Internal Revenue Bulletin 2013-15 (PDF rendition): IRS Notices

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

Bulletin No. 201
3-15
April 8, 2013
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.
SPECIAL ANNOUNCEMENT
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
INCOME TAX
Rev. Rul. 2013–8, page 763.
Fringe benefits aircraft valuation formula.For purposes
of section 1.61–21(g) of the Income Tax Regulations, relating
to the rule for valuing non-commercial flights on employer-pro-
vided aircraft, the Standard Industry Fare Level (SIFL) cents-
per-mile rates and terminal charge in effect for the first half of
2013 are set forth.
Rev. Rul. 2013–9, page 764.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for April 2013.
T.D. 9610, page 765.
Final regulations under sections 1471 through 1474 of the
Code, commonly known as FACTA, were added by the Hir-
ing Incentives to Restore Employment Act of 2010, Pub. L.
111–147 (the HIRE Act). These sections generally require U.S.
withholding agents 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 ac-
counts. These sections also require U.S. withholding agents to
withhold tax on certain payments to a nonfinancial foreign entity
(NFFE) that does not provide information about its substantial
United States owners to withholding agents. These regulations
provide guidance to persons making certain U.S.-related pay-
ments to FFIs and NFFE’s, and payments by FFIs to other per-
sons. Notices 2010–60, 2011–34, and 2011–53 obsoleted.
Announcement 2012–42 obsoleted.
Notice 2013–20, page 902.
This notice provides interim guidance relating to the allocation
of the credit for increasing research activities to corporations
and trades or businesses under common control for purposes
of § 41(f)(1)(A)(ii) and § 41(f)(1)(B)(ii) of the Internal Revenue
Code, as amended by section 301(c) of the American Taxpayer
Relief Act of 2012, P.L. 112–240, for taxable years beginning
after December 31, 2011.
Notice 2013–21, page 903.
This notice postpones until October 15, 2013, the deadline to
make an election under section 165(i) of the Code to deduct
in the preceding taxable year losses attributable to Hurricane
Sandy sustained in federally declared disaster areas in Con-
necticut, Delaware, District of Columbia, Maryland, Massachu-
setts, New Hampshire, New Jersey, New York, Pennsylvania,
Rhode Island, Virginia, and West Virginia resulting from Hurri-
cane Sandy.
(Continued on the next page)
Finding Lists begin on page ii.

Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
EMPLOYEE PLANS
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
EXEMPT ORGANIZATIONS
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
ESTATE TAX
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
GIFT TAX
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
orityList. TheGuidancePriorityListisusedbytheTreasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
EMPLOYMENT TAX
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
orityList. TheGuidancePriorityListisusedbytheTreasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
SELF-EMPLOYMENT TAX
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
orityList. TheGuidancePriorityListisusedbytheTreasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
(Continued on the next page)
April 8, 20132013–15 I.R.B.

EXCISE TAX
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
TAX CONVENTIONS
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
ADMINISTRATIVE
T.D. 9613, page 900.
Final regulations under section 6654 of the Code relating to re-
duced estimated income tax payments for qualified individuals
with small business income for any taxable year beginning in
2009 and does not apply to any taxable years beginning before
or after 2009.
Notice 2013–22, page 904.
This notice invites public comment on recommendations for
items that should be included on the 2013-2014 Guidance Pri-
ority List. The Guidance Priority List is used by the Treasury
Department and the Service to identify and prioritize the tax
issues that should be addressed through regulations, revenue
rulings, revenue procedures, notices, and other published ad-
ministrative guidance. The 2013-2014 Guidance Priority List
will establish the guidance that the Treasury Department and
the Service intend to prioritize for purposes of allocating re-
sources from July 1, 2013, through June 30, 2014. Please
submit comments by May 1, 2013.
2013–15 I.R.B.April 8, 2013

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th 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 poli
cy of the Service to publish in the Bulletin all sub-
stantive ru
lings necessary to promote a uniform application of
the tax laws
, including all rulings that supersede, revoke, mod-
ify, or amen
d any of those previously published in the Bulletin.
All publish
ed rulings apply retroactively unless otherwise indi-
cated. Pro
cedures relating solely to matters of internal man-
agement ar
e not published; however, statements of internal
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, identifying 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, Leg-
islation 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 Secre-
tary (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 cont
ents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
April 8, 20132013–15 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 42.—L
ow-Income
Housing Credi
t
The adjusted a
pplicable federal short-term, mid-
term, and long
-term rates are set forth for the month
of April 2013.
See Rev. Rul. 2013-9, page 764.
Section 61.—Gross Income
Defined
26 CFR 1.61–21: Taxation of fringe benefits.
Fringe benefits aircraft valuation for-
mula.For purposes of section 1.61–21(g)
of the Income Tax Regulations, relating
to the rule for valuing non-commercial
flights on employer-provided aircraft,
the Standard I
ndustry Fare Level (SIFL)
cents-per-mi
le rates and terminal charge
in effect for t
he first half of 2013 are set
forth.
Rev. Rul. 2013–8
For purposes of the taxation of fringe
benefits under section 61 of the Inter-
nal Revenue Code, section 1.61–21(g) of
the Income Tax Regulations provides a
rule for valuing noncommercial flights
on employer-provided aircraft. Section
1.61–21(g)(5) provides an aircraft valua-
tion formula to determine the value of such
flights. The value of a flight is determined
under the base
aircraft valuation formula
(also known as
the Standard Industry Fare
Level formula
or SIFL) by multiplying
the SIFL cent
s-per-mile rates applicable
for the perio
d during which the flight was
takenbythea
ppropriate aircraft multiple
provided in s
ection 1.61–21(g)(7) and then
adding the a
pplicable terminal charge. The
SIFL cents-
per-mile rates in the formula
and the term
inal charge are calculated by
the Departm
ent of Transportation and are
reviewed se
mi-annually.
The followi
ng chart sets forth the termi-
nal charge
and SIFL mileage rates:
Period Durin
gWhich
the Flight Is
Taken
Terminal
Charge
SIFL Mileage
Rates
1/1/13 - 6/30
/13
$48.54
Up to 500 miles
= $.2655 per mile
501-1500 miles
= $.2024 per mile
Over 1500 mil
es
=$.1946perm
ile
DRAFTING INFORMATION
The principal author of this revenue
ruling is Kathleen Edmondson of the
Office of Division Counsel/Associate
Chief Counsel (Tax Exempt/Government
Entities).For further information
regarding this revenue ruling, contact
Ms. Edmondson at (202) 622–0047 (not a
toll-free call).
Section 280
G.—Golden
Parachute
Payments
Federal sh
ort-term, mid-term, and long-term rates
are set for
th for the month of April 2013. See Rev.
Rul. 2013-
9, page 764.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of April 2013. See Rev. Rul.
2013-9, page 764.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of April 2013. See Rev.
Rul. 2013-9, page 764.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
2013–15 I.R.B.763April 8, 2013

Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of April 2013. See Rev.
Rul. 2013-9, page 764.
Section 807.—
Rules for
Certain Rese
rves
The adjusted
applicable federal short-term, mid-
term, and lon
g-term rates are set forth for the month
of April 2013
. See Rev. Rul. 2013-9, page 764.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for April 2013.
Rev. Rul. 2013–9
This revenue ruling provides vari-
ous prescribed rates for federal income
tax purposes for April 2013 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. How-
ever, under section 42(b)(2), the applicable
percentage for non-federally subsidized
new buildings placed in service after July
30, 2008, and before December 31, 2013,
shall not be less than 9%. Finally, Table
5 contains the federal rate for determining
the present value of an annuity, an interest
for life or for a term of years, or a remain-
der or a reversionary interest for purposes
of section 7520.
REV. RUL. 2013–9 TABLE 1
Applicable Federal Rates (AFR) for April 2013
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR.22%.22%.22%.22%
110% AFR.24%.24%.24%.24%
120% AFR.26%.26%.26%.26%
130% AFR.29%.29%.29%.29%
Mid-term
AFR1.09%1.09%1.09%1.09%
110% AFR1.20%1.20%1.20%1.20%
120% AFR1.31%1.31%1.31%1.31%
130% AFR1.43%1.42%1.42%1.42%
150% AFR1.65%
1.64%1.64%1.63%
175% AFR
1.92%1.91%1.91%1.90%
Long-term
AFR2.70%2.68%2.67%2.67%
110% AFR2.97%
2.95%
2.94%2.93%
120% AFR
3.25%
3.22%3.21%3.20%
130% AFR
3.51%
3.48%3.46%3.46%
April 8, 20137642013–15 I.R.B.

REV. RUL. 2013–9 TABLE 2
Adjusted AFR for April 2013
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adj
usted
AFR
.22%.22%.22%.22%
Mid-term adjusted AFR1.09%1.09%1.09%1.09%
Long-term adjusted
AFR
2.70%2.68%2.67%2.67%
REV. RUL. 2013–9 TABLE 3
Rates Under Section 382 for April 2013
Adjusted federal long-term rate for the current month2.70%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)2.77%
REV. RUL. 2013–9 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for April 2013
Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, and before December 31, 2013, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.43%
Appropriate percentage for the 30% present value low-income housing credit3.19%
REV. RUL. 2013–9 TABLE 5
Rate Under Section 7520 for April 2013
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest1.4%
S
ection 1288.—Treatment
o
f Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
Section 1471.—Withhold-
able Payments to Foreign
Financial Institutions
26 CFR 1.1471–1: Scope of chapter 4 and definitions.
T.D. 9610
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR part 1 and 301
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 Regulations.
SUMMARY: This document contains fi-
nal regulations under chapter 4 of Subti-
tle A (sections 1471 through 1474) of the
Internal Revenue Code of 1986 (Code) re-
garding information reporting by foreign
financial institutions (FFIs) with respect to
U.S. accounts and withholding on certain
payments to FFIs and other foreign enti-
ties. These regulations affect persons mak-
ing certain U.S.-related payments to FFIs
and other foreign entities and payments by
FFIs to other persons.
2013–15 I.R.B.765April 8, 2013

DATES:Effective date. These regulations
are effective January 28, 2013.
Applicability dates.Fordates
of applicability, see §§1.1471–1(c);
1.1471–2(a)(1);1.1471–2(a)(2)(i),
(ii),(iii)(A);1.1471–2(a)(4)(ii);
1.1471–3(d)(1);1.1471–3(d)(4)(i),
(ii);(iv);1.1471–3(d)(6)(v);
1.1471–3(d)(11)(viii)(A);
1471–3(d)(12)(iii)(B); 1471–3(e)(3)(ii);
1471–3(e)(4)(vii)(B); 1.1471–4(b)(1),
(4); 1.1471–4(d)(7); 1.1471–4(e)(2)(v);
1.1471–4(e)(3)(iv); 1.1471–5(f)(2)(iv);
1.1471–6(i);1.1472–1(b);
1.1473–1(a)(1)(ii) and 1.1473–1(a)(4)(vi);
1.1474–1(d)(4)(iii)(C) and 1.1474–1(i);
1.1474–2(c); 1.1471–3(c); 1.1474–4(b);
1.1474–5(c); 1.1474–6(f); 1.1474–7(c);
301.1474–1(e).
FOR FURTHER INFORMATION
CONTACT: John Sweeney, (202)
622–3840 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
I.In General
This document contains final amend-
ments to the Income Tax Regulations
(CFR parts 1 and 301) under sections
1471 through 1474 of the Code (com-
monly known as the Foreign Account Tax
Compliance Act, or FATCA). On March
18, 2010, the Hiring Incentives to Re-
store 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. with-
holding agents to withhold tax on certain
payments to foreign financial institutions
(FFIs) that do not agree to report certain
information to the Internal Revenue Ser-
vice (IRS) regarding their United States
accounts (U.S. accounts), and on certain
payments to certain nonfinancial foreign
entities (NFFEs) that do not provide infor-
mation on their substantial United States
owners (substantial U.S. owners) to with-
holding agents. Since the enactment of
chapter 4, the Department of the Trea-
sury (Treasury Department) and the IRS
have issued preliminary guidance on the
implementation of chapter 4. See Notice
2010–60, 2010–37 I.R.B. 329, Notice
2011–34, 2011–19 I.R.B. 765, and Notice
2011–53, 2011–32 I.R.B. 124, (collec-
tively, the FATCA Notices). The FATCA
Notices are available at IRS.gov.
On February 15, 2012 (77 FR 9022),
the Treasury Department and the IRS
published a notice ofproposed rulemak-
ing (the proposed regulations) addressing
chapter 4’s due diligence, withholding, re-
porting, and associated requirements. On
October 24, 2012, the Treasury Depart-
ment and the IRS released Announcement
2012–42, which announced the intention
to amend certain provisions of the pro-
posed regulations in adopting the final
regulations.
The Treasury Department and the IRS
received numerous comments in response
to the proposed regulations, and a public
hearing on the proposed regulations was
held on May 15, 2012. The comments re-
ceived in writing and at the public hear-
ing were carefully considered in develop-
ing these final regulations.
II.Chapter 4 Policy in the Context of the
U.S. Federal Income Tax Laws
U.S. taxpayers’ investments have be-
come increasingly global in scope. FFIs
now provide a significant proportion of the
investment opportunities for, and act as
intermediaries with respect to the invest-
ments of, U.S. taxpayers. Like U.S. finan-
cial institutions, FFIs are generally in the
best position to identify and report with
respect to their U.S. customers. Absent
such reporting by FFIs, some U.S. taxpay-
ers may attempt to evade U.S. tax by hid-
ing money in offshore accounts. To pre-
vent this abuse of the U.S. voluntary tax
compliance system and address the use of
offshore accounts to facilitate tax evasion,
it is essential in today’s global investment
climate that reportingbe available with re-
spect to both the onshore and offshore ac-
counts of U.S. taxpayers. This informa-
tion reporting strengthens the integrity of
the U.S. voluntary tax compliance system
by placing U.S. taxpayers that have ac-
cess to international investment opportu-
nities on an equal footing with U.S. tax-
payers that do not have such access or oth-
erwise choose to invest within the United
States.
To this end, chapter 4 extends the scope
of the U.S. information reporting regime
to include FFIs that maintain U.S. ac-
counts. Chapter 4 also imposes increased
disclosure obligations on certain NFFEs
that present a high risk of U.S. tax avoid-
ance. In addition, chapter 4 provides for
withholding on FFIs and NFFEs that do
not comply with the reporting and other
requirements of chapter 4. This withhold-
ing generally may be credited against the
U.S. income tax liability of the beneficial
owner of the payment to which the with-
holding is attributable, and generally may
be refunded to the extent the withhold-
ing exceeds such liability. An FFI that
does not comply with the requirements of
section 1471(b), however, and that benefi-
cially owns the payment from which tax is
withheld under chapter 4, may not receive
a credit or refund of such tax except to the
extent required by a treaty obligation of
the United States.
III.Statutory Provisions
The following discussion briefly ex-
plains the statutory provisions of FATCA,
which are implemented by these regula-
tions. Section 1471(a) requires any with-
holding agent to withhold 30 percent of
any withholdable payment to an FFI that
does not meet the requirements of section
1471(b). A withholdable payment is de-
fined in section 1473(1) to mean, subject
to certain exceptions: (i) any payment of
interest, dividends, rents, salaries, wages,
premiums, annuities, compensations, re-
munerations, emoluments, and other fixed
or determinable annual or periodical gains,
profits, and income (FDAP income), if
such payment is from sources within the
United States; and (ii) any gross proceeds
from the sale or other disposition of any
property of a type which can produce in-
terest or dividends from sources within the
United States.
An FFI meets the requirements of sec-
tion 1471(b) if it either enters into an
agreement (an FFI agreement) with the
IRS under section 1471(b)(1) to perform
certain obligationsor meets requirements
prescribed by the Treasury Department
and the IRS to be deemed to comply with
the requirements of section 1471(b). An
FFI is defined as any financial institu-
tion that is a foreign entity, other than a
financial institution organized under the
laws of a possession of the United States
(generally referred to as a U.S. territory in
this preamble). For this purpose, section
1471(d)(5) defines a financial institution
April 8, 20137662013–15 I.R.B.

as, except to the extent provided by the
Secretary, any entity that: (i) accepts de-
posits in the ordinary course of a banking
or similar business; (ii) as a substantial
portion of its business, holds financial
assets for the account of others; or (iii)
is engaged (or holding itself out as be-
ing engaged) primarily in the business of
investing, reinvesting, or trading in securi-
ties, partnership interests, commodities, or
any interest in such securities, partnership
interests, or commodities.
Section 1471(b)(1)(A) and (B) requires
an FFI that enters into an FFI agreement
(a participating FFI) to identify its U.S.
accounts and comply with verification and
due diligence procedures prescribed by
the Secretary. A U.S. account is defined
under section 1471(d)(1) as any financial
account held by one or more specified
United States persons, as defined in sec-
tion 1473(3), (specified U.S. persons)
or United States owned foreign entities
(U.S. owned foreign entities), subject to
certain exceptions. Section 1471(d)(2) de-
fines a financial account to mean, except
as otherwise provided by the Secretary,
any depository account, any custodial ac-
count, and any equity or debt interest in an
FFI, other than interests that are regularly
traded on an established securities market.
A U.S. owned foreign entity is defined in
section 1471(d)(3) as any foreign entity
that has one or more substantial U.S. own-
ers (as defined in section 1473(2)).
A participating FFI is required under
section 1471(b)(1)(C) and (E) to report
certain information on an annual basis to
the IRS with respect to each U.S. account
and to comply with requests for additional
information by the Secretary with respect
to any U.S. account. The information that
must be reported with respect to each U.S.
account includes: (i) the name, address,
and taxpayer identifying number (TIN) of
each account holder who is a specified
U.S. person (or, in the case of an account
holder that is a U.S. owned foreign en-
tity, the name, address, and TIN of each
specified U.S. person that is a substantial
U.S. owner of such entity); (ii) the ac-
count number; (iii) the account balance or
value; and (iv) except to the extent pro-
vided by the Secretary, the gross receipts
and gross withdrawals or payments from
the account (determined for such period
and in such manner as the Secretary may
provide). In lieu of reporting account bal-
ance or value and reporting gross receipts
and gross withdrawals or payments, a par-
ticipating FFI may, subject to conditions
provided by the Secretary, elect under sec-
tion 1471(c)(2) to report the information
required under sections 6041, 6042, 6045,
and 6049 as if such institution were a U.S.
person and each holder of such U.S. ac-
count that is a specified U.S. person or U.S.
owned foreign entity were a natural per-
son and citizen of the United States. If for-
eign law would prevent the FFI from re-
porting the required information absent a
waiver from the account holder, and the
account holder fails to provide a waiver
within a reasonable period of time, the FFI
is required under section 1471(b)(1)(F) to
close the account.
Section 1471(b)(1)(D)(i) requires a
participating FFI to withhold 30 percent of
any passthru payment to a recalcitrant ac-
count holder or to an FFI that does not meet
the requirements of section 1471(b) (non-
participating FFI).A passthru payment
is defined in section 1471(d)(7) as any
withholdable payment or other payment
to the extent attributable to a withholdable
payment. Section 1471(d)(6) defines a
recalcitrant account holder as any account
holder that fails to provide the information
required to determine whether the account
is a U.S. account, or the information re-
quired to be reported by the FFI, or that
fails to provide a waiver of a foreign law
that would prevent reporting. A participat-
ing FFI may, subject to such requirements
as the Secretary may provide, elect un-
der section 1471(b)(3) not to withhold on
passthru payments, and instead be subject
to withholding on payments it receives,
to the extent those payments are allocable
to recalcitrant account holders or nonpar-
ticipating FFIs. Section 1471(b)(1)(D)(ii)
requires a participating FFI that does not
make such an election to withhold on
passthru payments it makes to any partici-
pating FFI that makes such an election.
Section 1471(e) provides that the re-
quirements of the FFI agreement shall ap-
ply to the U.S. accounts of the participating
FFI and, except as otherwise provided by
the Secretary, to the U.S. accounts of each
other FFI that is a member of the same ex-
panded affiliated group, as defined in sec-
tion 1471(e)(2).
Section 1471(f) exempts from with-
holding under section 1471(a) certain
payments beneficially owned by certain
persons, including any foreign govern-
ment, international organization, foreign
central bank of issue, or any other class
of persons identified by the Secretary as
posing a low risk of tax evasion. Section
1472(a) requires a withholding agent to
withhold 30 percent of any withholdable
payment to an NFFE if the payment is
beneficially owned by the NFFE or an-
other NFFE, unless the requirements of
section 1472(b) are met with respect to the
beneficial owner of the payment. Section
1472(d) defines an NFFE as any foreign
entity that is not a financial institution as
defined in section 1471(d)(5).
The requirements of section 1472(b) are
met with respect to the beneficial owner of
a payment if: (i) the beneficial owner or
payee provides the withholding agent with
either a certification that such beneficial
owner does not have any substantial U.S.
owners, or the name, address, and TIN of
each substantial U.S. owner; (ii) the with-
holding agent does not know or have rea-
son to know that any information provided
by the beneficial owner or payee is incor-
rect; and (iii) the withholding agent reports
the information provided to the Secretary.
Section 1472(c)(1) provides that with-
holding under section 1472(a) does not ap-
ply to payments beneficially owned by cer-
tain classes of persons, including any class
of persons identified by the Secretary. In
addition, section 1472(c)(2) provides that
withholding under section 1472(a) does
not apply to any class of payment identi-
fied by the Secretary for purposes of sec-
tion 1472(c) as posing a low risk of tax
evasion.
Section 1474(a) provides that every
person required to withhold and deduct
any tax under chapter 4 is made liable for
such tax and is indemnified against the
claims and demands of any person for the
amount of any payments made in accor-
dance with the provisions of chapter 4. In
general, the beneficial owner of a payment
is entitled to a refund for any overpayment
of tax actually due under other provisions
of the Code. However, with respect to any
tax properly deducted and withheld under
section 1471 from a payment beneficially
owned by an FFI, section 1474(b)(2) pro-
vides that the FFI is not entitled to a credit
or refund, except to the extent required
by a treaty obligation of the United States
(and, if a credit or refund is required by
a treaty obligation of the United States,
2013–15 I.R.B.767April 8, 2013

no interest shall be allowed or paid with
respect to such credit or refund). In addi-
tion, section 1474(b)(3) provides that no
credit or refund shall be allowed or paid
with respect to any tax properly deducted
and withheld under chapter 4 unless the
beneficial owner of the payment provides
the Secretary with such information as
the Secretary may require to determine
whether such beneficial owner is a U.S.
owned foreign entity and the identity of
any substantial U.S. owners of such entity.
Section 1474(c) provides that informa-
tion provided under chapter 4 is confiden-
tial under rules similar to section 3406(f),
except that the identity of an FFI that meets
the requirements of section 1471(b) is not
treated as return information for purposes
of section 6103.
Section 1474(d) provides that the Sec-
retary shall provide for the coordination
of chapter 4 with other withholding pro-
visions under the Code, including provid-
ing for the proper crediting of amounts
deducted and withheld under chapter 4
against amounts required to be deducted
and withheld under other provisions.
Section 1474(f) provides that the Sec-
retary shall prescribe such regulations or
other guidance as may be necessary or ap-
propriate to carry out the purposes of, and
prevent the avoidance of, chapter 4.
IV.Balanced and Integrated 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 of the statute. These final
regulations exercise this authority by pro-
viding specific operational guidelines for
implementing FATCA in a manner con-
sistent with its principal policy objectives.
Recognizing that there are costs asso-
ciated with the implementation of any
new withholding and reporting regime,
the Treasury Department and the IRS
solicited comments and met extensively
with stakeholders to develop an imple-
mentation approach that achieves an ap-
propriate balance between fulfilling the
important policy objectives of chapter 4
and minimizing the burdens imposed on
stakeholders. This engagement resulted in
hundreds of constructive comments from
and numerous productive meetings with
stakeholders. While the comments cov-
ered a broad range of issues relating to the
implementation of FATCA, the vast ma-
jority of commenters expressed concerns
regarding the costs and burdens associated
with implementing FATCA and the legal
impediments to compliance in a number
of jurisdictions. Comments also expressed
concerns regarding the procedural and
systems aspects of registering and report-
ing.
The Treasury Department and the IRS
carefully consideredthese comments and
established three avenues for addressing
the principal concerns regarding burdens,
legal impediments, and technical imple-
mentation. The first avenue was to adopt
a risk-based approach to implementing the
statute that effectively addresses policy
considerations, eliminates unnecessary
burdens, and, to the extent possible, builds
on existing practices and obligations. The
second avenue was to collaborate with
foreign governments to develop an al-
ternative intergovernmental approach to
implementing chapter 4 that removes le-
gal impediments, allows for alignment
and coordination with local law reporting
practices, and achieves further burden re-
ductions. The third avenue was to develop
administrative approaches to simplify the
process for registering and entering into
an agreement with the IRS in order to min-
imize operational costs associated with
collecting and reporting FATCA informa-
tion.
A. Targeted Regulations
These final regulations address poten-
tial administrative burdens associated with
FATCA compliance by adopting a risk-
based and targeted approach to implement
the statute with respect to scope, diligence,
and timing. In particular, with respect to
scope, consistent with the objectives of
the statute, the regulations limit the insti-
tutions, obligations, and accounts subject
to FATCA to more specifically target con-
cerns and address practical considerations.
For example, the final regulations refine
the scope of FATCA in the following ways:
•Expansion of Grandfather Rule for
Certain Obligations.Topromotethe
orderly implementation of FATCA, the
final regulations exempt from chapter
4 withholding all obligations outstand-
ing on January 1, 2014, and any asso-
ciated collateral. In addition, because
evolving areas of the law may create
chapter 4 withholding obligations in
the future and create uncertainty and
risk in the meantime, the final regu-
lations address obligations (and asso-
ciated collateral) that may give rise
to withholdable payments through fu-
ture regulations under section 871(m)
(relating to dividend equivalent pay-
ments) or to foreign passthru payments
under the chapter 4 foreign passthru
payment rules. Such obligations are
grandfathered if the obligations are
outstanding at any point prior to six
months after the implementing regula-
tions are published.
•Scope of Covered Financial Institu-
tions. In response to comments, the
final regulations treat passive entities
that are not professionally managed as
NFFEs rather than as FFIs. The final
regulations also provide appropriate
exemptions for financial institutions
and certain passive NFFEs that are part
of a nonfinancial group of companies
and that support the operations of the
group.
•Expansion of Deemed Compliant and
Other Exempt Categories. The final
regulations expand the categories of
FFIs that are deemed to comply with
FATCA without the need to enter into
an agreement with the IRS in order
to focus the application of FATCA on
higher-risk financial institutions that
provide services to the global invest-
ment community. In addition, the final
regulations expand the scope of retire-
ment funds that are considered exempt
beneficial owners the income of which
is not subject to chapter 4 withholding.
With respect to diligence, the final reg-
ulations reduce the administrative burdens
associated with identifying U.S. accounts
by calibrating due diligence requirements
based on the value and risk profile of the
account, and by permitting FFIs in many
cases to rely on information they already
collect. For example, the final regulations
reduce the burdens associated with identi-
fying U.S. accounts in the following ways:
•Accounts exempt from review.The
final regulations exempt from review
entirely all preexisting accounts held
April 8, 20137682013–15 I.R.B.

by individuals with a balance or value
of $50,000 or less. This threshold is
raised to $250,000 for preexisting ac-
counts held by entities and for pre-
existing accounts that are cash value
insurance and annuity contracts. In
addition, the final regulations exempt
insurance contracts with a balance or
value of $50,000 or less from treatment
as financial accounts.
•Reduced diligence and documenta-
tion rules for lower value preexisting
accounts. In the case of preexisting
accounts with a balance or value of
$1,000,000 or less, the final regula-
tions permit a participating FFI to
determine whether any of its accounts
held by individuals are U.S. accounts
based solely on a search of electroni-
cally searchable account information
for certain U.S.indicia. In addition,
for such accounts held by passive
NFFEs, the final regulations allow a
withholding agent to rely on its review
conducted for anti-money laundering
due diligence purposes to identify any
substantial U.S. owners of the payee
in lieu of obtaining a certification.
•Reliance on self-certification.In the
case of accounts held by entities, the
final regulations expand the ability of
FFIs to rely on a self-certification from
an account holder as to its chapter 4
status.
Finally, with respect to timing, the final
regulations allow reasonable timeframes
to review existing accounts and implement
FATCA’s obligations in stages to minimize
burdens and costs consistent with achiev-
ing the statute’s compliance objectives.
For example:
•Time allowed for review of pre-exist-
ing accounts. The final regulations
treat all accounts maintained by an FFI
prior to January 1, 2014, as preexist-
ing accounts. In addition, the final reg-
ulations allow participating FFIs and
withholding agents until December 31,
2015, to document account holders and
payees that are notprima facieFFIs.
•Phased implementation of reporting.
The final regulations modify the due
date for the first information report by
requiring participating FFIs to file the
first information reports with respect to
the 2013 and 2014 calendar years not
later than March 31, 2015.
•Phased implementation of withholding
on passthru payments and gross pro-
ceeds. The final regulations exempt
from withholding foreign passthru
payments and gross proceeds from
sales or dispositions of property occur-
ring before January 1, 2017.
B. Intergovernmental Agreements
1. In general
In many cases, foreign law would pre-
vent an FFI from reporting directly to
the IRS the information required by the
FATCA statutory provisions and these
regulations, thus potentially exposing the
FFI to withholding. Such an outcome
would be inconsistent with FATCA’s ob-
jective to address offshore tax evasion
through increased information reporting.
To overcome these legal impediments,
the Treasury Department has collabo-
rated with foreign governments to develop
two alternative model intergovernmental
agreements that facilitate the effective
and efficient implementation of FATCA
in a manner that removes domestic le-
gal impediments to compliance, fulfills
FATCA’s policy objectives, and further
reduces burdens on FFIs located in partner
jurisdictions.
The first model intergovernmental
agreement was published on July 26,
2012. A partner jurisdiction signing an
agreement with the United States based
on the first model (Model 1 IGA) agrees
to adopt rules to identify and report infor-
mation about U.S. accounts that meet the
standards set out in the Model 1 IGA. FFIs
covered by a Model 1 IGA that are not
otherwise excepted or exempt pursuant to
the agreement must identify U.S. accounts
pursuant to due diligence rules adopted by
the partner jurisdiction and report speci-
fied information about the U.S. accounts
to the partner jurisdiction. The partner ju-
risdiction then exchanges this information
with the IRS on an automatic basis. These
standards ensure that the IRS will receive
the same quality and quantity of infor-
mation about U.S. accounts from FFIs
covered by a Model 1 IGA as it receives
from FFIs applying these final regulations.
A second model intergovernmental
agreement was published on November
14, 2012. A partner jurisdiction signing an
agreement with the United States based on
the second model (Model 2 IGA) agrees to
direct and enable all FFIs that are located
in the jurisdiction, and that are not other-
wise excepted or exempt pursuant to the
Model 2 IGA, to register with the IRS and
report specified information about U.S.
accounts directly to the IRS in a manner
consistent with chapter 4 and these final
regulations, except as expressly modified
by the Model 2 IGA. In the case of certain
recalcitrant account holders, the informa-
tion reported to the IRS by FFIs covered
by a Model 2 IGA is supplemented by
government-to-government exchange of
information.
Both Model 1 IGAs and Model 2 IGAs
(together, IGAs) contemplate that the part-
ner jurisdiction will require all financial in-
stitutions that are located in the jurisdic-
tion, and that are not otherwise excepted or
exempt pursuant to the agreement, to iden-
tify and report information about U.S. ac-
counts. In consideration of the full cooper-
ation by the partner jurisdiction, the model
agreements contemplate a number of sim-
plifications and burden reductions associ-
ated with the application of FATCA in the
partner jurisdiction. The Treasury Depart-
ment and the IRS believe that IGAs repre-
sent efficient and effective ways of imple-
menting the requirements of chapter 4 and
will continue to conclude bilateral agree-
ments based on the two models with inter-
ested jurisdictions. In addition, the Trea-
sury Department and the IRS continue to
receive comments strongly supporting the
approach to FATCA implementation em-
bodied in the IGAs. The Treasury De-
partment and the IRS remain committed to
working cooperativelywithforeignjuris-
dictions on multilateral efforts to improve
transparency and information exchange on
a global basis.
2. Interaction of IGAs with the Final
Regulations
FFIs covered by a Model 1 IGA, and
that are in compliance with local laws im-
plemented to identify and report U.S. ac-
counts in accordance with the terms of the
Model 1 IGA, will be treated as satisfying
the due diligence and reporting require-
ments of chapter 4. Accordingly, consis-
tent with the terms of the Model 1 IGA,
these FFIs do not need to apply the fi-
2013–15 I.R.B.769April 8, 2013

nal regulations for purposes of comply-
ing with and avoiding withholding under
FATCA. In certain cases prescribed in the
Model 1 IGA, the laws of the partner juris-
diction may allow theresident FFI to elect
to apply provisions of these regulations in-
stead of the rules otherwise prescribed in
the Model 1 IGA.
FFIs covered by a Model 2 IGA with
the United States will be required to imple-
ment FATCA in the manner prescribed by
these regulations except to the extent ex-
presslymodifiedbytheModel2IGA.The
final regulations accommodate such varia-
tions.
C. Streamlined Registration and Technical
Implementation
FFIs registering with the IRS will be
able to do so through a secure online web
portal, the FATCA Registration Portal
(Portal), from anywhere in the world.
The Portal is designed to accomplish an
entirely paperless registration process.
Registering FFIs will be able to use the
Portal to register their chapter 4 status
(such as participating FFI or reporting
Model 1 FFI (both as defined in the final
regulations)), manage their registration
information, and, as appropriate, agree to
the terms of or make the representations
required for their status. The Portal will
also facilitate electronic communication
between the IRS and FFIs and other reg-
istrants. Registered FFIs designated as
leadsofanexpandedaffiliatedgroupwill
be able to use the Portal to manage the
registration status of group members. The
Portal will also be usedby registering FFIs
that are already Qualified Intermediaries
(QIs) to renew their QI status. An FFI’s
submission and maintenance of registra-
tion information through the Portal will
maximize processing efficiencies, mini-
mize errors, and ensure expedient issuance
of a Global Intermediary Identification
Number (“GIIN”). An FFI will use its
GIIN to establish its chapter 4 status for
withholding purposes and to identify the
institution for reporting purposes under
the final regulations. The IRS currently
contemplates that the GIIN may also be
used by reporting Model 1 FFIs to sat-
isfy reporting requirements under local
law and is discussing this possibility with
its Model 1 IGA partners. With regard
to reporting, the IRS is also discussing
with partner jurisdictions the possibility
of adopting a single format for reporting
FATCA information, whether that infor-
mation is reported directly to the IRS or to
the tax administration in a Model 1 IGA
jurisdiction.
The IRS also anticipates that the cer-
tifications of compliance required to be
made by responsible officers pursuant to
§§1.1471–4(c)(7) and 1.1471–4(f)(3) will
be made electronically through the Portal,
resulting in similar efficiencies.
Summary of Comments and
Explanation of Revisions
I.In General
The Treasury Department and the IRS
received a number of general comments
requesting improvements to the readability
of the proposed regulations. In response,
the Treasury Department and the IRS made
substantial changes in the final regulations
to simplify and clarify the chapter 4 rules.
In addition, the Treasury Department and
the IRS received numerous specific com-
ments regarding the proposed regulations
and made numerous changes to the final
regulations in response to those comments.
The following discussion addresses the
significant changes in the final regulations
from the proposed regulations. To facili-
tate this discussion, the defined terms from
§1.1471–1(b) are used throughout.
II.Comments and Changes to §1.1471–1
— Scope of Chapter 4 and Definitions
The chapter 4 definitions have been re-
vised to reflect the IGAs and other changes
adopted in the final regulations. Revisions
of the definitions are discussed as relevant
in the succeeding sections of this pream-
ble.
III.Comments and Changes to §1.1471–2
— Requirement to Deduct and Withhold
Tax on Withholdable Payments to Certain
FFIs
A. Grandfathered Obligations
Comments requested modifications to
the scope of grandfathered obligations to
facilitate market transition and allow time
for adapting master agreements and collat-
eral arrangements in light of the IGAs, the
future issuance of guidance under section
871(m), and other systems developments.
In response, the final regulations provide
that grandfathered obligations consist of:
(1) any obligation outstanding on January
1, 2014; (2) any obligation that produces
withholdable payments solely because the
obligation is treatedas giving rise to a
dividend equivalent pursuant to section
871(m) and the regulations thereunder
and that is executed on or before the date
that is six months after the date on which
obligations of its type are first treated as
giving rise to dividend equivalents; and (3)
any agreement requiring a secured party to
make payments with respect to collateral
securing one or more grandfathered obli-
gations (even if the collateral is not itself a
grandfathered obligation). If collateral (or
a pool of collateral) secures both grandfa-
thered obligations and obligations that are
not grandfathered, the collateral posted to
secure the grandfathered obligations must
be determined by allocating (pro rata by
value) the collateral (or, in the case of a
pool of collateral,each item comprising
the pool of collateral) to all outstanding
obligations secured by the collateral (or
pool of collateral).
In addition, the final regulations pro-
vide that an obligation will not give rise
to a foreign passthru payment if it is ex-
ecuted on or before the date that is six
months after the date on which final reg-
ulations defining the term foreign passthru
payment are filed with the Federal Regis-
ter. Comments also requested clarification
of the outstanding date of a debt instru-
ment that is reopened in a qualified reopen-
ing under §1.1275–2(k). For debt obliga-
tions, the final regulations determine the
date the obligation is outstanding based on
the issue date of the debt. Thus, whether
debt issued in a qualified reopening will
be treated as a grandfathered obligation de-
pends on the issue date of the original debt,
which is the issue date of the debt issued in
the qualified reopening.
The final regulations also provide that
the date a non-debt obligation is outstand-
ing is the date a legally binding agreement
is executed. Thus, a line of credit or a
revolving credit facility for a fixed term
may qualify as an obligation provided that
the agreement as of its issue date fixes the
material terms (including a stated maturity
date) under which the credit will be pro-
vided.
In response to comments regarding
insurance contracts, the final regulations
April 8, 20137702013–15 I.R.B.

provide that: (1) a life insurance contract
payable no later than upon the death of the
insured individual(s) is an obligation that
may qualify as a grandfathered obligation;
and (2) premiums paid for an insurance
contract or annuity contract that is treated
as a grandfathered obligation are treated
as payments made under a grandfathered
obligation.
Finally, comments requested provisions
to simplify a withholding agent’s determi-
nation of whether an obligation is grand-
fathered. Accordingly, the final regula-
tions provide that: (1) a withholding agent,
other than the issuer of the obligation (or
an agent of the issuer) may, absent actual
knowledge, rely on a written statement by
the issuer of the obligation to determine
whether such obligation meets the require-
ments for grandfathered treatment; (2) a
withholding agent is required to treat a
modification as material only if the with-
holding agent knows or has reason to know
that such modification was material; and
(3) a withholding agent, other than the is-
suer of the obligation (or an agent of the
issuer), absent actual knowledge, will have
reason to know of a material modification
if it receives a disclosure thereof from the
issuer of the obligation (or from such is-
suer’s agent).
B. Other Changes to the Withholding
Provisions
Comments requested that the withhold-
ing provisions under chapter 4 conform
with certain withholding provisions of
chapter 3. In addition, comments re-
quested that the election to be withheld
upon under section 1471(b)(3) and pro-
vided in the proposed regulations be
available on an account-by-account ba-
sis. In response to these comments, the
final regulations: (1) clarify the excep-
tion to withholding when a withholding
agent lacks control, custody, or knowledge
of a payment; (2) treat a payment as a
withholdable payment in the absence of
knowledge of its source or character, or
allow for up to a one-year escrow of 30
percent of the payment pending a determi-
nation of the relevant facts; and (3) permit
the election to be withheld upon pursuant
to §1.1471–2(a)(2)(iii) to be made on an
account-by-account basis, provided other
applicable requirements are satisfied.
IV.Comments and Changes to §1.1471–3
— Identification of Payee
A. Documentation Alternatives
1. In General
Comments requested that the final reg-
ulations generally permit a withholding
agent to rely upon a withholding certifi-
cate to establish the chapter 4 status of a
payee without obtaining additional docu-
mentary evidence, unless such documen-
tary evidence is required under chapter
3. This comment was adopted. The final
regulations further expand the types of
documentary evidence upon which a with-
holding agent may rely with respect to off-
shore obligations, including government
websites and reports from government
agencies. For preexisting obligations, the
final regulations permit a withholding
agent to rely on information previously
recorded in the withholding agent’s files,
in addition to standardized industry codes,
in determining the chapter 4 status of the
payee. For these purposes, a standardized
industry code may be any coding system
employed by the withholding agent.
2. Written Statements
Comments requested that the final reg-
ulations permit reliance on written state-
ments without additional documentation
for offshore obligations that do not gener-
ate payments of U.S. source FDAP income
(such as a depository account maintained
outside of the United States by an FFI)
and enumerate the elements they must con-
tain. This comment was adopted. A writ-
ten statement may also be relied upon with
respect to an offshore obligation that gen-
erates payments of U.S. source FDAP in-
come if it is accompanied by documentary
evidence establishing the foreign status of
the person named on the written statement.
Comments noted that signed docu-
mentation outside of the United States
generally does not require signature un-
der penalties of perjury, and that such a
requirement would depart from current
AML due diligence procedures. The final
regulations remove the penalties of per-
jury requirement for written statements
used as documentation for payments made
outside of the United States on offshore
obligations, other than for payments of
U.S. source FDAP income.
3. Substitute and Non-IRS Forms
Comments requested the ability to use
substitute forms, including forms prepared
or filled out in a foreign language. In re-
sponse, the final regulations provide that
substitute forms may be both prepared in
and filled out in a foreign language, pro-
vided the withholding agent furnishes the
IRS with a translated version upon request.
Such substitute forms must contain the
same certifications as the official IRS form
to the extent relevant. For this purpose, a
substitute form for individuals is accept-
able, provided that the form contains the
required information, including the indi-
vidual’s permanent residence address, all
relevant tax identification numbers, and, if
not signed under penalties of perjury, the
withholding agent has obtained applicable
documentary evidence that supports the
person’s claim of foreign status. Quali-
fying non-IRS forms may be used within
the United States as well as for offshore
obligations, and also may be used for pur-
poses of chapter 3 to the extent provided
in §1.1441–1(e)(4)(vi).
4. Reliance on Pre-FATCA Form W–8
In response to comments that FFIs
would have difficulty obtaining new doc-
umentation on all preexisting account
holders in a compressed time frame, the
final regulations provide that a withhold-
ing agent may rely upon a pre-FATCA
Form W–8 in lieu of obtaining an updated
version of the withholding certificate in
certain circumstances.
5. Curing Inconsequential Errors
Comments requested that a minor error
in a withholding certificate not invalidate
the certificate if the error can be cured with
supplemental information already on file
for the payee. In response, the final reg-
ulations provide that a withholding agent
may treat a withholding certificate as valid,
notwithstanding an inconsequential error,
if it otherwise has sufficient documenta-
tion to cure the error that does not con-
tradict the information on the withholding
certificate. A failure to make a required
certification, or to provide a country of res-
idence (or country under which treaty ben-
efits are sought), is not an inconsequential
error.
2013–15 I.R.B.771April 8, 2013

B. Continuing Validity of Documentation
Comments requested relief from the
general requirement to refresh documen-
tation every three years. In response, the
final regulations permit documentation
to remain valid indefinitely, subject to a
change in circumstances, if the chapter 4
status claimed is a specified low-risk cat-
egory. The Treasury Department and the
IRS are considering extending the final
regulations’ validity rule to chapter 3 in
appropriate circumstances (for example,
when the payee does not make a claim that
withholding under chapter 3 is reduced
pursuant to a treaty).
C. Owner-Documented FFIs
In response to comments requesting
reduced documentation requirements for
the owner-documented FFI provisions,
the final regulations make several mod-
ifications that also take into account
the policy considerations presented by
owner-documented FFIs. These modifica-
tions include: (1) permitting transitional
reliance, subject to certain requirements,
on documentation collected for AML due
diligence purposes for payments made
prior to January 1, 2017, on preexisting
obligations; (2) allowing such entities
to issue debt interests to an expanded
group of holders, provided such debt
holders are reported in the same man-
ner as equity holders; (3) simplifying the
withholding statement provided for an
owner-documented FFI; and (4) provid-
ing for indefinite validity for withholding
certificates and withholding statements
submitted with respect to obligations hav-
ing an aggregate value equal to or less than
$1,000,000.
D. “Eyeball Test” and Effectively
Connected Income Presumption
Comments requested that chapter 4
incorporate the so-called “eyeball test”
under chapters 3 and 61 that treats pay-
ments inside the United States to certain
entities that have “incorporated,” “cor-
poration,” or an indication of status as
a financial institution in their names as
made to U.S exempt recipients. More-
over, comments noted that withholding
agents often already obtain documentary
evidence for these entities to satisfy AML
due diligence requirements. In response
to these comments, the final regulations
permit a withholding agent to rely upon
documentary evidence obtained with re-
spect to the payee, in lieu of a Form W–9,
in order to establish the entity’s status as a
U.S. person and rely on the “eyeball test”
to determine (to the extent applicable) the
payee’s status as other than a specified
U.S. person under chapter 4.
Comments also requested that the fi-
nal regulations incorporate the chapter 3
rules under which withholding agents are
permitted to presume that payments made
to U.S. branches of certain banks and in-
surance companies are payments of in-
come that is effectively connected with the
conduct of a trade or business within the
United States. In response, the regulations
permit a withholding agent to presume that
a payment made to a U.S. branch of cer-
tain banks and insurance companies is a
payment of income that is effectively con-
nected with a trade or business within the
United States (and thus not a withholdable
payment) if the withholding agent obtains
a GIIN that enables the withholding agent
to confirm that the FFI is a participating
FFI or registered deemed-compliant FFI,
as well as an EIN for the U.S. branch that
enables the withholding agent to properly
report the payment. Conforming changes
are anticipated to be made to the presump-
tion rule in chapter 3 to provide consis-
tency with the rule set forth in these reg-
ulations.
E. Rules for Offshore Obligations of
Funds and New Accounts of Preexisting
Customers
Comments requested additional clarity
regarding when an interest in an invest-
ment fund should be treated as an offshore
obligation. Comments also stated that, in
general, an investment fund’s office is not
separate from that of its manager or ad-
ministrator, and shares issued by invest-
ment funds are not “maintained and exe-
cuted” at a particular office. In response to
these comments, the definition of an off-
shore obligation has been amended to clar-
ify that an offshore obligation also includes
an equity interest in a foreign entity if the
owner of the interest purchased the inter-
est outside the United States either directly
from the foreign entity or from another en-
tity located outside the United States.
Comments also requested that a new ac-
count of a preexisting customer be treated
as a preexisting obligation. Comments
stated that in such cases, withholding
agents and FFIs generally do not get ad-
ditional documentation from the customer
because they are not required to do so for
AML due diligence purposes. In response
to these comments, the final regulations
permit a new account of a customer that
has a preexisting obligation to be treated
as a preexisting obligation, provided that
the withholding agent or FFI maintaining
the account also treats the new obligation
and the prior obligation as one obligation
for purposes of applying AML due dili-
gence, aggregating balances, and applying
the standards of knowledge for purposes
of chapter 4. The final regulations also
permit this treatment to apply on a group
basis for expanded affiliated groups and
sponsored FFI groups.
F. Standards of Knowledge
Under the final regulations, the stan-
dards of knowledge provisions have been
modified to allow withholding agents to
rely on a claim of status as a participating
or registered-deemed compliant FFI based
on checking the payee’s GIIN against the
published IRS FFI list. Prior to January 1,
2015, a withholding agent is not required
to confirm GIINs regarding an FFI’s claim
of status as a reporting Model 1 FFI. How-
ever, an FFI will have reason to know that
such claim is unreliable if the withholding
agent does not have a permanent residence
address for the FFI (or address of the rel-
evant branch) in the relevant country that
has in effect a Model 1 IGA.
The final regulations further provide:
(1) limits, generally conformed with the
chapter 3 limits, on a withholding agent’s
reason to know regarding a payee’s claim
of status as a foreign person; (2) limits on
the review that must be conducted with
respect to particular types of documenta-
tion, and in particular on the scope of re-
view with respect to preexisting obliga-
tions; and (3) further guidance regarding
when a payee has made a reasonable ex-
planation regarding the presence of U.S.
indicia. The Treasury Department and the
IRS intend to issue guidance under chapter
3 that is consistent with the rules in these
regulations regarding such reasonable ex-
planations.
April 8, 20137722013–15 I.R.B.

G. Reliance on Presumptions in Lieu of
Documentation
Under the final regulations, a withhold-
ing agent may choose to rely on presump-
tion rules in lieu of accepting and review-
ing documentation of payees. This accom-
modates withholding agents that are un-
sure whether the documentation they have
obtained is reliable or that do not wish to
accept the responsibility associated with
the acceptance of the documentation.
H. Consolidation and Sharing of
Documentation, and Third-Party Reliance
Comments requested reduction of du-
plicative documentation requirements, fa-
cilitation of documentation sharing, and
more detailed rules regarding reliance on
agents or third-party service providers. In
response, the final regulations adopt the
following provisions.
1. Multiple Accounts of the Same Payee
The final regulations provide
rules (consistent with chapter 3 in
§1.1441–1(e)(4)(ix)(A)) for a withholding
agent to rely on documentation for mul-
tiple accounts of the same payee if the
withholding agent aggregates the balance
or value of those accounts (when relevant)
and shares information across those ac-
counts for purposes of determining when
the withholding agent has actual knowl-
edge or reason to know that the chapter 4
status claimed is inaccurate.
2. Mergers or Bulk Acquisitions
The final regulations provide a tempo-
rary six month period during which with-
holding agents that acquire accounts in a
merger or bulk acquisition for value may
rely, in the absence of contrary knowl-
edge or a change in circumstances, upon
the chapter 4 statuses assigned by a prede-
cessor that is a U.S. withholding agent, a
participating FFI, or a reporting Model 1
FFI that has completed all due diligence
required under its agreement or pursuant
to the applicable Model 1 IGA, provided
that the predecessor is not a member of
the withholding agent’s expanded affili-
ated group prior to a merger or bulk acqui-
sition, or after a bulk acquisition. At the
end of the temporary period, the acquirer
may continue to so rely only if the doc-
umentation it has, including the acquired
documentation, supports the chapter 4 sta-
tuses claimed.
3. Common Agents
Thefinalregulationspro-
viderules(consistentwith
§1.1441–1(e)(4)(ix)(A)(4) and (B)) with
respect to sharing and relying upon
documentation that has been provided
by a common agent for multiple parties,
including a fund advisor or principal
underwriter that collects documentation
for a family of mutual funds. This re-
liance is made contingent upon the agent
also sharing any knowledge regarding
inaccuracy or unreliability of the chapter
4 status claims across all the withholding
agents with which the agent shares the
documentation.
4. Third-Party Data Providers
The final regulations provide rules per-
mitting a withholding agent to rely upon
documentation collected with respect to
an entity by a third-party data provider,
subject to conditions including: (1) the
third-party data provider is in the busi-
ness of collecting information regarding
entities and providing business reports or
credit reports to unrelated customers and
must have reviewed all information it has
for the entity and verified that such addi-
tional information does not conflict with
the chapter 4 status claimed by the entity;
(2) the third-party data provider collects
documentation sufficient to meet the appli-
cable documentation requirements; and (3)
the third-party data provider provides no-
tice of changes in circumstances. This pro-
vision permits withholding agents to rely
upon documentation collected by a third-
party data provider, but does not relieve the
withholding agent of the obligation to de-
termine whether that documentation is re-
liable based on the information contained
in the documentation and other informa-
tion in the withholding agent’s files.
5. Introducing Brokers
Comments requested that for purposes
of chapter 4 a withholding agent be permit-
tedtorelyuponcertificationsregardinga
payee’s chapter 4 status provided by an in-
troducing broker that is a QI or participat-
ing FFI (in addition to introducing brokers
who are U.S. persons, as provided under
the proposed regulations). In response to
these comments, the final regulations per-
mit reliance upon a certification provided
by a participating FFI (which includes a
QI that is a financial institution) if the par-
ticipating FFI is acting as an agent of the
payee with respect to an obligation and re-
ceiving all payments made by the with-
holding agent with respect to that obliga-
tion on behalf of the payee, provided that
certain requirements are met and the with-
holding agent does not know or have rea-
son to know that the broker has not ob-
tained valid documentation as represented
or the information contained in the certifi-
cation is otherwise inaccurate.
6. Transfer Agents
Comments requested that a transfer
agent’s obligationsas a withholding agent
be limited to the obligations of the princi-
pal on behalf of which the transfer agent
acts in order to avoid duplicative efforts or
conflicts between the standards applicable
to the transfer agent and the principal.
In response, the final regulations provide
that merely acting as an agent with re-
spect to a financial account belonging to
the principal will not cause the agent to
also have a financial account for that cus-
tomer unless the agent would be treated as
having the financial account independent
of its actions as an agent. An agent that
makes a payment on behalf of a princi-
pal is a withholding agent with respect to
the payment and, accordingly (as under
chapter 3) has a responsibility to deter-
mine the chapter 4 status of the payee and
withhold, if required. However, because
the obligation belongs to the principal,
the level of due diligence that must be
completed with respect to the obligation
is determined by the obligation’s status
with respect to the principal. In order to
minimize any duplicative responsibilities,
the final regulations permit the agent to
rely (absent contrary knowledge or reason
to know) upon documentation collected
by the principal or a certification by the
principal that appropriate documentation
has been collected.
2013–15 I.R.B.773April 8, 2013

I. Electronic Transmission of
Documentation
Comments requested that a withholding
agent be permitted to rely upon with-
holding certificatesthat are signed with
a handwritten signature, scanned into an
electronic device, and then e-mailed to the
withholding agent. The final regulations
adopt the rule of the proposed regulations,
which permits the electronic transmis-
sion of a withholding certificate that has
been signed with a handwritten signa-
ture and then scanned and e-mailed to the
withholding agent if the requirements of
§1.1441–1(e)(4)(iv) are met. Further, the
Treasury Department and the IRS con-
tinue to consider whether to retain the
confirmation requirements in chapters 3
and 4. In addition, in response to com-
ments, the final regulations do not require
that documentary evidence that has been
transmitted electronically be a certified or
notarized copy.
J. Other Changes Made to Payee
Identification Rules
Consistent with a risk-based approach
to compliance under chapter 4, the final
regulations adopt in whole or part several
modifications requested by comments, in-
cluding modifications to:
(1) Permit documentary evidence that
does not contain an address, provided
that the documentaryevidence contains
the person’s country of residence or cit-
izenship, and the withholding agent has
obtained a permanent residence address
for the person.
(2) Include a director, any foreign
equivalent of an officer in the United
States, and any other person granted writ-
ten authority as a person authorized to
sign a withholding certificate or written
statement.
(3) Permit, in lieu of retention of copies
of documentation, the retention of nota-
tions regarding documentation reviewed
and (for obligations that are not preexisting
obligations) any U.S.indiciaidentified, in
thecourseofAMLduediligence.
(4) Treat registered deemed-compliant
FFIs as payees under the same circum-
stances in which participating FFIs are
treated as payees.
(5) Treat all excepted NFFEs in the
same manner, and provide that any ex-
cepted NFFE is the payee, unless it is act-
ing as an agent or intermediary (other than
a QI accepting primary withholding re-
sponsibility).
(6) Permit the submission of a with-
holding certificate within 30 days of pay-
ment (rather than the 15 days permitted in
the proposed regulations) without an affi-
davit of accuracy as of the time of pay-
ment.
(7) Provide a definition for the term
standing instructions to pay amounts to
include current payment instructions that
will repeat without further instructions be-
ing provided by the account holder.
(8) Clarify that a withholding statement
submitted by a participating FFI or regis-
tered deemed-compliant FFI can include
pooled information with respect to each
class of payees unless payee-specific infor-
mation is provided for purposes of chapter
3, in which case a chapter 4 status must be
provided for each payee that is identified
on the withholding statement.
V.Comments and Changes to §1.1471–4
— FFI Agreement
A. In General
1. FFI Agreement
The Treasury Department and the IRS
received comments requesting additional
guidance on the requirements of the FFI
agreement. In response to these com-
ments, the final regulations set forth all
of the substantive requirements applicable
to an FFI under the FFI agreement. The
final regulations provide the requirements
for verifying compliance with the FFI
agreement, define an event of default and
procedures for remediating of an event
of default, allow participating FFIs to
file collective refund claims on behalf of
certain account holders and payees for
amounts overwithheld, and provide pro-
cedural requirements if a participating
FFI is legally prohibited from reporting
or withholding as required under the FFI
agreement. In addition, the final regula-
tions do not restrict a participating FFI’s
ability to terminate an FFI agreement.
This responds to comments concerning fu-
ture withholding requirements for foreign
passthru payments, and allows an FFI the
flexibility to reconsider its status as further
guidance is promulgated.
The Treasury Department and the IRS
expect to publish a revenue procedure set-
ting out the terms of an FFI agreement,
consistent with these final regulations, co-
ordinating an FFI’s obligations under the
FFI agreement with chapter 3 obligations
and with the provisions of any applicable
IGA, and including administrative provi-
sions such as those relating to termination,
renewal, and modification of the agree-
ment.
2. Effective Date of the FFI Agreement
Many comments were received re-
garding the effective date provided in the
proposed regulations for implementing
the chapter 4 rules. Comments requested
a delay of the effective date of the FFI
agreement to allow FFIs sufficient time
to modify systems and to implement the
required account opening procedures. In
response to comments, the final regula-
tions delay the effective date of the FFI
agreement until December 31, 2013, for
all participating FFIs that receive a GIIN
prior to January 1, 2014. This change
aligns the effective date of, and due dili-
gence periods under, the FFI agreement
with the timelines provided under the
IGAs.
3. U.S. Branches of Participating FFIs
Comments requested further clarifi-
cations on the application of the chapter
4 rules to U.S. branches of participating
FFIs. In response to these comments, the
final regulations provide comprehensive
rules for U.S. branches of participating
FFIs. A U.S. branchof a participating
FFI that is treated as a U.S. person, as
provided in §1.1441–1(b)(2)(iv), is sub-
ject to special requirements to fulfill the
withholding, due diligence, and reporting
requirements of a U.S. financial institution
to the extent provided under chapters 4
and 61 and section 3406(a). Additionally,
suchaU.S.branchisrequiredtofileasep-
arate Form 1042 to report amounts subject
to reporting under chapter 4 and any taxes
withheld.
A U.S. branch of a participating FFI that
is not treated as a U.S. person is required to
fulfill the general requirements set forth in
§1.1471–4 for withholding, due diligence,
and reporting.
April 8, 20137742013–15 I.R.B.

B. Withholding by FFIs
The final regulations provide that an
FFI is not required to withhold on foreign
passthru payments until the later of Jan-
uary 1, 2017, or six months after the date
of publication in the Federal Register of fi-
nal regulations defining the term foreign
passthru payments.
Comments requested more compre-
hensive rules concerning the withholding
requirements of a participating FFI under
the FFI agreement. In response to these
comments, the final regulations provide
that a participating FFI may apply the
exceptions from withholding provided in
§1.1471–2, including the exception for
grandfathered obligations and the tran-
sitional withholding requirements for
payments made toprima facieFFIs. In
addition, the proposed regulations did not
provide detail on the coordination of with-
holding under sections 1471(a) and 1472
with withholding under section 1471(b).
The final regulations provide that a par-
ticipating FFI that satisfies its obligations
under §1.1471–4(b) to withhold on with-
holdable payments made to payees that
are nonparticipating FFIs and recalcitrant
account holders will be deemed to satisfy
its obligations under sections 1471(a) and
1472 with respect to such payees and ac-
count holders.
C. Due Diligence
The final regulations adopt numerous
comments intended to assist participating
FFIs in complying with their obligations
to perform due diligence to identify and
document account holders.
1. General Requirements for Due
Diligence
In response to comments, the final reg-
ulations modify the general requirements
for identifying and documenting account
holders in a number of ways. For exam-
ple, the final regulations modify the record
retention requirements for offshore obliga-
tions to allow an FFI to retain a notation
in its files regarding the documentary ev-
idence examined, rather than retaining a
copy of the documentary evidence itself,
unless the FFI is required pursuant to its
AML due diligence to retain copies of doc-
umentation reviewed. In such cases, the fi-
nal regulations no longer require a notation
of the name of the person who reviewed
the documentary evidence.
The final regulations also provide spe-
cial procedures to identify and document
accounts acquired in mergers or bulk ac-
quisitions for value from another financial
institution. For accounts acquired from
nonparticipating FFIs or deemed-compli-
ant FFIs that do not apply the final regu-
lations’ due diligence procedures, the fi-
nal regulations allow a participating FFI
to apply preexisting account identification
and documentation procedures. For ac-
counts acquired from another participat-
ing FFI, certain deemed-compliant FFIs,
or U.S. financial institutions, the final reg-
ulations allow a participating FFI to rely
on the chapter 4 determinations made by
such transferor financial institution, sub-
ject to certain conditions. Additionally,
the final regulations in §1.1471–4 incorpo-
rate by reference the revised rules for doc-
umentation standards, validity periods of
documentation, and reliance on valid doc-
umentation collected by other withholding
agents provided in §1.1471–3(c).
2. Account of a Preexisting Customer and
Sharing of Account Documentation
Comments requested that a new ac-
count opened at an FFI by a customer that
has a preexisting account with the FFI
be treated as a preexisting account rather
than a new account. Comments stated
that in such cases, FFIs generally do not
obtain documentation from the customer
for AML due diligence purposes. Rec-
ognizing the substantial burden for the
FFI to separately document an existing
customer, the final regulations revise the
definition of a preexisting obligation to
permit a new account of a customer that
has a preexisting account to be treated as a
preexisting account provided that the FFI
maintaining the account also treats the new
account and the preexisting account as one
account for purposes of applying AML
due diligence, aggregating balances, and
applying the standards of knowledge for
purposes of chapter 4 to all such accounts.
The final regulations allow this treatment
on a group basis for expanded affiliated
groups and sponsored FFI groups that
share documentation within the group. In
addition, to address comments concerning
the burden of documenting multiple ac-
counts of a customer generally (regardless
of whether any such accounts are preexist-
ing accounts), the final regulations allow a
participating FFI, participating FFI group,
or a sponsored FFI group to apply the pro-
visions for documentation sharing systems
described in §1.1471–3(c)(8).
3. Change in Circumstances
In response to comments that the obli-
gations of a participating FFI following a
change in circumstances were unclear in
the proposed regulations, the final regu-
lations provide that an FFI must retain a
record of documentation to establish the
account holder’s chapter 4 status within the
earlier of 90 days from the date of a change
in circumstances or the date a withhold-
able payment or foreign passthru payment
is made to the account or, if unable to do so,
must treat such account as held by a recal-
citrant account holder or nonparticipating
FFI (as applicable).
4. Entity Accounts
Comments indicated that for certain in-
vestment entities, direct investment may
be held in bearer form so that the invest-
ment entity is unable to document such ac-
count holders until the time of payment.
The final regulations allow a participating
FFIthatisaninvestmententitytodocu-
ment an account holder of a preexisting ac-
count that is in bearer form at the time of
payment.
The final regulations clarify that in ad-
dition to documenting the entity account
holder, a participating FFI is also required
to document the payee (if other than the ac-
count holder) to the extent necessary to de-
termine whether withholding applies. For
example, if an account is held by an NFFE
that is a flow-through entity (other than a
WP, WT, or excepted NFFE), the partici-
pating FFI is also required to identify and
document the partners, owners, or benefi-
ciaries of such entity to determine if with-
holding is required with respect to pay-
ments of U.S. source FDAP income made
to such account.
5. Individual Accounts
a. New Accounts
Comments requested alternative docu-
mentation options to address difficulties
in obtaining U.S. tax forms from account
2013–15 I.R.B.775April 8, 2013

holders. In response to these comments,
the final regulations modify the identifi-
cation and documentation procedures of
participating FFIs with respect to individ-
ual accounts that are new accounts to per-
mit certain alternative forms of documen-
tation. For example, the final regulations
permit a participating FFI to rely on in-
formation provided by a third-party credit
agency to establish an account holder’s
foreign status when certain conditions are
met.
The final regulations adopt the require-
ment in the proposed regulations for a
participating FFI to review all information
collected in connection with the opening
or maintenance of each account, including
documentation collected as part of the
participating FFI’s account opening pro-
cedures and documentation collected for
other regulatory purposes, to determine
if an account holder’s claim of foreign
status is unreliable or incorrect. The fi-
nal regulations clarify that a participating
FFI is required in such reviews to apply
the standards of knowledge provided in
§1.1471–3(e) for offshore obligations held
by individuals. If the participating FFI is
not able to establish an account holder’s
status as a foreign person, the final regula-
tions require the participating FFI to retain
a record of a U.S. TIN and, if necessary,
a valid and effective waiver described in
section 1471(b)(1)(F)(i) to establish an
account holder’s status as a U.S. person.
The final regulations allow a participating
FFI to retain a record of a U.S. TIN by any
means (that is, not exclusively by retaining
arecordofaFormW–9).
The final regulations also provide al-
ternative identification and documentation
procedures for certain cash value insur-
ance or annuity contracts. Comments
noted that when a group life insurance
contract or group annuity contract is issued
to an employer and individual employees
are the insured/beneficiaries, the insurance
company does not have a direct relation-
ship with the employee/certificate holders
at inception of the contract. In response,
the final regulations do not require the
insurance company to document each em-
ployee until the date on which an amount is
payable to an employee/certificate holder
or beneficiary if the participating FFI ob-
tains a certification from an employer that
no employee/certificate holder (account
holder) is a U.S. person and certain other
conditions are satisfied (for example, that
the number of employees covered under
the contract exceeds 25). Comments also
requested relief from the requirement to
identify and document beneficiaries of
cash value insurance contracts. In re-
sponse, the final regulations provide that a
participating FFI may presume that an in-
dividual beneficiary (other than the owner)
receiving a death benefit with respect to a
life insurance contract that is a cash value
insurance contract is a foreign person,
and is therefore not required to retain a
record of documentation from such per-
son, unless the participating FFI has actual
knowledge or reason to know that the ben-
eficiary is a U.S. person. A participating
FFI has reason to know that a beneficiary
of a cash value insurance contract is a U.S.
person if the information collected by the
participating FFI and associated with the
beneficiary contains U.S.indicia.
b. Preexisting Accounts
Comments requested clarification with
regard to procedures for identifying and
documenting preexisting accounts. In re-
sponse to these comments, the final reg-
ulations provide a more detailed explana-
tion of the application of these rules. For
example, the final regulations expressly
provide that a participating FFI is not re-
quired to retain a record of documentation
from the account holder until there is a
change in circumstances if the identifica-
tion and documentation procedure speci-
fied for preexisting accounts is applied and
no U.S.indiciaare identified. In addition,
the final regulations expressly provide that
for preexisting accounts, a participating
FFI may apply the identification and doc-
umentation procedure for either new ac-
counts or preexisting accounts.
The proposed regulations did not
coordinate the rules in §1.1471–3(e)
(covering standards of knowledge) with
the documentation requirements under
§1.1471–4(c) to establish an account
holder’s foreign status when U.S.indi-
ciaare associated with the account. To
provide such coordination, §1.1471–4(c)
incorporates by reference the standards of
knowledge in §1.1471–3(e).
c. Presumption of Status for Individual
Accounts
Comments noted that the proposed reg-
ulations were unclear concerning the ap-
plication of the presumption rules to in-
dividual account holders of participating
FFIs. In response to these comments, the
final regulations clarify that the presump-
tion rules of §1.1471–3(f) do not apply to
individual account holders of a participat-
ing FFI. A participating FFI must complete
the requisite identification and documen-
tation procedures with respect to each ac-
count within the time period provided by
§1.1471–5(g)(3) (start of recalcitrant ac-
count holder status), or, if unable to do so,
must treat such account as held by a recal-
citrant account holder.
d. Preexisting Individual Accounts
Previously Documented
With respect to the exception to the
preexisting account identification proce-
dure (other than the relationship manager
inquiry) for an account documented as
held by foreign individuals for purposes
of chapter 61 or the QI, WP, or WT agree-
ment, the final regulations clarify that an
individual account holder’s foreign sta-
tus has been documented under chapter
61 if the participating FFI has retained a
record of the documentation required un-
der chapter 61 to establish the individual’s
foreign status and the account received
a reportable payment (as defined under
section 3406(b)) in any prior year. With
respect to QIs, WPs, and WTs, an account
holder’s foreign status has been docu-
mented if the QI, WP, or WT has met the
relevant documentation requirements of
its agreement with respect to an account
holder that received a reportable amount
in any year in which the agreement was in
effect.
e. Certifications of Responsible Officer
The final regulations retain the require-
ment in the proposed regulations for a re-
sponsible officer to certify, to the best of
his/her knowledge after conducting a rea-
sonable inquiry, that the participating FFI
does not have any formal or informal prac-
tices or procedures in place to assist ac-
count holders in avoiding chapter 4, such
as advising account holders to split up their
accounts to avoid reporting as high-value
April 8, 20137762013–15 I.R.B.

accounts. Comments requested additional
examples of policies that violate the cer-
tification. The final regulations provide
such additional examples, including: ad-
vising that account holders of U.S. ac-
counts close, transfer, or withdraw from
their account to avoid reporting; inten-
tional failures to disclose a known U.S. ac-
count; or advising that an account holder
remove U.S.indiciafrom its account infor-
mation. In response to comments, the final
regulations also provide that an e-mail re-
quiring responses from relevant customer
on-boarding and management personnel as
to whether they engaged in any such prac-
tices is considered a reasonable inquiry for
purposes of the certification.
Comments requested specific timing
for making the certifications regarding
completion of required due diligence. The
final regulations respond to these com-
ments and also simplify and consolidate
the certifications. The final regulations
provide that these certifications may be
made concurrently and no later than 60
days following the date that is two years
after the effective date of the FFI agree-
ment. See section V.F.3 of this preamble
for a discussion of a responsible officer’s
periodic certification requirements.
Comments also requested clarification
on a responsible officer’s responsibilities if
he/she could not make the required certifi-
cation. The final regulations provide that
a responsible officer may make a qualified
certification stating why the general certi-
fication cannot be made and that corrective
actions will be taken by the responsible of-
ficer.
D. Account Reporting
1. In General
As in the proposed regulations, the
final regulations indicate that the FFI
that maintains an account is generally
responsible for reporting the account in
accordance with the reporting rules under
§1.1471–4(d). The final regulations add
in §1.1471–5 a rule to determine if an FFI
is treated as maintaining an account.
The final regulations describe the re-
porting responsibilities of a sponsoring en-
tity that has agreed to fulfill the reporting
requirements of a sponsored FFI and gen-
erally require the sponsoring entity to re-
port accounts of the sponsored FFI in the
manner the sponsored entity would other-
wise be required to report if it were a par-
ticipating FFI.
2. Account Balance or Value
In response to comments generally re-
questing that the final regulations accom-
modate current business practices of FFIs,
the final regulations provide that a partici-
pating FFI must report the average balance
or value of the account to the extent that the
FFI reports average balances or values to
the account holder for a calendar year and
otherwise to report the balance or value of
the account as of the end of the calendar
year.
3. Payments
The final regulations clarify that any
distribution (including a distribution that
would be considered a redemption) made
to an account holder with respect to
a cash value insurance contract or an-
nuity contract must be reported under
§1.1471–4(d)(4)(iv)(C) without regard to
the U.S. tax treatment.
4. Section 953(d) Insurance Companies
and Reporting in a Manner Similar to
Section 6047(d)
Comments requested that a foreign in-
surance company that has made an elec-
tion under section 953(d) be excluded from
the definition of an FFI. The final regu-
lations do not adopt this comment when
the foreign insurance company is not li-
censedtodobusinessintheUnitedStates.
How a foreign insurance company and its
United States shareholders are taxed is im-
material to the need for reporting with re-
gard to insurance or annuity contracts is-
sued by the insurance company to its cus-
tomers. Therefore, the final regulations
provide that the term U.S. person does
not include an insurance company that has
made an election under section 953(d) if
the company is not licensed to do business
in any State. However, a foreign insurance
company that has made an election under
section 953(d) and is licensed to do busi-
ness in the United States would be consid-
ered, for purposes of chapter 4, a U.S. per-
son and, therefore, would remain subject
to reporting with respect to its life insur-
ance and annuity contracts under section
6047(d), not chapter 4.
Comments also requested that a foreign
insurance company be permitted to sat-
isfy its chapter 4 reporting obligations by
reporting under section 6047(d). Permit-
ting a foreign insurance company that is
not licensed to do business in the United
States to report only the information re-
quired under section 6047(d) would pro-
vide insufficient reporting for FATCA pur-
poses because section 6047(d) reporting
applies only to distributions made under a
contract issued by an insurance company
licensed to do business under the laws of a
State.
In response to the comments, however,
the final regulations permit an insurance
company participating FFI that is not li-
censed to do business in the United States
to elect to report its chapter 4 account in-
formation with respect to its life insurance
and annuity contracts in a manner similar
to section 6047(d) reporting. Under this
election, an insurance company participat-
ing FFI reports the sum of: (1) a cash value
or annuity contract’s account balance or
value; and (2) any amount paid under the
contract as a “gross distribution” in Box
1 of Form 1099–R. The participating FFI
couldthencheckbox2btoindicatethetax-
able amount is not determined.
5. Special Reporting for Calendar Year
2013
The final regulations incorporate the
reporting requirements in Announcement
2012–42, 2012–47 I.R.B. 561, with re-
spect to calendar year 2013. The final
regulations provide that if an FFI agree-
ment has an effective date that is on or
before December 31, 2014, the participat-
ing FFI is required to report U.S. accounts
that it maintained during 2013 that are
outstanding on December 31, 2013. The
final regulations adopt the streamlined
reporting rules provided in the proposed
regulations. The final regulations also
eliminate the proposed regulations’ re-
quirement for reporting by September 30,
2014, and instead permit participating
FFIs to report for both calendar years 2013
and 2014 on or before March 31, 2015.
E. Expanded Affiliated Group
Requirements
The final regulations do not incorporate
comments suggesting the sunset date for
2013–15 I.R.B.777April 8, 2013

limited branches and limited FFIs be ex-
tended beyond December 31, 2015. The
final regulations also do not adopt sug-
gestions to relax the requirement that all
members of an expanded affiliated group
be participating FFIs, deemed-compliant
FFIs, or limited FFIs. The Treasury De-
partment and the IRS believe that IGAs
are the appropriate vehicle to address these
concerns.
F. Verification
1. In General
In General The final regulations include
the verification and certification require-
ments for participating FFIs. These ver-
ification proceduresrely on a responsible
officer (or designee) to establish a compli-
ance program that includes policies, proce-
dures, and processes sufficient for the par-
ticipating FFI to satisfy the requirements
of the FFI agreement. The participating
FFI must subject its compliance program
to periodic review. The responsible offi-
cer may be any officer of any participating
FFI or reporting Model 1 FFI in the par-
ticipating FFI’s expanded affiliated group
with sufficient authority to fulfill the du-
ties of a responsible officer described in
the final regulations. The responsible of-
ficer may designate others to implement
and oversee the compliance with the ver-
ification requirements, but must make any
required certifications to the IRS (as de-
scribed below).
2. Consolidated Compliance Program
In response to comments supporting the
approach set forth in Notice 2011–34 for
an optional consolidated compliance pro-
gram, the final regulations provide for such
a program. Under the final regulations, a
participating FFI, reporting Model 1 FFI,
or U.S. financial institution (compliance
FI) may agree to establish and maintain a
consolidated compliance program and per-
form a consolidated periodic review on be-
half of one or more FFIs in the same ex-
panded affiliated group that elect this op-
tion (the consolidatedcompliance group).
The consolidated compliance group is not
required to include every FFI in the ex-
panded affiliated group, and an expanded
affiliated group may have multiple consol-
idated compliance groups organized under
different or the same compliance FI. The
final regulations also require a sponsoring
entity to act as the compliance FI for all of
the FFIs that it sponsors (including any cer-
tified deemed-compliant FFIs that it spon-
sors).
It is anticipated that additional guidance
will be provided in either the instructions
to the registration system or the FFI agree-
ment for an electing FFI to identify itself
as part of a consolidated compliance group
and procedures for the responsible officer
of the compliance FI to make the required
certifications on behalf of the consolidated
compliance group.
3. Certification of Compliance
The final regulations require the re-
sponsible officer, on behalf of the partic-
ipating FFI, to periodically certify to the
IRS that the FFI is in compliance with
the requirements of the FFI agreement.
Such certification is required once every
three years. In advance of such certifi-
cation, a participating FFI is required to
review its compliance program and its
compliance with the requirements of the
FFI agreement. In consideration of the
results of this review, the responsible of-
ficer is required to certify to the IRS that
it maintains effective internal controls and
that there were no material failures during
the certification period, or any material
failures that did occur were corrected. A
material failure is a failure of the partic-
ipating FFI to fulfill the requirements of
the FFI agreement if the failure was the
result of a deliberate action by the partic-
ipating FFI to avoid the requirements of
the FFI agreement or was an error attrib-
utable to a failure to implement sufficient
internal controls. The final regulations
provide that a material failure that occurs
in limited circumstances will not result in
an event of default. If a material failure
occurringduringthecertification period
has not been corrected, or if an event of
default has occurred, the final regulations
provide that a responsible officer may in-
stead make a qualified certification.
4. IRS Review of Compliance
Comments requested guidance on the
standards the IRS would apply when re-
questing additional information from a
participating FFI to determine its compli-
ance with its FFI agreement. The final
regulations provide for general inquiries
under which the IRS contacts the partici-
pating FFI to request additional informa-
tion regarding the information reported on
the returns filed by the participating FFI,
and for inquiries when the IRS determines
in its discretion that there may have been
substantial non-compliance with an FFI
agreement. The IRS expects that inquiries
regarding substantial non-compliance will
notbemadeonaroutinebasis. Ifade-
termination that there may have been
substantial non-compliance is made, the
IRS may inquire as to the FFI’s compli-
ance with certain requirements of the FFI
agreement and may request information
necessary to verify the participating FFI’s
compliance with the FFI agreement, such
as a description of the participating FFI’s
procedures for conducting its periodic
review. The IRS may also request the per-
formance of specified review procedures
(including an external audit). If the IRS
determines, based upon its review, that the
FFI has not substantially complied with
the requirements of an FFI agreement, it
will deliver a noticeof event of default.
G. Event of Default
The final regulations define an event of
default of the FFI agreement and describe
procedures for a participating FFI to reme-
diate an event of default. Comments ex-
pressed concern that any failure to comply
with an FFI agreement would result in ter-
mination of that agreement. In response to
these comments, the final regulations clar-
ify that an event of default does not result
in automatic termination of the FFI agree-
ment. The final regulations provide that
if the IRS becomes aware of an event of
default, it will deliver a notice of default
to the participating FFI and allow the par-
ticipating FFI to develop a plan to reme-
diate the event of default. If the partici-
pating FFI fails to respond to the notice of
default or comply with an agreed-upon re-
mediation plan, the IRS may terminate the
FFI’s participating FFI status within a rea-
sonable period of time, subject to an FFI’s
request for reconsideration of termination
by written request to the LB&I Director for
Foreign Payments Practice.
H. Collective Refunds
The final regulations provide that a par-
ticipating FFI (or a reporting Model 1 FFI)
April 8, 20137782013–15 I.R.B.

