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claims made for any payee. For this pur-
pose, a withholding agent may not treat a
payee as a foreign person if an address in
the United States is provided for such
payee and may not treat a person as a
resident of a country with which the
United States has an income tax treaty if
the address for that person is outside the
applicable treaty country. Notwithstand-
ing a U.S. address or an address outside a
treaty country, the withholding agent may
treat a payee as a foreign person or a
foreign person as a resident of a treaty
country if the withholding statement is
accompanied 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, in
writing, by the nonqualified intermediary,
flow-through entity, or U.S. branch sup-
porting the payee's foreign status or the
foreign person's residency in a treaty
country.

(ii) The withholding agent must review
each withholding certificate in accordance
with the requirements of paragraphs (b)(5)
and (6) of this section and verify that the
information on the withholding certificate
is consistent with the information on the
withholding statement required under
§ 1.1441-1(e)(3)(iv). If there is a discrep-
ancy between the withholding certificate
and the withholding statement, the with-
holding agent may choose to rely on the
withholding certificate, if valid, and in-
struct the nonqualified intermediary, flow-
through entity, or U.S. branch to correct
the withholding statement or apply the
presumption rules of § § 1.1441-1(b),
1.1441-5(d) and (e)(6), 1.6049-5(d), and
1.1471-3(f) (for a withholdable payment
for chapter 4 purposes) to the payment
allocable to the payee who provided the
withholding certificate. If the withholding
agent chooses to rely upon the withhold-
ing certificate, the withholding agent is
required to instruct the intermediary or
flow-through entity to correct the with-
holding statement and confirm that the
intermediary or flow-through entity does
not know or have reason to know that the
withholding certificate is unreliable or in-
accurate.

(iii) The withholding agent must re-
view the documentary evidence provided
by the nonqualified intermediary, flow-
through entity, or U.S. branch to deter-

mine that there is no obvious indication
that the payee is a U.S. non-exempt recip-
ient or that the documentary evidence
does not establish the identity of the per-
son who provided the documentation
(e.g., the documentary evidence does not
appear to be an identification document).

(11) Limits on reason to know for mul-
tiple obligations belonging to a single
person. A withholding agent that main-
tains multiple obligations for a single per-
son will have reason to know that a claim
of foreign status for the person is inaccu-
rate based on account information for an-
other obligation held by the person only to
the 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 identifying
number and consolidates the account in-
formation and payment information for
the obligations; or

(ii) The withholding agent has treated
the obligations as consolidated obligations
for purposes of sharing documentation
pursuant to § 1.1441-1(e)(4)(ix) or for
purposes of treating one or more accounts
as preexisting obligations.

(12) Reasonable explanation support-
ing claim of foreign status. A reasonable
explanation supporting an individual's
claim of foreign status for purposes of
paragraphs (b)(5) and (8) of this section
means a written statement prepared by the
individual or the individual's completion
of a checklist provided by the withholding
agent, stating that the individual meets the
requirements of one of paragraphs
(b)(12)(i) through (iv) of this section.

(i) The individual certifies that he or
she-

(A) Is a student at a U.S. educational
institution and holds the appropriate visa;

(B) Is a teacher, trainee, or intern at a
U.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 a
diplomatic post or a position in a consul-
ate, embassy, or international organization
in the United States; or

(D) Is a spouse or unmarried child un-
der the age of 21 years of one of the
persons described in paragraphs
(b)(12)(i)(A) through (C) of this section;

(ii) The individual provides informa-
tion demonstrating that he or she has not
met the substantial presence test set forth
in § 301.7701(b)-1(c) of this chapter (e.g.,
a written statement indicating the number
of days present in the United States during
the three-year period that includes the cur-
rent year);

(iii) The individual certifies that he or
she meets the closer connection exception
described in § 301.7701(b)-2, states the
country to which the individual has a
closer connection, and demonstrates how
that closer connection has been estab-
lished; or

(iv) With respect a payment entitled to
a reduced rate of tax under a U.S. income
tax treaty, the individual certifies that he
or she is treated as a resident of a country
other than the United States and is not
treated as a U.S. resident or U.S. citizen
for purposes of that income tax treaty.

(13) Additional guidance. The IRS
may prescribe other circumstances for
which 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 to
establish an account holder's status as a
foreign person or a beneficial owner enti-
tled to a reduced rate of withholding in
published guidance (see § 601.601(d)(2)
of this chapter).

(c) Agent-(1) In general. A withhold-
ing agent may authorize an agent to fulfill
its obligations under chapter 3 if the re-
quirements of paragraph (c)(2) of this sec-
tion are satisfied. The acts of an agent of a
withholding agent (including the receipt
of withholding certificates, the payment of
amounts of income subject to withhold-
ing, and the deposit of tax withheld) are
imputed to the withholding agent on
whose behalf it is acting.

(2) Authorized agent. An agent is an
authorized agent only if-

(i) There is a written agreement be-
tween the withholding agent and the for-
eign person acting as agent that clearly
provides which obligations under chapter
3 that the agent is authorized to fulfill;

(ii) A Form 8655, "Reporting Agent
Authorization," is filed with the IRS if the
agent (including any sub-agent) is acting
as a reporting agent for filing Form 1042
or making tax deposits and payments;

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(iii) Books and records and relevant
personnel of the agent (including any sub-
agent) are available to the withholding
agent (on a continuous basis, including
after termination of the relationship) in
order to evaluate the withholding agent's
compliance 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 assert
any of the defenses that may otherwise be
available, including under common law
principles of agency in order to avoid tax
liability under the Internal Revenue Code.

(3) Liability of withholding agent act-
ing through an agent. An authorized agent
is subject to the same withholding and
reporting obligations that apply to any
withholding agent under the provisions of
chapter 3 of the Code and the regulations
thereunder. See the instructions to Form
1042-S for the manner for filing the form
when an authorized agent acts on behalf
of a withholding agent. Except as other-
wise provided in the QI, WP, and WT
agreements, an authorized agent does not
benefit from the special procedures or ex-
ceptions that may apply to a qualified in-
termediary, WP, or WT. A withholding
agent acting through an authorized agent
is liable for any failure of the agent, such
as failure to withhold an amount or make
payment of tax, in the same manner and to
the same extent as if the agent's failure
had been the failure of the withholding
agent. For this purpose, the agent's actual
knowledge or reason to know shall be
imputed to the withholding agent. The
withholding agent's liability shall exist ir-
respective of the fact that the authorized
agent is also a withholding agent and is
itself separately liable for failure to com-
ply with the provisions of the regulations
under section 1441, 1442, or 1443. How-
ever, the same tax, interest, or penalties
shall not be collected more than once.

(d) through (f)(2)(i) [Reserved]. For
further 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 example
assumes that withholding under chapter 4
does not apply.

Example 1. (i) DS is a U.S. subsidiary of FP, a
corporation organized in Country N, a country that
does not have an income tax treaty with the United
States. FS is a special purpose subsidiary of FP that
is incorporated in Country T, a country that has an
income tax treaty with the United States that prohib-
its the imposition of withholding tax on payments of
interest. FS is capitalized with $10,000,000 in debt
from BK, a Country N bank, and $1,000,000 in
capital from FS.

(ii) On May 1, 1995, C, a U.S. person, purchases
an automobile from DS in return for an installment
note. 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 installment
notes for FS and C is not notified of the sale of its
obligation and continues to make payments to DS.
But for the withholding tax on payments of interest
by DS to BK, DS would have borrowed directly
from 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 note
held by BK also is a financing transaction. After FS
purchases the installment note, and during the time
the installment note is held by FS, the transactions
constitute 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 financed
entity. Because the participation of FS in the financ-
ing arrangement reduces the tax imposed by section
881 and because there was a tax avoidance plan, FS
is a conduit entity.

(iv) Because C does not know or have reason to
know of the tax avoidance plan (and by extension
that the financing arrangement is a conduit financing
arrangement), C is not required to withhold tax under
section 1441. However, DS, who knows that FS's
participation in the financing arrangement is pursu-
ant to a tax avoidance plan and is a withholding
agent for purposes of section 1441, is not relieved of
its withholding responsibilities.

Example 2. Assume the same facts as in Example
1 except that C receives a new payment booklet on
which DS is described as "agent". Although C may
deduce that its installment note has been sold, with-
out more C has no reason to know of the existence of
a financing arrangement. Accordingly, C is not liable
for 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 in
the process of negotiating a loan of $10,000,000
from BK1, a bank located in Country N, a country
that does not have an income tax treaty with the
United States. Before the loan agreement is signed,
DC's tax lawyers point out that interest on the loan
would not be subject to withholding tax if the loan
were made by BK2, a subsidiary of BK1 that is
incorporated in Country T, a country that has an
income tax treaty with the United States that prohib-
its the imposition of withholding tax on payments of
interest. BK1 makes a loan to BK2 to enable BK2 to
make the loan to DC. Without the loan from BK1 to
BK2, BK2 would not have been able to make the
loan to DC.

(ii) The loan from BK1 to BK2 and the loan from
BK2 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 financing
entity, BK2 is the intermediate entity, and DC is the
financed entity. Because the participation of BK2 in
the financing arrangement reduces the tax imposed
by section 881 and because there is a tax avoidance
plan, BK2 is a conduit entity.

(iii) Because DC is a party to the tax avoidance
plan (and accordingly knows of its existence), DC
must withhold tax under section 1441. If DC does
not withhold tax on its payment of interest, BK2, a
party to the plan and a withholding agent for pur-
poses of section 1441, must withhold tax as required
by section 1441.

Example 4. (i) DC is a U.S. corporation that has
a long-standing banking relationship with BK2, a
U.S. subsidiary of BK1, a bank incorporated in
Country N, a country that does not have an income
tax treaty with the United States. DC has borrowed
amounts of as much as $75,000,000 from BK2 in the
past. On January 1, 1995, DC asks to borrow
$50,000,000 from BK2. BK2 does not have the
funds available to make a loan of that size. BK2
considers asking BK1 to enter into a loan with DC
but rejects this possibility because of the additional
withholding tax that would be incurred. Accord-
ingly, BK2 borrows the necessary amount from BK1
with the intention of on-lending to DC. BK1 does not
make the loan directly to DC because of the with-
holding tax that would apply to payments of interest
from DC to BK1. DC does not negotiate with BK1
and has no reason to know that BK1 was the source
of the loan.

(ii) The loan from BK2 to DC and the loan from
BK1 to BK2 are both financing transactions and
together constitute a financing arrangement within
the meaning of § 1.881-3(a)(2)(i). BK1 is the financ-
ing entity, BK2 is the intermediate entity, and DC is
the financed entity. The participation of BK2 in the
financing arrangement reduces the tax imposed by
section 881. Because the participation of BK2 in the
financing arrangement reduces the tax imposed by
section 881 and because there was a tax avoidance
plan, BK2 is a conduit entity.

(iii) Because DC does not know or have reason
to know of the tax avoidance plan (and by extension
that the financing arrangement is a conduit financing
arrangement), DC is not required to withhold tax
under section 1441. However, BK2, who is also a
withholding agent under section 1441 and who
knows that the financing arrangement is a conduit
financing arrangement, is not relieved of its with-
holding responsibilities.

(3) and (g) [Reserved]. For further
guidance, see § 1.1441-7(f)(3) and (g).

(h) Effective date/Applicability. Except
as 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, and
before July 1, 2014, see this section as in
effect and contained in 26 CFR part 1, as
revised April 1, 2013.)

(i) Expiration date. The applicability of
this section expires on February 28, 2017.

Par. 16. Section 1.1461-1 is amended
by revising paragraphs (b)(1), (c)(1)(i),

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(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 tax
withheld.

* * * * *

(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).

(3) * * *

(i) [Reserved]. For further guidance,
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 of
tax withheld (temporary).

(a) [Reserved]. For further guidance,
see § 1.1461-1(a).

(b) Income tax return-(1) General
rule. A withholding agent shall make an
income tax return on Form 1042 (or such
other form as the IRS may prescribe) for
income paid during the preceding calen-
dar year that the withholding agent is re-
quired to report on an information return
on Form 1042-S (or such other form as
the IRS may prescribe) under paragraph
(c)(1) of this section. See section 6011 and
§ 1.6011-1(c). The withholding agent
must file the return on or before March 15
of the calendar year following the year in
which the income was paid. The return
must show the aggregate amount of in-
come paid and tax withheld required to be
reported on all the Forms 1042-S for the
preceding calendar year by the withhold-
ing agent, in addition to such information
as is required by the form and accompa-
nying instructions. See § 1.1474-1(c) for
the requirement to show the aggregate
chapter 4 reportable amounts and tax
withheld on Form 1042. A single Form
1042 may be filed by a withholding agent
to report amounts under chapters 3 and 4,
including tax withheld. Withholding cer-
tificates or other statements or information
provided to a withholding agent are not
required to be attached to the return. A
return must be filed under this paragraph
(b)(1) even though no tax was required to
be withheld during the preceding calendar
year. The withholding agent must retain a
copy 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 regulations
thereunder for the applicable statute of
limitations. Adjustments to the total
amount of tax withheld, as described in
§ 1.1461-2, shall be stated on the return as
prescribed by the form and accompanying
instructions.

(2) [Reserved]. For further guidance,
see § 1.1461-1(b)(2).

(c) Information returns-(1) Filing re-
quirement-(i) In general. A withholding
agent (other than an individual who is not
acting in the course of a trade or business
with respect to a payment) must make an
information return on Form 1042-S (or
such 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 amount
under sections 1441, 1442, 1443, or
§ 1.1446-4(a) (applicable to publicly
traded partnerships required to pay tax
under section 1446 on distributions) must
file a Form 1042-S, "Foreign Person's
U.S. Source Income Subject to Withhold-
ing," for the payment withheld upon
whether or not that person is engaged in a
trade or business and whether or not the
payment is an amount subject to reporting.
The reference in the previous sentence to
withholding under § 1.1446-4 shall apply
to partnership taxable years beginning af-
ter May 18, 2005, or such earlier time as
the regulations under § § 1.1446-
1 through 1.1446-5 apply by reason of an
election under § 1.1446-7. A Form
1042-S shall be prepared for each recipi-
ent of an amount subject to reporting and
for each single type of income payment.
The Form 1042-S shall be prepared in
such manner as the form and accompany-
ing instructions prescribe. One copy of the
Form 1042-S shall be filed with the IRS
on or before March 15th of the calendar
year following the year in which the
amount subject to reporting was paid. It
shall be filed with a transmittal form as
provided in the instructions to the Form
1042-S and to the transmittal form. With-
holding certificates, documentary evi-
dence, or other statements or documenta-
tion provided to a withholding agent are
not required to be attached to the form.
Another copy of the Form 1042-S must
be furnished to the recipient for whom the
form is prepared (or any other person, as
required under this paragraph (c) or the
instructions to the form) on or before
March 15th of the calendar year following
the year in which the amount subject to
reporting was paid. The withholding agent
must retain a copy of each Form 1042-S
for the statute of limitations on assessment
and collection applicable to the Form
1042 to which the Form 1042-S relates.

(ii) Recipient-(A) Defined. For pur-
poses of this section, the term recipient
means-

(1) A beneficial owner as defined in
§ 1.1441-1(c)(6), including a foreign es-
tate or a foreign complex trust, as defined
in § 1.1441-1(c)(25);

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(2) A qualified intermediary as defined
in § 1.1441-1(e)(5)(ii);

(3) A withholding foreign partnership
as defined in § 1.1441-5(c)(2) or a with-
holding foreign trust under § 1.1441-
5(e)(5)(v);

(4) A territory financial institution
treated as a U.S. person under § 1.1441-
1(b)(2)(iv)(A);

(5) A U.S. branch that is treated as a
U.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 extent
the income is (or is treated as) effectively
connected with the conduct of a trade or
business 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 foreign
person 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 distribution
from a publicly traded partnership subject
to withholding under section 1446 and
§ 1.1446-4 on distributions of effectively
connected income. This paragraph
(c)(1)(ii)(A)(8) shall apply to partnership
taxable years beginning after May 18,
2005, or such earlier time as the regula-
tions under §§ 1.1446-1 through
1.1446-5 apply by reason of an election
under § 1.1446-7.

(9) A foreign intermediary, nonwith-
holding foreign partnership or nonwith-
holding foreign trust that is a participating
FFI or registered deemed-compliant FFI
with respect to a chapter 4 reporting pool
of U.S. payees;

(10) A participating FFI or a registered
deemed-compliant FFI that is a recipient
of a withholdable payment described in
§ 1.1474-1(d)(1)(ii)(A)(1)(iii); and

(11) Any other person as required on
Form 1042-S or the instructions to the
form.

(B) Persons that are not recipients. A
recipient does not include-

(1) A nonqualified intermediary, ex-
cept with respect to a payment (or portion
of a payment) for which a nonqualified
intermediary that is an FFI is a recipient
reporting as described in § 1.1474-
1(d)(1)(ii)(A)(1)(iii);

(2) A payee included in a chapter 3 or
chapter 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 other
than income effectively connected with
the conduct of a trade or business in the
United 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 territory
financial institution) described in
§ 1.1441-1(b)(2)(iv)(A) that is not treated
as a U.S. person under that section and is
not 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) for
persons that are defined as recipients of a
withholdable payment of U.S. source
FDAP income for purposes of chapter 4 in
addition to the persons that are recipients
under 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) introductory
text through (c)(2)(ii)(D).

(A) through (D) [Reserved]. For further
guidance, see § 1.1461-1(c)(2)(ii)(A).

(E) Any item required to be reported on
Form 1099, and such other forms as are
prescribed pursuant to the information re-
porting provisions of sections 6041
through 6050W and the regulations under
those sections;

(F) and (G) [Reserved]. For further
guidance, see § 1.1461-1(c)(2)(ii)(F) and
(G).

(H) Interest (including original issue
discount) 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 required
to be satisfied (taking into account the
provisions of § 1.871-14(e)(4)(ii), if ap-
plicable;

(I) Interest on a foreign-targeted bearer
obligation (see § § 1.1441-1(b)(4)(i) and
1.1441-2(a)) issued before March 19,
2012;

(J) and (K) [Reserved]. For further
guidance, see § 1.1461-1(c)(2)(ii)(J) and
(K).

(3) [Reserved]. For further guidance,
see § 1.1461-1(c)(3).

(i) The name, address, taxpayer identi-
fying number of the withholding agent,
and the withholding agent's status for
chapter 3 purposes (based on the status
codes applicable for chapter 3 purposes
provided on the form);

(ii) [Reserved]. For further guidance,
see § 1.1461-1(c)(3)(ii).

(iii) For a payment not subject to with-
holding under chapter 4, the rate of with-
holding applied or the basis for exempting
the payment from withholding under
chapter 3, and the exemption applicable to
the payment for chapter 4 purposes (based
on the exemption codes provided on the
form);

(iv) through (ix) [Reserved]. For fur-
ther guidance, see § 1.1461-1(c)(3)(iv)
through (ix).

(4) Method of reporting-(i) Payments
by 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 as
defined in § 1.1441-1(e)(5)(ii) that makes
payments of amounts subject to reporting
on Form 1042-S must file a separate Form
1042-S for each recipient who receives
such 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 instructions
to the form, only payments for which the
income code, exemption code, withhold-
ing rate and recipient code are the same
may be reported on a single Form 1042-S.
See paragraph (c)(4)(ii) of this section for
reporting of payments made to a person
that is not a recipient. See § 1.1474-
1(d)(4) for additional requirements that
may apply for reporting on Form 1042-S
with respect to a withholdable payment
that is a chapter 4 reportable amount.

(A) Payments to beneficial owners. If a
U.S. withholding agent makes a payment
directly to a beneficial owner it must com-
plete Form 1042-S treating the beneficial
owner as the recipient. Under the grace
period rule of § 1.1441-1(b)(3)(iv), a U.S.
withholding agent may, under certain cir-
cumstances, treat a payee as a foreign
person while the withholding agent awaits

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a valid withholding certificate. A U.S.
withholding agent who relies on the grace
period rule to treat a payee as a foreign
person must file a Form 1042-S to report
all payments on Form 1042-S during the
period that person was presumed to be
foreign even if that person is later deter-
mined to be a U.S. person based on ap-
propriate documentation or is presumed to
be a U.S. person after the grace period
ends. In the case of joint owners, a with-
holding agent may provide a single Form
1042-S made out to the owner whose
status the U.S. withholding agent relied
upon to determine the applicable rate of
withholding. If, however, any one of the
owners requests its own Form 1042-S, the
withholding agent must furnish a Form
1042-S to the person who requests it. If
more than one Form 1042-S is issued for
a single payment, the aggregate amount
paid and tax withheld that is reported on
all Forms 1042-S cannot exceed the total
amounts paid to joint owners and the tax
withheld thereon.

(B) Payments to a qualified intermedi-
ary, a withholding foreign partnership, or
a withholding foreign trust. A U.S. with-
holding agent that makes payments to a
qualified intermediary (whether or not the
qualified intermediary assumes primary
withholding responsibility for purposes of
chapter 3 and chapter 4 of the Code), a
withholding foreign partnership, or a
withholding foreign trust shall complete
Forms 1042-S treating the qualified inter-
mediary, withholding foreign partnership,
or withholding foreign trust as the recipi-
ent. The U.S. withholding agent must
complete a separate Form 1042-S for
each chapter 3 and chapter 4 withholding
rate pool with respect to each qualified
intermediary. A qualified intermediary
that does not assume primary withholding
responsibility on all payments it receives
provides information regarding the pro-
portions of income subject to a particular
withholding rate (that is, a chapter 3 with-
holding rate pool) to the withholding
agent 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 and
chapter 4 withholding rate pool with re-
spect to the qualified intermediary. To the
extent a qualified intermediary is required

to report a payment under chapter 61, it
may provide a U.S. withholding agent
with information regarding withholding
rate 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 a
Form 1099 completed for each U.S. non-
exempt recipient to the extent such U.S.
non-exempt recipient is subject to Form
1099 reporting and is not reported on
Form 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 of
reporting such payees on a withholding
statement) and for the withholding rate
pools (including chapter 4 withholding
rate pools) otherwise reportable on a with-
holding statement provided by a qualified
intermediary.

(C) Amounts paid to U.S. branches
treated as U.S. persons. A U.S. withhold-
ing agent making a payment to a U.S.
branch of a foreign person (including a
territory financial institution) described in
§ 1.1441-1(b)(2)(iv)(A) shall complete
Form 1042-S as follows-

(1) If the branch has provided the U.S.
withholding agent with a withholding cer-
tificate that evidences its agreement with
the withholding agent to be treated as a
U.S. person, the U.S. withholding agent
files Forms 1042-S treating the U.S.
branch or territory financial institution as
the 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. withholding
agent must complete a separate Form
1042-S for each recipient whose docu-
mentation is associated with the U.S.
branch's or territory financial institution's
withholding certificate; or

(3) If the U.S. withholding agent can-
not reliably associate a payment with a
valid withholding certificate from the U.S.
branch, it shall treat the U.S. branch as the
recipient and report the income as effec-
tively connected with the conduct of a
trade 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. withholding
agent may make a payment to a foreign
entity that is simultaneously claiming a
reduced rate of tax on its own behalf for a
portion of the payment and a reduced rate
on behalf of persons in their capacity as
interest 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 separate
Form 1042-S for those payments for
which the entity is treated as the beneficial
owner and Forms 1042-S for each of the
interest holders in the entity for which the
interest holder is treated as the recipient.
For those payments for which the interest
holder in an entity is treated as the recip-
ient, the U.S. withholding agent shall pre-
pare the Form 1042-S in the same manner
as a payment made to a nonqualified in-
termediary or flow-through entity as set
forth in paragraph (c)(4)(ii) of this section.
If the claims are consistent but the with-
holding agent has not chosen to accept the
multiple claims, or if the claims are incon-
sistent, the withholding agent must file a
separate Form 1042-S for the person or
persons 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 nonqualified
intermediary, a flow-through entity, and
certain 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 territory
financial institution) described in
§ 1.1441-1(b)(2)(iv) (other than a U.S.
branch or territory financial institution
that is treated as a U.S. person), it must
complete a separate Form 1042-S for
each recipient to the extent the withhold-
ing agent can reliably associate a payment
with valid documentation (within the
meaning of § 1.1441-1(b)(2)(vii)) from
the recipient which is associated with the
withholding certificate provided by the
nonqualified intermediary, flow-through
entity, or U.S. branch or territory financial
institution. See § 1.1474-1(d)(4)(i) for
when a withholding agent may report a
chapter 4 reportable amount made to such
an entity in a chapter 4 withholding rate
pool. See also § 1.1441-1(e)(3)(iv)(A) for
when a withholding statement provided

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by a nonqualified intermediary may in-
clude a chapter 4 withholding rate pool of
U.S. payees. If a payment is reported by
the withholding agent in a chapter 4 with-
holding rate pool, the withholding agent
must 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 of
nonqualified intermediaries or flow-
through entities, the withholding agent
must nevertheless complete Form 1042-S
for the recipient to the extent it can reli-
ably associate the payment with documen-
tation from the recipient. A withholding
agent that is completing a Form 1042-S
for a recipient that receives a payment
through a nonqualified intermediary, a
flow-through entity, or a U.S. branch or
territory financial institution must include
on 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 directly
receives the payment. If a U.S. withhold-
ing agent cannot reliably associate the
payment, or any portion of the payment,
with valid documentation from a recipient
either because no such documentation has
been provided or because the nonqualified
intermediary, flow-through entity, or U.S.
branch or territory financial institution has
failed to provide sufficient allocation in-
formation so that the withholding agent
can associate the payment, or any portion
thereof, with valid documentation, then
the withholding agent must report the pay-
ments as made to an unknown recipient in
accordance with the appropriate presump-
tion rules for that payment. Thus, if the
payment is not a withholdable payment
and under the presumption rules the pay-
ment is presumed to be made to a foreign
person, the withholding agent must gen-
erally withhold 30 percent of the payment
and report the payment on Form 1042-S
made out to an unknown recipient and
shall 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 on
behalf of the unknown recipient. If, how-
ever, the recipient is presumed to be a
U.S. non-exempt recipient (as defined in
§ 1.1441-1(c)(21)), the withholding agent
must withhold on the payment as required

under section 3406 and report the pay-
ment as required under chapter 61 of the
Internal Revenue Code. See § 1.1474-
1(d)(4) for reporting requirements that ap-
ply to payments of chapter 4 reportable
amounts 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 withholding
rate 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 certain
U.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) (other
than a U.S. branch or territory financial
institution, that is treated as a U.S. person)
is a withholding agent and must file Forms
1042-S for amounts paid to recipients in
the same manner as a U.S. withholding
agent. A Form 1042-S will not be re-
quired, however, if another withholding
agent has reported the same amount for
which the nonqualified intermediary,
flow-through entity, or U.S. branch would
be required to file a return and the entire
amount that should be withheld from such
payment has been withheld (including
withholding and reporting in accordance
with the applicable presumption rule for
the payment). A nonqualified intermedi-
ary, flow-through entity, or U.S. branch
must report payments made to recipients
to the extent it has failed to provide the
appropriate documentation to another
withholding agent together with the infor-
mation required for that withholding agent
to reliably associate the payment with the
recipient documentation or to the extent it
knows, or has reason to know, that less
than the required amount has been with-
held. A nonqualified intermediary or flow-
through entity that is required to report a
payment on Form 1042-S must follow the
same rules as apply to a U.S. withholding
agent under paragraph (c)(4)(i) and
(c)(4)(ii) of this section.

(v) Pro rata reporting for allocation
failures. 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) (other
than a U.S. branch or territory financial
institution treated as a U.S. person) uses
the alternative procedures of § 1.1441-
1(e)(3)(iv)(D) and fails to provide infor-
mation sufficient to allocate the amount
subject to reporting paid to a withholding
rate pool to the payees identified for that
pool, then the withholding agent shall re-
port the payment in accordance with the
rule 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 more
Form 1042-S information returns for a
taxable year must file Form 1042-S re-
turns on magnetic media. See, however,
§ 301.1474-1(a) of this chapter for the
requirements for a withholding agent that
is a financial institution to file Forms
1042-S on magnetic media. See, also,
§ 301.6011-2 of this chapter for require-
ments applicable to a withholding agent
that files Forms 1042-S with the IRS on
magnetic media and publications of the
IRS relating to magnetic media filing.

(d) through (h) [Reserved]. For further
guidance, see § 1.1461-1(d) through (h).

(i) Effective/applicability date. Unless
otherwise provided in this section, this
section shall apply to amounts reported
under this section beginning for calendar
year 2014. (For returns required for pay-
ments made after December 31, 2000, see
this section as in effect and contained in
26 CFR part 1 revised April 1, 2013.)

(j) Expiration date. The applicability of
this section expires on February 28, 2017.

Par. 18. Section 1.1461-2 is amended
by revising paragraphs (a)(2)(i), (a)(4),
and (d) to read as follows:

§ 1.1461-2 Adjustments for
overwithholding or underwithholding of
tax.

(a) * * *

(2) * * *

(i) [Reserved]. For further guidance,
see § 1.1461-2T(a)(2)(i).

* * * * *

(4) [Reserved]. For further guidance,
see § 1.1461-2T(a)(4).

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(d) Effective/applicability date-(1)
Unless otherwise provided in this section,
this section applies to payments made af-
ter December 31, 2000.

(2) [Reserved]. For further guidance,
see § 1.1461-2T(d)(2).

Par. 19. Section 1.1461-2T is added to
read as follows:

§ 1.1461-2T Adjustments for
overwithholding or underwithholding of
tax (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 the
beneficial owner or payee for the amount
overwithheld. 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, the
amount of any deposit of tax made by the
withholding agent under § 1.6302-
2(a)(1)(iii) for any subsequent payment
period occurring before the end of the
calendar year following the calendar year
of overwithholding. Any such reduction
that occurs for a payment period in the
calendar year following the calendar year
of overwithholding shall be allowed only
if-

(A) The repayment to the beneficial
owner or payee occurs before the earlier
of the due date (not including extensions)
for filing Form 1042-S for the calendar
year of overwithholding or the date the
Form 1042-S is actually filed with the
IRS;

(B) The withholding agent states on a
timely filed (not including extensions)
Form 1042 for the calendar year of over-
withholding, that the filing of the Form
1042 constitutes a claim for credit in ac-
cordance with § 1.6414-1; and

(C) The withholding agent states, on a
timely filed (not including extensions)
Form 1042 for the calendar year of over-
withholding, that the filing of the Form
1042 constitutes a claim for credit in ac-
cordance with § 1.6414-1.

(ii) and (3) [Reserved]. For further
guidance, see § 1.1461-2(a)(2)(ii) and (3).

(4) Examples. The principles of this
paragraph (a) are illustrated by the follow-
ing examples:

Example 1. (i) N is a nonresident alien individual
who is a resident of the United Kingdom. In Decem-
ber 2001, a domestic corporation C pays a dividend
of $100 to N, at which time C withholds $30 and
remits the balance of $70 to N. On February 10,
2002, prior to the time that C files its Form 1042 and
Form 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 rate
of withholding to 15% under the provisions of the
U.S .- U.K. tax treaty. Consequently, N advises C that
its tax liability is only $15 and not $30 and requests
reimbursement 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 payments
upon which tax is required to be withheld under
chapter 3 of the Code; accordingly, its return on
Form 1042 for such year, which is filed on March 15,
2002, shows total tax withheld of $30, an adjusted
total tax withheld of $15, and $30 previously paid for
such year. Pursuant to § 1.6414-1(b), C claims a
credit for the overpayment of $15 shown on the
Form 1042 for 2001. Accordingly, it is permitted to
reduce by $15 any deposit required by § 1.6302-2 to
be made of tax withheld during the calendar year
2002. The Form 1042-S required to be filed by C
with respect to the dividend of $100 paid to N in
2001 is required to show tax withheld under chapter
3 of $30 and tax repaid to N of $15.

Example 2. The facts are the same as in Example
1\. In addition, during 2002, C makes payments to N
upon which it is required to withhold $200 under
chapter 3 of the Code, all of which is withheld in
June 2002. Pursuant to § 1.6302-2(a)(1)(iii), C de-
posits the amount of $185 on July 15, 2002 ($200
less the $15 for which credit is claimed on the Form
1042 for 2001). On March 15, 2003, C Corporation
files 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 Example
1\. Under § 1.6302-2(a)(1)(ii), C is required to de-
posit on a quarter-monthly basis the tax withheld
under chapter 3 of the Code. C withholds tax of $100
between February 8 and February 15, 2002, and
deposits $75 [($100×90%) less $15] of the withheld
tax within 3 banking days after February 15, 2002,
and by depositing $10 [($100-$15) less $75] within
3 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 apply
to payments made after June 30, 2014.

(e) Expiration date. The applicability
of this section expires on February 28,
2017.

Par. 20. In § 1.6041-1, paragraphs
(d)(5)(i) and (ii) and (j) are revised to read
as follows:

§ 1.6041-1 Return of information as to
payments 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 made
after December 31, 2002. The provisions
of 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).

Par. 21. Section 1.6041-1T is added to
read as follows:

§ 1.6041-1T Return of information as to
payments 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 a
notional principal contract is not required
to be reported if the amount is paid by a
non-U.S. payor or a non-U.S. middleman
and is paid and received outside the
United States (as defined in § 1.6049-
4(f)(16)).

(ii) An amount paid with respect to a
notional principal contract is not required
to be reported if the amount is paid by a
payor that has no actual knowledge that
the payee is a U.S. person and is paid and
received outside the United States (as de-
fined in § 1.6049-4(f)(16)), and the payor
is-

(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 to
payments made after June 30, 2014.

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

Par. 22. Section 1.6041-4 is amended
by revising paragraphs (a)(1) through (3),
adding paragraph (a)(7), and revising
paragraphs (b) and (d) to read as follows:

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§ 1.6041-4 Foreign-related items and
other exceptions.

(a) * * *

(1) through (3) [Reserved]. For further
guidance, see § 1.6041-4T(a)(1) through
(3).

* * * * *

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

(2) [Reserved]. For further guidance,
see § 1.6041-4T(d)(2).

Par. 23. Section 1.6041-4T is added to
read as follows:

§ 1.6041-4T Foreign-related items and
other exceptions (temporary).

(a) [Reserved]. For further guidance,
see § 1.6041-4(a).

(1) Returns of information are not re-
quired for payments that a payor can, prior
to payment, reliably associate with docu-
mentation upon which it may rely to treat
as made to a foreign beneficial owner in
accordance with § 1.1441-1(e)(1)(ii) or as
made to a foreign payee in accordance
with § 1.6049-5(d)(1) or presumed to be
made to a foreign payee under § 1.6049-
5(d)(2), (3), (4), or (5). Returns of infor-
mation are also not required for a payment
that a payor or middleman can, prior to
payment, reliably associate with docu-
mentation upon which it may rely to treat
as 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 a
chapter 4 withholding rate pool (as de-
fined in § 1.6049-4(f)(5)) or specific pay-
ees to which withholding applies under
chapter 4. Payments excepted from report-
ing under this paragraph (a)(1) may be
reportable, for purposes of chapter 3 of the
Internal Revenue Code (Code), under
§ 1.1461-1(b) and (c) and, for purposes of
chapter 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 this
paragraph (a)(1). The provisions in
§ 1.6049-5(c)(5) regarding the definitions
of U.S. payor and non-U.S. payor shall
also apply for purposes of this paragraph
(a)(1). See § 1.1441-1(b)(3)(iii)(B) and
(C) for special payee rules regarding
scholarships, grants, pensions, annuities,
etc. The provisions of § 1.1441-1 shall
apply by substituting the term payor for
the term withholding agent and without
regard to the fact that the provisions apply
only to amounts subject to withholding
under chapter 3 of the Code and the reg-
ulations under that chapter.

(2) Returns of information are not re-
quired for payments of amounts from
sources outside the United States (deter-
mined under the provisions of part I, sub-
chapter N, chapter 1 of the Code and the
regulations under those provisions) paid
by a non-U.S. payor or non-U.S. middle-
man and that are paid and received outside
the United States. For a definition of non-
U.S. payor and non-U.S. middleman, see
§ 1.6049-5(c)(5). For circumstances in
which an amount is considered to be paid
and 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. person
receives a payment from a payor, which
payment the payor can reliably associate
with 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 not
required to report such payment when it,
in turn, pays the amount, unless, and to the
extent, the intermediary or branch knows
that the payment is required to be reported
under 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 are
not exempt from reporting under
§ 1.6041-3(q) to the person from whom
the U.S. branch receives the payment, the
U.S. branch must report the payment on
an information return. See, however, para-
graph (a)(7) of this section for when re-
porting under section 6041is coordinated
with reporting under chapter 4 of the Code
or an applicable IGA (as defined in
§ 1.6049-4(f)(7)). The exception de-

scribed in this paragraph (a)(3) for
amounts paid by a foreign intermediary
shall not apply to a qualified intermediary
that assumes reporting responsibility un-
der chapter 61 of the Code with respect to
amounts reportable under the agreement
described in § 1.1441-1(e)(5)(iii).

(4) through (6) [Reserved]. For further
guidance, see § 1.6041-4(a)(4) through
(6).

(7) Returns of information are not re-
quired for payments with respect to which
a return is not required by applying the
rules of § 1.6049-4(c)(4) (by substituting
the term a payment subject to reporting
under section 6041 for the term an inter-
est payment).

(b) Joint owners. Amounts paid to joint
owners for which a certificate or docu-
mentation is required as a condition for
being exempt from reporting under para-
graph (a) of this section are presumed
made to U.S. payees who are not exempt
recipients if, prior to payment, the payor
or middleman cannot reliably associate
the payment either with a Form W-9 fur-
nished by one of the joint owners in the
manner required in § § 31.3406(d)-
1 through 31.3406(d)-5, or with documen-
tation described in paragraph (a)(1) of this
section furnished by each joint owner
upon which the payor or middleman can
rely to treat each joint owner as a foreign
payee 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 joint
payee 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 section
apply to payments made after June 30,
2014.

(e) Expiration date. The applicability
of this section expires on February 28,
2017.

Par. 24. Section 1.6042-2 is amended
by revising paragraph (a)(1)(i) and adding
paragraph (f) to read as follows:

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§ 1.6042-2 Returns of information as to
dividends paid.

(a) * * *

(1) * * *

(i) [Reserved]. For further guidance,
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 as to dividends paid (temporary).

(a) [Reserved]. For further guidance,
see § 1.6042-2(a).

(1) [Reserved]. For further guidance,
see § 1.6042-2(a)(1).

(i) Every person who makes a payment
of dividends (as defined in § 1.6042-3) to
any other person during a calendar year.
The information return shall show the ag-
gregate amount of the dividends, the
name, address, and taxpayer identifying
number of the person to whom paid, the
amount of tax deducted and withheld un-
der section 3406 from the dividends, if
any, and such other information as re-
quired by the forms. An information re-
turn is generally not required if the
amount of dividends paid to the other per-
son during the calendar year aggregates
less than $10 or if the payment is made to
a person who is an exempt recipient de-
scribed in § 1.6049-4(c)(1)(ii) unless the
payor backup withholds under section
3406 on such payment (because, for ex-
ample, the payee has failed to furnish a
Form W-9), in which case the payor must
make a return under this section, unless
the payor refunds the amount withheld
pursuant to § 31.6413(a)-3 of this chapter.
Further, a return of information is not
required under this section for-

(A) Payments with respect to which a
return is not required by applying the rules
of § 1.6049-4(c)(4) (by substituting the
term dividend for the term interest); or

(B) Payments made by a paying agent
on behalf of a corporation described in
section 1297(a) with respect to a share-
holder of the corporation if-

(1) The paying agent obtains from the
corporation a written certification signed
by an officer of the corporation, that states

that the corporation is described in section
1297(a) for each calendar year during
which the paying agent relies on the pro-
visions of paragraph (a)(1)(i)(B) of this
section, and the paying agent has no rea-
son to know the written certification is
unreliable or incorrect;

(2) The paying agent identifies, prior to
payment, the corporation as a participat-
ing FFI (including a reporting Model 2
FFI) (as defined in § 1.6049-4(f)(10) or
(14), respectively), or reporting Model 1
FFI (as defined in § 1.6049-4(f)(13)), in
accordance with the requirements of
§ 1.1471-3(d)(4) (substituting the terms
paying agent and corporation for the
terms withholding agent and payee);

(3) The paying agent obtains, before
each year the payment would otherwise be
reported, a written certification represent-
ing that the corporation shall report the
payment as part of its reporting obliga-
tions under chapter 4 of the Code or an
applicable IGA (as defined in § 1.6049-
4(f)(7)) with respect to its U.S. accounts
and provided the paying agent does not
know that the corporation is not reporting
the payment as required. A paying agent
that knows that the corporation is not re-
porting the payment as required under
chapter 4 of the Code or an applicable
IGA (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 such
knowledge; and

(4) The paying agent is not also acting
in its capacity as a custodian, nominee, or
other agent of the payee with respect to
the payments.

(ii) through (e) [Reserved]. For further
guidance, see § 1.6042-
2(a)(1)(ii) through (e).

(f) Effective/applicability date. The
provisions of paragraphs (a)(1)(i) of this
section apply to payments made after June
30, 2014.

(g) Expiration date. The applicability
of this section expires on February 28,
2017.

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 to
reporting.

* * * * *

(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) apply
to 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 to reporting (temporary).

(a) through (b)(1)(ii) [Reserved]. For
further guidance, see § 1.6042-3(a)
through (b)(1)(ii).

(iii) Distributions or payments that a
payor can, prior to payment, reliably as-
sociate with documentation upon which it
may rely to treat as made to a foreign
beneficial 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 also
not required for payments that a payor or
middleman can, prior to payment, reliably
associate with documentation upon which
it may rely to treat as made to a foreign
intermediary 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 which
withholding under chapter 4 applies. Pay-
ments excepted from reporting under this
paragraph (b)(1)(iii) may be reportable,
for purposes of chapter 3 of the Internal

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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 documentation
of foreign status shall apply for purposes
of 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. payor
shall also apply for purposes of this para-
graph (b)(1)(iii). The provisions of
§ 1.1441-1 shall apply by substituting the
term payor for the term withholding agent
and without regard to the fact that the
provisions apply only to amounts subject
to withholding under chapter 3 of the
Code.

(iv) Distributions or payments from
sources outside the United States (as de-
termined under the provisions of part I,
subchapter N, chapter 1 of the Code and
the regulations under those provisions)
that are paid by a non-U.S. payor or non-
U.S. middleman and that are paid and
received outside the United States. For a
definition 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 the
United States, see § 1.6049-4(f)(16).

(v) [Reserved]. For further guidance,
see § 1.6042-3(b)(1)(v).

(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. person
receives a payment from a payor, which
payment the payor can reliably associate
with 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 not
required to report such payment when it,
in turn, pays the amount, unless, and to the
extent, the intermediary or branch knows
that the payment is required to be reported
under 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 are
not exempt from reporting under
§ 1.6049-4(c)(1)(ii) to the person from
whom the U.S. branch receives the pay-
ment, the amount paid by the U.S. branch
to such person is a dividend. See, how-
ever, § 1.6042-2(a)(1)(i)(A) for when re-
porting under section 6042 is coordinated
with reporting under chapter 4 of the Code

or an applicable IGA (as defined in
§ 1.6049-4(f)(7)). The exception of this
paragraph (b)(1)(vi) for amounts paid by a
foreign intermediary shall not apply to a
qualified intermediary that assumes re-
porting responsibility under chapter 61 of
the Code with respect to amounts report-
able under the agreement described in
§ 1.1441-1(e)(5)(iii).

(vii) through (b)(2) [Reserved]. For
further guidance, see § 1.6042-
3(b)(1)(vii) through (b)(2).

(3) Joint owners. Amounts paid to joint
owners for which a certificate or docu-
mentation is required as a condition for
being exempt from reporting under this
paragraph (b) are presumed made to U.S.
payees who are not exempt recipients if,
prior to payment, the payor or middleman
cannot reliably associate the payment ei-
ther with a Form W-9 furnished by one of
the joint owners in the manner required in
§ § 31.3406(d)-1 through 31.3406(d)-5 of
this chapter, or with documentation de-
scribed in paragraph (b)(1)(iii) of this sec-
tion furnished by each joint owner upon
which it can rely to treat each joint owner
as a foreign payee or foreign beneficial
owner. However in the case of a withhold-
able payment (as defined in § 1.6049-
4(f)(15)) made to joint payees, if any such
joint payee does not appear to be an indi-
vidual, the payment is presumed made to
a foreign payee that is a nonparticipating
FFI (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 period
described in § 1.6049-5(d)(2)(ii) shall ap-
ply only if each payee qualifies for such
grace 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 made
after June 30, 2014.

(c) [Reserved]. For further guidance,
see § 1.6042-3(c).

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

Par. 28. Section 1.6045-1 is amended
by:

1\. Revising paragraph (c)(3)(ii) and
adding paragraphs (c)(3)(xiv) and (xv).

2\. Revising paragraphs (g)(1)(i),
(g)(3)(iv), and (g)(4) and (5).

The revisions and additions read as fol-
lows:

### § 1.6045-1 Returns of information of brokers 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 to
payments 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) and
adding paragraphs (p) and (q) to read as
follows:

§ 1.6045-1T Returns of information of
brokers and barter exchanges
(temporary).

(a) through (c)(3)(i) [Reserved]. For
further 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 sale
effected by a broker for a customer if the
sale 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 this
chapter); or

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(B) A sale with respect to which a
return is not required by applying the rules
of § 1.6049-4(c)(4) (by substituting the
term a sale subject to reporting under
section 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 return
of information is required under this sec-
tion for payments made by a stock transfer
agent (as described in § 1.6045-
1(b)(iv)) with respect to a redemption of
stock of a corporation described in section
1297(a) with respect to a shareholder in
the corporation if-

(A) The stock transfer agent obtains
from the corporation a written certifica-
tion signed by an officer of the corpora-
tion, that states that the corporation is
described in section 1297(a) for each cal-
endar year during which the stock transfer
agent relies on the provisions of paragraph
(c)(3)(xiv) of this section, and the stock
transfer agent has no reason to know that
the written certification is unreliable or
incorrect;

(B) The stock transfer agent identifies,
prior to payment, the corporation as a
participating FFI (including a reporting
Model 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 with
the requirements of § 1.1471-
3(d)(4) (substituting the terms stock trans-
fer agent and corporation for the terms
withholding agent and payee);

(C) The stock transfer agent obtains,
before each year the payment would oth-
erwise be reported, a written certification
representing that the corporation shall re-
port the payment as part of its account
holder reporting obligations under chapter
4 of the Code or an applicable IGA (as
defined in § 1.6049-4(f)(7)) and provided
the stock transfer agent does not know
that the corporation is not reporting the
payment as required. A stock transfer
agent that knows that the corporation is
not reporting the payment as required un-
der chapter 4 of the Code or an applicable
IGA must report all payments reportable
under this section that it makes during the
year in which it obtains such knowledge;
and

(D) The stock transfer agent is not also
acting in its capacity as a custodian, nom-
inee, or other agent of the payee with
respect to the payment.

(xv) Effective/applicability date. Para-
graphs (c)(3)(ii) and (xiv) of this section
apply 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 CFR
part 1 revised April 1, 2013.)

(c)(4) through (g)(1) [Reserved]. For
further guidance, see § 1.6045-1(c)(4)
through (g)(1).

(i) With respect to a sale effected at an
office of a broker either inside or outside
the United States, the broker may treat the
customer as an exempt foreign person if
the broker can, prior to the payment, reli-
ably associate the payment with documen-
tation upon which it can rely in order to
treat the customer as a foreign beneficial
owner in accordance with § 1.1441-
1(e)(1)(ii), as made to a foreign payee in
accordance with § 1.6049-5(d)(1), or pre-
sumed to be made to a foreign payee
under § 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 rules
applicable to documentation of foreign
status shall apply with respect to a sale
when the broker completes the acts nec-
essary to effect the sale at an office out-
side the United States, as described in
paragraph (g)(3)(iii)(A) of this section,
and no office of the same broker within
the United States negotiated the sale with
the customer or received instructions with
respect to the sale from the customer. The
provisions in § 1.6049-5(c) regarding the
definitions of U.S. payor, U.S. middle-
man, non-U.S. payor, and non-U.S. mid-
dleman shall also apply for purposes of
this paragraph (g)(1)(i). The provisions of
§ 1.1441-1 shall apply by substituting the
terms broker and customer for the terms
withholding agent and payee and without
regard for the fact that the provisions ap-
ply to amounts subject to withholding un-
der chapter 3 of the Internal Revenue
Code (Code). The provisions of
§ 1.6049-5(d) shall apply by substituting
the terms broker and customer for the
terms payor and payee. For purposes of
this paragraph (g)(1)(i), a broker that is
required to obtain, or chooses to obtain, a
beneficial owner withholding certificate

described in § 1.1441-1(e)(2)(i) from an
individual may rely on the withholding
certificate only to the extent the certificate
includes a certification that the beneficial
owner has not been, and at the time the
certificate is furnished, reasonably expects
not to be present in the United States for a
period aggregating 183 days or more dur-
ing each calendar year to which the cer-
tificate pertains. The certification is not
required if a broker receives documentary
evidence 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 customer
is a foreign intermediary or certain U.S.
branches. A foreign intermediary, as de-
fined in § 1.1441-1(c)(13), is an exempt
foreign person, except when the broker
has actual knowledge (within the meaning
of § 1.6049-5(c)(3)) that the person for
whom the intermediary acts is a U.S. per-
son that is not exempt from reporting un-
der paragraph (c)(3) of this section or the
broker 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 a
foreign intermediary, as described in
§ 1.1441-1(c)(13), or a U.S. branch that is
not treated as a U.S. person receives a
payment from a payor or middleman,
which payment the payor or middleman
can 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 or
branch is not required to report such pay-
ment when it, in turn, pays the amount,
unless, and to the extent, the intermediary
or branch knows that the payment is re-
quired to be reported under 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 information re-
garding U.S. persons that are not exempt
from reporting under paragraph (c)(3) of
this section to the person from whom the
U.S. branch receives the payment, the
U.S. branch must report the payment on
an information return. See, however, para-
graph (c)(3)(ii) of this section for when
reporting under section 6045 is coordi-
nated with reporting under chapter 4 of
the Code or an applicable IGA (as defined
in § 1.6049-4(f)(7)). The exception of

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this paragraph (g)(3)(iv) for amounts paid
by a foreign intermediary shall not apply
to a qualified intermediary that assumes
reporting responsibility under chapter 61
of the Code except as provided under the
agreement described in § 1.1441-
1(e)(5)(iii).