may file a collective refund claim on be-
half of its account holders and payees that
were overwithheld upon under chapter 4,
subject to certain conditions and proce-
dural requirements.
I. Legal Prohibitions on Reporting U.S.
Accounts and Withholding
In response to comments requesting
clarification on whether an FFI can enter
into an FFI agreement if foreign law im-
poses prohibitions on the FFI’s ability to
report or withhold, the final regulations
clarify that an FFI may enter into an FFI
agreement if it can meet the requirements
of §1.1471–4(i). The final regulations
require, however, that if foreign law pro-
hibits a participating FFI from fulfilling its
withholding obligations with respect to an
account, the participating FFI must close
the account within a reasonable time or, if
local law prohibits closing the account, the
participating FFI must block or transfer
the account. Similarly, if a participating
FFI is prohibited by foreign law, absent a
waiver, from reporting information on an
account that it must treat as a U.S. account,
the final regulations provide that the par-
ticipating FFI must request a waiver of
foreign law from such account holder and
if such waiver is not obtained within a rea-
sonable period of time, the participating
FFI must close or transfer such account.
VI.Comments and Changes to §1.1471–5
– Definitions Applicable to Section 1471
A. U.S. Accounts
Comments requested additional ex-
ceptions from the definition of U.S. ac-
count for low-value accounts other than
preexisting accounts and the depository
account exception provided by section
1471(d)(1)(B). In response to these com-
ments, the Treasury Department and the
IRS have provided a $50,000 exception for
cash value insurance contracts by amend-
ing the definition of financial account,
discussed below.
B. Account Holder
Comments requested clarification of
whether an entity that is disregarded as
an entity separate from its owner under
§301.7701–2(c)(2)(i) (disregarded entity)
is treated as an account holder. In response
to these comments, because the definition
of person excludes a disregarded entity,
the final regulations clarify that an ac-
count held by a disregarded entity shall be
treated as held by the person owning such
entity.
Comments expressed concern regard-
ing the identification of the account holder
of insurance and annuity contracts. The fi-
nal regulations provide that an insurance
or annuity contract that is a financial ac-
count is treated as held by each person that
can access the contract value (for example,
through a loan, withdrawal, or surrender)
or change a beneficiary under the contract.
If no person can access the contract value
or change a beneficiary under the contract,
then the contract is treated as held by both
the person(s) named in the contract as the
owner(s) of the contract and each benefi-
ciary under the contract. When the obliga-
tion to pay any benefit under the contract
becomes fixed, the person entitled to such
benefit is treated as a holder of the contract.
C. Financial Accounts
1. Depository Accounts
In response to comments, the final reg-
ulations limit the scope of the term deposi-
tory account in a number of ways. For ex-
ample, the final regulations exclude certain
escrow accounts established for commer-
cial transactions from treatment as finan-
cial accounts. The final regulations also
exclude negotiable debt instruments that
are traded on a regulated market or over-
the-counter market and distributed through
financial institutions. In response to com-
ments, the final regulations also clarify the
meaning of “any othersimilar instrument”
in the definition of a depository account.
The final regulations limit the scope of a
depository account to an account for the
placing of money (as opposed to the hold-
ing of property) in the custody of an en-
tity engaged in a banking or similar busi-
ness. The final regulations also clarify that
a credit balance with respect to a credit
card account issued by a credit card com-
pany is a depository account.
Comments requested guidance regard-
ing the specific circumstances in which
an amount held by an insurance company
would be treated as a depository account.
The final regulations provide that a depos-
itory account includes an amount that an
insurance company holds under a guaran-
teed investment contract or under a similar
agreement to pay or credit interest thereon.
The final regulations also provide that a
depository account does not include an ad-
vance premium or premium deposit re-
ceived by an insurancecompany, provided
the prepayment or deposit relates to an in-
surance contract for which the premium
is payable annually and the amount of the
prepayment or deposit does not exceed the
annual premium for the contract. Such
amounts are also excluded from cash value
for purposes of determining whether a con-
tract is a cash value insurance contract.
2. Equity and Debt Interests
With regard to equity or debt interests
in investment entities, the final regulations
revise the financial account definition to
correspond to the changes discussed be-
low to the definition of FFI for investment
entities. Accordingly,the final regulations
generally remove from the financial ac-
count definition debt or equity interests
in investment entities that are described
solely in §1.1471–5(e)(4)(i)(A), which
are generally investment advisors or asset
managers. This treatment parallels the
treatment of equity and debt interests in
entities that act solely as depository insti-
tutions or custodial institutions.
Comments requested that bank holding
companies should betreated like deposi-
tory institutions for purposes of the finan-
cial account exclusion for non-regularly
traded debt and equity interests to cover
cases in which the holding company raises
funds for its subsidiaries. Comments noted
that these interests are often held through
custodial institutions that are in a better po-
sition to document the holders and report
andwithholdonsuchinstruments.Thefi-
nal regulations respond to these comments
by generally removing from the definition
of financial account debt or equity interests
in holding companies and treasury centers
of expanded affiliate groups whose aggre-
gate income is derived primarily from ac-
tive NFFEs, depository institutions, custo-
dial institutions, and insurance companies.
Nevertheless, the final regulations
limit the exception from financial ac-
count for a debt or equity interest in a
holding company or a treasury center
so that the exception does not apply in
cases in which the debt or equity interest
2013–15 I.R.B.779April 8, 2013

tracks the performance of one or more
investment entities described in paragraph
§1.1471–5(e)(4)(i)(B) or (C) (generally
traders and investment vehicles) or one or
more passive NFFEs that are members of
entity’s expanded affiliated group rather
than of the group as a whole. The final
regulations also provide anti-abuse rules
if the value of the interest is determined,
directly or indirectly, primarily by refer-
ence to assets that give rise (or could give
rise) to withholdable payments, or the in-
terest is issued with a principal purpose
of avoiding the reporting or withholding
requirements of chapter 4.
The proposed regulations provided that
an equity or debt interest in certain types
of financial institutions would be treated
as a financial account only if the value of
the interest is determined, directly or indi-
rectly, primarily by reference to assets that
give rise (or could give rise) to withhold-
able payments. Comments requested addi-
tional guidance regarding when an equity
or debt interest would be considered to be
determined, directly or indirectly, primar-
ily by reference to assets that give rise (or
could give rise) to withholdable payments.
The final regulations provide that the value
of an interest is determined, directly or in-
directly, primarily by reference to assets
that give rise (or could give rise) to with-
holdable payments if the amount payable
upon redemption of the interest is either se-
cured or determined primarily by reference
to assets that give rise to withholdable pay-
ments. The value of a debt interest is deter-
mined, directly or indirectly, primarily by
reference to assets that give rise (or could
give rise) to withholdable payments if the
debt is convertible into stock of a U.S. per-
son, amounts payable as interest or upon
redemption of the debt are determined pri-
marily by reference to profits or assets of a
U.S person, or the debt is secured by assets
of a U.S. person.
A number of comments were received
regarding the exception from financial ac-
count status for debt and equity that is reg-
ularly traded on an established securities
market. The final regulations respond to
comments by adopting the definitions pro-
vided in the final regulations under sec-
tion 1472, including the revisions made
to those regulations that provide a spe-
cial rule for the initial year of public of-
fering. The final regulations also clarify
that an interest is not regularly traded if
the holder of the interest (other than a fi-
nancial institution acting as an intermedi-
ary) is registered on the books of the in-
vestment entity. This rule does not apply
to the extent a holder’s interest is regis-
tered prior to January 1, 2014, on the books
of the investment entity. The proposed
regulations excluded debt or equity inter-
ests in an investment entity that are regu-
larly traded because such interests are typ-
ically held through other financial institu-
tions, so that reporting by the issuing en-
tity is not necessary to fulfill the purposes
of chapter 4. Where that is not the case,
the final regulations clarify that such inter-
ests are treated as financial accounts. See
§1.1471–3(c)(9)(iii), however, for when
the entity may relyupon a certification
from broker acting as an agent of a payee
(including receiving of payments on behalf
of the payee from the entity).
3. Accounts Held by Estates
With regard to accounts held by estates,
in response to comments, the final regula-
tions conformed the chapter 4 rules with
the reporting rules under section 6038D by
excepting accounts held by estates from
the definition of financial account.
4. Insurance Definitions and Contracts
Comments requested that the defini-
tions of “annuity contract,” “life insurance
contract,” and “insurance company” in the
proposed regulation be modified to elim-
inate the need for foreign companies to
become proficient in the specialized defi-
nitions of these terms under U.S. tax rules
defining these products and to accommo-
date local law definitions and practices.
In response to comments, the final regu-
lations replace the references to U.S. tax
law rules when defining these terms with
plain language definitions and incorporate,
where appropriate, references to local law
definitions and practices.
Comments also requested that the fi-
nal regulations clarify when an insurance
company is a financial institution or a
NFFE, because an insurance company’s
reserve activities could cause an insurance
company that is not a specified insurance
company to qualify asa depository insti-
tution, custodial institution, or investment
entity. In response to these comments,
the final regulations clarify that: (1) an
insurance company that is not a specified
insurance company must independently
determine whether it is a depository insti-
tution, custodial institution, or investment
entity; (2) an insurance company’s reserve
activities with respect to its insurance con-
tracts and annuity contracts are not taken
into consideration in determining whether
the company is a depository institution,
custodial institution, or investment entity;
and (3) an insurance company that is not a
financial institution is a NFFE.
The final regulations also respond to
comments by expanding the exclusion
from financial account status for certain
term life insurance contracts. Because
mortality risk under an insurance contract
increases as the insured ages, the final
regulations permit increasing periodic pre-
mium payments. To prevent front loading
premiums, however, the final regulations
require that the premiums be payable at
least annually during the period the con-
tract is in existence or until the insured
attains age 90, and that the premiums do
not decrease over time.
In addition, the Treasury Department
and the IRS did not accept comments re-
questing that return of premium be per-
mitted to the extent that it did not exceed
the aggregate premiums paid for the con-
tract, without regard to mortality, morbid-
ity, and expense charges. The Treasury
Department and the IRS believe such in-
struments implicate the policy objectives
of chapter 4. Accordingly, under the final
regulations, if a policyholder at the begin-
ning of January purchases a term life insur-
ance contract with a $100,000 annual pre-
mium, terminates the contract on April 1st,
and upon termination receives $75,000 as a
return of the premium paid ($100,000 less
$25,000 mortality, morbidity, and expense
charges for the period the contract was in
force), then the contract qualifies for the
term contract exclusion from a cash value
insurance contract. If, however, upon ter-
mination, the policyholder would receive
an amount exceeding $75,000, the contract
would not qualify for exclusion from fi-
nancial account status as a term life insur-
ance contract.
Comments requested an exemption
from financial account status for imme-
diate pension or disability annuities that
relate to exempt retirement or pension
accounts. The final regulations respond to
this comment by providing that a financial
account does not include a non-investment
April 8, 20137802013–15 I.R.B.

linked, non-transferable, immediate an-
nuity purchased by the accountholder in
connection with an exempt retirement or
pension account.
In response to comments requesting an
expansion of the contracts that are exempt
from financial account status, the final reg-
ulations made a number of revisions to the
rules associated with cash value insurance
contracts. The finalregulations provide
that an insurance contract is excluded from
the definition of a financial account unless
it has a cash value that exceeds $50,000
at any time during the calendar year, un-
less the participating FFI elects to report
all contracts with a cash value. In addi-
tion, the final regulations exclude indem-
nity reinsurance contracts between two in-
surance companies from the definition of a
cash value insurance contract and expand
the exclusions from cash value to include
a refund of premium upon the termination
of a contract.
5. Exception for Certain Savings
Accounts
Numerous comments were received re-
questing that the proposed regulation’s ex-
ceptions from financial account status for
certain savings accounts be expanded to
accommodate savingsvehicles commonly
used in a number of jurisdictions. In re-
sponse to these comments, substantial re-
visions were made to the exceptions in
order to accommodate more savings ve-
hicles without significantly increasing the
ability for U.S. persons to use such ve-
hicles to avoid chapter 4 reporting. For
retirement and pension accounts, the ex-
cepted category is revised to eliminate the
requirements that all contributions to the
account be government,employer, or em-
ployee contributions and that the contribu-
tions be limited to earned income. In addi-
tion, the limitation on contributions is lib-
eralized to allow plans that either have an
annual contribution limit of $50,000 or less
or a maximum lifetime contribution limit
of $1,000,000 or less. The final regula-
tions also add the condition that the rele-
vant tax authorities require information re-
porting with respect to the account. For
non-retirement savings accounts, the final
regulations eliminate the requirement that
contributions be limited by reference to
earned income and instead require that the
account be tax favored. The final regu-
lations expand the definition of “tax fa-
vored” provided in the proposed regula-
tions for purposes of these rules.
6. Account Balance or Value
The proposed regulations did not pro-
vide express guidance on the manner in
which debt interests should be valued. The
final regulations revise the definition of ac-
count balance or value with respect to a
debt interest to mean the principal amount
of such debt.
Comments noted that certain insurance
companies value insurance and annuity
contracts on the contract’s anniversary
date under normal business practices. In
response to these comments, the final
regulations allow the annual reporting of
account balance or value of an insurance
or annuity contract to be based upon either
the account value at calendar year end
or the account value at each contract an-
niversary date. Also, the final regulations
provide that in the case of an annuity con-
tract for which no value is reported to the
account holder, the annuity is valued using
the discount interest rate and mortality
tables that are either (1) prescribed under
section 7520 and the regulations thereun-
der, or (2) used by the FFI to determine
the amounts payable under the contract.
7. Maintaining a Financial Account
The Treasury Department and the IRS
received comments that the proposed reg-
ulations could be read to provide that a sin-
gle account could be maintained by multi-
ple entities (such as both a collective in-
vestment vehicle andits transfer agent),
thereby creating multiple documentation,
reporting, or withholding obligations for
each entity. In response to these com-
ments, the final regulations identify the en-
tity that will be treated as maintaining a fi-
nancial account in order to avoid requiring
multiple entities to document, withhold,
and report with respect to a financial ac-
count.
D. Foreign Financial Institution
In response to comments requesting
conformity between IGA definitions and
the chapter 4 definitions, the final reg-
ulations amend the definition of FFI to
provide that IGAs determine whether a
resident entity described in the applicable
IGA is an FFI. A corresponding change
was made to the definition of NFFE. The
statutory and regulatory definitions apply
for entities that are not resident in IGA
jurisdictions.
E. Financial institution
1. Depository Institution
With regard to the definition of a depos-
itory institution, the Treasury Department
and the IRS received a number of com-
ments regarding whether merely accept-
ing deposits was or should be sufficient to
create depository institution status. In re-
sponse to these comments, the final reg-
ulations clarify that accepting deposits is
necessary but not sufficient to create de-
pository entity status.Therefore, an entity
that accepts deposits must also engage in
one or more of the enumerated banking or
financing activities (adapted from section
864’s and section 954(f)’s active banking,
financing, and similar business rules). The
final regulations also provide that, to be
treated as a depository institution, an entity
needs to engage on a regular basis in one
or more such activities. In addition, the
final regulations clarifythatanentitythat
completes money transfers by instructing
agents to transmit funds is not in a banking
or similar business because it does not ac-
cept deposits or other similar temporary in-
vestments of funds. The final regulations
also clarify that an entity that solely ac-
cepts deposits from persons as collateral or
security pursuant to a lease, loan, or similar
financing arrangement is not a depository
institution. This exception is intended to
exclude from FFI status entities such as fi-
nance companies that do not fund their op-
erations through deposits and entities act-
ing as networks for credit card banks that
hold cash collateral from such banks.
2. Custodial Institution
With regard to the definition of a cus-
todial institution, the proposed regulations
define custodial institutions by reference
to whether over 20 percent of an entity’s
income is “attributable to the holding of fi-
nancial assets.” In response to comments,
the final regulations clarify the specific
types of income that will be treated as at-
tributable to holding financial assets.
In addition, in response to comments
that new institutions (starts-ups) cannot
2013–15 I.R.B.781April 8, 2013

qualify as custodial institutions, the fi-
nal regulations provide a special rule for
start-up entities that bases custodial in-
stitution status on theexpectations and
purposes of the entity.
3. Investment Entity
Comments requestedthat the definition
of “financial institution” be clarified and
more narrowly defined to exclude passive,
non-commercial investment vehicles, in-
cluding trusts. The IGAs adopt this ap-
proach by requiring an investment entity to
undertake activity on behalf of customers.
The IGAs also expand the definition of
an investment entity to include an entity
that provides certain financial services to
customers, such as individual or collective
portfolio management or otherwise invest-
ing, administering, or managing funds or
money on behalf of other persons, regard-
less of whether the entity holds financial
assets.
Taking into consideration comments
that the provisions of the final regulations
should conform as closely as possible to
the provisions of the IGAs, the final regu-
lations generally incorporate the definition
of investment entity contained in the IGAs
by providing that an investment entity in-
cludes any entity that primarily conducts
as a business on behalf of customers: (1)
trading in an enumerated list of financial
instruments; (2) individual or collective
portfolio management;or (3) otherwise in-
vesting, administering, or managing funds,
money, or certain financial assets on be-
half of other persons. In addition, the final
regulations limit the scope of the proposed
regulations’ definition of investment entity
by treating an entity (other than an entity
that primarily conducts as a business on
behalf of customers one of the activities
enumerated in the preceding sentence) the
gross income of which is primarily attrib-
utable to investing, reinvesting, or trading
as an investment entity only if the entity
is managed by a depository institution, a
custodial institution, another investment
entity, or an insurance company that quali-
fies as a financial institution. Accordingly,
passive entities that are not professionally
managed are generally treated as passive
NFFEs rather than as FFIs. However,
entities that function or hold themselves
out as mutual funds, hedge funds, or any
similar investment vehicle established
with an investment strategy of investing,
reinvesting, or trading in financial assets
are investment entities.
Consistent with the approach of the
proposed regulations, the final regulations
provide that an entity primarily conducts
an activity as a business if gross income
attributable to such activity equals or
exceeds 50 percent of the entity’s gross
income.
4. Insurance Companies and Holding
Companies
With regard to insurance companies
and holding companies of insurance com-
panies, the final regulations provide that
a holding company that is a member of
an expanded affiliated group that includes
an insurance company will be treated as
an FFI if it issues or is obligated to make
payments with respect to a cash value
insurance contract or annuity contract,
regardless of whether it would otherwise
be treated as an FFI.
5. Certain Holding Companies and
Treasury Centers
Comments noted that under many cir-
cumstances a company within an affiliated
group of companies that serves as a hold-
ing company or provides treasury services
for or on behalf of group members should
not be considered a financial institution
under chapter 4. In response to these com-
ments, the final regulations limit the cir-
cumstances under which a holding com-
pany or treasury center is treated as a fi-
nancial institution. Under the final regula-
tions, such entities are FFIs in two situa-
tions. First, subject to limited exceptions
for nonfinancial groups, discussed below,
such entities are FFIs if they are part of
an expanded affiliated group that includes
a depository institution, custodial institu-
tion, insurance company, or investment
entity described in paragraph (e)(4)(i)(B)
and (C) (not exclusively a financial service
provider). Second, they are FFIs regard-
less of whether they are a member of a non-
financial group if they are formed in con-
nection with or availed of by a collective
investment vehicle, mutual fund, exchange
traded fund, private equity fund, hedge
fund, venture capitalfund, leveraged buy-
out fund, or any similar investment vehi-
cle established with an investment strat-
egy of investing, reinvesting, or trading in
financial assets. These rules help to en-
sure that holding companies and treasury
centers cannot be used by financial groups
with nonparticipating FFIs or limited FFIs
to shelter payments from chapter 4 with-
holding.
6. Exceptions to FFI Status
The Treasury Department and the IRS
received a number of comments request-
ing more comprehensive exceptions to FFI
status for holding companies and similar
entities. Comments noted instances in
which holding companies and other finan-
cial entities were part of a nonfinancial
group, the activities of these entities were
in furtherance of the nonfinancial business
of the group, and the entities provided no
meaningful investment opportunities to
third-parties. In response to these com-
ments, the final regulations provide more
comprehensive exceptions to FFI status
for certain nonfinancial group entities as
described below. These entities are also
excepted NFFEs for purposes of section
1472.
In particular, the final regulations
provide an exception to FFI status (and
passive NFFE status for section 1472 pur-
poses) for holding companies, treasury
centers, and captive finance companies
that are part of a nonfinancial group. In
response to comments, excepted holding
companies may be part of nonfinancial
group structures that include tiers of hold-
ing companies. Nonfinancial groups are
permitted to include FFI members to a
limited extent when all such members are
participating FFIs or deemed-compliant
FFIs. In response to comments, the final
regulations also provide that an excepted
entity can provide a mixture of holding
company, treasury center, and captive
finance company functions so long as
substantially all of its activities are such
activities. The final regulations also pro-
vide that this excepted status does not
apply to entities formed in connection with
or availed of by private equity funds and
similar arrangements.
The final regulations also create a new
exception to FFI status for excepted in-
ter-affiliate FFIs. Comments noted that
financial groups may include dormant
entities, entities that were formed for a
specific deal and were not subsequently
April 8, 20137822013–15 I.R.B.

liquidated, or entities formed for regula-
tory purposes whose activities are entirely
within the financial group. In response
to these comments, the final regulations
provide that an entity that is a member of
a PFFI group is not an FFI if it: (1) does
not maintain financial accounts (other
than accounts maintained for members of
its expanded affiliated group); (2) does
not hold an account with or receive pay-
ments from any withholding agent other
than a member of its expanded affiliated
group; (3) does not make withholdable
payments to any person other than to mem-
bers of its expanded affiliated group that
are not limited FFIs or limited branches;
and (4) has not agreed to report under
§1.1471–4(d)(1)(ii) or otherwise act as
an agent for chapter 4 purposes on behalf
of any financial institution, including a
member of its expanded affiliated group.
In response to comments, the final reg-
ulations also provide an exception for an
entity that is changing its line or business,
provided that the entity previously quali-
fied as an active NFFE.
With regard to entities described in sec-
tion 501(c), the final regulations exclude
insurance companies described in section
501(c)(15) from the section 501(c) excep-
tion from FFI status. Section 501(c)(15)
insurance companies are for-profit insur-
ance companies that qualify for the ex-
emption from U.S. tax because they are
small companies, but are not in any way
restricted from maintaining financial ac-
counts for specified U.S. persons. There-
fore, these entities are not low-risk, so as
to warrant an exemption from FFI status.
F. Deemed-compliant FFIs
1. In General
The final regulations generally retain
the same deemed-compliant categories
that were included in the proposed reg-
ulations but have made several modi-
fications and clarifications in response
to comments received. In addition, the
final regulations introduce new cate-
gories of deemed-compliant FFIs for
certain credit card issuers, as described
in §1.1471–5(f)(1)(i)(E), sponsored FFIs,
as described in §1.1471–5(f)(2)(iii), and
limited-life debt investment entities, as
described in §1.1471–5(f)(2)(iv). In re-
sponse to comments, the deemed com-
pliant category for retirement funds has
been combined with the exempt benefi-
cial owner category for a retirement fund
in §1.1471–6(f). Because a non-profit
organization may be either an FFI or
an NFFE, the category for non-profit
organizations that are exempt from with-
holding under chapter 4 has been moved
from the deemed-compliant FFI section
to §1.1471–5(e)(5), which describes en-
tities that are excepted from treatment as
financial institutions and are treated in-
stead as excepted NFFEs. The proposed
regulations indicated that the Treasury
Department and the IRSwere considering
whether an additional deemed-compliant
category should be created for insurance
companies. In response to comments, the
final regulations instead permit insurance
companies to qualify as local FFIs and
FFIs with only low-value accounts.
The Treasury Department and the IRS
decline to adopt other recommendations to
add to the categories of deemed-compliant
FFIs to address jurisdiction-specific enti-
ties and arrangements and, instead, retain
the proposed regulations’ approach of us-
ing generally applicable attributes to de-
fine different categories of deemed com-
pliant FFIs. Nevertheless, in the context
of IGAs relating to the implementation of
chapter 4, the Treasury Department will
continue to identify entities that qualify
as deemed-compliant FFIs on a jurisdic-
tion-specific basis, and the final regula-
tions treat those entities as deemed-com-
pliant FFIs. In addition, the Treasury De-
partment and the IRS have undertaken in
other parts of these regulations to limit the
number of entities that are subject to the
chapter 4 rules. For example, as discussed
herein, the category of exempt beneficial
owners has been refined and expanded in
response to comments and certain entities
have been removed from the definition of
FFI, either because they have neither cus-
tomers nor assets relevant to the applica-
tion of chapter 4 or because chapter 4’s
purposes are adequately served by treating
such entities as NFFEs.
2. Registered Deemed-Compliant FFIs
a. Local FFIs
Comments requested that the final reg-
ulations expand the types of entities that
qualify as local FFIs to include insurance
companies, credit unions, and investment
entities. The final regulations adopt these
comments. The final regulations do not
adopt comments that requested specific
standards for an FFI to apply when de-
termining whether it is regulated as a
financial institution under the laws of its
country of organization or incorporation.
This requirement is intended merely to
ensure that the government of incorpora-
tion or organization exercises some form
of financial regulation over the FFI and,
accordingly, is intended to be applied
broadly.
The final regulations have amended the
requirement that a local FFI not have a
fixed place of business outside its country
of incorporation or organization to per-
mitanFFItohavealocationinanother
jurisdiction, provided that location is not
publicly advertised and performs solely
administrative support functions (that is,
back office functions). The Treasury De-
partment and the IRS otherwise intend for
the local FFI category to be available only
to FFIs whose activities are limited to a
single country. Accordingly, the Treasury
Department and the IRSdeclined to adopt
other comments suggesting that the pres-
ence and activities of the local FFI and its
expanded affiliated group should not be
limited to one country.
Comments pointed out that an FFI that
services only the local population may ad-
vertise U.S. dollar denominated accounts
for legitimate business reasons. In re-
sponse to such comments, the final regu-
lations eliminate the proposed regulations’
prohibition against advertising U.S. dollar
denominated deposit accounts or invest-
ments, provided that the FFI does not so-
licit customers or account holders outside
its country of incorporation or organiza-
tion. For this purpose, an FFI will not
be considered to have solicited customers
or account holders outside its country of
incorporation or organization merely be-
cause it operates a website, provided that
the website does not specifically indicate
that the FFI maintains accounts for, or pro-
vides services to, nonresidents and does
not otherwise target or solicit U.S. cus-
tomers or account holders. Comments re-
quested clarification as to whether an FFI
would be considered to have solicited cus-
tomers outside its country of incorporation
or organization (the FFI’s country) if it ad-
vertises through print, radio, or television
2013–15 I.R.B.783April 8, 2013

that is distributed in multiple countries in
addition to the FFI’s country. The Trea-
sury Department and the IRS have modi-
fied the regulations to indicate that an FFI
whoseprint,radio,ortelevision advertis-
ing is distributed outside the FFI’s coun-
try is not considered to have solicited cus-
tomers or account holder outside the FFI’s
country, provided the FFI’s advertising is
distributed or aired primarily within the
FFI’s country and the FFI does not ad-
vertise services or accounts for nonresi-
dents and does not otherwise target or so-
licit U.S. customers or account holders.
In response to comments stating that
many countries do not impose informa-
tion reporting requirements on their finan-
cial institutions, thefinal regulations pro-
vide that an FFI may still qualify as a lo-
cal FFI notwithstanding that its accounts
are not subject to information reporting or
withholding requirements if the AML due
diligence requirements of the FFI’s coun-
try require the FFI to identify whether its
account holders are residents of the FFI’s
country.
Comments noted that many FFIs
would fail to meet the 98 percent resi-
dent account holder threshold provided in
§1.1471–5(f)(1)(i)(A)(5), and requested
that the Treasury Department and the IRS
reduce the threshold. The local FFI excep-
tion is not intended to apply to FFIs that
serve significant numbers of nonresident
account holders. The 98 percent threshold
is intended to provide limited flexibility
in cases in which a financial institution
otherwise qualifies as a local FFI but has
a few nonresident account holders, for ex-
ample because a prior resident has moved
or taken a job in another country. Accord-
ingly, the Treasury Department and the
IRS have declined to reduce the 98 percent
threshold necessary to qualify for the local
FFI exception.
The final regulations have amended the
resident test in §1.1471–5(f)(1)(i)(A)(5)to
require the resident threshold be applied
based on account value instead of the num-
ber of accounts. In addition, to accommo-
date territories and administrative regions
that primarily service their mainland pop-
ulations, the resident threshold has been
modified to permit the FFI to apply the test
based on residents or citizens rather than
solely based on residents, as provided in
the proposed regulations.
Comments have also addressed the
provision in the proposed regulations that
required each member of the FFI’s ex-
panded affiliated group to qualify as a
local FFI in order for any member of the
group to qualify as a local FFI, and have
noted that this requirement did not per-
mit the group to have members that were
NFFEsorothertypesofFFIs. Thefinal
regulations continue to provide that in
order for an FFI to qualify as a local FFI,
any FFI member of the expanded affiliated
group should also be a local FFI in the
same country, but provide an exception
for members of the expanded affiliated
group that are NFFEs or retirements funds
described under §1.1471–6(f).
The final regulations also add as a con-
dition of local FFI status a requirement that
the FFI not have policies or practices that
discriminate against opening or maintain-
ing accounts for U.S. individuals that are
resident in the local FFI’s country.
The Treasury Department and the IRS
declined to adopt a number of other com-
ments requesting changes to the local FFI
registered deemed compliant criteria. The
Treasury Department and the IRS believe
that the final regulations strike the ap-
propriate balance between ensuring that
only entities that are low-risk or otherwise
not necessary to carry out the purposes
of chapter 4 are given deemed-compliant
status and providing rules that have ap-
plication across a number of jurisdictions
and legal and regulatory systems.
b. Nonreporting Members of PFFI Groups
The final regulations retain the same re-
quirements for a nonreporting member of a
PFFI group that were provided in the pro-
posed regulations except that the final reg-
ulations, in response to comments, con-
form this deemed-compliant category with
other categories by allowing a nonreport-
ing member of a PFFI group to close a U.S.
account or an account of anonparticipating
FFI.
c. Qualified Collective Investment
Vehicles
The final regulations retain the deemed-
compliant category forqualified collec-
tive investment vehicles. The primary pur-
pose of this deemed-compliant category
is to provide relief for investment entities
that are owned solely through participating
FFIs or directly by large institutional in-
vestors, payments to which would not be
subject to withholding or reporting under
chapter 4. For this reason, the Treasury
Department and the IRS have generally de-
clined to adopt comments that request an
expansion of the types of investors permit-
ted in a qualified collective investment ve-
hicle except that the final regulations per-
mit investors that are retirement plans and
nonprofit organizations. An investment
entity that has other types of investors may
be able to qualify as a deemed-compli-
ant FFI if it meets the requirements un-
der §1.1471–5(f)(1)(i)(D) to be a restricted
fund.
Comments suggested that an invest-
ment entity that is not regulated as an
investment fund by its country of incor-
poration or organization should be con-
sidered regulated as an investment fund if
it is regulated by the country in which it
operates or if its fund manager is regulated
with respect to the investment entity. The
final regulations adopt this suggestion and
expand the cases in which an investment
entity will be considered to be regulated
to include cases in which the investment
entity is regulated in all of the countries
in which it is registered and all countries
in which it operates, or the investment
entity’s manager is regulated with respect
to the investment entity in all countries in
which the investment entity is registered
and all countries in which the investment
entity operates.
Comments requested that a collec-
tive investment vehicle be eligible for
deemed-compliant status notwithstanding
that the vehicle previously issued bearer
shares which remain outstanding if the
vehicle discontinues issuing such shares.
In response to these comments, the final
regulations permit a qualified collective
investment vehicle to have outstanding
bearer obligations that were issued prior
to January 1, 2013, if the qualified col-
lective investment vehicle identifies the
status of the holder prior to payment, no
shares are issued in bearer form, including
reissuances of surrendered shares, after
December 31, 2012, and certain other con-
ditions are met.
April 8, 20137842013–15 I.R.B.

d. Restricted Funds
As with qualified collective investment
funds, comments suggested that a fund
may not always be regulated by its country
of incorporation or organization but should
be considered regulated if it is regulated
by the country in which it operates or if its
fund manager is regulated with respect to
the fund. The final regulations adopt this
suggestion and expand the methods under
which a fund will be considered to be reg-
ulated to include cases in which the fund
is regulated in all of the countries in which
it is registered and all countries in which
it operates, or the fund’s manager is regu-
lated with respect to the investment entity
in all countries in which the investment en-
tity is registered and all countries in which
the investment entity operates.
Several comments indicated confusion
regarding the requirement that all interests
in the fund must be sold through identi-
fied distributors or redeemed directly by
the fund. The final regulations clarify
that interests in the fund may be issued
by the fund directly if the investor can
only dispose of those interests by hav-
ing them redeemed or transferred by the
fund, and not by selling them on a sec-
ondary market. Further, the regulations
clarify that interests in the restricted fund
can only be issued directly by the fund
or by designated distributors described in
§1.1471–5(f)(1)(i)(D)(3). Finally, the reg-
ulations clarify that interests in an invest-
ment fund that are issued through a trans-
fer agent or a distributor that does not hold
the interests as a nominee of the account
holder are considered issued directly by
the fund.
Because the restricted fund category
was created to provide relief for foreign
funds that only target foreign investors,
the Treasury Department and the IRS de-
clined to adopt comments requesting that
the restricted fund category be expanded
to permit U.S. distributors. However, in
response to requests that the restricted
fund distributor provisions include for-
eign branches of U.S. financial institutions
in the list of acceptable distributors de-
scribed in §1.1471–5(f)(1)(i)(D)(3), the
final regulations modify the definition of
a participating FFI to include a qualified
intermediary (“QI”) branch of a U.S. fi-
nancial institution. In addition, since a for-
eign branch of a U.S. financial institution
that is a reporting Model 1 FFI is a regis-
tered deemed-compliant FFI, such foreign
branch will also satisfy the distributor re-
quirements of §1.1471–5(f)(1)(i)(D)(3).
In response to comments that the
renegotiation of distribution agreements
will take a substantial amount of time
and requests that a restricted fund be
provided an additional year in order to
renegotiate its distribution agreements
to include the prohibitions required un-
der §1.1471–5(f)(1)(i)(D), the Treasury
Department and the IRS are providing
investment funds until the later of June
30, 2014, or six months after the date the
investment fund registers with the IRS
as a registered deemed-compliant FFI to
renegotiate its debt and equity interest
distribution agreements to comply with
§1.1471–5(f)(i)(i)(D)(4)and(5). The
Treasury Department and the IRS are
also modifying the sales restrictions of
§1.1471–5(f)(1)(i)(D)(4) to restrict sales
only to specified U.S. persons, rather than
all U.S. persons as was provided in the
proposed regulations.
The Treasury Department and the IRS
did not adopt comments requesting that the
prohibition on sales to U.S. persons be lim-
ited only to sales to U.S. residents because
such change would be inconsistent with
the policy objectives of chapter 4. The
Treasury Department and the IRS also de-
clined to remove the requirement that a re-
stricted fund acquire or redeem all debt and
equity interests that were issued through a
distributor that ceases to be a qualifying
distributor within six months of the dis-
tributor’s change in status, but have mod-
ified the requirement to permit such inter-
ests to be transferred to another distributor
described in §1.1471–5(f)(1)(i)(D)(3).
Comments also requested that a re-
stricted fund be permitted to have pre-
existing direct accounts that were issued
in bearer form before January 1, 2013, if
the fund performs the required account
identification procedures when the bearer
certificate is presented for payment. In
response, the final regulations permit
a restricted fund to have outstanding
bearer obligations that were issued prior
to January 1, 2013, if the restricted fund
identifies the status of the holder prior to
payment, no shares are issued in bearer
form, including reissuances of surrendered
shares, after December 31, 2012, and cer-
tain other conditions are met.
e. Qualified Credit Card Issuers
The Treasury Department and the IRS
have received comments requesting a
deemed-compliant category for credit card
issuers that accept deposits associated
with the credit card. In response to these
comments, the Treasury Department and
the IRS are adding a new category of
registered deemed-compliant FFIs to the
final regulations for credit card issuers that
agreetopreventacustomerfromhaving
a deposit with the credit card issuer in
excess of $50,000.
f. Registered Deemed-Compliant
Procedural Requirements
Comments requested that the qualified
collective investment vehicle rules provide
acureperiodinthecaseofnoncompli-
ance that occurs following the FFI’s reg-
istration with the IRS (including a change
of status by the FFI’s interest holders that
results in disqualification as a qualified
collective investment vehicle). The final
regulations provide a registered deemed-
compliant FFI with six months from the
time it becomes ineligible for the regis-
tered deemed-compliant status to cure the
default or notify the IRS of its change in
status.
g. Sponsored FFIs
Comments noted that in many cases
itmaybepreferableforatrusteeorfund
manager to perform the due diligence and
reporting for all of the FFIs which it man-
ages on a consolidated basis. Comments
also noted that a number of U.S. financial
institutions have systems in place to per-
form all due diligence, withholding, and
reporting obligations of its controlled for-
eign corporation subsidiaries for U.S. tax
purposes. In response to these comments,
the final regulations create a registered
deemed compliant FFI category for spon-
sored FFIs for which a sponsoring entity
agrees to perform all due diligence, with-
holding, reporting,and other requirements
the sponsored FFI would have been re-
quired to perform if it were a participating
FFI, and complies with certain other re-
quirements.
2013–15 I.R.B.785April 8, 2013

3. Certified Deemed-Compliant FFIs
a. Nonregistering Local Banks
In response to comments requesting a
simplification of the definition of a bank
for purposes of the nonregistering local
bank category, the final regulations do
not include a cross reference to section
581 and have clarified that, in addition
to banks, certain credit unions or similar
organizations may also qualify as nonreg-
istering local banks. The final regulations
amend the requirements applicable to
a nonregistering local bank to conform
with the changes made to the local FFI
registered deemed-compliant category de-
scribed above.
Because the nonregistering local bank
category was intended to apply only to
very small FFIs, the Treasury Department
and the IRS declined to adopt comments
requesting that the threshold for total as-
sets of the FFI be raised above $175 mil-
lion for the FFI and $500 million for the
FFI’s expanded affiliated group.
b. Sponsored, Closely Held Investment
Vehicles
The final regulations also create a
certified deemed-compliant category for
sponsored, closely held investment vehi-
cles, which are sponsored by a sponsoring
FFI in the same manner as the registered
deemed-compliant category.
c. Limited Life Debt Investment Entities
The Treasury Department and the IRS
received comments stating that certain in-
vestment vehicles will be unable to comply
with the registration and due diligence re-
quirements in the regulations, thus neces-
sitating a deemed-compliant category for
such entities. In particular, comments have
noted that vehicles that have a fixed lifes-
pan and that were created for the purpose
in investing in a limited type of debt obli-
gation with the intent to hold such obli-
gations until maturity or until the liquida-
tion of the vehicle will often provide the
trustee of the vehicle with limited author-
ity to act in manner not specifically pro-
vided for under the agreement. In most
cases, the trustee would not be permitted
to register the vehicle as a participating FFI
or comply with the due diligence require-
ments of a participating FFI unless the trust
indenture requires the trustee to do so, the
trusteeisrequiredtodosounderaprovi-
sion of law, or all of the investors in the
vehicle agree to amend the trust agreement
to provide the trustee with the power to act
in such a manner. In order to provide time
to address these limitations, the final reg-
ulations permit these entities to qualify as
deemed-compliant FFIs for a limited pe-
riod of time. After December 31, 2016,
the deemed-compliant status of these enti-
ties terminates, and each such entity will be
required to comply with the terms of any
applicable IGA or otherwise register as a
participating FFI.
4. Owner-Documented FFIs
Comments stated that the $50,000 debt
limit on owner-documented FFIs was too
restrictive for common business practices
of many small FFIs and requested that
such entities be allowed to have unlim-
ited debt interests provided the FFI iden-
tify and pass up to the withholding agent
the chapter 4 status of all debt holders.
In response to these comments, the final
regulations no longer prohibit owner-doc-
umented FFIs from issuing debt interests
that constitute financial accounts in excess
of $50,000 to persons other than nonpartic-
ipating FFIs, providedthat the owner-doc-
umented FFI reports all individuals and
specified U.S. persons that directly or in-
directly hold such interests (other than per-
sons that hold such interests through a par-
ticipating FFI, registered deemed-compli-
ant FFI, certified deemed-compliant FFI,
U.S. person, exempt beneficial owner, or
excepted NFFE) to the designated with-
holding agent.
5. Restricted Distributors
Commentsrequestedthat
§1.1471–5(f)(4) be amended to permit
a participating FFI to treat a distributor
as a restricted distributor. The Treasury
Department and the IRS agree that per-
mitting a participating FFI that holds an
interest in a restricted fund as a nominee
to use a restricted distributor to distribute
that interest fulfills the same purpose as
permitting the restricted fund to use a
restricted distributor. For this reason,
the final regulations have been amended
to permit a participating FFI to use a
restricted distributor to distribute interests
in a restricted fund that the participating
FFI holds as a nominee.
G. Recalcitrant Account Holders
The final regulations expand the defi-
nition of recalcitrant account holder to in-
clude an account holder that is documented
as an NFFE (other than a WP or WT) but
that fails to provide the information re-
quired under §1.1471–3(d) regarding its
owners.
The final regulations also revise the
start of recalcitrant account holder status
to coordinate with a participating FFI’s
withholding requirements. The final reg-
ulations require a participating FFI or
deemed-compliant FFI to treat an ac-
count other than preexisting account or an
account (including preexisting account)
that undergoes a change in circumstances
as held by a recalcitrant account holder
beginning on the earlier of the date a
withholdable payment or foreign passthru
payment is made to the account or the date
that is 90 days after account opening or
the change in circumstances.
The proposed regulations did not co-
ordinate recalcitrant account holder status
under chapter 4 with the chapter 61 backup
withholding procedures for cases in which
a participating FFI receives a notice from
the IRS regarding a name and TIN mis-
match for an account holder. The final reg-
ulations clarify that an account for which
the participating FFIor deemed-compliant
FFI receives a notice from the IRS indi-
cating that the name and TIN combination
provided for the account holder is incor-
rect will be treated as a recalcitrant account
holder following the date of such notice if
the account holder does not provide a cor-
rect name and TIN combination within the
time prescribed in §31.3406(d)–5(a). The
IRS intends to provide a process similar to
the “B Notice” process of chapter 61 to no-
tify an FFI of a name/TIN mismatch for
an account holder of a U.S. account that
was reported under §1.1471–4(d). Under
§31.3406(d)–5(a), a payor that receives
a “B Notice” for a payee is required to
start backup withholding and reporting re-
portable payments made to such payee on
or before the 30th business day after the re-
ceipt of the “B Notice.” Similarly, a partic-
ipating FFI or deemed-compliant FFI is re-
quired to treat an account holder for which
it receives a notice indicating a name/TIN
April 8, 20137862013–15 I.R.B.

mismatch as a recalcitrant account holder
(and withhold and report to the extent re-
quired) on or before the 30th business day
after the FFI receives such notice.
H. Expanded Affiliated Group
Proposed §1.1471–5(i) defined an ex-
panded affiliated group for purposes of
chapter 4. The final regulations make two
material changes to the proposed regula-
tions.
First, some comments requested an ex-
clusion from membership in an expanded
affiliated group for entities formed through
seed capital investments by another group
member. These comments described a
seed capital investment as an initial capi-
tal contribution made to an investment en-
tity by an entity related to the manager of
the investment entity for purposes of estab-
lishing a performance record before selling
interests in the entity to unrelated investors
or for purposes otherwise deemed appro-
priate by the manager. In support of this
exclusion, comments noted the burden of
monitoring ownership changes in the in-
vestment entity for determining when to
exclude the entity as a member of such a
group, including the potential updating re-
quired for purposes of the group’s FFI ap-
plication with the IRS. In response to these
comments, the final regulations modify the
definition of expanded affiliated group to
exclude from the group an investment en-
tity owned by an FFI group member when
the member’s ownership exists solely to
provide a seed capital investment in an en-
tity. The final regulations describe the cir-
cumstances in which an investment quali-
fies for this treatment (including by defin-
ing seed capital) and prescribe a three-year
period in which the investment entity is ex-
cluded from the group.
Second, the final regulations incorpo-
rate an anti-abuse rule that disregards a
change in ownership, voting rights, or the
form of an entity with respect to an ex-
panded affiliated group if the change is
pursuant to a plan a principal purpose of
which is to avoid withholding or reporting
obligations under chapter 4.
VII. Comments and Changes to Section
1.1471–6 — Payments Beneficially Owned
by Exempt Beneficial Owners
Proposed §1.1471–6 defined classes of
entities that qualify as exempt beneficial
owners for purposes of chapter 4. The fi-
nal regulations expand the circumstances
in which certain classes of entities qual-
ify as exempt beneficial owners and mod-
ifywhenanentityqualifiesasanexempt
beneficial owner under §1.1471–6(g) (de-
scribing certain entities owned by only ex-
empt beneficial owners). The final regula-
tions also clarify that, except as provided in
§1.1471–6(f) (regarding retirement funds),
an entity cannot qualifyasanexemptben-
eficial owner unless it is the beneficial
owner of the payment.
To coordinate the final regulations’
identification of specific entities as ex-
empt beneficial owners with the IGAs, the
definition of an exempt beneficial owner is
expanded to include any entity identified
as an exempt beneficial owner pursuant
to an IGA. This change is incorporated
into the definition ofan exempt beneficial
owner in §1.1471–1(b)(38).
Comments noted that limiting the defi-
nition of international organization to in-
clude only international organizations in
which the United States participates as a
member was unnecessary. In response to
these comments, this definition has been
expanded to allow an entity to qualify as
an international organization if the entity:
(1) is a supranational organization or in-
tergovernmental organization recognized
as an international organization under cer-
tain provisions of foreign law or that has
in effect a headquarters agreement with
a foreign government; and (2) prevents
private inurement under the principles of
§1.1471–6(b)(3)(ii).
In response to comments, the final
regulations broaden the classes of pen-
sion funds qualifying as exempt beneficial
owners under §1.1471–6(f) by including
several new categories of pension funds,
each of which applies without regard to
whether the pension fund is the beneficial
owner of income. Comments requested re-
moval of the beneficial owner requirement
because, depending on the jurisdiction,
a fund may or may not be treated as the
beneficial owner of income it receives
under local law. Other comments were
received regarding the interaction of the
exemption for retirement plans in pro-
posed §1.1471–6(f) with those retirement
plans afforded deemed compliant status
in proposed §1.1471–5(f)(2)(ii) (which
did not require the plan to be the bene-
ficial owner and which included certain
plans with fewer that twenty partici-
pants). In response to these comments,
§1.1471–5(f)(2)(ii) was removed and the
types of retirement plans that may qual-
ify as exempt beneficial owners under
§1.1471–6(f) regardless of whether they
are beneficial owners was expanded, as
described below.
In response to comments, the final reg-
ulations treat a fund entitled to benefits un-
der an income tax treaty and operated prin-
cipally to administer or provide pension or
retirement benefits as an exempt benefi-
cial owner regardless of whether the fund
is generally exempt from taxation in the
country in which it is organized.
Regarding the general requirements
for retirement funds included in pro-
posed §1.1471–6(f), comments noted that
many plans would fail to qualify under
the rule requiring that all contributions
to the plan, except for rollover contribu-
tions from other retirement funds, come
from employer or employee contributions.
Comments suggested alternative require-
ments to prevent funds from being abused
for chapter 4 purposes, including annual
information reporting, strict limitations
on withdrawals or distributions from the
fund, or penalties for early distributions.
Additionally, comments noted that cer-
tain types of mandatory government plans
may also fail the requirement in proposed
§1.1471–6(f) that contributions be solely
from employer or employee contribu-
tions. Comments also requested that funds
that provide for disability or death ben-
efits should not disqualify a retirement
fund from being an exempt beneficial
owner that would otherwise qualify under
§1.1471–6(f).
In response to these comments, the fi-
nal regulations: (1) provide rules allowing
for alternative sources of contributions
apart from those from employers and
employees; (2) provide anti-abuse provi-
sions based on alternatives suggested in
comments; and (3) allow, in appropriate
circumstances, plans to provide disability
or death benefits. In response to com-
ments, the final regulations also broaden
the treaty-qualified retirement fund cat-
egory and add a new category for funds
formed pursuant to pension plans that
would meet the requirements of section
401(a), other than the requirement that
theplanbefundedbyatrustcreatedor
organized in the United States.
2013–15 I.R.B.787April 8, 2013

Comments also questioned whether the
proposed regulations intended to exclude
certain pension funds established by ex-
empt beneficial owners, noting that the
regulations under section 892 specifically
include an exemption for certain pension
funds established by foreign governments.
The Treasury Department and the IRS
generally intend for these types of pension
funds to qualify as exempt beneficial own-
ers. To eliminate the possibility that such
plans might not so qualify in appropriate
cases, the final regulations provide that
pension funds meeting certain require-
ments (relating to retirement, disability,
or death benefits) will qualify as exempt
beneficial owners when established by
another exempt beneficial owner for its
employees, employees’ beneficiaries, or
other persons providing services to such
funds.
With respect to the allowance in pro-
posed §1.1471–6(g) providing exempt
beneficial owner status to certain enti-
ties wholly owned by exempt beneficial
owners, comments noted that this pro-
vision did not contemplate structures in
which entities are owned directly by other
entities that would qualify as exempt ben-
eficial owners under §1.1471–6(g). The
final regulations are amended to clarify
that exempt beneficial owner status under
§1.1471–6(g) applies in such cases. The
final regulations also clarify that receiv-
ing loans from depository institutions or
issuing debt to other exempt beneficial
owners will not prevent an entity from
qualifying as an exempt beneficial owner
under §1.1471–6(g).
The final regulations provide in
§1.1471–6(h) an exception to exempt
beneficial owner status for foreign govern-
ments, international organizations, foreign
central banks of issue, and the govern-
ments of U.S. territories that engage in
certain commercial activities, replacing
the prohibition in the proposed regulations
on commercial activities that had applied
only to foreign governments. Some com-
ments noted that an entity would fail to
qualify as an exempt beneficial owner
under the commercialactivities exception
in the proposed regulations even when the
entity accepts deposits or maintains finan-
cial accounts only for exempt beneficial
owners (such as the members in an entity
such as a development bank organized by
certain foreign governments). The final
regulations respond to these comments by
providing a limitation on the commercial
activities exception for activities for or on
behalf of other exempt beneficial owners.
VIII.Section 1.1472–1 — Withholding on
NFFEs
The regulations under section 1472 pro-
vide rules applicable to withholding agents
for withholding on certain NFFEs and re-
porting with respect to the substantial U.S.
owners of certain NFFEs.
In response to comments requesting
a transition period to accommodate the
creation of associated systems, the fi-
nal regulations provide that withholding
agents are required to withhold under
section 1472 only with respect to with-
holdable payments made after December
31, 2013. In addition, §1.1472–1(b)(2)
provides that withholding agents are not
required to withhold under section 1472
on payments made before January 1, 2015,
with respect to a preexisting obligation to
a payee that is not aprima facieFFI and
for which a withholding agent does not
have documentation indicating the payee’s
status as a passive NFFE with one or more
substantial U.S. owners.
The final regulations also clarify the
interaction of section 1472 withholding
with a participating FFI’s withholding
obligations under section 1471(b) and
the associated regulations. Under the fi-
nal regulations, a participating FFI that
complies with its withholding obligations
under §1.1471–4(b) will be deemed to sat-
isfy its obligations under section 1472 with
respect to withholdable payments made to
NFFEs that are account holders. Section
1472 will continue to apply to a participat-
ing FFI that acts as a withholding agent on
a withholdable payment made to an NFFE
that is not an account holder (for example,
a payment with respect to a contract that
does not constitute a financial account).
These withholding obligations will be
limited, however, by §1.1473–1(a)(4)(vi),
which provides a temporary exception
from the definition of withholdable pay-
ment for certain payments of U.S. source
FDAP income made prior to January 1,
2017, with respect to offshore obligations.
Inresponsetocomments,
§1.1472–1(c)(1)(i)(B) clarifies the ap-
plication of the publicly traded rules for
excepted NFFE status in the year of an
initial public offering.
With regard to the exception from with-
holding for payments to active NFFEs, the
Treasury Department and the IRS received
comments requesting that passive income
be defined by reference to section 954(c).
This comment was not adopted. The Trea-
sury Department and the IRS believe that
providing a specific list of items constitut-
ing passive income will provide more cer-
tainty for withholding agents and NFFEs.
The final regulations do, however, clarify
the scope of passive income, including the
rules regarding commodities. In addition,
in response to comments, the final regula-
tions expand the exceptions to passive in-
come in a number of respects. First, the
final regulations in §1.1472–1(c)(1)(iv)(B)
provide that passive income will not in-
clude dividends, interest, rents, and royal-
ties received or accrued from a related per-
son to the extent that they are properly al-
locable to income of the payor that is not
passive income. Second, the final regula-
tions provide an exception from passive in-
come for certain income earned by dealers
acting in the ordinary course of their trade
or business.
In addition, the final regulations pro-
vide expanded categories of excepted
NFFEs to address the treatment of holding
companies and similar entities that are part
of and that support a group conducting an
active trade or business. The final regula-
tions also clarify that an entity will not be
an active NFFE unless less than 50 percent
of its gross income is from passive income
and less than 50 percent of its assets are
passive assets (that is, assets that produce
or are held for the production of passive
income), on a weighted average basis.
Also, the requirements for reporting on
substantial U.S. owners were moved to
§1.1474–1(i)(2) in the final regulations to
include these requirements with the other
reporting requirements applicable to with-
holding agents.
IX.Changes and Comments to §1.1473–1
— Section 1473 Definitions
A. Withholdable Payment
1. In General
Comments noted that U.S. mutual funds
that invest in foreign securities will pay
dividends that are withholdable payments
April 8, 20137882013–15 I.R.B.

and, correspondingly,that gross proceeds
from the sale of interests in such U.S. funds
would be withholdable payments. Those
comments requested that the definition of
withholdable payment be amended such
that U.S. fund dividends would be char-
acterized based on the assets held by the
fund and would be subject to withholding
only to the extent provided under the for-
eign passthru payment rules otherwise ap-
plicable to participating FFIs to avoid cre-
ating a competitive imbalance.
The final regulations provide temporary
relief to U.S. stock and debt issuers, in-
cluding U.S. funds, by delaying withhold-
ing on gross proceeds until 2017. Trea-
sury and the IRS do not believe, however,
that eliminating chapter 4 withholding on
payments of dividends that constitute U.S.
source FDAP incomeunder chapter 3 ad-
vances the purposes of chapter 4. It is ex-
pected, however, that these issues will be
alleviated in practice through the conclu-
sion of IGAs.
Comments also requested that the rules
defining withholdable payment exclude
payments that are reported by the with-
holding agent on Form 5471 or 5472 in
order to alleviate duplicative reporting.
The final regulations do not adopt this
comment because the chapter 4 withhold-
ing rules serve different purposes than the
reporting regimes under sections 6038 and
6038A which underlie Forms 5471 and
5472.
2. Gross Proceeds
Comments noted that clearing organi-
zations pay or credit a member’s account
with the net amount of sales or disposi-
tions that occurred throughout a given pe-
riod. The final regulations allow clearing
organizations to determine gross proceeds
based on the net amount paid or credited to
a member’s account under the settlement
procedures of such organization.
In response to comments, the final regu-
lations clarify that any contract that results
in the payment of a dividend equivalent
(as defined in section 871(m) and regula-
tions thereunder) is treated as property of
a type that can produce U.S. source FDAP
income, including if such dividend equiv-
alent is part of a termination payment.
The final regulations also modify the
definition of gross proceeds to exclude
proceeds from transactions not subject to
recognition under section 1058.
3. Exceptions to Withholdable Payment
a. Withholding on Offshore Payments of
U.S. Source FDAP Income
To coordinate the final regulations’
withholding requirements with those of the
Model 1 IGAs, the final regulations delay
withholding on certain offshore payments
of U.S. source FDAP income until January
1, 2017. Specifically, the final regulations
temporarily exclude from the definition of
withholdable payment a payment of U.S.
source FDAP income made with regard to
an offshore obligation prior to January 1,
2017, by a person that is not acting as an
intermediary with regard to the payment.
For purposes of this exception, the final
regulations expressly include a qualified
securities lender asan intermediary. The
final regulations alsolimit the application
of this rule for certain flow-through enti-
ties.
b. Excluded Nonfinancial Payments
Comments requested clarification and
expansion of the proposed regulations’
ordinary course of business exception to
withholdable payments. In particular,
comments requested that the definition of
ordinary course of business payments be
modified by striking the word “nonfinan-
cial” because it creates uncertainty as to
whether services provided to a financial
institution that are accounts payable type
expenses are ordinary course of business
payments. Comments also noted that
the ordinary course of business excep-
tion imposed significant administrative
burdens given the volume of cross-bor-
der payments that had to be identified
and classified. In response to these com-
ments, the final regulations replace the
ordinary course of business exception
with a more comprehensive exception for
excluded nonfinancial payments. The re-
vised exception provides greater certainty
by explicitly describing payments that are
excluded from withholdable payments and
by providing a list of payments that are
withholdable payments.
The proposed regulations also provided
that the exclusion for ordinary course of
business payments included payments for
the sale of goods. Commentators pointed
out that such an exception implied that the
sale of goods could give rise to U.S. source
FDAP income. The final regulations re-
move the reference to “goods” in the non-
financial payments exclusion and define
a payment of U.S. source FDAP income
to expressly incorporate the exclusion un-
der §1.1441–2(b)(2)(i) (stating that certain
gains from the sale of property do not con-
stitute FDAP income).
4. Excise Tax under Section 4371
Under the proposed regulations, with-
holdable payments include insurance and
reinsurance premiums that are U.S. source
FDAP income. Comments requested that
the final regulations exclude insurance and
reinsurance premiums from the definition
of withholdable payment to the extent the
premiums are subject to the excise tax un-
der section 4371. Such premiums are ex-
empt under chapter 3, however, because
the excise tax under section 4371 is an ad-
equate substitute for tax on the business in-
come of a foreign issuer. In contrast, with-
holding under chapter 4 is intended as an
incentive to FFIs to become participating
FFIs, rather than as a proxy for the tax on
the income of the issuer. As a result, the
policy reasons for the exclusion of such in-
surance and reinsurance premiums for pur-
poses of chapter 3 withholding are not rel-
evant for chapter 4 withholding. The fi-
nal regulations therefore do not adopt this
comment.
B. Substantial U.S. Owner
The final regulations include rules for
determining whethera specified U.S. per-
son is a substantial U.S. owner that remain
substantially unchanged from the pro-
posed regulations subject to the following
modifications. The proposed regulations
required that the determination of whether
a person is a substantial U.S. owner be
made by calculating such person’s di-
rect and indirect interest in the entity.
The attribution rules under the proposed
regulations required that a specified U.S
person’s indirect interest in an entity be
determined by looking through interests
held by entities that are U.S. persons. The
final regulations do not require an entity
to look through interests held by a U.S.
person that is not a specified U.S. person
2013–15 I.R.B.789April 8, 2013

when determining whether the entity has a
substantial U.S. owner. The final regula-
tions add a provision that requires an entity
making a determination as to whether a
specified U.S. person is a substantial U.S.
owner to aggregate the interests owned
by persons related to the specified U.S.
person, applying certain provisions of the
regulations under section 267 to determine
whether such persons are related.
In response to comments regarding the
difficulty of determining whether a speci-
fied U.S. person owns a sufficient interest
in an entity to be a substantial U.S. owner,
the final regulations provide a safe har-
bor that permits an entity, or a withholding
agent with respect to the entity, to treat a
specified U.S. person as a substantial U.S.
owner in lieu of making the calculations
necessary to determine whether such per-
son holds a sufficient interest to be a sub-
stantial U.S. owner.
Comments requested that the 10 per-
cent ownership threshold for determining
a substantial U.S. owner be changed to 25
percent to align with AML due diligence
requirements. These comments were not
adopted. Jurisdictions have varying ap-
proaches to enforcing AML due diligence
requirements, and thus, reliance on AML
due diligence to determine substantial U.S.
owners is more appropriate in the context
of the IGAs.
C. Specified U.S. Person
The final regulationsadd section 457(g)
plans and exempt trusts under section
403(b) to the classes of U.S. persons that
are not specified U.S. persons.
X.Comments and Changes to §1.1474–1
— Liability for Withheld Tax and
Withholding Agent Reporting
A. Use of Agents
The proposed regulations described the
circumstances under which a withholding
agent could appoint agents to fulfill its
obligations under chapter 4 and the with-
holding agent’s liability. Comments re-
quested removal of the proposed regula-
tions’ restrictions on the use of sub-agents.
The final regulations remove these restric-
tions and clarify that a withholding agent
remains liable for the acts of both its agents
and its agents’ sub-agents. The final reg-
ulations also clarify that any agent or sub-
agent that acts as a reporting agent for fil-
ing Form 1042 or making deposits and
payments reportable on the form on be-
half of a withholding agent must file a
Form 8655, “Reporting Agent Authoriza-
tion,” with the IRS.
B. Information Reporting
The proposed regulations set forth the
information reporting requirements of
a withholding agent paying a chapter 4
reportable amount and the transitional
reporting requirements of a participating
FFI or registered deemed-compliant FFI
making a payment of a foreign reportable
amount to a nonparticipating FFI. The pro-
posed regulations also required financial
institutions to file such returns electron-
ically on magnetic media without regard
to the general annual 250 return threshold
applicable to withholding agents other
than financial institutions.
The final regulations modify and clarify
certain provisions of the proposed regu-
lations with respect to these reporting re-
quirements. The final regulations modify
which persons are recipients for purposes
of reporting chapter 4 reportable amounts
and describe categories of recipients with
respect to payments of U.S. source FDAP
income. Due to the suspension of with-
holding on gross proceeds and foreign
passthru payments until 2017, the defini-
tion of a recipient of a payment other than
of U.S. source FDAP income is reserved.
Information reporting is required with
respect to a payment of gross proceeds
only if the payment is an amount subject
to withholding. In response to comments
requesting clarification of the meaning
of the term “subject to withholding,” the
final regulations in §1.1471–1(b)(118) de-
fine an amount subject to withholding as
an amount withheld upon or required to
be withheld upon under chapter 4. The
final regulations also clarify that a chapter
4 reportable amountexcludes an amount
paid to a payee that the withholding agent
treats as a U.S. person, but add a provi-
sion that an amount paid by a withholding
agent to a participating FFI or registered
deemed-compliant FFI is reportable to the
extent allocable to U.S. persons identified
in a pool of payees reported by the FFI (as
described in paragraph (d)(4)). The final
regulations also generally describe how a
withholding agent reports with respect to
payments made to a participating FFI or
registered deemed-compliant FFI that acts
as an intermediary or flow-through entity
when the FFI provides pooled informa-
tion to the withholding agent regarding
its account holders and payees subject
to withholding under chapter 4. In the
case of payments that are not subject to
withholding under chapter 4, the final reg-
ulations require reporting to the extent that
reporting is required under §1.1461–1.
Comments sought clarification on the
reporting obligations of a participating FFI
or registered deemed-compliant FFI that
acts as an intermediaryor is a flow-through
entity. The final regulations provide that if
a payment of U.S. source FDAP income is
made by a U.S. withholding agent to a par-
ticipating FFI or registered deemed-com-
pliant FFI that is an NQI, NWP, or NWT
that provides sufficient information to the
withholding agent to withhold and report
the payment, the FFI is not also required
to report the payment. The final regu-
lations clarify, however, that a participat-
ing FFI or registered deemed compliant
FFI is required to complete Forms 1042–S
by allocating the income and withholding
paid to its recalcitrant account holder pools
as described in §1.1471–4(d)(6) (requiring
a participating FFI to report the number
of accounts and account balance informa-
tion), and that such reporting is required
regardless of whether the FFI made a pay-
ment of a chapter 4 reportable amount to
each such account holder.
Comments were also received regard-
ing transitional reporting by participating
FFIs and deemed-compliant FFIs for for-
eign reportable amounts paid to nonpar-
ticipating FFIs. Suggestions included per-
mitting aggregate, in lieu of specific, payee
reporting; modifying the definition of for-
eign reportable amount; and eliminating
the transitional reporting altogether. Be-
cause the transitional reporting provides
relevant information concerning the extent
of compliance by FFIs with the require-
ments of chapter 4 in the absence of with-
holding with respect to foreign passthru
payments, however, these comments are
not adopted in the final regulations. The
final regulations otherwise clarify that re-
porting during the transitional period is re-
quired for aggregate payments paidbya
participating FFI rather thanto apartici-
pating FFI.
April 8, 20137902013–15 I.R.B.