(4) Examples. The application of the
provisions of this paragraph (g) may be
illustrated by the following examples:

Example 1. FC is a foreign corporation that is not
a U.S. payor or U.S. middleman described in
§ 1.6049-5(c)(5) that regularly issues and retires its
own debt obligations. A is an individual whose res-
idence address is inside the United States, who holds
a bond issued by FC that is in registered form (within
the meaning of section 163(f) and the regulations
under that section). The bond is retired by FP, a
foreign 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 to
A at A's U.S. address. The sale would be considered
to be effected at an office outside the United States
under paragraph (g)(3)(iii)(A) of this section except
that the proceeds of the sale are mailed to a U.S.
address. For that reason, the sale is considered to be
effected at an office of the broker inside the United
States under paragraph (g)(3)(iii)(B) of this section.
Therefore, FC is a broker under paragraph (a)(1) of
this section with respect to this transaction because,
although it is not a U.S. payor or U.S. middleman, as
described in § 1.6049-5(c)(5), it is deemed to effect
the sale in the United States. FP is a broker for the
same reasons. However, under the multiple broker
exception under paragraph (c)(3)(iii) of this section,
FP, rather than FC, is required to report the payment
because FP is responsible for paying the holder the
proceeds from the retired obligations. Under para-
graph (g)(1)(i) of this section, FP may not treat A as
an exempt foreign person and must make an infor-
mation return under section 6045 with respect to the
retirement of the FC bond, unless FP obtains the
certificate or documentation described in paragraph
(g)(1)(i) of this section.

Example 2. The facts are the same as in Example
1 except that FP mails the proceeds to A at an
address outside the United States. Under paragraph
(g)(3)(iii)(A) of this section, the sale is considered to
be effected at an office of the broker outside the
United States. Therefore, under paragraph (a)(1) of
this section, neither FC nor FP is a broker with
respect to the retirement of the FC bond. Accord-
ingly, neither is required to make an information
return under section 6045.

Example 3. The facts are the same as in Example
2 except that FP is also the agent of A. The result is
the same as in Example 2. Neither FP nor FC are
brokers under paragraph (a)(1) of this section with
respect to the sale since the sale is effected outside
the 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 Example
1 except that the registered bond held by A was
issued by DC, a domestic corporation that regularly
issues and retires its own debt obligations. Also, FP
mails the proceeds to A at an address outside the

United States. Interest on the bond is not described in
paragraph (g)(1)(ii) of this section. The sale is con-
sidered to be effected at an office outside the United
States under paragraph (g)(3)(iii)(A) of this section.
DC is a broker under paragraph (a)(1)(i)(B) of this
section. DC is not required to report the payment
under the multiple broker exception under paragraph
(c)(3)(iii) of this section. FP is not required to make
an information return under section 6045 because FP
is not a U.S. payor described in § 1.6049-
5(c)(5) and the sale is effected outside the United
States. Accordingly, FP is not a broker under para-
graph (a)(1) of this section.

Example 5. The facts are the same as in Example
4 except that FP is also the agent of A. DC is a
broker under paragraph (a)(1) of this section. DC is
not required to report under the multiple broker
exception under paragraph (c)(3)(iii) of this section.
FP is not required to make an information return
under section 6045 because FP is not a U.S. payor
described in § 1.6049-5(c)(5) and the sale is ef-
fected outside the United States and therefore FP is
not a broker under paragraph (a)(1) of this section.

Example 6. The facts are the same as in Example
4 except that the bond is retired by DP, a broker
within the meaning of paragraph (a)(1) of this sec-
tion and the designated paying agent of DC. DP is a
U.S. payor under § 1.6049-5(c)(5). DC is not re-
quired to report under the multiple broker exception
under paragraph (c)(3)(iii) of this section. DP is
required to make an information return under section
6045 because it is the person responsible for paying
the proceeds from the retired obligations unless DP
obtains the certificate or documentary evidence de-
scribed in paragraph (g)(1)(i) of this section.

Example 7. Customer A owns U.S. corporate
bonds issued in registered form after July 18, 1984,
and carrying a stated rate of interest. The bonds are
held through an account with foreign bank, X, and
are held in street name. X is a wholly-owned sub-
sidiary of a U.S. company and is not a qualified
intermediary within the meaning of § 1.1441-
1(e)(5)(ii). X has no documentation regarding A. A
instructs X to sell the bonds. In order to effect the
sale, 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 does
not provide documentation to Y and has no actual
knowledge that A is a foreign person but it does
appear that A is an entity (rather than an individual).

(i) Y's obligations to withhold and report. Y
treats X as the customer, and not A, because Y
cannot treat X as an intermediary because it has
received no documentation from X. Y is not required
to report the sales proceeds under the multiple broker
exception under paragraph (c)(3)(iii) of this section,
because X is an exempt recipient. Further, Y is not
required to report the amount of accrued interest paid
to X on Form 1042-S under § 1.1461-1(c)(2)(ii) be-
cause accrued interest is not an amount subject to
reporting under chapter 3 unless the withholding
agent knows that the obligation is being sold with a
primary 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 at
an 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 a
wholly-owned subsidiary of a U.S. corporation, X is
a controlled foreign corporation and therefore is a
U.S. payor. See § 1.6049-5(c)(5). Under the pre-
sumptions described in § 1.6049-5(d)(2) (as applied
to amounts not subject to withholding under chapter
3), X must apply the presumption rules of § 1.1441-
1(b)(3)(i) through (iii), with respect to the sales
proceeds, to treat A as a partnership that is a U.S.
non-exempt recipient because the presumption of
foreign 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 is
an 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 under
paragraph (c)(2) of this section. X has no obligation
to backup withhold on the payment based on the
exemption 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 also
required to separately report the accrued interest (see
paragraph (d)(3) of this section) on Form 1099 under
section 6049 because A is also presumed to be a U.S.
person who is not an exempt recipient with respect to
the payment because accrued interest is not an
amount 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 Example
7, except that X is a foreign corporation that is not a
U.S. payor under § 1.6049-5(c).

(i) Y's obligations to withhold and report. Y is
not required to report the sales proceeds under the
multiple broker exception under paragraph (c)(3)(iii)
of this section, because X is the person responsible
for 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 the
presumptions of § 1.6049-5(d)(2), X is not consid-
ered to be a broker under paragraph (a)(1) of this
section because it is a not a U.S. payor under
§ 1.6049-5(c)(5). Therefore X is not required to
report 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 after
July 1, 2014.

(h) through (k) [Reserved]. For further
guidance, 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.

Par. 30. Section 1.6049-4 is amended
by:

1\. Revising paragraph (b)(1).

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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 to
interest paid and original issue discount
includible in gross income after
December 31, 1982.

* * * * *

(b) * * *

(1) [Reserved]. For further guidance,
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,
see § 1.6049-4T(h).

Par. 31. Section 1.6049-4T is added to
read as follows:

§ 1.6049-4T Return of information as to
interest paid and original issue discount
includible in gross income after
December 31, 1982 (temporary).

(a) [Reserved]. For further guidance,
see § 1.6049-4(a).

(b) Information to be reported-(1) In-
terest payments. Except as provided in
paragraphs (b)(3) and (5) of this section,
in the case of interest other than original
issue discount treated as interest under
§ 1.6049-5(f), an information return on
Form 1099 shall be made for the calendar
year showing the aggregate amount of the
payments, the name, address, and tax-
payer identification number of the person
to whom paid, the amount of tax deducted
and withheld under section 3406 from the
payments, if any, and such other informa-
tion as required by the forms. An infor-

mation return is generally not required if
the amount of interest paid to a person
aggregates less than $10 or if the payment
is made to a person who is an exempt
recipient described in paragraph (c)(1)(ii)
of this section, unless the payor backup
withholds under section 3406 on such
payment (because, for example, the payee
(that is, exempt recipient) has failed to
furnish a Form W-9 on request), in which
case the payor must make a return under
this section, unless the payor refunds the
amount 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 with
chapter 4 reporting or an applicable
IGA-(i) U.S. accounts reported by FFIs
that are non-U.S. payors. An information
return shall not be required with respect to
an interest payment made by a participat-
ing FFI (including a reporting Model 2
FFI), or registered deemed-compliant FFI
(including a reporting Model 1 FFI), that
is a non-U.S. payor (as defined in
§ 1.6049-5(c)(5)) to an account holder of
an account maintained by the FFI, when
the payment is not subject to withholding
under 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) of
this section for circumstances in which an
FFI may allocate a payment described in
this paragraph (c)(4)(i) to a chapter 4
withholding 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) for
the 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 reporting
Model 1 FFI) reporting the account holder
of the U.S. account pursuant to the condi-
tions of its applicable deemed-compliant
status under § 1.1471-5(f)(1) for the year
in which the payment is made (including
reporting of the account holder's TIN).

(C) The FFI is a reporting Model 1 FFI
reporting the account holder of the report-
able U.S. account pursuant to an applica-
ble Model 1 IGA for the year in which the
payment is made (including reporting of
the account holder's TIN).

(ii) Other accounts reported by FFIs
under chapter 4. An information return
shall not be required under this section
with respect to a payment that is not sub-
ject to withholding under chapter 3 (as
defined in § 1.1441-2(a)) or backup with-
holding under § 31.3406(g)-1(e) and that
is made to a recalcitrant account holder of
a participating FFI (or non-consenting
U.S. account of a reporting Model 2 FFI),
provided that the FFI reports such account
holder in accordance with the classes of
account holders described in § 1.1471-
4(d)(6) for the year in which the payment
is made. See paragraph (c)(4)(iii) of this
section for circumstances in which an FFI
may allocate a payment described in this
paragraph (c)(4)(ii) to a chapter 4 with-
holding rate pool of U.S. payees. In the
case of a payment made by an FFI that is
a reporting Model 1 FFI, an information
return shall not be required with respect to
a payment that is not subject to withhold-
ing under chapter 3 or backup withholding
under § 31.3406(g)-1(e) and that is made
to an account holder of the FFI if the
account-

(A) Has U.S. indicia for which appro-
priate documentation sufficient to treat the
account as held by other than a specified
U.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 to
report pursuant to the applicable Model 1
IGA.

(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, a
participating FFI (including a reporting
Model 2 FFI) or registered deemed-
compliant FFI (including a reporting
Model 1 FFI) receiving a payment from
another payor may provide a withholding
statement to the payor allocating the pay-
ment to a chapter 4 withholding rate of
pool of U.S. payees only if the payment is
excepted from reporting under paragraph
(c)(4)(i) of this section or if the payment is

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both excepted from reporting under para-
graph (c)(4)(ii) of this section and not
subject to withholding under chapter 4.
See § 1.6049-5(b)(14) (providing an ex-
ception from reporting under section 6049
to a payor that has been furnished a with-
holding statement from an participating
FFI (including a reporting Model 2 FFI)
or registered deemed-compliant FFI (in-
cluding a reporting Model 1 FFI) and that
allocates the payment to a chapter 4 with-
holding rate pool). Thus, for example, a
U.S. payor that is a participating FFI may
not allocate a payment to a chapter 4
withholding rate pool of U.S. payees on a
withholding statement described in
§ 1.6049-5(b)(14) when the payment is
made to a U.S. account maintained by the
FFI, regardless of whether the FFI reports
the account in accordance with § 1.1471-
4(d)(3) because the U.S. payor is not ex-
cepted from reporting under this section
pursuant to paragraph (c)(4)(i) of this sec-
tion.

(iv) Example. The application of the
provisions of paragraphs (c)(4)(ii) and
(iii) of this section may be illustrated by
the following example:

Example. USP is a payor that makes an interest
payment that is not a withholdable payment (as de-
fined in paragraph (f)(15) of this section) to RM2, a
U.S. payor and reporting Model 2 FFI. The payment
is paid and received outside of the United States and
is not an amount subject to withholding under chap-
ter 3. RM2 receives the payment as an intermediary
on behalf of its account holder, A. RM2 has account
information 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 to
report A's account. Under the presumption rules
described in § 1.6049-5(d)(2)(i), RM2 is required to
treat A as a U.S. non-exempt recipient. Despite this
presumption rule, and because backup withholding
does not apply under § 31.3406(g)-1(e), no informa-
tion return shall be required with respect to the
payment under paragraph (c)(4)(ii) of this section if
A 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 withholding
statement 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 indebtedness
regardless of how denominated. For the
definition of the term offshore obligation,
see paragraph (f)(9) of this section.

(4) and (4)(i) [Reserved]. For further
guidance, see § 1.6049-4(f)(4) introduc-
tory text and (f)(4)(i).

(ii) Example. The application of the
provisions of paragraph (f)(4) of this sec-
tion may be illustrated by the following
example:

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 a
public offering on that date. Broker B holds the
obligation for A throughout 1984. Broker B is re-
quired to make an information return showing the
amount of original issue discount treated as paid to A
under § 1.6049-5(f).

(5) Chapter 4 withholding rate pool.
The term chapter 4 withholding rate pool
has the meaning set forth in § 1.1471-
1(b)(20). However, for determining the
U.S. payees included in a chapter 4 with-
holding rate pool for purposes of section
6049, see paragraph (c)(4)(iii).

(6) Foreign financial institution (or
FFI). The term foreign financial institu-
tion or FFI means an entity described in
§ 1.1471-1(b)(47),

(7) Intergovernmental agreement (or
IGA). The term intergovernmental agree-
ment or IGA has the meaning set forth in
§ 1.1471-1(b)(67) (i.e., either a Model 1
IGA described in § 1.1471-1(b)(78) or a
Model 2 IGA described in § 1.1471-
1(b)(79)).

(8) Non-consenting U.S. accounts. The
term non-consenting U.S. accounts has
the meaning set forth in an applicable
Model 2 IGA.

(9) Offshore obligation. The term off-
shore obligation means an offshore obli-
gation defined in § 1.6049-5(c)(1). For
the definition of the term obligation, see
paragraph (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. The
term recalcitrant account holder has the
same meaning set forth in § 1.1471-
1(b)(110).

(12) Registered deemed-compliant
FFI. 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 term
reporting Model 1 FFI means an FFI that
is described in § 1.1471-1(b)(114).

(14) Reporting Model 2 FFI. The term
reporting Model 2 FFI means a participat-

ing FFI that is described in § 1.1471-
1(b)(91).

(15) Withholdable payment. The term
withholdable payment means a payment
described in § 1.1471-1(b)(145).

(16) Paid and received outside the
United States-(i) In general. Except as
otherwise provided in paragraphs
(f)(16)(ii) and (iii) of this section, the term
paid and received outside the United
States means an amount that is paid by a
payor or middleman outside the United
States 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, an
amount that is described in paragraph
(f)(16)(ii)(A) or (B) of this section and
paid by transfer to an account maintained
by the payee in the United States or by
mail to a United States address (including
an amount paid with respect to a bond or
a discount obligation described in
§ 1.6049-5(e)(4)) is not considered to be
paid and received outside the United
States.

(A) An amount is described in this
paragraph (f)(16)(ii)(A) if it is paid by an
issuer or the paying agent of the issuer
with respect to an obligation that is-

(1) Issued by a U.S. payor, as defined
in § 1.6049-5(c)(5);

(2) Registered under the Securities Act
of 1933 (15 U.S.C. 77a); or

(3) Listed on an exchange that is reg-
istered as a national securities exchange in
the United States or included in an inter-
dealer quotation system in the United
States.

(B) An amount is described in this
paragraph (f)(16)(ii)(B) if it is paid by a
U.S. middleman (as defined in § 1.6049-
5(c)(5)) that, as a custodian, nominee, or
other agent of a payee, collects the amount
for or on behalf of the payee.

(iii) Deposits or accounts with banks
and other financial institutions. In the case
of an amount paid by a bank or other
financial institution with respect to a de-
posit or an account that is considered paid
at a branch or office outside the United
States as described in § 1.6049-
5(e)(2), the amount is not considered paid
and received outside the United States if
the institution has knowledge that the cus-
tomer has transmitted instructions to an
agent, branch, or office of the institution

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from inside the United States by mail,
telephone, electronic transmission, or oth-
erwise concerning the deposit or account
(unless the transmission from the United
States has taken place in isolated and in-
frequent circumstances).

(iv) Examples. The application of the
provisions of paragraph (f)(16) of this sec-
tion may be illustrated by the following
examples:

Example 1. FC is a foreign corporation that is not
a U.S. payor or U.S. middleman, as defined in
§ 1.6049-5(c)(5). A holds FC coupon bonds that are
not in registered form under section 163(f) and the
regulations. FB, a foreign branch of DC, a domestic
corporation, is the designated paying agent with re-
spect to the bonds issued by FC. A does not have an
account with FB. A presents a coupon to FB at its
office outside the United States with instructions to
transfer funds to a bank account maintained by A in
the United States. FB transfers the funds in accor-
dance with A's instructions. Even though the amount
is credited to an account in the United States, the
interest on the FC bonds is paid and received outside
the United States under paragraph (f)(16)(ii) of this
section and § 1.6049-5(e)(3) because the coupon is
presented 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; and
because the obligation is not registered under the
Securities Act of 1933 (15 U.S.C. 77a), listed on a
securities exchange that is registered as a national
securities exchange in the United States, or included
in an interdealer quotation system.

Example 2. FC is a foreign corporation that is not
a U.S. payor or U.S. middleman, as defined in
§ 1.6049-5(d)(1). B, a United States citizen, holds a
bond issued by FC in registered form under section
163(f) and the regulations thereunder and registered
under 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 United
States branch of a foreign corporation engaged in the
commercial banking business, is the registrar of the
bonds issued by FC. DB supplies FC with a list of
the holders of the FC bonds. Interest on the FC bonds
is paid to B and other bondholders by checks pre-
pared by FC at its principal office outside the United
States, and B's check is mailed from there to his
designated address in the United States. The bond is
described in paragraph (f)(16)(ii)(A)(2) of this sec-
tion. The interest on the FC bonds paid to B by FC
is not paid and received outside the United States
under paragraph (f)(16) of this section.

Example 3. The facts are the same as in Example
2 except that the checks are prepared and mailed in
the United States by DC, a U.S. corporation engaged
in the commercial banking business that is the des-
ignated paying agent with respect to the bonds issued
by FC, and B's check is mailed to his designated
address outside the United States. For purposes of
section 6049, the interest on the FC bonds paid by
DC is not paid and received outside the United States
under paragraph (f)(16)(i) of this section.

(g) [Reserved]. For further guidance,
see § 1.6049-4(g) ..

(h) Effective/applicability dates. The
provisions of paragraphs (c)(4), (f)(5)
through (f)(16) of this section apply to
payments made after June 30, 2014.

(i) Expiration date. The applicability of
this section expires on February 28, 2017.

Par. 32. Section 1.6049-5 is amended
by:

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 new
paragraph (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).
The revisions and additions read as fol-
lows:

§ 1.6049-5 Interest and original issue
discount subject to reporting after
December 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).
* * * * *

(12) [Reserved]. For further guidance,
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).

* * * * *

(4) [Reserved]. For further guidance,
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.

Par. 34. Section 1.6049-5T is added to
read as follows:

§ 1.6049-5T Interest and original issue
discount subject to reporting after
December 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 the
United States (determined under the pro-
visions of part I, subchapter N, chapter 1
of the Internal Revenue Code (Code) and
the 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 received
outside 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 the
amendment by section 502 of the Hiring
Incentives to Restore Employment Act of
2010 (HIRE Act), Public Law 111-147,
or section 881(c)(2)(A), as in effect prior
to the amendment by section 502 of the
HIRE Act, that were issued prior to March
19, 2012, or with respect to a foreign-

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targeted registered obligation described in
§ 1.871-14(e)(2) that was issued prior to
January 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 (as
defined in paragraph (c)(5) of this section)
that, as a custodian or nominee of the
payee, collects the amount for, or on be-
half of, the payee, regardless of whether
the middleman is also acting as agent of
the payor).

(8) Portfolio interest described in
§ 1.871-14(c)(1)(ii), paid with respect to
obligations in registered form described in
section 871(h)(2) or 881(c)(2) that is not
described in paragraph (b)(7) of this sec-
tion.

(9) [Reserved]. For further guidance,
see § 1.6049-5(b)(9).

(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, of
amounts that that it receives for, or on
behalf of, the payee, regardless of whether
the middleman is also acting as agent of
the payor) with respect to an obligation
that: has a face amount or principal
amount of not less than $500,000 (as de-
termined based on the spot rate on the date
of issuance if in foreign currency); has a
maturity (at issue) of 183 days or less;
satisfies the requirements of sections
163(f)(2)(B)(i) and (ii)(I), as in effect
prior to the amendment by section 502 of
the HIRE Act, and the regulations there-
under (as if the obligation would other-
wise be a registration-required obligation
within the meaning of section
163(f)(2)(A)) (however, an original issue
discount obligation with a maturity of 183
days or less from the date of issuance is
not 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 has
on its face the following statement (or a
similar statement having the same effect):

By accepting this obligation, the holder repre-
sents and warrants that it is not a United States
person (other than an exempt recipient de-
scribed in section 6049(b)(4) of the Internal
Revenue Code and regulations thereunder) and
that it is not acting for or on behalf of a United

States person (other than an exempt recipient
described in section 6049(b)(4) of the Internal
Revenue Code and the regulations thereunder).

(ii) If the obligation is in registered
form, it must be registered in the name of
an exempt recipient described in
§ 1.6049-4(c)(1)(ii). For purposes of this
paragraph (b)(10), a middleman may treat
an obligation as described in section
163(f)(2)(B)(i) and (f)(2)(B)(ii)(I), as in
effect prior to the amendment by section
502 of the HIRE Act, and the regulations
under that section if the obligation, or
coupons detached therefrom, whichever is
presented for payment, contains the state-
ment described in this paragraph (b)(10).
The exemption from reporting described
in this paragraph (b)(10) shall not apply if
the payor has actual knowledge that the
payee is a U.S. person who is not an
exempt recipient.

(11) Amounts paid with respect to an
account or deposit with a U.S. or foreign
branch of a domestic or foreign corpora-
tion or partnership that is paid with re-
spect to an obligation described in either
paragraph (b)(11)(i) or (ii) of this section,
if the branch is engaged in the commercial
banking business; and the interest or OID
is paid and received outside the United
States 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 other
agent of the payee, and collects the
amount for, or on behalf of, the payee,
regardless of whether the middleman is
also acting as agent of the payor). The
exemption from reporting described in
this paragraph (b)(11) shall not apply if
the payor has actual knowledge that the
payee is a U.S. person who is not an
exempt recipient.

(i) An obligation is described in this
paragraph (b)(11)(i) if it is not in regis-
tered form (within the meaning of section
163(f) and the regulations under that sec-
tion), is described in section 163(f)(2)(B),
as in effect prior to the amendment by
section 502 of the HIRE Act, and issued in
accordance with the procedures of
§ 1.163-5(c)(2)(i)(C) or (D), and, in the
case of a U.S. branch, is part of a larger
single public offering of securities. For
purposes of this paragraph (b)(11)(i), a
middleman may treat an obligation as de-
scribed in section 163(f)(2)(B), as in ef-

fect prior to the amendment by section
502 of the HIRE Act, if the obligation,
and any detachable coupons, contains the
statement described in section
163(f)(2)(B)(ii)(II), as in effect prior to
the amendment by section 502 of the
HIRE Act, and the regulations under that
section.

(ii)(A) An obligation is described in
this paragraph (b)(11)(ii) if it produces
income described in section 871(i)(2)(A);
has a face amount or principal amount of
not less than $500,000 (as determined
based on the spot rate on the date of
issuance if in foreign currency); satisfies
the requirements of sections
163(f)(2)(B)(i) and (ii)(I), as in effect
prior to the amendment by section 502 of
the HIRE Act, and the regulations there-
under (as if the obligation would other-
wise be a registration-required obligation
within the meaning of section
163(f)(2)(A)) and is issued in accordance
with the procedures of § 1.163-
5(c)(2)(i)(C) or (D) (however, an original
issue discount obligation with a maturity
of 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 this
paragraph (b)(11)(ii), a middleman may
treat an obligation as described in sections
163(f)(2)(B)(i) and (ii), as in effect prior
to the amendment by section 502 of the
HIRE Act, and the regulations under that
section if the obligation, or any detachable
coupon, contains the statement described
in paragraph (b)(11)(ii)(B) of this section.

(B) and (C) [Reserved]. For further
guidance, see § 1.6049-5(b)(11)(ii)(B)
and (C).

(12) Payments that a payor can, prior to
payment, reliably associate with docu-
mentation upon which it may rely to treat
the 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 in
accordance with paragraph (d)(1) of this
section or presumed to be made to a for-
eign payee under paragraph (d)(2) or (3)
of this section. However, such payments
may be reportable under § 1.1461-1(b)
and (c) or under § 1.1474-1(d)(2) (for a
chapter 4 reportable amount (as described
in § 1.1471-1(b)(18)). The provisions of
§ 1.1441-1 shall apply by substituting the
term payor for the term withholding agent

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and without regard to the fact that the
provisions apply only to amounts subject
to withholding under chapter 3 of the
Code. In the event of a conflict between
the provisions of § 1.1441-1 and para-
graph (d) of this section in determining
the foreign status of the payee, the provi-
sions of § 1.1441-1 shall govern for pay-
ments of amounts subject to withholding
under chapter 3 of the Code and the pro-
visions of paragraph (d) of this section
shall govern in other cases. This para-
graph (b)(12) does not apply to interest
paid on or after January 1, 2013, to a
nonresident alien individual to the extent
provided in § 1.6049-8.

(13) [Reserved]. For further guidance,
see § 1.6049-5(b)(13).

(14) Payments that a payor or middle-
man can, prior to payment, reliably asso-
ciate with documentation upon which it
may rely to treat as made to a foreign
intermediary or flow-through entity in ac-
cordance with § 1.1441-1(b) if it obtains
from the foreign intermediary or flow-
through entity a withholding statement
under § 1.1471-3(c)(3)(iii)(B)(2) (de-
scribing an FFI withholding statement),
§ 1.1471-3(c)(3)(iii)(B)(3) (describing a
chapter 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 withholding
statement provided by a qualified interme-
diary), or under § 1.1441-5 (describing a
withholding statement provided by a for-
eign partnership, foreign simple trust, or
foreign grantor trust), that allocates the
payment (or portion of a payment) to a
chapter 4 withholding rate pool or specific
payees to which withholding applies un-
der chapter 4. The provisions of each of
the foregoing sections shall apply by sub-
stituting the term payor for the term with-
holding agent. A payor or middleman may
rely on a withholding statement provided
by a foreign intermediary or flow-through
entity that identifies a chapter 4 withhold-
ing rate pool of U.S. payees (as described
in § 1.6049-4(c)(4)(iii)) or recalcitrant
account holders (as described in
§ 1.1471-4(d)(6)) if it identifies the for-
eign intermediary or flow-through entity
that maintains the accounts (as described
in § 1.1471-5(b)(5)) included in the chap-
ter 4 withholding rate pool as a participat-

ing FFI (including a reporting Model 2
FFI) or registered deemed-compliant FFI
(including a reporting Model 1 FFI) by
applying the rules in § 1.1471-3(d)(4) for
identifying the payee of a payment (by
substituting the term payor with the term
withholding agent). A payor or middle-
man may also rely on a withholding state-
ment provided by a foreign intermediary
that identifies a chapter 4 withholding rate
pool of U.S. payees or recalcitrant account
holders if it identifies the intermediary as
a qualified intermediary (as defined in
§ 1.1441-1(c)(15) by applying the rules
described in § 1.1441-1(b)(2)(vii)). See
also § 1.6049-4(c)(4)(iii) for when an
FFI may provide a chapter 4 withholding
rate pool of U.S. payees on a withholding
statement 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. person
receives a payment from a payor, which
payment the payor can reliably associate
with 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 not
required to report such payment when it,
in turn, pays the amount, unless, and to the
extent, the intermediary or branch knows
that the payment is required to be reported
under 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 are
not exempt from reporting under
§ 1.6049-4(c)(1)(ii) to the person from
whom the U.S. branch receives the pay-
ment, the amount paid by the U.S. branch
to such person is interest or original issue
discount. See, however, § 1.6049-
4(c)(4) for when reporting under section
6049 is coordinated with reporting under
chapter 4 or an applicable IGA (as defined
in § 1.6049-4(f)(7)). The exception for
payments 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 for
the payment under the agreement de-
scribed in § 1.1441-1(e)(5)(iii).

(16) [Reserved]. For further guidance,
see § 1.6049-5(b)(16).

(c) Applicable rules-(1) Documen-
tary evidence for offshore obligations and
certain other obligations-(i) A payor
may rely on documentary evidence de-
scribed in § 1.1471-3(c)(5)(i) instead of a
beneficial owner withholding certificate
described in § 1.1441-1(e)(2)(i) in the
case of an amount paid outside the United
States (as described in paragraph (e) of
this section) with respect to an offshore
obligation, or, in the case of broker pro-
ceeds described in § 1.6045-1(c)(2), to
the extent provided in § 1.6045-
1(g)(1)(i). For purposes of this section, the
term offshore obligation means-

(A) An account maintained at an office
or branch of a bank or other financial
institution located outside the United
States; or

(B) An obligation as defined in
§ 1.6049-4(f)(3) (other than an account
described in paragraph (c)(1)(i)(A) of this
section), contract, or other instrument
with respect to which the payor is either
engaged in business as a broker or dealer
in securities or a financial institution (as
defined in § 1.1471-5(e)) that engages in
significant activities at an office or branch
located outside the United States. For pur-
poses of the preceding sentence, an office
or branch of such payor shall be consid-
ered to engage in significant activities
with respect to an obligation when it par-
ticipates materially and actively in nego-
tiating the obligation under the principles
described in § 1.864-4(c)(5)(iii) (substi-
tuting the term obligation for the term
stock or security).

(ii) A payor may rely on documentary
evidence if the payor has established pro-
cedures to obtain, review, and maintain
documentary evidence sufficient to estab-
lish the identity of the payee and the status
of that person as a foreign person; and the
payor obtains, reviews, and maintains
such documentary evidence in accordance
with those procedures. A payor maintains
the documents reviewed for purposes of
this 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 the
documents reviewed for as long as it may
be relevant to the determination of the
payor's obligation to report under
§ 1.6049-4 and this section and noting in
its records the date on which the docu-

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ment was received and reviewed. Docu-
mentary evidence furnished for a payment
of an amount subject to withholding under
chapter 3 of the Code or that is a chapter
4 reportable amount under § 1.1474-
1(d)(2) must contain all of the information
that is necessary to complete a Form
1042-S for that payment. See § § 1.1471-
3(c) and 1.1471-4(c) for additional docu-
mentation requirements to identify a
payee or account holder for chapter 4 pur-
poses that may apply in addition to the
requirements under paragraph (c) of this
section.

(iii) Even if an account or obligation
(as defined in § 1.6049-4(f)(3)) is not
maintained outside the United States
(maintained in the United States), a payor
may 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 entity
acting as an intermediary collects the pay-
ment. A payor may also rely on documen-
tary evidence associated with a flow-
through withholding certificate for
payments treated as made to foreign part-
ners of a nonwithholding foreign partner-
ship, as defined in § 1.1441-1(c)(28), the
foreign beneficiaries of a foreign simple
trust, as defined in § 1.1441-1(c)(24), or
foreign owners of a foreign grantor trust,
as defined in § 1.1441-1(c)(26), even
though the partnership or trust account is
an obligation maintained in the United
States.

(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 (by
substituting the term payor for the term
withholding agent and disregarding the
fact that the provisions under § 1.1441-
1(e)(4) only apply to amounts subject to
withholding under chapter 3 of the Code)
to withholding certificates and documen-
tary evidence furnished for purposes of
this section. See § 1.1441-1(b)(2)(vii) for
provisions dealing with reliable associa-
tion of a payment with documentation.

(3) Standards of knowledge. A payor
may not rely on a withholding certificate
or documentary evidence described in
paragraph (c)(1) or (4) of this section if it
has actual knowledge or reason to know

that any information or certification stated
in the certificate or documentary evidence
is unreliable. A payor has reason to know
that information or certifications are unre-
liable only if the payor would have reason
to know under the provisions of § 1.1441-
7(b)(2) and (3) that the information and
certifications provided on the certificate or
in the documentary evidence are unreli-
able or, in the case of a Form W-9 (or an
acceptable substitute), it cannot reason-
ably rely on the documentation as set forth
in § 31.3406(h)-3(e) of this chapter (see
the information and certification described
in § 31.3406(h)-3(e)(2)(i) through (iv) of
this chapter that are required in order for a
payor 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 of
income 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 if
the payor has actual knowledge that the
payee is a U.S. person who is not an
exempt recipient.

(4) Special documentation rules for
certain payments. This paragraph (c)(4)
modifies the provisions of paragraph
(c)(1) of this section for payments of
amounts that are not subject to withhold-
ing under chapter 3 of the Code, other
than amounts described in paragraph
(d)(3)(iii) of this section (dealing with
U.S. short-term OID and U.S. source de-
posit interest described in section
871(i)(2)(A) or 881(d)(3)). Amounts are
not subject to withholding under chapter 3
of the Code if they are not included in the
definition 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 (as
described 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) of
this section, until the payor knows or has
reason 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 not
have customer information for the payee
that 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 as
required in paragraph (c)(4)(iv) of this
section.

(i) Statement in lieu of documentary
evidence with respect to accounts. If un-
der the local laws, regulations, or prac-
tices of a country in which an account is
maintained, it is not customary to obtain
documentary evidence described in para-
graph (c)(1) of this section with respect to
the type of account, the payor may, in-
stead of obtaining a beneficial owner
withholding certificate described in
§ 1.1441-1(e)(2)(i) or documentary evi-
dence described in paragraph (c)(1) of this
section, establish a payee's foreign status
based on the statement described in this
paragraph (c)(4)(i)(A) (or such substitute
statement as the Internal Revenue Service
may prescribe) made on an account open-
ing form. However, see, also § 1.1471-
4(c) or an applicable IGA for additional
documentation requirements that may ap-
ply to a participating FFI (including a
reporting Model 2 FFI) for determining
the status of its account holders for chap-
ter 4 purposes. The statement referred to
in this paragraph (c)(4)(i)(A) must appear
near the signature line and must state, "By
opening this account and signing below,
the account owner represents and warrants
that he/she/it is not a U.S. person for pur-
poses of U.S. Federal income tax and that
he/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 become
a U.S. citizen or a resident, you must
notify us within 30 days." Additionally, a
payor 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 this
section, establish a payee's foreign status
based on a written statement described in
paragraph § 1.1471-1(b)(150) to the ex-
tent a payor uses such written statement to
establish a payee's chapter 4 status and is
permitted to use the written statement un-
der § 1.1471-3(d) (by substituting the
term payor for the term withholding
agent) without any other documentary ev-
idence.

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(ii) Third-party identification. A payor
that is a participating FFI (including a
reporting Model 2 FFI) or a registered
deemed-compliant FFI may establish a
payee's status based on information pro-
vided by a third party credit agency under
this paragraph (c)(4) if the conditions de-
scribed in § 1.1471-4(c)(4)(ii) are satis-
fied (without regard to whether the payor
is a participating FFI).

(iii) Documentation under IGA. A
payor that is a reporting Model 1 FFI or
reporting Model 2 FFI may rely upon doc-
umentation or a certification establishing a
payee's status that is permitted under an
applicable IGA for determining whether
the account of the payee is other than a
U.S. account and regardless of whether
such documentation or certification is de-
scribed in paragraph (c)(1) of this section
or § 1.1441-1(e)(2).

(iv) Maintenance of documentation
and written statement. A payor maintains
documentation if it either maintains the
documentary evidence as described in
paragraph (c)(1) of this section or retains a
record of the documentary evidence re-
viewed if the payor is not required to
retain copies of the documentation pursu-
ant to the payor's AML due diligence (as
defined in § 1.1471-1(b)(4)). A payor re-
tains a record of documentary evidence
reviewed by noting in its records the type
of documentation reviewed, the date the
document was reviewed, the document's
identification number (if any), and
whether such documentation contained
any U.S. indicia described in § 1.1441-
7(b)(8). Any statement described in para-
graph (c)(4)(i)(A) of this section, must be
retained in accordance with § 1.1471-
3(c)(6)(iii).

(5) through (c)(5)(i)(E) [Reserved]. For
further guidance, see § 1.6049-5(c)(5) in-
troductory text through (c)(5)(i)(E).

(F) A U.S. branch or territory financial
institution described in § 1.1441-
1(b)(2)(iv) that is treated as a U.S. person.

(ii) [Reserved]. For further guidance,
see § 1.6049-5(c)(5)(ii).

(6) Examples. The following examples
illustrate the provisions of paragraphs (b)
and (c) of this section:

Example 1. FC is a foreign corporation that is not
engaged in a trade or business in the United States
during the current calendar year. D, an individual
who 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 the
United States by DC, a U.S. corporation that is the
designated paying agent of FC. D does not have an
account with DC. Although interest paid on the
obligation issued by FC is foreign source, the interest
paid by DC to D is considered to be interest under
paragraph (b)(6) of this section for purposes of in-
formation reporting under section 6049 because it is
not paid and received outside the United States
within the meaning of § 1.6049-4(f)(16).

Example 2. The facts are the same as in Example
1 except that D is a nonresident alien individual who
has furnished DC with a Form W-8 in accordance
with the provisions of § 1.1441-1(e)(1)(ii). By rea-
son of paragraph (b)(12) of this section, the payment
of interest by DC to D is not considered to be a
payment of interest for purposes of information re-
porting under section 6049. Therefore, DC is not
required to make an information return under section
6049.

Example 3. The facts are the same as in Example
2 except that the obligation of FC is held in a
custodial account for D by FB, a foreign branch of a
U.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 an
information return unless FB may treat D as a ben-
eficial owner that is a foreign person in accordance
with the provisions of § 1.1441-1(e)(1)(ii).

Example 4. The facts are the same as in Example
3 except that the FC obligation is held for D by NC,
in a custodial account at NC's foreign branch. NC is
a foreign corporation that is a non-U.S. middleman
described in paragraph (c)(5) of this section. The
payment by NC to D is paid and received outside of
the United States under § 1.6049-4(f)(16) and there-
fore is not considered to be a payment of interest for
purposes of section 6049 pursuant to paragraph
(b)(6) of this section. Therefore, NC is not required
to make an information return under section 6049
with respect to the payment.

(d) Determination of status as U.S. or
foreign 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 (by
applying the term payor instead of the
term withholding agent) to identify the
payee (other than a payee included in a
chapter 4 withholding rate pool described
in paragraph (b)(14) of this section) for
purposes of this section (and other sec-
tions of the regulations under this chapter
to which this paragraph (d)(1) applies),
except to the extent provided in this para-
graph (d)(1) in the case of a payment of an
amount that is not subject to withholding
under chapter 3 of the Code and that is not
a withholdable payment (as defined in
§ 1.6049-4(f)(15)). Amounts are not sub-
ject to withholding under chapter 3 of the
Code if they are not included in the defi-
nition of amounts subject to withholding

under § 1.1441-2(a) (e.g., deposit interest
with 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 not
subject to withholding under chapter 3 of
the Code and that are not withholdable
payments are as follows:

(i) The provisions of § 1.1441-
1(b)(2)(ii), dealing with payments to a
U.S. agent or intermediary of a foreign
person, shall not apply. Thus, a payment
to a U.S. agent or intermediary of a for-
eign person is treated as a payment to a
U.S. payee.

(ii) Payments to U.S. branches or ter-
ritory financial institution described in
§ 1.1441-1(b)(2)(iv) shall be treated as
payments to a foreign payee, irrespective
of the fact that the U.S. branch or territory
financial institution is otherwise treated as
a U.S. person for payments of amounts
subject to withholding under chapter 3
and withholdable payments, and irrespec-
tive of the fact that the branch or territory
financial institution is treated as a U.S.
payor for purposes of paragraph (c)(5) of
this section.

(2) Presumptions of U.S. or foreign
status 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 of
regulations under this chapter 61 to which
this 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 the
term withholding agent) to determine the
classification (e.g., individual, corpora-
tion, partnership, trust), status (i.e., a U.S.
or a foreign person), and other relevant
characteristics (e.g., beneficial owner or
intermediary) of a payee if a payment
cannot be reliably associated with valid doc-
umentation under § 1.1441-1(b)(2)(vii)
irrespective of whether the payments are
subject to withholding under chapter 3 of
the Code or are withholdable payments.
The provisions of § 1.1441-1(b)(3)(iii)(D)
and (vii)(B) (referencing presumption
rules for payments with respect to off-
shore obligations) shall not apply to a
payment of an amount not subject to with-
holding under chapter 3, unless it is an
amount that is a withholdable payment
made to a payee that is an entity. Thus, in

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the case of a withholdable payment made
to an entity, the presumption rules of
§ 1.1441-1(b)(3)(iii)(D) and (vii)(B) shall
apply regardless of whether the payment
is an amount subject to withholding under
chapter 3. Additionally, in the case of an
amount paid outside the United States
with 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 treated
as made to a payee that is an individual,
the presumption rules of § 1.1441-
1(b)(3)(iii) shall not apply, and the payee
shall be presumed a U.S. person only
when the payee has any of the indicia of
U.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 associated
with documentation, see § 1.1471-
3(f)(4) and (5) for determining the status
of the payee for chapter 4 purposes when
the payment is treated as made to a for-
eign entity (by applying the term payor
instead of the term withholding agent).
The rules of § 1.1441-1(b)(2)(vii) shall
apply for purposes of determining when a
payment can reliably be associated with
documentation, by applying the term
payor instead of the term withholding
agent. For this purpose, the information,
documentary evidence, statement, or other
documentation described in paragraph
(c)(4) of this section can be treated as
documentation with which a payment can
be associated.

(ii) Grace period in the case of indicia
of a foreign payee. When the conditions of
this paragraph (d)(2)(ii) are satisfied, the
30-day grace period provisions under sec-
tion 3406(e) shall not apply and the pro-
visions of this paragraph (d)(2)(ii) shall
apply instead. A payor that, at any time
during the grace period described in this
paragraph (d)(2)(ii), credits an account
with payments described in § 1.1441-
6(c)(2) (or credits an account with broker
proceeds from securities described in
§ 1.1441-6(c)(2)), that are reportable un-
der sections 6042, 6045, 6049, or 6050N
may, instead of treating the account as
owned by a U.S. person and applying
backup withholding under section 3406, if
applicable, choose to treat the account as
owned by a foreign person (and apply the
grace period described in § 1.1441-

1(b)(3)(iv)) if, at the beginning of the
grace period, the address that the payor
has in its records for the account holder is
in a foreign country, the payor has been
furnished the information contained in a
withholding certificate described in
§ 1.1441-1(e)(2), or the payor holds a
withholding certificate that is no longer
reliable other than because the validity
period as described in § 1.1441-
1(e)(4)(ii)(A) has expired. In the case of a
newly opened account, the grace period
begins on the date that the payor first
credits the account. In the case of an ex-
isting account for which the payor holds a
Form W-8 or documentary evidence of
foreign status, the payor may apply the
provisions of the grace period described in
§ 1.1441-1(b)(3)(iv), beginning on the
date that the payor first credits the account
after the existing documentation held with
regard to the account can no longer be
relied upon (other than because the valid-
ity period described in § 1.1441-
1(e)(4)(ii)(A) has expired). A new account
shall be treated as an existing account for
purposes of this paragraph (d)(2)(ii) if the
account holder already holds an account at
the branch location at which the new ac-
count is opened, or if the account is
treated as a consolidated obligation as de-
fined in § 1.1471-(1)(b)(23) for purpose
of chapter 4 to the extent the account does
not receive any amounts subject to with-
holding under chapter 3. A new account
shall also be treated as an existing account
for purposes of this paragraph (d)(2)(ii) if
an account is held at another branch loca-
tion if the institution maintains an account
information system described in
§ 1.1441-1(e)(4)(ix). The grace period
terminates on the earlier of the close of the
90th day from the date on which the grace
period begins or the date that valid docu-
mentation is provided. The grace period
also terminates when the remaining bal-
ance in the account (due to withdrawals or
otherwise) is equal to or less than 28 per-
cent (or other statutory tax rate that is
applicable to backup withholding) of the
total amounts credited since the beginning
of the grace period that would be subject
to backup withholding if the provisions of
this paragraph (d)(2)(ii) did not apply. At
the end of the grace period, the payor shall
treat 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 the
nature of any such documentation fur-
nished upon which the payor may rely to
treat the account as owned by a U.S. or
foreign payee. If the documentation has
not been received on or before the date of
expiration of the grace period, the payor
may also apply the presumptions de-
scribed in this paragraph (d) to amounts
credited to the account after the date on
which the grace period expires (until such
time as the payor can reliably associate
the documentation with amounts cred-
ited). See § 31.6413(a)-3(a)(1)(iv) of this
chapter for treating backup withheld
amounts under section 3406 as errone-
ously withheld when the documentation
establishing foreign status is furnished
prior to the end of the calendar year in
which backup withholding occurs. If the
provisions of this paragraph (d)(2)(ii) ap-
ply, the provisions of § 31.3406(d)-3 of
this chapter shall not apply. For purposes
of this paragraph (d)(2)(ii), an account
holder's reinvestment of gross proceeds of
a sale into other instruments constitutes a
withdrawal and a non-qualified electronic
transmission of information on a with-
holding certificate is a transmission that is
not in accordance with the provisions of
§ 1.1441-1(e)(4)(iv). See § 1.1092(d)-
1 for a definition of the term actively
traded for purposes of this paragraph
(d)(2)(ii).

(iii) Joint owners. Amounts paid to ac-
counts held jointly for which a certificate
or 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 not
exempt recipients if, prior to payment, the
payor cannot reliably associate the pay-
ment either with a Form W-9 furnished
by one of the joint owners in the manner
required in § § 31.3406(d)-1 through
31.3406(d)-5 of this chapter, or with doc-
umentation described in paragraph (b)(12)
of this section furnished by each joint
owner upon which it can rely to treat each
joint owner as a foreign payee or foreign
beneficial owner. In the case of an amount
that is a withholdable payment made to a
joint account, however, see § 1.1471-
3(f)(7) for when the payment is treated as
made to a foreign payee that is a nonpar-

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ticipating FFI (as defined in § 1.1471-
1(b)(82)). For purposes of applying this
paragraph (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 intermediaries
or flow-through entities-(i) Payments of
amounts subject to withholding under
chapter 3 of the Code or withholdable
payments. In the case of payments of
amounts that the payor may treat as made
to a foreign intermediary or flow-through
entity in accordance with § § 1.1441-
1(b)(3)(ii)(C) and (b)(3)(v)(A) and
1.1441-5(c) or (e) and that are subject to
withholding under § 1.1441-2(a), the pro-
visions of § § 1.1441-1(b)(2)(v) and
1.1441-5(c)(1), (e)(2), and (3) shall apply
(by applying the term payor instead of the
term withholding agent) to identify the
payee. If a payment of an amount subject
to withholding cannot be reliably associ-
ated with valid documentation from a
payee 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 the
payee's status for purposes of this section
(and other sections of regulations under
this chapter to which this paragraph (d)(3)
applies). In the case of an amount that is a
withholdable payment, see § 1.1471-
3(c)(3) for rules to identify the payee and
see § 1.1471-3(f)(5) for the presumption
rule that shall apply to amounts treated as
made to a foreign intermediary or flow-
through entity (by applying the term
payor instead of the term withholding
agent). For example, where a withhold-
able payment is made to an intermediary
under § 1.1471-3 that is treated as a non-
participating FFI under § 1.1471-
3(f)(5), the nonparticipating FFI shall be
treated as the payee under § 1.1471-
3(c)(3) and for purposes of this paragraph
(d)(3)(i), therefore, no information return
shall be required under this section.

(ii) Payments of amounts not subject to
withholding under chapter 3 of the Code
and 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 the
Code and that are not withholdable pay-
ments that the payor may treat as paid to a
foreign intermediary or flow-through en-

tity shall be treated as made to an exempt
recipient described in § 1.6049-4(c) ex-
cept to the extent that the payor has actual
knowledge that any person for whom the
intermediary or flow-through entity is col-
lecting the payment is a U.S. person who
is not an exempt recipient. In the case of
such actual knowledge, the payor shall
treat the payment that it knows is alloca-
ble to such U.S. person as a payment to a
U.S. payee who is not an exempt recipient
and has actual knowledge of the amount
allocable 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 discount
on the redemption of an obligation with a
maturity from the date of issue of 183
days or less (short-term OID) described in
section 871(g)(1)(B) or 881(e) that the
payor 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 payor
for the term withholding agent), shall be
treated as paid to an undocumented U.S.
payee that is not an exempt recipient un-
der paragraph § 1.6049-4(c) unless the
payor has documentation from the payees
of the payment and the payment is allo-
cated to foreign payees, as a group, and to
each 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 similar
withholding statement for a flow-through
entity) that identifies a chapter 4 withhold-
ing rate pool of U.S. payees (as described
in § 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) or
registered deemed-compliant FFI (includ-
ing a reporting Model 1 FFI) under
§ 1.1471-3(d)(4) (by substituting the term
payor with the term withholding agent).
See also § 1.6049-4(c)(4)(iii) for when
an 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).

(iv) [Reserved]. For further guidance,
see § 1.6049-5(d)(3)(iv).

(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 an
example, the following facts apply: all
FFIs, such as a nonqualified intermediary
that is an FFI, are treated as participating
FFIs; all payees have been identified with
chapter 4 statuses that do not require with-
holding under chapter 4; and none of the
payments are withholdable payments.

Example 1. (i) Facts. USP is a U.S. payor as
defined in paragraph (c)(5) of this section. USP pays
interest from sources within the United States that is
a withholdable payment to an account maintained in
the United States by X. The interest is not deposit
interest described in sections 871(i)(2)(A) or 881(d).
USP does not have a Form W-9, or withholding
certificate 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 no
indication that X is an individual, trust, or estate.

(ii) Analysis. The U.S. source interest is an
amount 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 the
payee 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 a
flow-through entity, in which case the rules of
§ 1.1441-5 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 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 or
estate, and X cannot be presumed to be an exempt
recipient in the absence of documentation. Paragraph
(d)(2)(i) of this section requires USP to apply the
provisions 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 be
a 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 section
6049 on Form 1099 and the interest is subject to
backup withholding under section 3406 because X
has not provided its TIN on a valid Form W-9. No
withholding 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 in
Example 1, except that the interest paid by USP is
from sources outside the United States.

(ii) Analysis. Interest from sources outside the
United States is not an amount subject to withhold-
ing, as defined in § 1.1441-2(a) or a withholdable
payment. Under paragraph (d)(1) of this section,
USP must apply the provisions of § § 1.1441-

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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 is made, is considered to be the
payee, unless X is determined to be a flow-through
entity, 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 a
payee as an individual, trust, estate, corporation, or
partnership. These rules apply irrespective of
whether 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 to
be an individual, trust or estate, and X cannot be
presumed to be an exempt recipient in the absence of
documentation. Paragraph (d)(2)(i) of this section
requires USP to apply the provisions 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 be a U.S. partnership in absence of
any indicia of foreign partnership status. The foreign
source interest is a payment subject to reporting on
Form 1099 under § 1.6049-5(a). Further, because X
is a non-exempt recipient that has failed to provide
its TIN on a valid Form W-9, the foreign source
interest is subject to backup withholding under sec-
tion 3406.

Example 3. (i) Facts. USP is a U.S. payor as
defined in paragraph (c)(5) of this section. USP
makes a payment of U.S. source interest outside the
United 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. USP
does not have a withholding certificate from X as
defined 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 to
withholding as defined in § 1.1441-2(a). Under para-
graph (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 the payee. Under § 1.1441-
1(b)(2)(i), X, the person to whom the payment is
made, is considered to be the payee, unless X is
determined to be a flow-through entity, 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 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 or
estate, and X cannot be presumed to be an exempt
recipient in the absence of documentation. Paragraph
(d)(2)(i) of this section requires USP to apply the
provisions 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)(D) and 1.1441-5(d)(2), X is presumed to
be a foreign partnership. Therefore, under paragraph
(d)(1) of this section and § 1.1441-5(c)(1)(i)(E), the
payees of the interest are presumed to be the partners
of 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 in
Example 3, except that the interest is paid by F, a
non-U.S. payor.

(ii) Analysis. The analysis and result are the same
as in Example 3. F is a withholding agent under
§ 1.1441-7 and its status as a non-U.S. payor under
paragraph (c)(5) of this section is irrelevant.

Example 5. (i) Facts. USP is a U.S. payor as
defined in paragraph (c)(5) of this section that is not
an FFI. USP makes a payment outside the United
States of interest from sources outside the United
States with respect to an offshore obligation held by
X. USP does not have a withholding certificate from
X as defined in § 1.1441-1(c)(16) nor does it have
documentary evidence as described in § § 1.1471-
3(c)(5)(i) and 1.6049-5(c)(1). USP does not have
actual 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 exempt
recipient, as defined in § 1.6049-4(c)(1)(ii) in the
absence of documentation.

(ii) Analysis. The interest is not an amount sub-
ject to withholding as defined in § 1.1441-2(a) and is
not 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 is
made, is considered to be the payee, unless X is
determined to be a flow-through entity, 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,

§ 1.1441-1(b)(3)(ii) applies to determine X's classi-
fication as an individual, trust, estate, corporation or
partnership. Under § 1.1441-1(b)(3)(ii)(B), X is
treated as a partnership, since it does not appear to be
an individual, trust, or estate and cannot be treated as
an exempt recipient without documentation. Para-
graph (d)(2)(i) of this section requires USP to apply
the provisions 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. Paragraph (d)(2)(i) also
states that the presumptions of foreign status for
payments made with respect to offshore obligations
contained in § § 1.1441-1(b)(3)(iii)(D) and 1.1441-
5(d)(2) do not apply to amounts that are not subject
to 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), X
is presumed to be a U.S. partnership because it does
not 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 an
exempt recipient and report the payment on Form
1099 under section 6049. Under § 31.3406(g)-
1(e) of this chapter, however, USP is not required to
backup withhold on the payment unless it has actual
knowledge that X is a U.S. person that is not an
exempt recipient.

Example 6. (i) Facts. The facts are the same as in
Example 5, except that the interest is paid by F, a
non-U.S. payor, as defined under paragraph (c)(5) of
this section.

(ii) Analysis. The analysis is the same as under
Example 5. However, F is a non-U.S. payor paying
foreign source interest outside the United States, and

there is no indication that the amount is received in
the United States under § 1.6049-4(f)(16). Thus,
paragraph (b)(6) of this section exempts the payment
from 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 an
FFI, makes a payment of U.S. source interest that is
a withholdable payment to NQI, a nonqualified in-
termediary as defined in § 1.1441-1(c)(14), that is a
certified deemed-compliant FFI under § 1.1471-
5(f)(2). The interest is paid inside the United States
to an account of a bank or other financial institution
maintained in the United States. NQI has provided
USP with a nonqualified intermediary withholding
certificate, as described in § 1.1441-1(e)(3)(iii) that
includes its chapter 4 status, but has not attached any
documentation from the persons on whose behalf it
acts or a withholding statement as described in
§ 1.1441-1(e)(3)(iv).

(ii) Analysis. U.S. source interest is an amount
subject to withholding under § 1.1441-2(a). USP
may treat the payment as made to a foreign interme-
diary under § 1.1441-1(b)(3)(v)(A) because USP
has received a nonqualified intermediary withhold-
ing certificate from NQI and may except NQI from
withholding under chapter 4 of the Code given
NQI's status for chapter 4 purposes as a deemed-
compliant FFI. Under paragraph (d)(3)(i) of this
section, USP must then apply § 1.1471-3(c)(3) to
treat the persons on whose behalf NQI is acting as
the payees. Paragraph (d)(3)(i) of this section also
requires USP to apply the presumption rules of
§ 1.1441-1(b)(3)(v) if it cannot reliably associate the
payment 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 a
nonparticipating FFI under § 1.1471-3(f)(4). There-
fore, the payment is not subject to reporting on Form
1099 under paragraph (b)(12) of this section. See
§ 1.1471-2(a) for the withholding requirement with
respect to the payment and § 1.1474-1(d)(2) for the
requirement to report the payment on Form 1042-S.

Example 8. (i) Facts. The facts are the same as in
Example 7, except that the interest is paid outside the
United States, as defined in paragraph (e) of this
section to an offshore account, as defined in para-
graph (c)(1) of this section and is not a withholdable
payment.

(ii) Analysis. Under § 1.1441-1(b)(3)(v)(B), the
interest is treated as paid to an unknown foreign
payee because it cannot be reliably associated with
documentation under § 1.1441-1(b)(2)(vii). There-
fore, the payment is not subject to reporting on Form
1099 under paragraph (b)(12) of this section because
the 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 subject
to reporting on Form 1042-S under § 1.1461-1(c).

Example 9. (i) Facts. The facts are the same as in
Example 8, except that the interest is paid by F, a
non-U.S. payor, as defined in paragraph (c)(5) of this
section.

(ii) Analysis. The analysis and results are the
same as in Example 8.

Example 10. (i) Facts. USP, a U.S. payor as
defined in paragraph (c)(5) of this section, makes a
payment of foreign source interest (other than de-
posit interest) to NQI, a foreign corporation and a

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nonqualified intermediary as defined in § 1.1441-
1(c)(14). NQI has provided USP with a nonqualified
intermediary 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 acts
or a withholding statement as described in § 1.1441-
1(e)(3)(iv).

(ii) Analysis. Foreign source interest is not an
amount subject to withholding under chapter 3 of the
Code 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 subject
to withholding under chapter 3 of the Code and that
are not withholdable payments described in para-
graph (d)(2)(i) of this section that a payor may treat
as paid to a foreign intermediary are treated as made
to 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 reporting
on Form 1099.

Example 11. (i) Facts. USP is a U.S. payor as
defined in paragraph (c)(5) of this section that is a
bank. USP pays U.S. source original issue discount
from the redemption of an obligation described in
section 871(g)(1)(B) to NQI, a foreign corporation
that is a nonqualified intermediary as defined in
§ 1.1441-1(c)(14. The redemption proceeds are not
paid outside of the United States as they are paid
with respect to an account NQI has with a branch of
a bank in the United States. See § 1.6049-
5(c)(2). NQI provides a nonqualified intermediary
withholding certificate as described in § 1.1441-
1(e)(3)(iii) that includes a certification of its status as
a registered deemed-compliant FFI but does not at-
tach any payee documentation or a withholding
statement described in § 1.1441-1(e)(3)(iv).

(ii) Analysis. Under paragraph (d)(3)(ii)(A) of
this section, USP must treat the payment as made to
an undocumented U.S. payee that is not an exempt
recipient and report the payment on Form 1099.
Further, because the payment is made inside the
United States, the exception to backup withholding
with respect to offshore obligations contained in
§ 31.3406(g)-1(e) of this chapter does not apply, and
the 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 30
years 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 is
not a withholdable payment under § 1.1471-2(b) as
the interest is a payment with respect to a grandfa-
thered obligation for purposes of chapter 4 of the
Code. NQI, a U.S. payor, is a nonqualified foreign
intermediary, as defined in § 1.1441-1(c)(14), and
has furnished P a valid nonqualified intermediary
withholding certificate described in § 1.1441-
1(e)(3)(iii) to which it has attached a valid Form
W-9 for A, and two valid beneficial owner Forms
W-8, one for B and one for C. A is not an exempt
recipient under § 1.6049-4(c). NQI furnishes a
withholding 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's
withholding 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 withholding
certificate indicates that C is a foreign corporation
not entitled to a reduced rate of withholding.

(ii) Analysis. As the interest is not a withholdable
payment under paragraph (d)(3)(i) of this section, P
applies the rules of § 1.1441-1(b)(2)(v) to determine
the payees of the interest even though NQI has not
certified its status for purposes of chapter 4 of the
Code. Under that section, the payees are the persons
on whose behalf NQI acts-A, B and C. Because P
can reliably associate 20% of the payment with valid
documentation provided by A, P must treat 20% of
the interest as paid to A, a U.S. person not exempt
from reporting, and report the payment on Form
1099. 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 that
section, the interest is presumed paid to an unknown
foreign payee. Under paragraph (b)(12) of this sec-
tion, P is not required to report the interest presumed
paid 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 reportable
on Form 1042-S under § 1.1461-1(c).

Example 13. (i) Facts. The facts are the same as
in Example 12, except that P can reliably associate
30% of the payment of interest to B, but cannot
reliably associate the remaining 70 percent with A or
C.

(ii) Analysis. Under paragraph (d)(3)(i) of this
section, P applies the rules of § 1.1441-1(b)(2)(v) to
determine the payees of the interest. Under that
section, the payees are the persons on whose behalf
NQI acts-A, B and C. Because P can reliably
associate 30% of the payment with B, a foreign
pensions fund exempt from withholding under an
income tax treaty, P may treat that payment as paid
to B and not subject to reporting on Form 1099 under
paragraph (b)(12) of this section. P cannot reliably
associate the remaining 70% of the payment with
valid 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 interest
is presumed paid to an unknown foreign payee.
Under paragraph (b)(12) of this section, P is not
required to report the interest presumed paid to a
foreign 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 Form
1042-S under § 1.1461-1(c).

Example 14. (i) Facts. The facts are the same as
in Example 12, except that P also makes a payment
of foreign source interest to NQI.

(ii) Analysis. Under paragraph (d)(3)(ii), P may
treat the foreign source interest as paid to an exempt
recipient as defined in § 1.6049-4(c) and not subject
to reporting on Form 1099 even though some or all
of the foreign source interest may in fact be owned
by A, the U.S. person that is not exempt from re-
porting.

Example 15. (i) Facts. The facts are the same as
in Example 12, except that NQI
is a non-U.S. payor.

(ii) Analysis. The analysis is the same as under
Example 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 of
U.S. payees on a withholding statement provided to
P in lieu of furnishing the Form W-9 to P when NQI
reports the payments in accordance with § 1.6049-
4(c)(4)(i). In such a case, provided that P obtains a
certification 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 because
P can reliably associate the payment with the docu-
mentation provided by NQI.

(e) Determination of whether amounts
are considered paid outside the United
States-(1) In general. For purposes of
section 6049 and this section, an amount
is considered to be paid by a payor or
middleman outside the United States if the
payor or middleman completes the acts
necessary to effect payment outside the
United States. See paragraphs (e)(2)
through (5) of this section for further clar-
ification of where amounts are considered
paid. A payment shall not be considered to
be made within the United States for pur-
poses of section 6049 merely by reason of
the fact that it is made on a draft drawn on
a United States bank account or by a wire
or other electronic transfer from a United
States account.

(2) Amounts paid with respect to de-
posits or accounts with banks and other
financial institutions. Notwithstanding
paragraph (e)(1) of this section, an amount
paid by a bank or other financial institu-
tion with respect to a deposit or with re-
spect to an account with the institution is
considered paid at the branch or office at
which the amount is credited unless the
amount is collected by the financial insti-
tution as the agent of the payee. However,
an amount will not be considered to be
paid at the branch or office where the
amount is considered to be credited unless
the branch or office is a permanent place
of business that is regularly maintained,
occupied, and used to carry on a banking
or similar financial business; the business
is conducted by at least one employee of
the branch or office who is regularly in
attendance at such place of business dur-
ing normal business hours; and the branch
or office receives deposits and engages in
one 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

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paragraph (e)(1) of this section, an amount
paid with respect to a bond with coupons
attached (including a certificate of deposit
with detachable interest coupons) or a dis-
count obligation that is not in registered
form (within the meaning of section
163(f) and the regulations thereunder) is
considered to be paid where the coupon or
the discount obligation is presented to the
payor or its paying agent for payment.

(4) Foreign-targeted registered obliga-
tions. Notwithstanding paragraph (e)(1) of
this section, where the payor is the issuer
or the issuer's agent, an amount is consid-
ered paid outside the United States with
respect to a foreign-targeted registered ob-
ligation issued before January 1, 2016, as
described in § 1.871-14(e)(2), if either the
amount is paid by transfer to an account
maintained by the registered owner out-
side the United States, or by mail to an
address of the registered owner outside
the United States, or by credit to an inter-
national account. For purposes of this
paragraph (e)(4), the term international
account means the book-entry account of
a financial institution (within the meaning
of section 871(h)(4)(B)) or of an interna-
tional financial organization with the Fed-
eral Reserve Bank of New York for which
the Federal Reserve Bank of New York
maintains records that specifically identify
an international financial organization or a
financial institution (within the meaning
of section 871(h)(4)(B)) as either a non-
United States person or a foreign branch
of a United States person as registered
owner. 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 the
United States is a member to the extent
that such central bank, authority, or orga-
nization holds obligations solely for its
own account and is exempt from tax under
section 892 or 895.

(5) Examples. The application of the
provisions of this paragraph (e) are illus-
trated by the following examples:

Example 1. FC is a foreign corporation that is not
a U.S. payor or U.S. middleman, as defined in para-
graph (c)(5) of this section. A holds FC coupon
bonds that are not in registered form under section
163(f) and the regulations thereunder. FB, a foreign
branch of DC, is the designated paying agent with
respect to the bonds issued by FC. A does not have
an account with FB. A presents a coupon from a FC
bond for payment to FB at its office outside the
United States. FB pays A with a check drawn against

a bank account maintained in the United States. For
purposes of section 6049, the place of payment of
interest on the FC bond by FB to A is considered to
be outside the United States under paragraph (e)(3)
of this section.

Example 2. Individual C deposits funds in an
account 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 employees
in foreign country X, accepts deposits, and conducts
one or more of the other activities listed in § 1.864-
4(c)(5)(i). The terms of C's deposit provide that it
will be payable with accrued interest. Under para-
graph (e)(2) of this section, FB is considered to pay
the interest on C's deposit outside the United States.

Example 3. DC, a U.S. corporation engaged in
the commercial banking business, maintains FB, a
branch in foreign country X. FB has an office and
employees in foreign country X, accepts deposits,
and engages in one or more of the other activities
listed in § 1.864-4(c)(5)(i). D, a United States citi-
zen, purchases a certificate of deposit issued in 1980
by FB. The certificate of deposit has a maturity of 20
years and has detachable interest coupons payable at
six-month intervals. D presents some of the coupons
at the U.S. office of DC and receives payment in
cash. Because the coupon is presented to DC for
payment within the United States, DC is considered
to have made the payment within the United States
under paragraph (e)(3) of this section.

Example 4. FB is recognized by both foreign
country X and by the Federal Reserve Bank as a
foreign country X branch of DC, a U.S. corporation
engaged in the commercial banking business. A local
foreign country X bank serves as FB's resident agent
in Country X. FB maintains no physical office or
employees in foreign country X. All the records,
accounts, and transactions of FB are handled at the
United States office of DC. E deposits funds in an
amount maintained with FB. Interest earned on the
deposit is periodically credited to E's account with
FB by employees of DC. For purposes of section
6049, the place of payment of the interest on E's
deposit with FB is considered to be within the United
States by reason of paragraphs (e)(1) and (e)(2) of
this section.

Example 5. DC is a U.S. corporation. A holds
bonds that were issued by DC in registered form
under section 163(f), as in effect prior to the amend-
ment by section 502 of the HIRE Act of 2010, and
the regulations thereunder and that are foreign-
targeted registered obligations as defined in § 1.871-
14(e)(2). DB, a commercial banking business, is the
registrar of bonds issued by DC. Interest on the DC
bonds is paid to A and other bondholders by check
prepared by DB at its principal office inside the
United States and mailed from there to A's address
outside the United States. The check is drawn on a
United States account maintained by DC with DB
within the United States. The place of payment to A
by DB of the interest on the DC bonds is considered
to 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 June
30, 2014.

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

PART 31-EMPLOYMENT TAXES
AND COLLECTION OF INCOME
TAX AT SOURCE

Par. 35. The authority citation for part
31 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 payments
to certain payees and certain other
payments.

* * * * *

(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 payments
to certain payees and certain other
payments (temporary).

(a) through (d) [Reserved]. For further
guidance, see § 31.3406(g)-1(a) through
(d).

(e) Certain reportable payments made
outside the United States by foreign per-
sons, foreign offices of United States
banks and brokers, and others. For report-
able payments made after June 30, 2014, a
payor is not required to backup withhold
under section 3406 on a reportable pay-
ment that is paid and received outside the
United States (as defined in § 1.6049-
4(f)(16)) with respect to an offshore obli-
gation (as defined in § 1.6049-5(c)(1)) or
on gross proceeds from a sale effected
outside the United States (as defined in
§ 1.6045-1(g)(3)(iii)), unless the payor
has actual knowledge that the payee is a
United States person. Further, no backup
withholding is required for reportable a
payment of an amount already withheld
upon by a participating FFI (as defined in

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§ 1.1471-1(b)(91)) or another payor in ac-
cordance with the withholding provisions
under chapters 3 or 4 of the Code and the
regulations under those chapters even if
the payee is a known U.S. person. For
example, a participating FFI is not re-
quired to backup withhold on a reportable
payment allocable to its chapter 4 with-
holding rate pool (as defined in § 1.6049-
4(f)(5)) of recalcitrant account holders (as
described in § 1.6049-4(f)(11)), if with-
holding was applied to the payment (ei-
ther by the participating FFI or another
payor) 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 before
July 1, 2014, see this paragraph (e) as in
effect and contained in 26 CFR part 1
revised April 1, 2013.)

(f) [Reserved]. For further guidance,
see § 31.3406(g)-1(f) introductory text
through (f)(5).

(g) Expiration date. The applicability
of this section expires on February 28,
2017.

Par. 38. In § 31.3406(h)-2, paragraph
(a)(3)(i) is revised to read as follows:

§ 31.3406(h)-2 Special rules.

(a) * * *

(3) * * *

(i) [Reserved]. For further guidance,
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 a
jointly 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, withholding
under section 3406 applies unless every
joint payee provides the statement regard-
ing foreign status (under the provisions of
chapters 3 or 61 of the Internal Revenue
Code and the regulations under those pro-

visions); any one of the joint owners who
has not established foreign status provides
a taxpayer identification number to the
payor 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)), any
joint 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 this
chapter for corresponding joint payees
provisions.

(a)(3)(ii) through (h) [Reserved]. For
further guidance, see § 31.3406(h)-
2(a)(3)(ii) through (h).

(i) Expiration date. The applicability of
this section expires on February 28, 2017.

### PART 301-PROCEDURE AND ADMINISTRATION

Par. 40. The authority citation for part
301 continues to read in part as follows:
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 to
income tax.

* * * * *

(e) [Reserved]. For further guidance,
see § 301.6402-3T(e).

(f) Effective/applicability date. (1) Ref-
erences in paragraph (e) of this section to
Form 8805 or other statements required
under § 1.1446-3(d)(2) shall apply to
partnership taxable years beginning after
April 29, 2008.

(2) [Reserved]. For further guidance,
see § 301.6402-3T(f)(ii).

Par. 42. Section 301.6402-3T is added
to read as follows:

### § 301.6402-3T Special rules applicable to income tax (temporary).

(a) through (d) [Reserved]. For further
guidance, see § 301.6402-3(a) through
(d).

(e) In the case of a nonresident alien
individual or foreign corporation, the ap-
propriate income tax return on which the
claim for refund or credit is made must
contain the tax identification number of
the taxpayer required pursuant to section
6109 and the entire amount of income of
the taxpayer subject to tax, even if the tax

liability for that income was fully satisfied
at source through withholding under chap-
ters 3 or 4 of the Internal Revenue Code
(Code). Also, if the overpayment of tax
resulted from the withholding of tax at
source under chapters 3 or 4 of the Code,
a copy of the Form 1042-S, "Foreign Per-
son's U.S. Source Income subject to
Withholding," Form 8805, "Foreign Part-
ner's Information Statement of Section
1446 Withholding Tax," or other state-
ment (required under § 1.1446-3(d)(2) of
this chapter) required to be provided to the
beneficial 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 be
attached to the return. For purposes of
claiming a refund, the Form 8805 or other
statement must include the taxpayer iden-
tification number of the beneficial owner
or partner even if not otherwise required.
No claim for refund or credit under chap-
ter 65 of the Code may be made by the
taxpayer for any amount that the payor
has 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). In
addition, no claim for refund or credit may
be made by a taxpayer for any amount that
has been repaid to a qualified intermediary
(as described in § 1.1441-1(e)(5)(ii)) or a
participating FFI (as described in
§ 1.1471-1(b)(91)) pursuant to a collec-
tive refund filed by such entity on behalf
of the taxpayer. See § 1.1441-1(e)(5)(iii)
(describing a qualified intermediary
agreement) and § 1.1471-4(h) (describing
a collective refund). Upon request, a tax-
payer must also submit such documenta-
tion as the IRS, may require establishing
that the taxpayer is the beneficial owner of
the income for which a claim for refund or
credit is being made and verifying the
grounds and facts set forth in taxpayer's
claim as required by § 301.6402-
2(b)(1). See § 1.1474-5 for additional re-
quirements that may apply in the case of a
refund of tax withheld under chapter 4.

(f) and (f)(1) [Reserved]. For further
guidance, see § 301.6402-3(f) introduc-
tory text and (f)(1).

(2) References in paragraph (e) of this
section to amounts withheld under chapter
4 of the Code and claims made with re-
spect to amounts withheld under chapter 4

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of the Code shall apply to withholdable
payments made after June 30, 2014.

(g) Expiration date. The applicability
of this section expires on February 28,
2017.

John Dalrymple
Deputy Commissioner for
Services and Enforcement.

Approved February 14, 2014.

Mark J. Mazur
Assistant 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 Federal
Register for March 6, 2014, 79 F.R. 12880)

Section 6055 .- Reporting
of health insurance
coverage
T.D. 9660

DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 1, 301, and
602

## Information Reporting of Minimum Essential Coverage

AGENCY: Internal Revenue Service
(IRS), Treasury.

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 information
reporting requirements of section 6055 of
the Internal Revenue Code (Code), en-
acted by the Patient Protection and Af-
fordable Care Act. Health insurance issu-
ers, certain employers, and others that
provide minimum essential coverage to
individuals 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 final
regulations affect health insurance issuers
and 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 INFORMATION
CONTACT: Andrew Braden, (202) 317-
7006 (not a toll-free number).

SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act

The collection of information con-
tained in these regulations has been re-
viewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545-2252.

The collection of information in these
final regulations is in §§ 1.6055-1 and
1.6055-2. The collection of information
will be used to determine whether an in-
dividual has minimum essential coverage
under section 1501(b) of the Patient Pro-
tection and Affordable Care Act (26
U.S.C. 5000A(f)). The collection of infor-
mation is required to comply with the
provisions of sections 5000A and 6055 of
the Code. The likely respondents are
health insurance issuers and carriers, self-
insured employers or other sponsors of
self-insured group health plans, and gov-
ernments that provide minimum essential
coverage.

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 Management
and Budget.

The burden for the collection of infor-
mation contained in these final regulations
will be reflected in the burden on Form
1095-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 as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
return 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 6055
and 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 of
minimum essential coverage (as defined
in section 5000A(f)) to report to the IRS
certain information about individuals cov-
ered by minimum essential coverage and
to provide a statement to the individuals.
Section 6055 was enacted by section 1502
of the Patient Protection and Affordable
Care Act, Public Law 111-148 (124 Stat.
119 (2010)), which together with the
Health Care and Education Reconciliation
Act of 2010, Public Law 111-152 (124
Stat. 1029 (2010)), is referred to as the
Affordable Care Act.

On September 9, 2013, a notice of pro-
posed rulemaking (REG-132455-11) was
published in the Federal Register (78 FR
54986). Written comments responding to
the proposed regulations were received. A
public hearing was held on November 19,
2013. The comments are available for
public inspection at www.regulations.gov
or on request. After consideration of all
the comments, the proposed regulations
are adopted as amended by this Treasury
decision. These final regulations also in-
clude certain nonsubstantive revisions to
increase consistency with final regulations
issued under section 6056 (TD 9661) con-
temporaneously with these regulations.

## Explanation of Provisions and Summary of Comments

### 1. Coverage Subject to Reporting

#### a. Minimum essential coverage

The proposed regulations provided that
every person that provides minimum es-
sential coverage to an individual during a
calendar year must file an information re-
turn and a transmittal on forms prescribed
by the IRS. Minimum essential coverage
is defined in section 5000A(f) and regula-
tions issued under that section.

Commenters suggested that section
6055 reporting should not be required for
an individual who may be exempt from

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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 health
plan, 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, the
final regulations provide for section 6055
reporting for all covered individuals.

## b. Supplemental coverage arrangements

The proposed regulations provided that
reporting is not required for arrangements
that provide benefits in addition or as a
supplement to a health plan or arrange-
ment that constitutes minimum essential
coverage. The preamble to the proposed
regulations identified health reimburse-
ment arrangements as supplemental cov-
erage to which this rule may apply. In
addition, 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 required
for health savings accounts, which are not
minimum essential coverage.

A commenter asked whether on-site
medical clinics are supplemental benefits
for which no reporting is required under
this rule. Another commenter asked
whether reporting is required for an indi-
vidual who is covered by Medicare Part B
but not Medicare Part A.

Under section 9832(c)(1)(G), coverage
at on-site medical clinics are excepted
benefits. Section 5000A(f)(3) provides
that excepted benefits are not minimum
essential coverage. Under section
5000A(f)(1)(A)(i), Medicare Part A but
not Medicare Part B is minimum essential
coverage. Accordingly, section 6055 re-
porting is not required for coverage at
on-site medical clinics or for Medicare
Part B.

Commenters asked whether the supple-
mental coverage rule applies to wellness
programs or to self-insured employer-
provided retiree coverage that supple-
ments Medicare benefits. Wellness pro-
grams that are an element of other
minimum essential coverage (such as
wellness programs offering reduced pre-
miums or cost-sharing under a group
health plan) do not require separate sec-

tion 6055 reporting. The final regulations
clarify that minimum essential coverage
that supplements a primary plan of the
same plan sponsor or that supplements
government-sponsored coverage (such as
Medicare) are supplemental coverage not
subject to reporting.

### 2. Persons Required to Report

### a. Self-insured group health plans

#### i. Controlled Groups

The proposed regulations provided that
the plan sponsor is responsible for report-
ing under section 6055 for a self-insured
group health plan and identified the spon-
sor and reporting entity for various types
of self-insured arrangements. In general,
the plan sponsor is the entity that estab-
lishes or maintains the plan. The proposed
regulations provided that the employer is
the plan sponsor for self-insured group
health plans established or maintained by
a single employer and that each participat-
ing employer is the plan sponsor for a plan
established or maintained by more than
one employer other than a multiple em-
ployer welfare arrangement. The proposed
regulations also provided that, for pur-
poses of identifying the employer, the sec-
tion 414 employer aggregation rules do
not apply. Thus, under the proposed reg-
ulations, a self-insured group health plan
or arrangement covering employees of
employers in a controlled group was
treated as sponsored by more than one
employer and each employer was required
to report for its employees.

Commenters requested that the final
regulations allow, but not require, one en-
tity in a controlled group to report under
section 6055 for all members of the group.
A commenter noted that only one entity
within the group may maintain the plan.
Other commenters noted that in some con-
trolled groups each entity may keep its
own records but other groups may not
track the entity to which an employee
belongs.

Most employers that sponsor self-
insured group health plans are applicable
large employer members required to re-
port under both section 6056 and section
6055. As discussed later in this preamble,
the final regulations provide that applica-

ble large employer members that are plan
sponsors of self-insured group health
plans will file a single information return
that combines reporting under sections
6055 and 6056. These entities apply the
rules under section 6056 for identifying
the reporting entities in a controlled
group. As stated in the preamble to the
proposed regulations, one member of a
controlled group may assist the other
members by filing returns and furnishing
statements on behalf of all members, thus
providing administrative flexibility. How-
ever, each employer is treated as a plan
sponsor separately liable for timely and
correct reporting. Employers in controlled
groups 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 reporting
as employers, may report under section
6055 as separate entities, or one entity
may report for the group.

## ii. Statutory Employees

A commenter asked that the final reg-
ulations clarify that a company may report
self-insured group health plan coverage
provided 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 shared
responsibility payment under section
4980H and related information reporting
under section 6056 apply to common law
and not statutory employees.

Under section 6055, the provider of
minimum essential coverage must report
for covered individuals. In many cases,
the provider is not the employer of the
covered individuals. The proposed and fi-
nal regulations provide that the plan spon-
sor of a self-insured group health plan
reports under section 6055. Accord-
ingly, the plan sponsor reports under
section 6055 for individuals covered by
the plan, whether or not the individuals
are employees.

### b. Small Business Health Options Program (SHOP)

In order to reduce the compliance bur-
den on health insurance issuers, the pro-

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posed regulations provided that issuers are
not required to report under section 6055
on qualified health plans enrolled in
through Affordable Insurance Exchanges
(Exchanges), also called Marketplaces.
Commenters requested that Exchanges
also be responsible for section 6055 re-
porting for coverage obtained through the
SHOP.

The final regulations do not require
health insurance issuers to report under
section 6055 for coverage under individ-
ual market qualified health plans pur-
chased through an Exchange because Ex-
changes must report on this coverage
under section 36B(f)(3). Exchanges are
not required, however, to report on cover-
age obtained through the SHOP, therefore
issuer reporting of SHOP coverage under
section 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 or
arrangement may enter into a written
agreement with another governmental
unit, or an agency or instrumentality of a
governmental unit, designating the other
governmental unit, agency, or instrumen-
tality as the person responsible for section
6055 reporting. The proposed regulations
reserved the definition of agency or in-
strumentality.

Under the proposed regulations, a gov-
ernment employer included an Indian
tribal government (as defined in section
7701(a)(40)) or subdivision of an Indian
tribal government (as defined in section
7871(d)). A commenter asked whether a
wholly-owned tribal entity formed under
tribal and federal law is an agency or
instrumentality of a governmental unit.
The commenter suggested that it is admin-
istratively burdensome for an Indian tribal
government (ITG) to determine whether a
particular entity qualifies as an agency or
instrumentality of an ITG under existing
authorities, 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 section
6055. Until future guidance is issued that

defines that term for purposes of section
6055, in determining whether an entity is
an agency or instrumentality of a govern-
mental unit, the entity may make that
determination based on a reasonable and
good faith interpretation of existing rules
relating to agency or instrumentality
determinations for other federal tax
purposes.

#### d. Government-sponsored programs

The proposed regulations provided
that, in general, a health insurance issuer
must report under section 6055 for all
insured coverage. However, under the
proposed regulations the responsible gov-
ernment department or agency and not the
issuer was the reporting entity for cover-
age under a government-sponsored pro-
gram provided through a health insurance
issuer (such as some Medicaid, Children's
Health Insurance Program (CHIP), and
Medicare programs). A commenter re-
quested that the final regulations specify
that this rule applies to the Medicare Ad-
vantage program. The final regulations
clarify that issuers do not report coverage
under the Medicare Advantage program.

#### 3. Information Required to Be Reported

#### a. Information not required to be reported

Section 6055 calls for the reporting of
several data elements that are not required
by taxpayers for preparing their tax re-
turns or by the IRS for tax administration.
As part of the effort to minimize the cost
and simplify the administrative imple-
mentation of reporting under section
6055, the proposed regulations did not
require reporting these unnecessary items.
For example, the proposed regulations did
not require reporting the amount of ad-
vance payments of the premium tax credit
and cost-sharing reductions or the amount
of the premium for employer coverage
paid by an employer. Several commenters
expressed support for these simplifica-
tions, and the final regulations retain
them.

b. Taxpayer identification numbers
(TINs)

## i. Requirement to Request TINs

The proposed regulations implemented
the statutory requirement that the section
6055 information return include the name
and TIN for the primary insured or other
related person (such as a parent or spouse)
who submits the application for coverage,
which the proposed regulations called the
responsible individual, and for each cov-
ered individual. However, the proposed
regulations permitted reporting entities to
report a date of birth if a TIN is not
available for an individual.

Some commenters advised that they do
not currently obtain TINs for individuals
enrolled in coverage, particularly for de-
pendents, and asserted that the require-
ment to obtain TINs is burdensome and
unnecessary. Commenters suggested that
individuals will be reluctant to provide
TINs and that no enforcement mechanism
such as backup withholding is available.
Some commenters expressed concerns
about 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 report
only a date of birth in lieu of a TIN for all
individuals, or alternatively to provide a
TIN only for an employee or other respon-
sible individual and dates of birth for
other covered individuals. Other com-
menters suggested that TIN reporting
should be limited to the reporting under
section 111 of the Medicaid, Medicare,
and SCHIP Extension Act of 2007 (PL
110-173, 121 Stat. 2492), which requires
TIN reporting only for individuals age 45
to 64 with coverage based on employment
status.

After consideration of the comments,
the final regulations retain the rule in the
proposed regulations directing reporting
entities to provide TINs for all covered
individuals and to provide a date of birth
only if a TIN is not available after the
reporting entity makes reasonable efforts
to obtain it. The purpose of information
reporting under section 6055 is for indi-
viduals to establish, and the IRS to con-
firm, that the individuals have minimum
essential coverage and are not subject to
the section 5000A individual shared re-

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sponsibility payment. The information on
Form 1040 identifying dependents that
can be matched with section 6055 report-
ing is name and TIN. Because many indi-
viduals have the same name, the name and
TIN combination enables the IRS to iden-
tify that a particular individual has mini-
mum essential coverage.

Individuals have a strong incentive to
provide a TIN to the reporting entity if
one is available to establish that they have
coverage qualifying under section 5000A.
Without a TIN to enable the IRS to match
coverage reported on the Form 1040 with
coverage reported on a section 6055 re-
turn, individuals will receive correspon-
dence from the IRS asking them to verify
coverage. Accordingly, the final regula-
tions allow section 6055 reporting of dates
of birth in lieu of TINs only if the report-
ing entity is informed that an individual
has no TIN or the reporting entity is un-
able to obtain a TIN after making reason-
able efforts, as discussed in more detail
later in this preamble. Nothing in these
final regulations authorizes a reporting en-
tity to terminate coverage if a TIN is not
provided. Reporting a date of birth in one
year does not eliminate the need to make
reasonable efforts to obtain a TIN.

A commenter suggested that requiring
TIN reporting for responsible individuals
not enrolled in the coverage reported is
unnecessary and inconsistent with the
statute, which requires reporting a TIN for
the "primary insured" and each other cov-
ered individual. Under section
6055(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 helpful
for tax administration because it facilitates
matching the coverage of individuals re-
ported under section 6055 with individu-
als for whom the responsible individual
claims a personal exemption deduction.
However, in response to the comment, the
final regulations provide that reporting
TINs for responsible individuals not en-
rolled in the coverage is optional.

Commenters requested that the final
regulations include rules on confidential-
ity and restricting the use of private infor-
mation by issuers and employers. A com-
menter suggested that the final regulations
include rules similar to 45 CFR 155.260
and 45 CFR 155.715, which restrict the

use of confidential information by Ex-
changes. The cited regulations under 45
CFR are issued under the authority of the
Department of Health and Human Ser-
vices (HHS) to oversee and regulate the
operation of Exchanges. Because the IRS
and Treasury Department lack similar reg-
ulatory authority over section 6055 report-
ing entities, the final regulations do not
include 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 social
security numbers and other TINs, IRS
rules permit reporting entities required to
furnish certain statements to partially
mask the TIN of statement recipients and
others reported on an information state-
ment by using a truncated TIN. It is ex-
pected that section 6055 reporting entities
will be able to truncate the TINs of the
responsible individual and covered indi-
viduals under these rules. The final regu-
lations clarify that reporting entities are
permitted to use truncated TINs on section
6055 statements.

## ii. Reasonable Efforts to Obtain TINs

Under section 6724(d), as amended by
the Affordable Care Act, a reporting entity
that fails to comply with the filing and
statement furnishing requirements of sec-
tion 6055 may be subject to penalties for
failure to file a correct information return
(section 6721) or failure to furnish a cor-
rect payee statement (section 6722). These
penalties may be waived if the failure was
due to reasonable cause and not willful
neglect (section 6724(a)). The preamble to
the proposed regulations noted that the
section 6721 and 6722 penalties may ap-
ply to a section 6055 reporting entity but
the penalties may be waived under section
6724 and the related regulations for cer-
tain failures due to reasonable cause. The
preamble explained that penalties are
waived if a reporting entity demonstrates
that it acted in a responsible manner and
that 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 uncertain
about what solicitations are required to
satisfy the requirement to act in a respon-

sible manner. In general, under
§ 301.6724(e) (regarding missing TINs), a
person will be treated as acting in a re-
sponsible manner if the person properly
solicits the TIN but does not receive it.
Under these rules, the reporting entity
makes an initial solicitation at the time the
relationship with the payee is established.
However, the reporting entity is not re-
quired to make this initial solicitation if it
already has the payee's TIN and uses that
TIN for all relationships with the payee. If
the reporting entity does not receive the
TIN, the first annual solicitation is gener-
ally required by December 31 of the year
in which the relationship with the payee
begins (January 31 of the following year if
the 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 TIN
is still not provided, the reporting entity
has acted in a responsible manner and
need not continue to solicit a TIN.

For example, a reporting entity that
makes an unsuccessful initial solicitation
for a TIN in December 2015 must make
the first annual solicitation by January 31,
2016. The second annual solicitation must
be made by December 31, 2016, to have
acted in a responsible manner. Assuming
that request is also unsuccessful, the re-
porting entity would not be penalized if its
section 6055 reporting submitted in early
2017 reported a date of birth in place of a
TIN for the individual in question.

Commenters pointed out that the rules
for solicitation in the existing regulations
may not adequately address the circum-
stances surrounding the relationship be-
tween a reporting entity and a responsible
individual and the covered individuals.
Commenters requested that the final reg-
ulations provide rules on soliciting TINs
specific to section 6055 reporting. For in-
stance, a commenter suggested that a re-
porting entity should be allowed to certify
that it has made reasonable efforts to ob-
tain TINs and that the certification should
be reviewed only upon examination, so
that reporting entities do not have to re-
spond to IRS notices requesting missing
TINs. Commenters also suggested that the
final regulations require reporting entities
to request information only once or at
most twice. Other commenters asked
whether certain procedures that are not

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addressed in the current section 6724 reg-
ulations would satisfy the solicitation re-
quirement, including: (1) Is a reporting
entity required to restart the solicitation
process if a new individual is added to a
policy; (2) does soliciting information
from the responsible individual serve as
soliciting information from each covered
individual 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 information
on, for example, an application for insur-
ance coverage serve as the first solicita-
tion; (4) may a reporting entity obtain
information from other documents in its
possession; and (5) may reporting entities
solicit information by email or phone call.

In enacting the Affordable Care Act,
Congress added section 6055 reporting to
the list of reporting provisions to which
the section 6721, 6722, and 6724 penalty
provisions apply, indicating that Congress
intended that section 6055 reporting
should be subject to the same rules in this
regard as other information reporting.
Regulations and other authorities under
those sections already provide detailed
rules for compliance, including the rules
described above for waiving any penalties
for reasonable cause that address some of
the commenters questions. For instance,
consistent with the rules in § 301.6724-
1(e)(1)(i), the reporting entity may make
an initial solicitation orally (by phone or
in person), in writing (including using an
application), or by electronic means such
as e-mail. The rules for the manner of
making 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 initial
solicitation is not required if the reporting
entity already has the payee's TIN and
uses that TIN for all relationships of the
payee with the reporting entity. In the case
of section 6055 reporting, a reporting en-
tity would likewise not be required to
make an initial solicitation if the reporting
entity has the TIN or other documents in
its possession that it uses for other aspects
of its relationship with the covered indi-
vidual and/or responsible individual. For
example, if the reporting entity is also the
responsible individual's employer, the re-
porting entity does not have to make an

initial solicitation for the employee's TIN
for purposes of section 6055 reporting and
may use the TIN that is used for employ-
ment purposes.

The solicitation rules under section
6724 also address situations in which the
reporting entity does not have TIN infor-
mation for account holders. Accounts
commonly are maintained jointly. In these
situations, the solicitation rules do not re-
quire solicitation of the accountholder
merely because another person is added to
the account. Similarly, although the addi-
tion of a new individual to a policy would
trigger an obligation to obtain a TIN for
the newly added individual, it would not
trigger an obligation to solicit a TIN from
existing covered individuals (or the re-
sponsible person).

Treasury and the IRS recognize that
the 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 the
final regulations do not revise the regula-
tions under section 6724 to specifically
address these circumstances, Treasury and
the IRS will continue to study the issue
and may provide additional clarification if
appropriate through guidance or forms
and 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. A
health insurance issuer also must report
the EIN of an employer maintaining a
plan and whether coverage was enrolled
in through the SHOP.

The proposed regulations provided
that, for a multiemployer group health
plan, the plan sponsor is the association,
committee, joint board of trustees, or
other similar group of representatives of
the parties who establish or maintain the
plan. A commenter asked that the final
regulations clarify that the plan sponsor of
a multiemployer plan is not required to
report 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 the
participating employers. The regulations
require only health insurance issuers to

report the EIN of the employer sponsoring
an insured group health plan.

#### d. Coverage dates

The proposed regulations provided that
section 6055 information returns must
provide the months for which an individ-
ual is enrolled in and entitled for at least
one day to receive benefits under the cov-
erage. Several commenters supported the
requirement to report only the months of
coverage, while others requested that re-
porting entities be allowed to report cov-
erage dates instead of months. Section
6055 reporting of coverage on a monthly
basis simplifies compliance for individual
taxpayers because section 5000A requires
that they demonstrate coverage under
minimum essential coverage for each
month of a taxable year. Accordingly, the
final regulations retain the rule in the pro-
posed regulations.

##### 4. Time and Manner of Filing

###### a. Electronic filing

The proposed regulations provided that
any person who is required to file under
section 6055 must file electronically if the
person 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, Forms
W-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. A
commenter requested that the final regu-
lations require electronic reporting only if
a reporting entity files at least 250 Forms
W-2.

A "no aggregation" method of deter-
mining whether the 250-return threshold
is met is consistent with the application of
the rule to other information returns, such
as Forms 1099 and W-2, that apply the
250-return threshold separately to each
type of return required to be filed. See
§ 301.6011-2(c)(1). The final regulations
adopt this rule. As a result, Forms 1095-B
and 1095-C will be required to be elec-
tronically filed only if the reporting entity
is required to file at least 250 of the spe-
cific form. Like transmittals of other in-
formation returns, the transmittal (Form

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1094-B or 1094-C) is not treated as a
separate return but must be electronically
filed in the form and manner required by
the IRS when the Form 1095 is electron-
ically filed. The final regulations amend
§ 301.6011-2 to add Forms in the 1094
and 1095 series. Proposed § 301.6011-8
will be removed in a separate document.

###### b. Corrected returns

The proposed regulations provided that
the section 6721 and section 6722 penal-
ties for failing to timely report correct
information apply to reporting entities un-
der section 6055. Penalties under section
6721 and section 6722 are reduced if a
reporting entity files a corrected return
within 30 days after the required filing
date. Penalties also are reduced, but by a
lesser amount, if a reporting entity makes
a correction by August 1 following the
reporting date. Penalties may be waived
under section 6724 if the failure to timely
and accurately report is due to reasonable
cause and not willful neglect.

A commenter stated that reporting en-
tities should not be required to submit
corrected returns if the information in-
cluded on the return is accurate at the time
it is filed. The commenter recommended
alternatively that the requirement to file
corrected returns should apply for no
more than 31 days after the end of the
calendar year. Other commenters sug-
gested a cut-off of the corrected return
requirement of 30 days past the return
filing due date.

Taxpayers require correct information
to properly complete and file their income
tax returns. The IRS must be able to ac-
curately match information reporting with
returns. 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 6055
reporting, a return or statement may be
incomplete or incorrect as a result of a
change in circumstances occurring after
the coverage year has ended. For example,
a child born during a month may be en-
rolled in coverage retroactive to the date
of birth, or coverage may be retroactively
cancelled due to a failure to pay premi-
ums. Accordingly, consistent with other
information reporting rules, the final reg-
ulations clarify that reporting entities that

fail to timely file corrected returns and
furnish corrected statements when infor-
mation changes as a result of a change in
circumstances have filed returns that are
incomplete or incorrect within the mean-
ing of sections 6721 and 6722.

##### 5. Combined Reporting

Applicable large employer members
that provide minimum essential coverage
on a self-insured basis are subject to the
reporting requirements of both section
6055 and section 6056, as well as the
requirement under section 6051 to file
Form W-2, Wage and Tax Statement, re-
porting wages paid to employees and
taxes withheld. The proposed regulations
did not permit combining section 6055
reporting with reporting for section 6056
or 6051. The proposed regulations al-
lowed the use of substitute forms for the
statement to individuals, which might
have 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 (78
FR 54986) described a number of propos-
als to simplify reporting under that
section.

Commenters supported allowing com-
bined section 6055 and section 6056 re-
porting for applicable large employer
members sponsoring self-insured plans,
suggesting that there is significant dupli-
cation in the information reported. Some
commenters requested that combined re-
porting be optional and that employers be
permitted to combine reporting for some
employees but not others.

In response to these comments, the fi-
nal regulations provide that applicable
large employer members will file a com-
bined return and statement for all report-
ing under sections 6055 and 6056. An
applicable large employer member that
sponsors a self-insured plan will report on
Form 1095-C, completing both sections
to report the information required under
sections 6055 and 6056. An applicable
large employer member that provides in-
sured coverage also will report on Form
1095-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 not
applicable large employer members or are

not reporting as employers, such as
health insurance issuers, sponsors of
multiemployer plans, and providers of
government-sponsored coverage, will
report under section 6055 on Form
1095-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 that
a reporting entity must furnish a statement
to each responsible individual reporting
the policy number and the name, address,
and a contact number for the reporting
entity, and the information required to be
reported to the IRS. A responsible indi-
vidual is a primary insured, employee,
former employee, uniformed services
sponsor, parent, or other related person
named on an application who enrolls one
or more individuals, including him or her-
self, in minimum essential coverage.

Commenters requested that the final
regulations provide that a statement is not
required to be furnished to a covered in-
dividual who dies during the year. The
commenters suggested alternatively that a
statement should not be required for an
individual who dies during the first three
months of a year who would be exempt
from the shared responsibility payment
under section 5000A because of a short
coverage gap.

Under § 1.5000A-1(a), the minimum
essential coverage requirement applies
only to full months that an individual is
alive. However, section 5000A does not
provide a general exemption from cover-
age for the year of death and the coverage
gap exception may not apply if the gap
began in the previous calendar year. Ac-
cordingly, to ensure that minimum essen-
tial coverage is properly reflected on a
decedent's final income tax return and the
estate is not held liable for a section
5000A payment, the final regulations do
not provide an exception for a covered
individual who dies during the year.

### b. Time for furnishing statements

Section 6055 and the proposed regula-
tions required a reporting entity to furnish

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the statement on or before January 31 of
the year following the calendar year in
which minimum essential coverage is pro-
vided. Commenters requested that the fi-
nal regulations permit reporting entities to
furnish statements within the last quarter
of the calendar year of coverage with
other material required to be sent at that
time. The final regulations do not address
furnishing a statement during the cover-
age year. However, the section 5000A re-
quirement applies to each month during a
calendar year, therefore a statement pro-
vided early in the last calendar quarter
would not report coverage for those
months. As a result, furnishing a state-
ment before the end of the year increases
the risk of reporting information that
changes after the end of the year, poten-
tially subjecting the reporting entity to
penalties.

A commenter requested that the final
regulations provide procedures for ex-
tending the time to furnish the section
6055 statement. Accordingly, in response
to this comment, like other information
reporting rules, the final regulations in-
clude rules allowing reporting entities
showing good cause the flexibility to ap-
ply for an extension of time not exceeding
30 days to furnish statements.

A commenter requested that reporting
entities be allowed to furnish statements
reporting employer-sponsored coverage
with the employees' Form W-2. Neither
the 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 Form
1095-B or 1095-C with the Form W-2 in
the same mailing.

### c. Mailing address

The proposed regulations provided
that, 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 the
individual's temporary address.

Commenters asked that reporting enti-
ties be allowed to send statements to an
alternate address, such as an employer's
address, for individuals residing outside of
the United States for whom the entity does
not 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 in
the 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 a
reporting entity's first class mailing to the
recipient's last known permanent address,
or if no permanent address is known, the
temporary address, discharges the require-
ment to furnish the statement, even if the
statement is returned. A reporting entity
that has no address for an individual
should send the statement to the address
where the individual is most likely to re-
ceive it, for example to the address the
reporting entity uses for requesting or pro-
viding information about the coverage.

### d. Electronic furnishing of statements

The proposed regulations permitted
electronic furnishing of statements to in-
dividuals if the recipient affirmatively
consents. Commenters requested that re-
porting entities be permitted to furnish
statements electronically unless the recip-
ient requests paper statements, arguing
that most recipients have access to a com-
puter. Other commenters suggested that
affirmative consent by the recipient
should not be required. A commenter sug-
gested that the final regulations provide
rules for the electronic furnishing of state-
ments to individuals that are similar to the
rules under section 2715 of the Public
Health Service Act for providing a sum-
mary of benefits and coverage, which al-
lows furnishing in paper or electronic
form.

Statutory and regulatory tax informa-
tion reporting rules uniformly require a
recipient's affirmative consent to receiv-
ing statements electronically. See, for ex-
ample, section 401 of the Jobs Creation
and Workers Assistance Act of 2002 (116
Stat. 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 rules
protect individuals who do not have ac-
cess to or are not comfortable using a
computer. Therefore, consistent with gen-
eral information reporting rules, the final

regulations do not permit reporting enti-
ties to furnish statements electronically
unless an individual affirmatively con-
sents to electronic furnishing.

The proposed regulations provided that
consent to receive statements electroni-
cally may be provided in any manner that
reasonably demonstrates that the recipient
can access the statement in the electronic
format in which it will be furnished. Com-
menters suggested that consent to elec-
tronic furnishing for other documents
should be treated as consent to electronic
furnishing of the section 6055 statement.
Other commenters requested that employ-
ers be allowed to post a notice on the
company's Web site advising employees
that statements are available and provide
paper statements only on request.

Consent to receive a statement in elec-
tronic format must be in a manner that
reasonably demonstrates that the recipient
is 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). The
proposed and final regulations explicitly
allow statement recipients to provide con-
sent and to access section 6055 statements
in response to a notice on a Web site. A
reporting entity may simultaneously re-
quest consent to receive an electronic sec-
tion 6055 statement and consent regarding
other statements. For instance, a reporting
entity may simultaneously request consent
to provide electronic statements for Forms
W-2 and 1095, but each form must be
specifically referenced in the request. A
general consent to receive statements
electronically does not reasonably demon-
strate that the recipient is able to access
the section 6055 statement in an electronic
format and does not serve as consent to
receive the section 6055 statement elec-
tronically.