XI.Comments and Changes to
§§1.1474–2 through –5 — Refunds,
Credits, and Reimbursement
Proposed §§1.1471–2 through –5 pro-
vide rules relating to the refund or credit
of taxes withheld under chapter 4 and
reimbursement procedures for withhold-
ing agents in cases of overwithholding.
Comments requested the establishment of
efficient procedures for beneficial owners
to obtain refunds of tax withheld under
chapter 4. In response to these comments,
the final regulations provide the alterna-
tive allowance for participating FFIs and
reporting Model 1 FFIs to obtain refunds
on behalf of their account holders un-
der the collective refund procedures of
§1.1471–4(h). To facilitate the provision
of refunds in other appropriate cases, the
final regulations include in §1.1474–1(d)
the allowance for a withholding agent
to issue a specific Form 1042–S to an
account holder subjected to withholding
under chapter 4 (in lieu of the pooled re-
porting otherwise permitted) for purposes
of substantiating withholding of amounts
under chapter 4.
XII.Comments and Changes to §1.1474–6
— Coordination of Chapter 4 with Other
Withholding Provisions
Proposed §1.1474–6 provided rules for
coordinating withholding under chapter 4
with other withholding provisions under
the Code. The final regulations adopt the
provisions of this section without sub-
stantial change, but add paragraph (b)(3)
to permit a withholding agent to offset
its obligation to withhold under chapter
4 with respect to payments of dividend
equivalents under section 871(m) in a
security lending or substantially similar
transaction to the extent that another with-
holding agent has withheld under chapter
3 or 4 with respect to the same underlying
security in such a transaction. This offset
is permitted only when there is sufficient
evidence that tax was actually withheld as
determined under the provisions of chap-
ter 3.
XIII.Comments and Changes to
§301.1474–1 — Required Use of
Magnetic Media for Financial Institutions
Filing Form 1042–S or Form 8966
Proposed §301.1474–1 requires that a
financial institution file Forms 1042–S on
magnetic media. The final regulations add
a requirement that a financial institution
also file Form 8966, “FATCA Report,” on
magnetic media.
Procedural Matters
I.The FATCA Registration Portal
The FATCA Registration Portal (Portal)
will be the primary means for financial in-
stitutions to interact with the IRS to com-
plete and maintain their chapter 4 registra-
tions, agreements, and certifications. The
Portal will be accessible to financial in-
stitutions beginning no later than July 15,
2013. At that time, financial institutions
will be able to register and, as appropriate,
agree to comply with their obligations as
participating FFIs or as sponsoring entities
(as described in section 3 below), or to reg-
ister and agree to act as limited FFIs or reg-
istered deemed-compliant FFIs (including
reporting Model 1 FFIs, which are treated
as registered deemed-compliant FFIs un-
der the final regulations). The IRS will
permit registration of FFIs that are report-
ing Model 1 FFIs or described as a Report-
ing Financial Institution under a Model 2
IGA so long as the associated jurisdiction
is identified on a list published by the IRS
of countries treated as having in effect an
IGA, as appropriate, even if any necessary
ratification of such IGA in the jurisdiction
has not yet been completed.
Once a financial institution has regis-
tered, the IRS will approve its registration.
The IRS intends, upon such approval, to
issue a GIIN to each participating FFI and
registered deemed-compliant FFI. These
GIINs will be assigned beginning no later
than October 15, 2013, and should be used
as the institution’s identifying number for
satisfying its reporting requirements and
identifying its status to withholding agents.
The IRS will electronically post the first
list (IRS FFI List) of participating FFIs
and registered deemed-compliant FFIs (in-
cluding reporting Model 1 FFIs) on De-
cember 2, 2013. The IRS intends to up-
date the IRS FFI List on a monthly basis.
The last date by which a financial institu-
tion can register with the IRS to ensure its
inclusion on the December 2013 IRS FFI
List is October 25, 2013.
A. The FFI Agreement
A financial institution registering
through the Portal will agree to comply
with the FATCA requirements pertaining
to its particular situation. These require-
ments will vary depending on the financial
institution’s status in the jurisdictions in
which it operates. For example, an FFI
may be a resident of a jurisdiction for
which it reports as a reporting Model 1 FFI
and have other branches in jurisdictions
covered by applicable Model 2 IGAs and
branches in jurisdictions not covered by
an IGA. In such case, the FFI will be able
to register once and may enter into an FFI
agreement on behalf of its branches that
are not covered under an applicable Model
1 IGA. Accordingly, the FFI agreement
will not relate to its operations as a report-
ing Model 1 FFI because those operations
will be subject to the rules set out under
the law of the applicable jurisdiction, but
the FFI agreement will incorporate the
requirements applicable to its operations
in jurisdictions other than those covered
under an applicable Model 1 IGA.
Before the Portal opens for registration,
the Treasury Department and the IRS will
publish a revenue procedure (FATCA Rev.
Proc.) containing all the terms and condi-
tions applicable to FFIs for chapter 4 pur-
poses and for FFIs also assuming chapter
3 responsibilities (that is, as QIs, WPs, and
WTs). The terms and conditions set forth
in the FATCA Rev. Proc. applicable to
FFIs for chapter 4 purposes will be fully
consistent with the rules set forth in these
final regulations. The terms and condi-
tions set forth in the FATCA Rev. Proc. ap-
plicable to FFIs that are assuming or con-
tinuing chapter 3 responsibilities are dis-
cussed in more detail in I.C and D of this
section.
B. Sponsored FFIs
AsdiscussedinsectionVI.Fabove,
the final regulations include three
deemed-compliant categories for spon-
sored FFIs, under which a sponsoring
entity agrees to register with the IRS and
undertake all of the chapter 4 obligations
of a participating FFI on behalf of one
or more sponsored FFIs. Beginning no
2013–15 I.R.B.791April 8, 2013

later than July 15, 2013, financial institu-
tions will be able to register as sponsoring
entities but will not at that time be re-
quired to provide information regarding
their sponsored FFIs. It is anticipated that
sponsoring entities will be able to provide
sponsored FFI information and obtain GI-
INs for each sponsored FFI beginning no
later than October 15, 2013.
If a sponsoring entity must also become
a participating FFI orregistered deemed-
compliant FFI with respect to accounts
that it maintains or register as a reporting
Model 1 FFI, the sponsoring entity will be
required to do so separately from its reg-
istration as a sponsoring entity. Such an
FFI will obtain a separate GIIN to be used
with respect to its own chapter 4 or FATCA
Partner reporting requirements and to es-
tablish its own chapter 4 status to with-
holding agents.
C. Qualified Intermediaries
Beginning January 1, 2014, QIs will be
required to assume chapter 4 responsibili-
ties with respect to their accounts as a con-
dition for maintaining QI status or for ob-
taining QI status. For this purpose, exist-
ing QI agreements will be modified to take
into account the applicable chapter 4 re-
quirements. The modified provisions of
the QI agreement will be set forth in the
FATCA Rev. Proc. that the IRS will pub-
lish before the Portal opens for registra-
tion.
Existing QIs will be required to renew
their QI agreements by registering on the
Portal and agreeing to comply with the
modified QI agreement described in the
FATCA Rev. Proc. Such a renewing
QI will be issued a GIIN that it will use
for FATCA reporting purposes and estab-
lishing its FATCA status with withholding
agents. The IRS currently contemplates
that the GIIN will also be used by QIs, in
lieu of the current QI EIN, for purposes
of QI reporting and establishing QI status
vis-à-vis withholding agents.
FFIs that wish to apply for QI status for
the first time must doso under the existing
paper-based QI application process. Once
approved as a QI through this process, the
FFI must also register or update its in-
formation regarding its QI status (includ-
ing its chapter 4 requirements) through the
Portal.
D. Withholding Foreign Partnerships and
Withholding Foreign Trusts
The existing agreements governing
WPsandWTswillalsobemodifiedto
incorporate the applicable chapter 4 re-
quirements of these entities (for financial
accounts other than equity interests) with
respect to their partners, owners and ben-
eficiaries. The FATCA Rev. Proc. will
describe these modifications.
Existing WPs and WTs that are FFIs
will be required to renew their agreements
byregisteringonthePortal and agreeing to
comply with the modified agreement de-
scribed in the FATCA Rev. Proc. Such
a renewing WP or WT will be issued a
GIIN that it will use for FATCA reporting
purposes and establishing its FATCA sta-
tus with withholding agents. The IRS cur-
rently contemplates that the GIIN will also
be used by WPs and WTs, in lieu of the
current WP EIN or WT EIN, for purposes
of chapter 3 reporting and establishing its
status vis-à-vis withholding agents.
FFIs that wish to apply for WP or WT
status for the first time must do so un-
der the existing paper-based application
process. Once approved as a WP or WT
through this process, the FFI must also reg-
ister or update its information regarding its
WP or WT status through the Portal. A
foreign entity other than an FFI will be re-
quired to apply as a WP or WT or renew its
status as such for assuming its chapter 4 re-
quirements under the existing paper-based
application process.
E. Foreign Branches of U.S. Financial
Institutions
U.S. financial institutions will register
their foreign branch operations through the
Portal in certain circumstances. A U.S. fi-
nancial institution with a foreign branch
that is a reporting Model 1 FFI must reg-
ister on behalf of the branch and obtain a
GIIN to comply with its FATCA Partner
reporting obligations with respect to such
branch. A U.S. financial institution with
a foreign branch that is a QI and seeks to
maintain QI status will register through the
Portal to renew its QI status for the branch
regardless of whether the branch is a re-
porting Model 1 FFI. A U.S. financial in-
stitution with non-QI branch operations in
a Model 2 jurisdiction or in a non-IGA ju-
risdiction is not required to register with
the IRS. The Treasury Department and the
IRS are considering ways to eliminate du-
plicative reporting or effect, as appropri-
ate, uniform reporting under chapters 4 and
61.
II.Future Guidance and Request for
Comments
A. Qualified Intermediaries
The Treasury Department and the IRS
are considering revising the requirements
of the QI agreement for external audit pro-
cedures to verify a QI’s compliance with
its QI agreement. Comments are requested
regarding the merits of requiring QIs to
provide, in lieu of external audit reports,
periodic certifications of compliance sim-
ilar to that required of participating FFIs
under the final regulations. Comments are
also requested as to the cases in which
internal audits and reviews by third-par-
ties should be required or permitted in lieu
of external audits, including the extent to
which such reviews should include evalu-
ations of a QI’s internal controls in lieu (in
whole or in part) of the account review pro-
cedures prescribed in Revenue Procedure
2002–55.
B. Private Arrangement Intermediaries
The Treasury Department and the IRS
anticipate issuing guidance to allow partic-
ipating FFIs and registered-deemed com-
pliant FFIs currently acting as private ar-
rangement intermediaries (PAIs) to con-
tinue to act as PAIs for FATCA purposes
under requirements similar to those spec-
ified in the current model QI agreement.
Further, the QI agreement will be modi-
fied in the FATCA Rev. Proc. to incor-
porate the requirement that a QI may only
contract with a PAI that is a participating
FFI or registered-deemed compliant FFI
(in addition to the chapter 3 requirements
for PAIs). As under the existing proce-
dures applicable to PAIs, PAIs will not be
required to separately register with the IRS
to obtain PAI status (other than registering
for chapter 4 purposes). QIs that contract
with PAIs for purposes of their QI agree-
ment will be required to identify these PAIs
as part of the Portal registration process de-
scribed above. As part of the revised re-
quirements for PAIs, the Treasury Depart-
ment and the IRS anticipate amending the
April 8, 20137922013–15 I.R.B.

external audit requirements of PAIs to pro-
vide requirements comparable to those re-
quired of QIs.
C. Coordination with Chapters 3 and 61
The Treasury Department and the IRS
intend: (1) to issue guidance coordinating
chapters 3 and 61 with chapter 4, in order
to reduce or eliminate duplicative report-
ing as between chapter 4 (and reporting
pursuant to a Model 1 IGA) and chapters 3
and 61; and (2) to conform, as appropriate,
the withholding, payee identification, and
other due diligence rules of chapters 3 and
61 with rules under chapter 4. Comments
are requested regarding how such coordi-
nation should be undertaken and whether
other chapter 4 rules should be coordinated
with other Code provisions.
D. Forms
A number of new and revised IRS forms
must be issued due to the new certifica-
tion, reporting, and withholding require-
ments of chapter 4.
For purposes of obtaining certifications
of account holder status for chapter 3 pur-
poses, withholding agents have relied on
IRS forms in the “W–8” series. The forms
in the W–8 series will be modified for
chapter 4 purposes. It should be noted,
however, that the regulations provide that
a financial institution, depending on the
circumstances, may also rely on substi-
tute forms, written certifications, and other
documentation.
The IRS has already released draft
versions of a revised Form W–8IMY,
“Certificate of Foreign Intermediary, For-
eign Flow-Through Entity, or Certain U.S.
Branches for United States Tax Withhold-
ing,” a revised Form W–8ECI “Certificate
of Foreign Person’s Claim That Income Is
Effectively Connected With the Conduct of
a Trade or Business in the United States,”
andarevisedFormW–8EXP“Certificate
of Foreign Government or Other For-
eign Organization for United States Tax
Withholding.” The IRS intends to release
shortly a new Form W–8BEN-E, “Cer-
tificate of Status for Beneficial Owner for
United States Tax Withholding (Entities),”
to be used only by beneficial owners that
are entities and, shortly thereafter, a draft
version of a revised Form W–8BEN, “Cer-
tificate of Foreign Status of Beneficial
Owner for United States Tax Withholding
(Individuals),” to be used only by benefi-
cial owners that are individuals.
The IRS also intends to release shortly
a new Form 8966, “FATCA Report,” that
will be used by FFIs (including QIs, WPs,
WTs) and withholding agents (in limited
circumstances) to comply with their chap-
ter 4 reporting obligations. This new Form
8966 will set forth all the information that
must be reported with respect to financial
accounts in accordance with these regu-
lations. Finally, the IRS intends to issue
shortly a revised Form 1042, “Annual
Withholding Tax Return for U.S. Source
Income of Foreign Persons,” and Form
1042–S, “Foreign Person’s U.S. Source
Income Subject to Withholding.” Revised
Forms 1042 and 1042–S will set forth
all the information that must be reported
by withholding agents to meet their obli-
gations under both §1.1474–1(c) and (d)
(chapter 4) and §1.1461–1 (chapter 3).
The IRS intends to publish later in 2013
or in early 2014 final versions of Form
8966 and Form 1042–S, together with the
XML-based schemas to be used by with-
holding agents for the electronic filing of
these forms.
Effect on Other Documents
The following publications are obsolete
as of January 28, 2013.
Notice 2010–60, 2010–37 I.R.B. 329
Notice 2011–34, 2011–19 I.R.B. 765
Notice 2011–53, 2011–32 I.R.B. 124
Announcement 2012–42, 2012–47
I.R.B. 561
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 de-
termined that sections 553(b) and (d) of the
Administrative Procedure Act (5 U.S.C.
Chapter6)donotapplytotheseregula-
tions.
The collection of information in these
final regulations is contained in a num-
ber of provisions including §§1.1471–2,
1.1471–3, 1.1471–4, 1.1472–1, and
1.1474–1. The IRS intends that these
information collection requirements will
be satisfied by persons complying with
revised chapter 3 reporting forms, new
reporting forms based on these final reg-
ulations, the terms, conditions, and re-
quirements of an FFI agreement, a QI
agreement, a WP agreement, or a WT
agreement that satisfies the requirements
of an applicable revenue procedure to
be issued by the IRS, or the alternative
certification and documentation require-
ments set out in these final regulations.
As a result, for purposes of the Paper-
work Reduction Act (44 U.S.C. 3507),
the reporting burden associated with the
collection of information in these final reg-
ulations will be reflected in the respective
OMB Form 83–1,Paperwork Reduction
Act Submission, associated with new or
revised IRS forms, the revenue procedure
relating to the FFI, QI, WP, and WT agree-
ments, and the alternative certification and
documentation requirements of these final
regulations.
It is hereby certified that the collection
of information in these final regulations
will not have a significant economic im-
pact on a substantial number of small en-
tities within the meaning of section 601(6)
of the Regulatory Flexibility Act (5 U.S.C.
chapter 6). Although the Treasury Depart-
ment and the IRS anticipate that a substan-
tial number of domestic small entities will
be affected by the collection of informa-
tion in these final regulations, the Trea-
sury Department and the IRS believe that
the economic impact to these entities re-
sulting from the information collection re-
quirements will not be significant.
The domestic small business entities
that are subject to chapter 4 and these
regulations are those domestic business
entities that are payors of U.S. source
FDAP income that are presently subject to
the information collection and reporting
rules under chapter 3. These domestic
small business entities are required to be
familiar with chapter 3’s information col-
lection 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
taxonpaymentsofU.S.sourceFDAP
income. Small domestic business entities
that are payors of U.S. source FDAP in-
come have developed and implemented
internal reporting and information col-
lection systems under which the business
entity satisfies its chapter 3 payee identi-
fication, withholding, and tax remittance
requirements.
2013–15 I.R.B.793April 8, 2013

The IRS intends to revise the present
chapter 3 reporting forms, with the re-
vised forms being used by a payor of U.S.
source FDAP income to satisfy the payor’s
obligations under chapters 3 and 4. As a
result, these final regulations’ information
collection requirements build on reporting
and information collection systems famil-
iar to and currently used by payors of U.S.
source FDAP income that are domestic
small business entities, thereby reducing
the burden imposed on these entities. In
addition, the final regulations’ alternative
certification and documentation provi-
sions reduce the information otherwise
required to be collected by withholding
agents and submitted by payees, thereby
further limiting the burden imposed by
the final regulations on domestic small
business entities. Therefore, a Regulatory
Flexibility Analysis under the Regulatory
Flexibility Act is not required.
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 impact
statement before promulgating a rule that
may result in the expenditure by State, lo-
cal, and tribal governments, in the aggre-
gate, or by the private sector, of $100 mil-
lion or more in any one year. If a budgetary
impact statement is required, section 205
of the Unfunded Mandates Reform Act re-
quires an agency to identify and consider
a reasonable number of regulatory alter-
natives before promulgating a rule. The
Treasury Department and the IRS have de-
termined that there is no federal mandate
imposed by this rulemaking that may re-
sult 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.
Pursuant to section 7805(f), the notice
of proposed rulemaking preceding these fi-
nal regulations was submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its
impact on small businesses. No comments
were received from the Small Business
Administration.
Drafting Information
The principal authors of §§1.1471–1
through 1.1474–7 are John Sweeney,
Danielle Nishida,Tara Ferris,
Quyen Huynh, Josephine Firehock,
and Susan Massey, all of the Office of
Associate Chief Counsel (International).
The principal author of §301.1474–1 is
Michael E. Hara, Office of Associate Chief
Counsel (Procedure and Administration).
However, other personnel from the IRS
and the Treasury Department participated
in the development of these regulations.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 301
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part1isamendedbyaddingentriesinnu-
merical order to read 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 1.1474–2 is also issued under
26 U.S.C. 1474
Section 1.1474–3 is also issued under
26 U.S.C. 1474
Section 1.1474–4 is also issued under
26 U.S.C. 1474
Section 1.1474–5 is also issued under
26 U.S.C. 1474
Section 1.1474–6 is also issued under
26 U.S.C. 1474
Section 1.1474–7 is also issued under
26 U.S.C. 1474* * *
Par. 2. . The undesignated center head-
ing and subheading immediately following
§1.1464–1 are removed.
Par. 3. Section 1.1471–1 and the edito-
rial note that follows are removed.
Par. 4. A new undesignated center
heading and §1.1471–0 are added imme-
diately following §1.1464–1 to read as fol-
lows:
Information Reporting by Foreign Fi-
nancial Institutions
§1.1471–0 Outline of regulation
provisions for sections 1471 through
1474.
This section lists the table of contents
for §§1.1471–1 through 1.1474–7 and
§301.1474–1 of this chapter.
§1.1471–1 Scope of chapter 4 and
definitions.
(a) Scope of chapter 4 of the Internal
Revenue Code.
(b) Definitions.
(1) Account.
(2) Account holder.
(3) Active NFFE.
(4) AML due diligence.
(5) Annuity contract.
(6) Assumes primary withholding re-
sponsibility.
(7) Beneficial owner.
(8) Blocked account.
(9) Broker.
(10) Cash value.
(11) Cash value insurance contract.
(12) Certified deemed-compliant FFI.
(13) Change in circumstances.
(14) Chapter 3.
(15) Chapter 4.
(16) Chapter 4 reportable amount.
(17) Chapter 4 status.
(18) Clearing organization.
(19) Complex trust.
(20) Consolidated obligations.
(21) Custodial account.
(22) Custodial institution.
(23) Customer master file.
(24) Deemed-compliant FFI.
(25) Deferred annuity contract.
(26) Depository account.
(27) Depository institution.
(28) Documentary evidence.
(29) Documentation.
(30) Dormant account.
(31) Effective date of the FFI agree-
ment.
(32) EIN.
(33) Election to be withheld upon.
(34) Electronically searchable informa-
tion.
April 8, 20137942013–15 I.R.B.

(35) Entity.
(36) Entity account.
(37) Excepted NFFE.
(38) Exempt beneficial owner.
(39) Expanded affiliated group.
(40) FATF.
(41) FATF-compliant jurisdiction.
(42) FFI.
(43) FFI agreement.
(44) Financial account.
(45) Financial institution.
(46) Flow-through entity.
(47) Flow-through withholding certifi-
cate.
(48) Foreign entity.
(49) Foreign passthru payment.
(50) Foreign payee.
(51) Foreign person.
(52) GIIN.
(53) Grandfathered obligation.
(54) Grantor trust.
(55) Gross proceeds.
(56) Group annuity contract.
(57) Group insurance contract.
(58) Immediate annuity.
(59) Individual account.
(60) Insurance company.
(61) Insurance contract.
(62) Intermediary.
(63) Intermediary withholding certifi-
cate.
(64) Investment entity.
(65) Investment-linked annuity con-
tract.
(66) Investment-linked insurance con-
tract.
(67) IRS FFI list.
(68) Life annuity contract.
(69) Life insurance contract.
(70) Limited branch.
(71) Limited FFI.
(72) Model 1 IGA.
(73) Model 2 IGA.
(74) NFFE.
(75) Nonparticipating FFI.
(76) Nonreporting IGA FFI.
(77) Non-U.S. account.
(78) NQI.
(79) NWP.
(80) NWT.
(81) Offshore account.
(82) Offshore obligation.
(83) Owner.
(84) Owner-documented FFI.
(85) Participating FFI.
(86) Participating FFI group.
(87) Partnership.
(88) Passive NFFE.
(89) Passthru payment.
(90) Payee.
(91) Payment with respect to an off-
shore obligation.
(92) Payor.
(93) Permanent residence address.
(94) Person.
(95) Preexisting account.
(96) Preexisting entity account.
(97) Preexisting individual account.
(98) Preexisting obligation.
(99) Pre-FATCA Form W–8.
(100)Prima facieFFI.
(101) QI.
(102) QI agreement.
(103) QI branch of a U.S. financial in-
stitution.
(104) Recalcitrant account holder.
(105) Registered deemed-compliant
FFI.
(106) Relationship manager.
(107) Reporting Model 1 FFI.
(108) Responsible officer.
(109) Restricted distributor.
(110) Simple trust.
(111) Specified insurance company.
(112) Specified U.S. person.
(113) Sponsored FFI.
(114) Sponsored FFI group.
(115) Sponsoring entity.
(116) Standardized industry code.
(117) Standing instructions to pay
amounts.
(118) Subject to withholding.
(119) Substantial U.S. owner.
(120) Territory entity.
(121) Territory financial institution.
(122) Territory financial institution
treated as a U.S. person.
(123) Territory NFFE.
(124) TIN.
(125) U.S. account.
(126) U.S. branch treated as a U.S. per-
son.
(127) U.S. financial institution.
(128) U.S.indicia.
(129) U.S. owned foreign entity.
(130) U.S. payee.
(131) U.S. payor.
(132) U.S. person.
(133) U.S. source FDAP income.
(134) U.S. territory.
(135) U.S. withholding agent.
(136) Withholdable payment.
(137) Withholding.
(138) Withholding agent.
(139) Withholding certificate.
(140) WP.
(141) Written statement.
(142) WT.
(c) Effective/applicability date.
§1.1471–2 Requirement to deduct and
withhold tax on withholdable payments
to certain FFIs.
(a) Requirement to withhold on pay-
ments to FFIs.
(1) General rule of withholding.
(2) Special withholding rules.
(i) Requirement to withhold on pay-
ments of U.S. source FDAP income to par-
ticipating FFIs that are NQIs, NWPs, or
NWTs.
(ii) Residual withholding responsibility
of intermediaries and flow-through enti-
ties.
(iii) Requirement to withhold if a par-
ticipating FFI or registered deemed-com-
pliant FFI makes an election to be withheld
upon.
(A) Election to be withheld upon for
U.S. source FDAP income.
(B) Election to be withheld upon for
gross proceeds.
(iv) Withholding obligation of a terri-
tory financial institution.
(v) Withholding obligation of a foreign
branch of a U.S. financial institution.
(vi) Payments of gross proceeds.
(3) Coordination of withholding under
sections 1471(a) and (b).
(4) Payments for which no withholding
is required.
(i) Exception to withholding if the with-
holding agent lacks control, custody, or
knowledge.
(A) In general.
(B) Example.
(ii) Exception to withholding for certain
payments made prior to January 1, 2016
(transitional).
(A) In general.
(B)Prima facieFFIs.
(iii) Payments to a participating FFI.
(iv) Payments toa deemed-compliant
FFI.
(v) Payments to an exempt beneficial
owner.
(vi) Payments to a territory financial in-
stitution.
(vii) Payments to an account held with
a clearing organization with FATCA-com-
pliant membership.
(viii) Payments to certain excepted ac-
counts.
2013–15 I.R.B.795April 8, 2013

(5) Withholding requirements if source
or character of payments is unknown.
(i) General rule.
(ii) Optional escrow procedure.
(b) Grandfathered obligations.
(1) Grandfathered treatment of out-
standing obligations.
(2) Definitions.
(i) Grandfathered obligation.
(ii) Obligation.
(iii) Date outstanding.
(iv) Material modification.
(3) Application to flow-through enti-
ties.
(i) Partnerships.
(ii) Simple trusts.
(iii) Grantor trusts.
(4) Determination by withholding agent
of grandfathered treatment.
(i) In general.
(ii) Determination of material modifica-
tion.
(iii) Record retention.
(c) Effective/applicability date.
§1.1471–3 Identification of payee.
(a) Payee defined.
(1) In general.
(2) Payee with respect to a financial ac-
count.
(3) Exceptions.
(i) Certain foreign agents or intermedi-
aries.
(ii) Foreign flow-through entity.
(iii) U.S. intermediary or agent of a for-
eign person.
(iv) Territory financial institution.
(v) Disregarded entity or branch.
(vi) U.S. branch of certain foreign
banks or foreign insurance companies.
(vii) Foreign branch of a U.S. person.
(b) Determination of payee’s status.
(1) Determining whether a payment is
received by an intermediary.
(2) Determination of entity type.
(3) Determination of whether the pay-
ment is made to a QI, WP, or WT.
(4) Determination of whether the payee
is receiving effectively connected income.
(c) Rules for reliably associating a
payment with a withholding certificate or
other appropriate documentation.
(1) In general.
(2) Reliably associating a payment
with documentation if a payment is made
through an intermediary or flow-through
entity that is not the payee.
(i) In general.
(ii) Exception to entity account docu-
mentation rules for an offshore account of
an intermediary or flow-through entity.
(3) Requirements for validity of certifi-
cates.
(i) Form W–9.
(ii) Beneficial owner withholding cer-
tificate (Form W–8BEN).
(iii) Withholding certificate of an in-
termediary, flow-through entity, or U.S.
branch (Form W–8IMY).
(A) In general.
(B) Withholding statement.
(1) In general.
(2) Special requirements for an FFI
withholding statement.
(3) Special requirements for a chapter 4
withholding statement.
(4) Special requirements for an exempt
beneficial owner withholding statement.
(C) Failure to provide allocation infor-
mation.
(D) Special rules applicable to a with-
holding certificate of a QI that assumes
primary withholding responsibility under
chapter 3.
(E) Special rules applicable to a with-
holding certificate of a QI that does not
assume primary withholding responsibil-
ity under chapter 3.
(F) Special rules applicable to a with-
holding certificate of a territory financial
institution that agrees to be treated as a
U.S. person.
(G) Special rules applicable to a with-
holding certificate of a territory financial
institution that does not agree to be treated
as a U.S. person.
(H) Special rules applicable to a with-
holding certificate of a U.S. branch treated
as a U.S. person.
(iv) Certificate for exempt status (Form
W–8EXP).
(v) Certificate for effectively connected
income (Form W–8ECI).
(4) Requirements for written state-
ments.
(5) Requirements for documentary evi-
dence.
(i) Foreign status.
(A) Certificate of residence.
(B) Individual government identifica-
tion.
(C) QI documentation.
(D) Entity government documentation.
(E) Third-party credit report.
(ii) Chapter 4 status.
(A) General documentary evidence.
(B) Preexisting account documentary
evidence.
(C) Payee-specific documentary evi-
dence.
(6) Applicable rules for withholding
certificates, written statements, and docu-
mentary evidence.
(i) Who may sign the withholding cer-
tificate or written statement.
(ii) Period of validity.
(A) General rule.
(B) Indefinite validity.
(C) Indefinite validity in the case of cer-
tain offshore obligations.
(D) Exception for certificate for effec-
tively connected income.
(E) Change in circumstances.
(1
) Defined.
(2) Obligation to notify withholding
agent of a change in circumstances.
(3) Withholding agent’s obligation with
respect to a change in circumstances.
(iii) Record retention.
(A) In general.
(B) Exception for documentary evi-
dence received with respect to offshore
obligations.
(iv) Electronic transmission of with-
holding certificate, written statement, and
documentary evidence.
(v) Acceptable substitute withholding
certificate.
(A) In general.
(B) Non-IRS form for individuals.
(vi) Electronic confirmation of TIN on
withholding certificate.
(vii) Reliance on a prior version of a
withholding certificate.
(7) Curing documentation errors.
(i) Curing inconsequential errors on a
withholding certificate.
(ii) Documentation received after the
time of payment.
(8) Documentation furnished on ac-
count-by-account basis unless exception
provided for sharing documentation within
expanded affiliated group.
(i) Single branch systems.
(ii) Universal account systems.
(iii) Shared account systems.
(iv) Document sharing gross proceeds.
(9) Reliance on documentation col-
lected by or certifications provided by
other persons.
(i) Shared documentation system main-
tained by an agent.
(ii) Third-party data providers.
April 8, 20137962013–15 I.R.B.

(iii) Reliance on certification provided
by introducing brokers.
(iv) Reliance on documentation and
certifications provided between principals
and agents.
(A) In general.
(B) Reliance upon certification of the
principal.
(C) Document sharing.
(D) Examples.
(v) Reliance upon documentation for
accounts acquired in merger or bulk acqui-
sition for value.
(d) Documentation requirements to es-
tablish payee’s chapter 4 status.
(1) Reliance on pre-FATCA Form W–8.
(2) Identification of U.S. persons.
(i) In general.
(ii) Reliance on documentary evidence.
(iii) Preexisting obligations.
(3) Identification of individuals that are
foreign persons.
(i) In general.
(ii) Exception for offshore obligations.
(4) Identification of participating FFIs
and registered deemed-compliant FFIs.
(i) In general.
(ii) Exception for payments made prior
to January 1, 2017, with respect to preex-
isting obligations (transitional).
(iii) Exception for offshore obligations.
(iv) Exceptions for payments to report-
ingModel1FFIs.
(v) Reason to know.
(5) Identification of certified deemed-
compliant FFIs.
(i) In general.
(ii) Sponsored, closely-held investment
vehicles.
(A) In general.
(B) Offshore obligations.
(6) Identification of owner-documented
FFIs.
(i) In general.
(ii) Auditor’s letter substitute.
(iii) Documentation for owners of
payee.
(iv) Content of FFI owner reporting
statement.
(v) Exception for preexisting obliga-
tions (transitional).
(vi) Exception for offshore obligations.
(vii) Exception for certain obligations
of $1,000,000 or less.
(7) Nonreporting IGA FFIs.
(i) In general.
(ii) Exception for offshore obligations.
(8) Identification of nonparticipating
FFIs.
(i) In general.
(ii) Special documentation rules for
payments made to an exempt beneficial
owner through a nonparticipating FFI.
(9) Identification of exempt beneficial
owners.
(i) Identification of foreign govern-
ments, governments ofU.S. territories,
international organizations, and foreign
central banks of issue.
(A) In general.
(B) Exception for offshore obligations.
(C) Exception for preexisting offshore
obligations.
(ii) Identification of retirement funds.
(A) In general.
(B) Exception for offshore obligations.
(C) Exception for preexisting offshore
obligations.
(iii) Identification of entities wholly
owned by exempt beneficial owners.
(10) Identification of territory financial
institutions.
(i) Identification of territory financial
institutions that are beneficial owners.
(A) In general.
(B) Exception for preexisting offshore
obligations.
(ii) Identification of territory financial
institutions acting as intermediaries or that
are flow-through entities.
(iii) Reason to know.
(11) Identification of excepted NFFEs.
(i) Identification of excepted nonfinan-
cial group entities.
(A) In general.
(B) Exception for offshore obligations.
(ii) Identification of excepted nonfinan-
cial start-up companies.
(A) In general.
(B) Exception for offshore obligations.
(C) Exception for preexisting offshore
obligations.
(iii) Identification of excepted nonfi-
nancial entities in liquidation or bank-
ruptcy.
(A) In general.
(B) Exception for offshore obligations.
(C) Exception for preexisting offshore
obligations.
(iv) Identification of section 501(c) or-
ganizations.
(A) In general.
(B) Reason to know.
(v) Identification of non-profit organi-
zations.
(A) In general.
(B) Exception for offshore obligations.
(C) Exception for preexisting offshore
obligations.
(D) Reason to know.
(vi) Identification of NFFEs that are
publicly traded corporations.
(A) Exception for offshore obligations.
(B) Exception for preexisting offshore
obligations.
(vii) Identification of NFFE affiliates.
(A) Exception for offshore obligations.
(B) Exception for preexisting offshore
obligations.
(viii) Identification of excepted terri-
tory NFFEs.
(A) Exception for payments made prior
to January 1, 2017, with respect to pre-
existing obligations of $1,000,000 or less
(transitional).
(B) Exception for offshore obligations.
(C) Exception for preexisting offshore
obligations of $1,000,000 or less.
(ix) Identification of active NFFEs.
(A) Exception for offshore obligations.
(B) Exception for preexisting offshore
obligations.
(C) Limit on reason to know.
(12) Identification of passive NFFEs.
(i) Exception for offshore obligations.
(ii) Special rule for preexisting offshore
obligations.
(iii) Required owner certification for
passive NFFEs.
(A) In general.
(B) Exception for preexisting obliga-
tions of $1,000,000 or less (transitional).
(e) Standards of knowledge.
(1) In general.
(2) Notification by the IRS.
(3) Participating FFIs and registered
deemed-compliant FFIs.
(i) In general.
(ii) Special rules for reporting Model 1
FFIs.
(4) Reason to know.
(i) Information conflicting with per-
son’s claim of chapter 4 status.
(ii) Specific standards of knowledge ap-
plicable to withholding certificates.
(A) In general.
(B) Classification of U.S. status, U.S.
address, or U.S. telephone number.
(1) Presumption of individual’s foreign
status.
(2) Presumption of entity’s foreign sta-
tus.
(C) U.S. place of birth.
2013–15 I.R.B.797April 8, 2013

(1) Accounts opened on or after January
1, 2014.
(2) Preexisting obligations.
(D) Standing instructions with respect
to offshore obligations.
(iii) Specific standard of knowledge ap-
plicable to written statements.
(iv) Specific standard of knowledge ap-
plicable to documentary evidence.
(A) In general.
(B) Classification of U.S. status, U.S.
address, or U.S. telephone number.
(1) Presumption of individual’s foreign
status.
(2) Presumption of entity’s foreign sta-
tus.
(C) U.S. place of birth.
(1) Accounts opened on or after January
1, 2014.
(2) Preexisting obligations.
(D) Standing instructions.
(E) Standards of knowledge applicable
to certain types of documentary evidence.
(1) Financial statement.
(2) Organizational documents.
(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) U.S.indiciafor entities.
(B)Documentationrequiredtocure
U.S.indicia.
(vi) Specific standards of knowledge
applicable to documentation received from
intermediaries and flow-through entities.
(A) In general.
(B) Limits on reason to know with
respect to documentation received
from participatingFFIs and registered
deemed-compliant FFIs that are interme-
diaries or flow-through entities.
(vii) Limits on reason to know.
(A) Scope of review for preexisting
obligations of entities.
(B) Reason to know there is a U.S. tele-
phone number associated with a preexist-
ing obligation.
(C) Reason to know there are U.S.in-
diciaassociated with preexisting offshore
obligations.
(D) Limits on reason to know for mul-
tiple obligations belonging to a single ac-
count holder.
(viii) Reasonable explanation support-
ing claim of foreign status.
(5) Conduit financing arrangements.
(6) Additional guidance.
(f) Presumptions regarding chapter 4
status of the person receiving the payment
in the absence of documentation.
(1) In general.
(2) Presumptions of classification as an
individual or entity.
(i) In general.
(ii) Documentary evidence furnished
for offshore obligation.
(3) Presumptions of U.S. or foreign sta-
tus.
(i) Payments to entities withindiciaof
foreign status.
(ii) Payments to certain exempt recipi-
ents.
(iii) Payments with respect to offshore
obligations.
(4) Presumption of chapter 4 status for
a foreign entity.
(5) Presumption of status as an interme-
diary.
(6) Presumption of effectively con-
nected income for payments to certain
U.S. branches.
(7) Joint payees.
(i) In general.
(ii) Exception for offshore obligations.
(8) Rebuttal of presumptions.
(9) Effect of reliance on presumptions
and of actual knowledge or reason to know
otherwise.
(i) In general.
(ii) Actual knowledge or reason to
know that amount of withholding is greater
than is required under the presumptions or
that reporting of the payment is required.
(g) Effective/applicability date.
§1.1471–4 FFI agreement.
(a) In general.
(1) Withholding.
(2) Identification and documentation of
account holders.
(3) Reporting.
(4) Expanded affiliated group.
(5) Verification.
(6) Event of default.
(7) Refunds.
(b) Withholding requirements.
(1) In general.
(2) Withholding determination.
(3) Satisfaction of withholding require-
ments.
(4) Foreign passthru payments.
(5) Withholding on limited FFIs and
limited branches.
(i) Limited FFIs.
(ii) Limited branches.
(6) Special rule for dormant accounts.
(7) Withholding requirements for U.S.
branches of participating FFIs that are
treated as U.S. persons.
(c) Due diligence for the identification
and documentation of account holders and
payees.
(1) Scope of paragraph.
(2) General rules for the identification
and documentation of account holders and
payees.
(i) Overview.
(ii) Standards of knowledge.
(A) In general.
(B) Limits on reason to know with
respect to certain accounts acquired in
merger of bulk acquisition.
(1) In general.
(2) Participating FFIs and certain
deemed-compliant FFIs that apply the due
diligence rules, and U.S. financial institu-
tions.
(iii) Change in circumstances.
(A) Obligation to identify a change in
circumstances.
(B) Definition of change in circum-
stances.
(C) Requirements following a change in
circumstances.
(iv) Record retention.
(v) Special rule for U.S. branches of
participating FFIs that are treated as U.S.
persons.
(3) Identification and documentation
procedure for entity accounts and payees.
(i) In general.
(ii) Timeframe for applying identifica-
tion and documentation procedure for en-
tity accounts and payees.
(iii) Documentation exception for cer-
tain preexisting entity accounts.
(A) Accounts to which this exception
applies.
(B) Aggregation of entity accounts.
(C) Election to forgo exception.
(4) Identification and documentation
procedure for individual accounts other
than preexisting accounts.
(i) In general.
(ii) Reliance on third-party for identi-
fication of individual accounts other than
preexisting accounts.
(iii) Alternative identification and doc-
umentation procedure for certain cash
value insurance or annuity contracts.
(A) Group cash value insurance con-
tracts or group annuity contracts.
April 8, 20137982013–15 I.R.B.

(B) Accounts held by beneficiaries of a
cash value insurance contract that is a life
insurance contract.
(5) Identification and documentation
procedure for preexisting individual ac-
counts.
(i) In general.
(ii) Special rule for preexisting indi-
vidual accounts previously documented as
U.S. accounts for purposes of chapter 3 or
61.
(iii) Exceptions for certain low value
preexisting individual accounts.
(A) Accounts to which an exception ap-
plies.
(B) Aggregation of accounts.
(C) Election to forgo exception.
(iv) Specific identification and docu-
mentation procedures for preexisting indi-
vidual accounts.
(A) In general.
(B) U.S.indiciaand relevant documen-
tation rules.
(1)U.S.indicia.
(2) Documentation to be retained upon
identifying U.S.indicia.
(i) Designation of account holder as a
U.S. citizen or resident.
(ii) Unambiguous indication of a U.S.
place of birth.
(iii) U.S. address or U.S. mailing ad-
dress.
(iv) Only U.S. telephone numbers.
(v) U.S. telephone numbers and non-
U.S. telephone numbers.
(vi) Standing instructions to pay
amounts.
(vii) Power of attorneyor signatory au-
thority granted to a person with a U.S.
address or “in-care-of” address or “hold
mail” address.
(C) Electronic search for identifying
U.S.indicia.
(D) Enhanced review for identify-
ing U.S.indiciain the case of certain
high-value accounts.
(1) In general.
(2) Relationship manager inquiry.
(3) Additional review of non-electronic
records.
(4) Limitations on the enhanced review
in the case of comprehensive electroni-
cally searchable information.
(E) Exception for preexisting individual
accounts that a participating FFI has doc-
umented as held by foreign individuals for
purposes of meeting its obligations under
chapter 61 or its QI, WP, or WT agreement.
(6) Examples.
(7) Certifications of responsible officer.
(d) Account reporting.
(1) Scope of paragraph.
(2) Reporting requirements in general.
(i) Accounts subject to reporting.
(ii) Financial institution required to re-
port an account.
(A) In general.
(B) Special reporting of account holders
of territory financial institutions.
(C) Special reporting of account holders
of a sponsored FFI.
(D) Special reporting of account hold-
ers that are owner-documented FFIs.
(E) Branch reporting of accounts.
(iii) Special U.S. account reporting
rules for U.S. payors.
(A) Special reporting rule for U.S. pay-
ors other than U.S. branches.
(B) Special reporting rules for U.S.
branches treated as U.S. persons.
(3) Reporting of accounts under section
1471(c)(1).
(i) In general.
(ii) Accounts held by specified U.S.
persons.
(iii) Accounts held by U.S. owned for-
eign entities.
(iv) Special reporting of accounts held
by owner-documented FFIs.
(v) Branch reporting.
(vi) Form for reporting accounts under
section 1471(c)(1).
(vii) Time and manner of filing.
(viii) Extensions in filing.
(4) Descriptions applicable to reporting
requirements of §1.1471–4(d)(3).
(i) Address.
(ii) Account number.
(iii) Account balance or value.
(A) In general.
(B) Currency translation of account bal-
ance or value.
(iv) Payments made with respect to an
account.
(A) Depository accounts.
(B) Custodial accounts.
(C) Other accounts.
(D) Transfers and closing of deposit,
custodial, insurance, and annuity financial
accounts.
(E) Amount and character of payments
subject to reporting.
(F) Currency translation.
(v) Record retention requirements.
(5) Election to perform chapter 61 re-
porting.
(i) In general.
(A) Election under section 1471(c)(2).
(B) Election to report in a manner sim-
ilar to section 6047(d).
(ii) Additional information to be re-
ported.
(iii) Special reporting of accounts held
by owner-documented FFIs.
(iv) Branch reporting.
(v) Time and manner of making the
election.
(vi) Revocation of election.
(vii) Filing of information under elec-
tion.
(6) Reporting on recalcitrant account
holders.
(i) In general.
(ii) Definition ofdormant account.
(iii) End of dormancy.
(iv) Forms.
(v)Timeandmanneroffiling.
(vi) Record retention requirements.
(7) Special reporting rules with respect
to the 2013 through 2015 calendar years.
(i) In general.
(ii) Participating FFIs that report under
§1.1471–4(d)(3).
(A) Reporting with respect to the 2013
and 2014 calendar years.
(B) Reporting with respect to the 2015
calendar year.
(iii) Participating FFIs that report under
§1.1471–4(d)(5).
(iv) Forms for reporting.
(A) In general.
(B) Special determination date and tim-
ing for reporting with respect to the 2013
calendar year.
(8) Reporting requirements of QIs, WPs
and WTs.
(9) Examples.
(e) Expanded affiliated group require-
ments.
(1) In general.
(2) Limited branches.
(i) In general.
(ii) Branch defined.
(iii) Limited branch defined.
(iv) Conditions for limited branch sta-
tus.
(v) Term of limited branch status (tran-
sitional).
(3) Limited FFI.
(i) In general.
(ii) Limited FFI defined.
(iii) Conditions for limited FFI status.
(iv) Period for limited FFI status (tran-
sitional).
2013–15 I.R.B.799April 8, 2013

(4) Special rule for QIs.
(f) Verification.
(1) In general.
(2) Compliance program.
(i) In general.
(ii) Consolidated compliance program.
(A) In general.
(B) Requirements of compliance FI.
(3) Certification of compliance.
(i) In general.
(ii) Certification of effective internal
controls.
(iii) Qualified certification.
(iv) Material failures defined.
(4) IRS review of compliance.
(i) General inquiries.
(ii) Inquiries regarding substantial non-
compliance.
(g) Event of default.
(1) Defined.
(2) Notice of event of default.
(3) Remediation of event of default.
(h) Collective credit or refund proce-
dures for overpayments.
(1) In general.
(2) Persons for which a collective re-
fund is not permitted.
(3) Payments for which a collective re-
fund is permitted.
(4) Procedural and other requirements
for collective refund.
(i) Legal prohibitions on reporting U.S.
accounts and withholding.
(1) In general.
(2)Requestingwavierorclosureofa
U.S. account.
(i) In general.
(ii) Valid and effective waiver for a U.S.
account.
(iii) Closure or transfer of U.S. account.
(3) Legal prohibitions preventing with-
holding.
(i) In general.
(ii) Block or transfer accounts or obli-
gations.
(j) Effective/applicability date.
§1.1471–5 Definitions applicable to
section 1471.
(a) U.S. accounts.
(1) In general.
(2) Definition of U.S. account.
(3) Account holder.
(i) In general.
(ii) Grantor trust.
(iii) Financial accounts held by agents
that are not financial institutions.
(iv) Jointly held accounts.
(v) Account holder for insurance and
annuity contracts.
(vi) Examples.
(4) Exceptions to U.S. account status.
(i) Exception for certain individual ac-
counts of participating FFIs.
(ii) Election to forgo exception.
(iii) Example.
(b) Financial accounts.
(1) In general.
(i) Depository account.
(ii) Custodial account.
(iii) Equity or debt interest.
(A) Equity or debt interest in an invest-
ment entity.
(B) Certain equity or debt interests in a
holding company or treasury center.
(C) Equity or debt interests in other fi-
nancial institutions.
(iv) Insurance and annuity contracts.
(2) Exceptions.
(i) Certain savings accounts.
(A) Retirement and pension accounts.
(B) Non-retirement savings accounts.
(C) Rollovers.
(D) Coordination with section 6038D.
(E) Account that is tax-favored.
(ii) Certain term life insurance con-
tracts.
(iii) Account held by an estate.
(iv) Certain escrow accounts.
(v) Certain annuity contracts.
(vi) Account or product excluded under
an intergovernmental agreement.
(3) Definitions.
(i) Depository account.
(A) In general.
(B) Exceptions.
(ii) Custodial account.
(iii) Equity interest in certain entities.
(A) Partnership.
(B) Trust.
(iv)Regularlytradedonanestablished
securities market.
(v) Value of interest determined, di-
rectly or indirectly, primarily by reference
to assets the give rise (or could give rise)
to withholdable payments.
(A) Equity interest.
(B) Debt interest.
(vi) Redemption or retirement amount
or return earned on the interest determined,
directly or indirectly, primarily by refer-
ence to one or more investment entities or
passive NFFEs.
(A) Equity interest.
(B) Debt interest.
(vii) Cash value insurance contracts.
(A) In general.
(B) Cash value.
(C) Amounts excluded from cash value.
(D) Policyholder dividend.
(4) Account balance or value.
(i) In general.
(ii) Special rule for immediate annuity.
(A) Immediate annuities without mini-
mum benefit guarantees.
(B) Immediate annuities with a mini-
mum benefit guarantee.
(C) Net present value of amounts
payable in future periods.
(iii) Account aggregation requirements.
(A) In general.
(B) Aggregation rule for relationship
managers.
(C) Examples.
(iv) Current translation of balance or
value.
(5) Account maintained by financial in-
stitution.
(c) U.S. owned foreign entity.
(d) Definition of FFI.
(e) Definition of financial institution.
(1) In general.
(2) Banking or similar business.
(i) In general.
(ii) Exception for certain lessors and
lenders.
(iii) Application of section 581.
(iv) Effect of local regulation.
(3) Holding financial assets for others
as a substantial portion of its business.
(i) Substantial portion.
(A) In general.
(B) Special rule for start-up entities.
(ii) Income attributable to holding fi-
nancial assets and related financial ser-
vices.
(iii) Effect of local regulation.
(4) Investment entity.
(i) In general.
(ii) Financial assets.
(iii) Primarily conducts as a business.
(A) In general.
(B) Special rule start-up entities.
(iv) Primarily attributable to investing,
reinvesting, or trading in financial assets.
(A) In general.
(B) Special rule for start-up entities.
(v) Examples.
(5) Exclusions.
(i) Excepted nonfinancial group enti-
ties.
(A) In general.
(B) Nonfinancial group.
April 8, 20138002013–15 I.R.B.

(C) Holding company.
(D) Treasury center.
(E) Captive finance company.
(ii) Excepted nonfinancial start-up
companies or companies entering a new
line of business.
(A) In general.
(B) Exception for investment funds.
(iii) Excepted nonfinancial entities in
liquidation or bankruptcy.
(iv) Excepted inter-affiliate FFI.
(v) Section 501(c) entities.
(vi) Non-profit organizations.
(6) Reserving activities of an insurance
company.
(f) Deemed-compliant FFIs.
(1) Registered deemed-compliant FFIs.
(i) Registered deemed-compliant FFI
categories.
(A) Local FFIs.
(B) Nonreporting members of partici-
pating FFI groups.
(C) Qualified collective investment ve-
hicles.
(D) Restricted funds.
(E) Qualified credit card issuers.
(F) Sponsored investment entities and
controlled foreign corporations.
(ii) Procedural requirements for regis-
tered deemed-compliant FFIs.
(iii) Deemed-compliant FFI that is
merged or acquired.
(2) Certified deemed-compliant FFIs.
(i) Nonregistering local bank.
(ii) FFIs with only low-value accounts.
(iii) Sponsored, closely-held invest-
ment vehicles.
(iv) Limited life debt investment enti-
ties (transitional).
(3) Owner-documented FFIs.
(i) In general.
(ii) Requirements of owner-docu-
mented FFI status.
(4) Definition of restricted distributor.
(g) Recalcitrant account holders.
(1) Scope.
(2) Recalcitrant account holder.
(3) Start of recalcitrant account holder
status.
(i) Preexisting accounts identified
under the procedures described in
§1.1471–4(c) for identifying U.S. ac-
counts.
(A) In general.
(B) Accounts other than high-value ac-
counts.
(C) High-value accounts.
(D) Preexisting accounts that become
high-value accounts.
(ii) Accounts that are not preexisting ac-
counts and accounts requiring name/TIN
correction.
(iii) Accounts with changes in circum-
stances.
(4) End of recalcitrant account holder
status.
(h) Passthru payment.
(1) Defined.
(2) Foreign passthru payment.
(i) Expanded affiliated group.
(1) Scope of paragraph.
(2) Expanded affiliated group defined.
(i) In general.
(ii) Partnerships and entities other than
corporations.
(3) Exception for FFIs holding certain
capital investments.
(4) Seed capital.
(5) Anti-abuse rule.
(j) Effective/applicability date.
§1.1471–6 Payments beneficially owned
by exempt beneficial owners.
(a) In general.
(b) Any foreign government, any politi-
cal subdivision of a foreign government, or
any wholly owned agency or instrumental-
ity of any one or more of the foregoing.
(1) Integral part.
(2) Controlled entity.
(3) Inurement to the benefit of private
persons.
(c) Any international organization or
any wholly owned agency or instrumental-
ity thereof.
(d) Foreign central bank of issue.
(1) In general.
(2) Separate instrumentality.
(3) Bank for International Settlements.
(4) Income on certain collateral.
(e) Governments of U.S. territories.
(f) Certain retirement funds.
(1) Treaty-qualified retirement fund.
(2) Broad participation retirement fund.
(3) Narrow participating retirement
funds.
(4) Fund formed pursuant to a plan sim-
ilar to a section 401(a) plan.
(5) Investment vehicles exclusively for
retirement funds.
(6) Pension fund of an exempt benefi-
cial owner.
(7) Example.
(g) Entities wholly owned by exempt
beneficial owners.
(h) Exception for commercial activities.
(1) General rule.
(2) Limitation.
(i) Effective/applicability date.
§1.1472–1 Withholding on NFFEs.
(a) In general.
(b) Withholdable payments made to an
NFFE.
(1) In general.
(2) Transitional relief.
(c) Exceptions.
(1) Beneficial owner that is an excepted
NFFE.
(i) Publicly traded corporation.
(A) Regularly traded.
(B) Special rules regarding the regu-
larly traded requirement.
(1) Year of initial public offering.
(2) Classes of stock treated as meeting
the regularly traded requirement.
(3) Anti-abuse rule.
(C) Established securities market.
(1) In general.
(2) Foreign exchange with multiple
tiers.
(3) Computation of dollar value of stock
traded.
(ii) Certain affiliated entities related to
a publicly traded corporation.
(iii) Certain territory entities.
(iv) Active NFFEs.
(A) Passive income.
(B) Exceptions from passive income
treatment.
(C) Methods of measuring assets.
(v) Excepted nonfinancial entities.
(2) Payments made to a WP, WT, or an
exempt beneficial owner.
(d) Rules for determining payee and
beneficial owner.
(1) In general.
(2) Payments made to an NFFE that is
aWPorWT.
(3) Payments made to a partner or ben-
eficiary of an NFFE that is an NWP or
NWT.
(4) Payments made to a beneficial
owner that is an NFFE.
(5) Absence of valid documentation.
(e) Information reporting requirements.
(1) Reporting on withholdable pay-
ments.
(2) Reporting on substantial U.S. own-
ers.
2013–15 I.R.B.801April 8, 2013

(f) Effective/applicability date.
§1.1473–1 Section 1473 definitions.
(a) Definition of withholdable payment.
(1) In general.
(2) U.S. source FDAP income defined.
(i) In general.
(A) FDAP income defined.
(B) U.S. source.
(C) Exceptions to withholding on U.S.
source FDAP incomenot applicable under
chapter 4.
(ii) Special rule for certain interest.
(iii) Original issue discount.
(iv) REMIC residual interests.
(v) Withholding liability of payee that
is satisfied by withholding agent.
(vi) Special rule for sales of interest
bearing debt obligations.
(vii) Payment of U.S. source FDAP in-
come.
(A) Amount of payment of U.S. source
FDAP income.
(B) When payment of U.S. source
FDAP income is made.
(3) Gross proceeds defined.
(i) Sale or other disposition.
(A) In general.
(B) Special rule for sales effected by
brokers.
(C) Special rule for gross proceeds from
sales settles by a clearing organization.
(ii) Property of a type that can produce
interest or dividend payments that would
be U.S. source FDAP income.
(A) In general.
(B) Contracts producing dividend
equivalent payments.
(C) Regulated investment company dis-
tributions.
(iii) Payment of gross proceeds.
(A) When gross proceeds are paid.
(B) Amount of gross proceeds.
(4) Payments not treated as withhold-
able payments.
(i) Certain short-term obligations.
(ii) Effectively connected income.
(iii) Excluded nonfinancial payments.
(iv) Gross proceeds from sales of ex-
cluded property.
(v) Fractional shares.
(vi) Offshore payments of U.S. source
FDAP income prior to 2017 (transitional).
(5) Special payment rules for
flow-through entities, complex trusts, and
estates.
(i) In general.
(ii) Partnerships.
(iii) Simple trusts.
(iv) Complex trusts and estates.
(v) Grantor trusts.
(vi) Special rule for an NWP or NWT.
(vii) Special rule for determining when
gross proceeds are treated as paid to a
partner, owner, or beneficiary of a flow-
through entity.
(6) Reporting of withholdable pay-
ments.
(7) Example.
(b) Substantial U.S. owner.
(1) Definition.
(2) Indirect ownership of foreign enti-
ties.
(i) Indirect ownership of stock.
(ii) Indirect ownership in a foreign part-
nership or ownership of a beneficial inter-
est in a foreign trust.
(iii) Ownership and holdings through
options.
(iv) Determination of proportionate in-
terest.
(v) Interests owned or held by a related
person.
(3) Beneficial interest in a foreign trust.
(i) In general.
(ii) Determining the 10 percent thresh-
old in the case of a beneficial interest in a
foreign trust.
(iii) Valuation rules for beneficial inter-
ests in foreign trusts.
(4) Exceptions.
(i)De minimisamount or value excep-
tion.
(ii) Trusts wholly owned by certain U.S.
persons.
(5) Special rule for certain financial in-
stitutions.
(6) Determination dates for substantial
U.S. owners.
(7) Examples.
(c) Specified U.S. person.
(d) Withholding agent.
(1) In general.
(2) Participating FFIs and registered
deemed-compliant FFIs as withholding
agents.
(3) Grantor trusts as withholding
agents.
(4) Deposit and return requirements.
(5) Multiple withholding agents.
(6) Exception for certain individuals.
(e) Foreign entity.
(f) Effective/applicability date.
§1.1474–1 Liability for withheld tax and
withholding agent reporting.
(a) Payment and returns of tax withheld.
(1) In general.
(2) Withholding agent liability.
(3) Use of agents.
(i) In general.
(ii) Authorized agent.
(iii) Liability of withholding agent act-
ing through an agent.
(4) Liability for failure to obtain doc-
umentation timely or to act in accordance
with applicable presumptions.
(i) In general.
(ii) Withholding satisfied by another
withholding agent.
(b) Payment of withheld tax.
(1) In general.
(2) Special rule for foreign passthru
payments and payments of gross proceeds
that include an undetermined amount of
income subject to tax.
(c) Income tax return.
(1) In general.
(2) Participating FFIs, registered
deemed-compliant FFIs, and U.S.
branches treated as U.S. persons.
(3) Amended returns.
(d) Information returns for payment re-
porting.
(1) Filing requirement.
(i) In general.
(ii) Recipient.
(A) Defined.
(B) Persons that are not recipients.
(2) Amounts subject to reporting.
(i) In general.
(ii) Exception to reporting.
(iii) Coordination with chapter 3.
(3) Required information.
(4)Methodofreporting.
(i) Payments by U.S. withholding agent
to recipients.
(A) Payments to certain entities that are
beneficial owners.
(B) Payments to participating FFIs,
deemed-compliant FFIs, and certain QIs.
(C) Amounts paid to a U.S. branch of
a participating FFI or registered deemed-
compliant FFI.
(D) Amounts paid to territory financial
institutions that are flow-through entities
or acting as intermediaries.
(E) Amounts paid to NFFEs.
(ii) Payments made by withholding
agents to certain entities that are not recip-
ients.
April 8, 20138022013–15 I.R.B.

(A) Entities that provide information
for a withholding agent to perform specific
payee reporting.
(B) Nonparticipating FFI that is a flow-
through entity or intermediary.
(C) Disregarded entities.
(iii) Reporting by participating FFIs
and deemed-compliant FFIs (including
QIs, WPs, and WTs).
(A) In general.
(B) Special reporting requirements
of participating FFIs, deemed-compliant
FFIs, and FFIs that make an election under
section 1471(b)(3).
(C)ReportingbyparticipatingFFIs
and registered deemed-compliant FFIs
(including QIs, WPs, and WTs) for certain
payments made to nonparticipating FFIs
(transitional).
(D) Reporting by U.S. branches
of a participatingFFI or registered
deemed-compliant FFI that is treated as a
U.S. person.
(iv) Reporting by territory financial in-
stitutions.
(v) Nonparticipating FFIs.
(vi) Other withholding agents.
(e) Magnetic media reporting.
(f) Indemnification of withholding
agent.
(g) Extensions of time to file Forms
1042 and 1042–S.
(h) Penalties.
(i) Additional reporting requirements
with respect to U.S. owned foreign entities
and owner-documented FFIs.
(1) Reporting by certain withholding
agents with respect toowner-documented
FFIs.
(2) Reporting by certain withholding
agents with respect to U.S. owned foreign
entities that are NFFEs.
(3) Cross reference to reporting by par-
ticipating FFIs.
(j) Effective/applicability date.
§1.1474–2 Adjustments for
overwithholding or underwithholding of
tax.
(a) Adjustments of overwithheld tax.
(1) In general.
(2) Overwithholding.
(3) Reimbursement of tax.
(i) General rule.
(ii) Record maintenance.
(4) Set-offs.
(5) Examples.
(b) Withholding of additional tax when
underwithholding occurs.
(c) Effective/applicability date.
§1.1474–3 Withheld tax as credit to
beneficial owner of income.
(a) Creditable tax
(b) Amounts paid to persons that are not
the beneficial owners
(c) Effective/applicability date
§1.1474–4 Tax paid only once.
(a) Tax paid.
(b) Effective/applicability date.
§1.1474–5 Refunds or credits.
(a) Refund and credit.
(1) In general.
(2) Limitation to refund and credit for a
nonparticipating FFI.
(3) Requirement to provide additional
documentation for certain beneficial own-
ers.
(i) In general.
(ii) Claim of reduced withholding under
an income tax treaty.
(iii) Additional documentation to be
furnished to the IRS for certain NFFEs.
(b) Tax repaid to payee.
(c) Effective/applicability date.
§1.1474–6 Coordination of chapter 4 with
other withholding provisions.
(a) In general.
(b) Coordination of withholding for
amounts subject to withholding under sec-
tions 1441, 1442, and 1443.
(1) In general.
(2) When withholding is applied.
(3) Special rule for certain substitute
dividend payments.
(c) Coordination with amounts subject
to withholding under section 1445.
(1) In general.
(2) Determining amount of distribution
from certain domestic corporations subject
to section 1445 or chapter 4 withholding.
(i) Distribution from qualified invest-
ment entity.
(ii) Distribution from a United States
real property holding corporation.
(d) Coordination with section 1446.
(1) In general.
(2) Determining the amount of distribu-
tion subject to section 1446.
(e) Example.
(f) Effective/applicability date.
§1.1474–7 Confidentiality of information.
(a) Confidentiality of information.
(b) Exception for disclosure of partici-
pating FFIs.
(c) Effective/applicability date.
§301.1474–1 Required use of magnetic
media for financial institutions filing Form
1042–S or Form 8966.
(a) Financial institutions filing certain
information returns.
(b) Waiver.
(c) Failure to file.
(d) Meaning of terms.
(1) Magnetic media.
(2) Financial institution.
(e) Effective/applicability date.
Par. 5. Section 1.1471–1 is added to
read as follows:
§1.1471–1 Scope of chapter 4 and
definitions.
(a)Scope of chapter 4 of the Internal
Revenue Code. Sections 1.1471–1 through
1.1474–7 provide rules for withholding
when a withholding agent makes a pay-
menttoanFFIorNFFEandprescribethe
requirements for and definitions relevant
to FFIs and NFFEs to which withholding
will not apply. Section 1.1471–1 pro-
vides definitions for terms used in chapter
4 of the Internal Revenue Code (Code)
and the regulations thereunder. Section
1.1471–2 provides rules for withhold-
ing under section 1471(a) on payments
to FFIs, including the exception from
withholding for payments made with re-
spect to certain grandfathered obligations.
Section 1.1471–3 provides rules for de-
termining the payee of a payment and
the documentation requirements to estab-
lish a payee’s chapter 4 status. Section
1.1471–4 describes the requirements of an
FFI agreement under section 1471(b) and
the application of sections 1471(b) and (c)
to an expanded affiliated group of FFIs.
Section1.1471–5defines terms relevant
to section 1471 and the FFI agreement
and defines categories of FFIs that will
be deemed to have met the requirements
of section 1471(b) pursuant to section
1471(b)(2). Section 1.1471–6 defines
classes of beneficial owners of payments
2013–15 I.R.B.803April 8, 2013

that are exempt from withholding under
chapter 4. Section 1.1472–1 provides rules
for withholding when a withholding agent
makes a payment to an NFFE, and defines
categories of NFFEs that are not subject
to withholding. Section 1.1473–1 pro-
vides definitions of the statutory terms in
section 1473. Section 1.1474–1 provides
rules relating to a withholding agent’s li-
ability for withheld tax, filing of income
tax and information returns, and deposit-
ing of tax withheld. Section 1.1474–2
provides rules relating to adjustments for
overwithholding and underwithholding of
tax. Section 1.1474–3 provides the cir-
cumstances in which a credit is allowed
to a beneficial owner for a withheld tax.
Section 1.1474–4 provides that a chapter
4 withholding obligation need only be
collected once. Section 1.1474–5 contains
rules relating to credits and refunds of
tax withheld. Section 1.1474–6 provides
rules coordinating withholding under sec-
tions 1471 and 1472 with withholding
provisions under other sections of the
Code. Section 1.1474–7 provides the con-
fidentiality requirement for information
obtained to comply with the requirements
of chapter 4. Any reference in the pro-
visions of sections 1471 through 1474 to
an amount that is stated in U.S. dollars
includes the foreign currency equivalent
of that amount. Except as otherwise pro-
vided, the provisions of sections 1471
through 1474 and the regulations thereun-
der apply only for purposes of chapter 4.
See §301.1474–1 of this chapter for the
requirements for reporting on magnetic
media that apply to financial institutions
making payments or otherwise reporting
accounts pursuant to chapter 4.
(b)Definitions. Except as otherwise
provided in this paragraph (b) or under the
terms of an applicable Model 2 IGA, the
following definitions apply for purposes of
sections 1471 through 1474 and the regu-
lations under those sections.
(1)Account.Thetermaccount
means a financial account as defined in
§1.1471–5(b).
(2)Account holder.Thetermac-
count holdermeans the person who
holds an account, asdetermined under
§1.1471–5(a)(3).
(3)Active NFFE.Thetermactive
NFFEhas the meaning set forth in
§1.1472–1(c)(1)(iv).
(4)AML due diligence.ThetermAML
due diligencemeans the customer due dili-
gence procedures of a financial institution
pursuant to the anti-money laundering or
similar requirements to which the financial
institution, or branch thereof, is subject.
This includes identifying the customer (in-
cluding the owners of the customer), un-
derstanding the nature and purpose of the
account, and ongoingmonitoring.
(5)Annuity contract.Thetermannu-
ity contractmeans a contract under which
the issuer agrees to make payments for a
period of time determined in whole or in
part by reference to the life expectancy of
one or more individuals. The term also in-
cludes a contract that is considered to be
an annuity contract in accordance with the
law, regulation, or practice of the jurisdic-
tion in which the contract was issued, and
under which the issuer agrees to make pay-
ments for a term of years. For purposes
of the preceding sentence, it is immaterial
whether a contract satisfies any of the sub-
stantive U.S. tax rules (for example, sec-
tions 72(s), 72(u), 817(h), and the investor
control prohibition) applicable to the taxa-
tion of a contract holder or issuer.
(6)Assumes primary withholding re-
sponsibility.Thetermassumes primary
withholding responsibilitymeans that a
QI, territory financial institution, or U.S.
branch of a participating FFI or registered
deemed-compliant FFI that assumes re-
sponsibility for withholding on a payment
for purposes of chapters 3 and 4 as if it
were a U.S. person. A QI may only as-
sume primary withholding responsibility
if it does not make an election to be with-
held upon with respect to the payment.
(7)Beneficial owner. Except as pro-
vided in §1.1472–1(d), §1.1471–6(d)(4),
and §1.1471–6(f), the termbeneficial
ownerhas the meaning set forth in
§1.1441–1(c)(6).
(8)Blocked account.Thetermblocked
accounthas the meaning set forth in
§1.1471–4(e)(2)(iii)(B).
(9)Broker.Thetermbrokermeans any
person, U.S. or foreign, that, in the ordi-
nary course of a trade or business during
the calendar year, stands ready to effect
sales to be made by others. Examples of a
broker include an obligor that regularly is-
sues and retires its own debt obligations, a
corporation that regularly redeems its own
stock, and a clearing organization that ef-
fects sales of securities for its members. A
broker does not include an international or-
ganization describedin §1.1471–6(c) that
redeems or retires an obligation of which
it is the issuer, a stock transfer agent that
records transfers of stock for a corporation
if the nature of the activities of the agent
is such that the agent ordinarily would not
know the gross proceeds from sales, an es-
crow agent that effects no sales other than
transactions incidental to the purpose of
the escrow (such as sales to collect on col-
lateral), or a corporation that issues and re-
tires long-term debt on an irregular basis.
(10)Cash value.Thetermcash
valuehas the meaning set forth in
§1.1471–5(b)(3)(vii)(B).
(11)Cash value insurance con-
tract.Thetermcash value insurance
contracthas the meaning set forth in
§1.1471–5(b)(3)(vii).
(12)Certified deemed-compliant
FFI
.Thetermcertified deemed-com-
pliant FFImeans an FFI described in
§1.1471–5(f)(2).
(13)Change in circumstances.
The termchange in circumstances
has the meaning set forth in
§1.1471–3(c)(6)(ii)(E) for withholding
agents and, in the case of a participat-
ing FFI, has the meaning set forth in
§1.1471–4(c)(2)(iii).
(14)Chapter 3. For purposes of chapter
4, the termchapter 3means sections 1441
through 1464 and the regulations thereun-
der, but does not include sections 1445 and
1446 and the regulations thereunder, un-
less the context indicates otherwise.
(15)Chapter 4.Thetermchapter 4
means sections 1471 through 1474 and the
regulations thereunder.
(16)Chapter 4 reportable amount.The
termchapter 4 reportable amounthas the
meaning set forth in §1.1474–1(d)(2)(i).
(17)Chapter 4 status.Thetermchapter
4 statusmeans a person’s status as a U.S.
person, a specified U.S. person, an individ-
ual that is a foreign person, a participating
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.
(18)Clearing organization.Theterm
clearing organizationmeansanentitythat
is in the business of holding securities for
its member organizations or clearing trades
of securities and transferring, or instruct-
ing the transfer of, securities by credit or
April 8, 20138042013–15 I.R.B.

debit to the account of a member without
the necessity of physical delivery of the se-
curities.
(19)Complex trust.Acomplex trustis
atrustthatisnotasimpletrustoragrantor
trust.
(20)Consolidated obligations.The
termconsolidated obligationsmeans 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
paragraph (b)(98)(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 consolidated
obligations pursuant to the previous sen-
tence must also treat the obligations as
a single obligation for purposes of sat-
isfying the standards of knowledge re-
quirements set forth in §§1.1471–3(e)
and 1.1471–4(c)(2)(ii), and for purposes
of determining the balance or value of
any of the obligations when applying 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 inaccurate, 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.
(21)Custodial account.Thetermcus-
todial accounthas the meaning set forth in
§1.1471–5(b)(3)(ii).
(22)Custodial institution.Theterm
custodial institutionhas the meaning set
forth in §1.1471–5(e)(1)(ii).
(23)Customer master file.Acustomer
master fileincludes the primary files of
a participating FFI or deemed-compliant
FFI for maintaining account holder infor-
mation, such as information used for con-
tacting account holders and for satisfying
AML due diligence.
(24)Deemed-compliant FFI.Theterm
deemed-compliant FFImeans an FFI that
is treated, pursuant to section 1471(b)(2)
and §1.1471–5(f), as meeting the re-
quirements of section 1471(b). The term
deemed-compliant FFIalso includes a QI
branch of a U.S. financial institution that
is a reporting Model 1 FFI.
(25)Deferred annuity contract.The
termdeferred annuity contractmeans an
annuity contract other than an immediate
annuity contract.
(26)Depository account.Thetermde-
pository accounthas the meaning set forth
in §1.1471–5(b)(3)(i).
(27)Depository institution.Theterm
depository institutionhas the meaning set
forth in §1.1471–5(e)(1)(i).
(28)Documentary evidence.Theterm
documentary evidencemeans documents,
other than a withholding certificate or writ-
ten statement, that a withholding agent is
permitted to rely upon to determine the
chapter 4 status of a person in accordance
with §1.1471–3(c)(5).
(29)Documentation.Thetermdocu-
mentationmeans withholding certificates,
written statements, documentary evidence,
and other documents that may be relevant
in determining a person’s chapter 4 sta-
tus, including any document containing a
determination of the account holder’s cit-
izenship or residency for tax or AML due
diligence purposes or an account holder’s
claim of citizenship or residency for tax or
AML due diligence purposes.
(30)Dormant account.Thetermdor-
mant accounthas the meaning set forth in
§1.1471–4(d)(6)(ii).
(31)Effective date of the FFI agree-
ment.Thetermeffective date of the FFI
agreementmeans the date on which the
IRS issues a GIIN to the participating FFI.
For participating FFIs that receive a GIIN
prior to December 31, 2013, the effective
date of the FFI agreement is December 31,
2013.
(32)EIN.Theterm
EINmeans an em-
ployer identification number (also known
as a federal tax identification number)
described in §301.6109–1(a)(1)(i) of this
chapter.
(33)Election to be withheld upon.The
termelection to be withheld uponhas the
meaning set forth in §1.1471–2(a)(2)(iii).
(34)Electronically searchable informa-
tion.Thetermelectronically searchable
informationmeans information that an
FFI maintains in its tax reporting files,
customer master files, or similar files,
and that is stored in the form of an elec-
tronic database against which standard
queries in programming languages, such
as Structured Query Language, may be
used. Information, data, or files are not
electronically searchable merely because
theyarestoredinanimage retrieval sys-
tem (such as portable document format
(.pdf) or scanned documents).
(35)Entity.Thetermentitymeans any
person other than an individual.
(36)Entity account.Thetermentity
accountmeans an account held by one or
more entities.
(37)Excepted NFFE.Thetermex-
cepted NFFEmeans an NFFE that is
described in §1.1472–1(c)(1).
(38)Exempt beneficial owner.The
termexempt beneficial ownermeans any
person described in §1.1471–6(b) through
(g) or that is otherwise treated as an ex-
empt beneficial owner pursuant to a Model
1 IGA or Model 2 IGA.
(39)Expanded affiliated group.The
termexpanded affiliated grouphas the
meaning set forth in §1.1471–5(i)(2).
(40)FATF.ThetermFATFmeans
the Financial Action Task Force, an in-
ter-governmental body that develops and
promotes international policies to combat
money laundering and terrorist financing.
(41)FATF-compliant jurisdiction.The
termFATF-compliant jurisdictionmeans a
jurisdiction that —
(i) Is not subject to a FATF call on its
members and other jurisdictions to apply
counter-measures to protect the interna-
tional financial system from the on-going
and substantial money laundering and ter-
rorist financing risks emanating from the
jurisdiction;
(ii) Is not a jurisdiction with strategic
AML/CFT (anti-money laundering and
combating the financing of terrorism)
deficiencies that has not made sufficient
progress in addressing the deficiencies
or has not committed to an action plan
developed with the FATF to address the
deficiencies; and
(iii) Is not a jurisdiction with strate-
gic AML/CFT deficiencies that the FATF
has identified as not making sufficient
2013–15 I.R.B.805April 8, 2013

progress on its action plan agreed upon
with the FATF.
(42)FFI.ThetermFFIorforeign finan-
cial institutionhas the meaning set forth in
§1.1471–5(d).
(43)FFI agreement.ThetermFFI
agreementmeans an agreement that is de-
scribed in §1.1471–4(a). An FFI agree-
ment includes a QI agreement, a withhold-
ing partnership agreement, and a withhold-
ing trust agreement that is entered into by
an FFI (other than an FFI that is a regis-
tered deemed-compliant FFI, including a
reporting Model 1 FFI) and that has an ef-
fective date or renewal date on or after De-
cember 31, 2013. The termFFI agreement
also includes a QI agreement that is en-
tered into by a foreign branch of a U.S. fi-
nancial institution (other than a branch that
is a reporting Model 1 FFI) and that has an
effective date or renewal date on or after
December 31, 2013.
(44)Financial account.Thetermfinan-
cial accounthas the meaning set forth in
§1.1471–5(b).
(45)Financial institution.Theterm
financial institutionhas the meaning set
forth in §1.1471–5(e).
(46)Flow-through entity.Theterm
flow-through entitymeans a partnership,
simple trust, or grantor trust, as determined
under U.S. tax principles.
(47)Flow-through withholding certifi-
cate.Thetermflow-through withholding
certificatemeans a Form W–8IMY sub-
mitted by a foreign partnership, foreign
simple trust, or foreign grantor trust.
(48)Foreign entity.Thetermfor-
eign entityhas the meaning set forth in
§1.1473–1(e).
(49)Foreign passthru payment.The
termforeign passthru paymenthas the
meaning set forth in §1.1471–5(h)(2).
(50)Foreign payee.Thetermforeign
payeemeans any payee other than a U.S.
payee.
(51)Foreign person.Thetermforeign
personmeans any person other than a U.S.
person and includes a QI branch of a U.S.
financial institution.
(52)GIIN.ThetermGIINorGlobal In-
termediary Identification Numbermeans
the identification number that is as-
signed to a participating FFI or registered
deemed-compliant FFI. The termGIINor
Global Intermediary Identification Num-
beralso includes the identification number
assigned to a reporting Model 1 FFI for
purposes of identifying such entity to
withholding agents. All GIINs will appear
on the IRS FFI list.
(53)Grandfathered obligation.The
termgrandfathered obligationhas the
meaning set forth in §1.1471–2(b).
(54)
Grantor trust.Agrantor trustis a
trust with respect to which one or more per-
sons are treated as owners of all or a por-
tion of the trust under sections 671 through
679. If only a portion of the trust is treated
as owned by a person, that portion is a
grantor trust with respect to that person.
(55)Gross proceeds.Thetermgross
proceedshas the meaning set forth in
§1.1473–1(a)(3).
(56)Group annuity contract.Theterm
group annuity contractmeans an annuity
contract under which the obligees are indi-
viduals who are affiliated through an em-
ployer, trade association, labor union, or
other association or group.
(57)Group insurance contract.The
termgroup insurance contractmeans an
insurance contract that—
(i) Provides coverage on individuals
who are affiliated through an employer,
trade association, labor union, or other
association or group; and
(ii) Charges a premium for each mem-
ber of the group (or member of a class
within the group) that is determined with-
out regard to the individual health charac-
teristics other than age, gender, and smok-
ing habits of the member (or class of mem-
bers) of the group.
(58)Immediate annuity.Thetermim-
mediate annuitymeans an annuity contract
that—
(i) Is purchased with a single premium
or annuity consideration; and
(ii) No later than one year from the pur-
chase date of the contract commences to
pay annually or more frequently substan-
tially equal periodic payments.
(59)Individual account.Thetermindi-
vidual accountmeans an account held by
one or more individuals.
(60)Insurance company.Thetermin-
surance companymeans an entity or ar-
rangement —
(i) That is regulated as an insurance
business under the laws, regulations, or
practices of any jurisdiction in which the
company does business;
(ii) The gross income of which (for ex-
ample, gross premiums and gross invest-
ment income) arising from insurance, rein-
surance, and annuity contracts for the im-
mediately preceding calendar year exceeds
50 percent of total gross income for such
year; or
(iii) The aggregate value of the assets
of which associated with insurance, rein-
surance, and annuity contracts at any time
during the immediately preceding calendar
year exceeds 50 percent of total assets at
anytimeduringsuchyear.
(61)Insurance contract.Thetermin-
surance contractmeans a contract (other
than an annuity contract) under which the
issuer in exchange for consideration agrees
to pay an amount upon the occurrence of
a specified contingency involving mortal-
ity, morbidity, accident, liability, or prop-
erty risk.
(62)Intermediary.Theterminter-
mediaryhas the meaning set forth in
§1.1441–1(c)(13).
(63)Intermediary withholding certifi-
cate.Thetermintermediary withholding
certificatemeans a Form W–8IMY sub-
mitted by an intermediary.
(64)Investment entity.Theterminvest-
ment entityhas the meaning set forth in
§1.1471–5(e)(1)(iii).
(65)Investment-linked annuity con-
tract.Theterminvestment-linked annuity
contract
means an annuity contract under
which benefits or premiums are adjusted
to reflect the investment return or market
value of assets associated with the con-
tract.
(66)Investment-linked insurance con-
tract.Theterminvestment-linked insur-
ance contractmeans an insurance contract
under which benefits, premiums, or the pe-
riod of coverage are adjusted to reflect the
investment return or market value of assets
associated with the contract.
(67)IRS FFI list.ThetermIRS FFI list
means the list published by the IRS that
contains the names and GIINs for all par-
ticipating FFIs, registered deemed-compli-
ant FFIs, and reporting Model 1 FFIs.
(68)Life annuity contract.Thetermlife
annuity contractmeans an annuity contract
that provides for payments over the life or
lives of one or more individuals.
(69)Life insurance contract.Theterm
life insurance contractmeans an insurance
contract under which the issuer, in ex-
change for consideration, agrees to pay an
amount upon the death of one or more in-
dividuals. That a contract provides one or
more payments (for example, for endow-
April 8, 20138062013–15 I.R.B.

ment benefits or disability benefits) in ad-
dition to a death benefit will not cause the
contract to be other than a life insurance
contract. For purposes of the preceding
sentence, it is immaterial whether a con-
tract satisfies any of the substantive U.S.
tax rules (for example, sections 101(f),
817(h), 7702, or investor control prohibi-
tion) applicable to the taxation of the con-
tract holder or issuer.
(70)Limited branch.Thetermlim-
ited branchhas the meaning set forth in
§1.1471–4(e)(2)(iii).
(71)Limited FFI.Thetermlim-
ited FFIhas the meaning set forth in
§1.1471–4(e)(3)(ii).
(72)Model 1 IGA.ThetermModel 1
IGAmeans an agreement or arrangement
between the United States or the Treasury
Department and a foreign government or
one or more agencies thereof to implement
FATCA through reporting by financial in-
stitutions to such foreign government or
agency thereof, followed by automatic ex-
change of the reported information with
the IRS. The IRS will publish a list iden-
tifying all countries that are treated as hav-
ingineffectaModel1IGA.
(73)Model 2 IGA.ThetermModel 2
IGAmeans an agreement or arrangement
between the United States or the Treasury
Department and a foreign government or
one or more agencies thereof to facilitate
the implementation of FATCA through re-
porting by financial institutions directly to
the IRS in accordance with the require-
ments of an FFI agreement, supplemented
by the exchange of information between
such foreign government or agency thereof
and the IRS. The IRS will publish a list
identifying all countries that are treated as
having in effect a Model 2 IGA.
(74)NFFE.ThetermNFFEornon-fi-
nancial foreign entitymeans a foreign en-
tity that is not a financial institution (in-
cluding a territory NFFE). The term also
means a foreign entity treated as an NFFE
pursuant to a Model 1 IGA or Model 2
IGA.
(75)Nonparticipating FFI.Theterm
nonparticipating FFImeans an FFI other
than a participating FFI, a deemed-compli-
ant FFI, or an exempt beneficial owner.
(76)Nonreporting IGA FFI.Theterm
nonreporting IGA FFImeans an FFI that is
identified as a nonreporting financial insti-
tution pursuant to a Model 1 IGA or Model
2 IGA that is not a registered deemed-com-
pliant FFI.
(77)Non-U.S. account.Thetermnon-
U.S. accountmeans an account that is not
a U.S. account and that does not have an
account holder that is anonparticipating
FFI or recalcitrant account holder.
(78)NQI.ThetermNQIornonqualified
intermediaryhas the meaning set forth in
§1.1441–1(c)(14).
(79)NWP.ThetermNWPornonwith-
holding foreign partnershipmeans a for-
eign partnership that is not a withholding
foreign partnership.
(80)NWT.ThetermNWTornonwith-
holding foreign trustmeans 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.
(81)Offshore account.Thetermoff-
shore accountmeans an account that is an
offshore obligation, all payments to which
are made outside of the United States,
within the meaning of §1.6049–5(e).
(82)Offshore obligation.Theterm
off-
shore obligationmeans any account, in-
strument, or contract that is maintained and
executedatanofficeorbranchofthewith-
holding agent at any location outside of
theUnitedStatesorinanylocationina
U.S. territory. The term also includes any
equity interest in a foreign entity that is
purchased by the owner of such interest
outside of the United States either directly
from the entity or from another person that
is located outside of the United States.
(83)Owner.Thetermownermeans
a person described in§1.1473–1(b)(1),
without regard to whether such person is a
U.S. person and without regard to whether
such person owns a ten percent interest in
the entity. The term also includes a per-
son that owns a discretionary interest in a
trust and receives a distribution during the
calendar year.
(84)Owner-documented FFI.Theterm
owner-documented FFImeans an FFI de-
scribed in §1.1471–5(f)(3).
(85)Participating FFI.Thetermpartic-
ipating FFImeans an FFI that has agreed
to comply with the requirements of an FFI
agreement, including an FFI described in
a Model 2 IGA that has agreed to comply
with the requirements of an FFI agreement.
The termparticipating FFIalso includes a
QI branch of a U.S. financial institution,
unless such branch is a reporting Model 1
FFI.
(86)Participating FFI group.The
termparticipating FFI groupmeans an
expanded affiliated group that includes
one or more participating FFIs and meets
the requirements of §1.1471–4(e)(1). The
termparticipating FFI groupalso means
an expanded affiliated group in which
one or more members of the group is a
reporting Model 1 FFI and each member
of the group that is an FFI is a registered
deemed-compliant FFI, nonreporting IGA
FFI, limited FFI, or retirement fund de-
scribed in §1.1471–6(f).
(87)Partnership.Thetermpart-
nershiphas the meaning set forth in
§301.7701–2(c)(1) of this chapter.
(88)Passive NFFE.Thetermpassive
NFFEmeans an NFFE other than an ex-
cepted NFFE.
(89)Passthru payment.Theterm
passthru paymenthas the meaning set
forth in §1.1471–5(h).
(90)Payee.Thetermpayeehas the
meaning set forth in §1.1471–3(a).
(91)Payment with respect to an offshore
obligation.Thetermpayment with respect
to an offshore obligationmeans a payment
made outside of the United States, within
the meaning of §1.6049–5(e), with respect
to an offshore obligation.
(92)Payor.Thetermpayorhas the
meaning set forth in §§31.3406(a)–2 of
this chapter and 1.6049–(a)(2) and gener-
ally includes a withholding agent.
(93)Permanent residence address.The
termpermanent residence addressis the
address in the country of which the person
claims to be a resident for purposes of that
country’s income tax. The address of a fi-
nancial institution with which the person
maintains an account, a post office box,
or an address used solely for mailing pur-
poses is not a permanent residence address
unless 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 perma-
nent address is the place at which the per-
son normally resides. If the person is an
entity and does not have a tax residence in
any country, then the permanent residence
address is the place at which the person
maintains its principal office.
2013–15 I.R.B.807April 8, 2013