### e. Form of statement

#### i. Information on the Statement

The proposed regulations provided that
the statement furnished to the responsible
individual must include a contact phone
number for the person required to file the
return. A commenter asked whether a re-
porting entity may provide an automated
response to inquiries if a person ultimately
is available. The final regulations do not

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prohibit initial automated responses if a
caller is able to reach a person during the
call.

A commenter requested that a report-
ing entity be permitted to designate a third
party to be the contact person. The final
regulations clarify that the statement only
must include a phone number for a person
designated as the reporting entity's con-
tact person. The final regulations do not
specify that the contact person must be a
reporting entity's employee or prohibit
designating a third party as the contact
person.

#### ii. Substitute Statements

The proposed regulations permitted
substitute statements if they include the
information required to be shown on the
return filed with the IRS and comply with
applicable requirements in published
guidance 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 in
creating substitute statements combining
information reporting under sections 6055
and 6056 and requested publication of a
revenue procedure providing the specifi-
cations. Other commenters asked that re-
porting entities be allowed flexibility in
customizing section 6055 statements in a
style recognizable to their recipients.

The final regulations permit the use of
substitute statements under section 6055
that conform to requirements provided in
published guidance. The IRS plans to pro-
vide these requirements in published guid-
ance or instructions. Employers submit-
ting Forms 1095-C combining reporting
under sections 6055 and 6056 to the IRS
also will report the information required
by those sections to the individuals in a
single statement.

Commenters requested that the final
regulations 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 month
you were covered by the plan for at least
one day." While the final regulations do
not adopt this comment, it is anticipated
that reporting entities will be able to check
a box on the information return to report

that an individual was covered for all 12
months of the calendar year.

### e. TIN matching program

Commenters requested that the IRS TIN
matching program, see Rev. Proc. 2003-09
(2003-1 CB 516) and § 601.601(d),
include section 6055 reporting. The TIN
matching program may be used only for
reportable payments subject to backup
withholding under section 3406. There-
fore, TIN matching is not permitted for
purposes of section 6055 reporting and the
final regulations do not include section
6055 reporting in the TIN matching
program.

### 7. Penalties

The proposed regulations applied to
calendar years beginning after December
31, 2014. Under Notice 2013-45
(2013-31 IRB 116), the IRS will not ap-
ply penalties for failure to comply with
section 6055 for 2014 (for coverage in
2014 and information returns filed and
statements furnished to covered individu-
als in 2015).

A commenter requested that the effec-
tive date of the section 6055 reporting
requirements be extended an additional
year if final regulations are not released by
January 1, 2014, thus requiring no report-
ing in 2016 for coverage in 2015. Other
commenters requested that the IRS waive
penalties for reporting in 2016 on 2015
coverage if a reporting entity makes a
good faith effort to comply. One com-
menter requested that penalties be waived
for the two years following the release of
final regulations.

In implementing new information re-
porting requirements, short-term relief
from penalties frequently is provided.
This relief generally allows additional
time to develop appropriate procedures
for collection of data and compliance with
these new reporting requirements. After
considering the comments received, the
IRS will not impose penalties under sec-
tions 6721 and 6722 on reporting entities
that can show that they have made good
faith efforts to comply with the informa-
tion reporting requirements. Specifically,
relief is provided from penalties under
sections 6721 and 6722 for returns and

statements filed and furnished in 2016 to
report 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 is
provided in the case of reporting entities
that do not make a good faith effort to
comply with these regulations or that fail
to timely file an information return or fur-
nish a statement. However, consistent
with the existing information reporting
rules, reporting entities that fail to timely
meet the requirements of these regulations
may be eligible for penalty relief if the
IRS determines that the standards for rea-
sonable cause under section 6724 are
satisfied.

## Effective/Applicability Date

These regulations apply for calendar
years beginning after December 31, 2014.
Consistent with Notice 2013-45, report-
ing entities will not be subject to penalties
for failure to comply with the section
6055 reporting requirements for coverage
in 2014 (including the provisions requir-
ing the furnishing of statements to cov-
ered individuals in 2015 with respect to
2014). Accordingly, a reporting entity will
not be subject to penalties if it first reports
beginning in 2016 for 2015 (including the
furnishing of statements to covered indi-
viduals).

Taxpayers are encouraged, however, to
voluntarily comply with section 6055 in-
formation reporting for minimum essen-
tial coverage provided in 2014. Given sig-
nificant changes in the information
reporting provisions in response to com-
menters' feedback on the proposed regu-
lations, including requiring applicable
large employer members to file a return
that combines section 6055 and section
6056 reporting, reporting entities that
wish to voluntarily comply with the sec-
tion 6055 information reporting provi-
sions for 2014 should build their systems
and report in accordance with these final
regulations. Real-world testing of report-
ing systems and plan designs, built in ac-
cordance with the terms of these final reg-
ulations, through voluntary compliance
for 2014 will contribute to a smoother
transition to full implementation for 2015.

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## Special Analyses

It has been determined that these final
regulations are not a significant regulatory
action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It has also been
determined 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 Regulatory
Flexibility Act (5 U.S.C. chapter 6) (RFA)
generally require agencies to prepare a
regulatory flexibility analysis addressing
the 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 not
apply if the head of the agency certifies
that the rule will not have a significant
economic impact on a substantial number
of small entities. It is hereby certified that
these regulations will not have a signifi-
cant economic impact on a substantial
number of small entities.

Section 6055 requires a person that
provides minimum essential coverage to
an individual to file a return with the IRS
reporting information specified by the
statute and to furnish a statement contain-
ing this information to an individual.
These final regulations implement the un-
derlying statute and the economic impact
is principally a result of the underlying
statute. Specifically, these final regula-
tions primarily provide the time and man-
ner for filing and furnishing the returns
and statements that section 6055 requires.

Notice 2013-45 announced transition
relief providing that information reporting
under section 6055 will be optional for
2014. The notice advised that this relief
would allow additional time for dialogue
with prospective reporting entities in an
effort to simplify the reporting require-
ments. Between publication of Notice
2013-45 and publication of the proposed
regulations under section 6055, the IRS
and the Treasury Department engaged in a
series of discussions with employers,
health insurance issuers, and other report-
ing entities. The proposed and final regu-
lations address certain concerns expressed
in those discussions.

These final regulations minimize the
burden associated with the collection of

information imposed by section 6055 in a
number of ways. The regulations limit
reporting to only the information that the
IRS will use to verify minimum essential
coverage and administer the premium tax
credit, all of which is specified in the
statute. For example, the regulations do
not require reporting the amount of ad-
vance payments of the premium tax credit
and cost-sharing reductions or the amount
of the premium for employer coverage
paid by an employer. Similarly, the only
information the regulations require for ad-
ministration of the small employer health
insurance credit under section 45R is
whether a qualified health plan was en-
rolled in through an Exchange.

The final regulations reduce burden for
applicable large employer members by al-
lowing combined reporting under sections
6055 and 6056. The final regulations al-
low for substitute statements, furnishing
of statements with Forms W-2, and elec-
tronic delivery consistent with other infor-
mation reporting rules. Finally, the final
regulations relieve health insurance issu-
ers from reporting for individual market
qualified health plans enrolled in through
an Affordable Insurance Exchange be-
cause Exchanges will report on these en-
rollments under section 36B(f)(3).

Based on these facts, a Regulatory
Flexibility Analysis under the Regulatory
Flexibility Act is not required.

Pursuant to section 7805(f) of the
Code, the notice of proposed rulemaking
that preceded these final regulations was
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administra-
tion for comment on its impact on small
business.

## Drafting Information

The principal author of these final reg-
ulations is Andrew Braden of the Office of
Associate Chief Counsel (Income Tax and
Accounting). However, other personnel
from the IRS and the Treasury Depart-
ment participated in the development of
the regulations.

## List of Subjects

* * * * *

** * * *

* * * * *

## Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 1, 301, and
602 are amended as follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 is amended by adding entries in
numerical 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 for minimum essential coverage.

(a) Information reporting requirement.
Every person that provides minimum es-
sential coverage to an individual during a
calendar year must file an information re-
turn and transmittal and furnish state-
ments to responsible individuals on forms
prescribed by the Internal Revenue
Service.

(b) Definitions-(1) In general. The
definitions in this paragraph (b) apply for
purposes of this section.

(2) Affordable Care Act. The term Af-
fordable Care Act refers to the Patient
Protection 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 the
Employee Retirement Income Security
Act of 1974, as amended (29 U.S.C. 1001
et seq.).

(4) Exchange. Exchange has the same
meaning as in 45 CFR 155.20.

(5) Government employer. The term
government employer means an employer
that is a governmental unit or an agency or
instrumentality of a governmental unit.

(6) Governmental unit. The term gov-
ernmental unit refers to the government of
the United States, any State or political
subdivision of a State, or any Indian tribal
government (as defined in section
7701(a)(40)) or subdivision of an Indian
tribal government (as defined in section
7871(d)).

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(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 term
qualified health plan has the same mean-
ing as in section 1301(a) of the Affordable
Care Act (42 U.S.C. 18021(a)).

(10) Reporting entity. A reporting en-
tity is any person that must report, under
section 6055 and this section, minimum
essential coverage provided to an individual.

(11) Responsible individual. The term
responsible individual includes a primary
insured, employee, former employee, uni-
formed services sponsor, parent, or other
related person named on an application
who 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 section
7701(a)(41).

(c) Persons required to report-(1) In
general. The following persons must file
the information return and transmittal
form required under paragraph (a) of this
section to report minimum essential
coverage-

(i) Health insurance issuers, or carriers
(as used in 5 U.S.C. 8901), for all insured
coverage, except as provided in paragraph
(c)(3)(ii) of this section;

(ii) Plan sponsors of self-insured group
health plan coverage;

(iii) The executive department or
agency of a governmental unit that pro-
vides coverage under a government-
sponsored program (within the meaning
of section 5000A(f)(1)(A)); and

(iv) Any other person that provides
minimum essential coverage to an indi-
vidual.

(2) Plan sponsors of self-insured group
health plan coverage-(i) In general. For
purposes of this section, a plan sponsor of
self-insured group health plan coverage
is-

(A) The employer for a self-insured
group health plan or arrangement estab-
lished or maintained by a single employer
(determined without application of section
414(b), (c), (m) or (o) in the case of an
employer described in paragraph (f)(2)(i)

of this section), including each participat-
ing employer with respect to a self-
insured group health plan or arrangement
established or maintained by more than
one employer (and not including a mul-
tiemployer plan as defined in section
3(37) of ERISA or a Multiple Employer
Welfare Arrangement as defined in sec-
tion 3(40) of ERISA);

(B) The association, committee, joint
board of trustees, or other similar group of
representatives of the parties who estab-
lish or maintain the plan for a self-insured
group health plan or arrangement that is a
multiemployer plan (as defined in section
3(37) of ERISA).

(C) The employee organization for a
self-insured group health plan or arrange-
ment maintained solely by an employee
organization;

(D) Each participating employer for a
self-insured group health plan or arrange-
ment maintained by a Multiple Employer
Welfare Arrangement (as defined in sec-
tion 3(40) of ERISA) with respect to the
participating employer's own employees;
and

(E) For a self-insured group health plan
or arrangement for which a plan sponsor
is not otherwise identified in paragraphs
(c)(2)(i)(A) through (c)(2)(i)(D) of this
section, the person designated by plan
terms as the plan sponsor or plan admin-
istrator or, if no person is designated as
the administrator and a plan sponsor can-
not be identified, each entity that main-
tains the plan or arrangement.

(ii) Government employers. Unless
otherwise provided by statute or regula-
tion, a government employer that main-
tains a self-insured group health plan or
arrangement may enter into a written
agreement with another governmental
unit, or an agency or instrumentality of a
governmental unit, that designates the
other governmental unit, agency, or in-
strumentality as the person required to file
the returns and to furnish the statements
required by this section for some or all of
the individuals receiving minimum essen-
tial coverage under that plan or arrange-
ment. The designated governmental unit,
agency, or instrumentality must be part of
or related to the same governmental unit
as 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 must
make or revoke the designation before the
earlier of the deadline for filing the returns
or furnishing the statements required by
this section and must retain a copy of the
designation in its books and records. If the
requirements of this paragraph (c)(2)(ii)
are met, the designated governmental unit,
agency, or instrumentality is the sponsor
under paragraph (c)(2)(i) of this section. If
no entity is designated, the government
employer that maintains the self-insured
group health plan or arrangement is the
sponsor under paragraph (c)(2)(i) of this
section.

(3) Special rules for government-
sponsored programs-(i) Medicaid and
Children's Health Insurance Program
(CHIP) coverage. The State agency that
administers the Medicaid program under
title XIX of the Social Security Act (42
U.S.C. 1396 and following sections) or
the CHIP program under title XXI of the
Social Security Act (42 U.S.C. 1396 and
following sections) must file the returns
and furnish the statements required by this
section for those programs.

(ii) Government-sponsored coverage
provided through health insurance issu-
ers. An executive department or agency of
a 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 file
the returns and furnish the statements re-
quired by this section.

(iii) Nonappropriated Fund Health
Benefits Program. The Secretary of De-
fense may designate the Department of
Defense 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 file
the returns and furnish the statements re-
quired by this section for the Nonappro-
priated Fund Health Benefits Program.

(4) Other arrangements recognized as
minimum essential coverage. The Com-
missioner may designate in published
guidance, see § 601.601(d) of this chapter,
the reporting entity for arrangements the
Secretary of Health and Human Services,
in coordination with the Secretary of the
Treasury, recognizes under section

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5000A(f)(1)(E) as minimum essential
coverage.

(d) Reporting not required-(1) Qual-
ified health plans. A health insurance is-
suer is not required to file a return or
furnish a report under this section for cov-
erage in a qualified health plan in the
individual market enrolled in through an
Exchange.

(2) Additional health benefits. No re-
porting is required under paragraph (a) of
this section for minimum essential cover-
age that provides benefits in addition or as
a supplement to a health plan or arrange-
ment that constitutes minimum essential
coverage if-

(i) The primary and supplemental cov-
erages have the same plan sponsor; or

(ii) The coverage supplements
government-sponsored coverage (as de-
fined in section 5000A(f)(1)(A) and the
regulations under that section) such as
Medicare.

(3) Individuals not enrolled in cover-
age. No reporting is required under this
section for coverage offered to individuals
who do not enroll.

(e) Information required to be reported
to the Internal Revenue Service-(1) In
general. All information returns required
by this section must report the following
information for the calendar year of cov-
erage-

(i) The name, address, and employer
identification number (EIN) of the report-
ing entity required to file the return;

(ii) The name, address, and TIN, or
date of birth if a TIN is not available, of
the responsible individual, except that re-
porting entities may but are not required
to report the TIN of a responsible individ-
ual not enrolled in the coverage;

(iii) The name and TIN, or date of birth
if a TIN is not available, of each individ-
ual who is covered under the policy or
program;

(iv) For each covered individual, the
months for which, for at least one day, the
individual was enrolled in coverage and
entitled to receive benefits; and

(v) Any other information specified in
forms, instructions, or published guid-
ance, see §§ 601.601(d) and 601.602 of
this chapter.

(2) Information relating to employer-
provided coverage. In addition to the in-
formation described in paragraph (e)(1) of

this section, information returns reporting
minimum essential coverage provided to
an individual that is coverage provided by
a health insurance issuer through a group
health plan must report-

(i) The name, address, and EIN of the
employer sponsoring the plan;

(ii) Whether the coverage is a qualified
health plan enrolled in through the Small
Business Health Options Program
(SHOP) and the SHOP's unique identifier;
and

(iii) Other information specified in
forms, instructions, or published guid-
ance, see §§ 601.601(d) and 601.602 of
this chapter.

(f) Time and manner for filing return-
(1) In general. A reporting entity must file
the return and transmittal form required
under paragraph (a) of this section on or
before February 28 (March 31 if filed
electronically) of the year following the
calendar 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 in
forms or instructions. For extensions of
time for filing returns under this section
see §§ 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) Applicable
large employer members. A reporting en-
tity that is reporting under section 6055 as
an applicable large employer member (as
defined in § 54.4980H-1(a)(5) of this
chapter) makes the return required under
this paragraph (f) on Form 1094-C and
Form 1095-C or other form designated by
the Internal Revenue Service.

(ii) Reporting entities not reporting as
applicable large employer members. En-
tities reporting as health insurance issuers
or carriers, sponsors of self-insured group
health 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 Form
1094-B and Form 1095-B or other form
designated by the Internal Revenue
Service.

(iii) Substitute forms. Reporting enti-
ties may make the return required under
this paragraph (f) on a substitute form. A
substitute form must comply with revenue
procedures or other published guidance

(see § 601.601(d)(2) of this chapter) that
apply to substitute forms.

(g) Statements to be furnished to re-
sponsible individuals-(1) In general. Ev-
ery person required to file a return under
this section must furnish to the responsi-
ble individual identified on the return a
written statement. For purposes of the
penalty under section 6722, furnishing a
statement to the responsible individual is
treated as furnishing a statement to the
payee. The statement must show-

(i) The phone number for a person des-
ignated as the reporting entity's contact
person and policy number, if any; and

(ii) Information described in paragraph
(e) of this section required to be shown on
the section 6055 return for the responsible
individual and each covered individual
listed on the return.

(2) Statements for individuals other
than the responsible individual. A report-
ing entity is not required to provide a
statement described in paragraph (g)(1) of
this section to an individual who is not the
responsible individual.

(3) Form of the statement. A statement
required under this paragraph (g) may be
made either by furnishing to the responsi-
ble individual a copy of the return filed
with the Internal Revenue Service or on a
substitute statement. A substitute state-
ment must include the information re-
quired to be shown on the return filed with
the Internal Revenue Service and must
comply with requirements in published
guidance (see § 601.601(d)(2) of this
chapter) relating to substitute statements.
An Internal Revenue Service truncated
taxpayer identification number may be
used as the identification number for an
individual in lieu of the identification
number appearing on the corresponding
information return filed with the Internal
Revenue Service.

(4) Time and manner for furnishing
statements-(i) Time for furnishing-(A)
In general. A reporting entity must furnish
the statements required under this para-
graph (g) on or before January 31 of the
year following the calendar year in which
minimum essential coverage is provided.

(B) Extensions of time-(1) In general.
For good cause upon written application
of the person required to furnish state-
ments under this section, the Internal Rev-
enue Service may grant an extension of

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time not exceeding 30 days in which to
furnish these statements. The application
must be addressed to the Internal Revenue
Service, and must contain a full recital of
the reasons for requesting the extension to
aid the Internal Revenue Service in deter-
mining the period of the extension, if any,
that will be granted. A request in the form
of a letter to the Internal Revenue Service,
signed by the applicant, suffices as an
application. The application must be filed
on or before the date prescribed in para-
graph (g)(4)(i)(A) of this section.

(2) Automatic extension of time. The
Commissioner may, in appropriate cases,
prescribe additional guidance or proce-
dures, published in the Internal Revenue
Bulletin (see § 601.601(d)(2) of this chap-
ter), for automatic extensions of time to
furnish to one or more individuals the
statement required under section 6055.

(ii) Manner of furnishing. If mailed,
the statement must be sent to the respon-
sible individual's last known permanent
address or, if no permanent address is
known, 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, the
temporary address, discharges the require-
ment to furnish the statement. A reporting
entity may furnish the statement electron-
ically if the requirements of § 1.6055-2
are satisfied.

(h) Penalties-(1) In general. For pro-
visions relating to the penalty for failure
to file timely a correct information return
required under section 6055, see section
6721 and the regulations under that sec-
tion. For provisions relating to the penalty
for failure to furnish timely a correct state-
ment to responsible individuals required
under section 6055, see section 6722 and
the regulations under that section. See sec-
tion 6724 and the regulations under that
section for rules relating to the waiver of
penalties if a failure to file timely or ac-
curately is due to reasonable cause and is
not due to willful neglect.

(2) Application of section 6721 and
6722 penalties to section 6055 reporting.
For purposes of section 6055 reporting, if
the information reported on a return (in-
cluding a transmittal) or a statement re-
quired by this section is incomplete or
incorrect as a result of a change in circum-

stances (such as a retroactive change in
coverage), a failure to timely file or fur-
nish a corrected document is a failure to
file or furnish a correct return or statement
under sections 6721 and 6722.

(i) [Reserved.]

(j) Effective/applicability date. This
section applies for calendar years begin-
ning after December 31, 2014. Reporting
entities will not be subject to penalties
under section 6721 or 6722 for failure to
comply with the section 6055 reporting
requirements for coverage in 2014 (for
information returns filed and statements
furnished in 2015).

### § 1.6055-2 Electronic furnishing of statements

(a) Electronic furnishing of state-
ments-(1) In general. A person required
by section 6055 to furnish a statement
(furnisher) to a responsible individual (a
recipient) may furnish the statement in an
electronic format in lieu of a paper format.
A furnisher who meets the requirements
of paragraphs (a)(2) through (a)(6) of this
section is treated as furnishing the state-
ment in a timely manner.

(2) Consent-(i) In general. The recip-
ient must have affirmatively consented to
receive 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 the
statement in the electronic format in
which 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 withdraws
the consent and the withdrawal takes ef-
fect before the statement is furnished. The
furnisher may provide that a withdrawal
of consent takes effect either on the date
the furnisher receives it or on another date
no more than 60 days later. The furnisher
also may provide that a recipient's request
for a paper statement will be treated as a
withdrawal of the recipient's consent.

(iii) Change in hardware or software
requirements. If a change in the hardware
or 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 the
statement and inform the recipient that a
new consent to receive the statement in
the revised electronic format must be pro-
vided to the furnisher. After implementing
the revised hardware or software, the fur-
nisher must obtain from the recipient, in
the manner described in paragraph
(a)(2)(ii) of this section, a new consent or
confirmation of consent to receive the
statement electronically.

(iv) Examples. The following examples
illustrate the rules of this paragraph (a)(2):

Example 1. Furnisher F sends Recipient R a letter
stating that R may consent to receive the statement
required under section 6055 electronically on a web
site instead of in a paper format. The letter contains
instructions explaining how to consent to receive the
statement electronically by accessing the web site,
downloading and completing the consent document,
and e-mailing the completed consent back to F. The
consent document posted on the web site uses the
same electronic format that F will use for the elec-
tronically furnished statement. R reads the instruc-
tions and submits the consent in the manner provided
in the instructions. R has consented to receive the
statement required under section 6055 electronically
in the manner described in paragraph (a)(2)(i) of this
section.

Example 2. Furnisher F sends Recipient R an
e-mail stating that R may consent to receive the
statement required under section 6055 electronically
instead of in a paper format. The e-mail contains an
attachment instructing R how to consent to receive
the statement electronically. The e-mail attachment
uses the same electronic format that F will use for
the electronically furnished statement. R opens the
attachment, reads the instructions, and submits the
consent in the manner provided in the instructions. R
has 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 Web
site stating that Recipient R may receive the state-
ment required under section 6055 electronically in-
stead of in a paper format. The Web site contains
instructions on how R may access a secure Web page
and consent to receive the statement electronically.
The consent via the secure Web page uses the same
electronic format that F will use for electronically
furnishing the statement. R accesses the secure Web
page and follows the instructions for giving consent.
R has consented to receive the statement required
under 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 to
the recipient a clear and conspicuous dis-
closure statement containing each of the dis-
closures described in this paragraph (a)(3).

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(ii) Paper statement. The furnisher
must inform the recipient that the state-
ment will be furnished on paper if the
recipient does not consent to receive it
electronically.

(iii) Scope and duration of consent.
The furnisher must inform the recipient of
the scope and duration of the consent. For
example, the recipient must be informed
whether the consent applies to each state-
ment required to be furnished after the
consent is given until it is withdrawn or only
to the first statement required to be fur-
nished following the date of the consent.

(iv) Post-consent request for a paper
statement. The furnisher must inform the
recipient of any procedure for obtaining a
paper copy of the recipient's statement
after giving the consent described in para-
graph (a)(2)(i) of this section and whether
a request for a paper statement will be
treated 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 whose
name, mailing address, telephone number,
and e-mail address is provided in the dis-
closure statement;

(B) The furnisher will confirm the
withdrawal and the date on which it takes
effect in writing (either electronically or
on paper); and

(C) A withdrawal of consent does not
apply to a statement that was furnished
electronically in the manner described in
this paragraph (a) before the date on
which the withdrawal of consent takes
effect.

(vi) Notice of termination. The fur-
nisher must inform the recipient of the
conditions under which the furnisher will
cease furnishing statements electronically
to the recipient (for example, termination
of 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 the
procedures for updating the information
needed to contact the recipient. The furnisher
must inform the recipient of any change in the
furnisher's contact information.

(viii) Hardware and software require-
ments. The furnisher must provide the re-
cipient with a description of the hardware
and software required to access, print, and

retain the statement, and the date when the
statement will no longer be available on
the Web site. The furnisher must advise
the recipient that the statement may be
required to be printed and attached to a
Federal, State, or local income tax return.

(4) Format. The electronic version of
the statement must contain all required
information and comply with applicable
published guidance (see § 601.601(d) of
this 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, electronic
mail, or in person. The notice must pro-
vide instructions on how to access and
print the statement and include the follow-
ing statement in capital letters, "IMPOR-
TANT TAX RETURN DOCUMENT
AVAILABLE." If the notice is provided
by electronic mail, this statement must be
on 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 returned
as undeliverable, and the furnisher cannot
obtain the correct electronic address from
the furnisher's records or from the recip-
ient, the furnisher must furnish the notice
by mail or in person within 30 days after
the 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 must
furnish a corrected statement to the re-
cipient electronically. If the original
statement was furnished through a Web
site posting, the furnisher must notify
the recipient that it has posted the cor-
rected statement on the Web site in the
manner described in paragraph (a)(5)(i)
of this section within 30 days of the
posting. The corrected statement or the
notice must be furnished by mail or in
person if-

(A) An electronic notice of the Web
site posting of an original statement or the
corrected statement was returned as unde-
liverable; and

(B) The recipient has not provided a
new e-mail address.

(6) Access period. Statements fur-
nished on a Web site must be retained
on the Web site through October 15 of

the year following the calendar year to
which the statements relate (or the first
business day after October 15, if Octo-
ber 15 falls on a Saturday, Sunday, or
legal holiday). The furnisher must main-
tain access to corrected statements that
are 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 the
date 90 days after the corrected forms
are posted, whichever is later.

(7) Paper statements after withdrawal
of consent. A furnisher must furnish a
paper statement if a recipient withdraws
consent to receive a statement electroni-
cally and the withdrawal takes effect be-
fore the statement is furnished. A paper
statement furnished after the statement
due date under this paragraph (a)(7) is
timely if furnished within 30 days after
the date the furnisher receives the with-
drawal of consent.

(b) Effective/applicability date. This
section applies for calendar years begin-
ning after December 31, 2014. Reporting
entities will not be subject to penalties
under section 6722 with respect to the
reporting requirements for 2014 (for state-
ments furnished in 2015).

Par. 3. Section 1.6081-8 is amended in
paragraph (a) by adding the language
"1095 series," between the words "1042-
S," and "1098".

## PART 301 - PROCEDURE AND ADMINISTRATION

Par. 4. The authority citation for part
301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 5. Section 301.6011-2 is amended
in the first sentence of paragraph (b)(1) by
adding "1094 series, 1095 series," after
"1042-S".

Par 6. Section 301.6721-1 is amended
by removing the word "or" at the end of
paragraph (g)(3)(xxii), removing the pe-
riod and adding a semi-colon in its place
at the end of paragraph (g)(3)(xxiii), and
adding paragraphs (g)(3)(xxiv) and
(g)(3)(xxv) to read as follows:

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§ 301.6721-1 Failure to file correct
information 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 of
health insurance coverage by applicable
large employer members).

* * * * *

Par 7. Section 301.6722-1 is amended
by removing the word "or" at the end of
paragraph (d)(2)(xxxi), removing the pe-
riod and adding a semi-colon in its place
at the end of paragraph (d)(2)(xxxii), and
adding paragraphs (d)(2)(xxxiii) and
(d)(2)(xxxiv) to read as follows:

§ 301.6722-1 Failure to furnish correct
payee 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 of
health insurance coverage by applicable
large employer members).

** * * *

## PART 602 - OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

Par. 8. The authority citation for part
602 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 section where identified and described * * * * *

Current OMB Control No.

1.6055-1

1545-2252

1.6055-2 * * * * *

1545-2252

John Dalrymple
Deputy Commissioner for
Services and Enforcement.

Approved March 2, 2014,

Mark J. Mazur
Assistant Secretary of the Treasury
(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 Federal
Register for March 10, 2014, 79 F.R. 13231)

Section 6056 .- Information
Reporting by Applicable
Large Employers on Health
Insurance Coverage
Offered Under Employer-
Sponsored Plans

T.D. 9661
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 301 and 602

Information Reporting by
Applicable Large Employers
on Health Insurance
Coverage Offered Under
Employer-Sponsored Plans

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains fi-
nal regulations providing guidance to em-
ployers that are subject to the information
reporting requirements under section 6056
of the Internal Revenue Code (Code), en-
acted by the Affordable Care Act (gener-

ally employers with at least 50 full-time
employees, including full-time equivalent
employees). Section 6056 requires those
employers to report to the IRS informa-
tion about the health care coverage, if any,
they offered to full-time employees, in
order to administer the employer shared
responsibility provisions of section 4980H
of the Code. Section 6056 also requires
those employers to furnish related state-
ments to employees that employees may
use to determine whether, for each month
of the calendar year, they may claim on
their individual tax returns a premium tax
credit under section 36B (premium tax
credit). The regulations provide for a gen-
eral reporting method and alternative re-
porting methods designed to simplify and
reduce the cost of reporting for employers
subject to the information reporting re-
quirements under section 6056. The regu-
lations affect those employers, employees
and 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) and
301.6056-2(b).

FOR FURTHER INFORMATION
CONTACT: 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 been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545-2251.

The collection of information in these
regulations is in §§ 301.6056-1, and
301.6056-2. This information is collected
in accordance with the return and em-
ployee statement requirements under sec-
tion 6056 and is used to administer section
4980H and the premium tax credit. The
likely respondents are employers that are
applicable 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

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assigned by the Office of Management
and Budget.

The burden for the collection of infor-
mation contained in these final regulations
will be reflected in the burden on Form
1095-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 as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.

### Background

Sections I through V of the preamble
("Background") describe the statutory
provisions governing the information re-
porting requirements, as well as related
statutory provisions. Sections VI through
XIII of the preamble ("Explanation of
Provisions and Summary of Comments")
describe and explain how these regula-
tions implement the statutory provisions
of section 6056 and include a discussion
of alternative reporting methods and sim-
plifications that are adopted in these final
regulations. As is typical of regulations on
information reporting, these regulations
refer generally to additional information
that may be required under applicable
forms and instructions. Sections IX.B and
C of the preamble set forth the specific
data elements that will be included with
the reporting, including the data elements
that will be provided through the use of an
indicator code.

I. Reporting Requirements for
Applicable Large Employers (Section
6056)

Section 60561 requires applicable large
employers, as defined in section
4980H(c)(2), to file returns at the time
prescribed by the Secretary with respect to
each full-time employee and to furnish a
statement to each full-time employee by
January 31 of the calendar year following
the calendar year for which the return

must be filed. Section 6056 specifies cer-
tain information that must be reported on
the return and related statement and au-
thorizes the Secretary to require additional
information and determine the form of the
return. Section 6055 requires information
reporting by any person that provides
minimum essential coverage to an indi-
vidual during a calendar year, which in-
formation relates to the section 5000A
individual shared responsibility provi-
sions. Sections 6055 and 6056 are effec-
tive for periods beginning after December
31, 2013; however, Notice 2013-45
(2013-31 IRB 116) provides transition re-
lief from the section 6056 information re-
porting requirements (and section
4980H), as well as the section 6055 infor-
mation reporting requirements, so that re-
porting is not required with respect to
2014.

Proposed regulations under section
6056 were published in the Federal Reg-
ister on September 9, 2013 (REG-
136630-12 [78 FR 54996]). The pro-
posed regulations provide guidance on the
reporting method proposed to implement
the statutory provisions of section 6056
(referred to as the general method), and
discuss a variety of potential simplified
reporting methods, on which public com-
ments were requested. Comments re-
sponding to the proposed regulations and
potential simplified reporting methods
were submitted and are available for pub-
lic inspection at www.regulations.gov or
upon request. A public hearing was con-
ducted on November 18, 2013.

Treasury and the IRS have sought to
develop final information reporting rules
that will be as streamlined, simple, and
workable as possible, consistent with ef-
fective implementation of the law. This
has reflected a considered balancing of the
importance of (1) minimizing cost and
administrative tasks for reporting by enti-
ties and individuals, (2) providing individ-
uals the information to complete their tax
returns accurately, including with respect
to the individual shared responsibility pro-
visions and potential eligibility for the
premium tax credit, and (3) providing the

IRS with information needed for effective
and efficient tax administration. After
consideration of all of the comments and
testimony, as well as the comments pre-
viously submitted in response to Notice
2012-33 (2012-20 IRB 912), the pro-
posed regulations are adopted as amended
by this Treasury Decision. The amend-
ments are discussed in the Summary of
Comments and Explanation of Provisions
section of this preamble.

#### II. Shared Responsibility for Employers (Section 4980H)

Section 6056 reporting is needed for
the administration of section 4980H. Gen-
erally, a payment will be assessed under
section 4980H if the employer either does
not offer minimum essential coverage to
its full-time employees (and their depen-
dents) or the coverage offered is not af-
fordable or does not provide minimum
value, and one or more of the full-time
employees receive a premium tax credit
for purchase of coverage on an Affordable
Insurance Exchange (Exchange).2 Section
4980H(c)(2) defines the term "applicable
large employer" as, with respect to a cal-
endar year, an employer that employed an
average of at least 50 full-time employees
on business days during the preceding cal-
endar year. Generally, for purposes of de-
termining applicable large employer sta-
tus, a full-time employee includes any
employee who was employed on average
at least 30 hours of service per week and
any full-time equivalents determined pur-
suant to section 4980H(c)(2)(E). As pro-
vided in section 4980H(c)(2)(C)(i), all
employers treated as a single employer
under section 414(b), (c), (m), or (o) are
treated as one employer for purposes of
determining applicable large employer
status. Section 4980H contains rules for
determining whether an employer quali-
fies as an applicable large employer, in-
cluding special rules addressing an em-
ployer's first year of existence. See
section 4980H(c)(2)(C).

Section 4980H is effective for months
after 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 Education
Reconciliation 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, Public
Law 112-10 (125 Stat. 38 (2011)) (collectively, the Affordable Care Act).

2An Exchange is also referred to in other published guidance as a Marketplace.

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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 section
4980H for 2014. On February 12, 2014,
Treasury and the IRS released final regu-
lations under section 4980H (TD 9655 [79
FR 8544]).

The final regulations under section
4980H provide guidance on determining
applicable large employer status and de-
termining full-time employee status, in-
cluding defining and providing rules for
calculating hours of service. See
§§ 54.4980H-1(a)(24) (definition of hours
of service), 54.4980H-2 (determination of
applicable large employer status), and
54.4980H-3 (determination of full-time
employee status).

## III. Premium Tax Credit (Section 36B)

Section 6056 reporting is also essential
to the administration of the premium tax
credit under section 36B, which was
added by the Affordable Care Act. The
advanceable and refundable section 36B
premium tax credit helps individuals and
families afford health insurance coverage
purchased through an Exchange. An em-
ployee is not eligible for the premium tax
credit to subsidize the cost of Exchange
coverage if the employee is offered af-
fordable minimum essential coverage un-
der an employer-sponsored plan that pro-
vides minimum value, or if the employee
enrolls in an employer-sponsored plan
that provides minimum essential cover-
age. For purposes of the premium tax
credit, an employer-sponsored plan is af-
fordable if the employee's required con-
tribution for the lowest-cost self-only
minimum value coverage offered does not
exceed 9.5 percent of the employee's
household income. Since an employer or-
dinarily will not know an employee's
household income, the final section
4980H regulations provide various safe
harbors for determining affordability for
purposes of section 4980H based on in-
formation available to the employer.
Those safe harbors do not affect afford-
ability for purposes of the premium tax
credit, so that an employer will be treated
as having offered affordable health care
coverage for purposes of section 4980H if
it meets one of the safe harbors under the

section 4980H regulations even if the cov-
erage is not treated as affordable to the
individual employee for purposes of the
premium tax credit. An employee who is
offered affordable minimum essential
coverage providing minimum value under
an employer-sponsored plan but instead
purchases coverage on an Exchange will
not be eligible for a premium tax credit
(and if such an employee's spouse or de-
pendents are also offered coverage under
the employer-sponsored plan but instead
purchase coverage on an Exchange, they
also will not be eligible for a premium tax
credit on the Exchange). Individuals and
the IRS will use the information reported
under section 6056 on the cost of the
lowest-cost employer-sponsored self-only
minimum essential coverage that provides
minimum value for purposes of verifying
an individual's eligibility for the premium
tax credit.

Individuals, including employees, may
be eligible for advance payments of the
premium tax credit (APTC), which are
administered by HHS and paid to issuers
on behalf of individuals who enrolled in
Exchange coverage. Individuals who do
not request APTC also may be eligible to
claim the premium tax credit on their Fed-
eral income tax returns if they purchased
coverage on an Exchange and were not
offered employer-sponsored minimum es-
sential coverage that was affordable and
provided minimum value. The IRS and
employees will use the information pro-
vided on the section 6056 return and em-
ployee statement to determine whether an
employee is eligible for the premium tax
credit. Note that in connection with pro-
viding APTC, the Exchanges will employ
a verification process.

## IV. Individual Shared Responsibility (Section 5000A)

The Affordable Care Act also added
section 5000A to the Code. Section
5000A provides that every individual
must have minimum essential coverage,
qualify for an exemption, or include an
additional payment with their Federal in-
come tax return. Taxpayers who can claim
a child or another individual as a depen-
dent for federal income tax purposes are
responsible for making the payment if the

dependent does not have minimum essen-
tial coverage or an exemption.

Section 5000A(f)(1)(B) provides that
minimum essential coverage includes cov-
erage under an eligible employer-sponsored
plan. 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, an
employer to an employee that is either (a)
a governmental plan within the meaning
of section 2791(d)(8) of the Public Health
Service Act (42 U.S.C. 300gg-91(d)(8)),
(b) any other plan or coverage in the small
or large group market within a State, or (c)
a grandfathered health plan, as defined in
section 5000A(f)(1)(D), offered in a group
market, or (2) a self-insured group health
plan 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 include
coverage consisting solely of excepted
benefits described in section 2791(c)(1),
(c)(2), (c)(3), or (c)(4) of the Public Health
Service Act or regulations issued under
these provisions. See § 1.5000A-2(g).

V. Information Reporting By Providers
of Coverage (Issuers, Self-Insuring
Employers, and Sponsors of Certain
Government-Sponsored Programs)
(Section 6055)

The Affordable Care Act also added
section 6055 to the Code, providing for
information reporting for the administra-
tion of section 5000A. The section 6055
reporting requirements are effective for
years beginning after December 31, 2013;
however, as noted above in section I of
this preamble, Notice 2013-45 provides
transition relief for 2014 from the section
6055 reporting requirements so that the
reporting is not required with respect to
2014. Section 6055 requires information
reporting by any person that provides
minimum essential coverage to an indi-
vidual during a calendar year, including
coverage provided under an eligible
employer-sponsored plan, and the furnish-
ing to taxpayers of a related statement
covering each individual listed on the sec-
tion 6055 return. The information reported
under section 6055 may be used by indi-

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viduals and the IRS to verify the months
(if any) in which they were covered by
minimum essential coverage. Treasury
and the IRS are issuing final regulations
under section 6055 (TD 9660) concur-
rently with these final regulations.

## Summary of Comments and Explanation of Provisions

In general, in addition to the changes
described elsewhere in this preamble, the
final regulations adopt non-substantive
changes that were made to certain sections
of the proposed regulations in order to
increase consistency with the final regula-
tions under section 6055 issued concur-
rently with these final regulations. In ad-
dition, the proposed regulations provided
that reporting entities must file section
6056 information returns electronically if
they file 250 returns of any type. The final
regulations provide that reporting entities
must file section 6056 returns electroni-
cally if they file 250 returns under section
6056. These changes are discussed later in
this 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 of
these final regulations implementing the
section 6056 reporting provisions dis-
cussed in the Background portion of the
preamble. Specifically, this section in-
cludes the following:

Section VII ............. Key Terms

Section VIII ............ ALE Member
Subject to Section 6056 Requirements
With Respect to Full-Time Employees
Section IX ............. General Method -
Content, Manner, and Timing of Informa-
tion Required to be Reported to the IRS
and Furnished to Full-Time Employees
Section X .............. Alternative Methods
for Section 6056 Information Reporting
for Eligible ALE Members

Section XI ............. Other Possible Al-
ternative Methods Not Adopted in the Fi-
nal Regulations

Section XII.
Person Responsible
for Section 6056 Reporting

Section XIII.
Applicability of In-
formation Return Requirements and Pen-
alty Relief for 2015

### VII. Key Terms

These regulations under section 6056
use a number of terms that are defined in
other Code provisions or regulations. For
example, section 6056(f) provides that
any term used in section 6056 that is also
used in section 4980H shall have the same
meaning given to the term by section
4980H. The final regulations provide for
the following defined terms:

A. Applicable Large Employer has the
same 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 as
a single employer under section 414(b),
(c), (m), or (o) are treated as one employer
for purposes of determining applicable
large employer status.3 Under these regu-
lations, the section 6056 filing and fur-
nishing requirements are applied sepa-
rately to each person comprising the
applicable large employer consistent with
the approach taken in the section 4980H
regulations with respect to the determina-
tion of any assessable payment under sec-
tion 4980H. The person or persons that
comprise the applicable large employer
are 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 as
in § 54.4980H-1(a)(12).

D. Eligible Employer-Sponsored Plan
has the same meaning as in section
5000A(f)(2) and § 1.5000A-2(c)(1).

E. Full-time Employee has the same
meaning as in section 4980H(c)(4) and §
54.4980H-1(a)(21), but only as applied to
the determination and calculation of lia-
bility under section 4980H(a) and (b) with
respect to any individual employee (and
therefore 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 a
leased employee (as defined in section
414(n)(2)), a sole proprietor, a partner in a
partnership, a 2-percent S corporation share-
holder, or a worker described in section
3508.

F. Governmental Unit and Agency or
Instrumentality of a Governmental Unit.
The term governmental unit is defined as
the government of the United States, any
State or political subdivision of a State, or
any Indian tribal government (as defined
in section 7701(a)(40)) or subdivision of
an Indian tribal government (as defined in
section 7871(d)). The regulations do not
define the term agency or instrumentality
of a governmental unit for purposes of
section 6056, but reserve on the issue.
Until future guidance is issued that defines
the term for purposes of section 6056, an
entity may determine whether it is an
agency or instrumentality of a governmental
unit based on a reasonable and good faith
interpretation of existing rules relating to
agency or instrumentality determinations for
other federal tax purposes.

G. Minimum Essential Coverage has
the 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 applicable
guidance. See proposed § 1.36B-6.

I. Person has the same meaning as pro-
vided in section 7701(a)(1) and the related
regulations.

VIII. ALE Member Subject to Section
6056 Requirements with Respect to Full-
Time Employees

As indicated earlier in section VII.B of
this preamble, an ALE member is any
person that is an applicable large em-
ployer or a member of an aggregated
group (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 6056
filing 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. of
the preamble to the final section 4980H regulations (TD 9655).

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determination of whether an entity is an
applicable large employer is made at the
aggregated group level.4 For example, if
an applicable large employer is comprised
of a parent corporation and 10 wholly-
owned subsidiary corporations, there are
11 ALE members (the parent corporation
and each of the 10 subsidiary corpora-
tions). Under these regulations, each ALE
member with full-time employees is the
entity responsible for filing and furnishing
statements with respect to its full-time em-
ployees under section 6056. This is consis-
tent with the manner in which any potential
assessable payments under section 4980H
will be calculated and administered.

Some commenters requested that the
applicable large employer be permitted to
report and furnish statements on a consol-
idated basis, or that the sponsor of a health
plan offering coverage to employees of
more than one ALE member plan be per-
mitted to report and furnish statements on
behalf of all the employers of employees
eligible to participate in the plan. While
these regulations do not adopt these sug-
gestions, Treasury and the IRS understand
that ALE members may benefit from the
assistance of a third party in preparing
these returns, for example a third-party
plan administrator or a related ALE mem-
ber tasked with preparing the returns for
all the members of that applicable large
employer. For a discussion of how these
third parties may help an ALE member
fulfill its reporting obligations, see section
XII.C of this preamble.

The section 6056 return will form the
basis for the process leading to any assess-
ment of the ALE member under section
4980H, which is determined separately with
respect to each ALE member. Any assess-
able payment would be calculated based on
the relevant information related to the num-
ber of full-time employees of each ALE
member and the nature of the offer of cov-
erage, if any, made to each of that ALE
member's full-time employees for each cal-

endar month. Accordingly, the ALE mem-
ber is the appropriate taxpayer to file the
return relating to its potential tax liability.

Whether an employee is a full-time
employee is determined under section
4980H(c)(4) and any applicable guidance.
See §§ 54.4980H-1(a)(21) and
54.4980H-3. This includes any full-time
employees who may perform services for
multiple ALE members within the appli-
cable large employer.5 Under these regu-
lations, only ALE members with full-time
employees are subject to the filing and
statement furnishing requirements of sec-
tion 6056 (and only with respect to their
full-time employees). Accordingly, ALE
members without any full-time employees
are not subject to the section 6056 report-
ing requirements.

Generally, the ALE member providing
the section 6056 reporting is the common
law employer. An ALE member that is a
qualified 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 separate
from its owner for purposes of section
4980H 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. See
TD 9655. Therefore, the reporting require-
ments under section 6056 apply to an ALE
member that is a disregarded entity, and not
to its owner.6

IX. General Method - Content, Manner,
and Timing of Information Required to
be Reported to the IRS and Furnished to
Full-Time Employees

This section describes the general
method for reporting to the IRS and fur-
nishing statements to employees pursuant
to section 6056 that is set forth in these
regulations. This general method is avail-
able for all employers and with respect to
reporting for all full-time employees.
These regulations also provide alternative

reporting methods, which in some cases
may be available only with respect to a
certain group or groups of employees. In
those cases, with respect to those employ-
ees for whom an alternative reporting
method is not available, the employer
must use the general method. In any case,
the alternative reporting methods are op-
tional so that an employer may choose to
report for any or all of its full-time em-
ployees using the general method even if
an alternative reporting method is avail-
able. For a further description of the alter-
native reporting methods, see section X of
this preamble.

#### A. Information Reporting to the IRS

In accordance with section 6056, the
regulations provide for each ALE member
to file a section 6056 return with respect to
its 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 of
Wage and Tax Statements, filed as a trans-
mittal form for the Forms W-2, these reg-
ulations provide that a separate return is
required for each full-time employee, ac-
companied by a single transmittal form
for all of the returns filed for a given
calendar year.

Many commenters recommended that
the regulations allow combined informa-
tion reporting under sections 6055 and
6056 for applicable large employers that
sponsor self-insured plans and must report
under both sections. The proposed regula-
tions did not provide for combined report-
ing. In an effort to minimize taxpayer
burden and streamline the reporting pro-
cess as authorized by section 6056(d),
while minimizing the need for employers
and the IRS to build multiple systems to
accommodate multiple forms, these final
regulations adopt this suggestion by pro-
viding for use by all ALE members of a
single 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) that
is 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 applicable
large 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 of
the 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 employee
that 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 calendar
year 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 ALE
member.

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 respect
to the reporting requirements under section 6056.

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information required under both section
6055 and section 6056.

Accordingly, as a general method,
these regulations provide that the section
6056 return may be made by filing Form
1094-C (a transmittal) and Form 1095-C
(an employee statement), or other forms
the IRS designates. Alternatively, the sec-
tion 6056 return may be made by filing a
substitute form. Under these regulations, a
substitute form must include all of the
information required to be reported on
Forms 1094-C and 1095-C or other
forms the IRS designates and comply with
applicable revenue procedures or other
published guidance relating to substitute
returns. See §§ 301.6056-1(d)(2) and
601.601(d)(2). For a discussion of substi-
tute statements for employees, see section
IX.D of this preamble.

Form 1095-C will be used by ALE
members to satisfy the section 6055 and
6056 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 sections
6055 and 6056. An ALE member that
provides insured coverage will also report
on Form 1095-C, but will complete only
the section of Form 1095-C that reports
the information required under section
6056. Section 6055 reporting entities that
are not ALE members or are not reporting
in their capacity as employers, such as
health insurance issuers, self-insured mul-
tiemployer plans, and providers of
government-sponsored coverage, will re-
port under section 6055 on Form 1095-B.
In accordance with usual procedures,
these forms will be made available in draft
form in the near future.

In response to comments, Treasury and
the IRS also considered suggestions to
use, for section 6055 and 6056 reporting
purposes, information that employers
communicate to employees about
employer-sponsored coverage prior to
employees' potential enrollment in Ex-
change coverage. These comments ob-
served that, under the Affordable Care
Act, employers provide pre-enrollment in-

formation to employees by various means,
including information in the Notice of
Coverage Options provided to employees
pursuant to the requirements under section
18B of the Fair Labor Standards Act7 and
the Employer Coverage Tool developed
by the Department of Health and Human
Services (HHS) that supports the applica-
tion for enrollment in a qualified health
plan and insurance affordability pro-
grams.8

Treasury and the IRS have considered
and coordinated with the Departments of
HHS and Labor regarding the various pro-
visions with a view to identifying ways to
make the entire process as effective and
efficient as possible for all parties. That
said, the various reports are designed for
different purposes, and pre-enrollment re-
porting regarding anticipated employer
coverage in an upcoming coverage year is
unlikely to be helpful to individual tax-
payers in accurately completing their tax
returns more than a year later (and after
the coverage year has already ended).
Among other issues, the pre-enrollment
information may not be readily available
to individuals at the time they are filing
their tax returns, could be confused with
other information (such as the pre-
enrollment information provided to the in-
dividual pertaining to the coverage year
following the calendar year to which the
tax return relates), may not include certain
information, like premiums, necessary for
tax administration, and is in a format that
does not facilitate easy transfer to the ap-
propriate location on the Federal income
tax return. In addition, the pre-enrollment
information is generally not specific to the
particular employee's experience at the
employer. For these reasons, these regu-
lations do not adopt these suggestions.

#### B. Information Required to Be Reported and Furnished

Except as otherwise provided as part of
an alternative reporting method, these fi-
nal regulations provide that each ALE
member reports on the section 6056 infor-
mation return the same information set
forth in the proposed regulations. Specif-

ically, the final regulations require the fol-
lowing information: (1) the name, ad-
dress, and employer identification number
of the ALE member, and the calendar year
for which the information is reported; (2)
the name and telephone number of the
ALE member's contact person; (3) a cer-
tification as to whether the ALE member
offered to its full-time employees (and
their dependents) the opportunity to enroll
in minimum essential coverage under an
eligible employer-sponsored plan, by cal-
endar month; (4) the number of full-time
employees for each calendar month dur-
ing the calendar year, by calendar month;
(5) for each full-time employee, the
months during the calendar year for which
minimum essential coverage under the
plan was available; (6) for each full-time
employee, the employee's share of the
lowest cost monthly premium for self-
only coverage providing minimum value
offered to that full-time employee under
an eligible employer-sponsored plan, by
calendar month; and (7) the name, ad-
dress, and taxpayer identification number
of each full-time employee during the cal-
endar year and the months, if any, during
which the employee was covered under an
eligible employer-sponsored plan. In ad-
dition, these regulations provide, as with
other information reporting, that the sec-
tion 6056 information return may request
such other information as the Secretary
may prescribe or as may be required by
forms or instructions.

Some commenters requested that ALE
members be permitted to provide the
name and telephone number of a third
party in the part of the section 6056 return
requesting the name and telephone num-
ber of the ALE member's contact person.
An ALE member may provide the name
and telephone number of any contact per-
son, whether an employee of the ALE
member or an agent of the ALE member,
acting on behalf of the ALE member for
purposes of section 6056 reporting.

Some commenters requested that the
final regulations not require the reporting
of 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. See
Technical 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 at
http://www.dol.gov/ebsa/healthreform/regulations/coverageoptionsnotice.html Guidance on the Notice to Employees of Coverage

8 Available at https://www.healthcare.gov/downloads/ECT_Application_508_130615.pdf

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proposed regulations nor these final regu-
lations require reporting of such informa-
tion for purposes of section 6056.9 These
final regulations require only that an ALE
member report the social security number
of the full-time employee.

Some commenters requested that the
final regulations permit employers to re-
port dates of coverage rather than months
of coverage. Other commenters requested
that ALE members be permitted to pro-
vide the information on a payroll period
basis, rather than a monthly basis, to ad-
dress situations in which coverage is pro-
vided based on payroll periods. Other
commenters requested that the ALE mem-
ber be permitted to report by multi-month
periods, rather than on a monthly basis,
such as stating that coverage was offered
January through October of a particular
year. As provided in the final regulations
under section 4980H and adopted by
cross-reference in these regulations, the
individuals who are full-time employees
of an ALE member for a particular calen-
dar month generally may be identified on
a weekly basis or a payroll period basis
that approximates the calendar month. See
§§ 54.4980H-3(c)(3) and 54.4980H-
3(d)(1)(ii). However, both section 4980H
and the premium tax credit are adminis-
tered based on the calendar month, so that
whether the individual identified as a full-
time employee was offered coverage for
the entire calendar month is relevant to the
administration of both Code provisions.
Accordingly, ALE members are required
to report on the basis of the twelve calen-
dar months with respect to the coverage
offered (or not offered) to each full-time
employee.

As part of the effort to minimize the
cost and administrative steps associated
with the reporting requirements, the final
regulations omit information that is not
relevant to individual taxpayers or the IRS
for purposes of administering the pre-
mium tax credit and section 4980H or that
is already provided at the same time
through other means. Specifically, consis-
tent with the proposed regulations, these
final regulations do not require the report-
ing of the following four data elements

(and a more detailed description of the
data 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 any
permissible waiting periods under section
4980H10, because the length of a waiting
period is not relevant for administration of
the premium tax credit or section 4980H
or for an individual in preparing his or her
tax return. However, Treasury and the IRS
anticipate that information will be re-
quested, using an indicator code, regard-
ing whether coverage was not offered to
an employee during certain months be-
cause of a permissible waiting period un-
der section 4980H, since this information
is relevant to the administration of section
4980H.

Second, these regulations do not re-
quire reporting of the employer's share of
the 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 and
section 4980H. In contrast, whether the
employer-sponsored plan provides mini-
mum value coverage is relevant informa-
tion; accordingly, Treasury and the IRS
anticipate that information will be re-
quested, using an indicator code. Some
commenters requested that information on
the employer contribution continue to be
required because it would be informative
to the employee. Given that this informa-
tion is not relevant to tax administration,
and generally may be discerned by the
employee from the information reported
at the same time on the Form W-2, Box
12 using Code DD pursuant to section
6051(a)(14) (reporting of the total value
of employer-provided health benefits pro-
vided to the employee), these regulations
do not adopt this suggestion.

Third, these regulations do not require
the reporting of the monthly premium for
the 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 the
employee is eligible is relevant to the de-
termination of whether coverage is afford-
able (and thus to the administration of the
premium tax credit and section 4980H),
that is the only cost information requested.

Fourth, the regulations do not require
the reporting of the months, if any, during
which any of the employee's dependents
were covered under the plan. Instead, the
regulations require reporting only regard-
ing whether the employee was covered
under a plan. Information relating to the
months, if any, during which any of the
employee's dependents were covered un-
der the plan will be reported as part of the
section 6055 information return associ-
ated with that employee's coverage,
whether on the combined Form 1095-C
return submitted by an ALE member with
a self-insured plan or otherwise on the
Form 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 employee
was covered under a plan not be required
to be reported as part of the section 6056
reporting because that information will be
reported on the section 6055 return. Al-
though this information is required to be
reported under section 6055 and section
6056, this suggestion is not adopted in the
final regulations because the employee's
coverage under the eligible employer-
sponsored plan means that the employee
is not eligible for the premium tax credit.
However, under the final regulations,
ALE members with self-insured group
health plans will now use a combined
Form 1095-C to satisfy the section 6055
and section 6056 reporting requirements
and 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 regarding
whether an employee was covered once
on the section 6056 section of the com-
bined Form 1095-C and will leave the
section of the form pertaining to section
6055 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)

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Under the regulations, each ALE mem-
ber must file and furnish the section 6056
return and employee statement using its
EIN. Any ALE member that does not have
an EIN may easily apply for one online, or
by telephone, fax, or mail. See Publication
1635, Employer Identification Number,
for further information at www.irs.gov.

To assist in administering section
4980H and the premium tax credit, the
IRS will need certain information not spe-
cifically set forth under section 6056 but
authorized under section 6056(b)(2)(F).

Under the general method of section
6056 reporting, the following information
will be reported through the use of indi-
cator codes for some information, as part
of the section 6056 return (as well as the
number of individual employee state-
ments being submitted):

(1) Information as to whether the cov-
erage offered to full-time employees and
their dependents under an employer-
sponsored plan provides minimum value
and whether the employee had the oppor-
tunity to enroll his or her spouse in the
coverage;

(2) the total number of employees, by
calendar month;

(3) whether an employee's effective
date of coverage was affected by a per-
missible waiting period under section
4980H, by calendar month;

(4) whether the ALE member had no
employees or otherwise credited any
hours of service during any particular
month, by calendar month;

(5) whether the ALE member is a per-
son that is a member of an aggregated
group, determined under section 414(b),
414(c), 414(m), or 414(o), and, if applica-
ble, the name and EIN of each employer
member of the aggregated group consti-
tuting the applicable large employer on
any day of the calendar year for which the
information is reported;

(6) if an appropriately designated per-
son is reporting on behalf of an ALE
member that is a governmental unit or any
agency 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 contributing
employer to a multiemployer plan,
whether, with respect to a full-time em-
ployee, the employer is not subject to an
assessable payment under section 4980H
due to the employer's contributions to the
multiemployer plan; and

(8) if a third party is reporting for an
ALE member with respect to the ALE
member's full-time employees, the name,
address, and identification number of the
third 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 the
meaning of the provision included in the
proposed regulations asking whether an
ALE member was conducting business.
To clarify the intent, this provision is
changed to require an ALE member, using
an indicator code, to report any months
during which no employees were provid-
ing services or otherwise being credited
with hours of service for the ALE mem-
ber.

Some commenters requested that em-
ployers not be required to report whether
they expect to be an ALE member the
following year. This comment is adopted
in the final regulations.

Some commenters requested that em-
ployers be required to report information
in addition to what was described in the
proposed regulations. Commenters re-
quested that employers be required to re-
port information relating to the look-back
measurement method for determining
full-time employee status set forth in
§ 54.4980H-3(d). Specifically, comment-
ers requested that employers be required
to report on each variable hour employee
who 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 that
employers be required to report the ad-
ministrative and stability period start and
end dates and length, as well as the
months in which coverage was offered.
Commenters also requested that the cost
of coverage available to spouses and de-
pendents be reported. Although Treasury

and the IRS agree that this information
may be helpful to employees and their
spouses and dependents in certain circum-
stances, reporting such information on the
section 6056 return is not necessary for
the administration of the premium tax
credit or section 4980H and is not directly
relevant to the employee in determining
whether the employee is eligible for a
premium tax credit and is accurately
claiming the credit on the employee's in-
dividual tax return. Accordingly, this sug-
gestion is not incorporated in the final
regulations.

Other commenters requested that the
section 6056 return provide a means to
indicate whether an employee is a tribal
member who is exempt from the individ-
ual shared responsibility provision under
section 5000A(e). Because an individual's
exempt status for purposes of section
5000A is not relevant to the administra-
tion of the premium tax credit or section
4980H, this suggestion is not incorporated
in the final regulations.

#### C. Use of Indicator Codes to Provide Information With Respect to a Particular Full-Time Employee

In an effort to simplify and streamline
the section 6056 reporting process under
the general section 6056 reporting rules,
Treasury and the IRS anticipate that cer-
tain information described above as ap-
plied to a particular full-time employee
will be reported to the IRS, and furnished
to the full-time employee, through the use
of a code rather than by providing specific
or detailed information. Specifically, it is
contemplated that the following informa-
tion will be reported with respect to each
full-time employee for each calendar
month 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; or

d. 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 available
on the section 6056 return to indicate that an employer is using the transition relief.

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(2) coverage was not offered to the
employee and:

a. any failure to offer coverage will not
result in a payment under section 4980H(a)
or (b), for example because the employee
was in a limited non-assessment period
for certain employees, as defined in
§ 54.4980H-1(a)(26);

b. the employee was not a full-time
employee;

c. the employee was not employed by
the 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 for
that month;

(4) the employee was covered under
the plan; and

(5) the ALE member met one of the
affordability safe harbors under
§ 54.4980H-5(e)(2) with respect to the
employee.

It is anticipated that if multiple codes
apply with respect to a full-time employee
for a particular calendar month, the report-
ing format will accommodate the neces-
sary codes.

#### D. Section 6056 Statements to Full-time Employees

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 section
6056 employee statement to each of its
full-time employees that includes the
name, address and EIN of the ALE mem-
ber and the information required to be
shown on the section 6056 return with
respect to the full-time employee. The
section 6056 employee statement is not
required to include a copy of the transmit-
tal form that accompanies the return. As
part of the alternative reporting methods,
in certain circumstances, other methods of
furnishing information to an employee
may 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 the
flexibility to use a substitute type of state-
ment to provide the necessary information
to full-time employees. These regulations
provide that the section 6056 employee
statement may be made by furnishing a

copy of the section 6056 return on Form
1095-C (or another form the IRS desig-
nates) or a substitute employee statement
for that full-time employee. Under these
regulations, a substitute statement must
include the information required to be
shown on the section 6056 return filed
with the IRS with respect to that employee
and must comply with applicable revenue
procedures or other published guidance
relating to substitute statements. See
§ 601.601(d)(2). These regulations pro-
vide that section 6056 employee state-
ments on Form 1095-C or another form
the IRS designates may identify the em-
ployee using an IRS truncated TIN rather
than the social security number or other
identifying number of the employee
shown on the corresponding information
return filed with the IRS. See the proposed
regulations on IRS Truncated Taxpayer
Identification Numbers (REG-148873-09
[78 FR 913]).

E. Time for Filing Section 6056 Returns
and Furnishing Employee Statements

##### 1. In general

These regulations provide that section
6056 returns must be filed with the IRS
annually, no later than February 28
(March 31 if filed electronically) of the
year immediately following the calendar
year to which the return relates. This is the
same filing schedule applicable to other
information returns with which employers
are familiar, such as Forms W-2 and
1099. Because Notice 2013-45 provides
transition relief for section 6056 reporting
with respect to 2014, the first section 6056
returns required to be filed are for the
2015 calendar year and must be filed no
later than March 1, 2016 (February 28,
2016, being a Sunday), or March 31,
2016, if filed electronically. In addition,
the regulations provide that the section
6056 employee statements be furnished
annually to full-time employees on or be-
fore January 31 of the year immediately
following the calendar year to which the
employee statements relate. This means
that the first section 6056 employee state-
ments (meaning the statements for 2015)
must be furnished no later than February
1, 2016 (January 31, 2016, being a Sun-
day). However, see section X.C of this

preamble for a discussion of the 2015
section 6056 transition relief available for
employers eligible for the transition relief
set forth in section XV.D.6 of the pream-
ble to the final regulations under section
4980H (2015 section 4980H transition re-
lief for employers with at least 50 and less
than 100 full-time employees (including
full-time equivalent employees) that meet
certain conditions).

Some commenters asked for use of an
alternate filing date for employers whose
health plan is not a calendar year plan.
While Treasury and the IRS understand
that employers may collect information on
a plan year basis, employees will need to
receive their section 6056 employee state-
ments early in the calendar year in order
to have the requisite information to cor-

rectly and completely file their income tax
returns covering the calendar year and re-
flecting any available premium tax credit
for that calendar year. For this reason,
these regulations do not adopt this
suggestion.

The final regulations do not include
rules regarding extensions of the time to
file section 6056 returns. This topic is
addressed in the final regulations under
section 6055, which include amendments
to the regulations under section 6081 re-
lating to general rules on extensions of
time to file to include returns under both
sections 6055 and 6056. The final section
6055 regulations cross-reference the
amendments to the regulations under sec-
tion 6081; these regulations also include
this cross-reference.

##### 2. Voluntary Reporting for Calendar Year 2014

Under Notice 2013-45 and the pro-
posed regulations, in preparation for the
application of the section 4980H provi-
sions beginning in 2015, employers were
encouraged to voluntarily comply for
2014 (that is, by filing and furnishing sec-
tion 6056 returns and statements in early
2015) with the information reporting pro-
visions as described in the proposed reg-
ulations, and to maintain or expand health
coverage in 2014. At the time the notice
and proposed regulations were issued,
Treasury and the IRS anticipated that at
least as to the general method of reporting,
the final regulations would not differ sig-

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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 under
the 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 significantly
to streamline the process and reduce ad-
ministrative burden. Specifically, under
the final regulations, as suggested in com-
ments, all ALE members will file a single
combined return providing the relevant
section 6056 information and, as applica-
ble, also the relevant section 6055 infor-
mation.

Given this change in the information
reporting provisions in response to com-
menters' feedback on the proposed regu-
lations, employers that wish to voluntarily
comply with the information reporting
provisions with respect to 2014 should do
so in accordance with these final regula-
tions (generally meaning providing both
section 6056 and, if applicable, section
6055 information on a single form). Trea-
sury and the IRS continue to anticipate
that real-world testing of reporting sys-
tems and plan designs, built in accordance
with the terms of these final regulations,
through voluntary compliance for 2014
will contribute to a smoother transition to
full implementation for 2015.

### F. Manner of Filing of Section 6056 Information Returns and Furnishing of Section 6056 Employee Statements.

Treasury and the IRS understand that
electronic filing is often easier and more
efficient for taxpayers, and several com-
menters requested that employers be
permitted to file section 6056 returns
electronically. Some commenters re-
quested that the proposed regulations be
modified so that the section 6056 return
would not be aggregated with other re-
turns for purposes of determining
whether the returns are required to be
filed electronically. The final regulations
adopt these suggestions. Consistent with

other tax information reporting require-
ments, the final regulations require elec-
tronic filing of section 6056 information
returns (Forms 1094-C and 1095-C)
except for an ALE member filing fewer
than 250 returns under section 6056 dur-
ing the calendar year, and provide that
only section 6056 returns are counted in
applying the 250 return threshold for
section 6056 reporting. The final regu-
lations under section 6055, issued con-
temporaneously with these final regula-
tions, amend § 301.6011-2 to add forms
in the 1094 and 1095 series. Proposed
§ 301.6011-9 will be removed in a sep-
arate document.

Each section 6056 return for a full-time
employee is counted as a separate return.
ALE members filing fewer than 250 re-
turns during the calendar year may choose
to make the section 6056 returns on the
prescribed paper form, but are permitted
(and encouraged) to file section 6056 re-
turns electronically. This requirement for
electronic filing is the same as the current
requirements for other information
returns.

In addition to electronic filing, Trea-
sury and the IRS understand that elec-
tronic methods are often a simpler and
more efficient method to supply employ-
ees with the required information, and
several commenters requested that em-
ployers be permitted to electronically fur-
nish section 6056 employee statements to
full-time employees. In response, the reg-
ulations permit electronic furnishing of
section 6056 employee statements if no-
tice, consent, and hardware and software
requirements modeled on existing rules
are met. To provide rules for electronic
furnishing with which employers are al-
ready familiar, these final regulations,
consistent with the proposed regulations,
adopt a process substantially similar to the
process currently in place for the elec-
tronic furnishing of employee statements
(that is, Forms W-2) pursuant to section
6051 and applicable regulations.

Some commenters requested that ALE
members be permitted simply to post the

information on a website accessible to the
employee (similar to the current process
available to plan administrators of group
health plans for furnishing Summary of
Benefits and Coverage (SBCs)),12 or to
provide the information to an employee
only upon request. Other commenters re-
quested that the ALE member not be re-
quired to obtain consent to furnish the
information electronically. For many em-
ployees, the information provided in the
section 6056 employee statement will be
essential to the accurate preparation of
their individual tax return with respect to a
claim for the premium tax credit. Because
the employee's eligibility for the premium
tax credit will be based on household in-
come for that taxable year, which the em-
ployer will not know, the employer will
not be able to determine the identity of the
employees for which the section 6056 in-
formation is relevant. Moreover, given the
individualized nature of the information
required to be furnished to a full-time
employee on a section 6056 employee
statement and its intended use in prepar-
ing the employee's individual tax return,
permitting an employer to furnish such
information electronically without first
having obtained the employee's consent
to such electronic furnishing would be
inconsistent with the current procedures
for other information returns. Unlike sec-
tion 6056 employee statements that con-
tain individualized information, SBCs are
the same for a particular benefit package
under the plan. For these reasons, the reg-
ulations require that with respect to each
full-time employee to whom the informa-
tion is required to be furnished, the ALE
member must obtain consent from the em-
ployee before the section 6056 employee
statement may be provided electronically.

With respect to the consent require-
ment, some ALE members requested that
an employee's consent to receive the
Form W-2 electronically be deemed a
consent to also receive the employee
statement 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 participants
and 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 is
for 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 readily
accessible, 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 internet
and 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 online
enrollment or online renewal of coverage under the plan, and allows SBCs to be provided electronically to participants and beneficiaries who request an SBC online.

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statement electronically about which he or
she does not have information, and be-
cause the information furnished on the
section 6056 employee statement will be
relevant in determining the employee's
eligibility for the premium tax credit, any
consent given must specifically identify
the section 6056 return. Additionally, the
requirement for affirmative consent to re-
ceive section 6056 employee statements
electronically 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 this
suggestion.

Some commenters also requested
confirmation that the section 6056
employee statement and the section 6055
employee statement (if the section 6055
employee statement is provided by the
ALE member) may be provided in the
same mailing, and in the same mailing as
the Form W-2, in cases in which two or
more of those forms are provided by mail-
ing to the same employee. Because the
final regulations provide for ALE mem-
bers to combine section 6055 and section
6056 reporting, ALE members will be
providing only a single employee state-
ment (with the section 6056 information
and, with respect to employers with a self-
insured group health plan, section 6055
information). Additionally, there is no re-
quirement that employers mail informa-
tion returns separately, and the regulations
under sections 6051 do not prohibit fur-
nishing in the same mailing as the Form
W-2. Accordingly, employers are permit-
ted to mail to an employee in the same
mailing one or more of the required infor-
mation returns such as the combined sec-
tion 6055 and section 6056 employee
statement and the Form W-2.

### X. Alternative Methods for Section 6056 Information Reporting for Eligible ALE Members

In developing these regulations, Trea-
sury and the IRS have sought to develop
alternative reporting methods that will

minimize the cost and administrative tasks
for employers, consistent with the statu-
tory requirements to file an information
return with the IRS and furnish an em-
ployee statement to each full-time em-
ployee. Comments suggested that, at least
for some employers, the collection, as-
sembling and processing of the necessary
data into an appropriate format for filing
may not be necessary if the employer of-
fers sufficient coverage to make it un-
likely that the employer will be subject to
an assessable payment under section
4980H because its employees will gener-
ally be ineligible for a premium tax credit.
In response to these concerns and as part
of the development of the proposed regu-
lations, Treasury and the IRS formulated
certain potential simplified reporting
methods described in section XI of the
preamble to the proposed regulations and
requested comments on those methods
and on other possible simplified ap-
proaches that would minimize compliance
costs while providing sufficient and
timely information to individual taxpayers
and the IRS. After considering all of the
comments, Treasury and the IRS have for-
mulated the alternative reporting methods
described in this section X of the pream-
ble as optional alternatives to the general
reporting method.

The information provided to the IRS
and the employee pursuant to section
6056 is important for administering sec-
tion 4980H and the premium tax credit.
However, in some circumstances, only
some of the information required under
the general method is necessary. Treasury
and the IRS have identified specific
groups of employees for whom alternative
reporting 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 the
groups of employees for which an alter-
native reporting method is available. In
that case, the employer would continue to
use the general reporting method in the
regulations for those full-time employees
for whom an alternative reporting method
is not applicable. Commenters noted that
many 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 the
alternative reporting method so that it is
not advantageous to use. However, it is
anticipated that many employers will find
use of an alternative reporting method
preferable to the general reporting method
because a sufficient number of their em-
ployees will fit into one or more of the
alternative method categories described
below, and the more extensive reporting
will be required only for a sufficiently
limited number of their employees.

Subsections A through C of this sec-
tion X of this preamble describe alterna-
tive methods of reporting under section
6056 that are permitted under these final
regulations. Each of these methods is op-
tional for the reporting employer, and, ex-
cept as otherwise specified, does not affect
any reporting obligations under section
6055.

Subsection A
Reporting Based
on Certification of Qualifying Offers
Subsection B
Option to Report
Without Separate Identification of Full-
Time Employees If Certain Conditions
Related to Offers of Coverage Are Satis-
fied (98 Percent Offers)

Subsection C
Reporting for Ap-
plicable Large Employers with Fewer
Than 100 Full-time Employees Eligible
for Transition Relief Under Section
4980H.

Subsection D
Combinations of
Alternative Reporting Methods

A. Reporting Based on Certification of
Qualifying Offers

#### 1. In General

Under the final regulations, an ALE
member that satisfies specific require-
ments is permitted to certify that it offered
certain coverage (a qualifying offer, as
defined in this section X.A.1) to one or
more of its full-time employees and to
report simplified section 6056 return in-
formation with respect to those employ-
ees. Under this alternative method, the
ALE member also could provide a simpli-
fied employee statement in lieu of a copy
of the Form 1095-C to each full-time em-
ployee who received a qualifying offer for
all 12 months of the calendar year. To be
eligible to use this alternative method with
respect to full-time employees, the ALE

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member must certify that for all months
during the year in which the employee
was a full-time employee with respect to
whom a section 4980H assessable pay-
ment could apply13, the ALE member (1)
offered minimum essential coverage pro-
viding minimum value at an employee
cost for employee-only coverage not ex-
ceeding 9.5 percent of the mainland single
federal poverty line to one or more of its
full-time employees, and (2) offered min-
imum essential coverage to the employ-
ee's spouses and dependents (a qualifying
offer). For this purpose, the applicable
federal poverty line is the federal poverty
line as defined in § 54.4980H-1(a)(19), as
calculated and applied to the 48 contigu-
ous states and the District of Columbia. If
the employee cost of the employee-only
coverage does not exceed 9.5 percent of
the mainland single federal poverty line,
then, regardless of the size of the employ-
ee's household or other income or loss of
any member of the employee's household,
either the employer's coverage will be
affordable for purposes of the premium
tax credit or the employee's household
income will be less than 100 percent of
the federal poverty line so the employee
will generally not be an applicable tax-
payer for purposes of eligibility for the
premium tax credit.

For this purpose, an ALE member is
treated 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 would
have been able to elect such coverage if
the employee did have a spouse or depen-
dent. Note that an ALE member utilizing
the transition relief provided in the final
section 4980H regulations pertaining to
the offer of coverage to dependents in
2015 will not be treated as offering cov-
erage to an employee's dependents for
purposes of this alternative reporting
method. Treasury and the IRS anticipate
that the certification of eligibility based on
the qualifying offer will be made as part
of the section 6056 transmittal submitted
by the ALE member.

Treasury and the IRS anticipate that an
ALE member eligible for and using this
certification 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 of
the calendar year, Treasury and the IRS
anticipate that the ALE member will be
treated as reporting the required section
6056 information if it completes Form
1095-C by providing particular informa-
tion about the employee, specifically the
employee's name, social security number,
and address, and indicates, using an indi-
cator code, that a qualifying offer was
made for all 12 months of the calendar
year. In addition, the ALE member will be
treated as fulfilling the requirement under
section 6056 to furnish information to
those employees if it provides each of
them, by January 31 of the year following
the year to which the offer applies, either
a copy of the Form 1095-C filed with the
IRS, or a general statement in a format
prescribed by the IRS informing the em-
ployee that the employee, the employee's
spouse (if any), and the employee's de-
pendents (if any) received a qualifying
offer for all 12 months of the calendar
year for which the ALE member is report-
ing, and therefore the employee and the
employee's spouse (if any) and depen-
dents (if any) are generally ineligible for a
premium tax credit for all of those 12
months.

Some ALE members may provide a
qualifying offer for all 12 months of a
calendar year to employees who are em-
ployed during the entire year, but are not
full-time employees for one or more
months during the calendar year. These
ALE members may elect to report for
these employees using the certification
method, and to furnish those employees
with a copy of Form 1095-C filed with the
IRS or the prescribed statement, or may
use the general reporting method with re-
spect to those employees.

For each employee who received a
qualifying offer for fewer than 12 months
of the calendar year, for example because
the full-time employee was an employee
for fewer than 12 months of the calendar
year (for example, because the employee
was hired or terminated employment dur-
ing the calendar year or was in a permis-

sible waiting period under section 4980H
or look-back measurement period under
section 4980H for one or more months),
the ALE member will file and furnish
section 6056 returns and statements under
the general reporting method. The ALE
member will report information under the
general reporting method for those
months for which a qualifying offer was
not received, but may use an indicator
code to report for months for which the
qualifying offer was received, in accor-
dance with forms and instructions. How-
ever, see section X.A.2 of this preamble
for an alternative method applicable to
2015.

## 2. Alternative Method Based on Certification of Qualifying Offers for 2015

Solely for 2015, an ALE member may
use an alternative method as described
below. To utilize this method the ALE
member must (1) certify that it has made a
qualifying offer (as described in section
X.A.1) to at least 95 percent of its full-
time employees and to their spouses and
dependents, and (2) in lieu of providing a
Form 1095-C (or another form the IRS
designates) to its employees, satisfy its
section 6056 furnishing requirement with
respect to all of its full-time employees by
furnishing a statement to each of its full-
time employees, by January 31 of the year
following the year to which the statement
relates. The statement will be in a format
prescribed by the IRS and the form of the
statement may vary depending on whether
the employee received a qualifying offer
from the employer for all, some, or none
of the months of the calendar year. As
with section X.A.1, if the qualifying offer
applied to an employee to all 12 months of
the calendar year, it is anticipated that the
statement will inform the employee that
the employee and the employee's spouse
(if any) and dependents (if any) will not
be eligible to claim a premium tax credit
for any of the twelve calendar months. If
the qualifying offer did not apply to an
employee for all 12 months of the calen-
dar year, it is anticipated the statement
will 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-time
employee or was in a permissible waiting period or initial measurement period under section 4980H and the associated regulations.

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ployee and the employee's spouse (if any)
and dependents (if any) may be eligible to
claim a premium tax credit for one or
more of the 12 calendar months. The
statement furnished to the employee must
include a contact name and contact tele-
phone number for the ALE member from
whom further information may be ob-
tained regarding the offer of coverage that
may affect the eligibility of the employee
(or any spouse or dependents of the em-
ployee) for the premium tax credit. The
contact name and telephone number can
be a name and telephone number at the
ALE member or at another entity, such as
a third party administrator, that is autho-
rized to provide information on behalf of
the 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 the
IRS 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 or
the specific months of the calendar year or
it was not, and provides the statement to
the employee. Further details will be pro-
vided in forms and instructions.

This alternative reporting method for
2015 is optional and an ALE member may
use any other available reporting method.

B. Option to Report Without Separate
Identification of Full-Time Employees If
Certain Conditions Related to Offers of
Coverage Are Satisfied (98 percent
Offers)

In section XI.B of the preamble to the
proposed regulations, Treasury and the
IRS stated that they understand that some
employers offer minimum essential cov-
erage to all or nearly all of their employ-
ees, and are able to accurately represent
that the only employees not offered cov-
erage are also not full-time employees. An
employer making an offer of minimum
essential coverage to all of its full-time
employees would not owe an assessable
payment under section 4980H(a), which
requires such an offer only to 95 percent
of an employer's full-time employees. See
§ 54.4980H-4(a). However, while the
employer might know that it is offering

such coverage to a group consisting of
almost all of its full-time employees and
some of its other employees, the employer
might not have determined, in the case of
each 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 such
coverage to all of its employees whose
hours of service average at least 20 hours
per week. Section XI.B of the preamble to
the proposed regulations suggested a pos-
sible approach under which employers of-
fering coverage to 100 percent of their
full-time employees would be permitted
to provide section 6056 reporting without
determining whether each employee of-
fered coverage is a full-time employee
and without specifying the number of the
employer's full-time employees.

Some commenters requested that eligi-
bility to use this simplified method be
expanded to include an employer that can
represent that it offered coverage to sub-
stantially all of its full-time employees,
and requested that "substantially all" be
defined for this purpose as at least 95
percent of the full-time employees. These
commenters suggested that while some
employers may be able to certify that they
meet a 100 percent offer standard, other,
especially larger, employers could not be
certain that an offer had been extended to
every full-time employee (including em-
ployees who were full-time employees for
only certain months of the year).

In response to these concerns, the final
regulations relax the condition on use of
this simplified method, which allows the
employer to report without identifying or
specifying the number of full-time em-
ployees. To be eligible to use this method
under the final regulations, an employer
must certify on its transmittal form that it
offered minimum essential coverage provid-
ing minimum value that is affordable, to at
least 98 percent of the employees on whom
it reports in its section 6056 return. For this
purpose, coverage is treated as affordable if
the cost of employee-only coverage satisfies
any applicable affordability safe harbor un-
der the section 4980H final regulations. Set-
ting the level at 98 percent will help ensure
that the employer has offered coverage to at
least 95 percent of its full-time employees
and therefore is not subject to an assessable
payment under section 4980H(a), without

knowing which reported employees are full-
time and which are part-time. While this
alternative method allows reporting without
identifying or specifying the number of full-
time employees, it does not exempt the em-
ployer from any penalties that might apply
for 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 employees
not offered coverage. Accordingly, to the
extent the employer fails to report with re-
spect to any full-time employee, the alterna-
tive method described here will not affect
the application of any generally applicable
penalties for failure to report (subject to any
relief that might be provided for under these
regulations or other applicable guidance),
and the possible application of any such
penalties will not preclude the employer
from using this simplified alternative
method if the employer satisfies the 98 per-
cent condition.

As noted, the 98 percent offer is re-
quired to provide minimum value and be
affordable for purposes of section 4980H
to avoid overburdening employers and the
IRS with the need to determine at a later
date whether a substantial number of em-
ployees who received a premium tax
credit were full-time employees. If an em-
ployer were permitted to report under sec-
tion 6056 on a large number of employees
who were offered coverage that either was
not minimum value or not affordable, the
reporting could include large numbers of
employees who may well be eligible to
claim a premium tax credit on the Ex-
change, without identifying the employ-
ee's status as a full-time employee. In
such a case, both employers and the IRS
would be overburdened with the process
of determining at a later date whether any
employees who received a premium tax
credit were full-time employees with re-
spect to whom the employer is liable for
an assessable payment under section
4980H(b). The 98 percent standard helps
avoid the need for excessive inquiries to
employers as to whether particular em-
ployees claiming a premium tax credit
were full-time employees.

Example: Employer has 1,000 employees who
are expected to have at least 27 hours of service per
week in a calendar year. Employer does not want to
determine which of these employees are full-time
employees for purposes of section 4980H. Before the
start of the year, Employer makes an offer of mini-

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mum essential coverage providing minimum value
that is affordable for section 4980H purposes to 990
of these 1,000 employees and reports under section
6056 for all 1,000 employees. Because Employer has
satisfied the conditions set forth in this section X.B,
Employer is not required to report either the total
number of full-time employees for the year or
whether any particular employee was a full-time
employee for any calendar month during the year. If
an employee included as part of the return declines
the offer of coverage and properly claims a premium
tax credit with respect to coverage provided through
an Exchange for one or more months during the
calendar year, and the employer is contacted by the
IRS to determine whether the employer did or did
not owe an assessable payment under section
4980H(b), the employer could determine at that
point whether the employee was a full-time em-
ployee for those months and supply that information
to the IRS.

C. Reporting for Applicable Large
Employers with Fewer Than 100 Full-
time Employees Eligible for Transition
Relief Under Section 4980H.

To assist applicable large employers
that are in the smaller size range, such as
those with at least 50 full-time employees
but fewer than 100 full-time employees
(including full-time equivalent employ-
ees), in transitioning into compliance with
section 4980H, the final regulations pro-
vide transition relief from section 4980H
for 2015 (plus, in the case of any non-
calendar plan year that begins in 2015, the
portion of the 2015 plan year that falls in
2016). See section XV.D.6 of the pream-
ble to the final regulations under section
4980H for a description of eligibility con-
ditions for transition relief. (Note section
4980H does not apply to employers with
fewer than 50 full-time employees (in-
cluding full-time equivalent employees)).
Employers eligible for this section 4980H
transition relief will still report under sec-
tion 6056 for 2015 in accordance with
these final regulations.

As part of this transition relief, the
ALE member must certify on its section
6056 transmittal form for calendar year
2015 (that is, for the section 6056 trans-
mittal form that will be filed in 2016), as
prescribed by the form and instructions,
that it meets the eligibility requirements
set forth in section XV.D.6(a)(1) through
(3) of the preamble to the final regulations
under section 4980H. ALE members with
non-calendar year plans will certify with
regard to their 2015 plan year, including
the months of their 2015 plan year that fall

in calendar year 2015, on the section 6056
transmittal form for 2015 (that is for the
section 6056 transmittal form that will be
filed in 2016), and will certify with regard
to the months of their 2015 plan year that
fall in calendar year 2016 on the section
6056 transmittal form for 2016 (that is the
section 6056 transmittal form that will be
filed in 2017).

## D. Combinations of Alternative Reporting Methods

The alternative reporting methods de-
scribed above would apply to particular
groups of employees that in many cases
would not be identical. An employer is
permitted to use different alternative re-
porting methods for different employees
at the employer's election, as specified in
forms and instructions ..

## XI. Other Possible Alternative Methods Not Adopted in the Final Regulations

### A. Mandatory Self-Insured No-Cost Minimum Value Coverage

In section IX.B of the preamble to the
proposed regulations, Treasury and the
IRS stated they were considering whether
employers that provide mandatory mini-
mum value coverage to an employee, an
employee's spouse, and an employee's
dependents, with no employee contribu-
tion, could file and furnish only the return
required under section 6055, include a
code on the employee's Form W-2, and
complete only summary information on
the section 6056 transmittal form.

This alternative method of reporting
was not adopted because its use would
leave gaps in information needed for tax
administration of the premium tax credit,
in particular because codes will not be
used on the Form W-2 to report months of
mandatory minimum essential coverage
providing minimum value.

However, an ALE member that offers
no-cost minimum essential coverage pro-
viding minimum value coverage to all of
its employees will not be liable for a po-
tential assessable payment under section
4980H for any month in which an em-
ployee received such an offer. Thus, ALE
members will be treated as reporting the
required section 6056 information if the
employer files a Form 1095-C statement

and provides particular information about
the employee, specifically the employee's
name, social security number, and ad-
dress, and indicates using a code if the
coverage was offered for all 12 calendar
months or for some months of the year if,
for example, the employee was not full-
time in certain months or was no longer
employed. The employer must also fur-
nish each employee a copy of the Form
1095-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 alternative
reporting available.

If a self-insured employer is an ALE
member, the employer will report the cov-
erage information on the part of the Form
1095-C that is required under section
6055. If the ALE member offers no cost
mandatory minimum essential coverage
providing minimum value to all its em-
ployees, it will use an indicator code on
the Form 1094-C transmittal to indicate
that it offered this type of coverage. Self-
insured employers that are not ALE mem-
bers will file the section 6055 information
return under section 6055. Further details
will be provided in forms and instructions.

B. Eliminating Section 6056 Employee
Statements in Favor of Form W-2
Reporting for Certain Groups of
Employees Offered Coverage

The proposed regulations outlined a
possible alternative reporting method un-
der which employers would be permitted
in certain circumstances to report offers of
minimum value coverage on Form W-2,
in accordance with the form and instruc-
tions, instead of reporting the offers to the
IRS on a section 6056 return or furnishing
a section 6056 employee statement to the
employee. The proposed regulations spec-
ified that this possible alternative method,
if permitted, could be used only for an
employee employed by the employer for
the entire calendar year in which the offer,
the individuals to whom the offer is made,
and the employee contribution for the
lowest-cost option for self-only coverage
providing minimum value, all remained
the same for all twelve months of the
calendar year.

Commenters indicated that such a pro-
posed alternative reporting method, if per-

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mitted, would need to be expanded to be
available for employees offered coverage
under their employer's plan for less than a
full calendar year or for whom the offer of
coverage changed during the calendar
year in order to be useful. Specifically,
commenters suggested that additional
codes or other modifications to the Form
W-2 should be made so that the alterna-
tive reporting method could be extended
to employees who were not employed for
the entire calendar year or not employed
as full-time employees during the entire
calendar year, were not offered coverage
for the entire calendar year, or for whom
the cost of coverage changed during the
calendar year.

Expanding the alternative reporting
method as requested would leave gaps in
information that is needed for tax admin-
istration. For example, if used for employ-
ees who were not employed during the
full calendar year, the reporting would not
provide any information regarding the
particular calendar months for which cov-
erage was offered (or not offered). Even if
the 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 Form
W-2 received by the employee from an-
other employer using the same reporting
method. That is because while both em-
ployers would report the number of
months coverage was offered, that infor-
mation would not be sufficient to deter-
mine whether offers of coverage were
overlapping (because the employee was
employed simultaneously at both employ-
ers). Additionally, for months for which
coverage was not offered, information as
to whether the employee was employed
and 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 permissible
waiting period under section 4980H or
employed but not as a full-time em-
ployee).

The specific reason coverage was not
offered is relevant to the administration of
section 4980H because the failure to offer
coverage for certain reasons does not re-
sult in an assessable payment under sec-
tion 4980H for a calendar month, even if
the full-time employee receives a pre-
mium tax credit for that month. More

codes and other data to be reported on the
Form W-2 would be needed to administer
section 4980H and the premium tax credit.

Commenters noted that, unless ex-
panded, this proposed alternative report-
ing method would be of little use to most
large employers.

Other commenters suggested that the
increase in complexity and, in some cases,
modifications to the Form W-2, should
not be made because the Form W-2 is
such an established and integral part of the
payroll and tax system. These commenters
noted that revising Form W-2 would re-
sult in additional administrative burden
and substantial added cost to employers
given the need to modify the payroll and
online systems and could result in delayed
furnishing of Forms W-2 to employees or
require corrected Forms W-2 to account
for new information related to offers of
coverage. Commenters further noted that
revised Forms W-2 could create confu-
sion among employees, particularly since
the addition of information related to of-
fers of coverage would likely result in an
increase in the number of pages of the
Form W-2, requiring time for employees
to understand the changes, and possibly
resulting in disruptions in the preparation
of individual tax returns. Treasury and the
IRS agree with the commenters that the
suggested expansions of this alternative
reporting method are in some cases not
feasible, and in other cases do not provide
sufficient administrative simplification to
warrant the proposed increase in the com-
plexity of the data reported on the Form
W-2. Given that it is not feasible to ex-
pand this proposed alternative method,
that commenters indicated the method is
not workable as proposed because it does
not 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 final
regulations do not adopt this alternative
reporting method.

C. Voluntarily Reporting Section 6056
Elements During or Prior to the Year of
Coverage

Some commenters have expressed an
interest in voluntarily reporting informa-
tion about the coverage they offer their

employees prior to the end of a coverage
year, for example at their open enrollment
or before the open enrollment at the Ex-
changes, on the theory that earlier section
6056 reporting to the IRS could lead to
greater efficiency in the employer verifi-
cation system employed by Exchanges to
determine eligibility for premium tax
credits.

A proposal of this kind would need to
address a number of issues. The regula-
tions under section 6103 do not authorize
the IRS to share taxpayer information in
this manner. Even if this information shar-
ing were permitted, individuals would not
receive the information for their tax return
preparation proximate to when they are
completing their tax returns. In addition,
the information about the offer of cover-
age before the year starts may change
during the calendar year. Gaps in com-
plete and timely information increase the
need for additional follow-up communica-
tion among employers, employees, and
the IRS.

Also, offering 2 sets of reporting alter-
natives with filing occurring at different
time periods would present challenges.
Because the reporting options would be
voluntary, different reporting protocols
and regimes would need to be established
and would need to accommodate em-
ployer choices to change the method of
reporting from year to year. The multiple
forms, procedures, and protocols would
create complexity and be difficult to ad-
minister. Accordingly, the final regula-
tions do not adopt this approach.

## D. Reporting for Employees Potentially Ineligible for the Premium Tax Credit

Some commenters have requested an
exemption from reporting for employers
that have many employees who are rela-
tively highly paid, on the theory that those
employees are unlikely to be eligible for a
premium tax credit. The assumption is
that a relatively highly paid employee's
household income is likely to exceed 400
percent of the federal poverty line and
therefore the employee is unlikely to qual-
ify for a premium tax credit. The precon-
dition of a section 4980H(b) assessable
payment-that the employee receive a
premium tax credit-is unlikely to be sat-
isfied.

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Treasury and the IRS have considered
this request and have concluded that such
an exemption would not be useful for
many employers or administrable. Em-
ployers would not be in a position to know
the correlation between an employee's
Form W-2 wages and household income
with sufficient accuracy to determine
whether an employee may be eligible for
the premium tax credit. The only pertinent
information the employer retains is the
employee's annual wages, yet the poverty
level from which the premium tax credit
income 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 use
an affordability safe harbor based on
wages for purposes of compliance with
section 4980H might still be eligible for a
premium tax credit based on their house-
hold income.

The preamble to the proposed regula-
tions requested comments as to whether
there is a level of Form W-2 wages at
which such a determination might be
made with sufficient confidence, and
whether that level of wages would be so
high as not to be of practical use to em-
ployers. Comments indicated that some
employers would be interested in explor-
ing options that would permit them to not
file a section 6056 return for an employee
if, for example, the employee's wages
were $150,000, except if the employer has
actual knowledge that the coverage would
be unaffordable to the employee's family.
Other commenters indicated that if addi-
tional follow-up would be required it
would create further economic and admin-
istrative burden, such that it would be
doubtful that the method would be uti-
lized. Additionally, the vast majority of
employers would be required to report
with respect to at least some full-time
employees with lower income than this
threshold. Accordingly, the final regula-
tions do not adopt this suggestion.

XII. Person Responsible For Section
6056 Reporting

Under the regulations, in general, each
ALE member must file a section 6056

return with respect to its full-time employ-
ees for a calendar year.

### A. Special Rules for Governmental Units: Designation

In accordance with section 6056(e),
these regulations provide that in the case
of any ALE member that is a governmen-
tal unit or any agency or instrumentality
thereof (together referred to in this pream-
ble as a governmental unit), that govern-
mental unit may report under section 6056
on its own behalf or may appropriately
designate another person or persons to
report on its behalf.14 For purposes of
designation, another person is appropri-
ately designated for purposes of the filing
and furnishing requirements of section
6056 if that other person is part of or
related to the same governmental unit as
the ALE member. For example, a political
subdivision of a state may designate the
state, another political subdivision of the
state, or an agency or instrumentality of
the foregoing as the designated person for
purposes of section 6056 reporting. The
person designated might be the govern-
mental unit that operates the relevant
health plan or the governmental unit that
does other information reporting on behalf
of the designating governmental unit. If
the designation is accepted by the desig-
nee and is made before the filing deadline,
the designated governmental unit is the
designated entity responsible for section
6056 reporting.

The person (or persons) appropriately
designated for this purpose would report
under section 6056 on behalf of the ALE
member. Accordingly, the person (or per-
sons) appropriately designated is (are) the
person(s) responsible for section 6056 re-
porting on behalf of the ALE member and
subject to the penalties for failure to com-
ply with information return requirements
under 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 each
ALE member for which the appropriately
designated person is reporting. The desig-
nated entity would provide the name of

both the designated entity and the ALE
member for which it is reporting. Addi-
tionally, the regulations require that there
be a single identified section 6056 trans-
mittal (Form 1094-C) reporting aggregate
employer-level data for all full-time em-
ployees of the ALE member (including
full-time employees of the ALE member
the reporting for which has been trans-
ferred to a designated person), and that
there be only one section 6056 employee
statement (Form 1095-C) for each full-
time employee of the ALE member with
respect to employment with that ALE
member. Further details will be provided
in forms and instructions.

These regulations further provide that
the designation under section 6056(e)
must be in writing, must contain certain
language, must be signed by both the ALE
member and the designated person, and
must be effective under all applicable
laws. These regulations also require that
the designation set forth the name and
EIN of the designated person, and appoint
that person as the person responsible for
reporting under section 6056 on behalf of
the ALE member. The designation must
contain information identifying the cate-
gory of full-time employees (which may
be full-time employees eligible for a spec-
ified health plan, or in a particular job
category, provided that the specific em-
ployees covered by the designation can be
identified) 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 for
reporting under section 6056 for all full-
time employees of an ALE member, the
designation should so indicate.

The designation must also contain lan-
guage that the designated person agrees
that it is the appropriately designated per-
son under section 6056(e), and an ac-
knowledgement that the designated per-
son is responsible for reporting under
section 6056 on behalf of the ALE mem-
ber and subject to the requirements of
section 6056 and the information report-
ing penalty provisions of sections 6721
and 6722. The designation must also set
forth the name, address, and EIN of the
ALE 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.

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ber as the person subject to the require-
ments of section 4980H. These regula-
tions provide that an equivalent applicable
statutory or regulatory designation con-
taining similar language will be treated as
a written designation for purposes of sec-
tion 6056(e). The designation will not be
submitted to the IRS and should be main-
tained under the normal record-retention
rules under section 6103.

### B. ALE Members Participating in Multiemployer Plans

Several commenters noted that the
unique structure of many multiemployer
plans means that some of the information
relevant to the section 6056 return, such as
the employee contribution (if any) for the
lowest-cost self-only coverage providing
minimum value, is held by the multiem-
ployer arrangement. On the other hand,
some of the information relevant to the
section 6056 return, such as whether a
participant is a full-time employee for a
particular month, is held by the ALE
member. As noted by commenters, this
may make the preparation, filing, and fur-
nishing of the returns challenging.

In response to this operating structure
and its impact on the administration of
section 4980H, section XV.E of the pre-
amble to the final regulations under sec-
tion 4980H provides that until further
guidance is issued, employers generally
will be treated as having met their obliga-
tions under section 4980H with respect to
a full-time employee if the employer is
required by a collective bargaining agree-
ment (or appropriate related participation
agreement) to contribute on behalf of that
employee to a multiemployer plan that
provides coverage, to individuals who sat-
isfy the plan's eligibility conditions, meet-
ing the affordability and minimum value
requirements and that offers coverage to
those individuals' dependents. Comment-
ers to the section 6056 proposed regula-
tions noted that an employer could also
provide this information with respect to its
full-time employees and thereby provide
the information to the IRS that is relevant
to the administration of section 4980H.
However, that reporting would not pro-
vide all the relevant information needed to
administer the premium tax credit because
the employer's contribution to the mul-

tiemployer plan on behalf of an employee
for a particular calendar month may not
necessarily align with whether the plan
offered coverage to that particular full-
time employee, nor would it provide the
amount of the required employee contri-
bution for the lowest-cost self-only cover-
age providing minimum value.

Some commenters requested that the
regulations apply the reporting require-
ment to the multiemployer plan; however,
section 6056 applies the reporting and fur-
nishing requirements only to the employer
and not the relevant plan in which the
employee participates. In the alternative,
commenters requested that the regulations
require the multiemployer plan to transfer
any information to which it has access that
is required to be reported under section
6056 to the contributing employer in a
timely manner and form. However, there
is 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 that
section 6056 does not apply to the mul-
tiemployer plan, and that the return relates
to the employer's potential liability under
section 6056, Treasury and the IRS do not
have the statutory authority to transfer the
reporting obligations from the relevant
employer to the multiemployer plan.

Some commenters suggested that the
multiemployer plan be permitted to sub-
mit the section 6056 return on behalf of
the contributing employers. Treasury and
the IRS understand that the plan adminis-
trator of a multiemployer plan may have
better access than a participating em-
ployer to certain information on eligible
employees required to be included as part
of section 6056 reporting. For this reason,
section 6056 reporting with respect to
full-time employees on behalf of whom an
ALE member contributed to a multiem-
ployer plan is permitted under an ap-
proach whereby the multiemployer plan
administrator would prepare returns per-
taining to the full-time employees covered
by the collective bargaining agreement el-
igible to participate in the multiemployer
plan and the ALE member would prepare
returns pertaining to the remaining full-
time employees (those who are not eligi-
ble to participate in a multiemployer
plan). The administrator of the multiem-
ployer plan would file a separate section

6056 return for each ALE member that is
a contributing employer on behalf of
whom it files, providing the name, ad-
dress, and identification number for both
the plan and the ALE member for whom it
is reporting. In addition, the multiem-
ployer plan may assist the employer in
furnishing statements to the employees.

The regulations also require that there
be a single identified section 6056 trans-
mittal (Form 1094-C) reporting aggregate
employer-level data for all full-time em-
ployees of the ALE member (including
full-time employees of the ALE member
the reporting for which was done by a
multiemployer plan), and that there be
only one section 6056 employee statement
(Form 1095-C) for each full-time em-
ployee of the ALE member with respect to
the employee's employment with the ALE
member. Further details will be provided
in forms and instructions.

The ALE member would remain the
responsible person under section 6056
with respect to all of its full-time employ-
ees and accordingly would be subject to
any potential liability for failure to prop-
erly file returns or furnish statements. To
the extent the plan administrator that pre-
pares returns or statements required under
section 6056 is a tax return preparer, it is
subject to the requirements generally ap-
plicable to return preparers. See section
XII.C for information about third party
reporting.