(94)Person.Thetermpersonhas the
meaning set forth in section 7701(a)(1)
and the regulations thereunder, and also in-
cludes an entity or arrangement that is an
insurance company . The termpersondoes
not include a wholly owned entity that is
disregarded for federal tax purposes as an
entity separate from its owner. Notwith-
standing the previous sentence, the term
personincludes, with respect to a with-
holdable payment, a QI branch of a U.S.
financial institution.
(95)Preexisting account.Thetermpre-
existing accountmeans a financial account
that is a preexisting obligation.
(96)Preexisting entity account.The
termpreexisting entity accountmeans a
preexisting account held by one or more
entities.
(97)Preexisting individual account.
The termpreexisting individual account
means a preexisting account held by one
or more individuals.
(98)Preexisting obligation—(i) The
termpreexisting obligationmeans any ac-
count, instrument, contract, debt, or equity
interest maintained, executed, or issued by
the withholding agent that is outstanding
on December 31, 2013. With respect to
a withholding agent that is a participat-
ing FFI, the termpreexisting obligation
means any account, instrument, or con-
tract (including any debt or equity interest)
maintained, executed, or issued by the
FFI that is outstanding on the effective
date of the FFI agreement. With respect
to a withholding agent that is a registered
deemed-compliant FFI, a preexisting obli-
gation means any account, instrument,
or contract (including any debt or equity
interest) that is maintained, executed, or is-
sued by the FFI prior to the later of the date
that the FFI registers as a deemed-com-
pliant 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) The termpreexisting obligationalso
includes any obligation (referring to an ac-
count, instrument, contract, debt, or equity
interest) of an account holder or payee, re-
gardless of the date such obligation was
entered into, if—
(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 obli-
gation under paragraph (b)(98)(i) of this
section;
(B) The withholding agent (and, as ap-
plicable, the member of the withholding
agent’s expanded affiliated group or spon-
sored FFI group) treats both of the afore-
mentioned obligations, and any other obli-
gations of the payee or account holder that
are treated as preexisting obligations under
this paragraph (b)(98)(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)(96)(i) of this sec-
tion.
(99)Pre-FATCA Form W–8.Theterm
pre-FATCA Form W–8means a version of
a Form W–8 (or a substitute form) that was
issued prior to 2013 and that does not con-
tain chapter 4 statuses but otherwise meets
the requirements of §1.1441–1(e)(1)(ii)
applicable to such certificate and has not
expired.
(100)Prima facie FFI.The termprima
facie FFImeans an entity described in
§1.1471–2(a)(4)(ii)(B).
(101)QI.ThetermQIorqualified in-
termediaryhas the meaning set forth in
§1.1441–1(e)(5)(ii).
(102)QI agreement.ThetermQI
agreementmeans the agreement described
in §1.1441–1(e)(5)(iii).
(103)QI branch of a U.S. financial in-
stitution.ThetermQI branch of a U.S. fi-
nancial institutionmeans a foreign branch
of a U.S. financial institution for which a
QI agreement is in effect.
(104)Recalcitrant account holder.The
termrecalcitrant account holderhas the
meaning set forth in §1.1471–5(g).
(105)
Registered deemed-compliant
FFI.Thetermregistered deemed-com-
pliant FFImeans an FFI described in
§1.1471–5(f)(1). The termregistered
deemed-compliant FFIalso includes a QI
branch of a U.S. financial institution that
is a reporting Model 1 FFI.
(106)Relationship manager.Arela-
tionship manageris an officer or other
employee of an FFI who is assigned re-
sponsibility for specific account holders on
an on-going basis (including as an offi-
cer or employee that is a member of an
FFI’s private banking department), advises
account holders regarding their banking,
investment, trust, fiduciary, estate plan-
ning, or philanthropic needs, and recom-
mends, makes referrals to, or arranges for
the provision of financial products, ser-
vices, or other assistance by internal or
external providers to meet those needs.
Notwithstanding the previous sentence, a
person is only a relationship manager with
respect to an account that has a balance or
value of more than $1,000,000, taking into
account the aggregation rules described in
§1.1471–5(b)(4)(iii)(A) and (B).
(107)Reporting Model 1 FFI.Theterm
reporting Model 1 FFImeans an FFI with
respect to which a foreign government or
agency thereof agrees to obtain and ex-
change information pursuant to a Model 1
IGA, other than an FFI that is treated as
a nonparticipating FFI under the Model 1
IGA.
(108)Responsible officer.Theterm
responsible officermeans, with respect
to a participating FFI, an officer of any
participating FFI or reporting Model 1
FFI in the participating FFI’s expanded
affiliated group with sufficient authority
to fulfill the duties of a responsible officer
described in §1.1471–4, which include the
requirement to periodically certify to the
IRS regarding the FFI’s compliance with
its FFI agreement. The termresponsible
officermeans, in the case of a registered
deemed-compliant FFI, an officer of any
deemed-compliant FFI or participating
FFI in the deemed-compliant FFI’s ex-
panded affiliated group with sufficient
authority to ensure that the FFI meets the
applicable requirements of §1.1471–5(f).
If a participating FFI elects to be part of
a consolidated compliance program, the
termresponsible officermeans an offi-
cer of the compliance FI (as described
in §1.1471–4(f)) with sufficient authority
to fulfill the duties of a responsible offi-
cer described in §1.1471–4(f)(2) and (3)
on behalf of each FFI in the compliance
group.
(109)Restricted distributor.Theterm
restricted distributormeans an entity de-
scribed in §1.1471–5(f)(4).
(110)Simple trust.Thetermsimple
trustmeans a trust that meets the require-
ments of section 651(a)(1) and (2).
(111)Specified insurance company.
The termspecified insurance com-
April 8, 20138082013–15 I.R.B.

panyhas the meaning set forth in
§1.1471–5(e)(1)(iv).
(112)Specified U.S. person.Theterm
specified U.S. personorspecified United
States personhas the meaning set forth in
§1.1473–1(c).
(113)Sponsored FFI.Thetermspon-
sored FFImeans any entity described in
§1.1471–5(f)(1)(i)(F) (sponsored invest-
ment entities and sponsored controlled for-
eign corporations) or §1.1471–5(f)(2)(iii)
(sponsored, closely held investment vehi-
cles).
(114)Sponsored FFI group.Theterm
sponsored FFI groupmeans a group of
sponsored FFIs that share the same spon-
soring entity.
(115)Sponsoring entity.Theterm
sponsoring entitymeans an entity that reg-
isters with the IRS and agrees to perform
the due diligence, withholding, and report-
ing obligations of one or more FFIs pur-
suant to §1.1471–5(f)(1)(i)(F) or (2)(iii).
(116)Standardized industry code.The
termstandardized industry codemeans a
code that is part of a coding system used
by the withholding agent or FFI to clas-
sify account holders by business type for
purposes other than U.S. tax purposes and
that was implemented by the withholding
agent by the later of January 1, 2012, or
six months after the date the withholding
agent was formed or organized.
(117)Standing instructions to pay
amounts.Thetermstanding instructions
to pay amountsmeans current payment in-
structions provided by the account holder,
or an agent of the account holder, that will
repeat without further instructions being
provided by the account holder. There-
fore, for example, a payment instruction to
make an isolated payment is not a standing
instruction to pay amounts, even if the
instructions are given one year in advance.
However, an instruction to make payments
indefinitely is a standing instruction to
pay amounts for the period during which
such instructions are in effect, even if such
instructions are amended after a single
payment.
(118)Subject to withholding.Theterm
subject to withholding, with respect to an
amount, means an amount for which with-
holding is required under chapter 4 or an
amount for which chapter 4 withholding
was otherwise applied.
(119)Substantial U.S. owner.The
termsubstantial U.S. ownerorsubstantial
United States ownerhas the meaning set
forth in §1.1473–1(b).
(120)Territory entity.Thetermterri-
tory entitymeans any entity that is incor-
porated or organized under the laws of any
U.S. territory.
(121)Territory financial institution.
The termterritory financial institution
means a financial institution that is incor-
porated or organized under the laws of
any U.S. territory, not including a territory
entity that is an investment entity but that
is not a depository institution, custodial in-
stitution, or specified insurance company.
(122)Territory financial institution
treated as a U.S. person.Thetermterri-
tory financial institution treated as a U.S.
personmeans a territory financial institu-
tion that is treated as a U.S. person under
§1.1471–3(a)(3)(iv).
(123)Territory NFFE.Thetermterri-
tory NFFEmeans a territory entity that is
not a financial institution, including a ter-
ritory entity that is an investment entity but
is not a depository institution, custodial in-
stitution, or specified insurance company.
(124)TIN.ThetermTINmeans the tax
identifying number assigned to a person
under section 6109.
(125)U.S. account.ThetermU.S. ac-
count
orUnited States accounthas the
meaning set forth in §1.1471–5(a).
(126)U.S. branch treated as a U.S. per-
son.ThetermU.S. branch treated as a
U.S. personmeans a U.S. branch of a par-
ticipating FFI or registered deemed-com-
pliant FFI that is treated as a U.S. person
under §1.1441–1(b)(2)(iv)(A).
(127)U.S. financial institution.The
termU.S. financial institutionmeans a fi-
nancial institution that is a U.S. person, in-
cluding a U.S. branch treated as a U.S. per-
son.
(128)U.S. indicia.ThetermU.S.
indiciahas the meaning set forth in
§1.1471–4(c)(5)(iv)(B) when applied
to an individual and as set forth in
§1.1471–3(e)(4)(v)(A) when applied to an
entity.
(129)U.S. owned foreign entity.The
termU.S. owned foreign entityorUnited
States owned foreign entityhas the mean-
ing set forth in §1.1471–5(c).
(130)U.S. payee.ThetermU.S. payee
means any payee that is a U.S. person.
(131)U.S. payor.ThetermU.S. payor
means a U.S. payor or U.S. middleman as
defined in §1.6049–5(c)(5).
(132)U.S. person.ThetermU.S.
personorUnited States personmeans 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). For purposes of the preceding
sentence, the determination of whether
an insurance company is a U.S. person is
madewithoutregardtoanelectionbya
company not licensed to do business in
any State to be subject to U.S. income tax
as if it were a domestic insurance com-
pany. Thus, a foreign insurance company
notlicensedtodobusinessinanyState
that elects pursuant to section 953(d) to
be subject to U.S. income tax as if it were
a U.S. insurance company is not a U.S.
person.
(133)U.S. source FDAP income.The
termU.S. source FDAP incomehas the
meaning set forth in §1.1473–1(a)(2).
(134)U.S. territory.ThetermU.S.
territoryorpossession of the United
Statesmeans American Samoa, Guam, the
Northern Mariana Islands, Puerto Rico, or
the U.S. Virgin Islands.
(135)U.S. withholding agent.Theterm
U.S. withholding agentmeans a withhold-
ing agent that is either a U.S. person or a
U.S. branch of a foreign person.
(136)Withholdable payment.Theterm
withholdable paymenthas the meaning set
forth in §1.1473–1(a).
(137)Withholding.Thetermwithhold-
ingmeans the deduction and remittance of
tax at the applicable rate from a payment.
(138)Withholding agent.Theterm
withholding agenthas the meaning set
forth in §1.1473–1(d).
(139)Withholding certificate.The
termwithholding certificatemeans a Form
W–8, Form W–9, or any other certificate
that under the Code or regulations certifies
or establishes the chapter 4 status of a
payee or beneficial owner.
(140)WP.ThetermWPorwithholding
foreign partnershipmeans a foreign part-
nership that has executed the agreement
described in §1.1441–5(c)(2)(ii).
(141)Written statement.Thetermwrit-
ten statementhas the meaning set forth in
§1.1471–3(c)(4).
(142)WT.ThetermWTorwith-
holding foreign trustmeans a foreign
grantor trust or foreign simple trust that
2013–15 I.R.B.809April 8, 2013

has executed the agreement described in
§1.1441–5(e)(5)(v).
(c)Effective/applicability date.This
section applies January 28, 2013.
Par. 6. Section 1.1471–2 is added to
read as follows:
§1.1471–2 Requirement to deduct and
withhold tax on withholdable payments
to certain FFIs.
(a)Requirement to withhold on pay-
ments to FFIs—(1)General rule of with-
holding.Under section 1471(a), notwith-
standing any exemption from withholding
under any other provision of the Code
or regulations, a withholding agent must
withhold 30 percent of any withholdable
payment made after December 31, 2013,
to a payee that is an FFI unless either the
withholding agent can reliably associate
the payment with documentation upon
which it is permitted to rely to treat the
payment as exempt from withholding un-
der 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
obligation. A withholding agent that is
making a payment must determine who the
payee is under §1.1471–3(a) with respect
to that payment and the chapter 4 status
of such payee. See §1.1471–3 for require-
ments for determining the chapter 4 status
of a payee, including additional documen-
tation requirements where 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 description of the
withholding requirements imposed on ter-
ritory financial institutions as withholding
agents under chapter 4. In the case of
a withholdable payment to an NFFE, a
withholding agent is required to determine
whether withholding applies under section
1472 and §1.1472–1. Except as otherwise
provided in the regulations under chapter
4, a withholding obligation arises on the
date a payment is made, as determined
under §1.1473–1(a).
(2)Special withholding rules—(i)Re-
quirement to withhold on payments of
U.S. source FDAP income to participating
FFIs that are NQIs, NWPs, or NWTs.A
withholding agent that, after December
31, 2013, makes a payment of U.S. source
FDAP income to a participating FFI or
reporting Model 1 FFI that is an NQI re-
ceiving the payment as an intermediary,
NWP, or NWT must withhold 30 percent
of the payment unless the withholding
is reduced under this paragraph (a)(2)(i).
A withholding agent is not required to
withhold on a payment, or portion of a
payment, that it can reliably associate, in
the manner described in §1.1471–3(c)(2),
with a valid intermediary or flow-through
withholding certificate that meets the re-
quirements of §1.1471–3(d)(4) and an FFI
withholding statement that meets the re-
quirements of §1.1471–3(c)(3)(iii)(B)(1)
and (2) and that allocates the payment or
portion of the payment to payees for which
no withholding is required under chapter
4. Further, a withholding agent is not re-
quired to withhold on a payment that it can
reliably associate with documentation in-
dicating 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 December 31, 2013, is required to
withhold on such payment to the extent
required under chapter 4. Notwithstand-
ing the previous sentence, an intermedi-
aryorflow-throughentityisnotrequired
to withhold if another withholding agent
has withheld the full amount required. Fur-
ther, an NQI, NWP, or NWT is not required
to withhold with respect to a withholdable
payment under chapter 4 if it has provided
a valid intermediary withholding certifi-
cate or flow-through withholding certifi-
cate and all of the information required 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 withhold and report is de-
termined in accordance with its QI with-
holding agreement, WP agreement, or WT
agreement.
(iii)Requirement to withhold if a par-
ticipating FFI or registered deemed-com-
pliant FFI makes an election to be with-
held upon. A person that otherwise would
be a payee with respect to a payment but
that makes an election to be withheld upon
does not agree to accept primary withhold-
ing responsibility for the payment under
chapter 3 or 4. Accordingly, such person
cannot be treated as the payee and the with-
holding agent must determine whether it
must withhold based on the chapter 4 sta-
tus of the payee on whose behalf the person
is receiving the payment. The election to
be withheld upon is only available to the
extent provided in paragraph (a)(2)(iii)(A)
and (B) of this section. The election is
not available to an entity that is required
to accept primary withholding responsibil-
ity for the payment, such as a WP or WT
receiving a payment of U.S. source FDAP
income, or an entity that already must be
withheld upon because it may not accept
primary withholding responsibility for the
payment and, as such, already must pass up
documentation with respect to the payee to
the withholding agent, such as a participat-
ing FFI that is an NQI receiving a payment
of U.S. source FDAP income.
(A)Election to be withheld upon for
U.S. source FDAP income. A withhold-
ing agent is required to withhold with re-
spect to a payment, or portion of a pay-
ment, that is U.S. source FDAP income
subject to withholding that is made af-
ter December 31, 2013, to a QI that has
elected in accordance with this paragraph
to be withheld upon. In such case, the
withholding agent must withhold 30 per-
cent of the portion of the payment that is
allocable, pursuant to a withholding state-
ment described in §1.1471–3(c)(3)(iii)(B)
provided by the QI, torecalcitrant account
holders and nonparticipating FFIs. If no
such allocation information is provided,
the withholding agent must apply the pre-
sumption rules of §1.1471–3(f) to deter-
mine the chapter 4 status of the payee. A
QI that is an FFI and that makes the elec-
tion to be withheld upon with respect to
a payment of U.S. source FDAP income
may not assume primary withholding re-
sponsibility under chapter 3 for that pay-
ment. Conversely, a QI that is an FFI
and that does not make the election to be
withheld upon with respect to a payment
of U.S. source FDAP income is required
to assume primary withholding responsi-
bility under chapter 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—
April 8, 20138102013–15 I.R.B.

(1) The withholding agent is a partici-
pating FFI, reporting Model 1 FFI, QI, or
a U.S. withholding agent;
(2) The person who receives the pay-
ment is a participating FFI or registered
deemed-compliant FFI that acts as a QI
with respect to the payment and that is not
a QI branch of a U.S. financial institution;
(3) The person who receives the pay-
ment provides the withholding agent, at
or before the time of the payment, with a
valid intermediary withholding certificate
with respect to the payment that notifies
the withholding agent that it has elected to
be withheld upon, certifies that it is not as-
suming primary withholding responsibil-
ity under chapter 3, and designates whether
such election is made for all accounts held
with the withholding agent or for the spe-
cific accounts identified on the withhold-
ing certificate; and
(4) The intermediary withhold-
ing certificate is accompanied by a
withholding statement described in
§1.1471–3(c)(3)(iii)(B).
(B)Election to be withheld upon for
gross proceeds. [Reserved].
(iv)Withholding obligation of a terri-
tory financial institution. A territory fi-
nancial institution is a withholding agent
with respect to a withholdable payment if it
is a withholding agent under §1.1473–1(d)
with respect to such payment. A territory
financial institution that is a flow-through
entity or that acts as an intermediary with
respect to a withholdable payment has an
obligation to withhold if it agrees to be
treated as a U.S. person with respect to
the payment for purposes of both chap-
ter 4 and §1.1441–1(b)(2)(iv)(A). A ter-
ritory financial institution that is a flow-
through entity or that acts as an interme-
diary with respect to a withholdable pay-
ment is not required to withhold under
paragraph (a)(1) of this section, however,
if it has provided the withholding agent
that is a U.S. withholding agent, partici-
pating FFI, reporting Model 1 FFI, or QI
with all of the documentation described in
§1.1471–3(c)(3)(iii) (in which it has not
agreed to be treated as a U.S. person with
respect to the payment), and it does not
know, or have reason to know, that another
withholding agent failed to withhold the
correct amount or failedto report the pay-
ment correctly under §1.1474–1(d).
(v)Withholding obligation of a foreign
branch of a U.S. financial institution.Gen-
erally, a foreign branch of a U.S. financial
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 participating FFI or a
registered deemed-compliant FFI. Accord-
ingly, a QI branch of a U.S. financial in-
stitution must withhold in accordance with
this section in addition to meeting its obli-
gations under either §1.1471–4(b) and its
FFI agreement or §1.1471–5(f). Similarly,
a foreign branch of a U.S. financial insti-
tution that is also a reporting Model 1 FFI
is both a withholding agent and a regis-
tered deemed-compliantFFI. Accordingly,
a foreign branch of a U.S. financial insti-
tution that is a reporting Model 1 FFI must
withhold in accordancewith this section.
A foreign branch of a U.S. financial insti-
tution that is not a QI is not permitted to
make an election to be withheld upon.
(vi)Payments of gross proceeds.[Re-
served].
(3)Coordination of withholding under
sections 1471(a) and (b). The following
entities are deemed to satisfy their with-
holding obligations under section 1471(a)
and this section: participating FFIs that
comply with the withholding requirements
of §1.1471–4(b); exempt beneficial own-
ers; section 501(c) entities described in
§1.1471–5(e)(5)(v); and nonprofit organi-
zations described in §1.1471–5(e)(5)(vi).
See §1.1471–5(f) for when a deemed-com-
pliant FFI is deemed to satisfy its with-
holding obligations under section 1471(a)
and this section.
(4)Payments for which no withholding
is required. A withholding agent that has
determined, in accordance with the doc-
umentation requirements and other rules
provided in §1.1471–3, that the payee of
a withholdable payment is a foreign en-
tity must determine whether the payment
is exempt from withholding. Paragraphs
(a)(4)(i) through (viii) of this section de-
scribe the circumstances in which a with-
holdable payment is not subject to with-
holding under section 1471(a) and this sec-
tion.
(i)Exception to withholding if the with-
holding agent lacks control, custody, or
knowledge—(A)In general. A withhold-
ing agent that is not related to the payee
or beneficial owner has an obligation to
withhold under section 1471 only to the
extent that, at any time between the date
that the obligation to withhold would arise
(but for the provisions of this paragraph
(a)(4)(i)) and the due date for filing the re-
turn on Form 1042 (including extensions)
for the year in which the payment occurs,
it has control over or custody of money
or property owned by the payee or ben-
eficial owner from which to withhold an
amount and has knowledge of the facts that
give rise to the payment. The exemption
from the obligation to withhold under this
paragraph (a)(4)(i) does not apply, how-
ever, to payments with respect to stock or
other securities or if the lack of control or
custody of money or property from which
to withhold is part of a pre-arranged plan
known to the withholding agent to avoid
withholding under section 1471 or 1472.
A withholding agent does not lack con-
trol over money or property for purposes
of this paragraph (a)(4)(i) if the withhold-
ing agent directs another party to make
the payment. Thus, for example, a prin-
cipal does not cease to have control over
a payment when it contracts with a pay-
ing agent to make the payments to its ac-
count holders in lieu of paying the ac-
count holders directly. Further, a with-
holding agent does not lack knowledge of
the facts that give rise to a payment merely
because the withholding agent does not
know the character or source of the pay-
ment for U.S. tax purposes. See paragraph
(a)(5) of this section for rules addressing a
withholding agent’s obligations when the
withholding agent has knowledge of the
facts that give rise to the payment, but the
character or source of the payment is not
known. For purposes of this paragraph
(a)(4)(i), a withholding agent is related to
the payee or beneficial owner if it is re-
latedwithinthemeaningofsection482.
Any exemption from withholding pursuant
to this paragraph (a)(4)(i) applies with-
out a requirement that documentation be
furnished to the withholding agent. The
special rules set forth in §1.1441–2(d)(2)
through (4), regarding the obligation of a
withholding agent with respect to cancella-
tion of debt, the satisfaction of a tax liabil-
ity following underwithholding by a with-
holding agent, and amounts described in
§1.860G–3(b)(1) (regarding certain part-
nership allocations of REMIC net income
with respect to a REMIC residual interest)
also apply for purposes of chapter 4.
(B)Example. A, an individual, owns stock in DC,
a domestic corporation, through a custodian, Bank 1,
that is a participating FFI. A also has a money mar-
2013–15 I.R.B.811April 8, 2013

ket account at Bank 2, which is also a participating
FFI. DC pays a dividend of $1,000 that is deposited in
A’s custodial account at Bank 1. A then directs Bank
1 to transfer $1,000 to A’s money market account at
Bank 2. With respect to the payment of the dividend
into A’s custodial account with Bank 1, both DC and
Bank 1 are withholding agents making a withhold-
able payment for which they have custody, control,
and knowledge. See §1.1473–1(a)(2)(vii)(B) and (d).
Therefore, both DC and Bank 1 have an obligation to
withhold on the payment unless they can reliably as-
sociate the payment with documentation sufficient to
treat the respective payeesas not subject to withhold-
ing under chapter 4. With respect to the wire transfer
of $1,000 from A’s account at Bank 1 to A’s account
at Bank 2, neither Bank 1 nor Bank 2 is required to
withhold with respect to the transfer because neither
bank has knowledge of the facts that gave rise to the
payment. Even though Bank 1 is a custodian with
respect to A’s interest in DC and has knowledge re-
garding the $1,000 dividend paid to A, once Bank 1
credits the $1,000 dividend to A’s account, the $1,000
becomes A’s property. When A transfers the $1,000
to its account at Bank 2, this constitutes a separate
payment about which Bank 1 has no knowledge re-
garding the type of payment made. Further, Bank 2
only has knowledge that it receives $1,000 to be cred-
ited to A’s account but has no knowledge regarding
the type of payment made. Accordingly, Bank 1 and
Bank 2 have no withholding obligation with respect
to the transfer from A’s custodial account at Bank 1
to A’s money market account at Bank 2.
(ii)Exception to withholding for cer-
tain payments made prior to January 1,
2016 (transitional)—(A)In general.For
any withholdable payment made prior to
January 1, 2016, with respect to a preex-
isting obligation for which a withholding
agent does not have documentation indi-
cating the payee’s status as a nonpartici-
pating FFI, the withholding agent is not re-
quired to withhold under this section and
section 1471(a) unless the payee is aprima
facieFFI.
(B)Prima facie FFIs.If the payee is
aprima facieFFI, the withholding agent
must treat the payee as a nonparticipating
FFI beginning on July 1, 2014, until the
date the withholding agent obtains docu-
mentation sufficient to establish a different
chapter 4 status of the payee. Aprima fa-
cie FFImeans any payee if—
(1) The withholding agent has available
as part of its electronically searchable in-
formation a designation for the payee as a
QI or NQI; or
(2) For an account maintained in the
United States, the payee is presumed to
be a foreign entity under §1.1471–3(f) or
is documented as a foreign entity for pur-
poses of chapter 3 or 61, and the with-
holding agent has recorded as part of its
electronically searchable information one
of the following North American Industry
Classification System or Standard Indus-
trial Classification codes indicating that
the payee is a financial institution:
(i) Commercial Banking (NAICS
522110).
(ii) Savings Institutions (NAICS
522120).
(iii) Credit Unions (NAICS 522130).
(iv) Other Depositary Credit Intermedi-
ation (NAICS 522190).
(v) Investment Banking and Securities
Dealing (NAICS 523110).
(vi) Securities Brokerage (NAICS
523120).
(vii) Commodity Contracts Dealing
(NAICS 523130).
(viii) Commodity Contracts Brokerage
(NAICS 523140).
(ix) Miscellaneous Financial Invest-
ment Activities (NAICS 523999).
(x) Open-End Investment Funds
(NAICS 525910).
(xi) Commercial Banks, NEC (SIC
6029).
(xii) Branches and Agencies of Foreign
Banks (branches) (SIC 6081).
(xiii) Foreign Trade and International
Banking Institutions (SIC 6082).
(xiv) Asset-Backed Securities (SIC
6189).
(xv) Security & Commodity Brokers,
Dealers, Exchanges & Services (SIC
6200).
(xvi) Security Brokers, Dealers & Flota-
tion Companies (SIC 6211).
(xvii
) Commodity Contracts Brokers &
Dealers (SIC 6221).
(xviii) Unit Investment Trusts,
Face-Amount Certificate Offices, and
Closed-End Management Investment Of-
fices (SIC 6726).
(iii)Payments to a participating FFI.
Except to the extent provided in paragraph
(a)(2)(i) of this section, a withholding
agent is not required to withhold under
section 1471(a) and this section on a
withholdable payment made to a payee
that the withholding agent can treat as
a participating FFI in accordance with
§1.1471–3(d)(3). For this purpose, a lim-
ited branch of a participating FFI is treated
as a nonparticipating FFI.
(iv)Payments to a deemed-compliant
FFI. Except to the extent provided in para-
graph (a)(2)(i) or (iii) of this section, a
withholding agent is not required to with-
hold under section 1471(a) and this sec-
tion on a withholdable payment made to
a payee that the withholding agent can
treat as a deemed-compliant FFI in accor-
dance with §1.1471–3(d)(4) through (7).
For this purpose, a limited branch of a
deemed-compliant FFI is treated as a non-
participating FFI.
(v)Payments to an exempt beneficial
owner. A withholding agent is not re-
quired to withhold under section 1471(a)
and this section on a withholdable payment
to the extent that the withholding agent
can reliably associate the payment with
documentation to determine the portion of
the payment that is allocable to an ex-
empt beneficial owner in accordance with
§1.1471–3(d)(8). For example, a with-
holding agent is not required to withhold
under this section on a withholdable pay-
ment made to a payee that is an exempt
beneficial owner with respect to the pay-
ment, to a nonparticipating FFI to the ex-
tent that the nonparticipating FFI receives
the payment as an intermediary on be-
half of one or more of its account hold-
ers that are exempt beneficial owners, or
to a flow-through entity to the extent that
the flow-through entity receives the pay-
ment with respect to one or more of its
partners, beneficiaries, or owners (as ap-
plicable) that are exempt beneficial own-
ers. See §1.1471–3(d)(8)(ii) for special
rules for a withholding agent to determine
the portion of a withholdable payment that
is beneficially owned by an exempt bene-
ficial owner in the case of a payment made
to a nonparticipating FFI.
(vi)Payments to a territory finan-
cial institution. A withholding agent is
not required to withhold under section
1471(a) and this section on a withhold-
able payment made to a payee that the
withholding agent can treat as a terri-
tory financial institution that beneficially
owns the payment in accordance with
§1.1471–3(d)(10)(i). A withholding agent
also is not required to withhold under
this section on a withholdable payment
that the withholding agent can treat, in
accordance with §1.1471–3(d)(10)(ii), as
made to a territory financial institution
that is a flow-through entity or that acts
as an intermediary with respect to the
payment and that has agreed to be treated
as a U.S. person for purposes of chapters
3and4withrespecttothepayment. A
territory financial institution’s agreement
to be treated as a U.S. person for pur-
April 8, 20138122013–15 I.R.B.

poses of this section must be evidenced
by a withholding certificate described in
§1.1471–3(c)(3)(iii)(F) furnished by the
territory financial institution to the with-
holding agent.
(vii)Payments to an account held with
a clearing organization with FATCA-com-
pliant membership. [Reserved].
(viii)Payments to certain excepted
accounts. A withholding agent is not re-
quired to withhold under section 1471(a)
and this section on a withholdable pay-
ment made to an account described in
§1.1471–5(b)(2).
(5)Withholding requirements if source
or character of payment is unknown—(i)
General rule. If a withholding agent has
knowledge of the facts that give rise to a
payment but is unable to determine at the
time of payment the character of the pay-
ment sufficiently to determine whether it
is a withholdable payment, such payment
must be treated as a withholdable payment.
If a withholding agent has knowledge of
thefactsthatgiverisetoapaymentbutis
unable to determine at the time of payment
the source of the payment, such payment
must be treated as U.S. source income. For
example, if a withholding agent does not
know at the time of payment the amount
of the payment that is a withholdable pay-
ment, because that calculation depends on
facts that are not known at the time of pay-
ment (for example, because the withhold-
ing agent does not know whether services
were performed in the United States or
whether the payment constitutes income to
the recipient) the withholding agent must
withhold an amount necessary to ensure
that the amount withheld is not less than 30
percent of the amount that could be a with-
holdable payment, subject to the limitation
that the withheld amount must not exceed
30 percent of the amount paid. Notwith-
standing this paragraph (a)(5), a withhold-
ing agent may presume a payment to be
effectively connected with the conduct of
a trade or business in the United States,
and thus, not a withholdable payment, if it
can do so under §1.1471–3(f)(6) (regard-
ing payments to certain U.S. branches).
(ii)Optional escrow procedure.With
respect to a payment described in para-
graph (a)(5) of this section, the withhold-
ing agent may elect to retain 30 percent
of the payment to hold in escrow until the
earlier of the date that the amount of the
withholdable payment can be determined
or one year from the date the amount is
placed in escrow, at which time either the
withholding becomes due under this sec-
tion or, to the extent that it is determined
that the payment is of a type for which
no withholding is required, the escrowed
amount must be paid to the payee.
(b)Grandfathered obligations—(1)
Grandfathered treatment of outstand-
ing obligations.Notwithstanding
§1.1473–1(a), a withholdable payment
does not include any payment made under
a grandfathered obligation described in
paragraph (b)(2)(i)(A) of this section, or
any gross proceeds from the disposition
of such an obligation. Notwithstanding
§1.1471–5(h), a foreign passthru payment
does not include any payment made un-
der a grandfathered obligation described
in paragraph (b)(2)(i)(A) or (B) of this
section, or any gross proceeds from the
disposition of such an obligation. A pre-
mium paid with regard to an insurance
contract or annuity contract that is a grand-
fathered obligation is treated as a payment
made under a grandfathered obligation.
(2)Definitions. The following defini-
tions apply solely for purposes of this para-
graph (b).
(i)Grandfathered obligation—(A) The
termgrandfathered obligationmeans—
(1) Any obligation outstanding on Jan-
uary 1, 2014;
(2) Any obligation that gives rise to
a withholdable payment solely because
the obligation is treated as giving rise to
a dividend equivalent pursuant to section
871(m) and the regulations thereunder,
provided that the obligation is executed on
or before the date that is six months after
the date on which obligations of its type
are first treated as giving rise to dividend
equivalents; and
(3) Any agreement requiring a secured
party to make a payment with respect to,
or to repay, collateral posted to secure a
grandfathered obligation. If collateral (or
a pool of collateral) secures both grandfa-
thered obligations andobligations that are
not grandfathered, the collateral posted to
secure the grandfathered obligations must
be determined by allocating (pro rata by
value) the collateral (or each item compris-
ing the pool of collateral) to all outstand-
ing obligations secured by the collateral
(or pool of collateral).
(B) Solely for purposes of a foreign
passthru payment, the termgrandfathered
obligationalso includes any obligation
that is executed on or before the date that
is six months after the date on which fi-
nal regulations defining the term foreign
passthru payment are filed with the Fed-
eral Register.
(ii)Obligation—(A) Except as other-
wise provided in paragraph (b)(2)(ii)(B) of
this section, the termobligationmeans any
legally binding agreement or instrument.
An obligation for purposes of this para-
graph (b)(2)(i) includes, for example—
(1) A debt instrument (for example, a
bond, guaranteed investment certificate, or
term deposit);
(2) An agreement to extend credit for a
fixed term (for example, a line of credit or
a revolving credit facility), provided that
the agreement as of its issue date fixes the
material terms (including a stated maturity
date) under which the credit will be pro-
vided;
(3) A derivatives transaction entered
into between counterparties under an
ISDA Master Agreement that is evidenced
by a confirmation;
(4) A life insurance contract under
which the entire contract value is payable
no later than upon the death of the individ-
ual(s) insured under the contract; and
(5) An immediate annuity contract
payable for a period certain or for the life
of the annuitant.
(B) Anobligationfor purposes of this
paragraph (b)(2)(ii) does not include any
legal agreement or instrument that—
(1) Is treated as equity for U.S. tax pur-
poses;
(2) Lacks a stated expiration or term
(for example, a savings deposit or demand
deposit, a deferred annuity contract, or a
life insurance contract or annuity contract
that permits a substitution of a new indi-
vidual as the insured or as the annuitant un-
der the contract);
(3) Is a brokerage agreement, custo-
dial agreement, investment linked insur-
ance contract, investment linked annuity
contract, or similar agreement to hold fi-
nancial assets for the account of others and
to make and receive payments of income
and other amounts with respect to such as-
sets; or
(4) Is a master agreement that merely
sets forth standard terms and conditions
that are intended to apply to a series of
transactions between parties but that does
2013–15 I.R.B.813April 8, 2013

not set forth all of the specific terms nec-
essary to conclude a particular transaction.
(iii)Date outstanding. Except as pro-
vided in the following sentence, an obliga-
tion that constitutes indebtedness for U.S.
tax purposes is outstanding on the date pro-
vided in paragraph (b)(2)(i) if it has an
issue date before such date. In all other
cases, including an agreement described in
paragraph (b)(2)(ii)(A)(2)ofthissection,
an obligation is outstanding on the date
provided in paragraph (b)(2)(i) if a legally
binding agreement establishing the obliga-
tion was executed between the parties to
the agreement before such date. Any ma-
terial modification of an outstanding obli-
gation will result in the obligation being
treated as newly issued or executed as of
the effective date of such modification.
(iv)Material modification. In the case
of an obligation that constitutes indebt-
edness for U.S. tax purposes, a material
modification is any significant modifica-
tion of the debt instrument as defined in
§1.1001–3(e). In all other cases, whether
a modification of an obligation is material
is determined based on the facts and cir-
cumstances.
(3)Application to flow-through enti-
ties—(i)Partnerships. A payment made
under a grandfathered obligation includes
a payment made to a partnership with re-
spect to such obligation and a payment
made with respect to a partnership’s dispo-
sition of such obligation. A payment made
under a grandfathered obligation also in-
cludes the income from such obligation
that is includible in the gross income of a
partner with respect to a capital or profits
interest in the partnership and the gross
proceeds allocated to a partner from the
disposition of such obligation as deter-
mined under §1.1473–1(a)(5)(vii).
(ii)Simple trusts. A payment made un-
der a grandfathered obligation includes a
payment made to a simple trust with re-
spect to such obligation, including a pay-
ment made with respect to a simple trust’s
disposition of such obligation. A pay-
ment made under a grandfathered obliga-
tion also includes income from such obli-
gation that is includible in the income of
a beneficiary and further includes a bene-
ficiary’s share of the gross proceeds from
a disposition of such obligation as deter-
mined under §1.1473–1(a)(5)(vii).
(iii)Grantor trusts. A payment made
under a grandfathered obligation includes
a payment made to a grantor trust with
respect to such obligation, including a
payment made with respect to the trust’s
disposition of such obligation. A payment
made under a grandfathered obligation
also includes income from such obliga-
tion that is includible in the gross income
of a person that is treated as an owner
of the trust and the gross proceeds from
the disposition of such obligation to the
extent such owner is treated as owning
the portion of the trust that consists of the
obligation.
(4)Determination by withholding agent
of grandfathered treatment—(i)In gen-
eral. A withholding agent other than the
issuer of the obligation (or agent of the
issuer) may, absent actual knowledge, rely
on a written statement by the issuer of the
obligation to determine if such obligation
meets the requirements for grandfathered
treatment provided under this paragraph
(b).
(ii)Determination of material mod-
ification. For purposes of paragraph
(b)(2)(iv) of this section (defining mate-
rial modification), a withholding agent is
required to treat a modification of an obli-
gation as material only if the withholding
agent knows or has reason to know that a
material modification has occurred with
respect to the obligation. A withholding
agent, other than the issuer of the obliga-
tion (or agent of the issuer), has reason to
know that a material modification has oc-
curred with respect to an obligation if the
withholding agent receives a disclosure
from the issuer of the obligation stating
that there has been a material modification
to such obligation.
(iii)Record retention. A withholding
agent that relies on a document provided
by the issuer of an obligation as described
in paragraph (b)(4)(i) or (ii) of this section
must retain such document in its records
for the applicable period of limitations on
assessment and collection with respect to
amounts paid under the obligation or from
disposition of the obligation.
(c)Effective/applicability date.This
section generally applies on January 28,
2013. For other dates of applicability, see
§§1.1471–2(a)(1); 1.1471–2(a)(2)(i), (ii),
(iii)(A); 1.1471–2(a)(4)(ii).
Par. 7. Section 1.1471–3 is added to
read as follows:
§1.1471–3 Identification of payee.
(a)Payee defined—(1)In general.Ex-
cept as otherwise provided in this para-
graph (a), for purposes of chapter 4 a payee
is the person to whom a payment is made,
regardless of whether such person is the
beneficial owner of the amount.
(2)Payee with respect to a financial ac-
count. For purposes of payments made to a
financial account and except as otherwise
provided in paragraph (a)(3) of this sec-
tion, the payee is the holder of the financial
account.
(3)Exceptions—(i)Certain foreign
agents or intermediaries—(A) Except
as otherwise provided in paragraphs
(a)(3)(iv) and (vi) of this section (applica-
ble to territory financial institutions and
certain U.S. branches), a foreign person
that is acting as an agent or intermediary
with respect to a payment in accordance
with paragraph (b)(1) of this section is not
the payee if such foreign person is—
(1) An NFFE, unless the NFFE is a QI
that has assumed primary withholding re-
sponsibility; or
(2) In the case of a payment of U.S.
source FDAP income, a participating
FFI, deemed-compliant FFI, or restricted
distributor, unless the participating FFI,
deemed-compliant FFI, or restricted dis-
tributor is a QI that has assumed primary
withholding responsibility.
(B) In the case of an agent or interme-
diary described in paragraph (a)(3)(i)(A)
of this section, the payee is the person or
persons for whom the agent or intermedi-
ary collects the payment. Thus, for ex-
ample, the payee of a payment of U.S.
source FDAP income that the withholding
agent can reliably associate with a with-
holding certificate from a QI that does not
assume primary withholding responsibil-
ity with respect to the payment under chap-
ter 3, or a payment to a participating FFI
that is an NQI, is the person or persons for
whomtheQIorNQIacts.
(ii)Foreign flow-through entity—(A) A
foreign entity that is a flow-through entity
is a payee with respect to a payment only
if the flow-through entity is—
(1) An FFI that is not a participating FFI
or deemed-compliant FFI, or restricted dis-
tributor receiving a payment of U.S. source
FDAP income;
April 8, 20138142013–15 I.R.B.

(2) An excepted NFFE that is not acting
as an agent or intermediary with respect to
the payment;
(3) A WP or WT that is not acting as an
agent or intermediary with respect to the
payment; or
(4) Receiving income that is (or is
deemed to be) effectively connected with
the conduct of a trade or business in the
United States, or receiving a payment of
gross proceeds from the sale of property
that can produce income that is effectively
connected with the conduct of a trade or
business in the United States and that is
excluded from the definition of a with-
holdable payment under §1.1473–1(a)(4).
(B) A withholding agent that makes a
withholdable payment to a flow-through
entity that is not described in paragraphs
(a)(3)(ii)(A)(1) through (3) of this section
will be required to treat the partner, ben-
eficiary, or owner (as applicable) as the
payee (looking through partners, benefi-
ciaries, and owners that are themselves
flow-through entities that are not described
in paragraphs (a)(3)(ii)(A)(1) through (3)).
(iii)U.S. intermediary or agent of a for-
eign person. A withholding agent that
makes a withholdable payment to a U.S.
person and has actual knowledge that the
person receiving the payment is acting as
an intermediary or agent of a foreign per-
son with respect to the payment must treat
such foreign person, and not the intermedi-
ary or agent, as the payee of such payment.
Notwithstanding the previous sentence, a
withholding agent that makes a withhold-
able payment to a U.S. financial institution
that is acting as an intermediary or agent
with respect to the payment on behalf of
one or more foreign persons may treat the
U.S. financial institution as the payee if the
withholding agent does not have reason to
know that the U.S. financial institution will
not comply with its obligations to withhold
under sections 1471 and 1472.
(iv)Territory financial institution.A
withholding agent that makes a withhold-
able payment to a territory financial insti-
tution that is a flow-through entity or is
acting as an intermediary or agent with re-
spect to the payment may treat the territory
financial institution as the payee only if the
territory financial institution has agreed (as
evidenced by a withholding certificate de-
scribed in paragraphs (c)(3)(iii)(A) and (F)
of this section) to be treated as a U.S. per-
son with respect to the payment for pur-
poses of both chapters 3 and 4. In all
other cases, the withholding agent must
treat as the payee the partner, beneficiary,
or owner (as applicable) of the territory fi-
nancial institution that is a flow-through
entity (looking through partners, benefi-
ciaries, and owners that are themselves
flow-through entities that are not described
in paragraphs (a)(3)(ii)(A)(1) through (3))
or the person on whose behalf the territory
financial institution is acting.
(v)Disregarded entity or branch.Ex-
cept as otherwise provided in paragraph
(a)(3)(v) through (vii) of this section, a
withholding agent that makes a withhold-
able payment to an entity that is disre-
garded for U.S. federal tax purposes un-
der §301.7701–2(c)(2)(i) of this chapter as
an entity separate from its single owner
must treat the single owner as the payee.
Notwithstanding the previous sentence, a
withholding agent that makes a payment to
a limited branch will be required to treat
the payment as being made to a nonpartic-
ipating 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 regis-
tered 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, however, 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 withholding certificate it may provide
to a withholding agent for purposes of
chapter 4. Accordingly, a U.S. branch
of either a participating FFI or registered
deemed-compliant FFI must furnish a
withholding certificate on a Form W–8
to certify its chapter 4 status (and not a
Form W–9). See also paragraph (f)(6)
for the rules under which a withholding
agent can presume a payment constitutes
income that is effectively connected 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
maynotmakeanelectiontobewithheld
upon, as described insection 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 to apply the
due diligence rules applicable to a U.S.
withholding agent in lieu of those other-
wise applicable to a participating FFI. 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)Foreign branch of a U.S. person.
A payment to a foreign branch of a U.S.
person is generally a payment to a U.S.
payee. However, a payment to a foreign
branch of a U.S. financial institution will
be treated as a payment to an FFI if the
foreign branch is a QI that is acting as an
intermediary with respect to the payment.
Therefore, a foreign branch that is a QI will
provide the withholding agent with an in-
termediary withholding certificate and the
withholding agent will report the payment
as having been made to the foreign branch
on a Form 1042–S.
(b)Determination of payee’s status.
Except as otherwise provided in this sec-
tion, a withholding agent must base its
determination of the chapter 4 status of a
payee on documentation that the withhold-
ing agent can reliably associate with such
payment. If a withholding agent makes a
payment to a person that is not the payee,
the withholding agent will be required
to determine the chapter 4 status of each
intermediary or flow-through entity in the
payment chain until the withholding agent
is able to identify the payee. Paragraph (c)
of this section provides rules for when a
withholding agent can reliably associate a
payment with appropriate documentation.
Paragraph (d) of this section provides
documentation requirements applicable
to each class of payees, including excep-
tions for payments made with respect to
offshore obligations or preexisting obli-
gations. Paragraph (e) provides standards
for determining when a withholding agent
will be considered to have reason to know
that a claim of exemption from withhold-
ing is unreliable or incorrect. Paragraph
(f) of this section provides presumptions
that apply for purposes of determining a
payee’s chapter 4 status in the absence of
documentation or if the documentation
provided is unreliable or incorrect.
(1)Determining whether a payment is
received by an intermediary. A withhold-
ing agent must treat the person who re-
ceives a payment as an intermediary if it
can reliably associate the payment with a
valid intermediary withholding certificate
on which the person who receives the pay-
ment claims to be a QI or NQI. A U.S.
2013–15 I.R.B.815April 8, 2013

person’s foreign branch that is acting in
its capacity as a QI is treated as a for-
eign intermediary. A withholding agent
that makes a payment with respect to an
offshore obligation must also treat the per-
son who receives the payment as an inter-
mediary if the person has provided writ-
ten notification, whetherornotsuchnoti-
fication is signed, that it accepts the pay-
ment on behalf of another person or per-
sons. A withholding agent may rely on
the type of certificate furnished as determi-
native of whether the person who receives
the payment is an intermediary, unless the
withholding agent knows or has reason to
know that the certificate is incorrect. For
example, a withholding agent that receives
a beneficial owner withholding certificate
from an FFI may treat the FFI as the ben-
eficial owner unless it has information in
its records that would indicate otherwise or
the certificate contains information that is
not consistent with beneficial owner status
(for example, sub-account numbers that do
not correspond to accounts maintained by
the withholding agent for such person or
names of one or more persons other than
the person submitting the withholding cer-
tificate). If the FFI receives a payment
in part as a beneficial owner and in part
as an intermediary, the withholding agent
may request that the FFI furnish two cer-
tificates, that is, a beneficial owner certifi-
cate for the amounts it receives as a ben-
eficial owner, and an intermediary with-
holding certificate for the amounts it re-
ceives as an intermediary. A withholding
agent that cannot reliably associate a pay-
ment with documentation sufficient to treat
the person who receives the payment as
an intermediary or as other than an inter-
mediary pursuant to this paragraph (b)(1)
must follow the presumption rules set forth
inparagraph(f)(5)ofthissectiontode-
termine whether it must treat the person
who receives the payment as an interme-
diary. A determination that a payment is
made to an intermediary under this para-
graph (b)(1) is not a determination that the
payment can be reliably associated with
documentation. See paragraph (c)(2) of
this section for rules on reliably associat-
ing a payment with documentation if such
payment is made through an intermediary.
(2)Determination of entity type.Aper-
son’s entity classification for purposes of
chapter 4 is the person’s entity classifica-
tion for U.S. federal income tax purposes.
Thus, for example, an entity that is disre-
garded as a legal entity in its country of
organization or an arrangement that does
not have a legal personality and is not a
juridical person in the country in which it
was organized will be treated as an entity
for purposes of chapter 4 if it is an entity
for U.S. federal income tax purposes. A
withholding agent may rely upon a per-
son’s entity classification contained in a
valid Form W–8 or W–9 if the withholding
agent has no reason toknow that the entity
classification is incorrect. A withholding
agent that makes a payment with respect to
an offshore obligation may also rely upon
a written notification provided by the per-
son who receives the payment, regardless
of whether such notification is signed, that
indicates the person’s entity classification
(other than as a QI, WP, or WT) unless
the withholding agent has reason to know
that the entity classification indicated by
the person who receives the payment is in-
correct. A withholding agent may not rely
on a person’s claim of classification other
than as a corporation if the person’s name
indicates that the person is a per se corpo-
ration described in §301.7701–2(b)(8) of
this chapter unless the certificate or writ-
ten statement contains a statement that the
person is a grandfathered per se corpora-
tion described in §301.7701–2(b)(8) and
that its grandfathered status has not been
terminated.
(3)Determination of whether the pay-
ment is made to a QI, WP, or WT. A with-
holding agent may treat the person who re-
ceives 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,
and the form contains the person’s GIIN,
inthecaseofaQIoraWPorWTthatis
an FFI, or the person’s QI-EIN, WP-EIN,
or WT-EIN in the case of a QI, WP, or WT
that is not an FFI.
(4)Determination of whether the payee
is receiving effectively connected income.
A withholding agent may treat a payment
as being made to a payee that is receiving
income that is effectively connected with
a trade or business in the United States,
or gross proceeds from the sale of prop-
erty that can produce income that is ef-
fectively connected with the conduct of a
trade or business in the United States, if
it can reliably associate the payment with
a valid Form W–8ECI described in para-
graph (c)(3)(v) of this section or if it can
do so under the presumption rule in para-
graph (f)(6) of this section.
(c)Rules for reliably associating a
payment with a withholding certificate
or other appropriate documentation—(1)
In general. A withholding agent can re-
liably associate a withholdable payment
with valid documentation if, prior to the
payment, it has obtained (either directly
or through an agent) valid documenta-
tion appropriate to the payee’s chapter
4 status as described in paragraph (d) of
this section, it can reliably determine how
much of the payment relates to the valid
documentation, and it does not know or
have reason to know that any of the in-
formation, certifications, or statements
in, or associated with, the documenta-
tion are unreliable or incorrect. Thus, a
withholding agent cannot reliably asso-
ciate a withholdable payment with valid
documentation provided by a payee to
the extent such documentation appears
unreliable or incorrect with respect to the
claims made, or to the extent that infor-
mation required to allocate all or a portion
of the payment to each payee is unreliable
or incorrect. A withholding agent may
rely on information and certifications con-
tained in withholding certificates or other
documentation without having to inquire
into the truthfulness of the information
or certifications, unless it knows or has
reason to know that the information or
certifications are untrue. A withholding
agent may rely upon the same documen-
tation for purposes of both chapters 3 and
4 provided the documentation is sufficient
to meet the requirements of each chapter.
Alternatively, a withholding agent may
elect to rely upon the presumption rules
of paragraph (f) of this section in lieu of
obtaining documentation from the payee.
(2)Reliably associating a payment
with documentation if a payment is made
through an intermediary or flow-through
entity that is not the payee—(i)In gen-
eral. A withholding agent that makes a
payment to a foreign intermediary or for-
eign flow-through entity that is not the
payee under paragraph (a) of this section
can reliably associate the payment with
valid documentation if, in addition to the
documentation described in paragraph
(d) of this section that is relevant to each
April 8, 20138162013–15 I.R.B.

payee, the withholding agent also has ob-
tained a valid Form W–8IMY, described
in paragraph (c)(3)(iii) of this section,
from the intermediary or flow-through
entity (and, with respect to a payment
made through a chain of intermediaries
or flow-through entities, has received a
valid Form W–8IMY from each inter-
mediary or flow-through entity in that
chain). An intermediary or flow-through
entity that is a participating FFI or reg-
istered deemed-compliant FFI receiving
a payment of U.S. source FDAP income
may, in lieu of providing the withholding
agent with documentation for each payee,
provide pooled allocation information to
the extent and in the manner permitted by
paragraph (c)(3)(iii)(B)(2)ofthissection.
(ii)Exception to entity account docu-
mentation rules for an offshore account of
an intermediary or flow-through entity.In
the case of an offshore account held by an
intermediary or flow-through entity not re-
ceiving a payment of U.S. source FDAP
income, an FFI may, in lieu of obtain-
ing a withholding certificate, reliably asso-
ciate such account with valid documenta-
tion if the FFI has obtained a written state-
ment certifying as to the account holder’s
chapter 4 status and stating that the ac-
count holder is a flow-through entity or is
acting as an intermediary with respect to
the payment. In such case, the interme-
diary or flow-through entity will also be
required to provide the withholding state-
ment that generally accompanies the Form
W–8IMY, designating the payees and the
appropriate amount that should be allo-
cated to each payee, and valid documenta-
tion for each payee. If no such withholding
statement or underlying documentation is
provided, the payment will be treated as
made to a nonparticipating FFI.
(3)Requirements for validity of certifi-
cates—(i)Form W–9. A valid Form W–9,
or a substitute form, must meet the require-
ments prescribed in §31.3406(h)–3 of this
chapter, including the requirement that the
form contain the payee’s name and TIN,
and be signed and dated under penalties
of perjury by the payee or a person au-
thorized to sign for the payee pursuant to
sections 6061 through 6063 and the regu-
lations thereunder. A foreign person, in-
cluding a U.S. branch of a foreign per-
son that is treated as a U.S. person under
§1.1441–1(b)(2)(iv), or a foreign branch of
a U.S. financial institution that is a QI, may
not provide a Form W–9.
(ii)Beneficial owner withholding cer-
tificate (Form W–8BEN). A beneficial
owner withholding certificate includes a
Form W–8BEN (or a substitute form) and
such other form as the IRS may prescribe.
A beneficial owner withholding certificate
is valid only if its validity period has not
expired, it is signed under penalties of
perjury by a person with authority to sign
for the person whose name is on the form,
and it contains—
(A) The person’s name, permanent res-
idence address, and TIN (if required);
(B) A certification that the person is not
a U.S. citizen (if the person is an individ-
ual) or a certification of the country under
the laws of which the person is created, in-
corporated, or governed (for a person other
than an individual);
(C) The entity classification of the per-
son;
(D) The chapter 4 status of the person;
and
(E) Such other information required un-
der paragraph (d) of this section applicable
to the chapter 4 status selected or other-
wise required by the regulations under sec-
tion 1471 or 1472, or by the form or its ac-
companying instructions in addition to, or
in lieu of, the information described in this
paragraph (c)(3)(ii).
(iii)Withholding certificate of an in-
termediary, flow-through entity, or U.S.
branch (Form W–8IMY)—(A)In general.
A withholding certificate of an intermedi-
ary, flow-through entity, or U.S. branch is
valid for purposes of chapter 4 only if it is
furnished on a Form W–8IMY, an accept-
able substitute form, or such other form as
the IRS may prescribe, it is signed under
penalties of perjury by a person with au-
thority 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) The name and permanent residence
address of the person.
(2) The country under the laws of which
the person is created, incorporated, or gov-
erned.
(3) The person’s entity classification for
U.S. tax purposes.
(4) The person’s chapter 4 status.
(5) A GIIN, in the case of a participating
FFI or a registered deemed-compliant FFI
(including a U.S. branch of such an entity),
or an EIN in the case of a QI, WP, or WT
that is not an FFI.
(6) In the case of an intermediary cer-
tificate, a certification that, with respect to
accounts listed on the withholding state-
ment, the intermediary is not acting for its
own account.
(7) With respect to a withholding cer-
tificate of a QI, a certification that it is act-
ing as a QI with respect to the accounts
listed on the withholding statement.
(8) In the case of a participating FFI or
registered deemed-compliant FFI (includ-
ing a U.S. branch of either such entities
that is not treated as a U.S. person) that is
an NQI, NWP, NWT, or a QI that makes an
election to be withheld upon, an FFI with-
holding statement that meets the require-
ments of paragraphs (c)(3)(iii)(B)(1)and
(2)ofthissection.
(9) In the case of a territory financial in-
stitution that does not agree to be treated as
a U.S. person or a U.S. branch that is not
a U.S. branch of a participating FFI, regis-
tered deemed-compliant FFI, or nonpartic-
ipating FFI, a chapter 4 withholding state-
ment that meets the requirements of para-
graphs (c)(3)(iii)(B)(1)and(3)ofthissec-
tion.
(10)InthecaseofanNFFEorcer-
tified deemed-compliant FFI that is an
NQI, NWP, or NWT and is not the payee,
a chapter 4 withholding statement that
meets the requirements of paragraphs
(c)(3)(iii)(B)(1)and(3) of this section.
(11) In the case of a nonparticipating
FFI receiving a payment on behalf of one
or more exempt beneficial owners, an ex-
empt beneficial owner withholding state-
ment that meets the requirements of para-
graphs (c)(3)(iii)(B)(1)and(4)ofthissec-
tion.
(12) Any other information, certifica-
tions, or statements as may be required by
the form or its accompanying instructions
in addition to, or in lieu of, the information
and certifications described in this para-
graph.
(B)Withholding statement—(1)In gen-
eral. A withholding statement forms an
integral part of the withholding certificate
and the penalties of perjury statement pro-
vided on the withholding certificate ap-
plies to the withholding statement as well.
The withholding statement may be pro-
vided in any manner, and in any form, to
which the person submitting the form and
the withholding agent mutually agree, in-
2013–15 I.R.B.817April 8, 2013

cluding electronically. If the withholding
statement is provided electronically, there
must be sufficient safeguards to ensure that
the information received by the withhold-
ing agent is the information sent by the
person submitting the withholding certifi-
cate and the electronic system must doc-
ument all occasions of user access that
result in the submission or modification
of withholding statement information. In
addition, the electronic system must be
capable of providing a hard copy of all
withholding statements provided electron-
ically. The withholding statement must
be updated as often as necessary for the
withholding agent to meet its reporting and
withholding obligations under chapter 4.
A withholding agent will be liable for tax,
interest, and penalties under §1.1474–1(a)
to the extent it does not follow the pre-
sumption rules of paragraph (f) of this sec-
tion 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 withholding agent
that is making a payment for which a with-
holding statement is also required for pur-
poses of chapter 3, may only rely upon
the withholding statement if, in addition
to providing the information required by
paragraph (c)(3)(iii)(B) of this section, the
withholding 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. An FFI withhold-
ing statement must include either pooled
information that indicates the portion of
the payment attributable to U.S. persons,
recalcitrant account holders, nonpartici-
pating FFIs, and any other class of payees
that is not subject to withholding under
chapter 4; or, when payee specific infor-
mation is provided for purposes of chapter
3, an allocation of the payment to each
payee with the payee’s chapter 4 status.
Regardless of whether the FFI withhold-
ing statement provides information on a
pooled basis or on a payee specific basis,
the withholding statement must identify
each intermediary or flow-through entity
that receives the payment on behalf of
a payee with such entity’s chapter 4 sta-
tus and GIIN, when applicable. An FFI
withholding statement must also include
any other information that the withholding
agent reasonably requests in order to fulfill
its obligations under chapter 4.
(3)Special requirements for a chap-
ter 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 that receives
the payment on behalf of the payee, in ac-
cordance with paragraph (d) of this sec-
tion, and any other information the with-
holding agent reasonably requests in or-
der to fulfill its obligations under chapter
4. Notwithstanding the prior sentence, a
chapter 4 withholding statement is permit-
ted to provide pooled allocation informa-
tion with respect to payees that are treated
as nonparticipating FFIs.
(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 withhold-
ing statement must allocate the remainder
of the payment that is not allocated to an
exempt beneficial owner to the nonpartic-
ipating FFI receiving the payment.
(C)Failure to provide allocation infor-
mation. A withholding certificate that fails
to provide allocation information or any
of the required documentation for one or
more of the payees will not be treated as in-
valid with respect to the persons for whom
valid documentation and allocation infor-
mation is properly provided. The portion
of the payment that is not reliably asso-
ciated with underlying documentation or
that is not properly allocated will be treated
in accordance with the presumption rules
set forth in paragraph (f) of this section.
For example, assume a withholding certifi-
cate that is provided by a participating FFI
that is an NQI includes an FFI withholding
statement that indicates that 50 percent of
the payment is allocable to payees that are
exempt for purposes of chapter 4 but does
not allocate the remaining 50 percent of
the payment for purposes of chapter 4. In
such case, the withholding agent may treat
50 percent of the payment as exempt from
chapter 4 and the remaining 50 percent that
was not allocated will be treated, under the
presumption rules set forth in paragraph (f)
of this section, as made to a pool of payees
that are nonparticipating FFIs.
(D)Special rules applicable to a with-
holding certificate of a QI that assumes
primary withholding responsibility under
chapter 3. A QI that assumes primary
withholding responsibility under chapter
3 for a payment may not make an elec-
tion to be withheld upon, as described in
§1.1471–2(a)(2)(iii), with respect to that
payment. Thus, if a QI assumes primary
withholding responsibility under chap-
ter 3 with respect to a payment of U.S.
source FDAP income, in addition to the
other requirements described in paragraph
(c)(3)(iii)(A) of this section, a withholding
agent can reliably associate the payment
with a valid withholding certificate only
when the QI has also indicated on the in-
termediary withholding certificate that it
will assume primary withholding respon-
sibility for that payment for purposes of
chapter 4.
(E)Special rules applicable to a with-
holding certificate of a QI that does not
assume primary withholding responsibility
under chapter 3. A QI that does not as-
sume primary withholding responsibility
under chapter 3 with respect to a payment
of U.S. source FDAP income will be re-
quired to make the election to be withheld
upon with respect to that payment. Thus,
if a QI does not assume primary withhold-
ing responsibility under chapter 3, a with-
holding agent can reliably associate a pay-
ment of U.S. source FDAP income with a
valid withholding certificate only when, in
addition to the other information required
by paragraph (c)(3)(iii)(A) of this section,
the withholding certificate indicates that
the QI does not assume primary withhold-
ing responsibility for that payment for pur-
poses of chapter 4.
(F)Special rules applicable to a with-
holding certificate of a territory financial
April 8, 20138182013–15 I.R.B.

institution that agrees to be treated as a
U.S. person. A withholding agent may re-
liably associate a payment with an inter-
mediary withholding certificate or flow-
through withholding certificate of a ter-
ritory financial institution that agrees to
be treated as a U.S. person if, in addition
to the other informationrequiredbypara-
graph (c)(3)(iii)(A) of this section, the cer-
tificate contains an EIN of the territory fi-
nancial institution and a certification that
the territory financial institution agrees to
be treated as a U.S. person and accepts pri-
mary withholding responsibility with re-
spect to the payment for purposes of both
chapters 3 and 4.
(G)Special rules applicable to a with-
holding certificate of a territory financial
institution that does not agree to be treated
as a U.S. person. A withholding agent
may reliably associate a payment with an
intermediary withholding certificate or a
flow-through withholding certificate of a
territory financial institution that does not
agree to be treated as a U.S. person if,
in addition to the information required by
paragraph (c)(3)(iii)(A) of this section, the
certificate indicates thatthe institution has
not agreed to be treated as a U.S. person
for purposes of chapter 4 and the institu-
tion provides a withholding statement de-
scribed in paragraphs (c)(3)(iii)(B)(1)and
(3) of this section.
(H)Special rules applicable to a with-
holding certificate of a U.S. branch treated
as a U.S. person. A withholding agent may
reliably associate a payment with a with-
holding certificate of a U.S. branch that is
treated as a U.S. person for purposes of
§1.1441–1(b)(2)(iv) if, in addition to the
other information required by paragraph
(c)(2)(iii)(A) of this section; the certifi-
cate contains the EIN of the U.S. branch;
the GIIN of the U.S. branch; and a certi-
fication that the U.S. branch is described
in paragraph §1.1441–1(b)(2)(iv) and, ac-
cordingly, is required to accept primary
withholding responsibility with respect to
the payment for purposes of both chapters
3 and 4.
(iv)Certificate for exempt status (Form
W–8EXP). A Form W–8EXP is valid only
if it contains the name, address, and chap-
ter 4 status of the payee, the relevant certi-
fications or documentation, and any other
requirements indicated in the instructions
to the form, and is signed under penalties
of perjury by a person with authority to
sign for the payee.
(v)Certificate for effectively connected
income (Form W–8ECI).AFormW–8ECI
is valid only if, in addition to meeting
the requirements in the instructions to the
form, it contains the name, address, and
TIN of the payee (other than a GIIN), rep-
resents that the amounts for which the cer-
tificate is furnished are effectively con-
nected with the conduct of a trade or busi-
ness in the United States and are includable
in the payee’s gross income for the taxable
year (or are gross proceeds from the sale
of property that can produce income that is
effectively connectedwith the conduct of a
trade or business in the United States), and
is signed under penalties of perjury by a
person with authority to sign for the payee.
(4)Requirements for written state-
ments. A written statement is a statement
by the payee, or other person receiving
the payment, that provides the person’s
chapter 4 status and any other information
reasonably requested by the withholding
agent to fulfill its obligations under chap-
ter 4 with respect to the payment, such as
whether the person is receiving the pay-
ment as a beneficial owner, intermediary,
or flow-through entity. A written state-
ment is valid only if it is provided by a
person with respect to an offshore obli-
gation, contains the name of the person,
the person’s address, the certifications rel-
evant to the person’s chapter 4 status (as
contained on a withholding certificate),
any additional information required with
respect to the chapter 4 status claimed as
provided under paragraph (d) of this sec-
tion (for example, a GIIN), and a signed
and dated certification that the informa-
tion provided on the form is accurate and
will be updated by the individual within
30 days of a change in circumstances that
causes the form to become incorrect. A
written statement may be submitted in any
form that is acceptable to the withholding
agent, including a statement made as part
of the account opening documentation. A
writtenstatementmaybeusedinlieuofa
withholding certificate only to the extent
provided under §1.1471–3(d), as applica-
ble to the chapter 4 status claimed.
(5)Requirements for documentary ev-
idence. Documentary evidence with re-
spect to a payee is only reliable if it con-
tains sufficient information to support the
payee’s claim of chapter 4 status.
(i)Foreign status. Acceptable docu-
mentary evidence supporting a claim of
foreign status includes the following types
of documentation if the documentation
contains a permanent residence address
for the person named on the documenta-
tion (or indicates the country in which a
person that is an individual is a resident or
citizen or the country in which a person
that is an entity has apermanent residence
or is incorporated or organized, if the
withholding agent has otherwise obtained
a current permanent residence address for
the person)—
(A)Certificate of residence. A certifi-
cate of residence issued by an appropri-
ate tax official of the country in which the
payee claims to be a resident that indicates
that the payee has filed its most recent in-
come tax return as a resident of that coun-
try;
(B)Individual government identifica-
tion. With respect to an individual, any
valid identification issued by an authorized
government body (for example, a govern-
ment or agency thereof, or a municipality),
that is typically used for identification pur-
poses;
(C)QI documentation. With respect
to an account maintained in a jurisdic-
tion with anti-money laundering rules that
have been approved by the IRS in connec-
tion with a QI agreement (as referenced
in §1.1441–1(e)(5)(iii)), any of the docu-
ments other than a Form W–8 or W–9 ref-
erenced in the jurisdiction’s attachment to
the QI agreement for identifying individu-
als or entities;
(D)Entity government documentation.
With respect to an entity, any official docu-
mentation issued by an authorized govern-
ment body (for example, a government or
agency thereof, or a municipality); and
(E)Third-party credit report.Forapay-
ment made with respect to an offshore obli-
gation to an individual, a third-party credit
report that is obtained pursuant to the con-
ditions described in §1.1471–4(c)(4)(ii).
(ii)Chapter 4 status. Acceptable doc-
umentary evidence supporting an entity’s
claim of chapter 4 status includes—
(A)General documentary evidence.
With respect to an entity other than a par-
ticipating FFI or registered deemed-com-
pliant FFI, any organizational document
(such as articles of incorporation or a
trust agreement), financial statement,
third-party credit report, letter from a
2013–15 I.R.B.819April 8, 2013

government agency, or statement from a
government website, agency, or registrar
(such as an SEC report) to the extent per-
mittedinparagraphs(d)and(e)ofthis
section;
(B)Preexisting account documentary
evidence. With respect to a preexisting
obligation of an entity, any standardized
industry code or any classification in the
withholding agent’s records with respect
to the payee that was determined based
on documentation supplied by the payee
(or other person receiving the payment)
and that was recorded by the withholding
agent by the later of January 1, 2012, or
six months after the date the withholding
agent was formed or organized, to the ex-
tent permitted by paragraph (d) of this sec-
tion and provided there is no U.S.indicia
associated with the payee for which appro-
priate curing documentation has not been
obtained as set forth in paragraph (e) of this
section; and
(C)Payee-specific documentary evi-
dence. A letter from an auditor or attorney
with a location in the United States that
is not related to the withholding agent or
payee and is subject to the authority of a
regulatory body that governs the auditor’s
or attorney’s review of the chapter 4 sta-
tus of the payee, any bankruptcy filing,
corporate resolution, copy of a stock mar-
ket index or other document to the extent
permitted in the specific payee documen-
tation requirements in paragraph (d) and
(e)ofthissection.
(6)Applicable rules for withholding
certificates, written statements, and docu-
mentary evidence. The provisions in this
paragraph (c)(6) describe standards gener-
ally applicable to withholding certificates
(Forms W–8 or substitute forms), written
statements, and documentary evidence
furnished to establish the payee’s chapter
4 status. These provisions do not apply to
Forms W–9 (or their substitutes). For cor-
responding provisions regarding the Form
W–9 (or a substitute Form W–9), see sec-
tion 3406 and the regulations thereunder.
(i)Who may sign the withholding cer-
tificate or written statement. A withhold-
ing certificate (including an acceptable
substitute) or written statement 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 or written statement, as pro-
vided in sections 6061 through 6063 and
the regulations thereunder. A person au-
thorized to sign a withholding certificate
or written statement includes an officer
or director of a corporation, a partner of
a partnership, a trustee of a trust, an ex-
ecutor of an estate, any foreign equivalent
of the former titles, and any other person
that has been provided written authoriza-
tion by the individual or entity named on
the certificate or written statement to sign
documentation on such person’s behalf.
(ii)Period of validity—(A)General
rule. Except as provided otherwise in
paragraphs (c)(6)(ii)(B) and (C), a with-
holding certificate or written statement
will remain valid until the last day of the
third calendar year following the year
in which the withholding certificate or
written statement is signed. Documen-
tary evidence is generally valid until the
last day of the third calendar year follow-
ing the year in which the documentary
evidence is provided to the withholding
agent. Nevertheless, documentary evi-
dence that contains an expiration date may
be treated as valid until that expiration
date if doing so would provide a longer pe-
riod of validity than the three-year period.
Notwithstanding the validity periods per-
mitted by paragraphs (c)(6)(ii)(A) through
(D) of this section, a withholding certifi-
cate, written statement, and documentary
evidence will cease to be valid if the with-
holding agent has knowledge of a change
in circumstances that makes the infor-
mation on the documentation incorrect.
Therefore, a withholding agent is required
to institute procedures to ensure that any
change to the customer master files that
constitutes a change in circumstances de-
scribed in paragraph (c)(6)(ii)(E) of this
section is identified by the withholding
agent. In addition, a withholding agent is
required to notify any person providing
documentation of the person’s obligation
to notify the withholding agent of a change
in circumstances.
(B)Indefinite validity. Notwithstand-
ing paragraph (c)(6)(ii)(A) of this section,
the following certificates (or parts of
certificates), written statements, or docu-
mentary evidence shall remain valid until
the withholding agent has knowledge of
a change in circumstances that makes the
information on the documentation incor-
rect—
(1) A withholding certificate or written
statement provided by a participating FFI
or registered deemed-compliant FFI that
has furnished a valid GIIN that has been
verified by the withholding agent in the
manner set forth in paragraph (e)(3) of this
section;
(2) A beneficial owner withholding cer-
tificate that is provided by an individual
claiming foreign status if the withholding
certificate is furnished with documentary
evidence supporting the individual’s claim
of foreign status and the withholding agent
does not have a current U.S. residence or
U.S. mailing address for the payee and
does not have one or more current U.S.
telephone numbers that are the only tele-
phone numbers the withholding agent has
for the payee;
(3) A beneficial owner withholding cer-
tificate that is provided by an entity de-
scribed in paragraph (c)(6)(ii)(C)(2)ofthis
section if the withholding certificate is fur-
nished with documentary evidence estab-
lishing the entity’s foreign status;
(4) A withholding certificate of an in-
termediary, flow-through entity, or U.S.
branch (not including the withholding cer-
tificates, written statements, or documen-
tary evidence of the payees, or withholding
statements associatedwith the withholding
certificate);
(5) A withholding certificate, writ-
ten statement, or documentary evidence
furnished by a foreign government, gov-
ernment 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; and
(6) Documentary evidence that is not
generally renewed or amended (such as a
certificate of incorporation).
(C)Indefinite validity in the case of cer-
tain offshore obligations. Notwithstanding
paragraph (c)(6)(ii)(A) of this section, the
following certificates, written statements,
and documentary evidence that are pro-
vided with respect to offshore obligations
shall remain valid until a change in circum-
stances occurs that makes the information
on the documentation incorrect—
(1) A withholding certificate or doc-
umentary evidence provided by an indi-
vidual claiming foreign status if the with-
holding agent does not have a current U.S.
residence 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
April 8, 20138202013–15 I.R.B.

has for the payee, and has not been pro-
vided standing instructions to make a pay-
ment in the United States for the obliga-
tion;
(2) A withholding certificate, written
statement, or documentary evidence pro-
vided by one of the following entities if
such entity is the payee—
(i) A retirement fund described in
§1.1471–6(f) or an entity that is wholly
owned by such a retirement fund;
(ii) An excepted nonfinancial group en-
tity described in §1.1471–5(e)(5)(i);
(iii) A section 501(c) entity described in
§1.1471–5(e)(v);
(iv) A non-profit organization described
in §1.1471–5(e)(5)(vi);
(v) A nonreporting IGA FFI;
(vi) A territory financial institution that
agrees to be treated as a U.S. person for
chapter 4 purposes;
(vii) An NFFE whose stock is regularly
traded as described in §1.1472–1(c)(1)(i);
(viii) An NFFE affiliate described in
§1.1472–1(c)(1)(ii);
(ix) An active NFFE that the withhold-
ing agent has determined, through its AML
due diligence, is engaged in a business
other than that of a financial institution,
and ongoing monitoring of the account for
purposes of AML due diligence does not
indicate that the determination is incorrect;
and
(x) A sponsored FFI described in
§1.1471–5(f)(2)(iii);
(3) A withholding certificate of an
owner-documented FFI, but not including
the withholding statements, documentary
evidence, and withholding certificates of
its owners (unless such documentation is
permitted indefinite validity under another
provision);
(4) A withholding statement associ-
ated 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 withhold-
ing agent does not exceed $1,000,000 on
the later of December 31, 2013, 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 December 31, 2013, or
the last 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 know not or have
reason to know that the entity has any con-
tingent beneficiariesor designated classes
with unidentified beneficiaries.
(D)Exception for certificate for effec-
tively connected income. Notwithstanding
paragraphs (c)(6)(ii)(B) to (C) of this sec-
tion, the period of validity of a withholding
certificate furnished toa 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
(c)(6)(ii)(A) of this section.
(E)Change in circumstances—(1)De-
fined. For purposes of this chapter, a
person is considered to have a change in
circumstances only if such change would
affect the chapter 4 status of the person.
A change in circumstances includes any
change that results in the addition of in-
formation described in paragraph (e)(4)
relevant to a person’s claim of foreign
status (that is, U.S.indiciathat is not oth-
erwise cured by documentation on file
and that is relevant to the chapter 4 sta-
tus claimed) or otherwise conflicts with
such person’s claim of chapter 4 status.
Unless stated otherwise, a change of ad-
dress or telephone number is a change in
circumstances for purposes of this para-
graph (c)(6)(ii)(E) only if it changes to an
address or telephone number in the United
States. A change in circumstances affect-
ing the withholding information provided
to the withholding agent, including allo-
cation information or withholding pools
contained in a withholding statement or
owner reporting statement, will terminate
the validity of the withholding certificate
with respect to the information that is no
longer reliable, until the information is
updated.
(2)Obligation to notify withholding
agent of a change in circumstances.If
a change in circumstances makes any
information on a certificate or other docu-
mentation incorrect, then the person whose
name is on the certificate or other docu-
mentation must inform the withholding
agent within 30 days of the change and
furnish a new certificate, a new written
statement, or new documentary evidence.
If an intermediary or a flow-through en-
tity becomes aware that a certificate or
other appropriate documentation it has fur-
nished to the person from whom it collects
a payment is no longer valid because of a
change in the circumstances of the person
who issued the certificate 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 in 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 certificate or new appropri-
ate documentation to replace the existing
certificate or documentation the validity
of which has expired due to the change in
circumstances.
(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
correctness of the certificate or docu-
mentation have changed. However, a
withholding agent may choose to treat a
person as having the same chapter 4 status
that it had prior to the change in circum-
stances until the earlier of 90 days from
the date that the certificate or documenta-
tion became unreliable due to the change
in circumstances or the date that a new
certificate or new documentation is ob-
tained. A withholding agent may rely on
a certificate without having to inquire into
possible changes of circumstances that
may affect the validity of the statement,
unless it knows or has reason to know that
circumstances have changed. A withhold-
ing agent may require a new certificate or
additional documentation at any time prior
to a payment, regardless of whether the
withholding agent knows or has reason to
knowthatanyinformationstatedonthe
certificate or documentation has changed.
(iii)Record Retention—(A)In general.
A withholding agent must retain each
withholding certificate, written statement,
2013–15 I.R.B.821April 8, 2013

or copy of documentary evidence for as
long as it may be relevant to the determina-
tion of the withholding agent’s tax liability
under section 1474(a) and §1.1474–1. A
withholding agent may retain an original,
certified copy, or photocopy (including
a microfiche, electronic scan, or similar
means of electronic storage) of the with-
holding certificate,written statement, or
documentary evidence. With respect to
documentary evidence, the withholding
agent must also note in its records the
date on which the document was received
and reviewed. Any documentation that is
stored electronicallymust be made avail-
able in hard copy form to the IRS upon
request during an examination.
(B)Exception for documentary evi-
dence received with respect to offshore
obligations. A withholding agent that
is making a payment with respect to an
offshore obligation and is not required to
retain copies of documentation reviewed
pursuant to its AML due diligence, may,
in lieu of retaining the documents as set
forth in paragraph (c)(6)(iii)(A), retain
a notation of the type of documentation
reviewed, the date the documentation was
reviewed, the document’s identification
number (if any) (for example, a passport
number), and whethersuch documentation
contained any U.S.indicia.Theprevi-
ous sentence applies with respect to an
offshore obligation that is also a preexist-
ing obligation, except, in such case, the
requirement to record whether the doc-
umentation contained U.S.indiciadoes
not apply. See also §1.1471–4(c)(2)(iv)
for the record retention requirements of a
participating FFI.
(iv)Electronic transmission of with-
holding certificate, written statement, and
documentary evidence. A withholding
agent may accept a withholding certifi-
cate (including an acceptable substitute
form), a written statement, or other such
form as the IRS may prescribe, electroni-
cally in accordance with the requirements
set forth in §1.1441–1(e)(4)(iv). See
§1.1441–1(e)(4)(iv) for procedures for
the electronic transmission of a withhold-
ing certificate that has been completed
and signed with a handwritten signature,
scanned into an electronic system, and
sent to the withholding agent via e-mail.
A withholding certificate (including a sub-
stitute form), written statement, or other
such form prescribed by the IRS may be
accepted by facsimile if the withholding
agent confirms that the individual or entity
furnishing the form is the individual or en-
tity named on the form and the faxed form
contains a signature of the person whose
name is on the form (or such person’s
authorized representative) made under
penalties of perjury in the manner de-
scribed in §1.1441–1(e)(4)(iv)(B)(3)(i). A
withholding agent may also accept a copy
of documentary evidence electronically,
including by facsimile or by e-mail, if the
withholding agent confirms that the per-
son furnishing the documentary evidence
is the person named on the documentary
evidence (or such person’s authorized rep-
resentative) and the copy does not appear
to have been altered from its original form.
(v)Acceptable substitute withholding
certificate—(A)In general. A withhold-
ing agent may substitute its own form for
an official Form W–8 (or such other of-
ficial form as the IRS may prescribe). A
substitute form will be acceptable if it con-
tains provisions that are substantially sim-
ilar to those of the official form, it con-
tains 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 in-
cludes a signature-under-penalties-of-per-
jury statement identical to the one on the
official form. The substitute form is ac-
ceptable 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 ex-
emptions from withholding provided on
the official version but the substitute form
must include any chapter 4 status for which
withholding may apply, such as the cate-
gories for a nonparticipating FFI or pas-
sive 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 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 with-
holding agent may refuse to accept a cer-
tificate from a person (including the offi-
cial Form W–8) if the certificate provided
is not an acceptable substitute form pro-
vided 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 withholding
agent has refused to accept the form sub-
mitted by the person and that the person
must submit the acceptable form provided
by the withholding agent in order for the
person to be treated as having furnished the
required withholding certificate.
(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 ad-
dress of the individual that is the payee or
beneficial owner, the form must provide
all countries in which the individual is res-
ident for tax purposes, city and country of
birth, a tax identification number, if any,
for each country of residence, 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 penal-
ties of perjury if the form is accompanied
by documentary evidence that supports
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.indiciaas
described in paragraph (e) of this section
or §1.1471–4(c)(4)(i)(A). The form may
also request other information required for
purposes of tax or AML due diligence in
the United States or in other countries.
(vi)Electronic confirmation of TIN
on withholding certificate.TheCom-
missioner may prescribe procedures in a
revenue procedure or other appropriate
guidance to require a withholding agent
to confirm electronically with the IRS in-
formation concerning any TIN stated on a
withholding certificate.
April 8, 20138222013–15 I.R.B.

(vii)Reliance on a prior version of
a withholding certificate. Upon the is-
suance by the IRS of an updated version
of a withholding certificate, a withholding
agent may continue to accept the prior ver-
sion of the withholding certificate for six
months after the revision date shown on
the updated withholding certificate, unless
the IRS has issued guidance that indicates
otherwise, and may continue to rely upon
a previously signed prior version of the
withholding certificate until its period of
validity expires.
(7)Curing documentation errors.The
provisions in this paragraph (c)(7) de-
scribe standards generally applicable to
withholding certificates (Forms W–8 or
substitute forms), written statements, and
documentary evidence furnished to estab-
lish the payee’s chapter 4 status. These
provisions do not apply to Forms W–9
(or their substitutes). For corresponding
provisions regarding the Form W–9 (or a
substitute Form W–9), see section 3406
and the regulations thereunder.
(i)Curing inconsequential errors on
a withholding certificate. A withholding
agent may treat a withholding certifi-
cate as valid, notwithstanding that the
withholding certificate contains an in-
consequential error, if the withholding
agent has sufficient documentation on file
to supplement the information missing
from the withholding certificate due to
the error. In such case, the documentation
relied upon to cure the inconsequential
error must be conclusive. For example,
a withholding certificate in which the in-
dividual submitting the form abbreviated
the country of residence may be treated as
valid, notwithstanding the abbreviation,
if the withholding agent has government
issued identification for the person from
a country that reasonably matches the
abbreviation. On the other hand, an abbre-
viation for the country of residence that
does not reasonably match the country of
residence shown on the person’s passport
is not an inconsequential error. A failure
to select an entity type on a withholding
certificate is not an inconsequential er-
ror, even if the withholding agent has an
organization document for the entity that
provides sufficient information to deter-
mine the person’s entity type, if the person
was eligible to make an election under
§301.7701–3(c)(1)(i) of this chapter (that
is, a check-the-box election). A failure to
check a box to make a required certifica-
tion on the withholding certificate or to
provide a country of residence or a country
under which treaty benefits are sought is
not an inconsequential error. In addition,
information on a withholding certificate
that contradicts other information con-
tained on the withholding certificate or in
the customer master file is not an inconse-
quential error.
(ii)Documentation received after the
time of payment. Proof that withhold-
ing was not required under the provisions
of chapter 4 and the regulations thereun-
der also may be established after the date
of payment by the withholding agent on
the basis of a valid withholding certifi-
cate and/or other appropriate documenta-
tion that was furnished after the date of
payment but that was effective as of the
date of payment. A withholding certifi-
cate furnished 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 af-
ter the date of payment, the withholding
agent will be required to obtain, in addi-
tion to the withholding certificate and affi-
davit, documentary evidence described in
paragraph (c)(5)(i) of this section that sup-
ports the individual’s claim of foreign sta-
tus. In the case of a withholding certifi-
cate of an entity 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-
fidavit, documentary evidence specified in
paragraph (c)(5)(ii) of this section that sup-
ports the chapter 4 status claimed. If docu-
mentation other than a withholding certifi-
cate is submitted from a payee more than
a year after the date of payment, the with-
holding agent will be required to also ob-
tain from the payee a withholding certifi-
cate and affidavit supporting the chapter 4
status claimed as of the date of the pay-
ment.
(8)Documentation furnished on ac-
count-by-account basis unless exception
provided for sharing documentation within
expanded affiliated group. Except as oth-
erwise provided in this paragraph (c)(8),
a withholding agent that is a financial
institution with which a customer may
open an account must obtain withhold-
ing certificates, written statements, Forms
W–9, or documentaryevidence on an ac-
count-by-account basis. Notwithstanding
the previous sentence, a withholding agent
may rely upon the withholding certifi-
cate, written statement, or documentary
evidence furnished by a customer under
any one or more of the circumstances de-
scribed in this paragraph (c)(8).
(i)Single branch systems. A withhold-
ing agent may rely on documentation fur-
nished by a customer for another account if
both accounts are held at the same branch
location and both accounts are treated as
consolidated obligations.
(ii)Universal account systems.Awith-
holdingagentmayrelyondocumentation
furnished by a customer for an account
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 with-
holding agent treats all accounts that share
documentation as consolidated obliga-
tions and the withholding agent and the
other branch location or expanded affili-
ated group member are part of a universal
account system that uses a customer iden-
tifier that can be used to retrieve system-
atically all other accounts of the customer.
A withholding agent that opts to rely upon
the chapter 4 status designated for the
payee in the universal account system
without obtaining and reviewing copies of
the documentation supporting the status
must be able to produce all documentation
(or a notation of the documentary evidence
reviewed if the withholding agent is not
required to retain copies of the documen-
tary evidence) relevant to the chapter 4
status claimed upon request by the IRS
and will be liable for any underwithhold-
ing that results from any failure to assign
the correct status based upon the available
information.
(iii)Shared account systems.Awith-
holdingagentmayrelyondocumentation
furnished by a customer for an account
held at another branch location of the
same withholding agent or at a branch
2013–15 I.R.B.823April 8, 2013

location of a member of the expanded
affiliated group of the withholding agent
if the withholding agent treats all accounts
that share documentation as consolidated
accounts and the withholding agent and
the other branch location or expanded
affiliated group member share an informa-
tion system, electronic or otherwise, that is
described in this paragraph (c)(8)(iii). The
system must allow the withholding agent
to easily access data regarding the nature
of the documentation, the information
contained in the documentation (including
a copy of the documentation itself), and
the validity status of the documentation.
The information system must also allow
the withholding agent to easily transmit
data into the system regarding any facts of
which it becomes aware that may affect
the reliability of the documentation. The
withholding agent must be able to estab-
lish, to the extent applicable, how and
when it has transmitted data regarding any
facts of which it became aware that may
affect the reliability of the documentation
andmustbeabletoestablishthatanydata
it has transmitted to the information sys-
tem has been processed and appropriate
due diligence has been exercised regard-
ing the validity of the documentation. A
withholding agent that opts to rely upon
the chapter 4 status designated for the
payee in the shared account system with-
out obtaining and reviewing copies of the
documentation supporting the status must
be able to produce all documentation (or
a notation of the documentary evidence
reviewed if the withholding agent is not
required to retain copies of the documen-
tary evidence) relevant to the chapter 4
status claimed upon request by the IRS
and will be liable for any underwithhold-
ing that results from any failure to assign
the correct status based upon the available
information.
(iv)Document sharing for gross pro-
ceeds. [Reserved].
(9)Reliance on documentation col-
lected by or certifications provided by
other persons—(i)Shared documentation
system maintained by an agent. A with-
holding agent may rely on documentation
collected by an agent(includingafund
advisor for mutual funds, hedge funds, or
a private equity group) of the withholding
agent. The agent may retain the documen-
tationaspartofaninformationsystem
maintained for a single withholding agent
or multiple withholding agents provided
that under the system, any withholding
agent on behalf of which the agent re-
tains documentation may easily access
data regarding the nature of the docu-
mentation, the information contained in
the documentation (including a copy of
the documentation itself) and its validity,
and must allow such withholding agent
to easily transmit data, either directly into
an electronic system or by providing such
information to the agent, regarding any
facts of which it becomes aware that may
affect the reliability of the documentation.
The withholding agent must be able to es-
tablish, to the extent applicable, how and
when it has transmitted data regarding any
facts of which it became aware that may
affect the reliability of the documentation
andmustbeabletoestablishthatany
data it has transmitted has been processed
and appropriate due diligence has been
exercised regarding the validity of the doc-
umentation. The agent must have a system
in effect to ensure that any information it
receives regarding facts that affect the reli-
ability of the documentation or the chapter
4 status assigned to the customer are pro-
vided to all withholding agents for which
the agent retains the documentation and
any chapter 4 status assigned by the agent
is amended to incorporate such informa-
tion. A withholding agent that opts to rely
upon the chapter 4 status assigned by the
agent without obtaining and reviewing
copies of the documentation supporting
thestatusmustbeabletoproducealldoc-
umentation relevant to the chapter 4 status
claimed upon requestby the IRS and will
be liable for any underwithholding that
results from a failure of the agent to assign
the correct status based upon the avail-
able information. See §1.1474–1(a) for a
withholding agent’s liability when it re-
lies upon an agent for chapter 4 purposes.
This paragraph (c)(9)(i) does not apply
to a withholding certificate provided by a
QI, a withholding certificate provided by
a territory financial institution that elects
to be treated as a U.S. person, or any
withholding statement,unless the person
submitting the form specifically identifies
the withholding agents for which the cer-
tificates and/or statements are provided.
(ii)Third-party data providers.A
withholding agent may rely upon docu-
mentation collectedby a third-party data
provider with respect to an entity, subject
to the conditions described in this para-
graph (c)(9)(ii).
(A) The third-party data provider must
have collected documentation that is suffi-
cient to determine the chapter 4 status of
the entity under paragraph (d) of this sec-
tion.
(B) The third-party data provider must
be in the business of providing credit re-
ports or business reports to unrelated cus-
tomers and must have reviewed all infor-
mation it has for the entity and verified that
such additional information does not con-
flict with the chapter 4 status claimed by
the entity.
(C) The third-party data provider must
notify the entity submitting the documen-
tation that such entity must notify the third-
party data provider in the event of a change
in circumstances within 30 days of the
change in circumstances, and the third-
party data provider must be obligated un-
der its contract with the withholding agent
to notify the withholding agent if a change
in circumstances occurs.
(D) The withholding agent may not
rely upon a chapter 4 status provided by a
third-party data provider if the withhold-
ing agent knows or has reason to know
that the chapter 4 status is unreliable or
incorrect based on information in the with-
holding agent’s account records, or if the
documentation or information provided
by the third-party data provider does not
support the chapter 4 status claimed.
(E) The withholding agent must be able
to submit copies of the documentation re-
ceived from the third-party data provider
upon request to the IRS and will remain li-
able for any underwithholding that occurs
as a result of its reliance on information
provided by the third-party data provider if
the documentation is invalid or unreliable.
(F) This paragraph (c)(9)(ii) does not
apply to a withholding statement or a with-
holding certificate that contains an election
to accept withholding or reporting respon-
sibility (such as one made by a QI, territory
financial institution, or U.S. branch) pro-
vided by a third-party data provider.
(iii)Reliance on certification provided
by introducing brokers—(A) A withhold-
ingagentmayrelyonacertificationof
a broker indicating the broker’s determi-
nation of a payee’s chapter 4 status and
indicating that the broker holds valid doc-
umentation sufficient to determine the
payee’s chapter 4 status under paragraph
April 8, 20138242013–15 I.R.B.

(d) of this section with respect to any
readily tradable instrument as defined in
§31.3406(h)–1(d) of this chapter if the
conditions in paragraph (c)(9)(iii)(B) of
this section are satisfied and the broker is
either—
(1) A U.S. person (including a U.S.
branch that is treated as a U.S. person) that
is acting as the agent of the payee; or
(2) A participating FFI or a reporting
Model 1 FFI that is acting as the agent of
the payee with respect to an obligation and
receiving all paymentsfrom the withhold-
ing agent with respect to such obligation as
an intermediary on behalf of the payee.
(B) The certification from the broker
must be in writing or in electronic form and
contain all of the information required of a
chapter 4 withholding statement described
in paragraph (c)(3)(iii)(B)(3). Notwith-
standing this paragraph (c)(9)(iii), a with-
holding agent may not rely upon a certi-
fication provided by a broker if it knows
or has reason to know that the broker has
not obtained valid documentation as rep-
resented or the information contained in
the certification is otherwise inaccurate. A
broker that chooses to provide a certifica-
tion under this paragraph (c)(9)(iii) will be
responsible for applying the rules set forth
in the regulations under section 1471 and
1472 to the withholding certificates, writ-
ten statements, or documentary evidence
obtained from the payee and shall be liable
for any underwithholding that occurs as a
result of the broker’s failure to reasonably
apply such rules.
(iv)Reliance on documentation and
certifications provided between principals
and agents—(A)In general. Subject to
the conditions under §1.1474–1(a)(3), a
withholding agent is permitted to use an
agent to fulfill its chapter 4 obligations
and such agent’s actions are imputed to
the principal. However, an agent that
makes a payment pursuant to an agency
arrangement (paying agent) is also a with-
holding agent with respect to the payment
unless an exception under §1.1473–(d)
applies. Therefore,the paying agent will
have its own obligation to determine the
chapter 4 status of the payee and withhold
upon the payment if required. Although
a paying agent is generally a withholding
agent for purposes of chapter 4, the finan-
cial accounts to which it makes payments
are not necessarily financial accounts of
the paying agent. See the rules under
§1.1471–5(b)(5) to determine when a fi-
nancial institution maintains a financial
account. In addition, the status of a pay-
ment as made with respect to an offshore
obligation or as a preexisting obligation
will be determined based on such obliga-
tion’s status in relation to the principal.
Further, the due diligence required with re-
spect to the payment will be determined by
the status of the principal and not the pay-
ing agent. Consequently, a payment that
is made, for example, by a paying agent
that is a foreign entity on behalf of a prin-
cipal that is a U.S. withholding agent will
be subject to the due diligence applicable
to the principal. See §1.1474–1(a)(3) for
rules regarding the reporting obligations
of a principal and agent in the case of a
payment made by an agent of behalf of a
principal.
(B)Reliance upon certification of the
principal. An agent that makes a pay-
ment on behalf of a principal that it may
treat, pursuant to paragraph (d) of this sec-
tion, as a U.S. withholding agent, partici-
pating FFI, or reporting Model 1 FFI may
rely upon a certification provided by the
principal indicating that the principal has
obtained valid documentation sufficient to
determine the chapter 4 status of the payee
and may rely upon the principal’s determi-
nation as to the payee’s chapter 4 status.
In such a case, the agent will be permitted
to rely upon the certification provided by
the principal when determining whether it
is required to withhold on the payment and
will not be liable for any underwithhold-
ing that occurs as a result of the principal’s
failure to properly determine the chapter 4
status of the payee unless the agent knows
or has reason to know the certification pro-
vided by the principal is inaccurate.
(C)Document sharing. In lieu of ob-
taining a certification from the principal as
described in paragraph (c)(9)(iv)(B) of this
section, or when reliance upon such cer-
tification is not permitted, an agent that
makes a payment on behalf of a princi-
pal may rely upon copies of documentation
provided to the principal with respect to
the payment. However, in such case, both
the principal and the agent are obligated to
determine the chapter 4 status of the payee
based upon the documentation and ensure
that adequate withholding occurs with re-
spect to the payment. While a principal is
imputed the knowledge of the agent with
respect to the payment, the agent is not im-
puted the knowledge of the principal.
(D)Examples—(1)Example 1.Paying agent that
does not collect documentation. A fund, P, that is a
participating FFI contracts with a U.S. person, A, to
make payments to its account holders with respect to
their equity interests in P. P contracts with another
agent, B, to obtain documentation sufficient to de-
termine the chapter 4 status of such account holders.
Based on the documentation it collects, B determines
that none of P’s account holders are subject to with-
holding. P provides a certification to A indicating
that it has obtained documentation sufficient to de-
termine the chapter 4 status of P’s account holders
and that each payee is not subject to withholding un-
der chapter 4. As the actions of B, as P’s agent, are
attributed to P, P may provide a certification to A in-
dicating that it has determined the chapter 4 status of
its payees, even if it is B, and not P, who made the
determinations. However, P will be liable for any un-
derwithholding that results from a failure by B to rea-
sonably apply the rules under chapter 4. A is permit-
ted to rely upon the certification provided by P and,
accordingly, is not required to withhold on the pay-
ments made to P’s account holders and would not be
liable for any underwithholding that results if the de-
terminations made by B are incorrect unless A had
reason to know that chapter 4 status claimed was in-
accurate.
(ii)Example 2.Paying agent that collects docu-
mentation. A fund, P, that is a participating FFI con-
tracts with a U.S. person, A, to make a payment to its
account holders on its behalf. P also contracts with A
to obtain documentation sufficient to determine the
chapter 4 status of P’s account holders. Based on the
documentation it collects, A determines that none of
P’s account holders are subject to withholding. As
the actions of A, as P’s agent, are imputed to P, P will
be liable for any underwithholding that results from
a failure by A to reasonably apply the rules under
chapter 4. P is also required to retain the documenta-
tion upon which A relied in determining the chapter
4 status of its account holders. Because A performed
the due diligence on behalf of P, A will have reason
to know if any of the chapter 4 determinations made
based on the documentation received were made in-
correctly, and, as a withholding agent with respect to
the payment, is liable, in addition to P, for any under-
withholding that results from an incorrect determina-
tion that withholding was not required. This result
applies regardless of whether A retains copies of the
documentation obtained with respect to P’s account
holders or receives a certification from P indicating
that P has obtained documentation sufficient to deter-
mine the chapter 4 status of its account holders and
that each payee is not subject to withholding under
chapter 4.
(v)Reliance upon documentation for
accounts acquired in merger or bulk acqui-
sition for value. A withholding agent that
acquires an account from a predecessor or
transferor in a merger or bulk acquisition
of accounts for value is permitted to rely
upon valid documentation (or copies of
valid documentation) collected by the pre-
decessor or transferor. In addition, a with-
holding agent that acquires an account in a
2013–15 I.R.B.825April 8, 2013

merger or bulk acquisition of accounts for
value, other than a related party transac-
tion, from a U.S. withholding agent, partic-
ipating FFI that has completed all due dili-
gence required under its agreement with
respect to the accounts transferred, or a re-
porting Model 1 FFI that has completed all
due diligence required pursuant to the ap-
plicable Model 1 IGA, may also rely upon
the predecessor’s or transferor’s determi-
nation of the chapter 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 cir-
cumstances occurs. At the end of the tran-
sition period, the acquirer will be permitted
to rely upon the predecessor’s determina-
tion as to the chapter 4 status of the account
holder only if the documentation that the
acquirer has for the account holder, includ-
ing documentation obtained from the pre-
decessor or transferor,supports the chapter
4 status claimed. An acquirer that discov-
ers at the end of the transition period that
the chapter 4 status assigned by the prede-
cessor or transferor to the account holder
was incorrect and, as a result, has not with-
held as it would have been required to but
for its reliance upon the predecessor’s de-
termination, will be required to withhold
on future payments, if any, made to the ac-
count 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 pur-
poses of this paragraph (c)(9)(v), a related
party transaction is a merger or sale of ac-
counts in which the acquirer is in the same
expanded affiliated group as the predeces-
sorortransferoreitherpriortoorafterthe
merger or acquisition or the predecessor or
transferor (or shareholders of the predeces-
sor or transferor) obtain a controlling in-
terest in the acquirer or in a newly formed
entity created for purposes of the merger
or acquisition. See §1.1471–4(c)(2)(ii)(B)
for an additional allowance for a partici-
pating 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)Documentation requirements to es-
tablish payee’s chapter 4 status.Unless
the withholding agent knows or has reason
to know otherwise, a withholding agent
mayrelyontheprovisionsofthispara-
graph (d) to determine the chapter 4 sta-
tus of a payee (or other person that re-
ceives a payment). Except as otherwise
provided in this paragraph (d), a withhold-
ing agent is required to obtain a valid with-
holding certificate or a Form W–9 from a
payee in order to treat the payee as hav-
ing a particular chapter 4 status. Para-
graphs (d)(1) through (12) of this section
indicate when it is appropriate for a with-
holding agent to rely upon a written state-
ment, documentary evidence, or other in-
formationinlieuofaFormW–8orW–9.
Paragraphs (d)(1) through (12) of this sec-
tion also prescribe additional documenta-
tion requirements that must be met in cer-
tain cases in order to treat a payee as hav-
ing a specific chapter 4 status and spe-
cific standards of knowledge that apply to
a particular payee, in addition to the gen-
eral standards of knowledge set forth in
paragraph (e) of this section. This para-
graph (d) also provides the circumstances
in which special documentation rules are
permitted with respect to preexisting obli-
gations. A withholding agent may not rely
on documentation described in this para-
graph (d) if the documentation is not valid
or cannot reliably be associated with the
payment pursuant to the requirements of
paragraph (c) of this section, or the with-
holding agent knows or has reason to know
that such documentation is incorrect or un-
reliable as described in paragraphs (d) and
(e) of this section. If the chapter 4 status
of a payee cannot be determined under this
paragraph (d) based on documentation re-
ceived, a withholding agent must apply the
presumption rules in paragraph (f) to deter-
mine the chapter 4 status of the payee.
(1)Reliance on pre-FATCA Form W–8.
To establish a payee’s status as a foreign
individual, foreign government, or inter-
national organization, a withholding agent
may rely upon a pre-FATCA Form W–8
in lieu of obtaining an updated version of
the withholding certificate. To establish
the chapter 4 status of a payee that is not
a foreign individual, foreign government,
or international organization, a withhold-
ing 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 es-
tablish the chapter 4 status of the payee and
the withholding agent has obtained any ad-
ditional documentation or information re-
quired for the particular chapter 4 status
(such as withholding statements, certifi-
cations as to owners, or required docu-
mentation for underlying owners), as set
forth under the specific payee rules in para-
graphs (d)(2) through (12) of this section.
See paragraph (d)(4)(ii) and (iv) of this
section for specific requirements when re-
lying upon a pre-FATCA Form W–8 for
a participating FFI or registered deemed-
compliant FFI. This paragraph (d)(1) does
not apply to nonregistering local banks,
FFIs with only low-value accounts, spon-
sored FFIs, owner-documented FFIs, ter-
ritory financial institutions that are not the
beneficial owners of the payment, or for-
eign central banks (other than a foreign
central bank specifically identified as an
exempt beneficial owner under a Model 1
IGA or Model 2 IGA).
(2)Identification of U.S. persons—(i)
In general. A withholding agent must treat
a payee as a U.S. person if it has a valid
Form W–9 associated with the payee or if
it must presume the payee is a U.S. per-
son under the presumption rules set forth
in paragraph (f) of this section. Consis-
tent with the presumption rules in para-
graph (f)(3) of this section, a withholding
agent must treat a payee that has provided
a valid Form W–9 as a specified U.S. per-
son unless the Form W–9 indicates that
the payee is other than a specified U.S.
person. Notwithstanding 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 withhold-
ing 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
example, 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 regardless of
whether the Form W–9 indicates that the
payee is not a specified U.S. person, be-
cause an individual that is a U.S. person is
not excepted from the definition of a spec-
ified U.S. person
(ii)Reliance on documentary evidence.
A withholding agent may also treat the
payee as a U.S. person that is other than
a specified U.S. person if the withholding
agent has documentary evidence described
in paragraphs (c)(5)(i)(C) and (D) of this
April 8, 20138262013–15 I.R.B.

section or general documentary evidence
(as described in paragraph (c)(5)(ii)(A)
of this section) that both establishes that
the payee is a U.S. person and establishes
(either through the documentation or the
application of the presumption rules in
§1.6049–4(c)(ii) or paragraph (f)(3) of this
section) that the payee is an exempt recipi-
ent. For purposes of the previous sentence,
an exempt recipient means with respect
to a withholding agent other than a par-
ticipating FFI or registered deemed-com-
pliant FFI, an exempt recipient under
§1.6049–4(c)(ii) or, with respect to a with-
holding agent that is a participating FFI or
registered deemed-compliant FFI, a U.S.
person other than a specified U.S. person
as described under §1.1473–1(c).
(iii)Preexisting obligations.Asan
alternative to applying the rules in para-
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 as a U.S. person if it has previously
reviewed a Form W–9 or documentary
evidence that established that the payee
is a U.S. person and established (through
the documentation or the application of
the presumption rules in §1.6049–4(c)(ii))
that the payee is an exempt recipient for
purposes of chapter 61.
(3)Identification of individuals that are
foreign persons—(i)In general. A with-
holding agent may treat a payee as an indi-
vidual that is a foreign person if the with-
holding agent has a withholding certificate
identifying the payee as such a person.
(ii)Exception for offshore obligations.
A withholding agent that makes a payment
with respect to an offshore obligation may
treat the payee as an individual that is a for-
eign person if it obtains documentary evi-
dence supporting the payee’s claim of sta-
tus as a foreign individual (as described in
paragraph (c)(5)(i)) or if the payee is pre-
sumed to be an individual that is a for-
eign person under the presumption rules
set forth in paragraph (f) of this section.
(4)Identification of participating
FFIs and registered deemed-compliant
FFIs—(i)In general. Except as otherwise
provided in paragraph (d)(4)(ii) through
(iv) of this section, a withholding agent
may treat a payee as a participating FFI or
registered deemed-compliant FFI only if
the withholding agent has a withholding
certificate identifying the payee as a par-
ticipating FFI or registered deemed-com-
pliant FFI and the withholding certificate
contains a GIIN for the payee that is veri-
fied against the published IRS FFI list in
the manner described in paragraph (e)(3)
of this section (indicating when a with-
holding agent may rely upon a GIIN). For
payments made prior to January 1, 2016,
a participating FFI that is a sponsored FFI
may provide the GIIN of its sponsoring
entity on the withholding certificate if the
sponsored FFI has not obtained a GIIN.
(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 partic-
ipating FFI or registered deemed-compli-
ant FFI if the payee has provided the with-
holding agent (either orally or in writing)
its GIIN and indicated whether it is a par-
ticipating FFI or a registered deemed-com-
pliant FFI, and the withholding agent has
verified the GIIN in the manner described
in paragraph (e)(3) of this section.
(iii)Exception for offshore obligations.
A withholding agent that makes a pay-
ment, other than a payment of U.S. source
FDAP income, with respect to an offshore
obligation may treat the payee as a partic-
ipating FFI or registered deemed-compli-
ant FFI if the payee provides the withhold-
ing agent with its GIIN and states whether
the payee is a participating FFI or a regis-
tered deemed-compliant FFI, and the with-
holding agent verifies the GIIN in the man-
ner 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 obligation may
treat the payee as a participating FFI or
registered deemed-compliant FFI if—
(A) The payee provides the withholding
agent with—
(1) A written statement that contains the
payee’s GIIN and states that the payee is
the beneficial owner of the payment and a
participating FFI or a registered deemed-
compliant FFI, as appropriate; and
(2) Documentary evidence supporting
the payee’s claim of foreign status; and
(B) The withholding agent verifies the
GIIN in the manner described in paragraph
(e)(3) of this section.
(iv)Exceptions for payments to report-
ing Model 1 FFIs.—(A) For payments
made prior to January 1, 2015, a withhold-
ing agent may treat the payee as a reporting
Model 1 FFI if it receives a withholding
certificate from the payee indicating that
the payee is a reporting Model 1 FFI and
the country in which the payee is a report-
ing Model 1 FFI, regardless of whether the
certificate contains a GIIN for the payee.
(B) For payments made prior to Jan-
uary 1, 2015, with respect to a preexist-
ing obligation, a withholding agent may
treat a payee as a reporting Model 1 FFI
if it obtains a pre-FATCA Form W–8 from
the payee, and the payee indicates (either
orally or in writing) that it is a reporting
Model 1 FFI and the country in which it
is a reporting Model 1 FFI, regardless of
whether the certificate contains a GIIN for
the payee.
(C) For payments made prior to Jan-
uary 1, 2015, with respect to an offshore
obligation, a withholding agent may treat
the 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 sup-
porting the payee’s claim of foreign status
(as described in paragraph (c)(5)(i) of this
section).
(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
provides the withholding agent with its
GIIN, either orally in writing, and the
withholding agent verifies the GIIN in the
manner described in paragraph (e)(3) of
this section.
(v)Reason to know. Except as oth-
erwise provided in this paragraph (d)(4),
a withholding certificate or written state-
ment that identifies the payee as a partic-
ipating FFI or registered deemed-compli-
ant FFI but does not provide the payee’s
GIIN or provides a GIIN that does not ap-
pear on the current published IRS FFI list
within 90 calendar days after the date that
2013–15 I.R.B.827April 8, 2013

the claim is made, will be treated as invalid
for purposes of chapter 4, and the payee
will be treated as an undocumented payee
beginning on the date that the form was
submitted until valid documentation or a
correct GIIN is provided. A withholding
agent that discovers that the payee’s GIIN
does not appear on the published IRS FFI
list within 90 calendar days after the date
the claim is made and, as a result, has not
withheld as it would have been required to
but for its reliance upon the payee’s claim
of status as a participating FFI or regis-
tered deemed-compliant FFI, will be re-
quired to withhold on future payments, if
any, made to the payee of the amount of tax
that should have been withheld during the
90 day period but for the erroneous classi-
fication as to the payee’s status. The with-
holding required pursuant the prior sen-
tence is in addition to any withholding re-
quired under §1.1471–2(a) on those pay-
ments. A withholding agent that has with-
held as required in the previous two sen-
tences may apply reimbursement or set-off
procedures, as described in §1.1474–2(a),
if it is later determined that the payee ap-
peared on the IRS FFI list as a participating
FFI or registered deemed-compliant FFI at
the time of payment.
(5)Identification of certified deemed-
compliant FFIs—(i)In general. Except
as otherwise provided in this paragraph
(d)(5), a withholding agent may treat a
payee as a category of certified deemed-
compliant FFI, other than a sponsored FFI,
if the withholding agent has a withhold-
ing 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 cer-
tified deemed-compliant FFI identified on
the withholding certificate.
(ii)Sponsored, closely held investment
vehicles—(A)In general. A withholding
agent may treat a payee as asponsored,
closely held investment vehicledescribed
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 FFI and in-
cludes the sponsor’s GIIN, which the with-
holding agent has verified against the pub-
lished IRS FFI list in the manner described
in paragraph (e)(3) of this section. In ad-
dition to the standards of knowledge 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 vehicle described
in §1.1471–5(f)(2)(iii) if its AML due dili-
gence indicates that the payee has in excess
of 20 individual investors that own direct
and/or indirect interests in the payee.
(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 spon-
sored FFI, and provides the GIIN of the
sponsor, 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
foreignstatus(asdescribedinparagraph
(c)(5)(i) of this section).
(6)Identification of owner-documented
FFIs—(i)In general. A withholding agent
may treat a payee as an owner-documented
FFI if all the following requirements of
paragraphs (d)(6)(i)(A) through (F) of this
section are met. A withholding agent may
not rely upon a withholding certificate to
treat a payee as an owner-documented FFI,
either in whole or in part, if the withhold-
ing certificate does not contain all of the
information and associated documentation
required by paragraphs (d)(6)(i)(A), (C),
and (D) of this section.
(A) The withholding agent has a with-
holding certificate that identifies the payee
as an owner-documented FFI that is not
acting as an intermediary;
(B) The withholding agent is a U.S.
financial institution, participating FFI, or
reporting Model 1 FFI that agrees pur-
suant to §1.1471–5(f)(3) to act as a desig-
nated withholding agent with respect to the
payee;
(C) The payee submits to the withhold-
ing agent an FFI owner reporting statement
that meets the requirements of paragraph
(d)(6)(iv) of this section;
(D) The payee submits to the withhold-
ing agent valid documentation meeting
the requirements of paragraph (d)(6)(iii)
of this section with respect to each per-
son identified on the FFI owner reporting
statement;
(E) The withholding agent does not
know or have reason to know that the
payee (or any other FFI that is an owner
of the payee and that the designated with-
holding agent is treating as an owner-doc-
umented FFI) maintains any financial
account for a nonparticipating FFI; and
(F) The withholding agent does not
know or have reason to know that the
payee is in an expanded affiliated group
with any other FFI other than an FFI that
is also treated as an owner-documented
FFI by the withholding agent or that the
FFI has any U.S. specified persons that
own an equity interest in the FFI or a debt
interest (other than a debt interest that is
not a financial account or that has a bal-
ance or value not exceeding $50,000) in
the FFI other than those identified on the
FFI owner reporting statement described
in paragraph (d)(6)(iv) of this section.
(ii)Auditor’s letter substitute.Apayee
may, in lieu of providing an FFI owner
reporting statement and documentation
for each owner of the FFI as described
in paragraphs (d)(6)(i)(C) and (D) of this
section, provide a letterfromanauditoror
an attorney that is licensed in the United
States or whose firm has a location in the
United States, signed no more than four
years prior to the date of the payment, that
certifies that the firm or representative has
reviewed the payee’s documentation with
respect to all of its owners and debt holders
described in paragraph (d)(6)(iv) of this
section in accordance with §1.1471–4(c)
and that the payee meets the requirements
of §1.1471–5(f)(3). The payee must also
provide an FFI owner reporting statement
and a Form W–9, with any applicable
waiver, for each specified U.S. person that
owns a direct or indirect interest in the
payee or that holds debt interests described
in paragraph (d)(6)(iv) of this section. A
withholding agent may rely upon the letter
described in this paragraph (d)(6)(ii) if it
does not know or have reason to know that
any of the information contained in the
letter in unreliable or incorrect.
(iii)Documentation for owners and
debt holders of payee. Acceptable doc-
umentation for an individual owning an
equity in the payee or debt holders de-
scribed in paragraph (d)(6)(iv) of this
section means a valid withholding cer-
tificate, valid Form W–9 (including any
necessary waiver), or documentary evi-
dence establishing the foreign status of the
April 8, 20138282013–15 I.R.B.

individual as set forth in paragraph (d)(3)
of this section. Acceptable documenta-
tion for a specified U.S. person means a
valid Form W–9 (including any necessary
waiver). Acceptable documentation for
all other persons owning an equity or debt
interest in the payee means documentation
described in this paragraph (d), applica-
ble to the chapter 4 status claimed by the
person. The rules for reliably associating
a payment with a withholding certificate
or documentary evidence set forth in para-
graph (c) of this section, the rules for payee
documentation provided in this paragraph
(d), and the standards of knowledge set
forth in paragraph (e) of this section will
apply to documentation submitted by the
owners and debt holders by substituting
the phrase “owner of the payee” or “debt
holder” for “payee.”
(iv)Content of FFI owner report-
ing statement. The FFI owner reporting
statement provided by an owner-docu-
mented FFI must contain the informa-
tion required by this paragraph (d)(6)(iv)
and is subject to the general rules ap-
plicable to all withholding statements
described in paragraph (c)(3)(iii)(B)(1)
of this section. An FFI that is a partner-
ship, simple trust, or grantor trust may
substitute an NWP withholding state-
ment described in §1.1441–5(c)(3)(iv) or
a foreign simple trust or foreign grantor
trust withholding statement described in
§1.1441–5(e)(5)(iv) for the FFI owner re-
porting statement, provided that the NWP
withholding certificate or foreign simple
trust or foreign grantor trust withholding
certificate contains all of the information
required in this paragraph (d)(6)(iv). The
owner reporting statement will expire on
the last day of the third calendar year fol-
lowing the year in which the statement
was provided to the withholding agent
unless an exception in paragraph (c)(6)(ii)
of this section (for example, accounts
with a balance or value of $1,000,000
or less) or this paragraph (d)(6) applies.
The owner-documented FFI will also be
required to provide the withholding agent
with an updated owner reporting statement
if there is a change in circumstances as
required under paragraph (c)(6)(ii)(E) of
this section.
(A) The FFI owner reporting statement
must provide the following information:
(1) The name, address, TIN (if any),
and chapter 4 status of every individual
and specified U.S. person that owns a di-
rect or indirect equity interest in the payee
(looking through all entities other than
specified U.S. persons).
(2) The name, address, TIN (if any),
and chapter 4 status of every individual
and specified U.S. person that owns a debt
interest in the payee (including any indi-
rect debt interest, which includes debt in-
terests in any entity that directly or indi-
rectly owns the payee or any direct or indi-
rect equity interest in a debt holder of the
payee), in either such case if the debt in-
terest constitutes a financial account in ex-
cess of $50,000 (disregarding all such debt
interests owned by participating FFIs, reg-
istered deemed-compliant FFIs, certified
deemed-compliant FFIs, excepted NFFEs,
exempt beneficial owners, or U.S. persons
other than specified U.S. persons).
(3) Any other information the withhold-
ing agent reasonably requests in order to
fulfill its obligations under chapter 4.
(B) The information on the FFI owner
reporting statement may contain names of
equity and debt holders that are prepopu-
lated by the withholding agent based on
prior information provided to the with-
holding agent by the payee if the prepopu-
lated form instructs the payee to amend the
statement if the contents are inaccurate, in-
complete, or have changed, and the payee
confirms in writing that the FFI owner re-
porting statement submitted to the with-
holding agent is accurate and complete.
(C) The FFI owner reporting statement
may be submitted in any form that meets
the requirements of this paragraph, includ-
ing a form used for purposes of AML due
diligence.
(v)Exception for preexisting obliga-
tions (transitional). A withholding agent
may treat a payment made prior to January
1, 2017, with respect to a preexisting obli-
gation as made to an owner-documented
FFI if the withholding agent has collected,
for purposes of satisfying its AML due
diligence, documentation with respect to
each individual and specified U.S. person
that owns a direct or indirect interest in the
payee, other than an interest as a creditor,
within four years of the date of payment,
that documentation is sufficient to satisfy
the AML due diligence requirements of
the jurisdiction in which the withholding
agent maintains theaccount, the withhold-
ing agent has sufficient information to
report all specified U.S. persons that own
an interest in the payee, and the withhold-
ing agent does not know, or have reason
to know, that any nonparticipating FFI
owns an equity interest in the FFI or that
any nonparticipatingFFI or specified U.S.
person owns a debt interest in the FFI
constituting a financial account in excess
of $50,000.
(vi)Exception for offshore obligations.
A withholding agent that is making a pay-
ment, other than a payment of U.S. source
FDAP income, with respect to an offshore
obligation may, in lieu of obtaining a with-
holding certificate as otherwise required
under paragraph (d)(6)(i)(A) of this sec-
tion, rely upon a written statement that in-
dicates the payee meets the requirements
to qualify as an owner-documented FFI
under §1.1471–5(f)(3) and is not acting as
an intermediary, if the withholding agent
provides a written notice to the payee in-
dicating that the payee is required to up-
date the written statement and all associ-
ated documentation (such as the FFI owner
reporting statement and underlying docu-
mentation) within 30 days of a change in
circumstances.
(vii)Exception for certain offshore obli-
gations of $1,000,000 or less—(A) A with-
holding agent may treat the payment as
being made to an owner-documented FFI
if—
(1) The payment is made with respect
to an offshore obligation that has a balance
or value not exceeding $1,000,000 on the
later of December 31, 2013, or the last day
of the calendar year in which the account
was opened, and the last calendar day of
each subsequent year preceding the pay-
ment, applying the aggregation principles
of §1.1471–5(b)(4);
(2) The withholding agent has collected
documentation or a certification as to the
payee’s owners (either for purposes of
complying with its AML due diligence or
for purposes of satisfying the requirements
of this paragraph (d)(6)(vii)) sufficient to
identify every individual and specified
U.S. person that owns any direct or indi-
rect interest in the payee (other than an
interest as a creditor) and determine the
chapter 4 status of such person;
(3) The documentation described in
paragraph (d)(6)(vii)(A)(2) of this section
is sufficient to satisfy the AML due dili-
gence requirements of the jurisdiction in
which the withholding agent maintains
2013–15 I.R.B.829April 8, 2013

the account (and such jurisdiction is a
FATF-compliant jurisdiction);
(4) The withholding agent has sufficient
information to report all specified U.S. per-
sons that own an interest in the payee in ac-
cordance with §1.1474–1(d); and
(5) The withholding agent does not
know, or have reason to know, that the
payee has any contingent beneficiaries
or designated classes with unidentified
beneficiaries or owners, that any nonpar-
ticipating FFI owns a direct or indirect
equity interest in the payee, or that any
specified U.S. persons or nonparticipating
FFIs own a debt interest constituting a fi-
nancial account in excess of $50,000 in the
payee (other than specified U.S. persons
that the withholding agent has sufficient
information to report).
(B) For example, a withholding agent
that is required to obtain a certification
from the payee identifying all persons
owning an interest in the payee as part of
its AML due diligence will not be required
to obtain an FFI owner reporting state-
ment, provided the other conditions of
this paragraph (d)(6)(vii) are met. On the
other hand, a withholding agent that has
only obtained documentation for persons
owning a certain threshold percentage
of the payee will be required to obtain
additional documentation to satisfy the
requirements of this paragraph (d)(6)(vii).
A withholding agent that treats a payee as
an owner-documented FFI pursuant to this
paragraph (d)(6)(vii) will not be required
to obtain new documentation, including
the FFI owner reporting statement, until
there is a change in circumstances or un-
til the account balance or value exceeds
$1,000,000 on the last day of the calendar
year.
(7)Nonreporting IGA FFIs—(i)In gen-
eral. A withholding agent may treat a
payee as a nonreporting IGA FFI if it has
a withholding certificate identifying the
payee, or the relevant branch of the payee,
as a nonreporting IGA FFI.
(ii)Exception for offshore obligations.
A withholding agent that makes a payment
with respect to an offshore obligation may
treat a payee as a nonreporting IGA FFI if
it can reliably associate the payment with a
written statement identifying the payee (or
the relevant branch of the payee) as a non-
reporting IGA FFI and, with respect to a
payment of U.S. source FDAP income, the
written statement indicates that the payee
is the beneficial owner of the income and
is accompanied by documentary evidence
supporting a claim of foreign status (as de-
scribed in paragraph (c)(5)(i) of this sec-
tion). A withholding agent that makes a
payment with respect to an offshore obli-
gation may also treat a payee as a nonre-
porting IGA FFI if the withholding agent
has a permanent residence address for the
payee, or an address of the relevant branch
of the payee, and has obtained a notifica-
tion, either orally or in writing, indicating
that the payee is not acting as an interme-
diary and general documentary evidence
(as described in paragraph (c)(5)(ii)(A) of
this section) that provides the withholding
agent with sufficient information to rea-
sonably determine that the payee is an en-
tity listed as a nonreporting IGA FFI pur-
suant to a Model 1 or Model 2 IGA.
(8)Identification of nonparticipating
FFIs—(i)In general. A withholding agent
is required to treat a payee as a nonpartic-
ipating FFI if the withholding agent can
reliably associate the payment with a with-
holding certificate identifying the payee
as a nonparticipating FFI, the withholding
agent knows or has reason to know that
the payee is a nonparticipating FFI, or the
withholding agent is required to treat the
payee as a nonparticipating FFI under the
presumption rules described in paragraph
(f)ofthissection.
(ii)Special documentation rules for
payments made to an exempt beneficial
owner through a nonparticipating FFI.A
withholding agent may treat a payment
made to a nonparticipating FFI as bene-
ficially owned by an exempt beneficial
owner if the withholding agent can reli-
ably associate the payment with—
(A) A withholding certificate that iden-
tifies the payee as a nonparticipating FFI
that is either acting as an intermediary or
is a flow-through entity; and
(B) An exempt beneficial owner with-
holding statement that meets the require-
ments of paragraphs (c)(3)(iii)(B)(1)and
(4) of this section and contains the associ-
ated documentation necessary to establish
the chapter 4 status of the exempt benefi-
cial owner in accordance with paragraph
(d)(9) of this section as if the exempt ben-
eficial owner were the payee.
(9)Identification of exempt beneficial
owners—(i)Identification of foreign gov-
ernments, governments of U.S. territories,
international organizations, and foreign
central banks of issue—(A)In general.A
withholding agent may treat a payee as
a foreign government, government of a
U.S. territory, international organization,
or foreign bank of central issue if it has
a withholding certificate that identifies the
payee as such an entity, indicates that the
payee is the beneficial owner of the pay-
ment, and for a government or foreign cen-
tral bank, indicates that the payee is not
engaged in commercial activities with re-
spect to the payments or accounts iden-
tified on the form. A withholding agent
may treat a payee as an international or-
ganization without requiring a withholding
certificate if the name of the payee is one
that is designated as an international organ-
ization by executive order (pursuant to 22
U.S.C. 288 through 288f) and other facts
surrounding the transaction reasonably in-
dicate that the international organization is
not receiving the payment as an intermedi-
ary on behalf of another person. A with-
holding agent may treat a payee as an ex-
empt beneficial owner pursuant to a Model
1 IGA or Model 2 IGA if it has a withhold-
ing certificate that identifies the payee as
such an entity and indicates that the payee
is the beneficial owner of the payment.
(B)Exception for offshore obligations.
A withholding agent that makes a pay-
ment, other than a payment of U.S. source
FDAP income, with respect to an offshore
obligation may treata payee as a foreign
government, government of a U.S. terri-
tory, international organization, or foreign
central bank of issue if the payee provides
a written statement that it is such an en-
tity and the written statement indicates that
the payee receives the payment as a benefi-
cial owner (within the meaning provided in
§1.1471–6). A written statement provided
by a foreign central bank of issue must also
state that the foreign central bank of issue
does not receive the payment in connection
with a commercial activity as provided in
§1.1471–6(h).
(C)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment, other than a payment of
U.S. source FDAP income, with respect
to an offshore obligation that is also a
preexisting obligation may treat the payee
as a foreign government, government of a
U.S. territory, international organization,
or foreign central bank of issue if—
(1) The payee is generally known to
the withholding agent to be, the payee’s
April 8, 20138302013–15 I.R.B.

name and the facts surrounding the pay-
ment reasonably indicate, or the withhold-
ing agent has preexisting account docu-
mentary evidence (as described in para-
graph (c)(5)(ii)(B) ofthis section) that rea-
sonably indicates that the payee is a for-
eign government or government of a U.S
territory, a political subdivision of a for-
eign government or government of a U.S.
territory, any wholly owned agency or in-
strumentalityofanyoneormoreofthe
foregoing, an international organization, a
foreign central bank of issue, or the Bank
for International Settlements; and
(2) The withholding agent does not
know that the payee is not the ben-
eficial owner, within the meaning of
§1.1471–6(b) through (e) (disregarding
any presumption that a financial institution
is assumed to be an intermediary absent
documentation indicating otherwise) or a
foreign central bank of issue receiving the
payment in connection with a commercial
activity.
(ii)Identification of retirement
funds—(A)In general. A withholding
agent may treat a payee as a retirement
fund described in §1.1471–6(f) if it has a
withholding certificate in which the payee
certifies that it is a retirement fund meet-
ing the requirementsof §1.1471–6(f).
(B)Exception for offshore obligations.
A withholding agent that makes a payment
with respect to an offshore obligation may
treat the payment as being made to a re-
tirement fund described in §1.1471–6(f)
if it obtains a written statement in which
the payee certifies that it is a retirement
fund under the laws of its local jurisdiction
meeting the requirements of §1.1471–6(f)
and, with respect to a payment of U.S.
source FDAP income, documentary evi-
dence supporting a claim of foreign status
(as described in paragraph (c)(5)(i) of this
section). A withholding agent that makes
a payment with respect to an offshore
obligation may also treat the payment as
made to a retirement fund if it obtains gen-
eral documentary evidence (as described
in paragraph (c)(5)(ii)(A) of this section)
that provides the withholding agent with
sufficient information to establish that the
payee is a retirement fund meeting the
requirements of §1.1471–6(f).
(C)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an off-
shore obligation that is also a preexisting
obligation, may treat the payee as a re-
tirement fund described in §1.1471–6(f)
if the withholding agent has general doc-
umentary evidence or preexisting account
documentary evidence (as described in
paragraphs (c)(5)(ii)(A) or (B)) that es-
tablishes that the payee is a foreign entity
that qualifies as a retirement fund in the
country in which the payee is organized.
(iii)Identification of entities wholly
owned by exempt beneficial owners.A
withholding agent may treat a payee as an
entity described in §1.1471–6(g) (refer-
ring to certain entities wholly owned by
exempt beneficial owners) if the withhold-
ing agent has—
(A) A withholding certificate or, for a
payment made with respect to an offshore
obligation, a written statement that identi-
fies the payee as an investment entity that
is the beneficial owner of the payment;
(B) An owner reporting statement that
contains the name, address, TIN (if any),
chapter 4 status (identifying the type of
exempt beneficial owner), and a descrip-
tion of the type of documentation (Form
W–8 or other documentary evidence) pro-
vided to the withholding agent for every
person that owns a direct equity interest,
or a debt interest constituting a financial
account, in the payee, and that is subject
to the general rules applicable to all with-
holding statements described in paragraph
(c)(3)(iii)(B)(1) of this section; and
(C) Documentation for every person
identified on the owner reporting state-
ment establishing, pursuant to the docu-
mentation requirements described in this
paragraph (d)(9), that such person is an
exempt beneficial owner (without regard
to whether the person is a beneficial owner
of the payment).
(10)Identification of territory financial
institutions—(i)Identification of territory
financial institutions that are beneficial
owners—(A)In general. A withholding
agent may treat a payee as a territory fi-
nancial institution if the withholding agent
has a withholding certificate identifying
the payee as a territory financial institution
that beneficially owns the payment. See
paragraph (d)(11)(viii) of this section for
rules for documenting territory NFFEs.
(B)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an off-
shore obligation that is also a preexisting
obligation may treat the payee as a terri-
tory financial institution if the withhold-
ing agent receives written notification,
whether signed or not, that the payee is the
beneficial owner of the payment and the
withholding agent has general documen-
tary evidence (as described in paragraph
(c)(5)(ii)(A) of this section) or preexisting
account documentary evidence (as de-
scribed in paragraph (c)(5)(ii)(B) of this
section) establishing that the payee was
organized or incorporated under the laws
of any U.S. territory and is a depository
institution, custodial institution, or speci-
fied insurance company.
(ii)Identification of territory financial
institutions acting as intermediaries or
that are flow-through entities. A withhold-
ing agent may treat a payment as being
made to a territory financial institution
that is acting as an intermediary or that is
a flow-through entity if the withholding
agent has an intermediary withholding
certificate or flow-through withhold-
ing certificate as described in paragraph
(c)(3)(iii) of this section that identifies
the person who receives the payment as a
territory financial institution. A withhold-
ing agent that obtains the documentation
described in the preceding sentence may
treat the territory financial institution as
the payee if the withholding certificate
contains a certification that the territory
financial institution agrees to be treated
as a U.S. person with respect to the pay-
ment. If the withholding certificate does
not contain such a certification, then the
withholding agent must treat the person on
whose behalf the territory financial insti-
tution receives the payment as the payee.
See paragraph (c)(3)(iii) of this section for
additional documentation that must ac-
company the withholding certificate of the
territory financial institution in this case.
(iii)Reason to know. In addition to the
general standards of knowledge described
in paragraph (e) of this section, a withhold-
ing agent will have reason to know that
an entity is not a territory financial insti-
tution if the withholding agent has: a cur-
rent residence or mailing address, either in
the entity’s account files or on documenta-
tion provided by the payee, for the entity
that is outside the U.S. territory in which
the entity claims to be organized; a current
telephone number for the payee that has a
country code other than the country code
for the U.S. territory or has an area code
other than the area code(s) of the applica-
2013–15 I.R.B.831April 8, 2013

ble U.S. territory and no telephone number
for the payee in the applicable U.S. terri-
tory; or standing instructions for the with-
holding agent to pay amounts from its ac-
count to an address or account outside the
applicable U.S. territory. A withholding
agent that has knowledge of a current ad-
dress, current telephone number, or stand-
ing payment instructions for the entity out-
side of the applicable U.S. territory, may
nevertheless treat the entity as a territory
financial institution if it obtains documen-
tary evidence that establishes that the en-
tity was organized in the applicable U.S.
territory.
(11)Identification of excepted
NFFEs—(i)Identification of excepted
nonfinancial group entities—(A)In gen-
eral. A withholding agent may treat a
payee as an excepted nonfinancial group
entity described in §1.1471–5(e)(5)(i) if
the withholding agent has a withholding
certificate identifying the payee as such an
entity.
(B)Exception for offshore obliga-
tions. A withholding agent that makes
a payment with respect to an offshore
obligation may treat a payee as an ex-
cepted nonfinancial group entity described
in §1.1471–5(e)(5)(i) if the withholding
agent obtains:
(1) A written statement in which the
payee certifies that itis a foreign entity op-
erating primarily as an excepted nonfinan-
cial group entity for a group that primarily
engages in a business other than a finan-
cial business described in §1.1471–5(e)(4)
and, with respect to a payment of U.S.
source FDAP income, documentary evi-
dence supporting a claim of foreign status
(as described in paragraph (c)(5)(i) of this
section); or
(2) General documentary evidence (as
described in paragraph (c)(5)(ii)(A) of
this section) that provides the withhold-
ing agent with sufficient information to
establish that the payee is an excepted
nonfinancial group entity described in
§1.1471–5(e)(5)(i).
(ii)Identification of excepted nonfinan-
cial start-up companies—(A)In general.
A withholding agent may treat a payee
as an excepted nonfinancial start-up com-
pany described in §1.1471–5(e)(5)(ii) if
the withholding agent has a withholding
certificate that identifies the payee as a
start-up company that intends to operate
as other than a financial institution and the
withholding certificate provides a forma-
tion date for the payee that is less than 24
months prior to the date of the payment.
(B)Exception for offshore obligations.
A withholding agent that makes a pay-
ment with respect to an offshore obligation
may treat a payee as an excepted non-
financial start-up company described in
§1.1471–5(e)(5)(ii) if it obtains—
(1) A written statement from the payee
in which the payee certifies that it is a
foreign entity formed for the purpose of
operating a business other than that of a
financial institution and provides the en-
tity’s formation date which was less than
24 months prior to the date of the pay-
ment and, with respect to a payment of
U.S. source FDAP income, documentary
evidence supporting aclaim of foreign sta-
tus (as described in paragraph (c)(5)(i) of
this section); or
(2) General documentary evidence (as
described in paragraph (c)(5)(ii)(A) of
this section) that provides the withholding
agent with sufficient information to estab-
lish that the payee is a foreign entity other
than a financial institution and has a for-
mationdatewhichislessthan24months
prior to the date of the payment.
(C)Exception for preexisting offshore
obligations. A withholding agent may
treat a payment made with respect to an
offshore obligation that is also a preex-
isting obligation as made to a start-up
company described in§1.1471–5(e)(5)(ii)
if the withholding agent has general
documentary evidence (as described in
paragraph (c)(5)(ii)(A) of this section) or
preexisting account documentary evidence
(as described in paragraph (c)(5)(ii)(B) of
this section) that provides the withholding
agent sufficient information to establish
that the payee is, or intends to be, engaged
in a business other than as a financial in-
stitution and establishes that the payee is a
foreign entity that was organized less than
24 months prior to the date of the payment.
(iii)Identification of excepted nonfi-
nancial entities in liquidation or bank-
ruptcy—(A)In general. A withhold-
ing agent may treat a payee as an ex-
cepted nonfinancial entity in liquida-
tion or bankruptcy, as described in
§1.1471–5(e)(5)(iii), if the withholding
agent has a withholding certificate that
identifies the payee as such an entity and
the withholding agent has no knowledge
that the payee has claimed to be such
an entity for more than three years. A
withholding agent may continue to treat
a payee as an entity described in this
paragraph for longer than three years if
it obtains, in addition to a withholding
certificate, documentary evidence such as
a bankruptcy filing or other public docu-
ment that supports the payee’s claim that
it remains in liquidation or bankruptcy.
(B)Exception for offshore obligations.
A withholding agent that makes a pay-
ment with respect to an offshore obligation
may treat the payee as an excepted nonfi-
nancial entity in liquidation or bankruptcy,
as described in §1.1471–5(e)(5)(iii) if the
withholding agent has general documen-
tary evidence (as described in paragraph
(c)(5)(ii)(A) of this section) or a copy of
a bankruptcy filing, or similar documenta-
tion, establishing that the payee is a foreign
entity in liquidation or bankruptcy and es-
tablishing that prior to the liquidation or
bankruptcy filing, the payee was engaged
in a business other than that of a financial
institution. A withholding agent may also
treat the payee with respect to an offshore
obligation as an excepted nonfinancial en-
tity in liquidation or bankruptcy, as de-
scribed in §1.1471–5(e)(5)(iii), if the with-
holding agent obtains a written statement
stating that the payee is a foreign entity
in the process of liquidating or reorganiz-
ing with the intent to continue or recom-
mence its former business as a nonfinan-
cial institution, the withholding agent has
no knowledge that the payee has claimed
to be such an entity for more than three
years (unless the withholding agent has ob-
tained additional documentary evidence to
support the claim that the entity remains
in bankruptcy or liquidation), and, with re-
spect to a payment of U.S. source FDAP
income, documentary evidence supporting
a claim of foreign status (as described in
paragraph (c)(5)(i) of this section).
(C)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an
offshore obligation that is also a preex-
isting obligation may treat a payee as
an excepted nonfinancial entity in liq-
uidation or bankruptcy, as described in
§1.1471–5(e)(5)(iii), if the withholding
agent has preexisting account documen-
tary evidence (as described in paragraph
(c)(5)(ii)(B) of this section) that unam-
biguously indicates that the payee is not
a financial institution and is a foreign en-
April 8, 20138322013–15 I.R.B.

tity that entered liquidation or bankruptcy
within the three years preceding the date
of the payment.
(iv)Identification of section 501(c)
organizations—(A)In general.A
withholding agent may treat a payee
as a 501(c) organization described in
§1.1471–5(e)(5)(v) if the withholding
agent can reliably associate the payment
with a withholding certificate that identi-
fies the payee as a section 501(c) organ-
ization and the payeeprovides either a
certification that the payee has been is-
sued a determination letter by the IRS that
is currently in effect concluding that the
payee is a section 501(c) organization and
providing the date of the letter, or a copy
of an opinion from U.S. counsel certifying
that the payee is a section 501(c) organiza-
tion (without regard to whether the payee
is a foreign private foundation).
(B)Reason to know. A withholding
agent must cease to treat a foreign organi-
zation’s claim that it is a section 501(c) or-
ganization as valid beginning on the earlier
of the date on which such agent knows that
the IRS has given notice to such foreign
organization that it is not a section 501(c)
organization or 90 days after the date on
which the IRS gives notice to the public
that such foreign organization is not a sec-
tion 501(c) organization. Further, a with-
holding agent will have reason to know
that a payee is not a section 501(c) organ-
ization if it has determined, pursuant to
its AML due diligence, that the payee has
beneficial owners (as defined for purposes
of the AML due diligence).
(v)Identification of non-profit or-
ganizations—(A)In general. A with-
holding agent may treat a payee as a
non-profit organization described in
§1.1471–5(e)(5)(vi) if the withholding
agent has a withholding certificate that
identifies the payee as a non-profit organ-
ization.
(B)Exception for offshore obligations.
A withholding agent may treat a payment
with respect to an offshore obligation as
made to a nonprofit organization without
obtaining a withholding certificate for the
payee if the payee—
(1) Has provided a written state-
ment indicating that the payee is a
non-profit organization described in
§1.1471–5(e)(5)(vi) and, with respect to a
payment of U.S. source FDAP income, has
provided documentary evidence support-
ing a claim of foreign status (as described
in paragraph (c)(5)(i) of this section); or
(2)Isrequiredtobereportedbythe
withholding agent as a tax-exempt charita-
ble organization under the information re-
porting laws of the country in which the ac-
count is maintained or is permitted an ex-
emption from withholding due to its sta-
tus as a tax exempt charitable organiza-
tion under the laws of the country in which
the account is maintained, and the with-
holding agent obtains general documen-
tary evidence (as described in paragraph
(c)(5)(ii)(A) of this section) establishing
that the payee was organized for charita-
ble purposes in the same country in which
the account is maintained by the withhold-
ing agent for the purposes described in
§1.1471–5(e)(5)(vi) and that the payee has
no beneficial owners (as that term is used
for purposes of that country’s AML due
diligence).
(C)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an
offshore obligation that is also a pre-
existing obligation may treat the payee
as a nonprofit organization described in
§1.1471–5(e)(5)(vi) if the payee—
(1)Providesaletteroflocalcounsel
that certifies that the payee qualifies as a
tax-exempt entity in itslocal jurisdiction;
or
(2) Provides a letter issued by the tax
authority of the country in which the payee
is organized or a statement provided on
the website of such tax authority indicat-
ing that the payee is a tax-exempt entity
or charitable organization in the payee’s
country of organization.
(D)Reason to know. A withholding
agent will have reason to know that a payee
is not a nonprofit organization if it has de-
termined, pursuant to its AML due dili-
gence, that the payee has beneficial own-
ers (as defined for purposes of the AML
due diligence).
(vi)Identification of NFFEs that are
publicly traded corporations. A withhold-
ing agent may treat a payee as an NFFE
described in §1.1472–1(c)(1)(i) (applying
to an entity the stock of which is regularly
traded on an established securities market)
if it has a withholding certificate that cer-
tifies that the payee is such an entity and
provides the name of a securities exchange
upon which the payee’s stock is regularly
traded.
(A)Exception for offshore obligations.
A withholding agent that makes a pay-
ment with respect to an offshore obliga-
tion may treat a payee as an NFFE de-
scribed in §1.1472–1(c)(1)(i) if the with-
holding agent obtains—
(1) A written statement that the payee
is a foreign corporation that is not a finan-
cial institution, thatits stock is regularly
traded on an established securities market,
the name of one of the exchanges upon
which the payee’s stock is traded, and, with
respect to a payment of U.S. source FDAP
income, documentary evidence supporting
a claim of foreign status (as described in
paragraph (c)(5)(i) of this section); or
(2) Any documentation establishing
that the payee is listed on a public securi-
ties exchange or on a stock market index
and general documentary evidence (as de-
scribed in paragraph (c)(5)(ii)(A) of this
section) establishing that the payee is a
foreign corporation other than a financial
institution.
(B)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an off-
shore obligation that is also a preexisting
obligation may treat the payee as an en-
tity described in §1.1472–1(c)(1)(i) if the
withholding agent has any documenta-
tion confirming that the payee is listed
on a public securities exchange or on a
stock market index and preexisting ac-
count documentary evidence (as described
in paragraph (c)(5)(ii)(B) of this section)
establishing that the payee is a foreign cor-
poration other than a financial institution.
(vii)Identification of NFFE affiliates.
A withholding agent may treat a payee as
an NFFE described in §1.1472–1(c)(1)(ii)
(applying to an affiliate of an entity the
stockofwhichisregularlytradedonanes-
tablished exchange) if it has a beneficial
owner withholding certificate that iden-
tifies the payee as a foreign corporation
that is an affiliate of an entity, described
§1.1472–1(c)(1)(i), whose stock is regu-
larly traded on an established exchange
and provides the name of the entity that is
regularly traded and one of the exchanges
upon which the entity’s stock is listed.
(A)Exception for offshore obligations.
A withholding agent that makes a pay-
ment with respect to an offshore obligation
may treat a payment as being made to an
NFFE described in §1.1472–1(c)(1)(ii) if
the withholding agent obtains—
2013–15 I.R.B.833April 8, 2013

(1) Documentary evidence or other in-
formation confirming that the payee is af-
filiated with an entity listed on a public se-
curities exchange or on a stock market in-
dex and general documentary evidence (as
described in paragraph (c)(5)(ii)(A) of this
section) that indicates that the payee is a
foreign corporation other than a financial
institution; or
(2) A written statement that the payee
is a foreign corporation that is not a finan-
cial institution, that the payee is an affil-
iate of another nonfinancial entity whose
stock is regularly traded on an established
securities exchange, providing the name
of the payee’s affiliate and one of the ex-
changes upon which the affiliate’s stock is
traded and, in the case of a payment of
U.S. source FDAP income, documentary
evidence supporting the payee’s claim of
foreignstatus(asdescribedinparagraph
(c)(5)(i) of this section).
(B)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an off-
shore obligation that is also a preexisting
obligation may treat the payee as an NFFE
described in §1.1472–1(c)(1)(ii) if the
withholding agent has—
(1) Documentation or other information
confirming that the payee is affiliated with
a corporation that is listed on a public secu-
rities exchange or on a stock market index;
(2) Preexistingaccount documen-
tary evidence (as described in paragraph
(c)(5)(ii)(B) of this section) that unam-
biguously indicatesthat the payee is a
corporation that is nota financial institu-
tion; and
(3) In the case of a payment of U.S.
source FDAP income,documentary ev-
idence supporting the payee’s claim of
foreignstatus(asdescribedinparagraph
(c)(5)(i) of this section).
(viii)Identification of excepted terri-
tory NFFEs. A withholding agent may
treat a payee as an excepted territory NFFE
described in §1.1472–1(c)(1)(iii) if it has
a withholding certificate that identifies the
payee as an NFFE that was organized in a
U.S. territory and includes a certification
for chapter 4 purposes that all of its own-
ers are bona fide residents of that U.S. ter-
ritory.
(A)Exception for payments made
prior to January 1, 2017, with respect to
preexisting 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 December 31,
2013, and the last day of each subsequent
calendar year preceding the payment,
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) Has a pre-FATCA Form W–8 iden-
tifying the payee as a foreign entity with a
permanent residence address in a U.S. ter-
ritory; and
(2) Has general documentary evidence
(as described in paragraph (c)(5)(ii)(A)
of this section), preexisting account doc-
umentary evidence (as described in para-
graph (c)(5)(ii)(B) of this section), or a
prospectus establishing that the payee is
an entity other than a depository insti-
tution, custodial institution, or specified
insurance company; and
(3) Is subject, with respect to such obli-
gation, to the laws of a FATF-compliant ju-
risdiction and as part of its AML due dili-
gence has not identified any owners of the
payee that are not bona fide residents of the
U.S. territory in which the payee is orga-
nized.
(B)Exception for offshore obligations.
A withholding agent that makes a pay-
ment with respect to an offshore obliga-
tion may treat a payment as being made
to an excepted territory NFFE described in
§1.1472–1(c)(1)(iii) if it has—
(1) A written statement providing that
the payee is an entity other than a de-
pository institution,custodial institution,
or specified insurance company, was or-
ganized in a U.S. territory, and is wholly
owned by one or more bona fide residents
of that U.S. territory, and, with respect to
a payment of U.S. source FDAP income,
the written statement must indicate that the
payee is the beneficial owner of the income
and be accompanied by documentary evi-
dence supporting a claim of foreign status
(as described in paragraph (c)(5)(i) of this
section); or
(2) General documentary evidence (as
described in paragraph (c)(5)(ii)(A) of this
section) or a prospectus establishing that
the payee is an entity other than a depos-
itory institution, custodial institution, or
specified insurance company, establishing
that the payee was organized in a U.S. ter-
ritory, and establishing that the payee is
wholly owned by one or morebona fide
residents of that U.S. territory.
(C)Exception for preexisting offshore
obligations of $1,000,000 or less.Awith-
holding agent thatmakes a payment with
respect to an offshore obligation that is
also a preexisting obligation with a balance
or value not exceeding $1,000,000 on De-
cember 31, 2013, (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 pre-
ceding the payment, applying the aggre-
gation principles of §1.1471–5(b)(4)(iii),
may rely upon its review conducted for
AML due diligence purposes to deter-
mine whether the owners of the payee
are bona fide residents of the U.S. ter-
ritory in which the payee is organized,
in lieu of obtaining a written statement
or documentary evidence described in
paragraph (d)(11)(viii)(B) of this section.
The preceding sentence applies only if
the withholding agent is subject, with re-
spect to such account, to the laws of a
FATF-compliant jurisdiction and has iden-
tified the residence of the owners. The
withholding agent relying upon this para-
graph (d)(11)(viii)(C) must still obtain a
written statement, documentary evidence,
as provided in paragraph (d)(11)(viii)(B)
of this section, or preexisting account
documentary evidence (as described in
paragraph (c)(5)(ii)(B) of this section) es-
tablishing that the payee is an entity other
than a depository institution, custodial in-
stitution, or specified insurance company
organized in a U.S. territory.
(ix)Identification of active NFFEs.
A withholding agent may treat a
payee as an active NFFE described in
§1.1472–1(c)(1)(iv) if it has a withhold-
ing certificate identifying the payee as an
active NFFE.
(A)Exception for offshore obligations.
A withholding agent that makes a payment
with respect to an offshore obligation may
treat the payee as an active NFFE if the
withholding agent has—
(1) General documentary evidence (as
described in paragraph (c)(5)(ii)(A) of this
section) providing sufficient information
to determine that the payee is a foreign en-
tity engaged in an active trade or business
other than that of a financial institution; or
(
2) A written statement stating that the
payee is a foreign entity engaged in an ac-
April 8, 20138342013–15 I.R.B.