## C. Section 6056 Reporting Facilitated by Third Parties

Treasury and the IRS understand that
third party administrators or other third
party service providers are integral to the
operation of many employers' health
plans, including with respect to compli-
ance with any reporting requirements. As
requested by several commenters, ALE
members are permitted to contract with
and use third parties to facilitate filing
returns and furnishing employee state-
ments to comply with section 6056, al-
though ALE members remain responsible
for reporting under section 6056, with the
exception of certain governmental unit ap-
plicable large employers that properly
designate under section 6056(e). While
these regulations do not provide guidance
on contractual or other reporting arrange-

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ments between private ALE members and
other parties, they do not prohibit these
arrangements. Such contractual arrange-
ments would not transfer the potential li-
ability of the ALE member for failure to
report and furnish under section 6056 and
the regulations, or the ALE member's po-
tential liability under section 4980H. To
the extent the other party that prepares
returns or statements required under sec-
tion 6056 is a tax return preparer, it will be
subject to the requirements generally ap-
plicable to return preparers.

As one example, an ALE member that
is a member of an aggregated group of
related entities (determined under section
414(b), 414(c), 414(m) or 414(o)) may
facilitate the filing of returns and the fur-
nishing of employee statements on behalf
of one or more of the other ALE members
of the aggregated group. Each other ALE
member of the group, for example, could
have the ALE member that operates the
employer-sponsored plan facilitate the fil-
ing of section 6056 returns and furnish
section 6056 employee statements on its
behalf.

In general, a separate section 6056 re-
turn must be filed for each ALE member,
providing that ALE member's EIN. If
more than one third party is facilitating
reporting for an ALE member, for exam-
ple, because the ALE member has con-
tracted with two or more third parties each
of which will facilitate reporting with re-
spect to certain groups of the ALE mem-
ber's employees, or if the ALE member
reports with respect to some of its em-
ployees and has a third party report with
respect to other employees, there must be
one authoritative section 6056 transmittal
(Form 1094-C) reporting aggregate
employer-level data for all full-time em-
ployees of the ALE member. Addition-
ally, there must be only one section 6056
employee statement (Form 1095-C) for
each full-time employee with respect to
each employee's employment with the
ALE member, so that all required infor-
mation for a particular full-time employee
of the applicable large employer member
is reflected on a single Form 1095-C.
Further details will be provided in forms
and instructions to accommodate third
parties in facilitating section 6056 report-
ing for ALE members (including for third

party service providers and multiemployer
plan administrators).

### XIII. Applicability of Information Return Penalties and Penalty Relief for 2015

These regulations provide that an ALE
member that fails to comply with the sec-
tion 6056 information return and em-
ployee statement requirements may be
subject to the general reporting penalty
provisions under sections 6721 (failure to
file correct information returns), and 6722
(failure to furnish correct payee state-
ment). These regulations also provide,
however, that the waiver of penalty and
special rules under section 6724 and the
applicable regulations, including abate-
ment of information return penalties for
reasonable cause, apply. The final regula-
tions under section 6055 include amend-
ments to the regulations under sections
6721 and 6722 to include returns under
both sections 6055 and 6056 in the defi-
nitions of information return and payee
statement. The final regulations under sec-
tion 6056 cross-reference those amend-
ments to the regulations under sections
6721 and 6722.

In implementing new information re-
porting requirements, short term relief
from penalties frequently is provided.
This relief generally allows additional
time to develop appropriate procedures
for collection of data and compliance with
these new reporting requirements. After
considering the comments received, the
IRS will not impose penalties under sec-
tions 6721 and 6722 on ALE members
that can show they make good faith efforts
to comply with the information reporting
requirements. Specifically, relief from
penalties is provided under sections 6721
and 6722 for returns and statements filed
and furnished in 2016 to report offers of
coverage in 2015, but only for incorrect or
incomplete information reported on the
return or statement, including social secu-
rity numbers. No relief is provided in the
case of ALE members that do not make a
good faith effort to comply with these
regulations or that fail to timely file an
information return or statement. However,
ALE members that fail to timely meet the
requirements of these regulations may be
eligible for penalty relief if the IRS deter-

mines that the standards for reasonable
cause under section 6724 are satisfied.

## Effective/Applicability Dates

These regulations are effective March
10, 2014. These regulations apply for cal-
endar years beginning after December 31,
2014. Consistent with Notice 2013-45,
reporting entities will not be subject to
penalties for failure to comply with the
section 6056 information reporting provi-
sions for 2014 (including the provisions
requiring the furnishing of employee
statements in 2015 with respect to 2014).
Accordingly, a reporting entity will not be
subject to penalties if it first reports be-
ginning in 2016 for 2015 (including the
furnishing of employee statements). Tax-
payers are encouraged, however, to vol-
untarily comply with section 6056 infor-
mation reporting for 2014 by using any of
the available reporting methods set forth
in 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 Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It has also been
determined 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 Regulatory
Flexibility 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 final
regulations, respectively, on small enti-
ties. Section 605(b) of the RFA, however,
provides that sections 603 and 604 shall
not apply if the head of the agency certi-
fies that the rule will not have a significant
economic impact on a substantial number
of small entities. For the reasons set forth
in the following paragraphs, it is hereby
certified that these regulations will not
have a significant economic impact on a
substantial number of small entities.

The regulations under sections 6011
and 6056 affect employers that are appli-
cable large employers, as defined in sec-
tion 4980H(c)(2). Some small entities fall
into this category. Therefore, it has been

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determined that these regulations will af-
fect a substantial number of small entities.
It has also been determined, however, that
the economic impact on entities affected
by these regulations will not be signifi-
cant.

The regulations implement the under-
lying statute and the economic impact is
principally a result of the underlying stat-
ute, rather than the regulations. The regu-
lations direct employers that are applica-
ble large employers to file information
returns with the IRS and to furnish state-
ments to employees providing informa-
tion as required by section 6056. Specifi-
cally, the regulations require applicable
large employers, as defined in section
4980H(c)(2), to file a return with the IRS
for each full-time employee reporting cer-
tain information regarding the health care
coverage offered and provided to the em-
ployee for the year. The regulations fur-
ther require applicable large employers to
furnish to each full-time employee a copy
of the return, or a substitute statement,
required to be filed by the applicable large
employer 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 in
dialogue with stakeholders. The final reg-
ulations address certain concerns that
were expressed by those stakeholders and
minimize the cost and administrative steps
associated with the reporting require-
ments. Specifically, the regulations limit
the reporting requirements on applicable
large employers by only requiring them to
file and furnish information that is neces-
sary for the IRS to administer section
4980H and the premium tax credit, and
information employees will need in order
to complete their tax returns. Addition-
ally, the regulations limit the reporting
requirements by providing for alternative
optional reporting methods for certain em-
ployers that will permit in certain situa-
tions an employer to provide more limited
information on its return and employer
statement, thus lowering that employer's
burden.

Based on these facts, a Regulatory
Flexibility Analysis under the Regulatory
Flexibility Act (5 U.S.C. Chapter 6) is not
required.

Pursuant to section 7805(f) of the
Code, the proposed regulations preceding
these regulations were submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.

## Drafting Information

The principal author of these regula-
tions is Ligeia M. Donis of the Office of
the Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities). However, other personnel from
the IRS and Treasury participated in their
development.

List of Subjects

** * * *

* * * * *

## Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 301 and
602 are amended as follows:

## PART 301-PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for
part 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 to
reporting by applicable large employers
on health insurance coverage offered
under employer-sponsored plans.

(a) In general. Section 6056 requires
an applicable large employer subject to
the requirements of section 4980H to re-
port certain health insurance coverage in-
formation to the Internal Revenue Service,
and to furnish certain related employee
statements 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 general
rules for filing the required information
with the IRS and furnishing the required
employee statements to employees. Para-
graphs (d) and (e) of this section describe
the information required to be reported on
a section 6056 information return and the
time and manner for filing. Paragraph (f)

of this section provides information about
the statement required to be furnished to a
full-time employee. Paragraph (g) of this
section prescribes the time and manner of
furnishing the statement, including exten-
sions of time to furnish, to a full-time
employee. 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 to
certain applicable large employers with
certain employees. Paragraph (k) of this
section describes certain special rules ap-
plicable to applicable large employers that
are governmental units.

(b) Definitions-(1) In general. The
definitions in this paragraph (b) apply for
purposes of this section.

(2) Applicable large employer. The
term applicable large employer has the
same 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 has
the same meaning as in § 54.4980H-
1(a)(11) of this chapter.

(5) Eligible employer-sponsored plan.
The term eligible employer-sponsored
plan has the same meaning as in section
5000A(f)(2) and § 1.5000A-2(c)(1) of
this chapter.

(6) Full-time employee. The term full-
time employee has the same meaning as in
section 4980H and § 54.5980H-1(a)(21)
of this chapter, as applied to the determi-
nation and calculation of liability under
section 4980H(a) and (b) with respect to
any individual employee, and not as ap-
plied to the determination of status as an
applicable large employer, if different.

(7) Governmental unit. The term gov-
ernmental unit refers to the government of
the United States, any State or political
subdivision thereof, or any Indian tribal
government (as defined in section
7701(a)(40)) or subdivision of an Indian
tribal government (as defined in section
7871(d)).

(8) Agency or instrumentality of a gov-
ernmental unit. [Reserved]

(9) Minimum essential coverage. The
term minimum essential coverage has the

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same meaning as in section 5000A(f) and
the regulations issued under that section.

(10) Minimum value. The term mini-
mum value has the same meaning as in
section 36B and any applicable regula-
tions.

(11) Person. The term person has the
same meaning as in section 7701(a)(1)
and applicable regulations.

(c) Content and timing of reporting by
applicable large employer members .- (1)
In general. Each applicable large em-
ployer member required to make a return
and furnish a related statement to its full-
time employees under section 6056 for a
calendar year must make a return and fur-
nish the related statement using such
form(s) as may be prescribed by the In-
ternal Revenue Service. An applicable
large employer member will satisfy its
reporting requirements under section 6056
if it files with the Internal Revenue Ser-
vice a return for each full-time employee
using Form 1095-C or another form the
IRS designates, and a transmittal form
using Form 1094-C or another form the
IRS designates, as prescribed in this sec-
tion and in the instructions to the forms.
Each Form 1095-C and the transmittal
Form 1094-C will together constitute an
information return to be filed with the
Internal Revenue Service.

(2) Reporting facilitated by third par-
ties. A separate section 6056 information
return must be filed for each applicable
large employer member. If more than one
section 6056 information return is being
filed for an applicable large employer
member, there must be one authoritative
section 6056 transmittal (Form 1094-C)
reporting aggregate employer-level data
for all full-time employees of the applica-
ble large employer member, in accordance
with forms and instructions. Additionally,
there must be only one section 6056 em-
ployee statement (Form 1095-C) for each
full-time employee with respect to that
full-time employee's employment with
the applicable large employer member, so
that all required information for a partic-
ular full-time employee of the applicable
large employer member is reflected on a
single Form 1095-C.

(d) Information required to be reported
to the Internal Revenue Service-(1) In
general. Except as provided in paragraph
(j) of this section (relating to alternative

reporting methods for eligible applicable
large employer members), every applica-
ble large employer member must make a
section 6056 information return with re-
spect to each full-time employee. Each
section 6056 information return must
show-

(i) The name, address, and employer
identification number of the applicable
large employer member,

(ii) The name and telephone number of
the 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 their
dependents) the opportunity to enroll in
minimum essential coverage under an el-
igible employer-sponsored plan, by calen-
dar month,

(v) The months during the calendar
year for which minimum essential cover-
age under the plan was available,

(vi) Each full-time employee's share of
the lowest cost monthly premium (self-
only) for coverage providing minimum
value offered to that full-time employee
under an eligible employer-sponsored
plan, by calendar month;

(vii) The number of full-time employ-
ees for each month during the calendar
year,

(viii) The name, address, and taxpayer
identification number of each full-time
employee during the calendar year and the
months, if any, during which the em-
ployee was covered under the plan, and

(ix) Any other information specified in
forms, instructions, or published guid-
ance, see §§ 601.601(d) and 601.602 of
this chapter.

(2) Form of the return. A return re-
quired under this paragraph (d) may be
made on Forms 1094-C and 1095-C or
other form(s) designated by the Internal
Revenue Service, or a substitute form. A
substitute form must include the informa-
tion required to be reported on Forms
1094-C and 1095-C and must comply
with applicable revenue procedures or
other published guidance relating to sub-
stitute statements. See § 601.601(d)(2) of
this chapter.

(e) Time and manner for filing return.
An applicable large employer member

must file the return and transmittal form
required under paragraph (d)(2) of this
section on or before February 28 (March
31 if filed electronically) of the year suc-
ceeding the calendar year to which it re-
lates in accordance with any applicable
guidance and the instructions to the form.
An applicable large employer member
must file the return and transmittal form at
the address specified on the return form or
its instructions. For extensions of time for
filing returns under this section, see
§§ 1.6081-1 and 1.6081-8 of this chapter.
See § 301.6011-2 for rules relating to
electronic filing.

(f) Statements required to be furnished
to full-time employees-(1) In general.
Except as provided in paragraph (j) of this
section, every applicable large employer
member required to file a return under
section 6056 must furnish to each of its
full-time employees identified on the re-
turn a written statement showing-

(i) The name, address and employer
identification number of the applicable
large employer member, and

(ii) The information required to be
shown on the section 6056 return with
respect to the full-time employee.

(2) Form of the statement. A statement
required under this paragraph (f) may be
made either by furnishing to the full-time
employee 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 substitute
statement. A substitute statement must in-
clude the information required to be
shown on the return filed with the IRS and
must comply with requirements in pub-
lished guidance (see § 601.601(d)(2) of
this 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 of
the identifying number appearing on the
corresponding information return filed
with the IRS.

(g) Time and manner for furnishing
statements-(1) Time for furnishing .- (i)
In general. Each statement required by
this section for a calendar year must be
furnished to a full-time employee on or
before January 31 of the year succeeding
that calendar year in accordance with ap-
plicable Internal Revenue Service proce-
dures and instructions

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(ii) Extensions of time-(A) In general.
For good cause upon written application
of 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 to
furnish such statements. The application
must be addressed to the Internal Revenue
Service, and must contain a full recital of
the reasons for requesting the extension to
aid the Internal Revenue Service in deter-
mining the period of the extension, if any,
that will be granted. A request in the form
of a letter to the Internal Revenue Service,
signed by the applicant, suffices as an
application. The application must be filed
on or before the date prescribed in para-
graph (g)(1) of this section.

(B) Automatic extension of time. The
Commissioner may, in appropriate cases,
prescribe additional guidance or proce-
dures, published in the Internal Revenue
Bulletin (see § 601.601(d)(2) of this chap-
ter), for automatic extensions of time to
furnish to one or more full-time employ-
ees the statement required under section
6056.

(2) Manner of furnishing. If mailed, the
statement must be sent to the full-time
employee's last known permanent address
or, if no permanent address is known, to
the employee's temporary address. For
purposes of this paragraph (g), an appli-
cable large employer member's first class
mailing to the last known permanent ad-
dress, or if no permanent address is
known, the temporary address, discharges
the requirement to furnish the statement.
An applicable large employer member
may furnish the statement electronically
in 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 failure
to file timely a correct information return
required under section 6056, see section
6721 and the regulations under that sec-
tion. For provisions relating to the penalty
for failure to furnish timely a correct state-
ment to full-time employees required un-
der section 6056, see section 6722 and the
regulations under that section. See section
6724 and the regulations under that sec-
tion for rules relating to the waiver of
penalties if a failure to file timely or ac-

curately is due to reasonable cause and is
not due to willful neglect.

(2) Application of section 6721 and
6722 penalties to section 6056 reporting.
For purposes of section 6056 reporting, if
the information reported on a return (in-
cluding a transmittal) or a statement re-
quired by this section is incomplete or
incorrect as a result of a change in circum-
stances (such as a retroactive change in
coverage), a failure to timely file or fur-
nish a corrected document is a failure to
file or furnish a correct return or statement
under sections 6721 and 6722.

(j) Alternative reporting methods for
eligible applicable large employer mem-
bers. In lieu of the general reporting
method described in paragraph (d) of this
section, eligible applicable large employer
members may use the following alterna-
tive reporting methods described in this
paragraph (j).

(1) Certification of qualifying offer. An
applicable large employer member is an
eligible applicable large employer mem-
ber and is treated as meeting its reporting
obligation under section 6056 if:

(i) The applicable large employer
member certifies on the section 6056
transmittal form, in accordance with the
form and the instructions to the form, that
it made a qualifying offer. A qualifying
offer is an offer to one or more of its
full-time employees for all months during
the year for which the employee was a
full-time employee and which are not
within a limited nonassessment period (as
defined in § 54.4980H-1(a)(26) of this
chapter), of minimum essential coverage
providing minimum value at an employee
cost for employee-only coverage not ex-
ceeding 9.5 percent of the mainland single
federal poverty line, and that includes an
offer of minimum essential coverage to
the employees' spouses and dependents.
For this purpose, the applicable federal
poverty line is the federal poverty line as
defined in § 54.4980H-1(a)(19) of this
chapter, as calculated and applied to the
48 contiguous states and the District of
Columbia;

(ii) The applicable large employer
member provides on the Form 1095-C or
other form as designated by the IRS, in
accordance with the form and the instruc-
tions to the form, the information with
respect to each full-time employee to

whom a qualifying offer, as defined in
paragraph (j)(1)(i) of this section, is made
for all twelve months of the applicable
calendar year;

(iii) The applicable large employer
member provides a statement to each full-
time employee to whom a qualifying offer
(as defined in paragraph (j)(1)(i) of this
section) was made for all twelve months
of the applicable calendar year, in such
form and manner as prescribed by the
Secretary, or a copy of the Form 1095-C
filed with the IRS with respect to that
full-time employee; and

(D) The applicable large employer
member files section 6056 returns and fur-
nishes section 6056 employee statements
with respect to all other full-time employ-
ees under the general reporting method
described in paragraph (d) of this section,
in accordance with forms and instructions.

(2) Option to report without separate
identification of full-time employees if cer-
tain conditions related to offers of cover-
age are satisfied (98 percent offers). An
applicable large employer member that
otherwise meets its reporting obligation
under section 6056 is not required to iden-
tify on its section 6056 return whether a
particular employee is a full-time em-
ployee for one or more calendar months of
the reporting year or report the total num-
ber of its full-time employees for the re-
porting year, if it certifies that it offered
minimum essential coverage providing
minimum value that was affordable under
section 4980H to at least 98 percent of the
employees (and their dependents) with re-
spect to whom it reports for purposes of
section 6056 in accordance with para-
graph (d) of this section (regardless of
whether the employee is a full-time em-
ployee for purposes of section 4980H for
a calendar month during the year).

(k) Special rules for governmental
units-(1) Person appropriately desig-
nated. In the case of any applicable large
employer member that is a governmental
unit or any agency or instrumentality
thereof, the person or persons appropri-
ately designated under section 6056(e) for
purposes of the filing and furnishing re-
quirements of section 6056 must be part
of or related to the same governmental
unit as the applicable large employer
member. The applicable large employer
member must make (or revoke) the desig-

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nation before the earlier of the deadline
for filing the returns or furnishing the
statements required by this section. A per-
son that has been appropriately designated
under section 6056(e) must file a separate
section 6056 return and transmittal for
each applicable large employer member
for which the person is reporting. The
person appropriately designated under
section 6056(e) assumes responsibility for
the section 6056 requirements on behalf
of the applicable large employer member
for which the person is designated. Not-
withstanding the designation, a separate
section 6056 information return must be
filed for each applicable large employer
member that is a governmental unit. If
more than one section 6056 information
return is being filed for an applicable large
employer member, there must be one au-
thoritative section 6056 transmittal (Form
1094-C) reporting aggregate employer-
level data for all full-time employees of
the applicable large employer member, in
accordance with forms and instructions. In
addition, notwithstanding the designation,
there must be only one section 6056 em-
ployee statement (Form 1095-C) for each
full-time employee with respect to that
full-time employee's employment with
the applicable large employer member, so
that all required information for a partic-
ular full-time employee of the applicable
large employer member is reflected on a
single Form 1095-C.

(2) Written designation. The designa-
tion under section 6056(e) must be made
in writing, must be signed by both the
applicable large employer member and
the 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 the
designated person, and appoint such per-
son as the person responsible for reporting
under 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 a
particular 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 reporting
under section 6056 on behalf of the appli-
cable large employer member. If the des-

ignated person is responsible for reporting
under section 6056 for all full-time em-
ployees of an applicable large employer
member, the designation must so indicate.
The designation must contain language
that the designated person agrees and cer-
tifies that it is the appropriately designated
person 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 large
employer member and subject to the re-
quirements of section 6056, including for
purposes of information reporting require-
ments under sections 6721, 6722, and
6724. The designation must also set forth
the name and employer identification
number of the applicable large employer
member, identifying the applicable large
employer member as the person subject to
the requirements of section 4980H. An
equivalent applicable statutory or regula-
tory designation containing the language
described in this paragraph (k)(2) will be
treated as a written designation for pur-
poses of section 6056(e) and this section.
The designation will not be submitted to
the IRS and should be maintained under
the normal record-retention rules under
section 6103.

(3) Application to alternative reporting
methods. A person designated under this
paragraph (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 if
that particular governmental unit meets
the eligibility requirements with respect to
those employees, but may use the alterna-
tive reporting method identified in para-
graph (j)(2) of this section only if the
governmental unit on whose behalf it is
reporting would itself be eligible to use
that alternative reporting method.

(l) Additional guidance. The Commis-
sioner may prescribe additional guid-
ance of general applicability, published
in 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. This
section applies for calendar years begin-
ning after December 31, 2014. Reporting

entities will not be subject to penalties
under sections 6721 or 6722 for failure to
comply with the section 6056 reporting
requirements for 2014 (for information re-
turns filed and for statements furnished to
employees in 2015).

Par 4. Section 301.6056-2 is added to
read as follows:

### § 301.6056-2 Electronic furnishing of statements

(a) Electronic furnishing of state-
ments-(1) In general. An applicable
large 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 in
lieu of a paper format, provided that the
furnisher 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 of
paragraphs (a)(2) through (6) of this sec-
tion is treated as furnishing the statement
in a timely manner.

(2) Consent-(i) In general. The recip-
ient must have affirmatively consented to
receive the statement in an electronic for-
mat. The recipient may make the consent
electronically in any manner that reason-
ably demonstrates that the recipient can
access the statement in the electronic for-
mat in which it will be furnished to the
recipient. Alternatively, the recipient may
make the consent in a paper document if
the 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 withdraws
the consent and the withdrawal takes ef-
fect before the statement is furnished. The
furnisher may provide that a withdrawal
of consent takes effect either on the date it
is received by the furnisher or on a sub-
sequent date. The furnisher may also pro-
vide that a recipient's request for a paper
statement will be treated as a withdrawal
of the recipient's consent.

(iii) Change in hardware or software
requirements. If a change in the hardware
or software required to access the state-
ment creates a material risk that the recip-
ient will not be able to access the state-

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ment, the furnisher must, prior to
changing the hardware or software, pro-
vide the recipient with a notice. The notice
must describe the revised hardware and
software required to access the statement
and inform the recipient that a new con-
sent to receive the statement in the revised
electronic format must be provided to the
furnisher. After implementing the revised
hardware and software, the furnisher must
obtain from the recipient, in the manner
described in paragraph (a)(2)(i) of this
section, a new consent or confirmation of
consent to receive the statement electron-
ically.

(iv) Examples. The following examples
illustrate the rules of this paragraph (a)(2):

Example 1. Furnisher F sends Recipient R a letter
stating that R may consent to receive the statement
required under section 6056 electronically on a web
site instead of in a paper format. The letter contains
instructions explaining how to consent to receive the
statement electronically by accessing the web site,
downloading the consent document, completing the
consent document and e-mailing the completed con-
sent back to F. The consent document posted on the
web site uses the same electronic format that F will
use for the electronically furnished statement. R
reads the instructions and accesses the web site,
downloads and completes the consent document, and
emails the completed consent back to F. R has con-
sented to receive the statement required under sec-
tion 6056 electronically in the manner described in
paragraph (a)(2)(i) of this section.

Example 2. Furnisher F sends Recipient R an
e-mail stating that R may consent to receive the
statement required under section 6056 electronically
instead of in a paper format. The e-mail contains an
attachment instructing R how to consent to receive
the statement electronically. The e-mail attachment
uses the same electronic format that F will use for
the electronically furnished statement. R opens the
attachment, reads the instructions, and submits the
consent in the manner provided in the instructions. R
has 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 web
site stating that Recipient R may receive the state-
ment required under section 6056 electronically in-
stead of in a paper format. The web site contains
instructions on how R may access a secure web page
and consent to receive the statement electronically.
The consent via the secure web page uses the same
electronic format that F will use for the electroni-
cally furnished statement. R accesses the web site
and follows the instructions for giving consent. R has
consented 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 to
the recipient a clear and conspicuous dis-

closure statement containing each of the
disclosures described in paragraphs
(a)(3)(ii) through (viii) of this section.

(ii) Paper statement. The furnisher
must inform the recipient that the state-
ment will be furnished on paper if the
recipient does not consent to receive it
electronically.

(iii) Scope and duration of consent.
The furnisher must inform the recipient of
the scope and duration of the consent. For
example, the recipient must be informed
whether the consent applies to each state-
ment required to be furnished after the
consent is given until it is withdrawn in
the manner described in paragraph
(a)(3)(v)(A) of this section or only to the
first statement required to be furnished
following the date of the consent.

(iv) Post-consent request for a paper
statement. The furnisher must inform the
recipient of any procedure for obtaining a
paper copy of the recipient's statement
after giving the consent described in para-
graph (a)(2)(i) of this section and whether
a request for a paper statement will be
treated 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 whose
name, mailing address, telephone number,
and e-mail address is provided in the dis-
closure statement,

(B) The furnisher will confirm the
withdrawal and the date on which it takes
effect in writing (either electronically or
on paper), and

(C) A withdrawal of consent does not
apply to a statement that was furnished
electronically in the manner described in
this paragraph (a) before the date on
which the withdrawal of consent takes
effect.

(vi) Notice of termination. The fur-
nisher must inform the recipient of the
conditions under which a furnisher will
cease furnishing statements electronically
to the recipient (for example, termination
of the recipient's employment with
furnisher-employer).

(vii) Updating information. The fur-
nisher must inform the recipient of the
procedures for updating the information
needed 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 hardware
and software required to access, print, and
retain the statement, and the date when the
statement will no longer be available on
the Web site. The furnisher must advice
the recipient that the statement may be
required to be printed and attached to a
Federal, State, or local income tax return.

(4) Format. The electronic version of
the statement must contain all required
information and comply with applicable
revenue procedures relating to substitute
statements 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 the
statement is posted on a Web site. The
notice may be delivered by mail, elec-
tronic mail, or in person. The notice must
provide instructions on how to access and
print the statement. The notice must in-
clude the following statement in capital
letters, "IMPORTANT TAX RETURN
DOCUMENT AVAILABLE." If the no-
tice is provided by electronic mail, the
foregoing 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 returned
as undeliverable, and the correct elec-
tronic address cannot be obtained from the
furnisher's records or from the recipient,
then the furnisher must furnish the notice
by mail or in person within 30 days after
the 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) and
the original statement was furnished elec-
tronically, the furnisher must furnish the
corrected statement to the recipient elec-
tronically. If the original statement was
furnished through a Web site posting and
the furnisher has corrected the statement,
the furnisher must notify the recipient that
it has posted the corrected statement on
the web site within 30 days of such post-
ing in the manner described in paragraph
(a)(5)(i) of this section. The corrected
statement or the notice must be furnished
by mail or in person if-

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(A) An electronic notice of the web site
posting of an original statement or the
corrected statement was returned as unde-
liverable, and

(B) The recipient has not provided a
new e-mail address.

(6) Access period. Statements fur-
nished on a web site must be retained on
the web site through October 15 of the
year following the calendar year to which
the statements relate (or the first business
day after October 15, if October 15 falls
on a Saturday, Sunday, or legal holiday).
The furnisher must maintain access to cor-
rected statements that are posted on the
web site through October 15 of the year
following the calendar year to which the
statements relate (or the first business day
after such October 15, if October 15 falls
on a Saturday, Sunday, or legal holiday)
or the date 90 days after the corrected
forms are posted, whichever is later.

(7) Paper statements after withdrawal
of consent. A furnisher must furnish a
paper statement if a recipient withdraws
consent to receive a statement electroni-
cally and the withdrawal takes effect be-

fore the statement is furnished. A paper
statement furnished after the statement
due date under this paragraph (a)(7) is
timely if furnished within 30 days after
the date the furnisher receives the with-
drawal of consent.

(b) Effective/applicability date. This
section applies for calendar years begin-
ning after December 31, 2014. Reporting
entities will not be subject to penalties
under section 6722 with respect to the
reporting requirements for 2014 (for state-
ments furnished in 2015).

PART 602 - OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION ACT

Par. 5. The authority citation for part
602 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 section
where identified and Current OMB
described
Control No.

* * * * *

301.6056-1

1545-2251

301.6056-2

1545-2251

* * * * *

John Dalrymple
Deputy Commissioner for
Services and Enforcement.

Approved March 2, 2014.

Mark J. Mazur
Assistant Secretary of the Treasury
(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 Federal
Register for March 10, 2014, 79 F.R. 13231)R

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## Part III. Administrative, Procedural, and Miscellaneous

26 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 the
Commissioner in certain cases to treat a
subsidiary member of an affiliated group
of corporations as if it had filed a Form
1122, Authorization and Consent of Sub-
sidiary Corporation To Be Included in a
Consolidated Income Tax Return, even
though it failed to do so. The Commis-
sioner will treat one or more subsidiary
members of an affiliated group (hereinaf-
ter, subsidiary) as if it had filed a Form
1122 under the conditions described in
section 3 of this revenue procedure.

.02 Except as provided in section 1.04
of this revenue procedure, if an affiliated
group satisfies the requirements of section
3 of this revenue procedure, the automatic
determination by the Commissioner under
§ 1.1502-75(b) granted by section 3.01 of
this revenue procedure is the exclusive
means for the Commissioner to determine
under § 1.1502-75(b) that a subsidiary is
treated as if it filed Form 1122 and thus
joined in the making of a consolidated
return by the affiliated group, notwith-
standing that the subsidiary failed to actu-
ally file Form 1122. Such an automatic
determination by the Commissioner is
available regardless of whether the return
of the common parent of the affiliated
group is under examination.

.03 If an affiliated group cannot satisfy
the requirements of section 3 of this rev-
enue procedure, a determination by the
Commissioner under § 1.1502-75(b) is
available only pursuant to a determination
letter issued by a Director (and not a letter
ruling issued by the Associate Chief
Counsel (Corporate)). See Rev. Proc.
2014-1, 2014-1 I.R.B. 1 (or a successor
revenue procedure), for the procedures for
requesting a determination letter and the
information that must be submitted in a
determination letter request. An affiliated
group may not request a determination
letter for a determination by the Commis-
sioner under § 1.1502-75(b) if, at the time
of 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 is
required 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 common
parent of the affiliated group, may, upon
examination, determine pursuant to
§ 1.1502-75(b)(2) or (3), based on the
standards 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) provides
that an affiliated group of corporations
that did not file a consolidated return for
the immediately preceding taxable year
may file a consolidated return in lieu of
separate returns for the taxable year, pro-
vided that each corporation that has been a
member of the group during any part of
the taxable year for which the consoli-
dated return is to be filed consents to the
regulations under § 1502 (in the manner
prescribed in § 1.1502-75(b)). If a group
wishes to exercise its privilege of filing a
consolidated return, a consolidated return
must be filed not later than the last day
prescribed by law (including extensions of
time) for the filing of the common pa-
rent's tax return. The consolidated return
may not be withdrawn after such last day
(but the group may withdraw the consol-
idated return at any time prior to such last
day).

.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 to
have joined in the making of a consoli-
dated return if it files a Form 1122 in the
manner specified in § 1.1502-75(h)(2).

.03 Section 1.1502-75(b)(2) provides
that if a member of the group fails to file
Form 1122, the Commissioner may under
the facts and circumstances determine that
the member has joined in the making of a
consolidated return by the group. The fol-

lowing circumstances, among others, will
be taken into account in making this de-
termination: (i) whether or not the income
and deductions of the member were in-
cluded in the consolidated return; (ii)
whether or not a separate return was filed
by 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 that
the member has joined in the making of
the consolidated return, the member shall
be treated as if it had filed a Form 1122 for
the year for purposes of § 1.1502-
75(h)(2).

.04 Section 1.1502-75(b)(3) provides
that if any member has failed to join in the
making of a consolidated return under ei-
ther § 1.1502-75(b)(1) or § 1.1502-
75(b)(2), then the tax liability of each
member of the group shall be determined
on the basis of separate returns unless the
common parent corporation establishes to
the satisfaction of the Commissioner that
the failure of the member to join in the
making of the consolidated return was due
to a mistake of law or fact, or to inadver-
tence. In such case, the member shall be
treated as if it had filed a Form 1122 for
the year for purposes of § 1.1502-
75(h)(2), and thus joined in the making of
the consolidated return for the year.

.05 Section 1.1502-75(h)(2) provides
that if a group wishes to file a consoli-
dated return for a taxable year, then a
Form 1122 must be executed by each sub-
sidiary. For taxable years beginning after
December 31, 2002, the group must attach
either executed Forms 1122 or unsigned
copies of the completed Forms 1122 to the
consolidated return. If the group submits
unsigned Forms 1122 with its return, it
must 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 group
for the immediately preceding taxable
year.

## SECTION 3. AUTOMATIC DETERMINATION UNDER § 1.1502-75(b)

.01 Pursuant to § 1.1502-75(b), if an
affiliated group satisfies the conditions de-

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scribed in sections 3.02, 3.03, 3.04, and
3.05 of this revenue procedure, it is
hereby determined by the Commissioner
that a subsidiary that actually failed to file
a Form 1122 (non-filing subsidiary) is
treated as if it filed a Form 1122 and thus
joined in the making of a consolidated
return by the affiliated group.

.02 The affiliated group timely filed
what purported to be a consolidated return
for the taxable year, either (a) including
Form 851 with the affiliated group's re-
turn, or (b) providing some other clear and
unequivocal indication on the return that
the return was intended as a consolidated
return for the affiliated group, for exam-
ple, checking of the appropriate box in
Item A at the top of the tax return.

.03 The non-filing subsidiary was not
prevented from joining in the filing of the
consolidated return by any applicable rule
of law, other than the failure to file Form
1122 (for example, section 1504(a)(3) of
the Internal Revenue Code, concerning
the five-year prohibition on a member that
disaffiliated from a consolidated group
joining in the filing of a consolidated re-
turn by the affiliated group or by another
affiliated group with the same common
parent).

.04 A separate return was not filed by
the non-filing subsidiary for any period of
time included in the consolidated return,
or any subsequent taxable year, other than
(a) a separate return for a period in which
the non-filing subsidiary's income and de-
ductions were not properly includible in
the affiliated group's consolidated return,
or (b) a partnership return, all the income
and deductions of which were included on
the consolidated return as part of the in-
come and deductions of the partners, all of
which were members of the affiliated
group.

.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, or
to inadvertence, provided that the affili-
ated group believed that the non-filing
subsidiary was a member of the affiliated
group for the taxable year and included
the non-filing subsidiary's income and de-
ductions in the consolidated return as if
the non-filing subsidiary was a member of
the 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, or
to inadvertence, provided that all of the
non-filing subsidiary's income and deduc-
tions were included on the consolidated
return as part of the income and deduc-
tions of another member of the group. For
example, the affiliated group believed that
the non-filing subsidiary was disregarded
as an entity separate from its owner for
Federal income tax purposes or had for-
mally ceased to exist pursuant to a merger
or liquidation into another member of the
group; 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 was
taxable as a partnership for Federal in-
come tax purposes, provided that all of the
non-filing subsidiary's income and deduc-
tions were included on the consolidated
return as part of the income and deduc-
tions of its partners.

## SECTION 4. EFFECT ON OTHER DOCUMENTS

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 determination
letter may be issued with respect to a request
for a determination letter postmarked or, if
not mailed, received on or before March 24,
2014. Requests for a determination letter
postmarked, or if not mailed, received, on or
before 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. DRAFTING INFORMATION

The principal author of this revenue
procedure is Ken Cohen of the Office of
Associate Chief Counsel (Corporate). For
further information regarding this revenue
procedure contact Mr. Cohen on (202)
317-6848 (not a toll-free number).

## Maximum Vehicle Values for 2014 for Use of Vehicle Cents-Per-Mile and Fleet- Average Valuation Rules

### Notice 2014-11

This notice provides the maximum ve-
hicle values for 2014 that taxpayers need
to determine the value of personal use of
employer-provided vehicles under the
special valuation rules provided under
section 1.61-21 (d) and (e) of the Income
Tax Regulations.

### MAXIMUM VEHICLE VALUES

The maximum value of employer-
provided vehicles first made available to
employees for personal use in calendar
year 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 automobile
and $17,300 for a truck or van.

The maximum value of employer-
provided vehicles first made available to
employees for personal use in calendar
year 2014 for which the fleet-average val-
uation rule provided under Regulation
section 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 made
available to employees for personal use in
calendar year 2014.

### DRAFTING INFORMATION

The principal author of this notice is
Don M. Parkinson of the Office of the
Division 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).

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# Application of Section 871(m) to Specified Equity- Linked Instruments

Notice 2014-14

## I. Background

On December 5, 2013, a withdrawal of
notice of proposed rulemaking, notice of
proposed rulemaking, and notice of public
hearing were published in the Federal
Register at 78 FR 73128 (2013) (the
"2013 proposed regulations"). The 2013
proposed regulations proposed new rules
for determining whether a transaction is
subject to tax pursuant to section 871(m)
of the Internal Revenue Code ("Code").
Generally, section 871(m)(1) provides
that a dividend equivalent is treated as a
dividend from sources within the United
States for purposes of sections 871(a),
881, 4948(a), and chapters 3 and 4. The
proposed regulations provide that a divi-
dend equivalent includes any payment
pursuant to a specified notional principal
contract ("specified NPC") or a specified
equity-linked instrument (“specified
ELI") that references the payment of a
dividend 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 or
after March 5, 2014.

The Treasury Department and the In-
ternal Revenue Service (the "Service")
have received comments recommending
that an ELI issued prior to January 1,
2016, not be treated as a specified ELI or,
alternatively, that an ELI not be treated as
a specified ELI if it is issued prior to the
date that the final regulations are pub-
lished. Comments note that the 2013 pro-
posed regulations significantly expanded
the scope of ELIs that would be subject to
tax pursuant to section 871(m). Com-
ments further note that this expansion will
create uncertainty in pricing transactions
today and will not give market partici-
pants sufficient time to implement the sys-
tems necessary to track the information
required by the 2013 proposed regulations
by March 5, 2014.

II. Amendment to the Term "Specified
ELI" in Final Regulations

When § 1.871-15(e) of the 2013 pro-
posed regulations is finalized, the Trea-
sury Department and the Service intend to
limit specified ELIs to ELIs issued on or
after 90 days after the date of publication
of the final regulations.

### III. Effective Date

This Notice is effective March 4, 2014.

#### IV. Effect on Other Documents

This Notice announces the intention of
Treasury and the Service to modify Prop.
Reg. § 1.871-15(e) as published in the
Federal Register 78 FR 73128 (2013)
when the Treasury Decision adopting
those 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 the
2013 proposed regulations described in
this Notice. Comments on this Notice may
be submitted along with comments to the
2013 proposed regulations. To provide
written 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 Franklin
Station, Washington, DC 20044. Submis-
sions may be hand-delivered Monday
through Friday between the hours of 8
a.m. and 4 p.m. to CC:PA:LPD:PR
(REG-120282-10), Courier's Desk, Inter-
nal Revenue Service, 1111 Constitution
Avenue NW., Washington, DC, or sent
electronically, via the Federal eRulemak-
ing Portal at http://www.regulations.gov
(IRS REG-120282-10).

The principal authors of this Notice are
D. Peter Merkel and Karen Walny of the
Office of Associate Chief Counsel (Inter-
national). For further information regard-
ing this notice call (202) 317-6938 (not a
toll-free number).

# Per Capita Distributions of Funds Held in Trust by the Secretary of the Interior Notice 2014-17

This notice provides interim guidance
concerning the federal income tax treat-
ment of per capita distributions made to
members of Indian tribes from funds held
in trust by the Secretary of the Interior.

The Internal Revenue Service (Ser-
vice) and the Treasury Department are
issuing this notice to allow Indian tribes to
review the interim guidance and provide
comments prior to the issuance of final
guidance. Comments may be submitted in
writing on or before September 17, 2014.
Comments should be submitted to Internal
Revenue Service, CC:PA:LPD:PR (No-
tice 2014-17), Room 5203, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044, or electronically to
notice.comments@irscounsel.treas.gov.
Please include "Notice 2014-17" in the
subject line of any electronic communica-
tions. Alternatively, comments may be
hand delivered between the hours of 8:00
a.m. and 4:00 p.m. Monday to Friday to
CC:PA:LPD:PR (Notice 2014-17), Cou-
rier's Desk, Internal Revenue Service,
1111 Constitution Ave., NW, Washing-
ton, DC. All comments will be available
for public inspection and copying.

## BACKGROUND

The Department of the Interior (DOI),
primarily through the Office of Special
Trustee (OST), is responsible for holding
in trust certain funds on behalf of individ-
ual Indians and federally recognized In-
dian tribes.

Current DOI regulations under 25
C.F.R. §§ 115.700-701 provide that funds
may be accepted by the Secretary of the
Interior on behalf of federally recognized
Indian 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" as
defined at 25 C.F.R. § 115.002. The OST
has the responsibility to manage the funds
and make them available to the tribe upon
request.

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Funds held in tribal Trust Accounts by
the DOI may be distributed per capita to
members 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 distributions
out of tribal Trust Accounts. However, the
Per Capita Act provided Indian tribes au-
thority to make per capita distributions
directly to members of the tribe out of the
tribe's Trust Account.

## CONSULTATION

In the spirit of Executive Order 13175,
representatives of the Service and the
Treasury Department consulted with tribal
leaders and members of Indian tribes con-
cerning the federal income tax treatment
of per capita distributions made to Indian
tribal members from funds held in tribal
Trust Accounts. These consultations and
conversations were extremely useful in
preparing this notice.

## APPLICABLE PROVISIONS OF LAW

Section 61(a) of the Internal Revenue
Code, 26 U.S.C. § 61, states that, except
as otherwise provided by law, gross in-
come means all income from whatever
source derived, including but not limited
to compensation, gross income derived
from business, and dividends. Under 26
U.S.C. § 61, Congress intends to tax all
gains and undeniable accessions to
wealth, 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 the
requirement to pay income taxes. Squire
v. Capoeman, 351 U.S. 1 (1956), 1956-1
C.B. 605. There is no provision in the
Internal Revenue Code that exempts an
individual from the payment of federal
income tax solely because he or she is an
Indian. Therefore, exemption of Indians
from the payment of tax must derive
plainly from treaties or agreements with
the Indian tribes concerned or an act of
Congress. See Rev. Rul. 67-284, 1967-2
C.B. 55.

The Per Capita Act provides authority
to 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 that
section may be distributed by either the
Secretary of the Interior or, at the request
of the governing body of the tribe and
subject to the approval of the Secretary of
the Interior, the tribe. In practice, proceeds
from trust assets or trust resources (both
defined at 25 C.F.R. § 115.002) are de-
posited into a tribal Trust Account for a
tribe and that tribe subsequently makes a
per capita distribution using funds from
that Trust Account.

The Indian Tribal Judgment Funds Use
or 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 25
U.S.C. § 117b(a), per capita distributions
made pursuant to 25 U.S.C. § 117a are
subject to the provisions of 25 U.S.C.
§ 1407. Pursuant to 25 U.S.C. § 1407,
none of the funds that are distributed per
capita or held in trust pursuant to a plan
approved under 25 U.S.C. § 1401 et. seq,
including all interest and investment in-
come accrued on the funds while held in
trust, 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 be
subject to the provisions of [25 U.S.C.
§ 1407] with respect to tax exemptions."
However, per capita distributions to tribal
members of "net revenues" from Indian
gaming activity that are subject to the
Indian Gaming Regulatory Act (net gam-
ing revenues) are subject to federal in-
come taxation and are subject to the in-
formation reporting and withholding
requirements of 26 U.S.C. §§ 6041 and
3402(r). See 25 U.S.C. §§ 2701-2721 and
25 C.F.R. Part 290. Under the Indian
Gaming Regulatory Act, net gaming rev-
enues means "gross revenues of an Indian
gaming activity less amounts paid out as,
or paid for, prizes and total operating ex-
penses, excluding management fees." 25
U.S.C. § 2703(9).

Under 25 C.F.R. § 115.703, the Secre-
tary of the Interior accepts and deposits
into tribal Trust Accounts only funds from
sources listed in the table in 25 C.F.R.
§ 115.702. The 25 C.F.R. § 115.702 table
provides that the Secretary of the Interior
will accept, among other payments, pay-
ments resulting from money directly de-

rived from title conveyance or use of trust
lands, payments resulting from penalties
for trespass on trust lands, and payments
resulting from a final order from a court of
competent jurisdiction for a cause of ac-
tion related to trust assets. The Secretary
of the Interior also accepts deposits of
funds derived directly from trust lands,
restricted fee lands, or trust resources. See
25 C.F.R. § 115.702 for a full list of funds
that the Secretary of the Interior accepts
and deposits into tribal Trust Accounts.

# FEDERAL INCOME TAX TREATMENT OF PER CAPITA DISTRIBUTIONS OF TRIBAL TRUST ACCOUNT FUNDS

## a. General Rule

Under 25 U.S.C. § 117b(a) and 25
U.S.C. § 1407, per capita distributions
made from funds the Secretary of the In-
terior holds in a Trust Account for the
benefit of a tribe are generally excluded
from the gross income of the members of
the 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's
Trust Account and that tribe subsequently
makes a per capita distribution using
funds from the Trust Account, the per
capita distributions are excluded from the
tribal members' gross income.

## b. Exception

Distributions to tribal members from a
tribal Trust Account constitute gross in-
come under 26 U.S.C. § 61 to the mem-
bers of the tribe receiving the distributions
if a Trust Account is used to mischarac-
terize taxable income as nontaxable per
capita distributions. For example, distri-
butions from a tribal Trust Account con-
stitute gross income under 26 U.S.C. § 61
if based on the facts and circumstances the
distributions are mischaracterized com-
pensation to tribal members for their ser-
vices, mischaracterized distributions of
business profits, or mischaracterized gam-
ing revenues.

The following examples illustrate situ-
ations in which distributions from a tribal
Trust Account are not treated as nontax-
able per capita distributions and are in-
cluded in gross income under 26 U.S.C.
§ 61.

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Example 1 - Mischaracterized Compensation
B is a housing authority established by Tribe C,
a federally recognized Indian tribe. The Director and
the Assistant Director of B are both members of
Tribe C. During each of the 2011, 2012, and 2013
taxable years, the Director and the Assistant Director
are each paid bonuses in the amount of $15x. In the
2014 taxable year, members of Tribe C's Tribal
Council authorize per capita distributions out of the
tribe's Trust Account in the amount of $1x to every
member of the tribe and an additional $2x in per
capita distributions to every elder in the tribe. In
addition, the members of Tribe C's Tribal Council
authorize distributions out of the Trust Account to
the Director and Assistant Director in the amount of
$15x each, instead of paying bonuses to the Director
and the Assistant Director. The distributions of $15x
to 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 of
Business Profits

Tribe D is a federally recognized Indian tribe. A
group of Tribe D members own Corporation E, an
information technology company that provides call
center services. Corporation E's headquarters is lo-
cated on land held in trust by the Secretary of the
Interior for the benefit of Tribe D. Tribe D charges
Corporation E rent at fair market value for its head-
quarters. However, the lease agreement with Tribe D
includes a provision whereby Corporation E deposits
an amount approximating its net revenues into Tribe

D's Trust Account, characterizing the revenue as
additional rent. Subsequently, members of Tribe D's
Tribal Council authorize per capita distributions out
of the Trust Account in an aggregate amount equal to
the purported "additional rent" to the group of Tribe
D members who own Corporation E. The distribu-
tions of the mischaracterized business profits from
the Trust Account constitute gross income under 26
U.S.C. § 61 to the members receiving the distribu-
tions.

Example 3 - Mischaracterized Gaming Revenues
Tribe F is a federally recognized Indian tribe.
Tribe F owns all of Corporation G, which owns and
operates a casino located on land held in trust by the
Secretary of the Interior for the benefit of Tribe F.
All of Corporation G's gaming revenues are subject
to the Indian Gaming Regulatory Act. Corporation G
distributes 50% of its net gaming revenues to Tribe
F. Under a lease agreement with Tribe F, Corpora-
tion G deposits the remaining 50% of its net gaming
revenues into Tribe F's Trust Account, characteriz-
ing the deposits as rent for use of the land for the
casino. Subsequently, members of Tribe F's Tribal
Council authorize per capita distributions to every
member of the tribe out of the net gaming revenues
that are held in the Trust Account. The distributions
out of the Trust Account are mischaracterized gam-
ing revenues. Because per capita distributions of net
gaming revenues are subject to federal income tax-
ation, the distributions constitute gross income under
26 U.S.C. § 61 to the members of the tribe receiving
the distributions.

# LIMITATION

This notice applies only to per capita
distributions made by the Secretary of the
Interior or an Indian tribe out of a tribal
Trust Account, as defined at 25 C.F.R.
§ 115.002. This notice does not affect the
federal income taxation of distributions
made from individual Indian trust ac-
counts, from which per capita distribu-
tions cannot be made. This notice also
does not affect the federal income taxation
of and withholding from distributions
made pursuant to a Revenue Allocation
Plan under the Indian Gaming Regulatory
Act, Pub. L. No. 100-497, 102 Stat.
2475, 25 U.S.C. §§ 2701-2721.

# DRAFTING INFORMATION

The principal author of this notice is
James Martin of the Office of Associate
Chief Counsel (Tax Exempt & Govern-
ment Entities). For further information,
please contact Mr. Martin at (202) 317-
5800 (not a toll-free number).

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# Part IV. Items of General Interest

Notice of proposed
rulemaking by cross-
reference to temporary
regulations and notice of
public hearing

## REG-130967-13

Regulations Relating to Information
Reporting by Foreign Financial
Institutions and Withholding on Certain
Payments to Foreign Financial
Institutions and Other Foreign Entities

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Notice of proposed rulemaking
by 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 issuing
final and temporary regulations that pro-
vide guidance under chapter 4 of Subtitle
A (sections 1471 through 1474) of the
Internal Revenue Code of 1986 (Code).
These regulations address reporting by
foreign financial institutions (FFIs) with
respect to U.S. accounts and withholding
on certain payments to FFIs and other
foreign entities. The text of the temporary
regulations published in the Federal Reg-
ister also serves as the text of these pro-
posed regulations. This document also
provides notice of a public hearing 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 May
5, 2014.

ADDRESSES: Send submissions to: CC:
PA:LPD:PR (REG-130967-13), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand-
delivered Monday through Friday be-
tween the hours of 8:00 a.m. and 4:00
p.m. to CC:PA:LPD:PR (REG-130967-
13), Courier's Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW,

Washington, DC 20224, or sent electron-
ically, via the Federal eRulemaking Portal
at www.regulations.gov (IRS REG-
130967-13). The public hearing will be
held in the IRS Auditorium, Internal Rev-
enue Building, 1111 Constitution Avenue,
NW, Washington, DC.