tive business other than that of a financial
institution and, in the case of a payment of
U.S. source FDAP income, documentary
evidence supporting the payee’s claim of
foreignstatus(asdescribedinparagraph
(c)(5)(i) of this section).
(B)Exception for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an off-
shore obligation that is also a preexisting
obligation may treat the payee as an active
NFFE if the withholding agent has pre-
existing account documentary evidence
(as described in paragraph (c)(5)(ii)(B)
of this section) that unambiguously in-
dicates that the payee is a foreign entity
engaged in a trade or business other than
that of a financial institution and, in the
case of a payment of U.S. source FDAP
income, documentary evidence support-
ing the payee’s claim of foreign status (as
described in paragraph (c)(5)(i) of this
section).
(C)Limitonreasontoknow. A with-
holding agent relying on documentary evi-
dence to determine that a payee is an ac-
tive NFFE will not be required to deter-
mine that the payee meets the income and
asset thresholds but rather must determine
only that the payee is primarily engaged in
a business other than that of a financial in-
stitution.
(12)Identification of passive NFFEs.A
withholding agent may treat a payment as
having been made to a passive NFFE if it
has a withholding certificate that identifies
the payee as a passive NFFE.
(i)Exception for offshore obligations.
A withholding agent that makes a payment
with respect to an offshore obligation may
treat the payment as made to a passive
NFFE if the withholding agent has—
(A) General documentary evidence (as
described in paragraph (c)(5)(ii)(A) of this
section) for the payee providing sufficient
information to determine that the payee is
a foreign entity that is not a financial insti-
tution; or
(B) A written statement that the payee
is a foreign entity that is not a financial in-
stitution and, for a payment of U.S. source
FDAP income, documentary evidence
supporting the payee’s claim of foreign
status (as described in paragraph (c)(5)(i)
of this section).
(ii)Special rule for preexisting offshore
obligations. A withholding agent that
makes a payment with respect to an off-
shore obligation that is also a preexisting
obligation may treat the payee as a passive
NFFE if the withholding agent has preex-
isting account documentary evidence (as
described in paragraph (c)(5)(ii)(B) of this
section) providing sufficient information
to determine that the payee is a foreign
entity that is not a financial institution and,
with respect to a payment of U.S. source
FDAP income, documentary evidence
supporting the payee’s claim of foreign
status (as described in paragraph (c)(5)(i)
of this section).
(iii)Required owner certification for
passive NFFEs—(A)In general.Unlessit
isaWPorWT,apassiveNFFEwillbere-
quired to provide to the withholding agent
either a written certification (contained on
a withholding certificate or in a written
statement) that it does not have any sub-
stantial U.S. owners or the name, address,
and TIN of each substantial U.S. owner of
the NFFE to avoid being withheld 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 payment
prior to January 1, 2017, with respect to
a preexisting obligation with a balance or
value not exceeding $1,000,000 on De-
cember 31, 2013, and the last day of each
subsequent calendar year preceding the
payment, applying the aggregation prin-
ciples of §1.1471–5(b)(4)(iii), may rely
upon its review conducted for AML due
diligence purposes to identify any sub-
stantial U.S. owners of the payee in lieu
of obtaining the certification or informa-
tion required in paragraph (d)(12)(iii)(A)
of this section if the withholding agent is
subject, with respect to such obligation,
to the laws of a FATF-compliant juris-
diction and has identified the residence
of any controlling persons (within the
meaning of the withholding agent’s AML
due diligence rules). A withholding agent
that makes a payment with respect to an
offshore obligation that is also a preex-
isting obligation with a balance or value
not exceeding $1,000,000 on December
31, 2013, (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 preceding the
payment, applying the aggregation prin-
ciples of §1.1471–5(b)(4)(iii), may rely
upon its review conducted for AML due
diligence purposes to identify any sub-
stantial U.S. owners of the payee in lieu
of obtaining the certification or informa-
tion required in paragraph (d)(12)(iii)(A)
of this section if the withholding 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 dili-
gence rules).
(e)Standards of knowledge—(1)In
general. The standards of knowledge dis-
cussed in this section apply for purposes
of determining the chapter 4 status of
payees, beneficial owners, intermediaries,
flow-through entities, and persons that
ownaninterestinanowner-documented
FFI. A withholding agent shall be liable
for tax, interest, and penalties to the ex-
tent provided under section 1474 and the
regulations under that section if it fails to
withhold the correct amount despite know-
ing or having reason to know the amount
required to be withheld. A withholding
agent that cannot reliably associate the
payment with documentation and fails to
act in accordance withthe presumption
rules set forth in paragraph (f) of this sec-
tion may also be liable for tax, interest,
and penalties. See paragraph (e)(4) in
this section for the specific standards of
knowledge applicable to a person’s spe-
cific claims of chapter 4 status.
(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. per-
son, a participating FFI, a deemed-compli-
ant 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
business days after the date the notice is re-
ceived.
(3)Participating FFIs and registered
deemed-compliant FFIs—(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 required under paragraph (d)(4)
of this section to confirm that the branch of
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 institution if
the payee’s name (including a name rea-
sonably similar to the name the withhold-
ing agent has on file for the payee) and
2013–15 I.R.B.835April 8, 2013

GIIN do not appear on the most recently
published IRS FFI list within 90 calendar
days of the date that the claim is made.
The withholding agent will also have rea-
son to know that an FFI is either a lim-
ited branch or limited FFI (and, thus, not
a participating FFI or registered-deemed
compliant FFI) if the withholding agent
has a permanent residence address or mail-
ing address for the FFI that is in a coun-
try other than the country that in which
the FFI claims to be a participating FFI
or registered deemed-compliant FFI or the
withholding agent makes a payment to the
FFI at an address outside of the country
in which the FFI claims to be a partici-
pating FFI or registered deemed-compli-
ant FFI. A payee whose registration with
the IRS as a participating FFI or a regis-
tered deemed-compliant FFI is in process
but has not yet received a GIIN may pro-
vide a withholding agent with a Form W–8
claiming the chapter 4 status it applied for
andwriting“appliedfor”intheboxforthe
GIIN. In such case, the FFI will have 90
calendar days from the date of its claim
to provide the withholding agent with its
GIIN and the withholding agent will have
90 calendar days from the date it receives
the GIIN 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 orregistered deemed-
compliant FFI. If an FFI is removed from
the published IRS FFI list, the withholding
agent knows that such FFI is not a partici-
pating FFI or registered deemed-compliant
FFI on the earlier of the date that the with-
holding 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 will have
reason to know that the FFI is not a report-
ing Model 1 FFI if the withholding agent
does not have a permanent residence ad-
dress for the FFI, or an address of the rele-
vant branch of the FFI, located in the coun-
try in which the FFI claims to be a re-
porting Model 1 FFI or the withholding
agent is directing a payment to a branch of
the FFI that is not located in the country
in which the FFI claims to be a reporting
Model 1 FFI.
(4)Reason to know. A withholding
agent shall be considered to have reason
to know that a claim of chapter 4 status
is unreliable or incorrect if its knowledge
of relevant facts or statements contained in
the withholding certificates or other doc-
umentation is such that a reasonably pru-
dent person in the position of the with-
holding agent would question the claims
made. For accounts opened on or after
January 1, 2014, a withholding agent will
also be considered to have reason to know
that a claim of chapter 4 status is unreliable
or incorrect if any information contained
in its account opening files or other cus-
tomer account files, including documenta-
tion collected for AML due diligence pur-
poses, conflicts with the payee’s claim of
chapter 4 status. In addition to the general
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 stan-
dards of knowledge applicable to the chap-
ter 4 status claimed as set forth in para-
graph (d) of this section. A withholding
agent that has relied upon documentation
that is valid pursuant to paragraph (c) to
treat a person as a foreign person, however,
will have reason to know that a person’s
claim of status as a foreign person is inac-
curate only if there are U.S.indiciaassoci-
ated with the person, as described in para-
graphs (e)(4)(ii) through (vi) of this sec-
tion, for which appropriate documentation
sufficient to cure the U.S.indiciain the
manner set forth in this paragraph (e) has
not been obtained.
(i)Information conflicting with per-
son’s claim of chapter 4 status. A with-
holding certificate, written statement, or
documentary evidence is unreliable or in-
correct if there is information on the face
of the documentation or in the withholding
agent’s account filesthat conflicts with
the person’s claim regarding its chapter 4
status. For example, a withholding agent
will have reason to know that a person’s
claim that it is an excepted NFFE is unre-
liable or incorrect if the withholding agent
has a financial statement or credit report
that indicates that the person is engaged
in business as a financial institution or if
documentation submitted by the person
indicates that the person is acting as an
intermediary with respect to the payment
and, thus, is not a beneficial owner for
purposes of §1.1472–1(c)(1). Further, a
withholding agent that has classified the
person as engaged in a particular type
of business in its own records, such as
through a standard industrial classification
code, will have reason to know that that
the chapter 4 status claimed by the person
is unreliable or incorrect if the claim con-
flicts with the withholding agent’s internal
classification.
(ii)Specific standards of knowledge ap-
plicable to withholding certificates—(A)
In general. A withholding agent has rea-
son to know that a withholding certificate
provided by a person is unreliable or in-
correct if the withholding certificate is in-
complete with respect to any item on the
certificate that is relevant to the claims
made by the person, the withholding cer-
tificate contains any information that is
inconsistent with the person’s claim, the
withholding agent has other account infor-
mation that is inconsistent with the per-
son’s claim, or the withholding certificate
lacks information necessary to establish
entitlement to an exemption from with-
holding for chapter 4 purposes. A with-
holding agent that relies on an agent to re-
view and maintain a withholding certifi-
cate is considered to know or have reason
to know the facts within the knowledge of
the agent. Paragraphs (e)(4)(ii)(B) through
(D) of this section do not apply to a with-
holding certificate provided by a partici-
pating FFI, a registered deemed-compli-
ant FFI, or a sponsored FFI, described in
§1.1471–5(f)(2)(iii), if the certificate con-
tains a GIIN for the FFI or sponsor that the
withholding agent verifies on the current
published IRS FFI list as provided in para-
graph (e)(3) of this section.
(B)Classification of U.S. status, U.S.
address, or U.S. telephone number.A
withholding agent has reason to know that
a withholding certificate provided by a per-
son is unreliable or incorrect if the with-
holding agent has classified the person as a
U.S. person in its customer files, the with-
holding certificate has a current permanent
residence address in the United States, the
withholding certificate has a current mail-
ing address in the United States, the with-
holding agent has a current residence or
mailing address as part of its account in-
formation that is an address in the United
States, or the person notifies the withhold-
ing agent of a new residence or mailing
April 8, 20138362013–15 I.R.B.

address in the United States (whether or
not provided on a withholding certificate).
A withholding agent also has reason to
know that a withholding certificate pro-
vided by a person is unreliable or incor-
rect if the withholding agent has a cur-
rent telephone number for the person in the
United States and has no telephone num-
ber for the person outside of the United
States. Notwithstanding the foregoing, a
withholding agent may rely upon a with-
holding certificate to establish the person’s
status as a foreign person despite knowing
that the person has any of the U.S.indicia
described in this paragraph (e)(4)(ii)(B) if
it may do so under the provisions of para-
graphs (e)(4)(ii)(B)(1)and(2)ofthissec-
tion.
(1)Presumption of individual’s foreign
status. A withholding agent may treat an
individual that has U.S.indiciadescribed
in paragraph (e)(4)(ii)(B) of this section
as a foreign person if the individual has
provided a withholding certificate and—
(i) The withholding agent has in its pos-
session, or obtains, documentary evidence
establishing foreign status (as described
in paragraph (c)(5)(i) of this section) that
does not contain a U.S. address and the
individual provides the withholding agent
with a reasonable written explanation sup-
porting the claim of foreign status;
(ii) For a payment made with respect
to an offshore obligation, the withholding
agent has in its possession, or obtains, doc-
umentary evidence establishing foreign
status (as described in paragraph (c)(5)(i)
of this section), that does not contain a
U.S. address; or
(iii) For a payment made with respect
to an offshore obligation, the withholding
agent classifies the individual as a resident
of the country in which the obligation is
maintained, the withholding agent is re-
quired to report payments made to the indi-
vidual annually on a tax information state-
ment 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 in-
formation exchange agreement or income
taxtreatyineffectwiththeUnitedStates.
(2)Presumption of entity’s foreign sta-
tus. A withholding agent may treat an en-
tity that has U.S.indiciadescribed in para-
graph (e)(4)(ii)(B) of this section as a for-
eign person if the entity has provided a
withholding certificate and—
(i) The withholding agent has in its pos-
session, or obtains, documentary evidence
establishing foreign status (as described
in paragraph (c)(5)(i) of this section) that
substantiates that the entity is actually or-
ganized or created under the laws of a for-
eign country; or
(ii) For a payment made with respect
to an offshore obligation, the withhold-
ing agent classifies the entity as a resident
of the country in which the obligation is
maintained, the withholding agent is re-
quired to report payments made to the en-
tity annually on a tax information state-
ment 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 in-
formation exchange agreement or income
tax treaty in effect with the United States.
(C)U.S. place of birth—(1)Accounts
opened on or after January 1, 2014.For
accounts opened on or after January 1,
2014, a withholding agent has reason to
know that a withholding certificate indi-
cating foreign status provided by an indi-
vidual is unreliable or incorrect if the with-
holding agent has, either on accompanying
documentation or as part of its account in-
formation, an unambiguous indication of
a place of birth for the individual 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 no knowledge
that the individual has any other U.S.indi-
ciadescribed in paragraph (e)(4)(ii) of this
section and the withholding agent obtains
a copy of the individual’s Certificate of
Loss of Nationality of the United States. A
withholding agent may also treat the indi-
vidual as a foreign person, notwithstanding
the U.S. place of birth and any other U.S.
indiciadescribed in paragraph (e)(4)(ii) of
this section, if the withholding agent ob-
tains a non-U.S. passport or other govern-
ment-issued identification that is evidence
of citizenship in a country other than the
United States and either a copy of the indi-
vidual’s Certificate of Loss of Nationality
of the United States, or a reasonable writ-
ten explanation of the account holder’s re-
nunciation of U.S. citizenship or the reason
the account holder did not obtain U.S. cit-
izenship at birth.
(2)Preexisting obligations.Forapay-
ment made with respect to a preexisting
obligation, a withholding agent will not be
required to conduct a search of its docu-
mentation to identify a U.S. place of birth
associated with an individual. However, if
the withholding agent, on or after January
1, 2014, reviews documentation that con-
tains a U.S. birth place for an individual
that is treated as a foreign person or is no-
tified that the individual has a U.S. place of
birth, then the account will be considered
to have experienced a change in circum-
stances as of the date that the withhold-
ing agent reviewed the documentation and
the withholding agent will be considered to
have reason to know that the individual is
a U.S. person. See paragraph (c)(6)(ii)(E)
of this section for rules regarding the time
period allowed to cure a change in circum-
stances.
(D)Standing instructions with respect
to offshore obligations. A withholding
agent has reason to know that a withhold-
ing certificate provided by a person is un-
reliable or incorrect if it is provided with
respect to an offshore obligation and the
person has standing instructions directing
the withholding agent to pay amounts to
an address or an account maintained in the
United States. The withholding agent may
rely upon the withholding certificate to es-
tablish the person’s status as a foreign per-
son, however, if the person provides docu-
mentary evidence establishing foreign sta-
tus (as described in paragraph (c)(5)(i) of
this section).
(iii)Specific standard of knowledge ap-
plicable to written statements.Awith-
holding agent must apply the standards of
knowledge applicable to withholding cer-
tificates, as set forth in paragraph (e)(4)(i)
and (ii) of this section, when determining
whether it can rely on a written statement.
(iv)Specific standard of knowledge
applicable to documentary evidence—(A)
In general. A withholding agent may
not treat documentary evidence provided
by a person as valid if the documentary
evidence does not reasonably establish
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, if any, does not match
the appearance or signature of the person
presenting the document. A withhold-
ing agent may not rely on documentary
evidence to reduce the rate of withhold-
ing that would otherwise apply under
2013–15 I.R.B.837April 8, 2013

the presumption rules in paragraph (f) of
this section if the documentary evidence
contains 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 claim, or the documen-
tary evidence lacks information necessary
to establish the person’s chapter 4 status.
(B)Classification of U.S. status, U.S.
address, or U.S. telephone number.A
withholding agent may not treat documen-
tary evidence provided by a person as valid
for purposes of establishing the person’s
foreign status if the withholding agent does
not have a permanent residence address for
the person. The previous sentence will
not apply, however, to a withholding agent
that is making a payment with respect to
an offshore obligation. Documentary ev-
idence is unreliable or incorrect to estab-
lish a person’s status as a foreign person
if the withholding agent has classified the
person as a U.S. person in its customer
files, the withholding agent has a current
residence or mailing address (whether or
not on the documentation) for the person
in the United States, if the person noti-
fies the withholding agent of a new address
in the United States, or if the withhold-
ing agent has a current telephone number
for the person in the United States and has
no telephone number for the person out-
side of the United States. Notwithstand-
ing the foregoing, a withholding agent may
rely on documentary evidence to establish
theperson’sstatusasaforeignpersonde-
spite knowing that the person has any of
the U.S.indiciadescribed in this paragraph
(e)(4)(iv)(B) if it may do so under the pro-
visions of paragraphs (e)(4)(iv)(B)(1)and
(2) of this section.
(1)Presumption of individual’s foreign
status. A withholding agent may treat an
individual that has U.S.indiciadescribed
in paragraph (e)(4)(iv)(B) of this section
as a foreign person if the individual has
provided documentary evidence and—
(i) The withholding agent has in its pos-
session, or obtains, additional documen-
tary evidence establishing foreign status
(as described in paragraph (c)(5)(i) of this
section), that does not contain a U.S. ad-
dress, and the individual provides the with-
holding agent with a reasonable written ex-
planation supporting the claim of foreign
status;
(ii) The withholding agent has in its
possession, or obtains, a valid beneficial
owner withholding certificate that contains
a permanent residence address outside the
United States and a mailing address, if any,
outside the United States (or, if a mailing
address is inside the United States, the di-
rect account holder provides a reasonable
written explanation supporting the individ-
ual’s claim of foreign status); or
(iii) For a payment made with respect
to an offshore obligation, the withhold-
ing agent has in its possession, or obtains,
a beneficial owner withholding certificate
that contains a permanent residence ad-
dress outside the United States.
(2)Presumption of entity’s foreign sta-
tus. A withholding agent may treat an en-
tity that has U.S.indiciadescribed in para-
graph (e)(4)(iv)(B) of this section as a for-
eign person if the entity has provided doc-
umentary evidence and—
(i) The withholding agent has in its pos-
session, or obtains, documentary evidence
establishing foreign status (as described
in paragraph (c)(5)(i) of this section) that
substantiates that the entity is actually or-
ganized or created under the laws of a for-
eign country;
(ii) The withholding agent obtains a
valid withholding certificate that contains
a permanent residence address outside the
United States and a mailing address, if
any, outside the United States; or
(iii) For a payment made with respect
to an offshore obligation, the withholding
agent classifies the entity as a resident of
the country in which the account is main-
tained, the withholding agent is required to
report payments made to the entity annu-
ally 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 ex-
change agreement or income tax treaty in
effect with the United States.
(C)U.S. place of birth—(1)Accounts
opened on or after January 1, 2014.For
accounts opened on or after January 1,
2014, a withholding agent has reason to
know that documentary evidence provided
to demonstrate an individual’s status as a
foreign person is unreliable or incorrect if
the documentation contains a U.S. birth
place for the individual or the withhold-
ing agent has, as part of its account infor-
mation, a place of birth for the individual
in the United States. A withholding agent
may treat the individual as a foreign per-
son, notwithstanding the U.S. birth place,
if the withholding agent has no knowledge
that the individual has any other U.S.in-
diciadescribed in paragraph (e)(4)(iv) of
this section and the withholding agent ob-
tains a copy of the individual’s Certificate
of Loss of Nationality of the United States.
A withholding agent may also treat the in-
dividual as a foreign person, notwithstand-
ing the U.S. birth place and any other U.S.
indiciadescribed in paragraph (e)(4)(iv) of
this section, if the withholding agent ob-
tains a withholding certificate from the in-
dividual that establishes the payee’s for-
eign status and either a copy of the indi-
vidual’s Certificate of Loss of Nationality
of the United States or a reasonable writ-
ten explanation of the individual’s renunci-
ation of U.S. citizenship or the reason the
individual did not obtain U.S. citizenship
at birth.
(2)Preexisting obligations.Forapay-
ment made with respect to a preexisting
obligation, a withholding agent will not be
required to conduct a search of its docu-
mentation to identify a U.S. place of birth
associated with an individual. However, if
the withholding agent, on or after January
1, 2014, reviews documentation that con-
tains a U.S. place of birth for the individual
that is treated as a foreign person or is noti-
fied that the individual has a U.S. place of
birth, then the account will be considered
to have experienced a change in circum-
stances as of the date that the withhold-
ing agent reviewed the documentation and
the withholding agent will be considered to
have reason to know that the individual is
a U.S. person. See paragraph (c)(6)(ii)(E)
of this section for rules regarding the time
period allowed to cure a change in circum-
stances.
(D)Standing Instructions. With respect
to an offshore obligation, documentary ev-
idence is unreliable or incorrect as an in-
dication of a person’s status as a foreign
person if the person has standing instruc-
tions directing the withholding agent to
pay amounts to an address or an account
maintained in the United States. The with-
holdingagentmaytreatthepersonasafor-
eign person, however, if the person pro-
vides a withholding certificate and docu-
mentary evidence establishing foreign sta-
tus (as described in paragraph (c)(5)(i) of
April 8, 20138382013–15 I.R.B.

this section), to the extent such documen-
tary evidence was not already provided.
(E)Standards of knowledge applica-
ble to certain types of documentary evi-
dence—(1)Financial statement. A with-
holding agent that obtains a financial state-
ment for purposes of establishing that a
foreign payee meets a certain asset thresh-
old will have reason to know that the chap-
ter 4 status claimed is inaccurate only if the
total assets shown on the financial state-
ment 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 chap-
ter 4 status claimed. A withholding agent
that obtains a financial statement for pur-
poses 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
§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 pur-
poses 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 withholding agent
that is not relying upon a financial state-
ment 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 required to inde-
pendently evaluate the financial statement
solely because the withholding agent also
has collected the financial statement in the
course of its account opening or other pro-
cedures.
(2)Organizational documents. A with-
holding agent that obtains organizational
documents for an entity solely for the
purpose of supporting the chapter 4 status
claimed will only be required to review
the document sufficiently to establish 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 sta-
tus claimed, unless otherwise specified
in paragraph (d) of this section. A with-
holding agent that obtains organizational
documents for the purpose of establishing
that an entity has a particular chapter 4
status will only be required to review the
document to the extent needed to establish
that the entity is a foreign person, that
the requirements applicable to the partic-
ular 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 ap-
plicable when only documentary evidence
is a code or classification described in
paragraph (c)(5)(ii)(B) of this section.A
withholding agent may not rely upon a
standard industry code or classification de-
scribed in paragraph (c)(5)(ii)(B) of this
section to treat an entity as having a for-
eign chapter 4 status if there are U.S.in-
diciadescribed in paragraph (e)(4)(v)(A)
of this section associated with the entity,
unless such U.S.indiciaare cured in the
manner set forth in paragraph (e)(4)(v)(B)
of this section.
(A)U.S. indicia for entities.Theterm
U.S. indiciawhen used with respect to an
entity includes, for purposes of this para-
graph (e)(4)(v) any of the following—
(1) Classification of an account holder
as a U.S. resident in the withholding
agent’s customer files;
(2) A current U.S. residence address or
U.S. mailing address;
(3) With respect to an offshore obliga-
tion, standing instructions to pay amounts
to a U.S. address or an account maintained
in the United States;
(4) A current telephone number for the
entity in the United States but no telephone
number for the entity outside of the United
States;
(5) A current telephone number for the
entity in the United States in addition to a
telephone number for the entity outside of
the United States;
(6) A power of attorney or signatory
authority granted to a person with a U.S.
address; and
(7) An “in-care-of” address or “hold
mail” address that is the sole address pro-
vided for the entity.
(B)Documentation required to cure
U.S. indicia. A withholding agent may
rely upon a code or classification described
in paragraph (c)(5)(ii)(B) of this section to
treat an entity as havingaforeignchapter
4statusifthereareU.S.indiciaassoci-
ated with the entity and the withholding
agent obtains the relevant documentation
described in this paragraph (e)(4)(v)(B).
(1)IfthereareU.S.indiciadescribed
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 withhold-
ing 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 sta-
tus as a foreign person (such as a certificate
of incorporation).
(2)IfthereareU.S.indiciadescribed
in paragraphs (e)(4)(v)(A)(1
)to(4)ofthis
section associated with the entity and the
withholding agent is making a payment
with respect to an offshore obligation, the
withholding agent may also treat the en-
tity as a foreign person if the withholding
agent obtains a withholding certificate for
the entity and the withholding agent treats
the entity as foreign for purposes of for-
eign tax reporting. A withholding agent
will treat an entity as foreign for purposes
of foreign tax reporting only if the with-
holding agent classifies the entity as a res-
ident of the country in which the obliga-
tion is maintained, the withholding agent
is required to report payments made to the
entity annually on a tax information state-
ment that is filed with the tax authority of
the country in whichthe account is main-
tained as part of that country’s resident re-
porting requirements, and that country has
an tax information exchange agreement or
income tax treaty in effect with the United
States.
(3)Ifthereareindiciadescribed in para-
graphs (e)(4)(v)(A)(5) through (7)ofthis
section associated with the entity, the with-
holding agent may treat the entity as a
foreign person if the withholding agent
obtains a withholding certificate or one
form of documentary evidence, described
in paragraph (c)(5) of this section, that es-
tablishes the entity’s status as a foreign per-
son (such as a certificate of incorporation).
(vi)Specific standards of knowledge
applicable to documentation received from
intermediaries and flow-through enti-
ties—(A)In general. A withholding agent
that receives documentation from a payee
through an intermediary or flow-through
entity is required to review all documen-
tation obtained with respect to the payee
and all intermediaries and/or flow-through
2013–15 I.R.B.839April 8, 2013

entities in the chain of payment, applying
the standards of knowledge set forth in
paragraph (e) of this section. This standard
requires, but is not limited to, a withhold-
ing agent’s compliance with the rules of
paragraphs (e)(4)(vi)(A)(1)and(2)ofthis
section.
(1) The withholding agent is required to
review the withholding statement or owner
reporting statement provided and may not
rely on information in the statement to
the extent the information does not sup-
port the claims made regarding the chap-
ter 4 status of the person. For this pur-
pose, a withholding agent may not treat a
person as a foreign person if an address
in the United States is provided for such
person unless the withholding statement is
accompanied by a valid withholding cer-
tificate and documentary evidence estab-
lishing foreign status (as described in para-
graph (c)(5)(i) of this section).
(2) The withholding agent must review
each withholding certificate and written
statement in accordance with paragraph
(e)(4)(i) through (iii)of this section and all
documentary evidence in accordance with
paragraph (e)(4)(i) and (iv) of this section,
and must verify that the information con-
tained on the withholding certificate, writ-
ten statement, and documentary evidence
is consistent with the information on the
withholding statement or owner reporting
statement. If there is a discrepancy be-
tween the withholdingcertificate, written
statement, or documentary evidence and
the withholding statement or owner report-
ing statement, the withholding agent may
choosetorelyonthewithholdingcertifi-
cate, written statement, or documentary
evidence provided such documentation is
valid and the intermediary or flow-through
entity does not indicate that the documen-
tation is unreliable or inaccurate, or may
apply the presumption rules set forth in
paragraph (f) of this section. If the with-
holding agent chooses to rely upon the
withholding certificate, written statement,
or documentary evidence, the withholding
agent is required to instruct the interme-
diaryorflow-throughentitytocorrectthe
withholding statement and confirm that the
intermediary or flow-through entity does
not know or have reason to know that the
documentation is unreliable or inaccurate.
(B)Limits on reason to know with
respect to documentation received
from participating FFIs and registered
deemed-compliant FFIs that are inter-
mediaries or flow-through entities.A
withholding agent that receives docu-
mentation 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 participating FFI or registered
deemed-compliant FFI in the withholding
statement unless the withholding agent
has information that conflicts with the
chapter 4 status provided. If underlying
documentation is provided for the payee
and information in the documentation or
in the withholding agent’s records con-
flicts with the chapter 4 status claimed,
the withholding agent will have reason to
know that the chapter 4 status claimed is
inaccurate. 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 chapter 3 or 61
or unless the withholding agent knows that
the review conducted by the participating
FFI or registered deemed-compliant FFI
for purposes of chapter 4 was not ade-
quate. For example, a withholding agent
that receives a withholding statement from
a participating FFI that is an intermedi-
ary stating that the payee is a registered
deemed-compliant FFI is only required to
determine that any withholding certificate
provided for the payee contains 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 require-
ments 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
will have reason to know that the claim
is inaccurate if it receives a withholding
statement that contains a U.S. address for
the payee unless the partnership also pro-
vides a copy of documentation sufficient
to cure the U.S.indiciain the manner set
forth in paragraph (e) of this section or
the withholding statement indicates that
appropriate documentation sufficient to
cure the U.S.indiciain the manner set
forth in paragraph (e) of this section has
been obtained and provides details of such
documentation, such as the type of docu-
mentation and an identification number of
the person contained on the document.
(vii)Limits on reason to know—(A)
Scope of review for preexisting obligations
of entities. For purposes of determining
whether a withholding agent that makes a
payment with respect to a preexisting obli-
gation to an entity has reason to know that
the chapter 4 status applied to the entity
is unreliable or incorrect, the withholding
agent is only required to review infor-
mation contradicting the chapter 4 status
claimed if such information is contained
in the current customer master file, the
most recent withholding certificate, writ-
ten statement, and documentary evidence
for the person, the most recent account
opening contract, the most recent docu-
mentation obtained by the withholding
agent for purposes of AML due diligence
or for other regulatory purposes, any
power of attorney or signature authority
forms currently in effect, and any standing
instructions to pay amounts that is cur-
rently in effect.
(B)Reason to know there is a U.S.
telephone number associated with a pre-
existing obligation. For payments made
with respect to a preexisting obligation,
a withholding agent, in lieu of searching
the account files addressed in paragraph
(e)(4)(vii)(A) of this section to determine
whether the payee (or other person receiv-
ing the payment) has a current telephone
number in the United States, may rely
upon a search of its electronically search-
able information associated with such
person. However, the withholding agent
may only rely upon the electronic search
described in the previous sentence if the
electronic search produces at least one
current phone number for the person. If
the electronic search does not produce a
telephone number for the person, the with-
holding agent will be required, by January
1, 2017, to search the files described in
paragraph (e)(4)(vii)(A) of this section to
locate a current telephone number for the
payee.
(C)Reason to know there are U.S. in-
diciaassociatedwithpreexistingoffshore
obligations. For payments made outside
April 8, 20138402013–15 I.R.B.

of the United States with respect to an off-
shore obligation that is also a preexisting
obligation and with respect to a withhold-
ing agent that had not already documented
the payee for purposes of chapter 3 or 61,
the withholding agent, in lieu of searching
the account files addressed in paragraph
(e)(4)(vii)(A) of this section to determine
whether there are U.S.indiciaassociated
with the payee (or other person who re-
ceives the payment), may instead rely upon
a search of its electronically searchable in-
formation associated with such person. A
withholding agent that relies upon an elec-
tronic search pursuant to this paragraph
(e)(4)(vii)(C) must also review for U.S.in-
diciaany documentation upon which the
withholding agent relies to determine the
chapter 4 status of the person and any doc-
umentation that the withholding agent had
been relying upon to determine the resi-
dency or citizenship of the person.
(D)Limits on reason to know for multi-
ple obligations belonging to a single per-
son. A withholding agent that maintains
multiple obligations for a single person
will have reason to know that a chapter 4
status assigned to the person is inaccurate
based on information contained in the cus-
tomer files for another obligation held by
the person only to the extent that—
(1) 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 customer information
and payment information for the obliga-
tions; or
(2) The withholding agent has treated
the obligations as consolidated obligations
for purposes of sharing documentation
pursuant to paragraph (c)(8) of this section
or for purposes of treating one or more
accounts as preexisting obligations.
(viii)Reasonable explanation support-
ing claim of foreign status. A reasonable
explanation supporting a claim of foreign
status for an individual means a written
statement prepared by the individual (or
the individual’s completion of a checklist
provided by the withholding agent), stat-
ing that the individual meets one of the
requirements of paragraphs (e)(4)(viii)(A)
through (D).
(A) The individual certifies that he or
she—
(1) Is a student at a U.S. educational
institution and holds the appropriate visa;
(2) Is a teacher, trainee, or intern at a
U.S. educational institution or a partici-
pant in an educational or cultural exchange
visitor program, and holds the appropriate
visa;
(3) Is a foreign individual assigned to a
diplomatic post or a position in a consulate,
embassy, or international organization in
the United States; or
(4) Is a spouse or unmarried child under
the age of 21 years of one of the persons
described in paragraphs (e)(4)(viii)(A)
through (C) of this section;
(B) 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 (for
example, a written statement indicating
the number of days present in the United
States during the three-year period that
includes the current year);
(C) The individual certifies that he or
she meets the closer connection excep-
tion 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
(D) 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.
(5)Conduit financing arrangements.
The rules set forth in §1.1441–7(f), re-
garding a withholding agent’s liability for
failing to withhold in the case in which
the financing arrangement is a conduit
financing arrangement, apply for purposes
determining a withholding agent’s liability
for any withholding required under chap-
ter 4.
(6)Additional guidance. The IRS may
prescribe other circumstances for which a
withholding certificate or documentary ev-
idence to establish a payee’s chapter 4 sta-
tus is unreliable or incorrect in addition to
the circumstances described in this para-
graph (e).
(f)Presumptions regarding chapter 4
status of the person receiving the payment
in the absence of documentation—(1)In
general. A withholding agent that can-
not, prior to the payment, reliably asso-
ciate (within the meaning of paragraph (c)
of this section) a payment with valid doc-
umentation may rely on the presumptions
of this paragraph (f) to determine 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 participating FFI or a
nonparticipating FFI). See paragraph (f)(9)
of this section for consequences to a with-
holding agent that fails to withhold in ac-
cordance with the presumptions set forth in
this paragraph (f) or that has actual knowl-
edge or reason to know facts that are con-
trary to the presumptions set forth in this
paragraph (f).
(2)Presumptions of classification as
an individual or entity—(i)In general.
A withholding agent that cannot reliably
associate a payment with a valid withhold-
ing certificate, or that has received valid
documentary evidence, as described in
paragraph (c)(5) of this section, but cannot
determine a person’s status as an indi-
vidual or an entity from the documentary
evidence, must presume that the person
is an individual if the person appears to
be an individual (for example, based on
the person’s name or information in the
customer file). If the person does not
appear to be an individual, then the per-
son shall be presumed to be an entity. In
the absence of reliable documentation, a
withholding agent must treat a person that
is presumed to be an entity as a trust or
estate if the person appears to be a trust
or estate (for example, based on the per-
son’s name or information in the customer
file). In addition, a withholding agent
must treat a person that is presumed to
be a trust, or a person that is known to
be a trust but for which the withholding
agent cannot determine the type of trust,
as a grantor trust if the withholding agent
knows that the settlor of the trust is a
U.S. person, and otherwise as a simple
trust. In the absence of reliable indica-
tions that the entity is a trust or estate,
the withholding agent must presume the
person is a corporation if it can be treated
as such under §1.6049–4(c)(1)(ii)(A)(1).
If the withholding agent cannot treat
the person as a corporation under
§1.6049–4(c)(1)(ii)(A)(1), then the person
must be presumed to be a partnership. See
paragraph (a) of this section to determine,
based upon the person’s presumed entity
type, whether the person is treated as a
payee.
2013–15 I.R.B.841April 8, 2013

(ii)Documentary evidence furnished
for offshore obligation. If the withholding
agent receives valid documentary evi-
dence, as described in paragraph (d) of this
section, with respect to an offshore obli-
gation 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 that the entity is a corpora-
tion unless the withholding agent knows,
or has reason to know, that the entity is
not classified as a corporation for U.S. tax
purposes. However, a withholding agent
may not treat a person that is known or
presumed to be a foreign corporation as a
beneficial owner if the withholding agent
knows, or has reason to know, that the per-
son is not the beneficial owner with respect
to the payment. For this purpose, a with-
holding agent will have reason to know
that the person is not a beneficial owner
if the documentary evidence indicates that
the person is a bank, broker, intermediary,
custodian, or other agent. A withholding
agent may, however, treat such a person
as a beneficial owner if the foreign person
provides written notification, regardless
of whether such notification is signed,
that indicates the person is the beneficial
owner of the payment.
(3)Presumptions of U.S. or foreign
status. A payment that the withholding
agent cannot reliably associate with a valid
withholding certificate or documentary
evidence is presumed to be made to a U.S.
person, except as otherwise provided in
this paragraph (f)(3). A payment that is
reliably associated with 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,
will be presumed to be 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. person
or the person’s name reasonably indicates
that the person is a bank (for example
because it contains the word “Bank” or a
foreign equivalent).
(i)Payments to entities with indicia of
foreign status. If a withholding agent can-
not reliably associate a payment with valid
documentation sufficient to determine the
person’s status as a U.S. person or foreign
person and the person is presumed to be an
entity, the person is presumed to be a for-
eign person and not a U.S. person—
(A) If the withholding agent has actual
knowledge of the person’s EIN and that
number begins with the two digits “98”;
(B) If the withholding agent’s commu-
nications with the person are mailed to an
address in a foreign country;
(C) If the withholding agent has a tele-
phone number for the person outside of the
United States; or
(D) If the name of the person indicates
that the entity is of a type that is on theper
selist of foreign corporations contained in
§301.7701–2(b)(8)(i) of this chapter (other
than a name which contains the designa-
tion “corporation” or “company”).
(ii)Payments to certain exempt re-
cipients. If the payment is made to
an entity that is treated as an ex-
empt recipient under the provisions of
§1.6049–4(c)(1)(ii)(A)(1), (F), (G), (H),
(I), (M), (O), (P), or (Q) in the case of inter-
est, or under similar provisions in chapter
61 applicable to the type of payment in-
volved, the entity shall be presumed to be
a foreign person.
(iii)Payments with respect to offshore
obligations. A payment to an individual
or an entity is presumed to be made to
a foreign person if the payment is made
outside of the United States with respect to
an offshore obligation and the withholding
agent does not know that the person is a
U.S. person.
(4)Presumption of chapter 4 status for
a foreign entity. A withholding agent that
makes a payment to a foreign entity that
it cannot reliably associate with a valid
withholding certificate or documentary ev-
idence sufficient to determine the chapter 4
status of that entity under paragraph (d) of
this section (for example, as a participating
FFI, nonparticipating FFI, or NFFE) must
presume that the entity is a nonparticipat-
ing FFI.
(5)Presumption of status as an inter-
mediary. If a withholding agent cannot re-
liably associate a payment with documen-
tation to treat the payment as made to an
intermediary, then the withholding agent
must treat the payment as made to an inter-
mediary if the withholding agent has doc-
umentary evidence or other documenta-
tion that indicates, or the facts and circum-
stances of the transaction (including the
name of the person who receives the pay-
ment or the presence of sub-account num-
bers not corresponding to accounts main-
tained by the withholding agent for such
person) indicate that the person who re-
ceives the payment is a bank, broker, cus-
todian, intermediary, or other agent, and
the withholding agent has no knowledge
that the person is receiving the payment
for its own account. Any portion of a pay-
ment that the withholding agent must treat
as made to a foreign intermediary (whether
a QI or an NQI) but that the withhold-
ing agent cannot treat as reliably associ-
ated with valid documentation under the
rules of paragraph (c) of this section, is
presumed to be made to a nonparticipat-
ing FFI account holder ofthe intermediary.
A person that the withholding agent is not
required to treat as a foreign intermediary
under this paragraph (f)(5) is presumed to
be a person other than an intermediary.
(6)Presumption of effectively con-
nected income for payments to certain U.S.
branches. A withholding agent that makes
apaymenttoaU.S.branchdescribedin
this paragraph (f)(6) may presume, in the
absence of documentation indicating oth-
erwise, that the U.S. branch is the payee
and the payment is effectively connected
with the conduct of a trade or business in
the United States if the withholding agent
has both an EIN for the branch and a valid
GIIN for the home office establishing that
the U.S. branch is a branch of a participat-
ing FFI or registered deemed-compliant
FFI. 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 su-
pervision 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.Ifa
withholding agent makes a payment to
April 8, 20138422013–15 I.R.B.

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 ap-
pear, by its name and other information
contained in the account file, to be an
individual, then the entire payment will
be treated as made to a nonparticipating
FFI. However, if one of the joint payees
provides 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.
(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 payees
and cannot reliably associate a 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 unknown foreign individual.
(8)Rebuttal of presumptions. A payee
may rebut the presumptions described in
this paragraph (f) 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 oth-
erwise provided in this paragraph (f)(9), a
withholding agent that withholds on a pay-
ment under section 1471 or 1472 in ac-
cordance 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 chap-
ter 4 status other than the status presumed.
A withholding agent that fails to report and
withhold in accordancewith the presump-
tions described in this paragraph (f) with
respect to a payment that it cannot reliably
associate with validdocumentation shall
be liable for tax, interest, and penalties.
See §1.1474–1(a) for the extent of a with-
holding agent’s liability for failing to with-
hold in accordance with the presumptions
described in this paragraph (f).
(ii)Actual knowledge or reason to know
that amount of withholding is greater
than is required under the presumptions
or that reporting of the payment is re-
quired. Notwithstanding the provisions of
paragraph (f)(9)(i) of this section, a with-
holding agent that knows or has reason to
know that the status or characteristics of
the person are other than what is presumed
under this paragraph (f) may not rely on
the presumptions described in this para-
graph (f) to the extent that, if it determined
the status of the person based on such
knowledge or reason to know, it would be
required to withhold (under this section
or another withholding 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 withholding agent must rely on
its knowledge or reason to know rather
than on the presumptions set forth in this
paragraph (f). Failure to do so shall result
in liability for tax, interest, and penalties
to the extent provided under §1.1474–1(a).
(g)Effective/applicability date.This
section generally applies on January 28,
2013. For other dates of applicability,
see §§1.1471–3(d)(1); 1.1471–3(d)(4)(i),
(ii), and (iv); 1.1471–3(d)(6)(v);
1.1471–3(d)(11)(viii)(A);
1.1471–3(d)(12)(iii)(B);
1.1471–3(e)(3)(ii);and
1.1471–3(e)(4)(vii)(B).
Par. 8. Section 1.1471–4 is added to
read as follows:
§1.1471–4 FFI agreement.
(a)In general. An FFI agreement will
be in effect in accordance with section
1471(b) if an FFI registers with the IRS
pursuant to procedures prescribed by the
IRS and agrees to comply with the terms
of an FFI agreement. The FFI agreement
will incorporate the requirements set forth
in this section, any modifications set forth
in an applicable Model 2 IGA, and any pro-
visions applicable to a reporting Model 1
FFI.
(1)Withholding. A participating FFI is
required to deduct and withhold tax with
respect to payments made to recalcitrant
account holders and nonparticipating FFIs
to the extent required under paragraph (b)
of this section. A participating FFI that is
prohibited by foreign law from withhold-
ing as required under paragraph (b) of this
section with respect to an account must
close such account within a reasonable pe-
riod of time or must otherwise block or
transfer such account as described in para-
graph (i) of this section.
(2)Identification and documentation
of account holders. A participating FFI
is required to obtain such information
regarding each holder of each account
maintained by the participating FFI to
determine whether each account is a U.S.
account or an account held by a recalci-
trant account holder or nonparticipating
FFI in accordance with the due diligence
procedures for identifying and document-
ing account holders described in paragraph
(c)ofthissection.
(3)Reporting. A participating FFI is re-
quired to report the information described
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 participating FFI must
also comply with the filing requirements
described in §1.1474–1(c) and (d) to re-
port payments that are chapter 4 reportable
amounts paid to recalcitrant account hold-
ers and nonparticipating FFIs (including
the transitional reporting of foreign re-
portable amounts paid to nonparticipating
FFIs for calendar years 2015 and 2016
described in §1.1474–1(d)(4)(iii)(C)). A
participating 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)Expanded affiliated group.Except
as otherwise provided in Model 1 IGA or
Model 2 IGA, in order for any FFI that is
a member of an expanded affiliated group
to be a participating FFI, each FFI that
is a member of the expanded affiliated
group must be a participating FFI or regis-
tered deemed-compliant FFI as described
in paragraph (e) of this section. For a lim-
ited period described in paragraph (e)(2) or
(e)(3) of this section, however, a branch of
anFFIoranFFIthatisamemberofanex-
panded affiliated group and is unable un-
der foreign law to satisfy the requirements
of this section may instead obtain status as
a limited branch of a participating FFI or
limited FFI if the branch or FFI meets the
requirements set forth in paragraph (e)(2)
or (e)(3) of this section (as applicable).
(5)Verification. A participating FFI is
required to adopt a compliance program
as described in paragraph (f) of this sec-
tion under the authority of the responsi-
ble officer, who will be required to cer-
tify periodically to the IRS on behalf of the
FFI regarding the participating FFI’s com-
2013–15 I.R.B.843April 8, 2013

pliance with the requirements of the FFI
agreement. If the IRS identifies concerns
about the participating FFI’s compliance,
the IRS may request additional informa-
tion to verify compliance with the require-
ments of the FFI agreement as described in
paragraph (f)(4) of this section.
(6)Event of default. A participating FFI
is required to cure an event of default with
respect to the FFI agreement as defined in
paragraph (g) of this section. Upon the oc-
currence of an event of default, the IRS
will deliver to a participating FFI a notice
of default and will allow the FFI an oppor-
tunity to cure the event of default as de-
scribed in paragraph (g) of this section.
(7)Refunds. A participating FFI may
file a collective refund on behalf of certain
account holders and payees for amounts
withheld by the participating FFI or its
withholding agent under chapter 4 in
excess of the account holder or payee’s
U.S. tax liability to the extent permit-
ted in paragraph (h) of this section. A
participating FFI may also make an ad-
justment for overwithholding using either
the reimbursement procedure described in
§1.1474–2(a)(3) or the set-off procedure
described in §1.1474–2(a)(4).
(b)Withholding requirements—(1)In
general. Except as otherwise provided in
a Model 2 IGA, a participating FFI is re-
quired to deduct and withhold a tax equal
to 30 percent of any withholdable pay-
ment made by such participating FFI to
an account held by a recalcitrant account
holder or to a nonparticipating FFI after
December 31, 2013, to the extent required
under paragraph (b)(3) of this section.
See paragraph (b)(2) of this section for
rules for a participating FFI to identify the
payee of a payment in order to determine
whether withholding is required under this
paragraph (b). See paragraph (b)(4) of this
section for the extent of a participating
FFI’s requirement to deduct and withhold
tax on a foreign passthru 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 withhold-
ing 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 withholding and the exclusion from the
definition of withholdable payment and
foreign passthru 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 participating 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.
(2)Withholding determination. Except
as otherwise provided under §1.1471–2
and paragraph (c) of this section with re-
spect to certain preexisting accounts, a
participating FFI is required to determine
whether withholding applies at the time a
payment is made by reliably associating
the payment with valid documentation
described in paragraph (c) of this section
for the payee of the payment. For a pay-
ment made to an account, if the account
is held by one or more individuals, 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 of the payment. 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 pro-
vided 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 reli-
ably associate a payment (or any portion of
a payment) with valid documentation, the
rules described in paragraph (c) of this sec-
tion shall apply to determine the chapter 4
status of the account holder (and payee if
other than the account holder). Notwith-
standing the foregoing, a participating FFI
may establish after the date of payment
that withholding was not required to the
extent permitted under §1.1471–3(c)(7)
or may apply the procedures provided in
§1.1474–2 when overwithholding occurs.
(3)Satisfaction of withholding require-
ments. A participating FFI that complies
with the withholding obligations of this
paragraph (b) with respect to accounts
held by recalcitrant account holders and
payees that are nonparticipating FFIs shall
be deemed to satisfy its withholding obli-
gations under sections 1471(a) and 1472
with respect to such account holders and
payees. A participating FFI that is an NQI,
NWP, NWT, or that is a QI that elects
under section 1471(b)(3) not to assume
withholding responsibility for the pay-
ment and that provides its withholding
agent with the information necessary to
allocate all or a portion of the payment to
each payee as part of a withholding cer-
tificate 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
FFIthatisanNQI,NWP,orNWThasa
residual withholding responsibility. See
also §1.1471–3(c)(9)(iii)(B) for the cir-
cumstances under which a participating
FFI that is a broker has a residual with-
holding responsibility as an intermediary
of the payment and may also be liable for
any underwithholding that occurs. See
§§1.1471–2(a) and 1.1472–1(a)(2)(i) and
the QI, WP, or WT agreement for the with-
holding requirements of a participating
FFI that is a QI, WP, or WT for purposes
of chapter 4.
(4)Foreign passthru payments.Apar-
ticipating FFI is not required to deduct and
withhold tax on a foreign passthru pay-
ment made by such participating FFI to
an account held by a recalcitrant account
holder or to a nonparticipating FFI before
the later of January 1, 2017, or the date of
publication in the Federal Register of fi-
nal regulations defining the term foreign
passthru payment.
(5)Withholding on limited FFIs and
limited branches—(i)Limited FFIs.A
participating FFI is required to withhold on
a withholdable payment made to a limited
FFI identifying itself as a nonparticipating
FFI. A participating FFI that is a mem-
ber of an expanded affiliated group that in-
cludes one or more limited FFIs will also
be required to treat any such limited FFI
as a nonparticipating FFI with respect to
withholdable payments made to such lim-
ited FFI. A participating FFI will be con-
sidered to have made a withholdable pay-
ment to a limited FFI if such participat-
ing FFI receives a withholdable payment
with respect to a security or instrument
held on behalf of a limited FFI (or an ac-
count maintained by the limited FFI). A
participating FFI will also be considered
April 8, 20138442013–15 I.R.B.

to have made a withholdable payment to a
limited FFI when the limited FFI receives
a payment with respect to a transaction be-
tween the limited FFI and such participat-
ing FFI that is in the same expanded affili-
ated group and such transaction hedges or
otherwise provides total return exposure to
another transaction between such partici-
pating FFI and a third party that gives rise
to a withholdable payment.
(ii)Limited branches. A participating
FFI is required to withhold on a withhold-
able payment made to a limited branch
identifying itself as anonparticipating FFI.
A branch of the participating FFI other
than the limited branch is also required
to withhold on a withholdable payment
when it receives the payment on behalf of
a limited branch of the participating FFI. A
branch of the participating FFI other than
a limited branch will be considered to have
received a withholdable payment on behalf
of a limited branch when such other branch
receives a withholdable payment with re-
spect to a security or instrument it holds
on behalf of a limited branch (or an ac-
count maintained by the limited branch).
A branch of a participating FFI other than
a limited branch will be considered to hold
a security or instrument on behalf of a
limitedbranchwhenitexecutesatrans-
action with a limited branch that hedges
or otherwise provides total return exposure
to another transaction between such other
branch and a third party that gives rise to a
withholdable payment.
(6)Special rule for dormant accounts.
A participating FFI that makes a pay-
ment to a recalcitrant account holder of
a dormant account and that withholds on
such payment as required under paragraph
(b)(1) of this section may, in lieu of de-
positing the tax withheld under §1.6302–2
and described in §1.1474–1(b), set aside
the amount withheld in escrow until the
date that the account ceases to be a dor-
mant account. In such case, the tax with-
held becomes due 90 days following the
date that the account ceases to be a dor-
mant account if the account holder does
not provide the documentation required
under paragraph (c) of this section or be-
comes refundable to the account holder if
the account holder provides the documen-
tation required under paragraph (c) of this
section establishing that withholding does
not apply. If a dormant account escheats
to a foreign government under the rele-
vant laws in the jurisdiction in which the
participating FFI (or branch thereof) oper-
ates, the participating FFI is not 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)Withholding requirements for U.S.
branches of participating FFIs that are
treated as U.S. persons. A U.S. branch of
a participating FFI that is treated as a U.S.
person and that satisfies its backup with-
holding obligations under section 3406(a)
with respect to accounts held at the U.S.
branch by account holders that are treated
as U.S. non-exempt recipients under chap-
ter 61 will be treated as satisfying its with-
holding obligation with respect to such ac-
counts under section 1471(b)(1) and this
paragraph (b). See paragraph (d)(2)(iii)(B)
of this section for the special reporting
requirements applicable to U.S. branches
of participating FFIs that are treated as
U.S. persons. See paragraphs (c)(2) and
(d)(4) of this section for the reporting re-
quirements of U.S. branches of participat-
ing FFIs with respect to payments that are
chapter 4 reportable amounts.
(c) Due diligence for the identification
and documentation of account holders and
payees—(1)Scope of paragraph.Except
to the extent that a participating FFI re-
lies on the due diligence procedures set
forth in an applicable Model 2 IGA, a par-
ticipating FFI must follow this paragraph
(c) to identify and document the chap-
ter 4 status of each holder of an account
maintained by the participating FFI to de-
termine if the account is a U.S. account,
non-U.S. account, or an account held by
a recalcitrant account holder or nonpartici-
pating FFI. Paragraph (c)(2) of this section
provides the general rules for identifica-
tion and documentation of account holders
and payees, and paragraph (c)(2)(v) pro-
vides special documentation requirements
for certain U.S. branches of participating
FFIs. Paragraph (c)(3) of this section pro-
vides the rules for documenting entity ac-
counts and payees. Paragraph (c)(4) of this
section provides the general rules for doc-
umenting individual accounts other than
preexisting accounts. Paragraph (c)(5) of
this section provides the identification and
documentation procedure for preexisting
individual accounts. Paragraph (c)(6) of
this section provides examples illustrating
the application of the documentation ex-
ceptions for entity accounts and individ-
ual accounts. Paragraph (c)(7) of this sec-
tion outlines the certification requirement
relating to the due diligence procedures of
this paragraph (c) with respect to preexist-
ing accounts within the specified periods
of time.
(2)General rules for the identification
and documentation of account holders
and payees—(i)Overview. Except as oth-
erwise provided in paragraphs (c)(3)(iii)
and (c)(5)(iii) of this section (documen-
tation exceptions for certain preexisting
accounts), a participating FFI is required
to identify among accounts maintained
by the participating FFI each account that
is a U.S. account or an account held by
a recalcitrant account holder or nonpar-
ticipating FFI, and to report information
about such accounts in the manner pro-
vided in paragraph (d) of this section and
§1.1474–1(d)(4)(iii). See §1.1471–5(a)(3)
for rules to determine the holder of an
account. The participating FFI is also
required to retain a record of the documen-
tation collected or otherwise maintained
that meets the requirements described
in this paragraph (c) when making cer-
tain payments to an account holder or
payee (if other than an account holder)
to determine whether withholding ap-
plies under paragraph (b) of this sec-
tion or whether reporting applies under
§1.1474–1(d)(4)(iii)(C) and any payee
for which it provides the certification
described in §1.1471–3(c)(9)(iii)(A) to
another withholding agent.
(ii)Standards of knowledge—(A)In
general. A participating FFI may rely
on valid documentation that is collected
pursuant to the due diligence procedures
set forth in this paragraph (c) or that is
otherwise maintained in the participat-
ing FFI’s files, unless the participating
FFI knows or has reason to know that
such documentation is unreliable or in-
correct. For purposesof a participating
FFI documenting an account holder under
this paragraph (c), the requirements for
the validity of withholding certificates,
written statements, and documentary ev-
idence provided in §1.1471–3(c) shall
apply regardless of whether the participat-
ing FFI makes a payment to the account.
Except as otherwise provided paragraph
(c)(2)(ii)(B) of this section (certain merg-
ers or bulk acquisitions) and in paragraph
(c)(5)(iv) of this section (preexisting indi-
2013–15 I.R.B.845April 8, 2013

vidual accounts), to determine whether a
participating FFI knows or has reason to
know that the documentation collected or
otherwise maintained with respect to the
account holder is unreliable or incorrect,
the standards of knowledge provided in
§1.1471–3(e) shall apply regardless of
whether the participating FFI makes a pay-
ment to the account. See §1.1471–3(c)(8)
and (9) for the requirement to obtain docu-
mentation on an account-by-account basis
and the exceptions tothis requirement.
(B)Limits on reason to know with
respect to certain accounts acquired in
merger or bulk acquisition.Aparticipat-
ing FFI that acquires accounts of another
financial institution either in a merger
or bulk acquisition of accounts for value
(other than a related party transaction de-
scribed in §1.1471–3(c)(9)(v)) may apply
the limitations on reason to know pro-
vided in paragraphs (c)(2)(ii)(B)(1)or(2)
of this section (as applicable and subject
to the conditions therein), or the rules of
§1.1471–3(c)(9)(v) to rely upon docu-
mentation collected by another financial
institution for an account acquired either
in a merger or bulk acquisition of accounts
for value.
(1)In general. The participating
FFI may treat accounts acquired in a
transaction described in this paragraph
(c)(2)(ii)(B) as preexisting accounts for
purposes of applying the identification
and documentation procedures of this
paragraph (c) by substituting the date of
acquisition of suchaccounts for the effec-
tive date of the FFI agreement.
(2)Participating FFIs and certain
deemed-compliant FFIs that apply the due
diligence rules, and U.S. financial insti-
tutions. If a participating FFI (transferee
FFI) acquires accounts of another par-
ticipating FFI or deemed-compliant FFI
(including a U.S. branch of either such
FFI) that applies the due diligence require-
ments of this paragraph (c) as a condition
of its status (as described in §1.1471–5(f)),
or of a U.S. financial institution (transferor
FI), the transferee FFI may rely on the
chapter 4 status determination made by the
transferor FI for an account holder and will
not be subject to the standards of knowl-
edge set forth in paragraph (c)(2)(ii)(A)
of this section until there is a change in
circumstances with respect to the account
if the following conditions are met—
(i) The transferee FFI does not have ac-
tual knowledge that the chapter 4 status de-
termination provided by the transferor FI is
unreliable or incorrect;
(ii) For the certification period follow-
ing the acquisition of such accounts (de-
scribed in paragraph (f)(3)(i) of this sec-
tion), the transferee FFI acquiring the ac-
counts tests a sample of the acquired ac-
counts to determine if the chapter 4 status
determinations made by the transferor FI
are reliable;
(iii) In the case of a transferor FI that is
a branch of a participating FFI or of a reg-
istered deemed-compliant FFI (other than
a U.S. branch that is treated as a U.S. per-
son) or that is a deemed-compliant FFI that
applies the requisite due diligence rules
of this paragraph (c) as a condition of its
status, the transferor FI provides a writ-
ten representation to the transferee FFI ac-
quiring the accounts that the transferor FI
has applied the due diligence procedures
of this paragraph (c) with respect to the
transferred accounts and, in the case of a
transferor FI that is a participating FFI, has
complied with the requirements of para-
graph (f)(2) of this section; and
(iv) In the case of a transferor FI that is
a U.S. financial institution or that is a U.S
branch of a participating FFI or of a regis-
tered deemed-compliant FFI that is treated
as a U.S. person, the transferee FFI may
rely on the chapter 4 status determinations
for a payee that is an entity only if prior to
the date of transfer the U.S. financial in-
stitution or U.S. branch made a withhold-
able payment to the payee or, for a payee
that is an individual, only if the U.S. finan-
cial institution or U.S. branch made a re-
portable payment (as defined under section
3406(b)) to the payee.
(iii)Change in circumstances—(A)
Obligation to identify a change in circum-
stances. A participating FFI is required
to institute procedures to ensure that any
change in circumstances, as described in
paragraph (c)(2)(iii)(B) of this section, is
identified by the participating FFI, includ-
ing procedures to ensure that a relationship
manager identifies any change in circum-
stances with respect to an account. For
example, if a relationship manager is noti-
fied that the account holder has a mailing
address in the United States when there
was no U.S. address previously associated
with the account, the participating FFI will
be required to treat the new address as a
change in circumstances and will be re-
quired to retain a record of the appropriate
documentation from the account holder as
described in paragraph (c)(5)(iv)(B)(2)(iii)
of this section.
(B)Definition of change in circum-
stances. For purposes of this section,
a change in circumstances (as defined
in §1.1471–3(c)(6)(ii)(D)) includes any
change or addition of information to the
account holder’s account (including the
addition, substitution, or other change
of an account holder) or any change or
addition of information to any account
associated with such account (applying
the account aggregation rules described
in §1.1471–5(b)(4)(iii) or by treating the
accounts as consolidated obligations) if
such change or addition of information
affects the chapter 4 status of the account
holder. For example, if a holder of an
account (including a preexisting account)
opens another account that is linked to
such account in the participating FFI’s
computerized system as described under
§1.1471–5(b)(4)(iii) and as part of the
participating FFI’saccount opening pro-
cedures the account holder provides a U.S.
telephone number for such other account,
this is a change in circumstances with re-
spect to the first mentioned account. With
respect to a preexisting account that meets
a documentation exception described in
paragraphs (c)(3)(iii) and (c)(5)(iii) of this
section, a change in circumstances also
includes a change in account balance or
value in a subsequent year that causes the
account no longer to meet the documenta-
tion exception.
(C)Requirements following a change
in circumstances. With respect to an in-
dividual account or an account held by a
passive NFFE for which there is a change
in circumstances with respect to the in-
formation regarding its owners, following
a change in circumstances the participat-
ing FFI must retain a record of the appro-
priate documentation described in para-
graph (c)(3) or (c)(5)(iv)(B)(2)ofthissec-
tion within the time period provided by
§1.1471–5(g)(3)(iii) or, if unable to do so,
must treat such account as held by a re-
calcitrant account holder. With respect to
an account held by an entity other than a
passive NFFE described in the preceding
sentence, following a change in circum-
stances, the participating FFI must retain
a record of the appropriate documentation
April 8, 20138462013–15 I.R.B.

described in paragraph (c)(3) of this sec-
tion by the earlier of 90 days or the date a
withholdable payment or foreign passthru
payment is made to the account or, if un-
able to do so, must treat such account as
held by a nonparticipating FFI.
(iv)Record retention. A participating
FFI must retain a record of the documen-
tation collected (or otherwise maintained)
to establish the chapter 4 status of an
account holder or payee pursuant to the re-
quirements of this paragraph (c)(2)(iv). A
participating FFI will be treated as having
retained a record of a withholding certifi-
cate, written statement, or documentary
evidence if the participating FFI retains
either an original, certified copy, or pho-
tocopy (including a microfiche, scan, or
similar means of record retention) of the
withholding certificate, written statement,
or documentary evidence collected to de-
termine the chapter 4 status of the account
holder for six calendar years following the
year in which the due diligence procedures
of this paragraph (c) were performed for
the account. With respect to documen-
tary evidence for an offshore obligation,
however, a participating FFI that is not
required to retain copies of documentation
reviewed pursuant to its AML due dili-
gence will be treated as having retained a
record of such documentation if the par-
ticipating FFI retains a record in its files
noting the date the documentation was
reviewed, each type of document, the doc-
ument’s identification number (if any) (for
example, passport number), and whether
any U.S.indiciawere identified. The pre-
vious sentence applies with respect to an
offshore obligation that is also a preexist-
ing obligation, except, in such case, the
requirement to record whether the doc-
umentation contained U.S.indiciadoes
not apply. A participating FFI must also
retain a record of any searches, includ-
ing search results provided by third-party
credit agencies as described in paragraph
(c)(4)(ii) of this section, results from elec-
tronic searches, and requests made and
responses to relationship manager in-
quiries for six calendar years following the
year in which the due diligence procedures
of this paragraph (c) were performed for
the account. A participating FFI may be
required to extend the six year retention
period if the IRS requests such extension
priortotheendofthesixyearretention
period. Notwithstanding the preceding
sentences, a participating FFI must retain
a record of the chapter 4 status of an ac-
count holder or payee for as long as the
FFI maintains the account or obligation.
See §1.1471–3(c)(6)(iii)(A) for the record
retention period applicable to a participat-
ing FFI that is a withholding agent with
respect to documentation collected (or
otherwise maintained) for a payee.
(v)Special rule for U.S. branches of
participating FFIs that are treated as U.S.
persons. A U.S. branch of a participat-
ing FFI that is treated as a U.S. person
shall apply, in lieu of the due diligence
requirements of this paragraph (c), the due
diligence requirements of §1.1471–3 to
determine the chapter 4 status of account
holders and payees that are entities and
shall apply the documentation require-
ments of chapter 3 or 61 (as applicable)
with respect to individual account holders.
See paragraph (b)(6) of this section for
special withholding rules and paragraph
(d)(2)(iii)(B) of this section for special
reporting rules applicable to such U.S.
branches.
(3)Identification and documentation
procedure for entity accounts and pay-
ees—(i)In general. With respect to
accounts held by entities, unless the doc-
umentation exception described in para-
graph (c)(3)(iii) of this section applies, a
participating FFI must determine if the ac-
count is a U.S. account or an account held
by a recalcitrant account holder or nonpar-
ticipating FFI by applying the principles
of §1.1471–3(b), (c), and (d) to establish
the chapter 4 status of each account holder
and each payee regardless of whether the
participating FFI makes a payment to the
account. If an account holder receiving a
payment is not the payee of the payment
under §§1.1471–3(a) and 1.1472–1(d)(3),
the participating FFI is also required to
establish the chapter 4 status of the payee
or payees in order to determine whether
withholding applies under paragraph (b)
of this section.
(ii)Timeframe for applying identifi-
cation and documentation procedure for
entity accounts and payees. For preex-
isting entity accounts, a participating FFI
must perform the requisite identification
and documentation procedures within
six months of the effective date of the
FFI agreement for any account holder
that is aprima facieFFI, as defined in
§1.1471–2(a)(4)(ii)(B), and within two
years of the effective date of the FFI agree-
ment for all other entity accounts, except as
otherwise provided in paragraph (c)(3)(iii)
of this section. For accounts that are not
preexisting accounts, the participating FFI
must perform the requisite identification
and documentation procedures by the ear-
lier of the date a withholdable payment or
a foreign passthru payment is made with
respect to the account or within 90 days
of the date the participating FFI opens the
account. Notwithstanding the foregoing
sentences of this paragraph (c)(3)(ii), with
respect to a preexisting obligation issued
in nonregistered (bearer) form by an in-
vestment entity, the investment entity is
required to perform the requisite identi-
fication and documentation procedures at
the time a payment is collected by the ben-
eficial owner of the payment (including
a beneficial owner that collects the pay-
ment through an intermediary or agent). If
the participating FFI cannot obtain all the
documentation described in §1.1471–3(d)
or if the participating FFI knows or has
reason to know that the documentation
provided for an entity account is unreliable
or incorrect (by applying the standards
of knowledge applicable to entities in
§1.1471–3(e) as modified by paragraph
(c)(2)(ii)), the participating FFI shall ap-
ply the presumption rules of §1.1471–3(f)
(as applicable to entities) to determine the
chapter 4 status of the account holder. In
the case of an account held by a passive
NFFE that provides the documentation
described in §1.1471–3(d)(12) to estab-
lish its status as a passive NFFE but fails
to provide the information regarding its
owners, see §1.1471–5(g)(2)(iv) for the
requirement to treat the account as held by
a recalcitrant account holder.
(iii)Documentation exception for cer-
tain preexisting entity accounts—(A)Ac-
counts to which this exception applies.Un-
less the participating FFI elects otherwise
pursuant to paragraph (c)(3)(iii)(C) of this
section, a participating FFI is not required
to perform the identification and documen-
tation procedure contained in this para-
graph (c)(3) with respect to a preexisting
entity account the aggregate balance or
value of which is $250,000 or less if no
holder of such account that has previously
been documented by the FFI as a U.S. per-
son for purposes of chapter 3 or 61 is a
specified U.S. person. For purposes of ap-
plying this exception, the account balance
2013–15 I.R.B.847April 8, 2013

must be determined as of the effective date
of the FFI agreement and the aggregation
rules of paragraph (c)(3)(iii)(B) of this sec-
tion shall apply. An account that meets this
exception will cease to meet this exception
as of the end of any subsequent calendar
year in which the account balance or value
exceeds $1,000,000, applying the aggrega-
tion rules of paragraph (c)(3)(iii)(B) of this
section, or as of the date on which there is
another change in circumstances with re-
spect to the account or any account aggre-
gated with the account.
(B)Aggregation of entity accounts.For
purposes of determining the aggregate bal-
ance or value of accounts held by an en-
tity in applying the exception in this para-
graph (c)(3)(iii), an FFI is required to ag-
gregate the balance or value of all accounts
held (in whole or in part) by the same ac-
count holder to the extent required under
§1.1471–5(b)(4)(iii)(A) and (B).
(C)Election to forgo exception.A
participating FFI may elect to forgo the
exception described in this paragraph
(c)(3)(iii) by applyingthe identification
and documentation procedures provided
in this paragraph (c)(3) within the time
period provided by paragraph (c)(3)(ii)
of this section or otherwise applying the
presumption rules of §1.1471–3(f) to de-
termine the chapter 4 status of the account
holder.
(4)Identification and documentation
procedure for individual accounts other
than preexisting accounts—(i)In general.
With respect to an individual account that
is not a preexisting account or an account
described under paragraph (c)(4)(iii)(B)
of this section or §1.1471–5(a)(4)(i) (pro-
viding an exception to U.S. account status
for certain depository accounts with an
aggregate balance or value of $50,000
or less), a participating FFI must deter-
mine if the account is a U.S. account or
non-U.S. account by retaining a record
of certain documentation to establish the
chapter 4 status of each account holder.
Specifically, a participating FFI must re-
tain a record of documentary evidence that
meets the requirementsof §1.1471–3(c)(5)
(as applicable to individuals), the infor-
mation described in paragraph (c)(4)(ii)
or (c)(4)(iii)(A) of this section, or a with-
holding certificate to establish an account
holder’s status as a foreign person. Ex-
cept as otherwise provided in paragraph
(c)(4)(iii)(A) of this section, the participat-
ing FFI must also review all information
collected in connection with the opening
or maintenance of each account, includ-
ing documentation collected as part of
the participating FFI’s account opening
procedures and documentation collected
for other regulatory purposes, and apply
the standards of knowledge in paragraph
(c)(2)(ii) of this section to determine if an
account holder’s claim of foreign status is
unreliable or incorrect. If the participating
FFI is not able to establish an account
holder’s status as a foreign person, the par-
ticipating FFI must retain a record of either
a Form W–9 or U.S. TIN (in any manner)
and a valid and effective waiver described
in section 1471(b)(1)(F)(i), if necessary,
to establish an account holder’s status as
a U.S. person and to confirm that the ac-
count is a U.S. account. A participating
FFI must complete the requisite identifi-
cation and documentation procedures with
respect to each account within the time pe-
riod provided by §1.1471–5(g)(3)(ii), or, if
unable to do so, it must treat such account
as held by a recalcitrant account holder.
The presumption rules of §1.1471–3(f) do
not apply to individual account holders of
a participating FFI.
(ii)Reliance on third party for identi-
fication of individual accounts other than
preexisting accounts. A participating FFI
may establish an account holder’s status as
a foreign person based on information pro-
vided by a third-party credit agency only if
the following conditions are met—
(A)AspartoftheparticipatingFFI’s
account opening procedures, the account
holder provides a residence address out-
side the United States and attests in writing
that the account holder is not a U.S. citizen
or resident;
(B) The third-party credit agency veri-
fies the account holder’s claimed residence
with at least one government data source
from the jurisdiction in which the partici-
pating FFI (or branch thereof) operates or
the account holder claims residence; and
(C) The participating FFI (or branch
thereof) relies on the information provided
by the third-party credit agency for pur-
poses of satisfying AML due diligence
with respect to the account in a FATF-com-
pliant jurisdiction.
(iii)Alternative identification and doc-
umentation procedure for certain cash
value insurance or annuity contracts—(A)
Group cash value insurance contracts or
group annuity contracts. A participating
FFI may treat an account that is a group
cash value insurance contract or group
annuity contract and that meets the re-
quirements of this paragraph (c)(4)(iii)(A)
as a non-U.S. account until the date on
which an amount is payable to an em-
ployee/certificate holder or beneficiary, if
the participating FFI obtains a certification
from an employer that no employee/cer-
tificate holder (account holder) is a U.S.
person. A participating FFI is also not
required to review all the account infor-
mation collected by the FFI to determine if
an account holder’s claim of foreign status
is unreliable or incorrect. An account that
is a group cash value insurance contract or
group annuity contract meets the require-
ments of this paragraph (c)(4)(iii)(A) if—
(1) The group life insurance contract
or a group annuity contract issued to an
employer and covers twenty-five or more
employee/certificate holders;
(2) The employee/certificate holders
are entitled to receive any contract value
and to name beneficiaries for the benefit
payable upon the employee’s death; and
(3) The aggregate amount payable to
any employee/certificate holder or benefi-
ciary does not exceed $1,000,000.
(B)Accounts held by beneficiaries of
a cash value insurance contract that is a
life insurance contract. A participating
FFI may presume that an individual ben-
eficiary (other than the owner) of a cash
value insurance contract that is a life insur-
ance contract (account holder) receiving a
death benefit is a foreign person and treat
such account as a non-U.S. account unless
the participating FFIhas actual knowledge
or reason to know that the beneficiary is a
U.S. person. A participating FFI has rea-
son to know that a beneficiary of a cash
value insurance contract is a U.S. person
if the information collected by the partic-
ipating FFI and associated with the bene-
ficiary contains U.S.indiciaas described
paragraph (c)(5)(iv)(B)(1) of this section.
If a participating FFI has actual knowl-
edge or reason to know that the benefi-
ciary is a U.S. person, the participating
FFI must retain a record of the appropri-
ate documentation described in paragraph
(c)(5)(iv)(B)(2)ofthissection.
(5)Identification and documentation
procedure for preexisting individual ac-
counts—(i)In general. With respect to
a preexisting individual account, unless
April 8, 20138482013–15 I.R.B.

the account is an account described in
§1.1471–5(a)(4)(i) (providing exception
to U.S. account status for certain deposi-
tory accounts with an aggregate balance
or value of $50,000 or less), a partici-
pating FFI may follow the identification
and documentation procedures described
below in paragraph (c)(5)(ii) through (iv)
of this section (as applicable), in lieu of
the identification and documentation pro-
cedures described in paragraph (c)(4) of
this section, to determine if an account
that is a preexisting account is a U.S.
account, non-U.S. account, or account
held by a recalcitrant account holder. A
participating FFI must first determine
whether there are any U.S.indiciaas-
sociated with the account (as defined in
paragraph (c)(5)(iv)(B)(1)ofthissection),
and second, if there are U.S.indiciaasso-
ciated with the account, retain a record of
the documentation described in paragraph
(c)(5)(iv)(B)(2)ofthissectiontoestab-
lish the account holder’s chapter 4 status.
For this purpose, the presumption rules of
§1.1471–3(f) do not apply. A participating
FFI must complete the requisite identifi-
cation and documentation procedures with
respect to each account within the time
period provided by §1.1471–5(g)(3)(i) or
(ii) (as applicable) or, if unable to do so,
must treat such account as held by a re-
calcitrant account holder. A participating
FFI may continue to treat an account with
no U.S.indiciaor an account that meets
a documentation exception described in
paragraph (c)(5)(iii) of this section or
§1.1471–5(a)(4)(i) (providing exception
to U.S. account status for certain deposi-
tory accounts with an aggregate balance
or value of $50,000 or less) as a non-U.S.
account, until there is a change in cir-
cumstances with respect to the account as
described in paragraph (c)(2)(iii) of this
section.
(ii)Special rule for preexisting indi-
vidual accounts previously documented as
U.S. accounts for purposes of chapter 3
or 61. If a participating FFI has doc-
umented an individual account holder as
a U.S. person for purposes of chapter 3
or 61 and such account holder is a speci-
fied U.S. person, the account holder’s ac-
count will be treated as a U.S. account
for chapter 4 purposes and the identifi-
cation and documentation procedures in
paragraph (c)(5)(i) and (iv) of this section
will not apply.
(iii)Exceptions for certain low value
preexisting individual accounts—(A)Ac-
counts to which an exception applies.Un-
less the participating FFI elects otherwise
pursuant to paragraph (c)(5)(iii)(C) of this
section, a participating FFI is not required
to perform requisite identification and doc-
umentation procedures described in para-
graph (c)(5)(i) and (iv)ofthissectionwith
respect to either a preexisting individual
account, other than a cash value insur-
ance or annuity contract, the aggregate bal-
ance or value of which is $50,000 or less,
or a preexisting individual account that
is a cash value insurance or annuity con-
tract described in §1.1471–5(b)(1)(iv) the
aggregate balance or value of which is
$250,000 or less. For purposes of apply-
ing these exceptions, the account balance
must be determined as of the effective date
of the FFI agreement and the aggregation
rules of paragraph (c)(5)(iii)(B) of this sec-
tion shall apply. An account that meets ei-
ther of these exceptions will cease to meet
these exceptions as of the end of any sub-
sequent calendar year in which the account
balance or value exceeds $1,000,000, ap-
plying the aggregation rules of paragraph
(c)(3)(iii)(B) of this section, or until there
is another change in circumstances with re-
spect to the account or any account aggre-
gated with the account.
(B)Aggregation of accounts. For pur-
poses of determining the aggregate bal-
ance or value of a preexisting individual
account, other than an account that is cash
value insurance or annuity contract, an
FFI is required to aggregate the balance or
value of all accounts that are not cash value
insurance or annuity contracts to the extent
required under §1.1471–5(b)(4)(iii)(A)
or (B). For purposes of determining the
aggregate balance orvalue of preexisting
individual account that is a cash value
insurance or annuity contract, an FFI will
be required to aggregate the balance or
value of all accounts that are cash value
insurance or annuity contracts to the extent
required under §1.1471–5(b)(4)(iii)(A) or
(B).
(C)Election to forgo exception.Apar-
ticipating FFI may elect to forgo the excep-
tions described in paragraph (c)(5)(iii) of
this section by applying the identification
and documentation procedures provided in
this paragraph (c) within the time provided
by paragraph (c)(5)(i) of this section or
otherwise treating the account as held by
a recalcitrant accountholder pursuant to
§1.1471–5(g).
(iv)Specific identification and doc-
umentation procedures for preexisting
individual accounts—(A)In general.A
participating FFI applying the identifi-
cation and documentation procedures of
this paragraph (c)(5)(iv) must review its
preexisting individual accounts (applying
the electronic search described in para-
graph (c)(5)(iv)(C) of this section and,
if appropriate, the enhanced review for
high-value accounts described in para-
graph (c)(5)(iv)(D) of this section) to
determine if there are any U.S.indicia(as
described in paragraph (c)(5)(iv)(B)(1)of
this section) associated with the account.
If no U.S.indiciaare identified with re-
spect to an account, the participating FFI
may treat the account as a non-U.S. ac-
count. If U.S.indiciaare identified with
respect to an account, the participating
FFI must retain a record of the appropri-
ate documentation described in paragraph
(c)(5)(iv)(B)(2) of this section to establish
the account holder’s status as a foreign
person. A participating FFI that follows
the procedures described in this paragraph
(c)(5)(iv) (as applicable) with respect to its
preexisting individual accounts will not be
treated as having reason to know that the
determination made with respect to the ac-
count was unreliable or incorrect because
of information contained in any account
files that the participating FFI did not re-
view and was not required to review under
the applicable identification procedure.
Thus, for example, if a participating FFI
was only required to perform an electronic
search with respect to a preexisting indi-
vidual account and no U.S.indiciawere
identified in the results of the electronic
search, the participating FFI would not
have reason to know that the individual
account holder was a U.S. person, even if
theparticipatingFFIhadonfile(butwas
not required to and did not review) a copy
of the individual’s passport that indicates
that the individual was born in the United
States.
(B)U.S. indicia and relevant docu-
mentation rules—(1)U.S. indicia.A
participating FFI must review an account
holder’s account information to the extent
required under paragraphs (c)(5)(iv)(C)
and (D) of this section for any of the fol-
lowing U.S.indicia:
2013–15 I.R.B.849April 8, 2013

(i) Designation of the account holder as
a U.S. citizen or resident;
(ii) A U.S. place of birth;
(iii) A current U.S. residence address or
U.S. mailing address (including a U.S. post
office box);
(iv) A current U.S. telephone number
(regardless of whether such number is the
only telephone number associated with the
account holder);
(v) Standing instructions to pay
amounts from the account to an account
maintained in the United States;
(vi) A current power of attorney or sig-
natory authority granted to a person with a
U.S. address; or
(vii) An “in-care-of” address or a “hold
mail” address that is the sole address the
FFI has identified for the account holder.
(2)Documentationtoberetainedupon
identifying U.S. indicia.IfU.S.indicia
are identified with respect to an account
holder’s account information, a partic-
ipating FFI must retain a record of the
documentation described in paragraphs
(c)(5)(iv)(B)(2)(i) through (vii)ofthis
section, applicable to the U.S.indicia
identified, to establish the account holder’s
status as a foreign person. If the partic-
ipating FFI cannot establish an account
holder’s status as a foreign person based
on such documentation, the participat-
ing FFI must retain a record of a Form
W–9 and a valid and effective waiver as
described in section 1471(b)(1)(F)(ii), if
necessary, to confirm that the account is a
U.S. account or, if unable to do so, must
treat the account as held by a recalcitrant
account holder.
(i)Designation of account holder as
a U.S. citizen or resident.Iftheinfor-
mation required to be reviewed with re-
spect to the account contains a designa-
tion of an account holder as a U.S. citi-
zen or resident, the participating FFI must
retain a record of a withholding certifi-
cate and documentary evidence described
in §1.1471–3(c)(5)(i)(B) evidencing citi-
zenship in a country other than the United
States in order to establish the account
holder’s status as a foreign person.
(ii)Unambiguous indication of a U.S.
place of birth. If information required to
be reviewed with respect to the account
unambiguously indicates a U.S. place of
birth for an account holder, the partici-
pating FFI must retain a record of a form
of 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, or, alternatively, a withholding cer-
tificate, a form of documentary evidence
described in §1.1471–3(c)(5)(i)(B) evi-
dencing citizenship in a country other than
the United States, and a reasonable written
explanation of the account holder’s renun-
ciation of U.S. citizenship or the reason
the account holder did not obtain U.S.
citizenship at birth in order to establish
the account holder’s status as a foreign
person.
(iii)U.S. address or U.S. mailing
address. Ifinformationrequiredtobe
reviewed with respect to the account
contains a U.S. address or a U.S. mail-
ing address for an account holder, the
participating FFI must retain a record
of a withholding certificate and a form
of documentary evidence described in
§1.1471–3(c)(5)(i)(A) through (C) in or-
der to establish the account holder’s status
as a foreign person.
(iv)Only U.S. telephone numbers.If
information required to be reviewed with
respect to the account contains one or
more telephone numbers in the United
States and no other telephone numbers
for an account holder, the participating
FFI must retain a record of a withholding
certificate and a form of documentary evi-
dence described in §1.1471–3(c)(5)(i)(A)
through (C) in order to establish the ac-
count holder’s status as a foreign person.
(v)U.S. telephone numbers and
non-U.S. telephone numbers.Ifinforma-
tion required to be reviewed with respect
to the account contains one or more tele-
phone numbers in the United States and
at least one telephone number outside
the United States for an account holder,
the participating FFI must retain a record
of a withholding certificate or a form
of documentary evidence described in
§1.1471–3(c)(5)(i)(A) through (C) in or-
der to establish the account holder’s status
as a foreign person.
(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 a form
of documentary evidence described in
§1.1471–3(c)(5)(i)(A) through (C) in or-
der to establish the account holder’s status
as a foreign person.
(vii)Power of attorney or signatory
authority granted to a person with a U.S.
address or “in-care-of” address or “hold
mail” address. If information required to
be reviewed with respect to the account
includes a power of attorney or signatory
authority granted to a person with a U.S.
address or contains an “in-care-of” ad-
dress or “hold mail” address that is the sole
address identified for the account holder,
the participating FFI must retain a record
of either a withholding certificate or a
form of documentary evidence described
in §1.1471–3(c)(5)(i)(A) through (C) in
order to establish the account holder’s
status as a foreign person.
(C)Electronic search for identifying
U.S. indicia. Except as provided in para-
graph (c)(5)(iv)(D) ofthis section relating
to the enhanced review for high-value
accounts, a participating FFI may rely
solely on a review of the electronically
searchable information associated with an
account and maintained by the participat-
ing FFI to determine if there are any of
the U.S.indiciadescribed in paragraph
(c)(5)(iv)(B)(1) of this section associated
with the account. For purposes of this
paragraph (c)(5)(iv)(C), however, an FFI
will not be required to treat as U.S.indicia
an in-care-of address or a hold mail ad-
dress that is the sole address identified for
the account holder.
(D)Enhanced review for identify-
ing U.S. indicia in the case of certain
high-value accounts—(1)In general.
With respect to preexisting individual ac-
counts that have a balance or value that
exceeds $1,000,000 as of the effective
date of the FFI agreement, or at the end of
any subsequent calendar year (“high-value
accounts”), a participating FFI must ap-
ply the enhanced review described in this
paragraph (c)(5)(iv)(D) in addition to the
electronic search described in paragraph
(c)(5)(iv)(C) of this section to identify
any U.S.indiciadescribed in paragraph
(c)(5)(iv)(B)(1) of this section associated
with the account. For purposes of deter-
mining the balance or value of an account,
a participating FFI must apply the aggre-
gation rules §1.1471–5(b)(4)(iii)(A) and
(B). If a participating FFI applied the en-
hanced review described in this paragraph
April 8, 20138502013–15 I.R.B.