## FOR FURTHER INFORMATION

CONTACT: Concerning the proposed
regulations, 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 on
the building access list to attend the hear-
ing, Oluwafunmilayo (Funmi) Taylor, at
(202) 317-5179 (not toll-free numbers).

## SUPPLEMENTARY INFORMATION: Background

Temporary regulations in this issue of
the Bulletin amend the Income Tax Reg-
ulations (26 CFR part 1) under chapter 4
of Subtitle A of the Code. The temporary
regulations set forth rules relating to in-
formation reporting by FFIs with respect
to U.S. accounts and withholding on cer-
tain payments to FFIs and other foreign
entities. The temporary regulations revise
and refine final regulations (TD 9610) un-
der chapter 4 that were published in the
Federal Register (78 FR 5874) on Janu-
ary 28, 2013, as corrected on September
10, 2013 (78 FR 55202). The text of the
temporary regulations also serves as the
text of these proposed regulations. The
preamble to the temporary regulations ex-
plains the temporary regulations and these
proposed regulations.

## Special Analyses

It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Exec-
utive Order 12866, as supplemented by
Executive Order 13653. Therefore, a reg-
ulatory assessment is not required. It has
also been determined that section 553(b)
of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
regulations.

It is hereby certified that the collection
of information in this notice of proposed
rulemaking will not have a significant

economic impact on a substantial number
of small business entities within the mean-
ing of section 601(6) of the Regulatory
Flexibility Act (5 U.S.C. chapter 6). Al-
though the Treasury Department and the
IRS anticipate that a substantial number of
domestic small business entities will be
affected by the collection of information
in this notice of proposed rulemaking, the
Treasury Department and the IRS believe
that the economic impact to these entities
resulting from the information collection
requirements will not be significant.

The domestic small business entities
that are subject to chapter 4 and the col-
lection of information in this notice of
proposed rulemaking are those domestic
business entities that are payors of certain
U.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 required
to be familiar with chapter 3's information
collection and reporting rules and forms in
order to determine a payee's U.S. with-
holding status and, based on that status,
withhold and remit the proper amount of
tax on payments of U.S. source FDAP
income. Small domestic business entities
that are payors of U.S. source income
have developed and implemented internal
reporting 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 present
chapter 3 reporting forms, with the revised
forms 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 proposed
rulemaking build on reporting and infor-
mation collection systems familiar to and
currently used by payors of U.S. source
FDAP income that are domestic small
business entities. Because the information
collection and reporting requirements of
chapter 4 and this notice of proposed rule-
making build on existing chapter 3 infor-
mation collection and reporting systems
of domestic small business entities mak-
ing payments of U.S. source income to
foreign persons, the information collec-

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tion requirements of this notice of pro-
posed rulemaking impose little additional
burden on those domestic entities. There-
fore, a Regulatory Flexibility Analysis un-
der the Regulatory Flexibility Act is not
required.

Pursuant to section 7805(f) of the
Code, this regulation has been submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small businesses.
The IRS invites the public to comment on
this certification.

## Comments and Public Hearing

Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments (a
signed original and eight (8) copies) or
electronic comments that are submitted
timely to the IRS. The IRS and the Trea-
sury Department request comments on all
aspects of the proposed regulations. All
comments will be available for public in-
spection and copying.

A public hearing has been scheduled
for June 24, 2014, beginning at 10 a.m. in
the Auditorium, Internal Revenue Build-
ing, 1111 Constitution Avenue, NW,
Washington, DC. Due to building security
procedures, visitors must enter at the Con-
stitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the "FOR FURTHER IN-
FORMATION CONTACT" section of
this preamble.

The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit electronic or written comments, an
outline of the topics to be discussed, and
the time to be devoted to each topic. Sub-
mit a signed original and eight (8) copies
or an electronic copy of the topics outline
by May 5, 2014. A period of 10 minutes
will be allotted to each person for making
comments. An agenda showing the sched-
uling of the speakers will be prepared
after the deadline for receiving outlines
has passed. Copies of the agenda will be
available free of charge at the hearing.

## Drafting Information

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

* * * * *

## Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 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. 1471.

Section 1.1471-3 is also issued under
26 U.S.C. 1471.

Section 1.1471-4 is also issued under
26 U.S.C. 1471.

Section 1.1471-5 is also issued under
26 U.S.C. 1471.

Section 1.1471-6 is also issued under
26 U.S.C. 1471.

Section 1.1472-1 is also issued under
26 U.S.C. 1472.

Section 1.1471-3 is also issued under
26 U.S.C. 1473.

Section 1.1474-1 is also issued under
26 U.S.C. 1474.

Section 1.1474-6 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).

The revisions and additions read as fol-
lows:

§ 1.1471-1 Scope of chapter 4 and
definitions.

* * * * *

(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 issue
of 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 elsewhere
in this issue of the Bulletin].

* * * * *

(20) [The text of proposed § 1.1471-
1(b)(20) is the same as the text of
§ 1.1471-1T(b)(20) published elsewhere
in this issue of the Bulletin].

** * * *

(23) [The text of the proposed amend-
ment to § 1.1471-1(b)(23) is the same as
the text of § 1.1471-1T(b)(23) published
elsewhere in this issue of the Bulletin].

* * * * *

(31) [The text of proposed § 1.1471-
1(b)(31) is the same as the text of
§1.1471-1T(b)(31) published elsewhere
in this issue of the Bulletin].

* * * * *

(35) [The text of the proposed amend-
ment to § 1.1471-1(b)(35) is the same as
the text of § 1.1471-1T(b)(35) published
elsewhere in this issue of the Bulletin].

* * * * *

(41) [The text of the proposed amend-
ment to § 1.1471-1(b)(41) is the same as
the text of § 1.1471-1T(b)(41) published
elsewhere in this issue of the Bulletin].

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(43) [The text of proposed § 1.1471-
1(b)(43) is the same as the text of
§ 1.1471-1T(b)(43) published elsewhere
in this issue of the Bulletin].

(48) [The text of the proposed amend-
ment to § 1.1471-1(b)(48) is the same as
the text of § 1.1471-1T(b)(48) published
elsewhere in this issue of the Bulletin].

(50) [The text of the proposed amend-
ment to § 1.1471-1(b)(50) is the same as
the text of § 1.1471-1T(b)(50) published
elsewhere in this issue of the Bulletin].

(67) [The text of proposed § 1.1471-
1(b)(67) is the same as the text of
§ 1.1471-1T(b)(67) published elsewhere
in this issue of the Bulletin].

(76) [The text of the proposed amend-
ment to § 1.1471-1(b)(76) is the same as
the text of § 1.1471-1T(b)(76) published
elsewhere in this issue of the Bulletin].

(77) [The text of the proposed amend-
ment to § 1.1471-1(b)(77) is the same as
the text of § 1.1471-1T(b)(77) published
elsewhere in this issue of the Bulletin].

* * * * *

(81) [The text of proposed § 1.1471-
1(b)(81) is the same as the text of
§ 1.1471-1T(b)(81) published elsewhere
in this issue of the Bulletin].

* * * * *

(83) [The text of the proposed amend-
ment to § 1.1471-1(b)(83) is the same as
the text of § 1.1471-1T(b)(83) published
elsewhere in this issue of the Bulletin].

* * * * *

(88) [The text of the proposed amend-
ment to § 1.1471-1(b)(88) is the same as
the text of § 1.1471-1T(b)(88) published
elsewhere in this issue of the Bulletin].

* * * * *

(91) [The text of the proposed amend-
ment to § 1.1471-1(b)(91) is the same as
the text of § 1.1471-1T(b)(91) published
elsewhere in this issue of the Bulletin].

* * * * *

(98) [The text of the proposed amend-
ment to § 1.1471-1(b)(98) is the same as
the text of § 1.1471-1T(b)(98) published
elsewhere in this issue of the Bulletin].
* * * * *

(100) [The text of the proposed amend-
ment to § 1.1471-1(b)(100) is the same as
the text of § 1.1471-1T(b)(100) published
elsewhere in this issue of the Bulletin].
* * * * *

(104) * * * (i) [The text of the proposed
amendment to § 1.1471-1(b)(104)(i) is
the same as the text of § 1.1471-
1T(b)(104)(i) published elsewhere in this
issue of the Bulletin].

(ii) * * *

(A) [The text of the proposed amend-
ment to § 1.1471-1(b)(104)(ii)(A) is the
same as the text of § 1.1471-
1T(b)(104)(ii)(A) published elsewhere in
this issue of the Bulletin].

(B) [The text of the proposed amend-
ment to § 1.1471-1(b)(104)(ii)(B) is the
same as the text of § 1.1471-
1T(b)(104)(ii)(B) published elsewhere in
this issue of the Bulletin].

(C) [The text of the proposed amend-
ment to § 1.1471-1(b)(104)(ii)(C) is the
same as the text of § 1.1471-
1T(b)(104)(ii)(C) published elsewhere in
this issue of the Bulletin].

(105) [The text of the proposed amend-
ment to § 1.1471-1(b)(105) is the same as
the text of § 1.1471-1T(b)(105) published
elsewhere in this issue of the Bulletin].

* * * * *

(113) [The text of proposed § 1.1471-
1(b)(113) is the same as the text of
§ 1.1471-1T(b)(113) published elsewhere
in this issue of the Bulletin].

* * * * *

(115) [The text of proposed § 1.1471-
1(b)(115) is the same as the text of
§ 1.1471-1T(b)(115) published elsewhere
in this issue of the Bulletin].

* * * * *

(123) [The text of proposed § 1.1471-
1(b)(123) is the same as the text of
§ 1.1471-1T(b)(123) published elsewhere
in this issue of the Bulletin].

(124) [The text of the proposed amend-
ment to § 1.1471-1(b)(124) is the same as
the text of § 1.1471-1T(b)(124) published
elsewhere in this issue of the Bulletin].

(125) [The text of the proposed amend-
ment to § 1.1471-1(b)(125) is the same as
the text of § 1.1471-1T(b)(125) published
elsewhere in this issue of the Bulletin].
* * * * *

(128) [The text of the proposed amend-
ment to § 1.1471-1(b)(128) is the same as

the text of § 1.1471-1T(b)(128) published
elsewhere in this issue of the Bulletin].

* * * * *

(135) [The text of the proposed amend-
ment to § 1.1471-1(b)(135) is the same as
the text of § 1.1471-1T(b)(135) published
elsewhere in this issue of the Bulletin].

* * * * *

(141) [The text of the proposed amend-
ment to § 1.1471-1(b)(141) is the same as
the text of § 1.1471-1T(b)(141) published
elsewhere 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 to
paragraph (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 and
withhold tax on withholdable payments
to certain FFIs.

(a) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-2(a)(1) is the same as
the text of § 1.1471-2T(a)(1) published
elsewhere 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 as
the text of § 1.1471-2T(a)(2)(i) published
elsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-
ment to § 1.1471-2(a)(2)(ii) introductory
text is the same as the text of § 1.1471-
2T(a)(2)(ii) published elsewhere in this
issue of the Bulletin].

(iii) * * *

(A) [The text of the proposed amend-
ment to § 1.1471-2(a)(2)(iii)(A) is the
same as the text of § 1.1471-
2T(a)(2)(iii)(A) published elsewhere in
this issue of the Bulletin].

* * * * *

(v) [The text of the proposed amend-
ment to § 1.1471-2(a)(2)(v) is the same as
the text of § 1.1471-2T(a)(2)(v) published
elsewhere in this issue of the Bulletin].

* * * * *

(4) * * *

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(ii) [The text of the proposed amend-
ment to § 1.1471-2(a)(4)(ii) is the same as
the 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 the
same as the text of § 1.1471-
2T(a)(4)(ii)(A) published elsewhere in
this issue of the Bulletin].

(B) [The text of the proposed amend-
ment to § 1.1471-2(a)(4)(ii)(B) is the
same as the text of § 1.1471-
2T(a)(4)(ii)(B) published elsewhere in
this 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 the
same as the text of § 1.1471-
2T(b)(2)(i)(A)(1) published elsewhere in
this issue of the Bulletin].

* * * * *

(ii) * * *

(A) * * *

(4) [The text of the proposed amend-
ment to § 1.1471-2(b)(2)(ii)(A)(4) is the
same as the text of § 1.1471-
2T(b)(2)(ii)(A)(4) published elsewhere in
this issue of the Bulletin].

* * * * *

(B) * * *

(2) [The text of the proposed amend-
ment to § 1.1471-2(b)(2)(ii)(B)(2) is the
same as the text of § 1.1471-
2T(b)(2)(ii)(B)(2) published elsewhere in
this issue of the Bulletin].

* * * * *

(iv) [The text of the proposed amend-
ment to § 1.1471-2(b)(2)(iv) is the same
as 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 same
as 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) introductory
text, (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) introductory text,
(d)(11)(viii)(C), (d)(12)(iii)(A) through
(B), (e)(2) through (3), (e)(4) introductory
text, (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).

The revisions and additions read as fol-
lows:

§ 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 same
as the text of § 1.1471-3T(a)(3)(iii) pub-
lished elsewhere in this issue of the Bul-
letin].

* * * * *

(v) [The text of the proposed amend-
ment to § 1.1471-3(a)(3)(v) is the same as
the text of § 1.1471-3T(a)(3)(v) published
elsewhere in this issue of the Bulletin].

(vi) [The text of the proposed amend-
ment to § 1.1471-3(a)(3)(vi) is the same
as 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-
ment to § 1.1471-3(b)(3) is the same as
the text of § 1.1471-3T(b)(3) published
elsewhere in this issue of the Bulletin].

* * * * *

(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 in
this issue of the Bulletin].

(D) [The text of the proposed amend-
ment to § 1.1471-3(c)(3)(ii)(D) is the
same as the text of § 1.1471-
3T(c)(3)(ii)(D) published elsewhere in
this 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].

** * * *

(5) [The text of the proposed amend-
ment to § 1.1471-3(c)(3)(iii)(A)(5) is the
same as the text of § 1.1471-
3T(c)(3)(iii)(A)(5) published elsewhere in
this issue of the Bulletin].

* * * * *

(B) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-3(c)(3)(iii)(B)(1) is the
same as the text of § 1.1471-
3T(c)(3)(iii)(B)(1) published elsewhere in
this issue of the Bulletin].

(2) [The text of the proposed amend-
ment to § 1.1471-3(c)(3)(iii)(B)(2) is the
same as the text of § 1.1471-
3T(c)(3)(iii)(B)(2) published elsewhere in
this issue of the Bulletin].

(3) [The text of the proposed amend-
ment to § 1.1471-3(c)(3)(iii)(B)(3) is the
same as the text of § 1.1471-
3T(c)(3)(iii)(B)(3) published elsewhere in
this issue of the Bulletin].

(4) [The text of the proposed amend-
ment to § 1.1471-3(c)(3)(iii)(B)(4) is the
same as the text of § 1.1471-
3T(c)(3)(iii)(B)(4) published elsewhere in
this issue of the Bulletin].

* * * * *

(5) * * *

(ii) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-3(c)(5)(ii)(B) is the
same as the text of § 1.1471-
3T(c)(5)(ii)(B) published elsewhere in
this 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

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same as the text of § 1.1471-
3T(c)(6)(ii)(B)(3) published elsewhere in
this issue of the Bulletin].

* * * * *

(5) [The text of the proposed amend-
ment to § 1.1471-3(c)(6)(ii)(B)(5) is the
same as the text of § 1.1471-
3T(c)(6)(ii)(B)(5) published elsewhere in
this issue of the Bulletin].

(6) [The text of the proposed amend-
ment to § 1.1471-3(c)(6)(ii)(B)(6) is the
same as the text of § 1.1471-
3T(c)(6)(ii)(B)(6) published elsewhere in
this 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)
published
elsewhere 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 the
same as the text of § 1.1471-
3T(c)(6)(ii)(C)(3) published elsewhere in
this issue of the Bulletin].

(4) [The text of the proposed amend-
ment to § 1.1471-3(c)(6)(ii)(C)(4) is the
same as the text of § 1.1471-
3T(c)(6)(ii)(C)(4) published elsewhere in
this issue of the Bulletin].

(5) [The text of the proposed amend-
ment to § 1.1471-3(c)(6)(ii)(C)(5) is the
same as the text of § 1.1471-
3T(c)(6)(ii)(C)(5) published elsewhere in
this issue of the Bulletin].

* * * * *

(E) * * *

(3) [The text of the proposed amend-
ment to § 1.1471-3(c)(6)(ii)(E)(3) is the
same as the text of § 1.1471-
3T(c)(6)(ii)(E)(3) published elsewhere in
this issue of the Bulletin].

* * * * *

(iv) [The text of the proposed amend-
ment to § 1.1471-3(c)(6)(iv) is the same
as 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 the
same as the text of § 1.1471-
3T(c)(6)(v)(A) published elsewhere in
this issue of the Bulletin].

(B) [The text of the proposed amend-
ment to § 1.1471-3(c)(6)(v)(B) is the
same as the text of § 1.1471-

3T(c)(6)(v)(B) published elsewhere in this
issue 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 elsewhere
in this issue of the Bulletin].

(9) * * *

(ii) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-3(c)(9)(ii)(B) is the
same as the text of § 1.1471-
3T(c)(9)(ii)(B) published elsewhere in
this issue of the Bulletin].

* * * * *

(v) [The text of the proposed amend-
ment to § 1.1471-3(c)(9)(v) is the same as
the text of § 1.1471-3T(c)(9)(v) published
elsewhere in this issue of the Bulletin].

(d) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-3(d)(1) is the same as
the text of § 1.1471-3T(d)(1) published
elsewhere in this issue of the Bulletin].

(2) * * *

(i) [The text of the proposed amend-
ment to § 1.1471-3(d)(2)(i) is the same as
the text of § 1.1471-3T(d)(2)(i) published
elsewhere in this issue of the Bulletin].

* * * * *

(iii) [The text of the proposed amend-
ment to § 1.1471-3(d)(2)(iii) is the same
as 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-
ment to § 1.1471-3(d)(4)(i) is the same as
the text of § 1.1471-3T(d)(4)(i) published
elsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-
ment to § 1.1471-3(d)(4)(ii) is the same
as 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) introductory
text is the same as the text of § 1.1471-
3T(d)(4)(iii) published elsewhere in this
issue of the Bulletin].

(A) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-3(d)(4)(iii)(A)(1) is the
same as the text of § 1.1471-

3T(d)(4)(iii)(A)(1) published elsewhere in
this issue of the Bulletin].

* * * * *

(iv) * * *

(A) [The text of the proposed amend-
ment to § 1.1471-3(d)(4)(iv)(A) is the
same as the text of § 1.1471-
3T(d)(4)(iv)(A) published elsewhere in
this issue of the Bulletin].

* * * * *

(C) [The text of the proposed amend-
ment to § 1.1471-3(d)(4)(iv)(C) is the
same as the text of § 1.1471-
3T(d)(4)(iv)(C) published elsewhere in
this issue of the Bulletin].

(D) [The text of the proposed amend-
ment to § 1.1471-3(d)(4)(iv)(D) is the
same as the text of § 1.1471-
3T(d)(4)(iv)(D) published elsewhere in
this issue of the Bulletin].

(v) [The text of the proposed amend-
ment to § 1.1471-3(d)(4)(v) is the same as
the text of § 1.1471-3T(d)(4)(v) pub-
lished elsewhere in this issue of the Bul-
letin].

(5) * * *

(i) [The text of the proposed amend-
ment to § 1.1471-3(d)(5)(i) is the same as
the text of § 1.1471-3T(d)(5)(i) published
elsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-
ment to § 1.1471-3(d)(5)(ii) is the same
as the text of § 1.1471-
3T(d)(5)(ii)(A) published elsewhere in
this 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 the
same as the text of § 1.1471-
3T(d)(6)(vii)(A)(1) published elsewhere
in 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) published
elsewhere in this issue of the Bulletin].
* * * * *

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(C) [The text of the proposed amend-
ment to § 1.1471-3(d)(11)(viii)(C) is the
same as the text of § 1.1471-
3T(d)(11)(vii)(C) published elsewhere in
this 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 the
same as the text of § 1.1471-
3T(d)(12)(iii)(A) published elsewhere in
this issue of the Bulletin].

(B) [The text of the proposed amend-
ment to § 1.1471-3(d)(12)(iii)(B) is the
same as the text of § 1.1471-
3T(d)(12)(iii)(B) published elsewhere in
this issue of the Bulletin].

(e) * * *

(2) [The text of the proposed amend-
ment to § 1.1471-3(e)(2) is the same as
the text of § 1.1471-3T(e)(2) published
elsewhere 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 text
is 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 the
text 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) introductory
text is the same as the text of § 1.1471-
3T(e)(4)(v) published elsewhere in this
issue of the Bulletin].

* * * * *

(B) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-3(e)(4)(v)(B)(1) is the
same as the text of § 1.1471-
3T(e)(4)(v)(B)(1) published elsewhere in
this issue of the Bulletin].

(2) [The text of the proposed amend-
ment to § 1.1471-3(e)(4)(v)(B)(2) is the
same as the text of § 1.1471-
3T(e)(4)(v)(B)(2) published elsewhere in
this issue of the Bulletin].

* * * * *

(vi) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-3(e)(4)(vi)(B) is the
same as the text of § 1.1471-
3T(e)(4)(vi)(B) published elsewhere in
this issue of the Bulletin].

(vii) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-3(e)(4)(vii)(B) is the
same as the text of § 1.1471-
3T(e)(4)(vii)(B) published elsewhere in
this issue of the Bulletin].

(viii) * * *

(A) * * *

(4) [The text of the proposed amend-
ment to § 1.1471-3(e)(4)(viii)(A)(4) is the
same as the text of § 1.1471-
3T(e)(4)(viii)(A)(4) published elsewhere
in 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 text
of § 1.1471-3T(f)(1) through (f)(9)(ii)
published elsewhere in this issue of the
Bulletin].

* * * * *

Par. 5. Section 1.1471-4 is amended
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) as
paragraph (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 text
to paragraph (d)(7).

The additions and revisions read as fol-
lows:

§ 1.1471-4 FFI agreement.

(a) * * *

(3) [The text of the proposed amend-
ment to § 1.1471-4(a)(3) is the same as
the text of § 1.1471-4T(a)(3) published
elsewhere in this issue of the Bulletin].

* * * * *

(b) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-4(b)(1) is the same as
the text of § 1.1471-4T(b)(1) published
elsewhere in this issue of the Bulletin].

(2) [The text of the proposed amend-
ment to § 1.1471-4(b)(2) is the same as
the text of § 1.1471-4T(b)(2) published
elsewhere in this issue of the Bulletin].

(3) [The text of the proposed amend-
ment to § 1.1471-4(b)(3) is the same as
the text of § 1.1471-4T(b)(3) published
elsewhere 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 elsewhere
in 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].

* * * * *

(6) [The text of the proposed amend-
ment to § 1.1471-4(b)(6) is the same as
the text of § 1.1471-4T(b)(6) published
elsewhere 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) is
the same as the text of § 1.1471-

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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 the
same as the text of § 1.1471-
4T(c)(5)(iv)(E) published elsewhere in
this issue of the Bulletin].

* * * * *

(d) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-4(d)(1) is the same as
the text of § 1.1471-4T(d)(1) published
elsewhere in this issue of the Bulletin].

(2) * * *

(i) [The text of the proposed amend-
ment to § 1.1471-4(d)(2)(i) is the same as
the text of § 1.1471-4T(d)(2)(i) published
elsewhere in this issue of the Bulletin].

(ii) * * *

(A) [The text of the proposed amend-
ment to § 1.1471-4(d)(2)(ii)(A) is the
same as the text of § 1.1471-
4T(d)(2)(ii)(A) published elsewhere in
this issue of the Bulletin].

(B) * * *

(2) [The text of the proposed amend-
ment to § 1.1471-4(d)(2)(ii)(B)(2) is the
same as the text of § 1.1471-
4T(d)(2)(ii)(B)(2) published elsewhere in
this issue of the Bulletin].

* * * * *

(E) [The text of the proposed amend-
ment to § 1.1471-4(d)(2)(ii)(E) is the
same as the text of § 1.1471-
4T(d)(2)(ii)(E) published elsewhere in
this 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].

(iii) * * *

(A) [The text of the proposed amend-
ment to § 1.1471-4(d)(2)(iii)(A) is the
same as the text of § 1.1471-
4T(d)(2)(iii)(A) published elsewhere in
this 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 the
same as the text of § 1.1471-
4T(d)(3)(ii)(E) published elsewhere in
this issue of the Bulletin].

(iii) * * *

(F) [The text of the proposed amend-
ment to § 1.1471-4(d)(3)(iii)(F) is the
same as the text of § 1.1471-
4T(d)(3)(iii)(F) published elsewhere in
this issue of the Bulletin].

* * * * *

(5) * * *

(v) [The text of the proposed amend-
ment to § 1.1471-4(d)(5)(v) is the same
as 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 same
as 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].

* * * * *

(7) [The text of the proposed amend-
ment to § 1.1471-4(d)(7) introductory
text 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 as
the text of § 1.1471-4T(d)(7)(i) published
elsewhere in this issue of the Bulletin].

(ii) * * *

(A) [The text of the proposed amend-
ment to § 1.1471-4(d)(7)(ii)(A) is the
same as the text of § 1.1471-
4T(d)(7)(ii)(A) published elsewhere in
this issue of the Bulletin].

* * * * *

(iii) [The text of the proposed amend-
ment to § 1.1471-4(d)(7)(iii) is the same
as 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 the
same as the text of § 1.1471-

4T(d)(7)(iv)(A) published elsewhere in
this issue of the Bulletin].

(B) [The text of the proposed amend-
ment to § 1.1471-4(d)(7)(iv)(B) is the
same as the text of § 1.1471-
4T(d)(7)(iv)(B) published elsewhere in
this issue of the Bulletin].

(8) [The text of the proposed amend-
ment to § 1.1471-4(d)(8) is the same as
the text of § 1.1471-4T(d)(8) published
elsewhere 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 the
text of Example 3 of § 1.1471-4T(d)(9) published
elsewhere in this issue of the Bulletin].

* * * * *

Example 5. [The text of the proposed amendment
to Example 5 of § 1.1471-4(d)(9) is the same as the
text of Example 5 of § 1.1471-4T(d)(9) published
elsewhere in this issue of the Bulletin].

* * * * *

Example 7. [The text of the proposed amendment
to Example 7 of § 1.1471-4(d)(9) is the same as the
text of Example 7 of § 1.1471-4T(d)(9) published
elsewhere in this issue of the Bulletin].

(e) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-4(e)(1) is the same as
the text of § 1.1471-4T(e)(1) published
elsewhere in this issue of the Bulletin].

(2) * * *

(ii) [The text of the proposed amend-
ment to § 1.1471-4(e)(2)(ii) is the same
as 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 as
the text of § 1.1471-4T(f)(4)(i) published
elsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-
ment to § 1.1471-4(f)(4)(ii) is the same as
the 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) introductory
text 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 same
as the text of § 1.1471-4T(g)(1)(ii) pub-

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lished elsewhere in this issue of the Bul-
letin].

* * * * *

(2) [The text of the proposed amend-
ment to § 1.1471-4(g)(2) is the same as
the text of § 1.1471-4T(g)(2) published
elsewhere in this issue of the Bulletin].

* * * * *

Par. 6. Section 1.1471-5 is amended
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) 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) intro-
ductory text, (f)(2)(i)(B), (f)(2)(iii) through
(iv), (f)(4)(i), (g)(3)(i)(D), and (i).

The additions and revisions read as fol-
lows:

§ 1.1471-5 Definitions applicable to
section 1471.

(a) * * *

(3) * * *

(i) [The text of the proposed amend-
ment to § 1.1471-5(a)(3)(i) is the same as
the text of § 1.1471-5T(a)(3)(i) published
elsewhere in this issue of the Bulletin].

* * * * *

(4) * * *

(i) [The text of the proposed amend-
ment to § 1.1471-5(a)(4)(i) is the same as
the text of § 1.1471-5T(a)(4)(i) published
elsewhere in this issue of the Bulletin].

* * * * *

(b) * * *

(1) * * *

(iii) * * *

(B) * * *
* * * * *

(2) [The text of the proposed amend-
ment to § 1.1471-5(b)(1)(iii)(B)(2) is the
same as the text of § 1.1471-
5T(b)(1)(iii)(B)(2) published elsewhere in
this issue of the Bulletin].

* * * * *

(3) * * *

(iv) [The text of the proposed amend-
ment to § 1.1471-5(b)(3)(iv) is the same
as 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 the
same as the text of § 1.1471-
5T(b)(3)(v)(A) published elsewhere in
this issue of the Bulletin].

(B) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-5(b)(3)(v)(B)(1) is the
same as the text of § 1.1471-
5T(b)(3)(v)(B)(1) published elsewhere in
this issue of the Bulletin].

(2) [The text of the proposed amend-
ment to § 1.1471-5(b)(3)(v)(B)(2) is the
same as the text of § 1.1471-
5T(b)(3)(v)(B)(2) published elsewhere in
this issue of the Bulletin].

(vi) [The text of the proposed amend-
ment to § 1.1471-5(b)(3)(vi) is the same
as 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 the
text 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 the
same as the text of § 1.1471-
5T(e)(1)(v)(A) published elsewhere in
this issue of the Bulletin].

** * * *

(3) * * *

(ii) [The text of the proposed amend-
ment to § 1.1471-5(e)(3)(ii) is the same as
the 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 as
the 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 amendment
to Example 8 of § 1.1471-5(e)(4)(v) is the same as
the 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 the
same as the text of § 1.1471-
5T(e)(5)(i)(A)(3) published elsewhere in
this 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 the
same as the text of § 1.1471-
5T(e)(5)(i)(B)(1) published elsewhere in
this issue of the Bulletin].

* * * * *

(C) [The text of the proposed amend-
ment to § 1.1471-5(e)(5)(i)(C) is the same
as the text of § 1.1471-
5T(e)(5)(i)(C) published elsewhere in this
issue of the Bulletin].

(D) * * *

(1) * * *

(iv) [The text of the proposed amend-
ment to § 1.1471-5(e)(5)(i)(D)(1)(iv) is
the same as the text of § 1.1471-
5T(e)(5)(i)(D)(1)(iv) published elsewhere
in this issue of the Bulletin].

(v) [The text of the proposed amend-
ment to § 1.1471-5(e)(5)(i)(D)(1)(v) is
the same as the text of § 1.1471-
5T(e)(5)(i)(D)(1)(v) published elsewhere
in this issue of the Bulletin].

* * * * *

(iv) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-5(e)(5)(iv)(B) is the
same as the text of § 1.1471-
5T(e)(5)(iv)(B) published elsewhere in
this issue of the Bulletin].

** * * *

(f) * * *

(1) * * *

(i) * * *

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(A) * * *

(6) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(A)(6) is the
same as the text of § 1.1471-
5T(f)(1)(i)(A)(6) published elsewhere in
this issue of the Bulletin].

* * * * *

(B) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(B)(1) is the
same as the text of § 1.1471-
5T(f)(1)(i)(B)(1) published elsewhere in
this issue of the Bulletin].

* * * * *

(3) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(B)(3) is the
same as the text of § 1.1471-
5T(f)(1)(i)(B)(3) published elsewhere in
this issue of the Bulletin].

(C) * * *

(2) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(C)(2) is the
same as the text of § 1.1471-
5T(f)(1)(i)(C)(2) published elsewhere in
this issue of the Bulletin].

* * * * *

(D) * * *

(4) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(D)(4) is the
same as the text of § 1.1471-
5T(f)(1)(i)(D)(4) published elsewhere in
this issue of the Bulletin].

(5) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(D)(5) is the
same as the text of § 1.1471-
5T(f)(1)(i)(D)(5) published elsewhere in
this issue of the Bulletin].

(6) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(D)(6) is the
same as the text of § 1.1471-
5T(f)(1)(i)(D)(6) published elsewhere in
this 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) introductory
text published elsewhere in this issue of
the Bulletin].

* * * * *

(E) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(E) is the same
as 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 the
same as the text of § 1.1471-
5T(f)(1)(i)(E)(1)(ii) published elsewhere
in 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 the
same as the text of § 1.1471-
5T(f)(1)(i)(F)(3)(v) published elsewhere
in this issue of the Bulletin].

(vi) [The text of proposed § 1.1471-
5(f)(1)(i)(F)(3)(vi) is the same as the text
of § 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 text
of § 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 text
of § 1.1471-5T(f)(1)(i)(F)(3)(viii) pub-
lished elsewhere in this issue of the Bul-
letin].

* * * * *

(5) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(i)(F)(5) is the
same as the text of § 1.1471-
5T(f)(1)(i)(F)(5) published elsewhere in
this issue of the Bulletin].

(ii) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-5(f)(1)(ii)(B) is the
same as the text of § 1.1471-
5T(f)(1)(ii)(B) published elsewhere in this
issue of the Bulletin].

* * * * *

(2) [The text of the proposed amend-
ment to § 1.1471-5(f)(2) introductory text
is the same as the text of § 1.1471-
5T(f)(2) published elsewhere in this issue
of the Bulletin].

(i) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-5(f)(2)(i)(B) is the same
as the text of § 1.1471-5T(f)(2)(i)(B) pub-
lished elsewhere in this issue of the Bul-
letin].

* * * * *

(iii) [The text of the proposed amend-
ment to § 1.1471-5(f)(2)(iii) is the same
as the text of § 1.1471-
5T(f)(2)(iii) through (f)(2)(iii)(E) pub-

lished elsewhere in this issue of the Bul-
letin].

(iv) [The text of the proposed amend-
ment to § 1.1471-5(f)(2)(iv) is the same
as 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 elsewhere
in this issue of the Bulletin].

* * * * *

(4) * * *

(i) [The text of the proposed amend-
ment to § 1.1471-5(f)(4)(i) is the same as
the text of § 1.1471-5T(f)(4)(i) published
elsewhere 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 the
same as the text of § 1.1471-
5T(g)(3)(i)(D) published elsewhere in this
issue 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 elsewhere
in 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 of
the 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 of
the 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 owned
by exempt beneficial owners.

* * * * *

(d) * * *

(1) [The text of the proposed amend-
ment to § 1.1471-6(d)(1) is the same as
the text of § 1.1471-6T(d)(1) published
elsewhere in this issue of the Bulletin].
* * * * *

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(4) [The text of the proposed amend-
ment to § 1.1471-6(d)(4) is the same as
the text of § 1.1471-6T(d)(4) published
elsewhere in this issue of the Bulletin].

* * * * *

(f) * * *

(2) * * *

(iii) * * *

(B) [The text of the proposed amend-
ment to § 1.1471-6(f)(2)(iii)(B) is the
same as the text of § 1.1471-
6T(f)(2)(iii)(B) published elsewhere in
this issue of the Bulletin].

(C) [The text of the proposed amend-
ment to § 1.1471-6(f)(2)(iii)(C) is the
same as the text of § 1.1471-
6T(f)(2)(iii)(C) published elsewhere in
this issue of the Bulletin].

* * * * *

(3) * * *

(ii) [The text of the proposed amend-
ment to § 1.1471-6(f)(3)(ii) is the same as
the 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 same
as the text of § 1.1471-6T(f)(3)(iii) pub-
lished elsewhere in this issue of the Bul-
letin].

* * * * *

(5) [The text of the proposed amend-
ment to § 1.1471-6(f)(5) is the same as
the text of § 1.1471-6T(f)(5) published
elsewhere in this issue of the Bulletin].

(6) [The text of the proposed amend-
ment to § 1.1471-6(f)(6) is the same as
the text of § 1.1471-6T(f)(6) published
elsewhere in this issue of the Bulletin].
* * * * *

(g) [The text of the proposed amend-
ment to § 1.1471-6(g) is the same as the
text 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 as
the text of § 1.1471-6T(h)(2) introduc-
tory text through (h)(2)(iii) published
elsewhere in this issue of the Bulletin].

* * * * *

Par. 8. Section 1.1472-1 is amended
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) introductory
text, (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).

The additions and revisions read as fol-
lows:

§ 1.1472-1 Withholding on NFFEs.

* * * * *

(b) * * *

(1) [The text of the proposed amend-
ment to § 1.1472-1(b)(1) is the same as
the text of § 1.1472-1T(b)(1) published
elsewhere in this issue of the Bulletin].

* * * * *

(2) [The text of the proposed amend-
ment to § 1.1472-1(b)(2) is the same as
the text of § 1.1472-1T(b)(2) published
elsewhere in this issue of the Bulletin].

(c) * * *

(1) [The text of the proposed amend-
ment to § 1.1472-1(c)(1) is the same as
the text of § 1.1472-1T(c)(1) published
elsewhere in this issue of the Bulletin].

(i) [The text of the proposed amend-
ment to § 1.1472-1(c)(1)(i) introductory
text 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 as
the 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 same
as 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) introductory
text is the same as the text of § 1.1472-
1T(c)(1)(iv) published elsewhere in this
issue of the Bulletin].

* * * * *

(C) [The text of the proposed amend-
ment to § 1.1472-1(c)(1)(iv)(C) is the
same as the text of § 1.1472-
1T(c)(1)(iv)(C) published elsewhere in
this issue of the Bulletin].

(v) [The text of the proposed amend-
ment to § 1.1472-1(c)(1)(v) is the same as
the text of § 1.1472-1T(c)(1)(v) published
elsewhere 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 as
the text of § 1.1472-1T(c)(2) published
elsewhere 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 issue
of the Bulletin].

(4) [The text of proposed § 1.1472-
1(c)(4) is the same as the text of § 1.1472-
1T(c)(4) published elsewhere in this issue
of the Bulletin].

(5) [The text of proposed § 1.1472-
1(c)(5) is the same as the text of § 1.1472-
1T(c)(5) published elsewhere in this issue
of the Bulletin].

(d) * * *

(1) [The text of the proposed amend-
ment to § 1.1472-1(d)(1) is the same as
the text of § 1.1472-1T(d)(1) published
elsewhere in this issue of the Bulletin].

(2) [The text of the proposed amend-
ment to § 1.1472-1(d)(2) is the same as
the text of § 1.1472-1T(d)(2) published
elsewhere in this issue of 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 of
the 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 of
the Bulletin].

* * * * *

Par. 9. Section 1.1473-1 is amended
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:

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<!-- PageFooter="March 24, 2014" -->
<!-- PageBreak -->

§ 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 same
as 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 the
same as the text of § 1.1473-
1T(a)(3)(iii)(B)(4) published elsewhere in
this issue of the Bulletin].

* * * * *

(4) * * *

(vi) [The text of the proposed amend-
ment to § 1.1473-1(a)(4)(vi) is the same
as 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].

(5) * * *

(i) [The text of the proposed amend-
ment to § 1.1473-1(a)(5)(i) is the same as
the text of § 1.1473-1T(a)(5)(i) published
elsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-
ment to § 1.1473-1(a)(5)(ii) is the same as
the 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 same
as 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 same
as 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 as
the text of § 1.1473-1T(a)(5)(v) published
elsewhere in this issue of the Bulletin].

(vi) [The text of the proposed amend-
ment to § 1.1473-1(a)(5)(vi) is the same
as the text of § 1.1473-1T(a)(5)(vi) pub-

lished elsewhere in this issue of the Bul-
letin].

* * * * *

(b) * * *

(2) * * *

(v) [The text of the proposed amend-
ment to § 1.1473-1(b)(2)(v) is the same as
the 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).

The additions and revisions read as fol-
lows:

§ 1.1474-1 Liability for withheld tax
and withholding agent reporting.

* * * * *

(d) * * *

(1) * * *

(i) [The text of the proposed amend-
ment to § 1.1474-1(d)(1)(i) is the same as
the text of § 1.1474-1T(d)(1)(i) published
elsewhere in this issue of the Bulletin].

(ii) * * *

(A) * * *

(1) * * *

(viii) [The text of the proposed amend-
ment to § 1.1474-1(d)(1)(ii)(A)(1)(viii) is
the 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) is
the 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) is
the same as the text of § 1.1474-
1T(d)(1)(ii)(B)(1)(i) published elsewhere
in this issue of the Bulletin].

* * * * *

(vi) [The text of the proposed amend-
ment to § 1.1474-1(d)(1)(ii)(B)(1)(vi) is
the same as the text of § 1.1474-
1T(d)(1)(ii)(B)(1)(vi) published elsewhere
in this issue of the Bulletin].

(vii) [The text of the proposed amend-
ment to § 1.1474-1(d)(1)(ii)(B)(1)(vii) is
the 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) is
the same as the text of § 1.1474-
1T(d)(1)(ii)(B)(1)(ix) published elsewhere
in this issue of the Bulletin].

* * * * *

(2) * * *

(i) [The text of the proposed amend-
ment to § 1.1474-1(d)(2)(i) is the same as
the text of § 1.1474-1T(d)(2)(i) through
(d)(2)(i)(C) published elsewhere in this
issue of the Bulletin].

* * * * *

(4) * * *

(i) * * *

(B) [The text of the proposed amend-
ment to § 1.1474-1(d)(4)(i)(B) is the
same as the text of § 1.1474-
1T(d)(4)(i)(B) published elsewhere in this
issue of the Bulletin].

* * * * *

(E) [The text of the proposed amend-
ment to § 1.1474-1(d)(4)(i)(E) is the
same as the text of § 1.1474-
1T(d)(4)(i)(E) published elsewhere in this
issue of the Bulletin].

(ii) * * *

(B) [The text of the proposed amend-
ment to § 1.1474-1(d)(4)(ii)(B) is the
same as the text of § 1.1474-
1T(d)(4)(ii)(B) published elsewhere in
this issue of the Bulletin].

(C) [The text of the proposed amend-
ment to § 1.1474-1(d)(4)(ii)(C) is the
same as the text of § 1.1474-
1T(d)(4)(ii)(C) published elsewhere in
this issue of the Bulletin].

(iii) * * *

[The text of the proposed amendment
to § 1.1474-1(d)(4)(iii) is the same as the

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text of § 1.1474-1T(d)(4)(iii) through
(d)(4)(iii)(C) published elsewhere in this
issue of the Bulletin].

* * * * *

(i) * * *

(1) [The text of the proposed amend-
ment to § 1.1474-1(i)(1) introductory text
is the same as the text of § 1.1474-
1T(i)(1) published elsewhere in this issue
of the Bulletin].

(i) [The text of the proposed amend-
ment to § 1.1474-1(i)(1)(i) is the same as
the text of § 1.1474-1T(i)(1)(i) published
elsewhere in this issue of the Bulletin].

(ii) [The text of the proposed amend-
ment to § 1.1474-1(i)(1)(ii) is the same as
the text of § 1.1474-1T(i)(1)(ii) published
elsewhere in this issue of the Bulletin].

(iii) [The text of the proposed amend-
ment to § 1.1474-1(i)(1)(iii) is the same
as 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 text
is the same as the text of § 1.1474-
1T(i)(2) published elsewhere in this issue
of the Bulletin].

* * * * *

(iii) [The text of the proposed amend-
ment to § 1.1474-1(i)(2)(iii) is the same
as the text of § 1.1474-1T(i)(2)(iii) pub-
lished elsewhere in this issue of the Bul-
letin].

* * * * *

Par. 11. Section 1.1474-6 is amended
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 4
with other withholding provisions.

* * * * *

(b) * * *

(1) [The text of the proposed amend-
ment to § 1.1474-6(b)(1) is the same as
the text of § 1.1474-6T(b)(1) published
elsewhere in this issue of the Bulletin].

* * * * *

(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 of
the Bulletin].

* * * * *

John Dalrymple
Deputy Commissioner for Services and
Enforcement

(Filed by the Office of the Federal Register on February 28,
2014, 4:15 p.m., and published in the issue of the Federal
Register for March 6, 2014, 79 F.R. 12812)

## Notice of proposed rulemaking by cross- reference to temporary regulations and notice of public hearing

Withholding of Tax on Certain
U.S. Source Income Paid to
Foreign Persons and Revision
of Information Reporting and
Backup Withholding
Regulations
REG-134361-12

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Notice of proposed rulemaking
by 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 regarding
withholding of tax on certain U.S. source
income paid to foreign persons, informa-
tion reporting and backup withholding
with respect to payments made to certain
U.S. persons, portfolio interest treatment
for nonresident alien individuals and for-
eign corporations, and requirements for
certain claims for refund or credit of in-
come tax made by foreign persons. The
text of the temporary regulations pub-
lished of the Bulletin also serves as the
text of these proposed regulations. This
document also provides notice of public
hearing 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 May
5, 2014.

ADDRESS: Send submissions to: CC:PA:
LPD:PR (REG-134361-12), room 5203,
Internal Revenue Service, PO Box 7604,
Ben Franklin Station, Washington, DC
20044. Submissions may be hand-
delivered Monday through Friday be-
tween the hours of 8:00 a.m. and 4:00
p.m. to CC:PA:LPD:PR (REG-134361-
12), Courier's Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW,
Washington, DC 20224, or sent electron-
ically, via the Federal eRulemaking Portal
at www.regulations.gov (IRS REG-
134361-12). The public hearing will be
held in the IRS Auditorium, Internal Rev-
enue Building, 1111 Constitution Avenue,
NW, Washington, DC.

FOR FURTHER INFORMATION
CONTACT: John Sweeney, (202) 622-
3840 (not a toll-free number).

SUPPLEMENTARY INFORMATION:
Background

Temporary regulations in this issue of
the 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 of
the 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 relating
to the coordination of withholding and
reporting requirements under chapter 4 of
the Code with withholding and reporting
requirements under chapter 3, reporting
requirements under chapter 61, and
backup withholding requirements under
section 3406. The temporary regulations
also provide guidance regarding claims
for credit or refund of chapter 4 withhold-
ing under § 301.6402-3(e). The tempo-
rary regulations also amend § 1.871-14 to
reflect certain changes to the procedures
for interest to qualify as portfolio interest.
The text of the temporary regulations also
serves as the text of these proposed regu-
lations. The preamble to the temporary
regulations explains the temporary regu-
lations and these proposed regulations.

<!-- PageFooter="Bulletin No. 2014-13" -->

<!-- PageFooter="March 24, 2014" -->
<!-- PageBreak -->

## Special Analyses

It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Exec-
utive Order 12866, as supplemented by
Executive Order 13653. Therefore, a reg-
ulatory assessment is not required. It has
also been determined that section 553(b)
of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
regulations.

It is hereby certified that the collection
of information in this notice of proposed
rulemaking will not have a significant
economic impact on a substantial number
of small entities within the meaning of
section 601(6) of the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6.

The domestic small business entities
that are subject to the collections of infor-
mation in this notice of proposed rulemak-
ing are those domestic business entities
that are payors of certain U.S. source in-
come to foreign persons. These domestic
small 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 information
reporting and tax withholding purposes.
The domestic small business entities sub-
ject to the collections of information in
this notice of proposed rulemaking are
also subject to comprehensive information
reporting and tax withholding rules under
chapters 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 are
also subject to information and reporting
rules under section 3406.

Payors of payments that are subject to
the information reporting and withholding
regimes under chapters 3, 4, and 61, and
section 3406 play an important role in
U.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 rulemaking
coordinates the information collection and
reporting requirements of chapters 3 and
61 and section 3406 applicable to domes-
tic small business entities that are payors
of certain U.S. source income with the
information collection and reporting re-
quirements of chapter 4 that are applicable
to those same domestic small business

entities. This notice of proposed rulemak-
ing establishes a more integrated set of
information reporting and tax withholding
rules 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 in
this notice of proposed rulemaking that
will apply to domestic small business en-
tities paying U.S. source income to for-
eign persons reduce burdens otherwise
placed on these entities, including remov-
ing duplicative reporting obligations that
would otherwise apply. In addition, this
notice of proposed rulemaking conforms
the due diligence, withholding, and re-
porting rules under chapters 3, 4, and 61,
and section 3406 to the extent appropriate
in light of the separate objectives of each
chapter or section, thereby reducing bur-
dens that would otherwise apply to do-
mestic small business entities making
payments of U.S. source income to for-
eign persons.

Although the Treasury Department and
the IRS anticipate that a substantial num-
ber of domestic small entities will be af-
fected by the collection of information in
this notice of proposed rulemaking, the
Treasury Department and the IRS believe
that the economic impact to these entities
resulting from the information collection
requirements will not be significant.
Therefore, a Regulatory Flexibility Anal-
ysis under the Regulatory Flexibility Act
is not required. Pursuant to section
7805(f) of the Code, this regulation has
been submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comment on its impact on
small businesses. The Internal Revenue
Service invites the public to comment on
this certification.

## Comments and Public Hearing

Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments (a
signed original and eight (8) copies) or
electronic comments that are submitted
timely to the IRS. The IRS and the Trea-
sury Department request comments on all
aspects of the proposed regulations. All
comments will be available for public in-
spection and copying.

A public hearing has been scheduled
for June 24, 2014, beginning at 10 a.m. in
the Auditorium, Internal Revenue Build-
ing, 1111 Constitution Avenue, NW,
Washington, DC. Due to building security
procedures, visitors must enter at the Con-
stitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the "FOR FURTHER IN-
FORMATION CONTACT" section of
this preamble.

The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit electronic or written comments, an
outline of the topics to be discussed, and
the time to be devoted to each topic. Sub-
mit a signed original and eight (8) copies
or an electronic copy of the topics outline
by May 5, 2014. A period of 10 minutes
will be allotted to each person for making
comments. An agenda showing the sched-
uling of the speakers will be prepared
after the deadline for receiving outlines
has passed. Copies of the agenda will be
available free of charge at the hearing.

## Drafting Information

The principal authors of these regula-
tions are John Sweeney, Joshua Rabon,
Subin Seth, and Nancy Lee of the Office
of Associate Chief Counsel (Interna-
tional). However, other personnel from
the IRS and the Treasury Department par-
ticipated in the development of these reg-
ulations.

* * * * *

* * * * *
* * * * *

## Proposed Amendments to the Regulations

Accordingly, 26 CFR parts 1, 31, and
301 are proposed to be amended as fol-
lows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *

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Par. 2. Section 1.871-14 is amended by
revising 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 of
tax on interest of nonresident alien
individuals and foreign corporations
received from certain portfolio debt
investments.

* * * * *

(b) [The text of the proposed amend-
ment to § 1.871-14(b) is the same as the
text 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 as
the text of § 1.871-14T(c)(2) published
elsewhere 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 the
text of § 1.871-14T(c)(2)(i) through (iv)
published elsewhere in this issue of the
Bulletin.]

(3) * * *

(i) [The text of the proposed amend-
ment to § 1.871-14(c)(3)(i) is the same as
the text of § 1.871-14T(c)(3)(i) published
elsewhere in this issue of the Bulletin.]

* * * * *

(4) [The text of the proposed amend-
ment to § 1.871-14(c)(4) is the same as
the text of § 1.871-14T(c)(4) published
elsewhere in this issue of the Bulletin.]

* * * * *

(e) * * *

(1) [The text of the proposed amend-
ment to § 1.871-14(e)(1) is the same as
the text of § 1.871-14T(e)(1) published
elsewhere in this issue of the Bulletin.]

* * * * *

(i) [The text of the proposed amend-
ment to § 1.871-14(i) is the same as the
text of § 1.871-14T(i) published else-
where in this issue of the Bulletin.]

Par. 3. Section 1.1441-1 is amended
by:

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) introductory
text, (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 the
deduction and withholding of tax on
payments to foreign persons.

(a) [The text of the proposed amend-
ment to § 1.1441-1(a) is the same as the
text 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 as
the text of § 1.1441-1T(b)(1) published
elsewhere in this issue of the Bulletin.]

(2) * * *

(i) [The text of the proposed amend-
ment to § 1.1441-1(b)(2)(i) is the same as
the text of § 1.1441-1T(b)(2)(i) published
elsewhere in this issue of the Bulletin.]

* * * * *

(iii) * * *

(A) [The text of the proposed amend-
ment to § 1.1441-1(b)(2)(iii)(A) is the
same as the text of § 1.1441-
1T(b)(2)(iii)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(iv) * * *

(A) [The text of the proposed amend-
ment to § 1.1441-1(b)(2)(iv)(A) is the
same as the text of § 1.1441-
1T(b)(2)(iv)(A) published elsewhere in
this 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 same
as the text of § 1.1441-
1T(b)(2)(iv)(B)(2) through (4) published
elsewhere in this issue of the Bulletin.]

(C) [The text of the proposed amend-
ment to § 1.1441-1(b)(2)(iv)(C) is the
same as the text of § 1.1441-
1T(b)(2)(iv)(C) published elsewhere in
this issue of the Bulletin.]

* * * * *

(E) [The text of the proposed amend-
ment to § 1.1441-1(b)(2)(iv)(E) is the
same as the text of § 1.1441-
1T(b)(2)(iv)(E) published elsewhere in
this issue of the Bulletin.]

* * * * *

(vi) [The text of the proposed amend-
ment to § 1.1441-1(b)(2)(vi) is the same
as 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 text
of § 1.1441-1T(b)(2)(vii)(B)(2) published
elsewhere 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)

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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 the
same as the text of § 1.1441-
1T(b)(2)(vii(F) published elsewhere in
this issue of the Bulletin.]

(3) * * *

(i) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(i) is the same as
the text of § 1.1441-1T(b)(3)(i) published
elsewhere in this 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 as
the text of § 1.1441-1T(b)(3)(ii)(A)
through (C) published elsewhere in this
issue of the Bulletin.]

(iii) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(iii) is the same
as 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 the
same as the text of § 1.1441-
1T(b)(3)(iii)(A) published elsewhere in
this issue of the Bulletin.]

(1) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(iii)(A)(1) is the
same as the text of § 1.1441-
1T(b)(3)(iii)(A)(1) published elsewhere in
this 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 the
same 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 in
this issue of the Bulletin.]
* * * * *

(D) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(iii)(D) is the
same as the text of § 1.1441-
1T(b)(3)(iii)(D) published elsewhere in
this issue of the Bulletin.]

* * * * *

(iv) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(iv) is the same
as 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 the
same as the text of § 1.1441-
1T(b)(3)(iv)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(v) * * *

(B) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(v)(B) is the
same as the text of § 1.1441-
1T(b)(3)(v)(B) published elsewhere in
this issue of the Bulletin.]

(vi) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(vi) is the same
as 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 same
as 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 the
same as the text of § 1.1441-
1T(b)(3)(ix)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(x) [The text of the proposed amend-
ment to § 1.1441-1(b)(3)(x) is the same as
the text of § 1.1441-1T(b)(3)(x) pub-
lished elsewhere in this issue of the Bul-
letin.]

(4) [The text of the proposed amend-
ment to § 1.1441-1(b)(4) is the same as
the text of § 1.1441-1T(b)(4) published
elsewhere in this issue of the Bulletin.]

(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) published
elsewhere in this issue of the Bulletin.]

* * * * *

(5) * * *

(ix) [The text of the proposed amend-
ment to § 1.1441-1(b)(5)(ix) is the same
as the text of § 1.1441-1T(b)(5)(ix) pub-
lished elsewhere in this issue of the Bul-
letin.]

(6) [The text of the proposed amend-
ment to § 1.1441-1(b)(6) is the same as
the text of § 1.1441-1T(b)(6) published
elsewhere in this issue of the Bulletin.]

(7) * * *

(i) [The text of the proposed amend-
ment to § 1.1441-1(b)(7)(i) is the same as
the text of § 1.1441-1T(b)(7)(i) published
elsewhere in this issue of the Bulletin.]

(A) through (C) [The text of the proposed
amendment 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 same
as 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 elsewhere
in this issue of the Bulletin.]

* * * * *

(c) [The text of the proposed amend-
ment to § 1.1441-1(c) is the same as the
text of § 1.1441-1T(c) published else-
where in this issue of the Bulletin.]

* * * * *

(2) [The text of the proposed amend-
ment to § 1.1441-1(c)(2) is the same as
the text of § 1.1441-1T(c)(2) published
elsewhere in this issue of the Bulletin.]

* * * * *

(5) [The text of the proposed amend-
ment to § 1.1441-1(c)(5) is the same as
the text of § 1.1441-1T(c)(5) published
elsewhere in this issue of the Bulletin.]
* * * * *

(10) [The text of the proposed amend-
ment to § 1.1441-1(c)(10) is the same as
the text of § 1.1441-1T(c)(10) published
elsewhere in this issue of the Bulletin.]
* * * * *

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(12) [The text of the proposed amend-
ment to § 1.1441-1(c)(12) is the same as
the text of § 1.1441-1T(c)(12) published
elsewhere 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 in
this issue of the Bulletin.]

(25) [The text of the proposed amend-
ment to § 1.1441-1(c)(25) is the same as
the text of § 1.1441-1T(c)(25) published
elsewhere in this 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 the
text of § 1.1441-1T(c)(28) through (56)
published elsewhere in this issue of the
Bulletin.]

(d) * * *

(4) [The text of the proposed amend-
ment to § 1.1441-1(d)(4) is the same as
the text of § 1.1441-1T(d)(4) published
elsewhere 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 elsewhere
in this issue of the Bulletin.]

(2) * * *

(ii) [The text of the proposed amend-
ment to § 1.1441-1(e)(2)(ii) is the same as
the text of § 1.1441-1T(e)(2)(ii) pub-
lished elsewhere in this issue of the Bul-
letin.]

(3) * * *

(ii) [The text of the proposed amend-
ment to § 1.1441-1(e)(3)(ii) is the same as
the text of § 1.1441-1T(e)(3)(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 the
same as the text of § 1.1441-
1T(e)(3)(ii)(A) published elsewhere in
this 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 same
as 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 the
same as the text of § 1.1441-
1T(e)(3)(iii)(A) published elsewhere in
this 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 as
the text of § 1.1441-1T(e)(3)(iii)(C)
through (E) published elsewhere in this
issue 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 the
Bulletin.]

(D) * * *

(1) [The text of the proposed amend-
ment to § 1.1441-1(e)(3)(iv)(D)(1) is the
same as the text of § 1.1441-
1T(e)(3)(iv)(D)(1) published elsewhere in
this issue of the Bulletin.]

(2) [The text of the proposed amend-
ment to § 1.1441-1(e)(3)(iv)(D)(2) is the
same as the text of § 1.1441-
1T(e)(3)(iv)(D)(2) published elsewhere in
this issue of the Bulletin.]

(i) and (ii) [The text of the proposed
amendment 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 the
Bulletin.]

(3) through (6) [The text of the proposed
amendment 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.]

* * * * *

(E) [The text of the proposed amend-
ment to § 1.1441-1(e)(3)(iv)(E) is the
same as the text of § 1.1441-
1T(e)(3)(iv)(E) published elsewhere in
this issue of the Bulletin.]

(v) [The text of the proposed amend-
ment to § 1.1441-1(e)(3)(v) is the same as
the text of § 1.1441-1T(e)(3)(v) published
elsewhere in this issue of the Bulletin.]

* * * * *

(4) [The text of the proposed amend-
ment to § 1.1441-1(e)(4) is the same as
the text of § 1.1441-1T(e)(4) published
elsewhere in this issue of the Bulletin.]

(i) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(i) is the same as
the text of § 1.1441-1T(e)(4)(i) published
elsewhere in this issue of the Bulletin.]

(ii) * * *

(A) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(ii)(A) is the
same as the text of § 1.1441-
1T(e)(4)(ii)(A) published elsewhere in
this issue of the Bulletin.]

(B) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(ii)(B) is the
same as the text of § 1.1441-
1T(e)(4)(ii)(B) published elsewhere in
this issue of the Bulletin.]

* * * * *

(8) through (12) [The text of the pro-
posed amendment to § 1.1441-1() is the
same as the text of § 1.1441-1T() pub-
lished elsewhere in this issue of the
Bulletin.]e)(4)(ii)(B)(8) through (12)

(C) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(ii)(C) is the
same as the text of § 1.1441-
1T(e)(4)(ii)(C) published elsewhere in
this issue of the Bulletin.]

(D) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(ii)(D) is the
same as the text of § 1.1441-
1T(e)(4)(ii)(D) published elsewhere in
this issue of the Bulletin.]

(1) through (3) [The text of the proposed
amendment 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 the
Bulletin.]

(iii) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(iii) is the same
as 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 the
same as the text of § 1.1441-
1T(e)(4)(iv)(A) published elsewhere in
this issue of the Bulletin.]

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* * * * *

(C) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(iv)(C) is the
same as the text of § 1.1441-
1T(e)(4)(iv)(C) published elsewhere in
this 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 the
text of § 1.1441-1T(e)(4)(v) through (vii)
published elsewhere in this issue of the
Bulletin.]

(A) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(vii)(A) is the
same as the text of § 1.1441-
1T(e)(4)(vii)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(F) [The text of the proposed amend-
ment to § 1.1441-1(e)(4)(vii)(F) is the
same as the text of § 1.1441-
1T(e)(4)(vii)(F) published elsewhere in
this 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 the
Bulletin.]

(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 same
as 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 as
the text of § 1.1441-1T(e)(5) published
elsewhere in this issue of the Bulletin.]

(f) [The text of the proposed amend-
ment to § 1.1441-1(f) is the same as the
text of § 1.1441-1T(f) published else-
where in this issue of the Bulletin.]

Par. 4. Section 1.1441-3 is amended by
revising paragraphs (a), (c)(4)(i), and (d),
and adding paragraph (j) to read as fol-
lows:

§ 1.1441-3 Determination of amounts to
be withheld.

(a) [The text of the proposed amend-
ment to § 1.1441-3(a) is the same as the
text of § 1.1441-3T(a) published else-
where in this issue of the Bulletin.]

* * * * *

(c) * * *

(4) * * *

(i) [The text of the proposed amend-
ment to § 1.1441-3(c)(4)(i) is the same as
the text of § 1.1441-3T(c)(4)(i) published
elsewhere in this issue of the Bulletin.]

* * * * *

(d) * * *
* * * * *

(j) [The text of the proposed amend-
ment to § 1.1441-3(j) is the same as the
text of § 1.1441-3T(j) published else-
where in this issue of the Bulletin.]

Par. 5. Section 1.1441-4 is amended
by 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 as
follows:

§ 1.1441-4 Exemptions from
withholding for certain effectively
connected income and other amounts.

(a) * * *

(2) * * *

(ii) [The text of the proposed amend-
ment to § 1.1441-4(a)(2)(ii) is the same
as the text of § 1.1441-
4T(a)(2)(ii)(A) through (B) published
elsewhere in this issue of the Bulletin.]
* * * * *

(b) * * *

(2) * * *

(i) [The text of the proposed amend-
ment to § 1.1441-4(b)(2)(i) is the same as
the text of § 1.1441-4T(b)(2)(i) published
elsewhere in this issue of the Bulletin.]
* * * * *

(iii) [The text of the proposed amend-
ment to § 1.1441-4(b)(2)(iii) is the same
as the text of § 1.1441-4T(b)(2)(iii) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(v) [The text of the proposed amend-
ment to § 1.1441-4(b)(2)(iv) is the same
as the text of § 1.1441-4T(b)(2)(iv) pub-
lished elsewhere in this issue of the Bul-
letin.]

(3) [The text of the proposed amend-
ment to § 1.1441-4(b)(3) is the same as
the text of § 1.1441-4T(b)(3) published
elsewhere in this issue of the Bulletin.]
* * * * *

(g) * * *

(3) [The text of the proposed amend-
ment to § 1.1441-4(g)(3) is the same as
the text of § 1.1441-4T(g)(3) published
elsewhere in this issue of the Bulletin.]

(h) [The text of the proposed amend-
ment to § 1.1441-4(h) is the same as the
text of § 1.1441-4T(g)(3) published else-
where in this issue of the Bulletin.]

Par. 6. Section 1.1441-5 is amended
by:

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 to
partnerships, trusts, and estates.

* * * * *

(b) * * *

(2) * * *

(iii) [The text of the proposed amend-
ment to § 1.1441-5(b)(2)(iii) is the same
as the text of § 1.1441-5T(b)(2)(iii) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(vi) [The text of the proposed amend-
ment to § 1.1441-5(b)(2)(vi) is the same
as the text of § 1.1441-5T(b)(2)(vi) pub-
lished elsewhere in this issue of the Bul-
letin.]

(c) * * *

(1) * * *

(i) [The text of the proposed amend-
ment to § 1.1441-5(c)(1)(i) is the same as
the text of § 1.1441-5T(c)(1)(i) published
elsewhere in this issue of the Bulletin.]
* * * * *

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(C) [The text of the proposed amend-
ment to § 1.1441-5(c)(1)(i)(C) is the same
as the text of § 1.1441-5T(c)(1)(i)(C)
published elsewhere in this issue of the
Bulletin.]

* * * * *

(iv) and (v) [The text of the proposed
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 elsewhere
in 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 the
text of § 1.1441-5T(c)(2)(i) through (iii)
published elsewhere in this issue of the
Bulletin.]

(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 in
this issue of the Bulletin.]

(iii) * * *

(A) [The text of the proposed amend-
ment to § 1.1441-5(c)(3)(iii)(A) is the
same as the text of § 1.1441-
5T(c)(3)(iii)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(iv) and (v) [The text of the proposed
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 elsewhere
in 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 text
of § 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 same
as 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 in
this issue of the Bulletin.]

(iii) * * *

(A) [The text of the proposed amend-
ment to § 1.1441-5(e)(5)(iii)(A) is the same
as the text of § 1.1441-5T(e)(5)(iii)(A)
published elsewhere in this issue of the
Bulletin.]

* * * * *

(iv) and (v) [The text of the proposed
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 elsewhere
in this issue of the Bulletin.]

(6) * * *

(ii) [The text of the proposed amend-
ment to § 1.1441-5(e)(6)(ii) is the same as
the text of § 1.1441-5T(e)(6)(ii) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(f) [The text of the proposed amend-
ment to § 1.1441-5(f) is the same as the
text 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 as
the text of § 1.1441-5T(g) published else-
where in this issue of the Bulletin.]

Par. 7. Section 1.1441-6 is amended
by revising paragraphs (a), (b)(1),
(b)(2)(i), (b)(2)(iv), and (c)(1), and adding
paragraph (i)(3) to read as follows:

§ 1.1441-6 Claim of reduced
withholding under an income tax treaty.

(a) [The text of the proposed amend-
ment to § 1.1441-6(a) is the same as the
text of § 1.1441-6T(a) published else-
where in this issue of the Bulletin.]

(b) * * *

(1) [The text of the proposed amend-
ment to § 1.1441-6(b)(1) is the same as
the text of § 1.1441-6T(b)(1) published
elsewhere in this issue of the Bulletin.]

(2) * * *

(i) [The text of the proposed amend-
ment to § 1.1441-6(b)(2)(i) is the same as

the text of § 1.1441-6T(b)(2)(i) published
elsewhere in this issue of the Bulletin.]

* * * * *

(iv) [The text of the proposed amend-
ment to § 1.1441-6(b)(2)(iv) is the same
as the text of § 1.1441-6T(b)(2)(iv) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(c) * * *

(1) [The text of the proposed amend-
ment to § 1.1441-6(c)(1) is the same as
the text of § 1.1441-5T(c)(1) published
elsewhere in this issue of the Bulletin.]

* * * * *

(i) * * *

(3) [The text of the proposed amend-
ment to § 1.1441-6(h) is the same as the
text of § 1.1441-6T(h) published else-
where in this issue of the Bulletin.]

Par. 8. Section 1.1441-7 is amended by
revising paragraphs (b), (c), and (f)(2)(ii),
and adding paragraph (h) to read as fol-
lows:

§ 1.1441-7 General provisions relating
to withholding agents.

* * * * *

(b) [The text of the proposed amend-
ment to § 1.1441-7(b) is the same as the
text 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 the
text 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 as
the text of § 1.1441-7T(f)(2)(ii) published
elsewhere in this issue of the Bulletin.]

* * * * *

(h) [The text of the proposed amend-
ment to § 1.1441-7(g) is the same as the
text of § 1.1441-7T(h) published else-
where in this issue of the Bulletin.]

Par. 9. Section 1.1461-1 is amended by
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) and (v), (c)(5), and
(i) to read as follows:

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§ 1.1461-1 Payments and returns of tax
withheld.

* * * * *

(b) * * *

(1) [The text of the proposed amend-
ment to § 1.1461-1(b)(1) is the same as
the text of § 1.1461-1T(b)(1) published
elsewhere in this issue of the Bulletin.]

* * * * *

(c) * * *

(1) * * *

(i) [The text of the proposed amend-
ment to § 1.1461-1(c)(1)(i) is the same as
the text of § 1.1461-1T(c)(1)(i) published
elsewhere in this issue of the Bulletin.]

(ii) [The text of the proposed amend-
ment to § 1.1461-1(c)(1)(ii) is the same as
the text of § 1.1461-1T(c)(1)(ii) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(E) [The text of the proposed amend-
ment to § 1.1461-1(c)(2)(ii)(E) is the
same as the text of § 1.1461-
1T(c)(2)(ii)(E) published elsewhere in this
issue 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 the
text of § 1.1461-1T(c)(2)(ii)(H) and (I)
published elsewhere in this issue of the
Bulletin.]

* * * * *

(3) * * *

(i) [The text of the proposed amend-
ment to § 1.1461-1(c)(3)(i) is the same as
the text of § 1.1461-1T(c)(3)(i) published
elsewhere in this issue of the Bulletin.]

* * * * *

(iii) [The text of the proposed amend-
ment to § 1.1461-1(c)(3)(iii) is the same
as the text of § 1.1461-1T(c)(3)(iii) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(4) * * *

(i) [The text of the proposed amend-
ment to § 1.1461-1(c)(4)(i) is the same as
the text of § 1.1461-1T(c)(4)(i) published
elsewhere in this issue of the Bulletin.]

(ii) * * *

(A) [The text of the proposed amend-
ment to § 1.1461-1(c)(4)(ii)(A) is the
same as the text of § 1.1461-

1T(c)(4)(ii)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(iv) [The text of the proposed amend-
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.]

* * * * *

(5) [The text of the proposed amend-
ment to § 1.1461-1(c)(5) is the same as
the text of § 1.1461-1T(c)(5) published
elsewhere in this issue of the Bulletin.]

* * * * *

(i) [The text of the proposed amend-
ment to § 1.1461-1(i) is the same as the
text of § 1.1461-1T(i) published else-
where in this issue of the Bulletin.]

Par. 10. Section 1.1461-2 is amended
by revising paragraphs (a)(2)(i), (a)(4),
and (d) to read as follows:

§ 1.1461-2 Adjustments for
overwithholding or underwithholding of
tax.

(a) * * *

(2) * * *

(i) * * *
* * * * *

(4) [The text of the proposed amend-
ment to § 1.1461-2(a)(4) is the same as
the text of § 1.1461-2T(a)(4) published
elsewhere in this issue of the Bulletin.]
* * * * *

(d) [The text of the proposed amend-
ment to § 1.1461-2(d) is the same as the
text of § 1.1461-2T(a)(4) published else-
where in this issue of the Bulletin.]

Par. 11. Section 1.6041-1 is amended
by revising paragraphs (d)(5)(i) and (ii)
and (j) to read as follows:

§ 1.6041-1 Return of information as to
payments of $600 or more.

* * * * *

(d) * * *

(5) * * *

(i) [The text of the proposed amend-
ment to § 1.6041-1(d)(5)(i) is the same as
the text of § 1.6041-1T(d)(5)(i) published
elsewhere in this issue of the Bulletin.]

(ii) [The text of the proposed amend-
ment to § 1.6041-1(d)(5)(ii) is the same
as 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 the
text of § 1.6041-1T(j) published else-
where in this issue of the Bulletin.]

Par. 12. Section 1.6041-4 is amended
by revising paragraphs (a)(1) through (3),
adding paragraph (a)(7), and revising
paragraphs (b) and (d) to read as follows:

§ 1.6041-4 Foreign-related items and
other 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 text
of § 1.6041-4T(a)(1) through (3) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(7) [The text of the proposed amend-
ment to § 1.6041-4(a)(7) is the same as
the text of § 1.6041-4T(a)(7) published
elsewhere in this issue of the Bulletin.]

(b) [The text of the proposed amend-
ment to § 1.6041-4(b) is the same as the
text 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 the
text of § 1.6041-4T(d) published else-
where in this issue of the Bulletin.]

Par. 13. Section 1.6042-2 is amended
by revising paragraph (a)(1)(i) and adding
paragraph (f) to read as follows:

§ 1.6042-2 Returns of information as to
dividends paid.

(a) * * *

(1) * * *

(i) [The text of the proposed amend-
ment to § 1.6042-2(a)(1)(i) is the same as
the text of § 1.6042-2T(a)(1)(i) through
(a)(1)(i)(B)(4) published elsewhere in this
issue of the Bulletin.]

* * * * *

(f) [The text of the proposed amend-
ment to § 1.6042-2(f) is the same as the
text of § 1.6042-2T(f) published else-
where in this issue of the Bulletin.]

Par. 14. Section 1.6042-3 is amended
by revising paragraphs b)(1)(iii),

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(b)(1)(iv),(b)(1)(vi), (b)(3), and (b)(5) to
read as follows:

§ 1.6042-3 Dividends subject to
reporting.

* * * * *

(b) * * *

(1) * * *

(iii) [The text of the proposed amend-
ment to § 1.6042-3(b)(1)(iii) is the same
as the text of § 1.6042-3T(b)(1)(iii) pub-
lished elsewhere in this issue of the Bul-
letin.]

(iv) [The text of the proposed amend-
ment to § 1.6042-3(b)(1)(iv) is the same
as the text of § 1.6042-3T(b)(1)(iv) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(vi) [The text of the proposed amend-
ment to § 1.6042-3(b)(1)(vi) is the same
as the text of § 1.6042-3T(b)(1)(vi) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

(3) [The text of the proposed amend-
ment to § 1.6042-3(b)(3) is the same as
the text of § 1.6042-3T(b)(3) published
elsewhere in this issue of the Bulletin.]
* * * * *

(5) [The text of the proposed amend-
ment to § 1.6042-3(b)(5) is the same as
the text of § 1.6042-3T(b)(5) published
elsewhere in this issue of the Bulletin.]

* * * * *

Par. 15. Section 1.6045-1 is amended
by revising paragraph (c)(3)(ii), adding
paragraphs (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 of
brokers and barter exchanges.

* * * * *

(c) * * *

(3) * * *

(ii) [The text of the proposed amend-
ment to § 1.6045-1(c)(3)(ii) is the same as
the text of § 1.6045-1T(c)(3)(ii) through
(c)(3)(ii)(B) published elsewhere in this
issue of the Bulletin.]

* * * * *

(xiv) [The text of the proposed amend-
ment to § 1.6045-1(c)(3)(xiv) is the same
as 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 same
as 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 as
the text of § 1.6045-1T(g)(1)(i) published
elsewhere in this issue of the Bulletin.]
* * * * *

(3) * * *

(iv) [The text of the proposed amend-
ment to § 1.6045-1(g)(3)(iv) is the same
as 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 as
the text of § 1.6045-1T(g)(4) published
elsewhere in this issue of the Bulletin.]
* * * * *

(5) * * *

(ii) [The text of the proposed amend-
ment to § 1.6045-1(g)(5)(ii) is the same
as the text of § 1.6045-1T(g)(5)(ii) pub-
lished elsewhere in this issue of the Bul-
letin.]

* * * * *

Par. 16. Section 1.6049-4 is amended
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 to
interest paid and original issue discount
includible in gross income after
December 31, 1982.

* * * * *

(b) * * *

(1) [The text of the proposed amend-
ment to § 1.6049-4(b)(1) is the same as
the text of § 1.6049-4T(b)(1) published
elsewhere in this issue of the Bulletin.]

* * * * *

(c) * * *

(4) [The text of the proposed amend-
ment to § 1.6049-4(c)(4) is the same as
the 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 as
the text of § 1.6049-4T(f)(3) published
elsewhere in this issue of the Bulletin.]

(4) * * *

(ii) [The text of the proposed amend-
ment to § 1.6049-4(f)(4)(ii) is the same
as 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 the
Bulletin.]

* * * * *

(h) [The text of the proposed amend-
ment to § 1.6049-4(h) is the same as the
text of § 1.6049-4T(h) published else-
where in this issue of the Bulletin.]

Par. 17. Section 1.6049-5 is amended
by 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 issue
discount subject to reporting after
December 31, 1982.

* * * * *

(b) * * *

(6) [The text of the proposed amend-
ment to § 1.6049-5(b)(6) is the same as
the text of § 1.6049-5T(b)(6) published
elsewhere in this issue of the Bulletin.]

(7) [The text of the proposed amend-
ment to § 1.6049-5(b)(7) is the same as
the text of § 1.6049-5T(b)(7) published
elsewhere in this issue of the Bulletin.]

(8) [The text of the proposed amend-
ment to § 1.6049-5(b)(8) is the same as
the text of § 1.6049-5T(b)(8) published
elsewhere in this issue of the Bulletin.]

* * * * *

(10)(i) [The text of the proposed
amendment to § 1.6049-5(b)(10)(i) is the

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same as the text of § 1.6049-
5T(b)(10)(i) published elsewhere in this
issue of the Bulletin.]

(ii) [The text of the proposed amend-
ment to § 1.6049-5(b)(10)(ii) is the same
as the text of § 1.6049-5T(b)(10)(ii) pub-
lished elsewhere in this issue of the Bul-
letin.]

(11) [The text of the proposed amend-
ment to § 1.6049-5(b)(11) is the same as
the text of § 1.6049-5T(b)(11) published
elsewhere in this issue of the Bulletin.]

(i) [The text of the proposed amend-
ment to § 1.6049-5(b)(11)(i) is the same
as 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 proposed
amendment to § 1.6049-5(b)(11)(ii)(A) is
the same as the text of § 1.6049-
5T(b)(11)(ii)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(12) [The text of the proposed amend-
ment to § 1.6049-5(b)(12) is the same as
the text of § 1.6049-5T(b)(12) published
elsewhere in this issue of the Bulletin.]
* * * * *

(14) [The text of the proposed amend-
ment to § 1.6049-5(b)(14) is the same as
the text of § 1.6049-5T(b)(14) published
elsewhere in this issue of the Bulletin.]

(15) [The text of the proposed amend-
ment to § 1.6049-5(b)(15) is the same as
the text of § 1.6049-5T(b)(15) published
elsewhere in this issue of the Bulletin.]
* * * * *

(c) * * *

(1) [The text of the proposed amend-
ment to § 1.6049-5(c)(1) is the same as
the text of § 1.6049-5T(c)(1) through
(c)(1)(iv) published elsewhere in this is-
sue of the Bulletin.]

(2) [The text of the proposed amend-
ment to § 1.6049-5(c)(2) is the same as
the text of § 1.6049-5T(c)(2) published
elsewhere in this issue of the Bulletin.]

(3) [The text of the proposed amend-
ment to § 1.6049-5(c)(3) is the same as
the text of § 1.6049-5T(c)(3) published
elsewhere in this issue of the Bulletin.]

(4) [The text of the proposed amend-
ment to § 1.6049-5(c)(4) is the same as
the 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 same
as the text of § 1.6049-
5T(c)(5)(i)(F) published elsewhere in this
issue of the Bulletin.]

* * * * *

(6) [The text of the proposed amend-
ment to § 1.6049-5(c)(6) is the same as
the text of § 1.6049-5T(c)(6) published
elsewhere in this issue of the Bulletin.]

(d) * * *

(1) [The text of the proposed amend-
ment to § 1.6049-5(d)(1) is the same as
the text of § 1.6049-5T(d)(1) published
elsewhere in this issue of the Bulletin.]

(2) * * *

(i) [The text of the proposed amend-
ment to § 1.6049-5(d)(2)(i) is the same as
the text of § 1.6049-5T(d)(2)(i) published
elsewhere in this issue of the Bulletin.]

(ii) [The text of the proposed amend-
ment to § 1.6049-5(d)(2)(ii) is the same
as 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 same
as the text of § 1.6049-5T(d)(2)(iii) pub-
lished elsewhere in this issue of the Bul-
letin.]

(3) * * *

(i) [The text of the proposed amend-
ment to § 1.6049-5(d)(3)(i) is the same as
the text of § 1.6049-5T(d)(3)(i) published
elsewhere in this issue of the Bulletin.]

(ii) [The text of the proposed amend-
ment to § 1.6049-5(d)(3)(ii) is the same
as 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 same
as 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 the
same as the text of § 1.6049-
5T(d)(3)(iii)(A) published elsewhere in
this issue of the Bulletin.]

* * * * *

(4) [The text of the proposed amend-
ment to § 1.6049-5(d)(4) is the same as
the text of § 1.6049-5T(d)(4) published
elsewhere in this issue of the Bulletin.]
(e) * * *

(1) [The text of the proposed amend-
ment to § 1.6049-5(e)(1) is the same as
the text of § 1.6049-5T(e)(1) published
elsewhere in this issue of the Bulletin.]

(2) [The text of the proposed amend-
ment to § 1.6049-5(e)(2) is the same as
the text of § 1.6049-5T(e)(2) published
elsewhere in this issue of the Bulletin.]

(3) [The text of the proposed amend-
ment to § 1.6049-5(e)(3) is the same as
the text of § 1.6049-5T(e)(3) published
elsewhere in this issue of the Bulletin.]

(4) [The text of the proposed amend-
ment to § 1.6049-5(e)(4) is the same as
the text of § 1.6049-5T(e)(4) published
elsewhere in this issue of the Bulletin.]

(5) [The text of the proposed amend-
ment to § 1.6049-5(e)(5) is the same as
the text of § 1.6049-5T(e)(5) published
elsewhere in this issue of the Bulletin.]
* * * * *

(g) * * *

(2) [The text of the proposed amend-
ment to § 1.6049-5(g)(2) is the same as
the text of § 1.6049-5T(g)(2) published
elsewhere in this issue of the Bulletin.]

PART 31-EMPLOYMENT TAXES
AND COLLECTION OF INCOME
TAX AT SOURCE

Par. 18. The authority citation for part
31 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *

Par. 19. Section 31.3406(g)-1 is
amended by revising paragraph (e) to read
as follows:

§ 31.3406(g)-1 Exception for payments
to certain payees and certain other
payments.

* * * * *

(e) [The text of the proposed amend-
ment to § 31.3406(g)-1(e) is the same as
the text of § 31.3406(g)-1T(e) published
elsewhere 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) * * *

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(i) [The text of the proposed amend- ment to § 31.3406(h)-2(a)(3)(i) is the same as the text of § 31.3406(h)-

Par. 22. Section 301.6402-3 is amended by revising paragraphs (e) and (f) to read as follows:

text of § 301.6402-3T(f) published else- where in this issue of the Bulletin.] * * * * *

2T(a)(3)(i) published elsewhere in this is-

sue of the Bulletin.] * * * * *

§ 301.6402-3 Special rules applicable to income tax.

John Dalyrmple

PART 301-PROCEDURE AND

* * * * *

Deputy Commissioner for Services and Enforcement.

ADMINISTRATION

(e) [The text of the proposed amend- ment to § 301.6402-3(e) is the same as

(Filed by the Office of the Federal Register on February 28, 2014, 4:15 p.m., and published in the issue of the Federal

Par. 21. The authority citation for part

the text of § 301.6402-3T(e) published

Register for March 6, 2014, 79 F.R. 12726)

301 is amended by adding an entry in numerical order to read in part as follows: Authority: 26 U.S.C. 7805 * * *

elsewhere in this issue of the Bulletin.] (f) [The text of the proposed amend- ment to § 301.6402-3(f) is the same as the

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# Definition of Terms

Revenue rulings and revenue procedures
(hereinafter referred to as "rulings") that
have an effect on previous rulings use the
following defined terms to describe the
effect:

Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).

Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.

Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.

Modifiedis used where the substance of
a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A

and B, the prior ruling is modified because
it corrects a published position. (Compare
with 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 in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.

Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.

Supersededdescribes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.

Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.

Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.

# Abbreviations

The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

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.

COOP-Cooperative.

IC-Insurance Company.

Ct.D .- Court Decision.

I.R.B .- Internal Revenue Bulletin.

CY-County.

LE-Lessee.

TT-Trustee.

D Decedent.

LP-Limited Partner.

LR-Lessor.

X-Corporation.

DE-Donee.

M-Minor.

Nonacq .- Nonacquiescence.

O Organization.

DR-Donor.

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.

C-Individual.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

CI-City.

T.I.R .- Technical Information Release.

TP-Taxpayer.
TR-Trust.

U.S.C .- United States Code.

DC-Dummy Corporation.

Del. Order-Delegation Order.

DISC-Domestic International Sales Corporation.

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.

BK-Bank.

B.T.A .- Board of Tax Appeals.

T.D .- Treasury Decision.

TFE-Transferee.

TFR-Transferor.

Y-Corporation.

Z-Corporation.

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## Numerical Finding List1

Bulletins 2014-1 through 2014-13

### Announcements

2014-1, 2014-2 I.R.B. 393
2014-2, 2014-4 I.R.B. 448
2014-4, 2014-7 I.R.B. 523
2014-05, 2014-6 I.R.B. 507
2014-06, 2014-6 I.R.B. 508
2014-07, 2014-6 I.R.B. 508
2014-08, 2014-6 I.R.B. 508
2014-09, 2014-6 I.R.B. 508
2014-10, 2014-6 I.R.B. 508
2014-11, 2014-6 I.R.B. 508
2014-12, 2014-6 I.R.B. 509
2014-13, 2014-10 I.R.B. 620

### Notices

2014-1, 2014-2 I.R.B. 270
2014-2, 2014-3 I.R.B. 407
2014-3, 2014-3 I.R.B. 408
2014-4, 2014-2 I.R.B. 274
2014-5, 2014-2 I.R.B. 276
2014-6, 2014-2 I.R.B. 279
2014-7, 2014-4 I.R.B. 445
2014-8, 2014-5 I.R.B. 452
2014-9, 2014-5 I.R.B. 455
2014-10, 2014-9 I.R.B. 605
2014-11, 2014-13 I.R.B. 880
2014-12, 2014-9 I.R.B. 606
2014-13, 2014-10 I.R.B. 616
2014-14, 2014-13 I.R.B. 881
2014-17, 2014-13 I.R.B. 881

## Proposed Regulations

REG-154890-03, 2014-6 I.R.B. 504
REG-159420-04, 2014-2 I.R.B. 374
REG-144468-05, 2014-6 I.R.B. 474
REG-119305-11, 2014-8 I.R.B. 524
REG-140974-11, 2014-3 I.R.B. 438
REG-121534-12, 2014-6 I.R.B. 473
REG-122706-12, 2014-11 I.R.B. 647
REG-134361-12, 2014-13 I.R.B. 895
REG-136984-12, 2014-2 I.R.B. 378
REG-113350-13, 2014-3 I.R.B. 440
REG-130967-13, 2014-13 I.R.B. 884
REG-141036-13, 2014-7 I.R.B. 516
REG-143172-13, 2014-2 I.R.B. 383

## Revenue Procedures

2014-1, 2014-1 I.R.B. 1
2014-2, 2014-1 I.R.B. 90
2014-3, 2014-1 I.R.B. 111
2014-4, 2014-1 I.R.B. 125
2014-5, 2014-1 I.R.B. 169
2014-6, 2014-1 I.R.B. 198

## Revenue Procedures-Continued

2014-7, 2014-1 I.R.B. 238
2014-8, 2014-1 I.R.B. 242
2014-9, 2014-2 I.R.B. 281
2014-10, 2014-2 I.R.B. 293
2014-11, 2014-3 I.R.B. 411
2014-12, 2014-3 I.R.B. 415
2014-13, 2014-3 I.R.B. 419
2014-14, 2014-2 I.R.B. 295
2014-15, 2014-5 I.R.B. 456
2014-16, 2014-9 I.R.B. 606
2014-17, 2014-12 I.R.B. 661
2014-18, 2014-7 I.R.B. 513
2014-19, 2014-10 I.R.B. 619
2014-20, 2014-9 I.R.B. 614
2014-21, 2014-11 I.R.B. 641
2014-22, 2014-11 I.R.B. 646
2014-23, 2014-12 I.R.B. 685
2014-24, 2014-13 I.R.B. 879

## Revenue Rulings

2014-1, 2014-2 I.R.B. 263
2014-2, 2014-2 I.R.B. 255
2014-3, 2014-2 I.R.B. 259
2014-4, 2014-5 I.R.B. 449
2014-6, 2014-7 I.R.B. 510
2014-8, 2014-11 I.R.B. 624

## Treasury Decisions

9649, 2014-2 I.R.B. 265
9650, 2014-3 I.R.B. 394
9651, 2014-4 I.R.B. 441
9652, 2014-12 I.R.B. 655
9653, 2014-6 I.R.B. 460
9654, 2014-6 I.R.B. 461
9655, 2014-9 I.R.B. 541
9656, 2014-11 I.R.B. 626
9657, 2014-13 I.R.B. 687
9658, 2014-13 I.R.B. 748
9659, 2014-12 I.R.B. 653
9660, 2014-13 I.R.B. 842
9661, 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 Bulletin
2013-52, dated December 23, 2013.

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Finding List of Current Actions on Previously Published Items1

Revenue Procedures-Continued:

Revenue Procedures-Continued:

2012-19

2013-27

Bulletins 2014-1 through 2014-13

Modified by

Obsoleted by

Rev. Proc. 2014-16, 2014-9 I.R.B. 606

Rev. Proc. 2014-23, 2014-12 I.R.B. 685

Announcements:

2012-19

2013-32

2007-44

Superseded by

Superseded in part by

Modified by

Rev. Proc. 2014-16, 2014-9 I.R.B. 606

Rev. Proc. 2014-1, 2014-1 I.R.B. 1, and

Ann. 2014-4, 2014-7 I.R.B. 523

Rev. Proc. 2014-3, 2014-1 I.R.B. 111

2012-20

2011-49

Modified by

2014-1

Modified by

Rev. Proc. 2014-17, 2014-12 I.R.B. 661

Amplified by Rev. Proc. 2014-18, 2014-7 I.R.B. 513

Ann. 2014-4, 2014-7 I.R.B. 523

2012-20

Notices:

Superseded by

2014-1 I.R.B. 111

2006-109

Rev. Proc. 2014-17, 2014-12 I.R.B. 661

Amplified by Rev. Proc. 2014-24, 2014-13 I.R.B. 879

Modified by

2013-1

Notice 2014-4, 2014-2 I.R.B. 274

Superseded by

2014-3

2009-78

Rev. Proc. 2014-1, 2014-1 I.R.B. 1

Amplified by Rev. Proc. 2014-18, 2014-7 I.R.B. 513

Superseded by

2013-2

2014-3 I.R.B 111

T.D. 9654 2014-6 I.R.B. 461

Superseded by

Rev. Proc. 2014-2, 2014-1 I.R.B. 90

Amplified by Rev. Proc. 2014-24, 2014-13 I.R.B. 879

2013-17

Amplified by

2013-3

2014-4

Notice 2014-1, 2014-2 I.R.B. 270

Superseded by

Modified by

Revenue Procedures:

Rev. Proc. 2014-3, 2014-1 I.R.B. 111

Rev. Proc. 2014-19, 2014-10 I.R.B. 619

2013-4

Proposed Regulations:

2003-49

Superseded by

Modified and superseded by

Rev. Proc. 2014-4, 2014-1 I.R.B. 125

209054-87

Rev. Proc. 2014-14, 2014-2 I.R.B. 295

A portion withdrawn by

2013-5

REG-113350-13 2014-3 I.R.B. 440

2011-4

Superseded by

Modified by

Rev. Proc. 2014-5, 2014-1 I.R.B. 169

Revenue Rulings:

Rev. Proc. 2014-17, 2014-12 I.R.B. 661

2011-14

2013-6

2005-48 (2005-2 CB 259)

Superseded by

Obsoleted by

Modified by

Rev. Proc. 2014-6, 2014-1 I.R.B. 198

T.D. 9659 2014-12 I.R.B. 653

Rev. Proc. 2014-16, 2014-9 I.R.B. 606

2011-14

2013-7

Clarified by

Superseded by

Rev. Proc. 2014-16, 2014-9 I.R.B. 606

Rev. Proc. 2014-7, 2014-1 I.R.B. 238

2011-14

2013-8

Modified by

Superseded by

Rev. Proc. 2014-17, 2014-12 I.R.B. 661

Rev. Proc. 2014-8, 2014-1 I.R.B. 242

2011-44

2013-9

Modified and Superseded by

Superseded by

Rev. Proc. 2014-11, 2014-3 I.R.B. 411

Rev. Proc. 2014-9, 2014-2 I.R.B. 281

2011-49

2013-10

Modified by

Superseded by

Rev. Proc. 2014-6, 2014-1 I.R.B. 198

Rev. Proc. 2014-10, 2014-2 I.R.B. 293

2012-14

2013-24

Modified by

Obsoleted by

Rev. Proc. 2014-17, 2014-12 I.R.B. 661

Rev. Proc. 2014-23, 2014-12 I.R.B. 685

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.

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# INDEX Internal Revenue Bulletins 2014-1 through 2014-13

The abbreviation and number in parenthesis following the index
entry refer to the specific item; numbers in roman and italic type
following the parentheses refer to the Internal Revenue Bulletin in
which the item may be found and the page number on which it
appears.

Key to Abbreviations:

Ann
Announcement

CD
Court Decision

DO
Delegation Order

EO
Executive Order

PL
Public Law

PTE
Prohibited Transaction Exemption

RP
Revenue Procedure

RR
Revenue Ruling

SPR
Statement of Procedural Rules

TC
Tax Convention

TD
Treasury Decision

TDO
Treasury Department Order

# ADMINISTRATIVE

Consolidated returns; failure to properly include subsidiary
(RP 24) 13, 879

Extension of time to file estate tax return to elect portability of a
deceased spousal unused exclusion amount under section
2010(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 rules
of regulations section 1.61-21(d) and (e) may be used (Notice
11) 13, 880

Minimum essential coverage, information reporting (TD 9660)
13, 842

# EMPLOYEE PLANS

Definition of a substantial risk of forfeiture (TD 9659) 12, 653
Domestic areas in which the Service will not issue letter rulings
or determination letters (RP 3) 1, 111
Excepted benefits (REG-143172-13) 2, 383

Final rules to implement the 90-day waiting period limitation
(TD 9656) 11, 626

Letter rulings:

And determination letters:

Areas which will not be issued from Associate Chief
Counsel and Division counsel (TE/GE) (RP 3) 1, 111
Exemption application determination letter rulings under
sections 501 and 521 (RP 9) 1, 281

And general information letters; procedures (RP 4) 1, 125
User fees, request for letter rulings (RP 8) 1, 242
Letter rulings and general information letters (RP 4) 1, 125
Letter 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, 198

Qualified plans:

Discrimination (Notice 5) 2, 276

Opinion letters (Ann 4) 7, 523

Determination 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, 242

Technical advice memorandum or TAM (RP 2) 1, 90

Technical advice procedures (RP 5) 1, 169

Full funding limitations, weighted average interest rates, segment
rates for:

January 2014 (Notice 8) 5, 452

Weighted average interest rates
Segment rates for February 2014 (Notice 13) 10, 616

# EMPLOYMENT TAX

Domestic areas in which the Service will not issue letter rulings
or determination letters (RP 3) 1, 111

Employment tax liability of agents authorized under section 3504
(TD 9649) 2, 265

Letter rulings or determination letters (RP 1) 1, 1

Regulations:

26 CFR 1.83-3 is revised; definition of a substantial risk of
forfeiture (TD 9659) 12, 653

26 CFR 54.9815-2708, amended; REG-122706-12) 11, 647

26 CFR 54,9801-1, thru-6, amended; 26 CFR 54.9802-1,
amended; 26 CFR 54.9815-2708, added; 26 CFR
54.9831-1, amended (TD 9656) 11, 626

Technical Advice Memorandum (TAM) (RP 2) 1, 90

# ESTATE TAX

Domestic areas in which the Service will not issue letter rulings
or determination letters (RP 3) 1, 111

Extension of time to file estate tax return to elect portability of a
deceased spousal unused exclusion amount under section
2010(c)(5)(A) (RP 18) 7, 513

Letter rulings or determination letters (RP 1) 1, 1
Technical Advice Memorandum (TAM) (RP 2) 1, 90

# EXCISE TAX

Domestic areas in which the Service will not issue letter rulings
or determination letters (RP 3) 1, 111

Final rules to implement the 90-day waiting period limitation
(TD 9656) 11, 626

Information reporting by applicable large employers on health
insurance coverage offered under employer-sponsored plans
(TD 9661) 13, 855

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# EXCISE TAX-Cont.

Interim guidance regarding supporting organizations (Notice 4)
2, 274

Letter rulings or determination letters (RP 1) 1, 1

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

Regulations:

26 CFR 54.9815-2708, amended; REG-122706-12) 11, 647

26 CFR 54,9801-1, thru-6, amended; 26 CFR 54.9802-1,
amended; 26 CFR 54.9815-2708, added; 26 CFR
54.9831-1, amended (TD 9656) 11, 626

Technical Advice Memorandum (TAM) (RP 2) 1, 90

# EXEMPT ORGANIZATIONS

Domestic areas in which the Service will not issue letter rulings
or determination letters (RP 3) 1, 111

Form 990 Revenue Procedure update to revoke Revenue Proce-
dure 79-6 (RP 22) 11, 646

Interim guidance regarding supporting organizations (Notice 4)
2, 274

Letter rulings:

And determination letters:

Areas which will not be issued from Associate Chief
Counsel and Division counsel (TE/GE) (RP 3) 1, 111
Exemption application determination letter rulings under
sections 501 and 521 (RP 9) 1, 281

And general information letters; procedures (RP 4) 1, 125
User fees, request for letter rulings (RP 8) 1, 242
Letter rulings (RP 10) 2, 293; (RP 9) 2, 281

Letter rulings or determination letters (RP 1) 1, 1

Proposed procedures for charitable hospitals to correct and dis-
close failures to meet section 501(r) (Notice 3) 3, 408

Reliance on proposed regulations for tax-exempt hospitals (No-
tice 2) 3, 407

Rulings and determination letters, user fees (RP 8) 1, 242

Technical Advice Memorandum (TAM) (RP 2) 1, 90
Technical advice procedures (RP 5) 1, 169

# INCOME TAX

Adequate disclosure revenue procedure (RP 15) 5, 456
Allocation of section 47 credits by a partnership to its partners
(RP 12) 3, 415

Allocation of section 752 recourse liabilities among related par-
ties (REG-136984-12) 2, 378

Amount of the life insurance reserves taken into account under
§ 807 of the Internal Revenue Code for variable contracts (RR
7) 9, 539

Areas in which rulings will not be issued; Associate Chief
Counsel (International) (RP 7) 1, 238

Basis in assets of tax exempt trusts (REG-154890-03) 6, 504
Bond premium carryforward (TD 9653) 6, 460

Cafeteria plans, FSA reimbursements, and HSA contribution
limits for same-sex spouses (Notice 1) 2, 270

2014 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 or
substantial basis reduction; modification of basis allocation
rules (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, 653
Definitions applicable to U.S. persons owning interests in passive
foreign investment companies (REG-113350-13) 3, 440

Depreciation deduction, limitations on certain automobiles (RP
21) 11, 641

Determination of ownership in a passive foreign investment
company; annual filing requirements for shareholders of pas-
sive foreign investment companies; filing requirements for
constructive owners in certain foreign corporations (REG-
140974-11) 3, 438; (TD 9650) 3, 394

Determining stock ownership for purposes of whether an entity is
a 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 rulings
or determination letters (RP 3) 1, 111

Equity-linked instruments and dividend equivalents (Notice 14)
13, 881

FATCA financial institution registration update (Ann 1) 2, 393
Interest:

Investment:

Federal short-term, mid-term, and long-term rates for:
January 2014 (RR 1) 2, 263

February 2014 (RR 6) 7, 510

March 2014 (RR 8) 11, 624

Final FFI agreement for participating FFI and reporting Model 2
FFI (RP 13) 3, 419

Guidance regarding resinstatement following auto revocation of
tax-exempt status under section 6033(j) (RP 11) 3, 411

Income tax treatment of per capita payments made from funds
held 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 other
foreign entities (REG-130967-13) 13, 884

Information reporting by foreign financial institutions and with-
holding on payments to foreign financial institutions and other
foreign entities (TD 9657) 13, 687

Intra-group gross receipts (REG-159420-04) 2, 374

Insurance tax, insurance companies, interest rate tables (RR 4) 5,
449

Letter rulings or determination letters (RP 1) 1, 1

Low-Income Housing Credit (Notice 15) 12, 661

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# INCOME TAX-Cont.

Maximum Vehicle Values for which the special valuation rules

of regulations section 1.61-21(d) and (e) may be used (Notice
11) 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 Settlement
payments (RR 2) 2, 255

Qualified census tracts (RP 14) 2, 295

Regarding disguised sales, generally (REG-119305-11) 8, 524
Regulations:

26 CFR 1.83-3 is revised; definition of a substantial risk of
forfeiture (TD 9659) 12, 653

26 CFR 1.263A-0, thru-3, amended; 1.471-3 amended; (TD
9652) 12, 655

Revocations, exempt organization (Ann 11) 6, 508

Sales-bases royalties and vendor allowances (TD 9652) 12, 655

Shared responsibility for employers regarding health coverage
(TD 9655) 9, 541

Shared responsibility payment for not maintaining minimum
essential coverage (REG-141036-13) 7, 516

Tangible property regulations method change guidance (RP 16)
9, 606

Technical Advice Memorandum (TAM) (RP 2) 1, 90

Transition relief for the tax credit for employee health insurance
expenses of certain small employers (Notice 6) 2, 279

Transition relief under section 5000A for certain individuals
without minimum essential coverage (Notice 10) 9, 605

Withholding of tax on certain U.S. source income paid to foreign
persons and revision of information reporting and backup
withholding regulations (REG-134361-12) 13, 895

Withholding of tax on certain U.S. source income paid to foreign
persons and revision of information reporting and backup
withholding regulations (TD 9658) 13, 748

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# INTERNAL REVENUE BULLETIN

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2008-2 edition.

# INTERNAL REVENUE BULLETINS ON CD-ROM

Internal Revenue Bulletins are available annually as part of Publication 1796 (Tax Products CD-ROM). The CD-ROM can be
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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