(c)(5)(iv)(D) to an account in a previous
year, the participating FFI will not be re-
quired to reapply such procedures to such
account in a subsequent year.
(2)Relationship manager inquiry.With
respect to all high-value accounts, a par-
ticipating FFI must identify accounts to
which a relationship manager is assigned
(including any accounts aggregated with
such account) and for which the relation-
ship manager has actual knowledge that
the account holder is a U.S. citizen or res-
ident.
(3)Additional review of non-electronic
records. Except as provided in paragraph
(c)(5)(iv)(E) of this section, and except
with respect to any account for which the
participating FFI has retained a record of
a withholding certificate and documentary
evidence described in §1.1471–3(c)(5) es-
tablishing the accountholder’s foreign sta-
tus, a participating FFI must review to
identify any U.S.indiciathe current cus-
tomer master file of a high-value account
and, if not contained in the current cus-
tomer master file, the following documents
described in paragraphs (c)(5)(iv)(D)(3)(i)
through (v) of this section that are asso-
ciated with such an account and were ob-
tained by the participating FFI within the
five calendar years preceding the later of
the effective date of the FFI agreement, or
the end of the calendar year in which the
account exceeded the $1,000,000 thresh-
old described in paragraph (c)(5)(iv)(D)(1)
of this section. The documents to be re-
viewed by the participating FFI if not con-
tained in the current customer master file
are—
(i) The most recent withholding certifi-
cate, written statement, and documentary
evidence;
(ii) The most recent account opening
contract or documentation;
(iii) The most recent documentation ob-
tained by the participating FFI for pur-
poses of AML due diligence or for other
regulatory purposes;
(iv) Any power of attorney or signature
authority forms currently in effect; and
(v) Any standing instructions to pay
amounts to another account.
(4)Limitations on the enhanced review
in the case of comprehensive electronically
searchable information. A participating
FFI is not required to apply the enhanced
review of this paragraph (c)(5)(iv)(D) and
may instead rely on the electronic search
described in paragraph (c)(5)(iv)(C) of this
sectiontoidentifyU.S.indiciato the ex-
tent the following information is available
in the FFI’s electronically searchable infor-
mation—
(i) The account holder’s nationality
and/or residence status;
(ii) The account holder’s current resi-
dence address and mailing address;
(iii) The account holder’s current tele-
phone number(s);
(iv) Whether there are standing instruc-
tions to pay amounts to another account;
(v) Whether there is a current “in-care-
of” address or “hold mail” address for the
account holder if no other residence or
mailing address is found for the account;
and
(vi) Whether there is any power of attor-
ney or signatory authority for the account.
(E)Exception for preexisting individ-
ual accounts that a participating FFI has
documented as held by foreign individuals
for purposes of meeting its obligations
under chapter 61 or its QI, WP, or WT
agreement. A participating FFI that has
previously obtained documentation from
an account holder to establish the account
holder’s status as a foreign individual in
order to meet its obligations under its QI,
WP, or WT agreement with the IRS, or to
fulfill its reporting 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 sec-
tion or the enhanced review described in
paragraph (c)(5)(iv)(D)(3
)ofthissection
for such account. The participating FFI
is required, however, to perform the re-
lationship manager inquiry described in
paragraph (c)(5)(iv)(D)(2)ofthissection
if the account is a high-value account de-
scribed in paragraph (c)(5)(iv)(D)(1)of
this section. For purposes of this para-
graph (c)(5)(iv)(E), a participating FFI has
documented an accountholder’s foreign
status under chapter 61if the participating
FFI has retained a record of the docu-
mentation required under chapter 61 to
establish the foreign status of an individ-
ual and the account received a reportable
payment as defined under section 3406(b)
in any prior year. In the case of a partic-
ipating FFI that is a QI, WP, or WT, the
participating FFI has documented an ac-
count holder’s foreign status under its QI,
WP, or WT agreement (as applicable) if
the participating FFI has met the relevant
documentation requirements of its agree-
ment with respect to an account holder
that received a reportable amount in any
year in which its agreement was in effect.
(6) Examples. The following exam-
ples illustrate thedocumentation excep-
tions provided in paragraphs (c)(3)(iii) and
(c)(5)(iii) of this section:
Example 1.Aggregation rules applicable to pre-
existing individual accounts. U, a U.S. resident indi-
vidual, holds 100 shares of common stock of FFI1,
an investment entity. On the effective date of FFI1’s
FFI agreement, the common stock held by U is worth
$45,000. U also holds shares of preferred stock of
FFI1. On the effective date of FFI1’s FFI agree-
ment, U’s preferred stock in FFI1 is worth $35,000.
Neither FFI1’s common stock nor FFI1’s preferred
stock is regularly traded on an established securi-
ties market. U also holds debt instruments issued by
FFI1 that are not regularly traded on an established
securities market. On the effective date of FFI1’s
FFI agreement, U’s FFI1 debt instruments are worth
$15,000. U’s common and preferred equity inter-
ests are associated with U and with one another by
reference to U’s foreign tax identification number in
FFI1’s computerized information management sys-
tem. However, U’s debt instruments are not associ-
ated with U’s equity interests in FFI1’s computerized
information management system. None of these ac-
counts are managed by a relationship manager. Pre-
viously, FFI1 was not required to and did not obtain
a Form W–9 from U for purposes of chapter 3 or 61.
U’s FFI1 debt interests are eligible for the paragraph
(c)(5)(iii)(A) documentation exception because that
account does not exceed the $50,000 threshold de-
scribed in paragraph (c)(5)(iii)(A)(1) of this section,
taking into account the aggregation rule described in
paragraph (c)(5)(iii)(A)(2) of this section. However,
U’s common and preferred equity interests are not el-
igible for the paragraph (c)(5)(iii)(A) documentation
exception because the accounts exceed the $50,000
threshold described in paragraph (c)(5)(iii)(A)(1)of
this section, taking into account the aggregation rules
described in §1.1471–5(b)(4)(iii) pursuant to the re-
quirements of paragraph (c)(5)(iii)(A)(2)ofthissec-
tion.
Example 2.Aggregation rules for owners of en-
tity accounts. In Year 1, U, a U.S. resident individ-
ual, maintains a depository account that is a preex-
isting account in CB, a commercial bank. The bal-
ance in U’s depository account on the first date CB’s
FFI agreement is in effect is $20,000. U also owns
100% of Entity X, which maintains a depository ac-
count that is a preexisting account in CB, and 50% of
Entity Y, which maintains a depository account that
is a preexisting account in CB. The balance in En-
tity X’s account on the first date CB’s FFI agreement
is in effect is $130,000 and the balance in Entity Y’s
account on effective date of CB’s FFI agreement is
$110,000. All three accounts are associated with one
another in CB’s computerized information manage-
ment system by reference to U’s foreign tax identi-
fication number. None of the accounts are managed
by a relationship manager. Previously, CB was not
required to and did not obtain a Form W–9 from U
for purposes of chapter 3 or 61. U’s depository ac-
count qualifies for the §1.1471–5(a)(4)(i) exception
to U.S. account status because it does not exceed the
2013–15 I.R.B.851April 8, 2013

$50,000 threshold, taking into account the aggrega-
tion rule described in §1.1471–5(a)(4)(i)(B)(2). En-
tity X’s account and Entity Y’s account both qual-
ify for the paragraph (c)(3)(iii) documentation excep-
tion because the accountsdo not exceed the $250,000
threshold described in paragraph (c)(3)(iii)(B)(1)of
this section taking into account the aggregation rules
described in §1.1471–5(b)(4)(iii) pursuant to the re-
quirements of paragraph (c)(3)(iii)(B)(2)ofthissec-
tion.
(7)Certifications of responsible officer.
In order for a participating FFI to com-
ply with the requirements of an FFI agree-
ment with respect to its identification pro-
cedures for preexisting accounts, a respon-
sible officer of the participating FFI must
certify to the IRS regarding the participat-
ing FFIs compliance with the diligence re-
quirements of this paragraph (c). Such cer-
tification must be made no later than 60
days following the date that is two years
after the effective date of the FFI agree-
ment. The responsible officer must certify
that the participating FFI has completed
the review of all high-value accounts as re-
quired under paragraphs (c)(5)(iv)(D) and
(E) of this section and treats any account
holder of an account for which the par-
ticipating FFI has not retained a record
of any required documentation as a recal-
citrant account holder as required under
this section and §1.1471–5(g).The respon-
sible officer must also certify that the par-
ticipating FFI has completed the account
identification procedures and documenta-
tion requirements of this paragraph (c) for
all other preexisting accounts or, if it has
not retained a record of the documentation
required under this paragraph (c) with re-
spect to an account, treats such account in
accordance with the requirements of this
section and §1.1471–5(g). The responsible
officer must also certify to the best of the
responsible officer’s knowledge after con-
ducting a reasonable inquiry, that the par-
ticipating FFI did not have any formal or
informal practices or procedures in place
from August 6, 2011, through the date of
such certification to assist account hold-
ers in the avoidance of chapter 4. A rea-
sonable inquiry for purposes of this para-
graph (c)(7) is a review of the participat-
ing FFI’s procedures and a written inquiry,
such as e-mail requests to relevant lines
of business, that requires responses from
relevant customer on-boarding and man-
agement personnel as to whether they en-
gaged in any such practices during that
period. Practices or procedures that as-
sist account holders in the avoidance of
chapter 4 include, for example, suggest-
ing that account holders split up accounts
to avoid classification as a high-value ac-
count; suggesting that account holders of
U.S. accounts close, transfer, or withdraw
from their account to avoid reporting; in-
tentional failures to disclose a known U.S.
account; suggesting that an account holder
remove U.S.indiciafrom its account infor-
mation; or facilitating the manipulation of
account balances or values to avoid thresh-
olds. If the responsible officer is unable to
make any of the certifications described in
this paragraph (c)(7), the responsible of-
ficer must make a qualified certification
to the IRS stating that such certification
cannot be made and that corrective actions
will be taken by the responsible officer.
(d)Account reporting—(1)Scope of
paragraph. This paragraph (d) provides
rules addressing the information reporting
requirements applicable to participating
FFIs with respect to U.S. accounts, ac-
counts held by owner-documented FFIs,
and recalcitrant account holders. Para-
graph (d)(2) of this section describes the
accounts subject to reporting under this
paragraph (d), and specifies the participat-
ing FFI that is responsible for reporting
an account or account holder. Paragraph
(d)(3) of this section describes the infor-
mation 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 applicable to paragraph (d)(3). Para-
graph (d)(5) of this section describes the
conditions 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 re-
quired to be reported under such election.
Paragraph (d)(6) of this section provides
rules for a participating FFI to report its
recalcitrant account holders. Paragraph
(d)(7) of this section provides special
transitional reporting rules applicable to
reports due in 2015 and 2016. Paragraph
(d)(8) of this section provides the report-
ing requirements of a participating FFI
that is a QI, WP or WT with respect to
U.S. accounts. See §301.1474–1(a) of this
chapter for the requirement for a financial
institution to file the information required
under this paragraph (d) on magnetic me-
dia.
(2)Reporting requirements in gen-
eral—(i)Accounts subject to reporting.
Subject 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)(vii) of this section, the
information describedin 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 para-
graph (d)(2)(ii) of this section and that
it is required to treat as U.S. accounts or
accounts 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 circumstances
during such year as described in paragraph
(c)(2)(iii) of this section. Alternatively,
a participating FFI may elect to report
under paragraph (d)(5) of this section with
respect to such accounts for each calendar
year. With respect to accounts held by
recalcitrant account holders, a participat-
ingFFIisrequiredtoreportwithrespect
to each calendar year under paragraph
(d)(6) of this section and not under para-
graph (d)(3) or (5) of this section. For
separate reporting requirements of par-
ticipating FFIs with respect to payments
and for transitional rules for participating
FFIs to report certain foreign reportable
amounts made to nonparticipating FFIs,
see §1.1474–1(d)(4)(iii).
(ii)Financial institution required to re-
port an account—(A)In general.Ex-
cept as otherwise provided in paragraphs
(d)(2)(ii)(B) through (E) of this section,
the participating FFI that maintains the
account is responsiblefor reporting the
account in accordance with the require-
ments of paragraph (d)(2)(iii), (3), or (5)
of this section (as applicable) for each cal-
endar year. Except as otherwise provided
in paragraph (d)(2)(ii)(C) of this section,
a participating FFI is responsible for re-
porting accounts held by recalcitrant ac-
count holders that it maintains in accor-
dance with the requirements of paragraph
(d)(6) of this section. A participating FFI
is not required to report the information re-
quired under paragraph (d)(6) of this sec-
tion with respect to an account held by a re-
calcitrant account holder of another partic-
ipating FFI even if thatother participating
FFI holds the account as an intermediary
April 8, 20138522013–15 I.R.B.

on behalf of such account holder and re-
gardless of whether the participating FFI is
required to report payments made to the re-
calcitrant account holder of such other FFI
under §1.1474–1(d)(4)(iii).
(B)Special reporting of account hold-
ers of territory financial institutions.In
the case of an account held by a territory
financial institution acting as an interme-
diary with respect to a withholdable pay-
ment—
(1) If the territory financial institu-
tion agrees to be treated as a U.S. per-
son with respect to the payment under
§1.1471–3(c)(3)(iii)(F), a participating
FFI is not required to report under para-
graph (d)(2)(i) of this section with respect
to the account holders of the territory fi-
nancial institution; or
(2) If the territory financial institution
does not agree to be treated as a U.S.
person with respect to a withholdable
payment, the participating FFI must re-
port with respect to each specified U.S.
person or substantial U.S. owner of a for-
eign entity that is an NFFE with respect
to which the territory financial institu-
tion acts as an intermediary and provides
the participating FFI with the informa-
tion and documentation required under
§1.1471–3(c)(3)(iii)(G).
(C)Special reporting of account hold-
ers of a sponsored FFI. A sponsoring en-
tity that has agreed to fulfill the reporting
responsibilities of this paragraph (d) on be-
half of a sponsored FFI shall report in ac-
cordance with the requirements of para-
graph (d)(2)(iii), (3), or (5) of this section
(as applicable) with respect to each U.S.
account and paragraph (d)(6) of this sec-
tion with respect to each account held by
a recalcitrant account holder of the spon-
sored FFI to the extent and in the manner
required if such sponsored FFI were a par-
ticipating FFI. The sponsoring entity shall
identify each sponsored FFI for which it
is reporting to the extent required on the
forms for reporting U.S. accounts and re-
calcitrant account holders and the accom-
panying instructions to the forms.
(D)Special reporting of accounts held
by owner-documented FFIs.Apartic-
ipating FFI that maintains an account
held by an FFI that it has agreed to
treat as an owner-documented FFI under
§1.1471–3(d)(6) shall report the infor-
mation described in paragraph (d)(3)(iv)
or (d)(5)(iii) of this section with respect
to each specified U.S. person identi-
fied in §1.1471–3(d)(6)(iv)(A)(1). See
§1.1474–1(i) for the reporting obliga-
tions of a participating FFI with respect
to a payee of an obligation other than an
account that it has agreed to treat as an
owner-documented FFI.
(E)Branch reporting of accounts.A
participating FFI may elect to comply with
its obligation to report under paragraph
(d)(3) or (d)(5) of this section by reporting
its accounts on a branch-by-branch basis
with respect to one or more of its branches.
A participating FFI that makes this elec-
tion shall use the information reporting
number assigned to the branch to identify
the branch that is reporting its accounts
separately. A branch that reports under
this election shall file with the IRS the in-
formation required to be reported on ac-
counts that it maintains in accordance with
the forms and their accompanying instruc-
tions provided by the IRS for purposes of
this election. For the definition of a branch
that applies for purposes of this paragraph
(d), see paragraph (e)(2)(ii) of this section.
(iii)Special U.S. account reporting
rules for U.S. payors—(A)Special re-
porting rule for U.S. payors other than
U.S. branches. Participating FFIs that are
U.S. payors (other than U.S. branches)
that report the information required under
chapter 61 with respect to account holders
of accounts that the participating FFI is re-
quired to treat as U.S. accounts or accounts
held by owner-documented FFIs and that
report the information described in para-
graph (d)(5)(ii) of this section with respect
to each such account shall be treated as
having satisfied the reporting require-
ments described in paragraph (d)(2)(i)
of this section with respect to accounts
that the participating FFI is required to
treat as U.S. accounts or accounts held by
owner-documented FFIs.
(B)Special reporting rules for U.S.
branches treated as U.S. persons.A
U.S. branch of a participating FFI that is
treated as a U.S. person shall be treated
as having satisfied the reporting require-
ments described in paragraphs (d)(2)(i)
and (d)(2)(ii)(C) of this section if it reports
under—
(1) Chapter 61 with respect to account
holders that are U.S. non-exempt recipi-
ents;
(2) Chapter 61 with respect to persons
subject to withholding under section 3406;
(3) Section 1.1474–1(i) with respect
to substantial U.S. owners of NFFEs that
are not excepted NFFEs as defined in
§1.1472–1(c) and;
(4) Section 1.1474–1(i) with respect
to specified U.S. persons identified in
§1.1471–3(d)(6)(iv)(A)(1)ofowner-doc-
umented FFIs.
(3)Reporting of accounts under section
1471(c)(1)—(i)In general. The partici-
pating FFI (or branch thereof) that is re-
sponsible for reporting an account that it
is required to treat as a U.S. account or
accounts held by owner-documented FFIs
under paragraph (d)(2)(ii) of this section
shall be required to report such account un-
der this paragraph (d)(3) for each calen-
dar year unless it elects to report its U.S.
accounts or accounts held by owner-docu-
mented FFIs under paragraph (d)(5) of this
section.
(ii)Accounts held by specified U.S. per-
sons. In the case of an account described
in paragraph (d)(3)(i) of this section that
is held by one or more specified U.S. per-
sons, a participating FFI is required to re-
port the following information under this
paragraph (d)(3)—
(A) The name, address, and TIN of each
account holder that is a specified U.S. per-
son;
(B) The account number;
(C) The account balance or value of the
account;
(D) The payments made with respect
to the account, as described in paragraph
(d)(4)(iv) of this section, during the calen-
dar year; and
(E) Such other information as is oth-
erwise required to be reported under this
paragraph (d)(3) or in the form described
in paragraph (d)(3)(vi) of this section and
its accompanying instructions.
(iii)Accounts held by U.S. owned for-
eign entities. With respect to each U.S. ac-
count described in paragraph (d)(3)(i) of
thissectionthatisheldbyanNFFEthat
is a U.S. owned foreign entity, a partici-
pating FFI is required to report under this
paragraph (d)(3)(iii)—
(A) The name of the U.S. owned foreign
entity that is the account holder;
(B) The name, address, and TIN of each
substantial U.S. owner of such entity;
(C) The account number;
(D) The account balance or value of the
account held by the NFFE;
2013–15 I.R.B.853April 8, 2013

(E) The payments made with respect
to the account, as described in paragraph
(d)(4)(iv) of this section, during the calen-
dar year; and
(F) Such other information as is oth-
erwise required to be reported under this
paragraph (d)(3) or in the form described
in paragraph (d)(3)(vi) of this section and
its accompanying instructions.
(iv)Special reporting of accounts held
by owner-documented FFIs. With respect
to each account held by an owner-docu-
mented FFI, a participating FFI is required
to report under this paragraph (d)(3)(iv)—
(A) The name of the owner-docu-
mented FFI;
(B) The name, address, and TIN of
each specified U.S. person identified in
§1.1471–3(d)(6)(iv)(A)(1);
(C) The account number of the account
held by the owner-documented FFI;
(D) The account balance or value of the
account held by the U.S. owned foreign
entity;
(E) The payments made with respect to
the account held by the owner-documented
FFI, as described in paragraph (d)(4)(iv) of
this section, during the calendar year; and
(F) Such other information as is oth-
erwise required to be reported under this
paragraph (d)(3) or in the form described
in paragraph (d)(3)(vi) of this section and
its accompanying instructions.
(v)Branch reporting. Except in the
case of a branch that reports separately un-
der paragraph (d)(2)(ii)(E) of this section,
a participating FFI that reports the infor-
mation described in paragraphs (d)(3)(ii)
through (iv) of this section shall also report
the jurisdiction of the branch that main-
tains the account being reported in accor-
dance with instructions to the form pro-
vided for purposes of such reporting.
(vi)Form for reporting accounts un-
der section 1471(c)(1). The information
described in paragraphs (d)(3)(ii) through
(iv) of this section shall be reported on
Form 8966, “FATCA Report,” (or such
other form as the IRS may prescribe)
with respect to each account subject to
reporting under paragraph (d)(3)(i) of this
section maintained at any time during the
calendar year. This form shall be filed in
accordance with its requirements and its
accompanying instructions.
(vii)Time and manner of filing. Except
as provided in paragraph (d)(7)(iv)(B) of
this section, Form 8966 shall be filed elec-
tronically with the IRS on or before March
31 of the year following the end of the cal-
endar year to which the form relates. See
the accompanying instructions to this form
for electronic filing instructions.
(viii)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.
(4)Descriptions applicable to report-
ing requirements of §1.1471–4(d)(3)—(i)
Address. The address to be reported with
respect to an account held by a speci-
fied U.S. person is the residence address
recorded by the participating FFI for the
account holder or, if no residence address
is associated with the account holder, the
address for the account used for mailing
or for other purposes by the participating
FFI. In the case of an account held by a
U.S. owned foreign entity, the address to
be reported is the address of each sub-
stantial U.S. owner of such entity. In the
case of an account held by an owner-doc-
umented FFI, the address to be reported is
the address of each specified U.S. person
identified in §1.1471–3(d)(6)(iv)(A)(1).
(ii)Account number. The account num-
ber to be reported with respect to an ac-
count is the identifying number assigned
by the participating FFI for purposes other
than to satisfy the reporting requirements
of this paragraph (d), or, if no such num-
ber is assigned to the account, a unique se-
rial number or other number such partici-
pating FFI assigns to the financial account
for purposes of reporting under paragraph
(d)(3) of this section that distinguishes the
account from other accounts maintained
by such institution.
(iii)Account balance or value—(A)In
general. The participating FFI shall re-
port the average balance or value of the
account if the FFI reports average balance
or value to the account holder for a cal-
endar year. If the participating FFI does
not report the average balance or value
of the account to the account holder, the
participating FFI shall report the balance
or value of the account as of the end of
the calendar year as determined in accor-
dance with §1.1471–5(b)(4). In the case
of an account that is a cash value insur-
ance or annuity contract, a participating
FFI shall report the balance or value of the
account as determined in accordance with
§1.1471–5(b)(4).
(B)Currency translation of account
balance or value. The account balance or
value of an account may be reported in
U.S. dollars or in the currency in which
the account is denominated. In the case
of an account denominated in one or more
foreign currencies, the participating FFI
may elect to report the account balance or
value in a currency in which the account
is denominated and is required to iden-
tify the currency in which the account is
reported. If the participating FFI elects
to report such an account in U.S. dollars,
the participating FFI must calculate the
account balance or value of the account in
the manner describedin §1.1471–5(b)(4).
(iv)Payments made with respect to
an account—(A)Depository accounts.
The payments made during a calendar
year with respect to a depository account
consist of the aggregate gross amount of
interest paid or credited to the account
during the year.
(B)Custodial accounts. The payments
made during a calendar year with respect
to a custodial account consist of—
(1) The aggregate gross amount of div-
idends paid or credited to the account dur-
ing the calendar year;
(
2) The aggregate gross amount of in-
terest paid or credited to the account dur-
ing the calendar year;
(3) The gross proceeds from the sale or
redemption of property paid or credited to
the account during the calendar year with
respect to which the FFI acted as a custo-
dian, broker, nominee, or otherwise as an
agent for the account holder; and
(4) The aggregate gross amount of all
other income paid or credited to the ac-
count during the calendar year.
(C)Other accounts. In the case of an
account described in §1.1471–5(b)(1)(iii)
(relating to debt or equity interests) or (iv)
(relating to cash value insurance contracts
and annuity contracts), the payments made
during the calendar year with respect to
such account are the gross amounts paid
April 8, 20138542013–15 I.R.B.

or credited to the account holder during
the calendar year including payments in re-
demption (in whole or part) of the account.
(D)Transfers and closings of deposit,
custodial, insurance, and annuity financial
accounts. In the case of an account closed
or transferred in its entirety by an account
holder during a calendar year that is a de-
pository account, custodial account, or a
cash value insurance contract or annuity
contract, the payments made with respect
to the account shall be—
(1) The payments and income paid or
credited to the account that are described
in paragraph (d)(4)(iv)(A) or (B) of this
section for the calendar year until the date
of transfer or closure; and
(2) The amount or value withdrawn or
transferred from the account in connection
with the closure or transfer of the account.
(E)Amount and character of payments
subject to reporting. For purposes of
reporting under paragraph (d)(3) of this
section, the amount and character of pay-
ments made with respect to an account
may be determined under the same prin-
ciples that the participating FFI uses to
report information on its resident account
holders to the tax administration of the
jurisdiction in which the FFI (or branch
thereof) is located. Thus, the amount and
character of items of income described
in paragraphs (d)(4)(iv)(A), (B), and (C)
need not be determined in accordance
with U.S. federal income tax principles.
If any of the types of payments described
in paragraph (d)(4)(iv) of this section are
not reported to the tax administration of
the jurisdiction in which the participating
FFI (or branch thereof) is located, such
amounts may be determined in the same
manner as is used by the participating FFI
for purposes of reporting to the account
holder. If any of the types of payments
described in this paragraph (d)(4)(iv) is
neither reported to the tax administration
of the jurisdiction in which the FFI (or
branch thereof) is located nor reported to
the account holder for the year for which
reporting is required under paragraph (d)
of this section, such item must be deter-
mined and reported either in accordance
with U.S. federal tax principles or in ac-
cordance with any reasonable method of
reporting that is consistent with the ac-
counting principles generally applied by
the participating FFI. Once a participat-
ing FFI (or branch thereof) has applied
a method to determine such amounts, it
must apply such method consistently for
all account holders and for all subsequent
years unless the Commissioner consents
to a change in such method. Consent will
be automatically granted for a change to
rely on U.S. federal income tax principles
to determine such amounts.
(F)Currency translation. A payment
described in this paragraph (d)(4)(iv) may
be reported in the currency in which the
payment is denominated or in U.S. dol-
lars. In the case of payments denominated
in one or more foreign currencies, a par-
ticipating FFI may elect to report the pay-
ments in a currency in which payments
are denominated and is required to iden-
tify the currency in which the account is
reported. If such a payment is reported
in U.S. dollars, the participating FFI must
calculate the amount in the manner de-
scribed in §1.1471–5(b)(4).
(v)Record retention requirements.A
participating FFI that produces, in the ordi-
nary course of its business, account state-
ments that summarize the activity (includ-
ing withdrawals, transfers, and closures) of
an account for any calendar year in which
the account was required to be reported un-
der paragraph (d)(3) of this section must
retain a record of such account statements.
The record must be retained for the longer
of six years or the retention period under
the FFI’s normal business procedures. A
participating FFI may be required to ex-
tend the six year retention period if the IRS
requests such an extension prior to the ex-
piration of the six year period.
(5)Election to perform chapter 61
reporting—(i)In general—(A)Election
under section 1471(c)(2). Except as oth-
erwise provided in this paragraph (d)(5), a
participating FFI may elect under section
1471(c)(2) and this paragraph (d)(5) to
report under sections 6041, 6042, 6045,
and 6049, as appropriate, with respect to
any account required to be reported under
this paragraph (d). Such reporting must be
done as if such participating FFI were a
U.S. payor and each holder of an account
that is a specified U.S. person, U.S. owned
foreign entity, or owner-documented FFI
were a payee who is an individual and cit-
izen of the United States. If a participating
FFI makes such an election, the FFI is
required to report the information required
under this paragraph (d)(5) with respect
to each such U.S. account or account held
by an owner-documented FFI, regardless
of whether the account holder of such ac-
count qualifies as a recipient exempt from
reporting by a payor or middleman under
sections 6041, 6042, 6045, or 6049, in-
cluding the reporting of payments made to
such account of amounts that are subject
to reporting under any of these sections.
A participating FFI that elects to report
an account under the election described in
this paragraph (d)(5) is required to report
the information described in paragraph
(d)(5)(ii) or (iii) of this section for a calen-
dar year regardless of whether a reportable
payment was made to the U.S. account
during the calendar year. A participating
FFI that reports an account under the elec-
tion described in this paragraph (d)(5) is
not required to report the information de-
scribed in paragraph (d)(3) of this section
with respect to the account. The election
under section 1471(c)(2) described in this
paragraph (d)(5)(i)(A) does not apply to
cash value insurance contracts or annu-
ity contracts that are financial accounts
described in §1.1471–5(b)(1)(iv). See
paragraph (d)(5)(i)(B) of this section for
an election to report cash value insurance
contracts or annuity contracts that are U.S.
accounts held by specified U.S. persons in
a manner similar to section 6047(d).
(B)Election to report in a manner simi-
lar to section 6047(d). Except as otherwise
provided in this paragraph (d)(5), a partici-
pating FFI may elect to report with respect
to any of its cash value insurance contracts
or annuity contracts that are U.S. accounts
held by specified U.S. persons under sec-
tion 6047(d), modified as follows. The
amount to be reported is the sum of the ac-
count balance or value (as of the calendar
year end or the most recent contract an-
niversary date) and any amount paid un-
der the contract during such reporting pe-
riod as if such participating FFI were a
U.S. payor. Each holder of a U.S. account
that is a specified U.S. person is treated
for purposes of reporting under this para-
graph (d)(5)(i)(B) as a contract holder or
payee who is an individual and citizen of
the United States.
(ii)Additional information to be re-
ported. In addition to the information
otherwise required to be reported un-
der sections 6041, 6042, 6045, 6047(d)
(in the manner described in paragraph
(d)(5)(i)(B) of this section with respect
to U.S. accounts held by specified U.S.
2013–15 I.R.B.855April 8, 2013

persons), and 6049, including the report-
ing of payments made to such accounts
subject to reporting under the applicable
section, a participating FFI that elects to
report under this paragraph (d)(5)(ii) must
report with respect to each account that it
is required to treat as a U.S. account—
(A) In the case of an account holder that
is a specified U.S. person—
(1) The name, address, and TIN of the
account holder; and
(2) The account number; and
(B) In the case of an account holder that
is a U.S. owned foreign entity that is an
NFFE—
(1) The name of such entity;
(2) The name, address, and TIN of each
substantial U.S. owner of such entity; and
(3) The account number.
(iii)Special reporting of accounts held
by owner-documented FFIs. With respect
to each account held by an owner-docu-
mented FFI, a participating FFI that elects
to report under this paragraph (d)(5) must
report payments made to the owner-docu-
mented FFI under the requirements of sec-
tions 6041, 6042, 6045, 6047(d), and 6049,
the other information required under each
applicable section, and the following infor-
mation—
(A) The name of such FFI;
(B) The name, address, and TIN of
each specified U.S. person identified in
§1.1471–3(d)(6)(iv)(A)(1); and
(C) The account number for the account
held by the owner-documented FFI.
(iv)Branch reporting. A participating
FFI that reports the information described
in paragraphs (d)(5)(ii) and (iii) of this sec-
tion shall also report the jurisdiction of the
branch that maintains the account being re-
ported.
(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 reporting date
following the calendar year for which the
election is made.
(vi)Revocation of election.Apartic-
ipating FFI may revoke the election de-
scribed in paragraph (d)(5)(i) (as a whole
or with regard to any of its accounts) by re-
porting the information described in para-
graph (d)(3) on the next reporting date fol-
lowing the calendar year for which the
election is revoked.
(vii)Filing of information under elec-
tion. In the case of an account holder that
is a specified U.S. person, the information
requiredtobereportedundertheelection
described in this paragraph (d)(5) shall be
filedwiththeIRSandissuedtotheaccount
holder in the time and manner prescribed
in sections 6041, 6042, 6045, 6047(d), and
6049 and in accordance with the forms
referenced therein and their accompany-
ing instructions provided by the IRS for
reporting under each of these sections. If
the account holder is an NFFE that is a
U.S. owned foreign entity or owner-docu-
mented FFI, however, the information re-
quired to be reported under the election de-
scribed in this paragraph (d)(5) shall be
filed on Form 8966 in accordance with
its requirements andits accompanying in-
structions.
(6)Reporting on recalcitrant account
holders—(i)In general. Except as oth-
erwise provided in a Model 2 IGA, a
participating FFI, as part of its reporting
responsibilities under this paragraph (d),
shall report to the IRS for each calendar
year the information described for each of
the classes of account holders described in
paragraphs (d)(6)(A) through (E) of this
section. See §1.1474–1(d)(4)(ii) for a par-
ticipating FFI or registered deemed-com-
pliant FFI’s requirement to report chapter
4 reportable amounts paid to such account
holders and tax withheld.
(A) The aggregate number and aggre-
gate balance or value of accounts held
by recalcitrant account holders at the end
of the calendar year that are described in
§1.1471–5(g)(2)(iv) (referencing passive
NFFEs that are recalcitrant account hold-
ers).
(B) The aggregate number and aggre-
gate balance or value of accounts held
by recalcitrant account holders at the end
of the calendar year that are described in
§1.1471–5(g)(2)(ii) and (iii) (referencing
U.S. persons that are recalcitrant account
holders).
(C) The aggregate number and aggre-
gate balance or value of accounts held by
recalcitrant account holders at the end of
the calendar year, other than accounts de-
scribed in paragraph (d)(6)(i)(A), (B), or
(E) of this section, that have U.S.indicia.
(D) The aggregate number and aggre-
gate balance or value of accounts held by
recalcitrant account holders at the end of
the calendar year, other than accounts de-
scribed in paragraph (d)(6)(i)(A) or (E) of
this section, that do not have U.S.indicia.
(E) The aggregate number and aggre-
gate balance or value of accounts held
by recalcitrant account holders at the end
of the calendar year that are dormant ac-
counts.
(ii)Definition of dormant account.A
dormant account is an account (other than
a cash value insurance contract or annuity
contract) that is a dormant or inactive ac-
count under applicable laws or regulations
or the normal operating procedures of the
participating FFI that are consistently ap-
plied for all accounts maintained by such
institution in a particular jurisdiction. If
neither applicable laws or regulations nor
the normal operating procedures of the par-
ticipating FFI maintaining the account ad-
dress dormant or inactive accounts, an ac-
count will be a dormant account if—
(A) The account holder has not initiated
a transaction with regard to the account
or any other account held by the account
holder with the FFI in the past three years;
and
(B) The account holder has not commu-
nicated with the FFI that maintains such
account regarding the account or any other
account held by the account holder with
the FFI in the past six years.
(iii)End of dormancy. An account
that is a dormant account under paragraph
(d)(6)(ii) of this section ceases to be a
dormant account when—
(A) The account holder initiates a trans-
action with regard to the account or any
other account held by the account holder
with the FFI;
(B) The account holder communicates
with the FFI that maintains such account
regarding the account or any other account
held by the account holder with the FFI; or
(C) The account ceases to be a dormant
account under applicable laws or regula-
tions or the participating FFI’s normal op-
erating procedures.
(iv)Forms. Reporting under paragraph
(d)(6)(i) of this section shall be filed on
Form 8966 in accordance with its require-
ments and accompanying instructions.
(v)Time and manner of filing. Except
as provided in paragraph (d)(7)(iv)(B) of
this section, Form 8966 shall be filed elec-
tronically with the IRS on or before March
31 of the year following the end of the cal-
April 8, 20138562013–15 I.R.B.

endar year to which the form relates. See
the accompanying instructions to this form
for electronic filing instructions.
(vi)Record retention requirements.A
participating FFI that produces, in the or-
dinary course of its business, account state-
ments that summarize the activity (includ-
ing withdrawals, transfers, and closures) of
an account held by a recalcitrant account
holder described in paragraph (d)(6)(i)(B)
of this section for any calendar year in
which the account was required to be re-
ported under paragraph (d)(6) of this sec-
tion must retain a record of such account
statements. Such record must be retained
for the longer of six years or the reten-
tion period under the FFI’s normal busi-
ness procedures. A participating FFI may
be required to extend the six year retention
period if the IRS requests such an exten-
sion prior to the expiration of the six year
period.
(7)Special reporting rules with re-
spect to the 2013 through 2015 calendar
years—(i)In general. If the effective date
of the FFI agreement of a participating FFI
is on or before December 31, 2014, the
participating FFI is required to report U.S.
accounts and accounts held by owner-doc-
umented FFIs that it maintained (or that is
otherwise required to report under para-
graph (d)(2)(ii) of this section) during the
2013, 2014, and 2015 calendar years in
accordance with paragraph (d)(7)(ii) or
(iii)ofthissection.
(ii)Participating FFIs that report under
§1.1471–4(d)(3). With respect to accounts
that a participating FFI is required to report
in accordance with paragraph (d)(2) of this
section, the participating FFI may, instead
of the information described in paragraphs
(d)(3)(ii) and (iii) of this section, report
only the following information—
(A)Reporting with respect to the 2013
and 2014 calendar years. With respect to
accounts maintainedduring the 2013 and
2014 calendar years—
(1) The name, address, and TIN of each
specified U.S. person who is an account
holder and, in the case of any account
holder that is an NFFE that is a U.S. owned
foreign entity or that is an owner-docu-
mented FFI, the name of such entity and
the name, address, and TIN of each sub-
stantial U.S. owner of such NFFE or, in
the case of an owner-documented FFI, of
each specified U.S. person identified in
§1.1471–3(d)(6)(iv)(A)(1);
(2) The account balance or value as of
the end of the relevant calendar year, or if
the account was closed after the effective
date of the FFI agreement, the amount or
value withdrawn or transferred from the
account in connection with closure; and
(3) The account number of the account.
(B)Reporting with respect to the 2015
calendar year. With respect to the 2015
calendar year, the participating FFI may
report only—
(1) The information described in para-
graph (d)(7)(ii)(A) of this section; and
(2) The payments made with respect
to the account except for those payments
described in paragraph (d)(4)(iv)(B)(3)of
this section (certain gross proceeds).
(iii)Participating FFIs that report
under §1.1471–4(d)(5). A participating
FFI that elects to report under paragraph
(d)(5) of this section may report only
the information described in paragraphs
(d)(7)(ii)(A)(1)and(3)ofthissectionfor
its 2013 and 2014 calendar years. With
respect to its 2015 calendar year, a par-
ticipating FFI is required to report all of
the information required to be reported
under paragraphs (d)(5)(i) through (iii) of
this section but may exclude from such re-
porting amounts reportable under section
6045.
(iv)Forms for reporting—(A)In gen-
eral. Except as provided in paragraph
(d)(7)(iv)(B) of this section, reporting un-
der paragraph (d)(7)(ii) of this section shall
be made on Form 8966 (or such other form
as the IRS may prescribe), in the man-
ner described in paragraph (d)(3)(vii) of
this section. Reporting under paragraph
(d)(7)(iii) of this section shall be made in
accordance with paragraph (d)(5)(vii) of
this section.
(B)Special determination date and
timing for reporting with respect to the
2013 calendar year. With respect to the
2013 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 ac-
count is closed prior to December 31,
2014) if such account was outstanding on
December 31, 2013. Reporting for both
the 2013 and 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 participating 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-documentedFFIs in accordance
with the dates otherwise applicable to re-
porting under chapter 61 with respect to
the 2013 calendar year.
(8)Reporting requirements of QIs, WPs
and WTs.SeetheQI,WP,orWTagree-
ment for the reporting requirements of a
participating FFI that is a QI, WP, or WT
with respect to U.S. accounts that it main-
tains.
(9)Examples. The following examples
illustrate the provisions of this paragraph
(d):
Example 1.Financial institution required to re-
port U.S. account. PFFI1, a participating FFI, is-
sues shares of stock that are financial accounts un-
der §1.1471–5(b). Such shares are held in custody
by PFFI2, another participating FFI, on behalf of U,
a specified U.S. person that holds an account with
PFFI2. The shares of PFFI1 held by PFFI2 will not
be subject to reporting by PFFI1 if PFFI1 may treat
PFFI2 as a participating FFI under §1.1471–3(d)(3).
See paragraph (d)(2)(ii)(A) of this section.
Example 2.Financial institution required to
report U.S. account. U, a specified U.S. person,
holds shares in PFFI1, a participating FFI that in-
vests in other financial institutions (a fund of funds).
The shares of PFFI1 are financial accounts under
§1.1471–5(b)(3)(iii). PFFI1 holds shares that are
also financial accounts under §1.1471–5(b)(3)(iii)
in PFFI2, another participating FFI. The shares of
PFFI2 held by PFFI1 are not subject to reporting
by PFFI2, if PFFI2 may treat PFFI1 as a partici-
pating FFI under §1.1471–3(d)(3). See paragraph
(d)(2)(ii)(A) of this section.
Example 3.U.S owned foreign entity.FC,apas-
sive 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 spec-
ified 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 re-
porting form described in paragraph (d)(3)(vi) of this
section and report the information described in para-
graph (d)(3)(iii) with respect to both FC and Q. See
paragraph (d)(3)(ii) of this section.
Example 4.Election to perform Form 1099 re-
porting with regard to an NFFE. Same facts as in
Example 3, except that PFFI1 has made the election
in accordance with paragraph (d)(5) of this section.
PFFI1 must complete and file the forms described
in paragraph (d)(5)(vii) for FC, treating FC as if it
were an individual and citizen of the United States
andmustidentifyQasasubstantialU.S.ownerofFC
on such form. See paragraph (d)(5)(ii) of this section.
2013–15 I.R.B.857April 8, 2013

PFFI1 shall not complete the forms described in para-
graph (d)(5)(vii) with regard to U.
Example 5.Owner-documented FFI.DC,an
owner-documented FFI under §1.1471–3(d)(6),
holds a custodial account with PFFI1, a participat-
ing 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)(vi) of this section with regard to
U and Q. See paragraph (d)(3)(iii) of this section.
Example 6.Election to perform Form 1099 re-
porting with regard to an owner-documented FFI.
SamefactsasinExample 5, except that PFFI1 has
made the election in accordance with paragraph
(d)(5) of this section. PFFI1 must complete and file
the forms described in paragraph (d)(5)(vii) for U
and Q.
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)(vi) of this section with regard to U’s account
on behalf of DC2. See paragraph (d)(2)(ii)(C) of this
section.
(e)Expanded affiliated group require-
ments—(1)In general. Except as other-
wise provided in this paragraph (e)(1) or
paragraphs (e)(2) and (e)(3) of this sec-
tion, each FFI that is a member of an
expanded affiliated group must have the
chapter 4 status of a participating FFI or
registered deemed-compliant FFI as a con-
dition for any member of such group to
obtain the status of a participating FFI or
registered deemed-compliant FFI. Accord-
ingly, except as otherwise provided in pub-
lished guidance, each FFI in an expanded
affiliated group must submit a registration
form to the IRS in such manner as the IRS
may prescribe requesting an FFI agree-
ment, 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 sec-
tion, each FFI that is a member of such
group must also agree to all of the re-
quirements for the status for which it ap-
plies with respect to all accounts main-
tained at all of its branches, offices, and di-
visions. For the withholding requirements
of a participating FFI with respect to lim-
ited branches and affiliates that are limited
FFIs, see paragraph (b)(5) of this section.
Notwithstanding the foregoing, an FFI (or
branch thereof) that is treated as a partici-
pating FFI or a deemed-compliant FFI pur-
suant to a Model 1 IGA or Model 2 IGA
will maintain such status provided that it
meets the terms for such status pursuant to
such agreement.
(2)Limited branches—(i)In general.
An FFI that otherwise satisfies the require-
ments for participating FFI status as de-
scribed in this section will be allowed to
become a participating FFI notwithstand-
ing that one or more of its branches cannot
satisfy all of the requirements of a partici-
pating FFI as described in this section if—
(A) All branches (as defined in para-
graph (e)(2)(ii) of this section) that cannot
satisfy all of the requirements of a partici-
patingFFIasdescribedinthissectionare
limited branches as described in paragraph
(e)(2)(iii) of this section;
(B) The FFI maintains at least one
branch that complies with all of the re-
quirements of a participating FFI, even if
the only branch that can comply is a U.S.
branch; and
(C) The FFI agrees to and complies with
the conditions in paragraph (e)(2)(iv) of
this section.
(ii)Branch defined. For purposes of this
section, a branch is a unit, business, or of-
fice of an FFI that is treated as a branch
under the regulatory regime of a country
or is otherwise regulated under the laws
of such country as separate from other of-
fices, units, or branches of the FFI and that
maintains books and records separate from
the books and records of other branches
of the FFI. For purposes of this section, a
branch includes units, businesses, and of-
fices of an FFI located in the country in
which the FFI is created or organized. All
units, businesses, or offices of a participat-
ing FFI in a single country shall be treated
as a single branch for purposes of this para-
graph (e)(2). An account will be treated
as maintained by a branch for purposes of
this paragraph (e)(2) if the rights and obli-
gations of the account holder and the par-
ticipating FFI with regard to such account
(including any assets held in the account)
are governed by the laws of the country of
the branch.
(iii)Limitedbranchdefined. A limited
branch is a branch of an FFI that, under
the laws of the jurisdiction as of February
15, 2012, and that apply with respect to the
accounts maintained by the branch, cannot
satisfy the conditions of both paragraphs
(e)(2)(iii)(A) and (B) of this section, but
with respect to which the FFI will agree
to the conditions of paragraph (e)(2)(iv) of
this section.
(A) With respect to accounts that pur-
suant to this section the participating FFI
is required to treat as U.S. accounts, ei-
ther report such accounts to the IRS as de-
scribed in paragraph (d) of this section,
close such accounts within a reasonable
period of time, or transfer such accounts to
a U.S. financial institution, a branch of the
FFI that will so report, a participating FFI,
or a reporting Model 1 FFI.
(B) With respect to recalcitrant account
holders and accounts held by nonpartici-
pating FFIs, withhold with respect to each
such account as required under paragraph
(b) of this section, block each such account
(as defined in this paragraph), close each
such account within a reasonable period of
time, or transfer each such account to a
U.S. financial institution, a branch of the
FFI that will so report, a participating FFI,
or a reporting Model 1 FFI. For purposes
of this paragraph (e)(2)(iii)(B), an account
is a blocked account if the FFI prohibits the
account holder from effecting any transac-
tions with respect to an account until such
time as the account is closed, transferred,
or the account holder provides the doc-
umentation described in paragraph (c) of
this section for the FFI to determine the
U.S. or non-U.S. status of the account and
report the account if required under para-
graph (d) of this section.
(iv)Conditions for limited branch sta-
tus. An FFI with one or more limited
branches must satisfy the following re-
quirements when applying for participat-
ing FFI status with the IRS—
(A) Identify the relevant jurisdiction
of each branch for which it seeks limited
branch status;
(B) Agree that each such branch will
identify its account holders under the due
diligence requirements applicable to par-
ticipating FFIs under paragraph (c) of this
section, retain account holder documenta-
tion pertaining to those identification re-
quirements for six years from the effective
date of the FFI agreement, and report to the
IRS with respect to accounts that it is re-
quired to treat as U.S. accounts to the ex-
tent permitted under the relevant laws per-
taining to the branch;
(C) Agree to treat each such branch as
an entity separate from its other branches
April 8, 20138582013–15 I.R.B.

for purposes of the withholding require-
ments described in paragraph (b)(5) of this
section;
(D) Agree that each such branch will
not open accounts that it is required to
treat as U.S. accounts or accounts held by
nonparticipating FFIs, including accounts
transferred from any branch of the FFI or
from any member of its expanded affiliated
group; and
(E) Agree that each limited branch will
identify itself to withholding agents as a
nonparticipating FFI (including to affili-
ates of the FFI in the same expanded affil-
iated group that are withholding agents).
(v)Term of limited branch status (tran-
sitional). An FFI that becomes a par-
ticipating FFI with one or more limited
branches will cease to be a participating
FFI after December 31, 2015, unless other-
wise provided pursuant to Model 1 IGA or
Model 2 IGA. A branch will cease to be a
limited branch as of the beginning of the
third calendar quarter following the date
on which the branch is no longer prohib-
ited from complying with the requirements
of a participating FFI as described in this
section. In such case, a participating FFI
will retain its status as a participating FFI if
it notifies the IRS by the date such branch
ceases to be a limited branch that it will
comply with the requirements of an FFI
agreement with respect to such branch, or
if otherwise provided pursuant to a Model
1 IGA or Model 2 IGA.
(3)Limited FFI—(i)In general. An FFI
will be allowed to become either a partici-
pating FFI or a registered deemed-compli-
ant FFI notwithstanding that one or more
of the FFIs in the expanded affiliated group
of which the FFI is a member cannot com-
ply with all of the requirements of a partic-
ipating FFI as described in this section if
each such FFI is a limited FFI under para-
graph (e)(3)(ii) of this section.
(ii)Limited FFI defined. A limited
FFI is a member of an expanded affiliated
group that includes one or more participat-
ing FFIs that agrees to the conditions de-
scribed in paragraph (e)(3)(iii) of this sec-
tion to become a limited FFI and if un-
der the laws of each jurisdiction that apply
with respect to the accounts maintained by
the affiliate, the affiliate cannot satisfy the
conditions of both paragraphs (e)(3)(ii)(A)
and (B) of this section.
(A) With respect to accounts that are
U.S. accounts, report such accounts to the
IRS as described in paragraph (d) of this
section, close such accounts within a rea-
sonable period of time, or transfer such ac-
counts to a U.S. financial institution, a par-
ticipating FFI, or a reporting Model 1 FFI.
(B) With respect to recalcitrant account
holders and accounts held by nonpartici-
pating FFIs, withhold with respect to each
such account as required under paragraph
(b) of this section, block each such ac-
count, close each such account within a
reasonable period of time, or transfer each
such account to a U.S. financial institution,
a participating FFI, or a reporting Model
1 FFI. See paragraph (e)(2)(ii)(B) of this
section for when an account is considered
blocked.
(iii)Conditions for limited FFI status.
An FFI that seeks to become a limited FFI
must—
(A) Register as part of its expanded af-
filiated group’s FFI agreement process for
limited FFI status;
(B) Agree as part of such registration to
identify its account holders under the due
diligence requirements applicable to par-
ticipating FFIs under paragraph (c) of this
section, retain account holder documenta-
tion pertaining to those identification re-
quirements for six years from the effective
date of its registration as a limited FFI, and
report with respect to accounts that it is re-
quired to treat as U.S. accounts to the ex-
tent permitted under the relevant laws per-
taining to the FFI;
(C) Agree as part of such registration
that it will not open accounts that it is re-
quired to treat as U.S. accounts or accounts
held by nonparticipating FFIs, including
accounts transferred from any member of
its expanded affiliated group; and
(D) Agree as part of such registration
that it will identify itself to withholding
agents as a nonparticipating FFI.
(iv)Period for limited FFI status (tran-
sitional). A limited FFI will cease to be
a limited FFI after December 31, 2015.
An FFI will also cease to be a limited FFI
when it becomes a participating FFI or
deemed-compliant FFI, or as of the begin-
ning of the third calendar quarter following
the date on which the FFI is no longer pro-
hibited from complying with the require-
ments of a participating FFI as described
in this section. In such case, participating
FFIs and deemed-compliant FFIs that are
members of the same expanded affiliated
group will retain their status if, by the date
that an FFI ceases to be a limited FFI, such
FFI enters into an FFI agreement or be-
comes a registered deemed-compliant FFI,
unless otherwise provided pursuant to an
applicable Model 1 IGA or Model 2 IGA.
(4)Special rule for QIs. An FFI that
has in effect a QI agreement with the IRS
will be allowed to become a limited FFI
notwithstanding that none of the FFIs in
the expanded affiliated group of which the
FFI is a member can comply with the re-
quirements of a participating FFI as de-
scribedinthissectioniftheFFIthatisa
QI meets the conditions of a limited FFI
under paragraph (e)(3)(ii) of this section.
(f)Verification—(1)In general.This
paragraph (f) describes the requirement for
a participating FFI to establish and imple-
ment a compliance program for satisfying
its requirements under this section. Para-
graph (f)(2) of this section provides the
requirement for a participating FFI to es-
tablish a compliance program and the op-
tion for a group of FFIs to adopt a con-
solidated compliance program. Paragraph
(f)(3) describes the periodic certification
that the participating FFI must make to the
IRS regarding the participating FFI’s com-
pliance with the requirements of an FFI
agreement. Paragraph (f)(4) describes IRS
information requests related to compliance
with an FFI agreement.
(2)Compliance program—(i)In gen-
eral. The participating FFI must appoint
a responsible officer to oversee the par-
ticipating FFI’s compliance with the re-
quirements of the FFIagreement. The re-
sponsible officer must (either personally
or through designated persons) establish
a compliance program that includes poli-
cies, procedures, and processes sufficient
for the participating FFI to satisfy the re-
quirements of the FFIagreement. The re-
sponsible officer (or designee) must peri-
odically review the sufficiency of the FFI’s
compliance program and the FFI’s com-
pliance with the requirements of an FFI
agreement during thecertification period
described in paragraph (f)(3) of this sec-
tion. The results of the periodic review
must be considered by the responsible of-
ficer in making the periodic certifications
required under paragraph (f)(3) of this sec-
tion.
(ii)Consolidated compliance pro-
gram—(A)In general. A participating
FFI that is a member of an expanded af-
filiated group that includes one or more
2013–15 I.R.B.859April 8, 2013

FFIs may elect to be part of a consoli-
dated compliance program (and perform
a consolidated periodic review) under the
authority of a participating FFI, reporting
Model 1 FFI, or U.S. financial institution
(compliance FI) that is a member of the
electing FFI’s expanded affiliated group,
regardless of whether all such members so
elect. A sponsoring entity is required to
act as the compliance FI for the sponsored
FFI group. In addition, when an FFI elects
to be part of a consolidated compliance
program, each branch that it maintains
(including a limited branch or a branch
described in §1.1471–5(f)(1)) must be
subject to periodic review as part of such
program.
(B)Requirements of compliance FI.A
participating FFI, reporting Model 1 FFI,
or U.S. financial institution that agrees to
establish and maintain a consolidated com-
pliance program and perform a consoli-
dated periodic review on behalf of one or
more FFIs (the compliance group), must
agree to identify itself as the compliance
FI and identify each FFI for which it acts
(an electing FFI) to the extent required
by the IRS as part of the FFI registration
process or certification procedures. The
agreement between the compliance FI and
each electing FFI must permit either the
compliance FI or the electing FFI to termi-
nate the agreement upon a finding by the
IRS or by either party that the other party
to the agreement is not fulfilling its obliga-
tions under the agreement or is no longer
able to fulfill such obligations.
(3)Certification of compliance—(i)In
general. In addition to the certifications
required under paragraph (c)(7) of this sec-
tion, six months following the end of each
certification period, the responsible officer
must make the certification described in ei-
ther paragraph (f)(3)(ii) or (iii) of this sec-
tion. The first certification period begins
on the effective date of the FFI agreement
and ends at the close of the third full cal-
endar year following the effective date of
the FFI agreement. Each subsequent cer-
tification period is the three calendar year
period following the previous certification
period, unless the FFI agreement provides
for a different period. The responsible of-
ficer must either certify that the participat-
ing FFI maintains effective internal con-
trols or, if the participating FFI has failed
to remediate any material failures (defined
in paragraph (f)(3)(iv) of this section) as of
the date of the certification, must make the
qualified certification described in para-
graph (f)(3)(iii) of this section.
(ii)Certification of effective internal
controls. The responsible officer must
certify to the following statements—
(A) The responsible officer (or de-
signee) has established a compliance pro-
gram that is in effect as of the date of the
certification and that has been subjected
to the review as described in paragraph
(f)(2)(i) of this section;
(B) With respect to material failures—
(1) There are no material failures for the
certification period; or
(2) If there are any material failures, ap-
propriate actions were taken to remediate
such failures and to prevent such failures
from reoccurring; and
(C) With respect to any failure to with-
hold, deposit, or report to the extent re-
quired under the FFI agreement, the FFI
has corrected such failure by paying any
taxes due (including interest and penal-
ties) and filing the appropriate return (or
amended return).
(iii)Qualified certification.Ifthere-
sponsible officer has identified an event of
default or a material failure that the partic-
ipating FFI has not corrected as of the date
of the certification, the responsible officer
must certify to the following statements—
(A) With respect to the event of default
or material failure—
(1) The responsible officer (or de-
signee) has identified an event of default
as defined in paragraph (g)(1) of this sec-
tion; or
(2) The responsible officer has deter-
mined that as of the date of the certifica-
tion, there are one or more material failures
with respect to the participating FFI’s com-
pliance with the FFI agreement and that
appropriate actions will be taken to prevent
such failures from reoccurring;
(B) With respect to any failure to with-
hold, deposit, or report to the extent re-
quired under the FFI agreement, the FFI
will correct such failure by paying any
taxes due (including interest and penal-
ties) and filing the appropriate return (or
amended return); and
(C) The responsible officer (or de-
signee) will respond to any notice of
default (if applicable) or will provide to
the IRS, to the extent requested, a descrip-
tion of each material failure and a written
plan to correct each such failure.
(iv)Material failures defined. A ma-
terial failure is a failure of the participat-
ing FFI to fulfill therequirements of the
FFI agreement if the failure was the re-
sult of a deliberate action on the part of
one or more employees of the participat-
ing FFI (its agent, sponsor, or compliance
FI) to avoid the requirements of the FFI
agreement or was an error attributable to
a failure of the participating FFI to im-
plement internal controls sufficient for the
participating FFI to meet the requirements
of this section. A material failure will
not constitute an event of default unless
such material failure occurs in more than
limited circumstanceswhen a participating
FFI has not substantially complied with the
requirements of an FFI agreement. Mate-
rial failures include the following—
(A) The deliberate or systemic failure
of the participating FFI to report accounts
that it was required to treat as U.S. ac-
counts, withhold on passthru payments to
the extent required, deposit taxes withheld,
or accurately report recalcitrant account
holders or payees that are nonparticipating
FFIs as required;
(B) A criminal or civil penalty or sanc-
tion imposed on the participating FFI (or
any branch or office thereof) by a regulator
or other governmental authority or agency
with oversight over the participating FFI’s
compliance with the AML due diligence
procedures to which it (or any branch or of-
fice thereof) is subject and that is imposed
based on a failure to properly identify ac-
count holders under the requirements of
those procedures; and
(C) A potential future tax liability re-
lated to the participating FFI’s compliance
(or lack thereof) with the FFI agreement
for which the FFI establishes, for financial
statement purposes, a tax reserve or provi-
sion.
(4)IRS review of compliance—(i)Gen-
eral inquiries. The IRS, based upon the
information reporting forms described
in paragraphs (d)(3)(v), (d)(5)(vi), or
(d)(6)(iv) of this section filed with the
IRS for each calendar year, may request
additional information with respect to the
informationreportedontheformsormay
request the account statements described
in paragraph (d)(4)(v) of this section.
(ii)Inquiries regarding substantial non-
compliance. If, based on the information
reporting forms described in paragraphs
(d)(3)(v), (d)(5)(vi), or (d)(6)(iv) of this
April 8, 20138602013–15 I.R.B.

section filed with the IRS for each cal-
endar year, the certifications made by the
responsible officer described in paragraph
(f)(3) of this section, or any other informa-
tion related to the participating FFI’s com-
pliance with its FFI agreement, the IRS
determines in its discretion that the par-
ticipating FFI may not have substantially
complied with the requirements of an FFI
agreement, the IRS may request from the
responsible officer (or designee) informa-
tion necessary to verify the participating
FFI’s compliance with the FFI agreement.
The IRS may request, for example, a de-
scription or copy of the participating FFI’s
policies and procedures for fulfilling the
requirements of the FFI agreement, a de-
scription of the participating FFI’s proce-
dures for conducting its periodic review,
or a copy of any written reports document-
ing the findings of such review in order to
evaluate the sufficiency of the participat-
ing FFI’s compliance program and review
of such program. The IRS may also re-
quest the performance of specified review
procedures by a person (including an exter-
nal auditor or third-party consultant) that
the IRS identifies as competent to perform
such procedures given the facts and cir-
cumstances surrounding the FFI’s poten-
tial failure to comply with the FFI agree-
ment.
(g)Event of default—(1)Defined.An
event of default occurs if a participating
FFI fails to perform material obligations
required with respect to the due diligence,
withholding, or reporting requirements of
the FFI agreement or if the IRS determines
that the participating FFI has failed to sub-
stantially comply with the requirements of
the FFI agreement. An event of default
also includes the occurrence of the follow-
ing—
(i) Failure to obtain, in any case in
which foreign law would (but for a waiver)
prevent the reporting of U.S. accounts re-
quired under paragraph (d) of this section,
valid and effective waivers from holders
of U.S. accounts or failure to otherwise
close or transfer such U.S. accounts as re-
quired under paragraph (i) of this section;
(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 account
holders or nonparticipating FFIs;
(iii) Failure, in any case in which for-
eign law prevents or otherwise limits with-
holding to the extent required under para-
graph (b) of this section, to fulfill the re-
quirements of paragraph (i) of this section;
(iv) Failure to establish or maintain a
compliance program for fulfilling the re-
quirements of the FFI agreement or to per-
form a periodic review of the participating
FFI’s compliance;
(v) Failure to take timely corrective
actions to remedy a material failure de-
scribed in paragraph (f)(3)(iv) of this
section after making the qualified certifi-
cation described in paragraph (f)(3)(iii) of
this section;
(vi) Failure to make the initial certifica-
tion required under paragraph (c)(7) of this
section or to make the periodic certifica-
tion required under paragraph (f)(3) of this
section within the specified time period;
(vii) Making incorrect claims for refund
under the collective refund procedures de-
scribed in paragraph (h) of this section;
(viii) Failure to cooperate with an IRS
request for additional information or mak-
ing any fraudulent statement or misrepre-
sentation of material fact to the IRS; or
(ix) Any transaction relating to sponsor-
ship, promotion, or noncustodial distribu-
tion for or on behalf of any Local FFI, as
described in §1.1471–5(f)(1)(i)(A), that is
an investment entity.
(2)Noticeofeventofdefault.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 re-
mediate the event of default within a spec-
ified 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 rea-
sons why the participating FFI does not
agree that an event of default has occurred.
Taking into account the terms of any ap-
plicable Model 2 IGA, if the participating
FFI does not provide a response within the
specified time period, the IRS may, at its
sole discretion, deliver a notice of termi-
nation that terminates the FFI’s participat-
ing FFI status. A participating FFI may re-
quest, within a reasonable period of time,
reconsideration of a notice of default or
notice of termination by written request
to the LB&I, Assistant Deputy Commis-
sioner (International).
(3)Remediationofeventofdefault.A
participating FFI will be permitted to re-
mediate an event of default to the extent
that it agrees with the IRS on a remedi-
ation plan. Such a plan may, for exam-
ple, allow a participating FFI to remedi-
ate an event of default described in para-
graph (g)(1)(iii) of this section by provid-
ing specific information regarding its U.S.
accounts when the FFI has been unable to
report all of the information with respect to
such accounts as required under paragraph
(d) of this section and has been unable to
close or transfer such accounts. The IRS
may, as part of a remediation plan, require
additional information from the FFI or the
performance of the specified review pro-
cedures described in paragraph (f)(4)(ii) of
this section.
(h)Collective credit or refund proce-
dures for overpayments—(1)In general.
Except as otherwise provided in the FFI
agreement, if there has been an overpay-
ment of tax with respect to an account
holder or payee of a participating FFI or
reporting Model 1 FFI resulting from tax
withheld under chapter 4 by either the par-
ticipating FFI or reporting Model 1 FFI
or by its withholding agent during a cal-
endar year and the amount withheld has
not been recovered under the reimburse-
ment or set-off procedures described in
§1.1474–2(a) (applied by either the with-
holding agent or the participating FFI or
reporting Model 1 FFI), the participating
FFI or reporting Model 1 FFI may request
a credit or refund from the IRS of the
overpayment to the extent permitted un-
der this paragraph (h) on behalf of such ac-
countholderorpayee.Forpurposesofthis
paragraph (h), an overpayment means an
amount withheld in excess of the account
holder or payee’s U.S. tax liability with re-
spect to the payment (including overwith-
holding as defined §1.1474–2(a)(2)). If a
participating FFI or reporting Model 1 FFI
does not elect the procedure provided in
this paragraph (h) torequest a credit or
refund, the participating FFI or reporting
Model1FFIisrequiredto(ormustrequest
that its withholding agent) file and furnish
within a reasonable period a Form 1042–S
(or such other form as the IRS may pre-
scribe) and Form 1042 (or amended forms)
to report to any account holder or payee
that has requested such form with regard
to the tax withheld by the participating FFI
or reporting Model 1 FFI or its withhold-
ing agent.
2013–15 I.R.B.861April 8, 2013

(2)Persons for which a collective re-
fund is not permitted. A participating FFI
or reporting Model 1 FFI cannot include
in its collective refund claim any payments
made to an account holder or payee that
is a nonparticipating FFI, a participating
FFI or reporting Model 1 FFI that is a
flow-through entity (including a WP or
WT) or that is acting as an intermediary
(including a QI), a U.S. person, or a pas-
sive NFFE that is a flow-through entity
with respect to taxes allocated to its sub-
stantial U.S. owners. A participating FFI
or reporting Model 1 FFI must follow the
procedures set forth under sections 6402
and 6414 and the regulations thereunder,
as modified by this paragraph (h), to claim
the credit or refund. No credit or refund
will be allowed after the expiration of the
statutory period of limitation for refunds
under section 6511.
(3)Payments for which a collective re-
fund is permitted. A collective refund
is permitted only for payments withheld
upon under chapter 4.
(4)Procedural and other requirements
for collective refund. A participating FFI
or reporting Model 1 FFI may use the col-
lective refund procedures of this paragraph
(h) under the following conditions—
(i) All account holders and payees for
which the participating FFI or reporting
Model 1 FFI seeks a refund must have
been included on a Form 1042–S in a re-
porting pool of nonparticipating FFIs or
recalcitrant account holders described in
§1.1474–1(d)(4)(iii) with respect to the
payments for which refund is sought and
the participating FFI or reporting Model
1 FFI (or the withholding agent) has not
filed or furnished a Form 1042–S to any
such account holder or payee with respect
to which the refund is sought;
(ii) If a refund is sought on the grounds
that the account holder or payee of a pay-
ment that is U.S. source FDAP income
subject to withholding under chapter 3 is
entitled to a reduced rate of tax by rea-
son of any treaty obligation of the United
States, the participating FFI or reporting
Model 1 FFI has alsoobtained valid doc-
umentation that meets the requirements of
chapter 3 for a reduced rate of tax and such
documentation is available to the IRS upon
request with respect to each such account
holder or payee; and
(iii) In filing a claim for refund with the
IRS under this paragraph (h), the partici-
pating FFI or reporting Model 1 FFI sub-
mits the following, together with its Form
1042 (or amended Form 1042) on which it
provides a reconciliation of amounts with-
held and claims a credit or refund, a sched-
ule identifying the taxes withheld with re-
spect to each account holder or payee to
which the claim relates, and, if applicable,
a copy of the Form 1042–S (or such other
form as the IRS may prescribe) furnished
to the participating FFI or reporting Model
1 FFI by its withholding agent reporting
the taxes withheld to which the claim re-
lates, and a statement that includes the fol-
lowing representations and explanation—
(A) The reason(s) for the overpayment;
(B) A representation that the partici-
pating FFI or reporting Model 1 FFI or
its withholding agent deposited the tax
for which a refund is being sought un-
der section 6302 and has not applied the
reimbursement or set-off procedure of
§1.1474–2 to adjust the tax withheld to
which the claim relates;
(C) A representation that the participat-
ing FFI or reporting Model 1 FFI has re-
paid or will repay the amount for which
refund is sought to the appropriate account
holders or payees;
(D) A representation that the participat-
ing FFI or reporting Model 1 FFI retains
a record showing the total amount of tax
withheld, credits from other withholding
agents, tax assumed by the participating
FFI or reporting Model 1 FFI, adjustments
for underwithholding, and reimbursements
for overwithholding as its relates to each
account holder and payee and also show-
ing the repayment to such account holders
or payees for the amount of tax for which
a refund is being sought;
(E) A representation that the partici-
pating FFI or reporting Model 1 FFI re-
tains valid documentation that meets the
requirements of chapters 3 (if applicable)
and 4 to substantiate the amount of over-
withholding with respect to each account
holder and payee for which a refund is be-
ing sought and that such documentation is
available to the IRS upon request; and
(F) A representation that the participat-
ing FFI or reporting Model 1 FFI will not
issue a Form 1042–S (or such other form
as the IRS may prescribe) to any account
holder or payee for which a refund is be-
ing sought.
(i)Legal prohibitions on reporting U.S.
accounts and withholding—(1)In general.
A participating FFI (or branch thereof) that
is prohibited by foreign law from reporting
the information required under paragraph
(d) of this section with respect to a U.S. ac-
count must follow the procedures of para-
graph(i)(2)ofthissectiontoobtainavalid
and effective waiver of such law and, if
such waiver is not obtained within a rea-
sonable period of time, to close or trans-
fer such account. A participating FFI (or
branch thereof) that is prohibited by law
from withholding with respect to a recal-
citrant account holder or nonparticipating
FFI as required under paragraph (b) of this
section is required to perform the proce-
dures of paragraph (i)(3) of this section to
obtain an authorization to withhold on pay-
ments made to the account holder or payee
to the extent required under paragraph (b)
of this section, close the account or ter-
minate the obligation (as applicable), or
to sell the assets in the account that pro-
duce (or could produce) withholdable pay-
ments and, if such authorization is not ob-
tained within a reasonable period of time,
to transfer or block such account or obli-
gation. An FFI that cannot comply with
any of the requirements of this paragraph
(i) is not eligible to enter into an FFI agree-
ment with the IRS, but may obtain status
asalimitedFFIiftheFFImeetsthere-
quirements and agreesto the conditions of
paragraph (e)(3) of this section. If a branch
of an FFI cannot comply with the require-
ments of this paragraph (i), then the FFI
must agree to the conditions of a limited
branch as described in paragraph (e)(2) of
this section to obtain status as a participat-
ing FFI.
(2)Requesting waiver or closure of a
U.S. account—(i)In general. If a partici-
pating FFI (or branch thereof) is prohibited
by law from reporting the information re-
quired under paragraph (d) of this section
with respect to a U.S. account that it main-
tains unless a valid and effective waiver of
such law is obtained, the participating FFI
must request a valid and effective waiver
(including by obtaining waivers from all
relevant account holders if necessary). For
accounts other than preexisting accounts,
the participating FFI must obtain a valid
and effective waiver upon opening the ac-
count or, if prohibitions on disclosure can-
not by law be waived, the participating FFI
must refrain from opening accounts that
are U.S. accounts or must transfer such ac-
counts as described in paragraph (i)(2)(iii)
April 8, 20138622013–15 I.R.B.

of this section. Beginning on the date pro-
vided in §1.1471–5(g)(3) and until such
time as the holder of a U.S. account ei-
ther consents to disclosure or closure of the
account or until the account is transferred,
the participating FFI is required to treat the
account as held by a recalcitrant account
holder.
(ii)Valid and effective waiver for a U.S.
account. For purposes of this paragraph
(i)(2), a valid and effective waiver is a
waiver that, under the applicable law gov-
erning the participating FFI’s agreement
with the account holder, permits the partic-
ipatingFFI(orbranchthereof)toreportto
the IRS all of the information specified in
paragraph (d) of this section with respect
to the U.S. account and permits the FFI to
provide the IRS with additional informa-
tion concerning suchaccount as specified
in paragraph (f) or (g) of this section.
(iii)Closure or transfer of U.S. account.
If the participating FFI (or branch thereof)
is prohibited by law from reporting a U.S.
account to the IRS under paragraph (d) of
this section and the participating FFI ei-
ther does not obtain a valid and effective
waiver (and Form W–9) or prohibitions on
disclosure cannot by law be waived, the
participating FFI (or branch thereof) must
close or transfer the account within a rea-
sonable time. If the participating FFI can-
not close or transfer the account absent the
account holder consenting to closure, the
participating FFI must request such a con-
sent from such account holder and, if ob-
tained, close or transfer the account within
a reasonable period of time.
(3)Legal prohibitions preventing with-
holding—(i)In general.Iftheparticipat-
ing FFI (or branch thereof) is prohibited by
law from withholding with respect to pay-
ments subject to withholding under para-
graph (b) of this section, the participating
FFI (or a branch thereof) must obtain the
authorization described in this paragraph
(i)(3)(i) from each account holder or payee
receiving such payments to either with-
hold, close the account or terminate the
obligation, or sell all of the assets in the
account that produce (or could produce)
withholdable payments. If the participat-
ing FFI does not receive such authorization
from the account holder or payee within a
reasonable period of time, the participating
FFI must block or transfer such accounts
or obligations as described in paragraph
(i)(3)(ii) of this section.
(ii)Block or transfer accounts or obli-
gations. If the participating FFI does
not receive the authorization described in
paragraph (i)(3)(i) of this section from the
account holder or payee within a reason-
able period of time and is prohibited by
law from closing accounts or terminating
obligations with account holders or pay-
ees as described in paragraph (i)(3)(i) of
this section, the participating FFI must
either block or transfer such accounts or
obligations prior to the date on which the
participating FFI would otherwise be re-
quired to withhold under paragraph (b) of
this section. See paragraph (e)(2)(iii)(B)
of this section for when an account is con-
sidered blocked. A transfer of an account
or obligation must be made to a branch of
the FFI that may so withhold or to a par-
ticipating FFI or reporting Model 1 FFI.
(j)Effective/applicability date.This
section generally applies on January 28,
2013. For other dates of applicability, see
§§1.1471–4(b)(1), (4); 1.1471–4(d)(7);
1.1471–4(e)(2)(v); 1.1471–4(e)(3)(iv).
Par. 9. Section 1.1471–5 is added to
read as follows:
§1.1471–5 Definitions applicable to
section 1471.
(a)U.S. accounts—(1)In general.This
paragraph (a) defines the termU.S. ac-
countand describes when a person is
treated as the holder of a financial account
(account holder). This paragraph also
provides rules for determining when an
exception to U.S. account status applies
for certain depository accounts, including
account aggregation requirements relevant
to applying the exception.
(2)Definition of U.S. account. Subject
to the exception described in paragraph
(a)(4)(i) of this section, a U.S. account
is any financial account maintained by an
FFI that is held by one or more specified
U.S. persons or U.S. owned foreign enti-
ties. For the definition of the term finan-
cial account, see paragraph (b) of this sec-
tion. For the definition of the term spec-
ified U.S. person, see §1.1473–1(c). For
the definition of the term U.S. owned for-
eign entity, see paragraph (c) of this sec-
tion. For reporting requirements of partic-
ipating FFIs with respect to U.S. accounts,
see §1.1471–4(d).
(3)Account holder—(i)In general.
Except as otherwise provided in this para-
graph (a)(3), theaccount holderis the
person listed or identified as the holder
or owner of the account with the FFI
that maintains the account, regardless of
whether such person is a flow-through
entity. Thus, for example, except as oth-
erwise provided in paragraphs (a)(3)(ii)
and (iii) of this section, if a trust (includ-
ingasimpleorgrantortrust)oranestate
is listed as the holder or owner of a fi-
nancial account, the trust or estate is the
account holder, rather than its owners or
beneficiaries. Similarly, except as oth-
erwise provided in this paragraph (a)(3),
if a partnership is listed as the holder or
owner of a financial account, the partner-
ship is the account holder, rather than the
partners 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) of this chapter, 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 benefi-
cial owner. See §1.1471–6(h) for when a
payment derived from certain commercial
activities is not treated as made to an ex-
empt beneficial owner.
(ii)Grantor trust. A trust is not treated
as an account holder if a person is treated
as the owner of the entire trust under sec-
tions 671 through 679. In that case, the ac-
count is held by the person that is treated
as the owner of the trust under such sec-
tions. In the case of a person that is treated
as the owner of a portion of the trust under
sections 671 through 679—
(A) If such person is treated as owning
all the assets in theaccount under sections
671 through 679, theaccount is treated as
held by such person;
(B) If such person is treated as owning
a portion of the account or the assets in the
account under sections 671 through 679,
the account is treated as held by both such
person and the trust; and
(C) If such person is not treated as own-
ing any portion of the account or any of
the assets in the account under sections 671
through 679, the account is treated as held
by the trust.
(iii)Financial accounts held by agents
that are not financial institutions.Aper-
son, other than a financial institution, that
2013–15 I.R.B.863April 8, 2013

holds a financial account for the benefit
or account of another person as an agent,
custodian, nominee, signatory, investment
advisor, or intermediary, is not treated as
an account holder with respect to such ac-
count for purposes of this section. Instead,
such other person is treated as the account
holder.
(iv)Jointly held accounts. With respect
to a jointly held account, each joint holder
is treated as an account holder for pur-
poses of determining whether the account
is a U.S. account. Thus, an account is a
U.S. account if any of the account hold-
ers is a specified U.S. person or a U.S.
owned foreign entity and the account is not
otherwise excepted from U.S. account sta-
tus under paragraph (a)(4) of this section.
When more than one U.S. person is a joint
holder, each U.S. person will be treated as
an account holder and will be attributed
the entire balance of the jointly held ac-
count, including for purposes of applying
the aggregation rules set forth in paragraph
(b)(4)(iii) of this section.
(v)Account holder for insurance and
annuity contracts. An insurance or annuity
contract is held by each person that is enti-
tled to access the contract’s value (for ex-
ample, through a loan, withdrawal, surren-
der, or otherwise) or change a beneficiary
under the contract. If no person can ac-
cess the contract’s valueorchangeabene-
ficiary, the account holders are any person
named in the contract as an owner and any
person who is entitled to receive a future
payment under the terms of the contract.
When an obligation to pay an amount un-
der the contract becomes fixed, each per-
son entitled to receive a payment is an ac-
count holder.
(vi)Examples. The following examples
illustrate the provisions of paragraph (a)(3)
of this section:
Example 1.Account held by agent. F, a nonresi-
dent alien, holds a power of attorney from U, a speci-
fied U.S. person, that authorizes F to open, hold, and
make deposits and withdrawals with respect to a de-
pository account on behalf of U. The balance of the
account for the calendar year is $100,000. F is listed
as the holder of the depository account at a participat-
ing FFI, but because F holds the account as an agent
for the benefit of U, F is not ultimately entitled to the
funds in the account. Because the depository account
is treated as held by U, a specified U.S. person, the
account is a U.S. account.
Example 2.Jointly held accounts. U, a specified
U.S. person, holds a depository account in a partici-
pating FFI. The balance of the account for the calen-
dar year is $100,000. The account is jointly held with
A, an individual who is a nonresident alien. Because
one of the joint holders is a specified U.S person, the
account is a U.S. account.
Example 3.Jointly held accounts.UandQ,both
specified U.S. persons, hold a depository account in
a participating FFI. The balance of the account for
the calendar year is $100,000. The account is a U.S.
account and both U and Q are treated as holders of
the account.
(4)Exceptions to U.S. account sta-
tus—(i)Exception for certain individual
accounts of participating FFIs.Unlessa
participating 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 the account is closed. For rules for
determining the account balance or value,
see paragraphs (a)(3)(iv) and (b)(4) of this
section.
(ii)Election to forgo exception.Apar-
ticipating FFI may elect to disregard the
exception described in paragraph (a)(4)(i)
of this section by reporting all U.S. ac-
counts, including those accounts that
would otherwise meet the conditions of
the exception.
(iii)Example.Aggregation rules for exception to
U.S. account status for certain depository accounts.
In Year 1, a U.S. resident individual, U, holds a de-
pository account with CB, a commercial bank that is
a participating FFI. The balance in U’s CB account at
the end of Year 1 is $35,000. In Year 1, U also holds a
custodial account with CB’s brokerage business. The
custodial account has a $45,000 balance as of the end
of Year 1. CB’s retail banking and brokerage busi-
nesses share computerized information management
systems that associate U’s depository account and U’s
custodial account with U and with one another within
the meaning of paragraph (b)(4)(iii)(A) of this sec-
tion. For purposes of applying the $50,000 threshold
described in paragraph (a)(4)(i) of this section, how-
ever, a depository account is aggregated only with
other depository accounts. Therefore, U’s depository
account is eligible for the paragraph (a)(4)(i) excep-
tion to U.S. account status because the balance of the
depository account does not exceed $50,000.
(b)Financial accounts—(1)In gen-
eral. Except as otherwise provided in this
paragraph (b), the termfinancial account
means—
(i)Depository account. Any depository
account (as defined in paragraph (b)(3)(i)
of this section) maintained by a financial
institution;
(ii)Custodial account. Any custodial
account (as defined in paragraph (b)(3)(ii)
of this section) maintained by a financial
institution;
(iii)Equity or debt interest—(A)Eq-
uity or debt interests in an investment en-
tity. Any equity or debt interest (other
than interests regularly traded on an estab-
lished securities market under paragraph
(e)(3)(iv) of this section) in an investment
entity described in paragraph (e)(4)(i)(B)
or (C) of this section (including an entity
that is also a depository institution, cus-
todial institution, insurance company, or
investment entity described in paragraph
(e)(4)(i)(A) of this section);
(B)Certain equity or debt interests in a
holding company or treasury center.Any
equity or debt interest (other than interests
regularly traded on an established secu-
rities market under paragraph (e)(3)(iv)
of this section) in a holding company or
treasury center described in paragraph
(e)(1)(v) of this section if—
(1) The expanded affiliated group of
which the entity is a member includes one
or more investment entities described in
paragraph (e)(4)(i)(B) or (C) of this sec-
tion or passive NFFEs and the income de-
rived by such investment entities or pas-
sive NFFEs is 50 percent or more of the
aggregate income earned by the expanded
affiliated group;
(2) The redemption or retirement
amount or return earned on the inter-
est is determined, directly or indirectly,
primarily by reference to one or more in-
vestment 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) The value of the interest is deter-
mined, directly or indirectly, primarily by
reference to assets that give rise (or could
give rise) to withholdable payments (as de-
termined under paragraph (b)(3)(v)) of this
section); or
(4) The interest is issued with a prin-
cipal purpose of avoiding the reporting or
withholding requirements of chapter 4;
(C)Equity or debt interests in other
financial institutions. Any equity or debt
interest (other than interests regularly
traded on an established securities market
April 8, 20138642013–15 I.R.B.

under paragraph (e)(3)(iv) of this section)
in an entity that is a depository institution,
custodial institution, investment entity de-
scribed in paragraph (e)(4)(i)(A) of this
section, or insurance company if—
(1)The value of the interest is deter-
mined, directly or indirectly, primarily by
reference to assets that give rise (or could
give rise) to withholdable payments (as de-
termined under paragraph (b)(3)(v) of this
section); or
(2) The interest is issued with a prin-
cipal purpose of avoiding the reporting or
withholding requirements of chapter 4.
(iv)Insurance and annuity contracts.
A contract issued or maintained by an in-
surance company, a holding company (as
described in paragraph (e)(5)(i)(C) of this
section) of an insurance company, or a fi-
nancial institution described in paragraphs
(e)(1)(i), (ii), (iii), or (v) of this section, if
the contract is a cash value insurance con-
tract (as defined in paragraph (b)(3)(vii) of
this section) or an annuity contract.
(2)Exceptions. A financial account
does not include an account described in
this paragraph (b)(2).
(i)Certain savings accounts—(A)Re-
tirement and pension accounts. A retire-
ment or pension account that satisfies the
following conditions under the laws of the
jurisdiction where the account is main-
tained:
(1) The account is subject to regulation
as a personal retirement account or is part
of a registered or regulated retirement or
pension plan for the provision of retire-
ment or pension benefits (including dis-
ability or death benefits);
(2) The account is tax-favored (as de-
scribed in paragraph (b)(2)(i)(E) of this
section);
(3) Annual information reporting is re-
quired to the relevant tax authorities with
respect to the account;
(4) Withdrawals are conditioned on
reaching a specified retirement age, dis-
ability, or death, or penalties apply to
withdrawals made before such specified
events; and
(5)Either—
(i) Annual contributions are limited to
$50,000 or less, or
(ii) There is a maximum lifetime contri-
bution limit to the account of $1,000,000
or less.
(B)Non-retirement savings accounts.
An account (other than an insurance or an-
nuity contract) that satisfies the following
conditions under the laws of the jurisdic-
tion where the account is maintained:
(1) The account is subject to regulation
as a savings vehicle for purposes other than
for retirement;
(2) The account is tax-favored (as de-
scribed in paragraph (b)(2)(i)(E) of this
section);
(3) Withdrawals are conditioned on
meeting specific criteria related to the
purpose of the savings account (for ex-
ample, the provision of educational or
medical benefits), or penalties apply to
withdrawals made before such criteria are
met; and
(4) Annual contributions are limited to
$50,000 or less;
(C)Rollovers. A financial account
that otherwise satisfies the requirements
of paragraph (b)(2)(i)(A) or (B) of this
section will not fail to satisfy such re-
quirements solely because such financial
account may receive assets or funds trans-
ferred from one or more financial accounts
that meet the requirements of paragraph
(b)(2)(i)(A) or (B) of this section or from
one or more retirement or pension funds
that meet the requirements of paragraph
(f)(2)(ii) of this section or §1.1471–6(f).
(D)Coordination with section 6038D.
The exclusions provided under paragraph
(b)(2)(i) of this section shall not apply for
purposes of determining whether an ac-
count or other arrangement is a financial
account for purposes of section 6038D.
(E)Account that is tax-favored.For
purposes of this paragraph (b)(2)(i), an ac-
count is tax-favored under the laws of a ju-
risdiction where the account is maintained
if—
(1) Contributions to the account that
would otherwise be subject to tax under
such laws are deductible or excluded from
the gross income of the account holder or
taxed at a reduced rate; or
(2) Taxation of investment income from
the account is deferred or taxed at a re-
duced rate.
(ii)Certain term life insurance con-
tracts. A life insurance contract with a
coverage period that will end before the
insured individual attains age 90, provided
that the contract satisfies the following
conditions—
(A) Periodic premiums, which do not
decrease over time, are payable at least
annually during the period the contract is
in existence or until the insured attains age
90, whichever is shorter;
(B) The contract has no contract value
that any person can access (by withdrawal,
loan, or otherwise) without terminating the
contract;
(C) The amount (other than a death ben-
efit) payable upon cancellation or termi-
nation of the contract cannot exceed the
aggregate premiums paid for the contract,
less the sum of mortality, morbidity, and
expense charges (whether or not actually
imposed) for the period or periods of the
contract’s existence and any amounts paid
prior to the cancellation or termination of
the contract; and
(D) The contract is not held by a trans-
feree for value.
(iii)Account held by an estate.Anac-
count that is held solely by an estate if the
documentation for such account includes a
copy of the deceased’s will or death certifi-
cate.
(iv)Certain escrow accounts.Anes-
crow account that is established in connec-
tion with—
(A) A court order or judgment; or
(B) A sale, exchange, or lease of real
or personal property, provided that the ac-
count meets the following conditions—
(1) The account is funded solely with a
down payment, earnest money, deposit in
an amount appropriate to secure an obliga-
tion of one of the parties directly related
to the transaction, or a similar payment, or
with a financial asset that is deposited in
the account in connection with the sale, ex-
change, or lease of the property;
(2) The account is established and used
solely to secure the obligation of the pur-
chaser to pay the purchase price for the
property, the seller to pay any contingent
liability, or the lessor or lessee to pay for
any damages relating to the leased prop-
erty as agreed under the lease;
(3) The assets of the account, includ-
ing the income earned thereon, will be paid
or otherwise distributed for the benefit of
the purchaser, seller, lessor, or lessee (in-
cluding to satisfy such person’s obligation)
when the property is sold, exchanged, or
surrendered, or the lease terminates;
(4) The account is not a margin or simi-
lar account established in connection with
a sale or exchange of a financial asset; and
(5) The account is not associated with a
credit card account.
2013–15 I.R.B.865April 8, 2013

(v)Certain annuity contracts. A non-
investment linked, non-transferable, im-
mediate life annuity contract (including a
disability annuity) that monetizes a retire-
ment or pension account described in para-
graph (b)(2)(i)(A) of this section.
(vi)Account or product excluded un-
der an intergovernmental agreement.An
account or product that is excluded from
the definition of financial account under
the terms of an applicable Model 1 IGA or
Model 2 IGA.
(3)Definitions. The following defini-
tions apply for purposes of chapter 4—
(i)Depository account—(A)In gen-
eral. Except as otherwise provided in this
paragraph (b)(3)(i), the termdepository
accountmeans any account that is—
(1) A commercial, checking, savings,
time, or thrift account, or an account that
is evidenced by a certificate of deposit,
thrift certificate, investment certificate,
passbook, certificate of indebtedness, or
any other instrument for placing money
in the custody of an entity engaged in
a banking or similar business for which
such institution is obligated to give credit
(regardless of whether such instrument is
interest bearing or non-interest bearing),
including, for example, a credit balance
with respect to a credit card account issued
by a credit card company that is engaged
in a banking or similar business; or
(2) Any amount held by an insurance
company under a guaranteed investment
contract or under a similar agreement to
pay or credit interest thereon or to return
the amount held.
(B)Exceptions. A depository account
does not include—
(1) A negotiable debt instrument that is
traded on a regulated market or over-the-
counter market and distributed and held
through financial institutions; or
(2) An advance premium or pre-
mium deposit described in paragraph
(b)(3)(vii)(C)(5)ofthissection.
(ii)Custodial account.Thetermcus-
todial accountmeans an arrangement for
holding a financial instrument, contract,
or investment (including, but not limited
to, a share of stock in a corporation, a
note, bond, debenture, or other evidence
of indebtedness, a currency or commod-
ity transaction, a credit default swap, a
swap based upon a nonfinancial index, a
notional principal contract as defined in
§1.446–3(c), an insurance or annuity con-
tract, and any option or other derivative in-
strument) for the benefit of another person.
(iii)Equity interest in certain enti-
ties—(A)Partnership. In the case of a
partnership that is a financial institution,
the termequity interestmeans either a cap-
ital or profits interest in the partnership.
(B)Trust. In the case of a trust that
is a financial institution, anequity interest
means an interest held by—
(1) A person who is an owner of all or
a portion of the trust under sections 671
through 679;
(2) A beneficiary who is entitled to a
mandatory distribution from the trust as
defined in §1.1473–1(b)(3); or
(3) A beneficiary who may receive a
discretionary distribution as defined in
§1.1473–1(b)(3) from the trust but only if
such person receives a distribution in the
calendar year.
(iv)Regularlytradedonanestablished
securities market. Debt or equity interests
described in paragraph (b)(1)(iii) of this
section are regularly traded on an estab-
lished securities market if the requirements
of §1.1472–1(c)(1)(i)(A) and (C) are met.
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 fi-
nancial institution acting as an intermedi-
ary) is registered on the books of the in-
vestment entity. The preceding sentence
shall not apply to the extent a holder’s in-
terest is registered prior to January 1, 2014,
on the books of the investment entity .
(v)Value of interest determined, di-
rectly or indirectly, primarily by reference
to assets that give rise (or could give rise)
to withholdable payments—(A)Equity
interest
. The value of an equity interest is
determined, directly or indirectly, primar-
ily by reference to assets that give rise (or
could give rise) to withholdable payments
if—
(1) The amount payable upon redemp-
tion by the issuer of the interest is secured
primarily by reference to assets that give
rise (or could give rise) to withholdable
payments; or
(2) In the case of an unsecured interest,
the amount payable upon redemption is de-
termined primarily by reference to assets
that give rise (or could give rise) to with-
holdable payments.
(B)Debt interest. The value of a debt
interest is determined, directly or indi-
rectly, primarily by reference to assets that
give rise (or could give rise) to withhold-
able payments if—
(1) Debt is convertible into stock of a
U.S. person;
(2) Amounts payable as interest or upon
redemption or retirement of the debt are
determined primarily by reference to prof-
its or assets of a U.S person; or
(3) The debt is secured by assets of a
U.S. person.
(vi)Redemption or retirement amount
or return earned on the interest deter-
mined, directly or indirectly, primarily
by reference to one or more investment
entities or passive NFFEs—(A)Equity
interest. Thereturnearnedonaneq-
uity 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
ifthereturnonsuchinterest(including
upon a sale, exchange, or redemption) is
determined primarily by reference to the
value or income (including the value of or
incomefromoneormoreassets)ofone
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.
(B)Debt interest. The redemption or
retirement amount or return earned on a
debt interest is determined, directly or in-
directly, primarily by reference to one or
more investment entities described in para-
graph (e)(4)(i)(B) or (C) of this section or
passive NFFEs that are members of en-
tity’s expanded affiliated group if—
(1) Debt is convertible into stock of 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 affiliated group;
(2) Amounts payable as interest or upon
redemption or retirement of the debt are
determined primarily by reference to the
value or income (including the value of or
incomefromoneormoreassets)ofone
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 affiliated group; or
(3) The debt is primarily secured by the
assets of one or more investment entities
described in paragraph (e)(4)(i)(B) or (C)
of this section or passive NFFEs that are
April 8, 20138662013–15 I.R.B.

members of the entity’s expanded affili-
ated group or is guaranteed by one or more
such entities.
(vii)Cash value insurance con-
tract—(A)In general.Thetermcash
value insurance contractmeans an insur-
ance contract (other than an indemnity
reinsurance contract between two insur-
ance companies and a term life insurance
contract described in paragraph (b)(2)(ii)
of this section) that has an aggregate cash
value greater than $50,000 at any time
during the calendar year, applying the
rules set forth in paragraph (b)(4)(iii) of
this section. A participating FFI may elect
to disregard the $50,000 threshold in the
preceding sentence by reporting all con-
tracts with a cash value greater than zero.
(B)Cash value. Except as otherwise
provided in paragraph (b)(3)(vii)(C) of this
section, the termcash valuemeans any
amount (determined without reduction for
any charge or policy loan) that—
(1) Is payable under the contract to any
person upon surrender, termination, can-
cellation, or withdrawal; or
(2) Any person can borrow under or
with regard to (for example, by pledging
as collateral) the contract.
(C)Amounts excluded from cash value.
Cash value does not include an amount
payable—
(1) Solely by reason of the death of an
individual insured under a life insurance
contract;
(2) As a personal injury or sickness ben-
efit or a benefit providing indemnification
of an economic loss incurred upon the oc-
currence of the event insured against;
(3) As a refund of a previously paid
premium (less cost of insurance charges
whether or not actually imposed) under an
insurance contract (other than a life insur-
ance or annuity contract) due to cancel-
lation or termination of the contract, de-
crease in risk exposure during the effective
period of the contract, or arising from the
correction of a posting or similar error with
regard to the premium for the contract; or
(4) As a policyholder dividend (other
than a termination dividend) provided
that the dividend relates to an insurance
contract under which the only bene-
fits payable are described in paragraph
(b)(3)(vii)(C)(2)ofthissection.
(5) As a return of an advance premium
or premium deposit for an insurance con-
tract for which the premium is payable at
least annually if the amount of the advance
premium or premium deposit does not ex-
ceed the next annual premium that will be
payable under the contract.
(D)Policyholder dividend—(1)For
purposes of paragraph (b)(3)(vii)(C)(4)
of this section and except as otherwise
provided in this paragraph, a policyholder
dividend means any dividend or similar
distribution to policyholders in their ca-
pacity as such, including—
(i)Anamountpaidorcredited(includ-
ing as an increase in benefits) if the amount
is not fixed in the contract but rather de-
pends on the experience of the insurance
company or the discretion of management;
(ii) A reduction in the premium that,
but for the reduction, would have been re-
quired to be paid; and
(iii) An experience rated refund or
credit based solely upon the claims expe-
rience of the contract or group involved.
(2) A policyholder dividend cannot ex-
ceed the premiums previously paid for the
contract, less the sum of the cost of insur-
ance and expense charges (whether or not
actually imposed) during the contract’s ex-
istence and the aggregate amount of any
prior dividends paid or credited with re-
gard to the contract.
(3) A policyholder dividend does not in-
clude any amount that is in the nature of
interest that is paid or credited to a con-
tract holder to the extent that such amount
exceeds the minimum rate of interest re-
quired to be credited with respect to con-
tract values under local law.
(4)Account balance or value.This
paragraph (b)(4) provides rules for deter-
mining the balance or value of a financial
account for purposes of chapter 4. For
example, the rules of this paragraph ap-
ply for purposes of determining whether an
FFI meets the requirements of paragraph
(f)(2)(i), (f)(2)(ii) or (f)(3) of this section
to certify to a deemed-compliant FFI sta-
tus. The rules of this paragraph also ap-
plytoaparticipatingFFI’sduediligence
and reporting obligations to the extent re-
quired under §1.1471–4(c) or (d) and to
a U.S. withholding agent’s due diligence
obligations to the extent required under
§1.1471–3.
(i)In general. Except as otherwise pro-
vided in paragraph (b)(4)(ii) of this sec-
tion with respect to immediate annuities,
the balance or value of a financial account
is the balance or value calculated by the fi-
nancial institution for purposes of report-
ing to the account holder. In the case of an
account described in paragraph (b)(1)(iii)
of this section, the balance or value of an
equity interest is the value calculated by
the financial institution for the purpose that
requires the most frequent determination
of value, and the balance or value of a
debt interest is its principal amount. Ex-
cept as provided in paragraph (b)(3)(vii)
of this section, the balance or value of an
insurance or annuitycontract is the bal-
ance or value as of either the calendar year
end or the most recent contract anniver-
sary date. The balance or value of the ac-
count is not to be reduced by any liabili-
ties or obligations incurred by an account
holder with respect to the account or any of
the assets held in the account and is not to
be reduced by any fees, penalties, or other
charges for which the account holder may
be liable upon terminating, transferring,
surrendering, liquidating, or withdrawing
cash from the account. Each holder of a
jointly held account is attributed the en-
tire balance or value of the joint account.
See §1.1473–1(b)(3) for rules regarding
the valuation of trust interests that also ap-
ply under this paragraph (b)(4)(i) to deter-
mine the value of trust interests that are fi-
nancial accounts.
(ii)Special rule for immediate annu-
ity
—(A)Immediate annuities without min-
imum benefit guarantees.Ifthevalueofan
immediate annuity contract with no mini-
mum benefit guarantee is not reported to
the account holder,the account balance
or value of the contract is the sum of the
net present values on the valuation date
of the amounts reasonably expected to be
payable in future periods under the con-
tract.
(B)Immediate annuities with a mini-
mum benefit guarantee. The account bal-
ance or value of an annuity contract with a
minimum guarantee is the sum of the net
present values on the valuation date of—
(1) The non-guaranteed amounts rea-
sonably expected to be payable in future
periods; and
(2) The guaranteed amounts payable in
future periods.
(C)Netpresentvalueofamounts
payable in future periods.The net present
value of an amount payable in a future
period shall be determined using—
(1) A reasonable actuarial valuation
method, and
2013–15 I.R.B.867April 8, 2013

(2) The mortality tables and interest
rate(s)—
(i) Prescribed pursuant to section 7520
and the regulations thereunder; or
(ii) Used by the issuer of the contract to
determine the amounts payable under the
contract.
(iii)Account aggregation require-
ments—(A)In general.Totheextent
a financial institution is required under
chapter 4 to determine the aggregate bal-
ance or value of an account, the financial
institution is required to aggregate the
account balance or value of all accounts
that are held (in whole or in part) by the
same person and that are maintained by
the financial institution or members of
its expanded affiliated group, but only to
the extent that the financial institution’s
computerized systems link the accounts
by reference to a data element, such as
client number, EIN, or foreign tax iden-
tifying number, and allow the account
balances of such accounts to be aggre-
gated. Notwithstanding the rules set forth
in this paragraph (b)(4)(iii), a financial
institutionisrequiredtoaggregatethebal-
ance or value of accounts that it treats as
consolidated obligations.
(B)Aggregation rule for relationship
managers. To the extent a financial insti-
tution is required under chapter 4 to ap-
ply the aggregation rules of this paragraph
(b)(4)(iii), the financial institution also is
required to aggregate all accounts that a
relationship managerknows are directly
or indirectly owned, controlled, or estab-
lished (other than ina fiduciary capacity)
by the same person, as well as all accounts
that the relationship manager has associ-
ated with one another through a relation-
ship code, customer identification number,
TIN, or similar indicator, or that the re-
lationship manager would typically asso-
ciate with each other under the procedures
of the financial institution (or the depart-
ment, division, or unit with which the rela-
tionship manager is associated).
(C)Examples. The following examples
illustrate the account aggregation require-
ments of this paragraph (b)(4)(iii):
Example 1.FFI not required to aggregate ac-
counts for U.S. account exception. A U.S. resident
individual, U, holds a depository account with
Branch 1 of CB, a commercial bank that is a partic-
ipating FFI. The balance in U’s Branch 1 account at
the end of Year 1 is $35,000. U also holds a depos-
itory account with Branch 2 of CB, with a $45,000
balance at the end of Year 1. CB’s retail banking
businesses share computerized information manage-
ment systems across its branches, but U’s accounts
are not associated with one another in the shared
computerized information system. In addition, CB
has not assigned a relationship manager to U or U’s
accounts. Because the accounts are not associated in
CB’s system or by a relationship manager, CB is not
required to aggregate theaccounts under paragraph
(b)(4)(iii) and both accounts are eligible for the ex-
ception to U.S. account status described in paragraph
(a)(4)(i) of this section as neither account exceeds
the $50,000 threshold.
Example 2.FFI required to aggregate accounts
for U.S. account exception. Same facts asExam-
ple 1, except that both of U’s depository accounts
are associated with U and with one another by ref-
erence to CB’s internal identification number. The
system shows the account balances for both accounts,
and such balances may be electronically aggregated,
though the system does not show a combined balance
for the accounts. In determining whether such ac-
counts meet the exception to U.S. account status de-
scribed in paragraph (a)(4)(i) of this section for cer-
tain depository accounts with an aggregate balance or
value of $50,000 or less, CB is required to aggregate
the account balances of all depository accounts under
the rules of paragraph (b)(4)(iii) of this section. Un-
der those rules, U is treated as holding depository ac-
counts with CB with an aggregate balance of $80,000.
Accordingly, neither account is eligible for the ex-
ception to U.S. account status, because the accounts,
when aggregated, exceedthe $50,000 threshold.
Example 3.Aggregation rules for joint accounts
maintained by a participating FFI. In Year 1, a U.S.
resident individual, U, holds a custodial account that
is a preexisting account at custodial institution CI,
a participating FFI. The balance in U’s CI custodial
account at the end of Year 1 is $35,000. U also
holds a joint custodial account that is a preexist-
ing account with her sister, A, a nonresident alien
for U.S. federal income tax purposes, with another
custodial institution, CI2. The balance in the joint
account at the end of Year 1 is also $35,000. CI and
CI2 are part of the same expanded affiliated group
and share computerized information management
systems. Both U’s custodial account at CI and U and
A’s custodial account at CI2 are associated with U
and with one another by reference to CI’s internal
identification number and the system allows the
balances to be aggregated. In determining whether
such accounts meet the documentation exception de-
scribed in §1.1471–4(c)(4)(iv) for certain preexisting
individual accounts with an aggregate balance or
value of $50,000 or less, CI is required to aggregate
the account balances of accounts held in whole or
in part by the same account holder under the rules
of paragraph (b)(4)(iii) of this section. Under those
rules, U is treated as having financial accounts with
C1 and CI2, each with an aggregate balance of
$70,000. Accordingly, neither account is eligible for
the documentation exception.
Example 4.Aggregation for applying indefinite
validity periods. In Year 1, an owner-documented
FFI, O, holds an offshore account with Branch 1 of
CB, a commercial bank that is a U.S. withholding
agent. The balance in O’s CB account at the end
of Year 1 is $600,000. In Year 1, O also holds an
account in the United States with Branch 2 of CB.
The Branch 2 account has a $450,000 balance at the
end of Year 1. CB’s banking businesses share com-
puterized information management systems across its
branches. O’s accounts are associated with one an-
other in the shared computerized information sys-
tem and the system allows the balances to be aggre-
gated. In determining whether CB is permitted to ap-
ply an indefinite validity period for the documenta-
tion submitted for O’s account at Branch 1 pursuant to
§1.1471–3(c)(6)(ii)(C)(4) (permitting indefinite va-
lidity for a withholding statement of an owner-doc-
umented FFI if the balance or value of all accounts
held by the owner-documented FFI does not exceed
$1,000,000), CB is required to aggregate the account
balance of O’s accounts at Branch 1 and Branch 2
to the extent required under the rules of paragraph
(b)(4)(iii) of this section. Accordingly, O is treated
as holding financial accounts with CB with an ag-
gregate balance of $1,050,000 and the documentation
submitted for O’s account at Branch 1 is not eligi-
ble for the indefinite validity period described under
§1.1471–3(c)(6)(ii)(C)(4).
(iv)Currency translation of balance or
value. If the balance or value of a fi-
nancial account, other obligation, or the
aggregate amount payable under a group
life or group annuity contract described in
§1.1471–4(c)(4) is denominated in a cur-
rency other than U.S. dollars, a withhold-
ing agent must calculate the balance or
value by applying a spot rate determined
under §1.988–1(d) to translate such bal-
ance or value into the U.S. dollar equiva-
lent. For the purpose of a participating or
registered deemed-compliant FFI report-
ing an account under §1.1471–4(d), the
spot rate must be determined as of the last
day of the calendar year (or, in the case
of an insurance contract or annuity con-
tract, the most recent contract anniversary
date, when applicable) for which the ac-
count is being reported or, if the account
was closed during such calendar year, the
date the account was closed. In the case
of an FFI determining whether an account
meets (or continues to meet) a preexist-
ing account documentation exception de-
scribed in §1.1471–4(c)(3)(iii), (c)(4)(iv),
or (c)(4)(v) or whether the account is an
account described in paragraph (a)(4)(i) of
this section, the spot rate must be deter-
mined on the date for which the FFI is
determining the threshold amount as pre-
scribed in those provisions.
(5)Account maintained by financial
institution. A custodial account is main-
tained by the financial institution that
holds custody over the assets in the ac-
count (including a financial institution
that holds assets in street name for an
account holder in such institution). A
depository account is maintained by the
April 8, 20138682013–15 I.R.B.

financial institution that is obligated to
make payments with respect to the ac-
count (excluding an agent of a financial
institution regardless of whether such
agent is a financial institution under para-
graph (e)(1) of this section). Any equity
or debt interest in a financial institution
that constitutes a financial account un-
der paragraph (b)(1)(iii) of this section is
maintained by such financial institution.
A cash value insurance contract or an
annuity contract described in paragraph
(b)(1)(iv) of this section is maintained by
the financial institution that is obligated to
make payments with respect to the con-
tract.
(c)U.S. owned foreign entity.Theterm
U.S. owned foreign entitymeans any for-
eign entity that has one or more substantial
U.S. owners (as defined in §1.1473–1(b)),
including a foreign entity described in
paragraph (c)(2) of this section. See
§1.1473–1(e) for the definition of foreign
entity for purposes of chapter 4. For the
requirements applicable to determining
direct and indirect ownership in an entity,
see §1.1473–1(b)(2).
(d)Definition of FFI.ThetermFFI
means, with respect to any entity that is
not resident in a country that has in effect
a Model 1 IGA or Model 2 IGA, any fi-
nancial institution (as defined in paragraph
(e) of this section) that is a foreign entity.
With respect to any entity that is resident in
a country that has in effect a Model 1 IGA
or Model 2 IGA, an FFI is any entity that is
treated as a FinancialInstitution pursuant
to such Model 1 IGA or Model 2 IGA. A
territory financial institution is not an FFI
under this paragraph (d).
(e)Definition of financial institu-
tion—(1)In general. Except as otherwise
provided in paragraph (e)(5) of this sec-
tion, the termfinancial institutionmeans
any entity that—
(i) Accepts deposits in the ordinary
course of a banking or similar business (as
defined in paragraph (e)(2) of this section)
(depository institution);
(ii) Holds, as a substantial portion of its
business (as defined in paragraph (e)(3) of
this section), financial assets for the benefit
of one or more other persons (custodial
institution);
(iii) Is an investment entity (as defined
in paragraph (e)(4) of this section);
(iv) Is an insurance company or a hold-
ing company (as described in paragraph
(e)(5)(i)(C) of this section) that is a mem-
ber of an expanded affiliated group that in-
cludes an insurance company, and the in-
surance company or holding company is-
sues, or is obligated to make payments
with respect to, a cash value insurance
or annuity contract described in paragraph
(b)(1)(iv) of this section (specified insur-
ance company); or
(v) Is an entity that is a holding com-
pany or treasury center (as described in
paragraphs (e)(5)(i)(C) and (e)(5)(i)(D)(1)
of this section) that—
(A) Is part of an expanded affiliated
group that includes a depository insti-
tution, custodial institution, insurance
company, or investment entity described
in paragraphs (e)(4)(i)(B) and (C) of this
section; or
(B) Is formed in connection with or
availed of by a collective investment ve-
hicle, mutual fund, exchange traded fund,
private equity fund, hedge fund, venture
capital fund, leveraged buyout fund, or
any similar investment vehicle established
with an investment strategy of investing,
reinvesting, or trading in financial assets.
(2)Banking or similar business—(i)In
general. Except as otherwise provided in
paragraph (e)(2)(ii) of this section, an en-
tity is considered to be engaged in a bank-
ing or similar business if, in the ordinary
course of its business with customers, the
entity accepts deposits or other similar in-
vestments of funds and regularly engages
in one or more of the following activities—
(A) Makes personal, mortgage, indus-
trial, or other loans or provides other ex-
tensions of credit;
(B) Purchases, sells, discounts, or ne-
gotiates accounts receivable, installment
obligations, notes, drafts, checks, bills of
exchange, acceptances, or other evidences
of indebtedness;
(C) Issues letters of credit and negoti-
ates drafts drawn thereunder;
(D) Provides trust or fiduciary services;
(E) Finances foreign exchange transac-
tions; or
(F) Enters into, purchases, or disposes
of finance leases or leased assets.
(ii)Exception for certain lessors and
lenders. An entity is not considered to be
engaged in a banking or similar business
for purposes of this paragraph (e)(2) if the
entity solely accepts deposits from persons
as collateral or security pursuant to a sale
or lease of property or pursuant to a sim-
ilar financing arrangement between such
entity and the person holding the deposit
with the entity.
(iii)Application of section 581. Enti-
ties engaged in a banking or similar busi-
ness include, but are not limited to, entities
that would qualify as banks under section
585(a)(2) (including banks as defined in
section 581 and any corporation to which
section 581 would apply but for the fact
that it is a foreign corporation).
(iv)Effect of local regulation.Whether
an entity is subject to the banking and
credit laws of a foreign country, the United
States, a State, a U.S. territory, or a subdi-
vision thereof, or is subject to supervision
and examination by agencies having reg-
ulatory oversight of banking or similar in-
stitutions, is relevant to, but not necessarily
determinative of, whether that entity qual-
ifies as a financial institution under section
1471(d)(5)(A). Whether an entity conducts
a banking or similar business is determined
based upon the character of the actual ac-
tivities of such entity.
(3)Holding financial assets for others
as a substantial portion of its business—(i)
Substantial portion—(A)In general.An
entity holds financial assets for the account
of others as a substantial portion of its busi-
ness if the entity’s gross income attribut-
able to holding financial assets and related
financial services equals or exceeds 20 per-
cent of the entity’s gross income during the
shorter of—
(1) The three-year period ending on De-
cember 31 of the year preceding the year in
which the determination is made; or
(2) The period during which the entity
has been in existence before the determi-
nation is made.
(B)
Special rule for start-up entities.
Anentitywithnooperatinghistoryasof
the date of the determination is considered
to hold financial assets for the account of
others as a substantial portion of its busi-
ness if the entity expects to meet the gross
income threshold described in paragraph
(e)(3)(i)(B) of this section based on its an-
ticipated functions, assets, and employees,
with due consideration given to any pur-
pose or functions for which the entity is li-
censed or regulated (including those of any
predecessor).
(ii)Income attributable to holding
financial assets and related financial ser-
vices. For purposes of this paragraph
(e)(3),income attributable to holding
2013–15 I.R.B.869April 8, 2013

financial assets and related financial
servicesmeans custody, account mainte-
nance, and transfer fees; commissions and
fees earned from executing and pricing se-
curities transactions; income earned from
extending credit to customers with respect
to financial assets held in custody (or ac-
quired through such extension of credit);
income earned on the bid-ask spread of
financial assets; and fees for providing
financial advice and for clearance and set-
tlement services.
(iii)Effect of local regulation.Whether
an entity is subject to the banking and
credit, broker-dealer, fiduciary, or other
similar laws and regulations of the United
States, a State, a U.S. territory, a political
subdivision thereof, or a foreign country,
or to supervision and examination by agen-
cies having regulatory oversight of banks,
credit issuers, or other financial institu-
tions, is relevant to, but not necessarily de-
terminative of, whether that entity holds fi-
nancial assets for the account of others as
a substantial portion of its business.
(4)Investment entity—(i)In general.
The terminvestment entitymeans any
entity that is described in paragraph
(e)(4)(i)(A), (B), or (C) of this section.
(A) The entity primarily conducts as a
business one or more of the following ac-
tivities or operations for or on behalf of a
customer—
(1) Trading in money market instru-
ments (checks, bills, certificates of de-
posit, derivatives, etc.); foreign currency;
foreign exchange, interest rate, and index
instruments; transferable securities; or
commodity futures;
(2) Individual or collective portfolio
management; or
(3) Otherwise investing, administering,
or managing funds, money, or financial as-
sets on behalf of other persons.
(B) The entity’s gross income is pri-
marily attributable to investing, reinvest-
ing, or trading in financial assets (as de-
fined in paragraph (e)(4)(ii) of this sec-
tion) and the entity is managed by an-
other entity that is described in paragraph
(e)(1)(i), (ii), (iv), or (e)(4)(i)(A) of this
section. For purposes of this paragraph
(e)(4)(i)(B), an entity is managed by an-
other entity if the managing entity per-
forms, either directly or through another
third-party service provider, any of the ac-
tivities described in paragraph (e)(4)(i)(A)
of this section on behalf of the managed
entity.
(C) The entity functions or holds itself
out as a collective investment vehicle, mu-
tual fund, exchange traded fund, private
equity fund, hedge fund, venture capital
fund, leveraged buyout fund, or any sim-
ilar investment vehicle established with an
investment strategy ofinvesting, reinvest-
ing, or trading in financial assets.
(ii)Financial assets. For purposes of
this paragraph, the termfinancial asset
means a security (as defined in section
475(c)(2) without regard to the last sen-
tence thereof), partnership interest, com-
modity (as defined in section 475(e)(2)),
notional principal contract (as defined in
§1.446–3(c)), insurance contract or annu-
ity contract, or any interest (including a fu-
tures or forward contract or option) in a
security, partnership interest, commodity,
notional principal contract, insurance con-
tract, or annuity contract.
(iii)Primarily conducts as a busi-
ness—(A)In general. An entity is treated
as primarily conducting as a business one
or more of the activities described in para-
graph (e)(4)(i)(A) of this section if the
entity’s gross income attributable to such
activities equals or exceeds 50 percent
of the entity’s gross income during the
shorter of—
(1) The three-year period ending on De-
cember 31 of the year preceding the year in
which the determination is made; or
(2) The period during which the entity
has been in existence.
(B)Special rule for start-up entities.
An entity with no operating history as of
the date of the determination is treated
as primarily conducting as a business
one or more of the activities described
in paragraph (e)(4)(i)(A) of this section
if such entity expects to meet the gross
income threshold described in paragraph
(e)(4)(iii)(A) of this section based on its
anticipated functions, assets, and employ-
ees, with due consideration given to any
purpose or functions for which the entity
is licensed or regulated (including those of
any predecessor).
(iv)Primarily attributable to investing,
reinvesting, or trading in financial as-
sets—(A)In general. An entity’s gross in-
come is primarily attributable to investing,
reinvesting, or trading in financial assets
for purposes of paragraph (e)(4)(i)(B) of
this section if the entity’s gross income
attributable to investing, reinvesting, or
trading in financial assets equals or ex-
ceeds 50 percent of the entity’s gross
income during the shorter of—
(1) The three-year period ending on De-
cember 31 of the year preceding the year in
which the determination is made; or
(2) The period during which the entity
has been in existence.
(B)Special rule for start-up entities.
Anentitywithnooperatinghistoryasof
the date of the determination will be con-
sidered to have income that is primarily at-
tributable to investing, reinvesting, or trad-
ing in financial assets for purposes of para-
graph (e)(4)(i)(B) of this section if such en-
tity expects to meet the income threshold
described in paragraph (e)(4)(iv)(A) of this
section based on its anticipated functions,
assets, and employees, with due consider-
ation given to any purpose or functions for
which the entity is licensed or regulated
(including those of any predecessor).
(v)Examples. The following examples
illustrate the provisions of paragraph (e)(4)
of this section:
Example 1.Investment advisor. Fund Manager is
an investment entity within the meaning of paragraph
(e)(4)(i)(A) of this section. Fund Manager, among its
various business operations, organizes and manages a
varietyoffunds,includingFundA,afundthatinvests
primarily in equities. Fund Manager hires Investment
Advisor, a foreign entity, to provide advice about the
financial assets in which Fund A invests. Investment
Advisor earned more than 50% of its gross income
for the last three years from providing services as an
investment advisor. Because Investment Adviser pri-
marily conducts as a business providing investment
advice on behalf of clients, Investment Advisor is an
investment entity under paragraph (e)(4)(i)(A) of this
section and an FFI under paragraph (e)(1)(iii) of this
section.
Example 2.Entity that is managed by an FFI.The
facts are the same as inExample 1. In addition, in ev-
ery year since it was organized, Fund A has earned
more than 50% of its gross income from investing in
financial assets. Accordingly, Fund A is an invest-
ment entity under paragraph (e)(4)(i)(B) of this sec-
tion because it is managed by Fund Manager and In-
vestment Advisor and its gross income is primarily
attributable to investing, reinvesting, or trading in fi-
nancial assets.
Example 3.Investment manager. Investment
Manager, a U.S. entity, is an investment entity within
the meaning of paragraph (e)(4)(i)(A) of this section.
Investment Manager organizes and registers Fund A
in Country A. Investment Manager is authorized to
facilitate purchases and sales of financial assets held
by Fund A in accordance with Fund A’s investment
strategy. In every year since it was organized, Fund
A has earned more than 50% of its gross income
from investing, reinvesting, or trading in financial
assets. Accordingly, Fund A is an investment entity
April 8, 20138702013–15 I.R.B.

under paragraph (e)(4)(i)(B) of this section and an
FFI under paragraph (e)(1)(iii) of this section.
Example 4.Foreign real estate investment fund
that is managed by an FFI. The facts are the same
as inExample 3, except that Fund A’s assets consist
solely of non-debt, direct interests in real property lo-
cated within and without the United States. Fund A is
not an investment entity under paragraph (e)(4)(i)(B)
of this section, even though it is managed by Invest-
ment Manager, because less than 50% of its gross in-
come is attributable to investing, reinvesting, or trad-
ing in financial assets.
Example 5.Trust managed by an individual.On
January 1, 2013, X, an individual, establishes Trust
A, a nongrantor foreign trust for the benefit of X’s
children, Y and Z. X appoints Trustee A, an indi-
vidual, to act as the trustee of Trust A. Trust A’s
assets consists solely of financial assets, and its in-
come consists solely of income from those financial
assets. Pursuant to the terms of the trust instrument,
Trustee A manages and administers the assets of the
trust. Trustee A does not hire any entity as a third-
party service provider to perform any of the activi-
ties described in paragraph (e)(4)(i)(A) of this sec-
tion. Trust A is not an investment entity under para-
graph (e)(4)(i)(B) of this section because it is man-
aged solely by Trustee A, an individual.
Example 6.Trust managed by a trust company.
ThefactsarethesameasinExample 5,exceptthatX
hires Trust Company, an FFI, to act as trustee on be-
half of Trust A. As trustee, Trust Company manages
and administers the assets of Trust A in accordance
with the terms of the trust instrument for the benefit of
Y and Z. Because Trust A is managed by an FFI, Trust
A is an investment entity under paragraph (e)(4)(i)(B)
of this section and an FFI under paragraph (e)(1)(iii)
of this section.
Example 7.Individual introducing broker.IB,
an individual introducing broker, provides investing
advice to her clients, and uses the services of a for-
eign entity to conduct and execute trades on behalf of
her clients. IB has earned 50% or more of her gross
income for the past three years from her services as
an investment advisor. Because IB is an individual,
she is not an investment entity within the meaning of
paragraph (e)(4) of this section.
Example 8.Entity introducing broker. The facts
are the same as inExample 7, except that IB is a for-
eign entity and not an individual. Because IB is an
entity that conducts investment activities and its gross
income is primarily attributable to such investment
activities, IB is an investment entity under paragraph
(e)(4)(i)(A) of this section and an FFI under para-
graph (e)(1)(iii) of this section.
(5)Exclusions. A financial institution
does not include an entity described in this
paragraph, provided that the entity is not
also described in paragraph (e)(1)(iv) of
this section. For the treatment of foreign
entities described inthis paragraph under
section 1472, see §1.1472–1(c)(1)(vi).
(i)Excepted nonfinancial group enti-
ties—(A)In general. A foreign entity that
is a member of a nonfinancial group (as de-
fined in paragraph (e)(5)(i)(B) of this sec-
tion) if—
(1) The entity is not a depository institu-
tion or custodial institution (other than for
members of its expanded affiliated group);
(2) The entity is a holding company,
treasury center, or captive finance com-
pany and substantiallyall the activities of
such entity are to perform one or more
of the functions described in paragraphs
(e)(5)(i)(C), (D), or (E) of this section; and
(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 capitalfund, leveraged buy-
out fund, or any similar investment vehicle
established with an investment strategy to
acquire or fund companies and to treat the
interests in those companies as capital as-
sets held for investment purposes.
(B)Nonfinancial group. An expanded
affiliated group is anonfinancial groupif,
taking into account the application of this
section,—
(1) For the three-year period preced-
ing the year for which the determination
is made, no more than 25 percent of the
gross income of the expanded affiliated
group (excluding income derived by any
member that is an entity described in para-
graph (e)(5)(ii) or (iii) of this section)
consists of passive income (as defined
in §1.1472–1(c)(1)(v)); no more than
five percent of the gross income of the
expanded affiliatedgroup is derived by
members of the expanded affiliated group
that are FFIs (excluding income derived
from transactions between members of the
expanded affiliated group or by any mem-
ber of the expanded affiliated group that
is a certified deemed-compliant FFI); and
no more than 25 percent of the fair mar-
ket value of assets held by the expanded
affiliated group (excluding assets held by
a member that is an entity described in
paragraph(e)(5)(ii)or(iii)ofthissection)
are assets that produce or are held for the
production of passive income; and
(2) Any member of the expanded affili-
ated group that is an FFI is either a partic-
ipating FFI or deemed-compliant FFI.
(C)Holding company. For purposes of
this paragraph (e)(5)(i), an entity is a hold-
ing company if its primary activity consists
of holding (directly or indirectly) all or part
of the outstanding stock of one or more
members of its expanded affiliated group.
(D)Treasury center—(1) Except as oth-
erwise provided in this paragraph, an en-
tity is a treasury center for purposes of this
paragraph (e)(5)(i) if the primary activity
of such entity is to enter into investment,
hedging, and financing transactions with
or for members of its expanded affiliated
group for purposes of—
(i) Managing the risk of price changes
or currency fluctuations with respect to
property that is held or to be held by the
expanded affiliated group (or any member
thereof);
(ii) Managing the risk of interest rate
changes, price changes, or currency fluc-
tuations with respect to borrowings made
or to be made by the expanded affiliated
group (or any member thereof);
(iii) Managing the risk of interest rate
changes, price changes, or currency fluctu-
ations with respect to assets or liabilities to
be reflected in financial statements of the
expanded affiliated group (or any member
thereof);
(iv) Managing the working capital of
the expanded affiliated group (or any
member thereof) by investing or trading
in financial assets solely for the account
and risk of such entity or any member of
its expanded affiliated group; or
(v) Acting as a financing vehicle for
borrowing funds for use by the expanded
affiliated group (or any member thereof).
(2) An entity is not a treasury center if
any equity or debt interest in the entity is
held by a person that is not a member of
the entity’s expanded affiliated group and
the redemption or retirement amount or re-
turn earned on such interest is determined
primarily by reference to—
(i) The investment, hedging, and fi-
nancing activities of the treasury center
with members outside of its expanded af-
filiated group; or
(ii) Any member of the group that is an
investment entity described in (e)(4)(i)(B)
or passive NFFE (as described in para-
graph (b)(3)(vi) of this section with respect
to either such entity).
(E)Captive finance company.Forpur-
poses of this paragraph (e)(5)(i), an entity
is a captive finance company if the primary
activity of such entity is to enter into fi-
nancing (including the extension of credit)
or leasing transactions with or for suppli-
ers, distributors, dealers, franchisees, or
customers of such entity or of any member
of such entity’s expanded affiliated group
that is an active NFFE.
2013–15 I.R.B.871April 8, 2013

(ii)Excepted nonfinancial start-up
companies or companies entering a new
line of business—(A)In general.Afor-
eign entity that is investing capital in assets
with the intent to operate a new business
or line of business other than that of a
financial institution or passive NFFE for a
period of—
(1) In the case of an entity intending to
operate a new business, 24 months from
the initial organization of such entity; and
(2)Inthecaseofanentitywiththein-
tent to operate a new line of business, 24
months from the date of the board resolu-
tion (or its equivalent) approving the new
line of business, provided that such en-
tity qualified as an active NFFE for the
24 months preceding the date of such ap-
proval.
(B)Exception for investment funds.An
entity is not described in this paragraph
(e)(5)(ii) if the entity functions (or holds
itself out) as an investment fund, such as
a private equity fund, venture capital fund,
leveraged buyout fund, or any investment
vehicle whose purpose is to acquire or fund
companies and hold interests in those com-
panies as capital assets for investment pur-
poses.
(iii)Excepted nonfinancial entities in
liquidation or bankruptcy.Aforeignen-
tity that was not a financial institution or
passive NFFE at any time during the past
five years and that is in the process of liq-
uidating its assets or reorganizing with the
intent to continue or recommence opera-
tions as a nonfinancial entity.
(iv)Excepted inter-affiliate FFI.Afor-
eign entity that is a member of a participat-
ing FFI group if—
(A) The entity does not maintain finan-
cial accounts (other than accounts main-
tained for members of its expanded affil-
iated group);
(B) The entity does not hold an account
with or receive payments from any with-
holding agent other than a member of its
expanded affiliated group;
(C) The entity does not make with-
holdable paymentsto any person other
than to members of its expanded affiliated
group that are not limited FFIs or limited
branches; and
(D) The entity has not agreed to report
under §1.1471–4(d)(1)(ii) or otherwise act
as an agent for chapter 4 purposes on be-
half of any financial institution, including
a member of its expanded affiliated group.
(v)Section 501(c) entities. A foreign
entity that is described in section 501(c)
other than an insurance company de-
scribedinsection501(c)(15).
(vi)Non-profit organizations.Afor-
eign entity that is established and main-
tained in its country of residence exclu-
sively for religious, charitable, scientific,
artistic, cultural or educational purposes
if—
(A) The entity is exempt from income
tax in its country of residence;
(B) The entity has no shareholders or
members who have a proprietary or ben-
eficial interest in its income or assets;
(C) Neither the laws of the entity’s
country of residence nor the entity’s for-
mation documents permit any income or
assets of the entity to be distributed to, or
applied for the benefit of, an individual or
noncharitable entity other than pursuant
to the conduct of the entity’s charitable
activities, or as payment of reasonable
compensation for services rendered or the
use of property, or as payment represent-
ing the fair market value of property that
the entity has purchased; and
(D) The laws of the entity’s country of
residence or the entity’s formation docu-
ments require that, upon the entity’s liq-
uidation or dissolution, all of its assets be
distributed to an entity that meets the re-
quirements of §1.1471–6(b) or another or-
ganization that meets the requirements of
this paragraph (e)(5)(vi) or escheat to the
government of the entity’s country of resi-
dence or any political subdivision thereof.
(6)Reserving activities of an insurance
company. The reserving activities of an in-
surance company will not cause the com-
pany to be a financial institution described
in (e)(1)(i), (ii), or (iii) of this section.
(f)Deemed-compliant FFIs.Theterm
deemed-compliant FFIincludes a regis-
tered deemed-compliant FFI (as defined in
paragraph (f)(1) of this section), a certi-
fied deemed-compliant FFI (as defined in
paragraph (f)(2) of this section), and, to
the extent provided in paragraph (f)(3) of
this section, an owner-documented FFI. A
deemed-compliant FFI will be treated pur-
suant to section 1471(b)(2) as having met
the requirements of section 1471(b). A
deemed-compliant FFI that complies with
the due diligence and withholding require-
ments applicable to such entity as provided
in this paragraph (f) will also be deemed to
have met its withholding obligations under
sections 1471(a) and 1472(a). For this pur-
pose, an intermediary or flow-through en-
tity that has a residual withholding obliga-
tion under §1.1471–2(a)(2)(ii) must fulfill
such obligation to be considered a deemed-
compliant FFI.
(1)Registered deemed-compliant FFIs.
A registered deemed-compliant FFI means
an FFI that meets the procedural require-
ments described in paragraph (f)(1)(ii) of
this section and that either is described in
any of paragraphs (f)(1)(i)(A) through (F)
of this section or is treated as a registered
deemed-compliant FFI under a Model 2
IGA. A registered deemed-compliant FFI
also includes any FFI, or branch of an FFI,
that is a reporting Model 1 FFI that com-
plies with the registration requirements of
aModel1IGA.
(i)Registered deemed-compliant FFI
categories—(A)Local FFIs. An FFI is
described in this paragraph (f)(1)(i)(A) if
the FFI meets the following requirements.
(1) The FFI is licensed and regulated
as a financial institution under the laws of
its country of incorporation or organiza-
tion (which must be a FATF-compliant ju-
risdiction at the time the FFI registers for
deemed-compliant status).
(2) The FFI does not have a fixed place
of business outside its country of incorpo-
ration or organization. For this purpose, a
fixed place of business does not include a
location that is not advertised to the pub-
lic and from which the FFI performs solely
administrative support functions.
(3) The FFI does not solicit customers
or account holders outside its country of
incorporation or organization. For this
purpose, an FFI will not be considered to
have solicited customers or account hold-
ers outside its country of incorporation or
organization merely because it operates a
website, provided that the website does not
specifically indicate that the FFI maintains
accounts for or provides services to non-
residents, and does not otherwise target or
solicit U.S. customers or account holders.
An FFI will also not be considered to have
solicited customers or account holders out-
side its country of incorporation or organi-
zation merely because it advertises in print
media or on a radio or television station
that is distributed or aired primarily within
its country of incorporation or organization
but is also incidentally distributed or aired
in other countries, provided that the adver-
tisement does not specifically indicate that
April 8, 20138722013–15 I.R.B.

the FFI maintains accounts for or provides
services to nonresidents and does not oth-
erwise target or solicit U.S. customers or
account holders.
(4) The FFI is required under the laws
of its country of incorporation or organiza-
tion to identify resident account holders for
purposes of either information reporting or
withholding of tax with respect to accounts
held by residents or is required to identify
resident accounts for purposes of satisfy-
ing such country’s AML due diligence re-
quirements.
(5) At least 98 percent of the accounts
by value maintained by the FFI as of the
last day of the preceding calendar year are
held by residents (including residents that
are entities) of the country in which the FFI
is incorporated or organized. An FFI that
is incorporated or organized in a member
state of the European Union may treat ac-
count holders that are residents (including
residents that are entities) of other member
states of the EuropeanUnion as residents
of the country in which the FFI is incor-
porated or organized for purposes of this
calculation.
(6) By the later of December 31, 2013,
or the date it registers as a deemed-compli-
ant FFI, the FFI implements policies and
procedures, consistent with those set forth
for a participating FFI under §1.1471–4(c),
to monitor whether the FFI opens or main-
tains an account for a specified U.S. per-
son who is not a resident of the country in
which the FFI is incorporated or organized
(including a U.S. person that was a resident
when the account was opened but subse-
quently ceases to be a resident), an entity
controlled or beneficially owned (as deter-
mined under the FFI’s AML due diligence)
by one or more specified U.S. persons that
are not residents of the country 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 account to a
participating FFI, reporting Model 1 FFI,
or U.S. financial institution, or withhold
and report on such account as would be re-
quired under §1.1471–4(b) and (d) if the
FFI were a participating FFI.
(7) With respect to each preexisting ac-
count held by a nonresident of the coun-
try in which the FFI is organized or held
by an entity, the FFI reviews those ac-
counts in accordancewith the procedures
described in §1.1471–4(c) applicable to
preexisting accounts to identify any U.S.
account or account held by a nonpartici-
pating FFI, and certifies to the IRS that it
did not identify any such account as a re-
sult of its review, that it has closed any
such accounts that were identified or trans-
ferred them to a participating FFI, report-
ing Model 1 FFI, or U.S. financial institu-
tion, or that it agrees to withhold and report
on such accounts as would be required un-
der §1.1471–4(b) and (d) if it were a par-
ticipating FFI.
(8) In the case of an FFI that is a mem-
ber of an expanded affiliated group, each
FFI in the group is incorporated or or-
ganized in the same country and, with
the exception of any member that is a re-
tirement plan described in §1.1471–6(f),
meets the requirements set forth in this
paragraph (f)(1)(i)(A) and the procedural
requirements of paragraph (f)(1)(ii) of this
section.
(9) The FFI does not have policies or
practices that discriminate against open-
ing or maintaining accounts for individu-
als who are specified U.S. persons and who
are residents of the FFI’s country of incor-
poration or organization.
(B)Nonreporting members of partici-
pating FFI groups. An FFI that is a mem-
ber of a participating FFI group is de-
scribed in this paragraph (f)(1)(i)(B) if it
meets the following requirements.
(1) By the later of December 31, 2013,
or the date it registers with the IRS pur-
suant to paragraph (f)(1)(ii) of this sec-
tion, the FFI implements policies and pro-
cedures to ensure that within six months of
opening a U.S. account or an account held
by a recalcitrant account holder or a non-
participating FFI, the FFI either transfers
such account to an affiliate that is a partic-
ipating FFI, reporting Model 1 FFI, or U.S.
financial institution, closes the account, or
becomes a participating FFI.
(2) The FFI reviews its accounts that
were opened prior to the time it imple-
ments the policies and procedures (includ-
ing time frames) described in paragraph
(f)(1)(i)(B)(1)ofthissection,usingthe
procedures described in §1.1471–4(c) ap-
plicable to preexisting accounts of partic-
ipating FFIs, to identify any U.S. account
or account held by a nonparticipating FFI.
Within six months of the identification of
any account described in this paragraph,
the FFI transfers the account to an affil-
iate that is a participating FFI, reporting
Model 1 FFI, or U.S. financial institution,
closes the account, or becomes a partici-
pating FFI.
(3) By the later of December 31, 2013,
or the date it registers with the IRS pur-
suant to paragraph (f)(1)(ii) of this section,
the FFI implements policies and pro-
cedures to ensure that it identifies any
account that becomes a U.S. account or
an account held by a recalcitrant account
holder or a nonparticipating FFI due to
a change in circumstances. Within six
months of the date on which the FFI first
has knowledge or reason to know of the
change in the account 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 participating FFI.
(C)Qualified collective investment ve-
hicles. AnFFIisdescribedinthispara-
graph (f)(1)(i)(C) if it meets the following
requirements.
(1) The FFI is an FFI solely because it
is an investment entity, and it is regulated
as an investment fund either in its country
of incorporation or organization or in all of
the countries in which it is registered and
all of the countries in which it operates. A
fund will be considered to be regulated as
an investment fund under this paragraph
if its manager is regulated with respect to
the investment fund in all of the countries
in which the investment fund is registered
and in all of the countries in which the
investment fund operates.
(2) Each holder of record of direct
debt interests in the FFI in excess of
$50,000, direct equity interests in the
FFI (for example the holders of its units
or global certificates), and any other ac-
count holder of the FFI is a participating
FFI, registered deemed-compliant FFI,
retirement plan described in §1.1471–6(f),
non-profit organization described in para-
graph (e)(5)(vi) of this section, U.S. person
that is not a specified U.S. person, non-
reporting IGA FFI, or exempt beneficial
owner. Notwithstanding the prior sen-
tence, an FFI will not be prohibited from
qualifying as a qualified collective invest-
ment vehicle solely because it has issued
interests in bearer form provided that the
FFI ceased issuing interests in such form
after December 31, 2012, retires all such
interests upon surrender, and establishes
2013–15 I.R.B.873April 8, 2013

policies and procedures to redeem or im-
mobilize all such interests prior to January
1, 2017, and that prior to payment the
FFI documents the account holder in ac-
cordance 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 participating FFI. For
purposes of this paragraph (f)(1)(i)(C), an
FFI may disregard equity interests owned
by specified U.S. persons acquired with
seed capital within the meaning of para-
graph (i)(4) of this section if the specified
U.S. person is described in paragraph
(i)(3)(i) and (ii) of this section (substitut-
ing the term “U.S. person” for “FFI” and
“member”), and the specified U.S. person
neither has held, nor intends to hold, such
interest for more than three years.
(3) In the case of an FFI that is part of
an expanded affiliated group, all other FFIs
in the expanded affiliated group are par-
ticipating FFIs, registered deemed-compli-
ant FFIs, sponsored FFIs described in para-
graph (f)(1)(i)(F)(1)or(2)ofthissection,
nonreporting IGA FFIs, or exempt benefi-
cial owners.
(D)Restricted funds.AnFFIisde-
scribed in this paragraph (f)(1)(i)(D) if it
meets the following requirements.
(1) The FFI is an FFI solely because it
is an investment entity, and it is regulated
as an investment fund under the laws of
its country of incorporation or organiza-
tion (which must be a FATF-compliant ju-
risdiction at the time the FFI registers for
deemed-compliant status) or in all of the
countries in which it is registered and in
all of the countries in which it operates.
A fund will be considered to be regulated
as an investment fund for purposes of this
paragraph if its manager is regulated with
respect to the fund in all of the countries
in which the investment fund is registered
and in all of the countries in which the in-
vestment fund operates.
(2) Interests issued directly by the fund
are redeemed by or transferred by the fund
rather than sold by investors on any sec-
ondary market. Notwithstanding the prior
sentence, an FFI will not be prohibited
from qualifying as a restricted fund solely
because it issued interests in bearer form
provided that the FFI ceased issuing in-
terests in bearer form after December 31,
2012, retires all such interests upon sur-
render, and establishes policies and proce-
dures to redeem or immobilize all such in-
terests prior to January 1, 2017, and that
prior to payment the FFI documents the ac-
count holder in accordance with the pro-
cedures set forth in §1.1471–4(c) applica-
ble to accounts other than preexisting ac-
counts and agrees to withhold and report
on such accounts as would be required un-
der §1.1471–4(b) and (d) if it were a partic-
ipating FFI. For purposes of this paragraph
(f)(1)(i)(D), interests in the FFI that are is-
sued by the fund through a transfer agent or
distributor that does not hold the interests
as a nominee of the account holder will be
considered to have been issued directly by
the fund.
(3) Interests that are not issued directly
by the fund are sold only through dis-
tributors that are participating FFIs, reg-
istered deemed-compliant FFIs, nonregis-
tering local banks described in paragraph
(f)(2)(i) of this section, or restricted dis-
tributors described inparagraph (f)(4) of
this section. For purposes of this para-
graph (f)(1)(i)(D) and paragraph (f)(4) of
this section, a distributor means an under-
writer, broker, dealer, or other person who
participates, pursuant to a contractual ar-
rangement with the FFI, in the distribution
of securities and holds interests in the FFI
as a nominee.
(4) The FFI ensures that by the later
of June 30, 2014, or six months after the
date the FFI registers as a deemed-compli-
ant FFI, each agreement that governs the
distribution of its debt or equity interests
prohibits sales and other transfers of debt
or equity interests in the FFI (other than
interests that are both distributed by and
held through a participating FFI) to spec-
ified U.S. persons, nonparticipating FFIs,
or passive NFFEs with one or more sub-
stantial U.S. owners. In addition, by that
date, the FFI’s prospectus and all mar-
keting materials must indicate that sales
and other transfers of interests in the FFI
to specified U.S. persons, nonparticipating
FFIs, or passive NFFEs with one or more
substantial U.S. owners are prohibited un-
less such interests are both distributed by
and held through a participating FFI.
(5) The FFI ensures that by the later
of June 30, 2014, or six months after the
date the FFI registers as a deemed-compli-
ant FFI, each agreement entered into by the
FFI that governs the distribution of its debt
or equity interests requires the distributor
to notify the FFI of a change in the dis-
tributor’s chapter 4 status within 90 days
of the change. The FFI must certify to
the IRS that, with respect to any distrib-
utor that ceases to qualify as a distribu-
tor identified in paragraph (f)(1)(i)(D)(3)
of this section, the FFI will terminate its
distribution agreement with the distributor,
or cause the distribution agreement to be
terminated, within 90 days of notification
of the distributor’s change in status and,
with respect to all debt and equity interests
of the FFI issued through that distributor,
will redeem those interests, convert those
interests to direct holdings in the fund, or
cause those interests to be transferred to
another distributor identified in paragraph
(f)(1)(i)(D)(3) of this section within six
months of the distributor’s change in sta-
tus.
(6) With respect to any of the FFI’s pre-
existing direct accounts that are held by
the beneficial owner of the interest in the
FFI, the FFI reviews those accounts in ac-
cordance 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 re-
quired 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 con-
tained an explicit prohibition of the is-
suance and/or sale of shares to U.S. enti-
ties 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 docu-
ment the account in accordance with pro-
cedures set forth in §1.1471–4(c) applica-
ble to accounts other than preexisting ac-
counts. By the later of June 30, 2014, or six
months after the date the FFI registers as a
deemed-compliant FFI, the FFI will be re-
quired to certify to the IRS either that it did
not identify any U.S. account or account
held by a nonparticipating 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, reporting Model 1 FFI, or U.S. finan-
cial institution, or withhold and report on
such accounts as would be required under
April 8, 20138742013–15 I.R.B.

§1.1471–4(b) and (d) if it were a partici-
pating FFI.
(7) By the later of December 31,
2013, or the date that it registers as a
deemed-compliant FFI, the FFI imple-
ments the policies and procedures de-
scribed in §1.1471–4(c) to ensure that it
either—
(i) Does not open or maintain an ac-
count for, or make a withholdable pay-
ment to, any specified U.S. person, non-
participating FFI, or passive NFFE with
one or more substantial U.S. owners and,
if it discovers any such accounts, closes
all accounts for any such person within six
months of the date that the FFI had reason
to know the account holder became such a
person; or
(ii) Withholds and reports on any ac-
count held by, or any withholdable pay-
ment made to, any specified U.S. person,
nonparticipatingFFI, or passive NFFE
with one or more substantial U.S. owners
to the extent and in the manner that would
be required under §1.1471–4(b) and (d) if
the FFI were a participating FFI.
(8)ForanFFIthatispartofanex-
panded affiliated group, all other FFIs in
the expanded affiliated group are partici-
pating FFIs, registered deemed-compliant
FFIs, sponsored FFIs described in para-
graph (f)(2)(iii)(B) or (C) of this section,
nonreporting IGA FFIs, or exempt benefi-
cial owners.
(E)Qualified credit card issuers.
An FFI is described in this paragraph
(f)(1)(i)(E) if the FFI meets the following
requirements.
(1) The FFI is an FFI solely because
it is an issuer of credit cards that accepts
deposits only when a customer makes a
payment in excess of a balance due with
respect to the card and the overpayment is
not immediately returned to the customer.
(2) By the later of December 31, 2013,
or the date it registers as a deemed-compli-
ant FFI, the FFI implements policies and
procedures 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 include credit
balances resulting from merchandise re-
turns.
(F)Sponsored investment entities and
controlled foreign corporations. An FFI
is described in this paragraph (f)(1)(i)(F)
if the FFI is described in paragraph
(f)(1)(i)(F)(1)or(2)ofthissectionandthe
sponsoring entity meets the requirements
of paragraph (f)(1)(i)(F)(3)ofthissection.
(1) An FFI is a sponsored invest-
ment entity described in this paragraph
(f)(1)(i)(F)(1)if—
(i) It is an investment entity that is not
aQI,WP,orWT;and
(ii) An entity has agreed with the FFI to
act as a sponsoring entity for the FFI.
(2) An FFI is a sponsored controlled
foreign corporation described in this para-
graph (f)(1)(i)(F)(2) if the FFI meets the
following requirements—
(i) The FFI is a controlled foreign cor-
poration as defined in section 957(a) that
is not a QI, WP, or WT;
(ii) The FFI is wholly owned, directly
or indirectly, by a U.S. financial institution
that agrees with the FFI to act as a sponsor-
ing entity for the FFI; and
(iii) The FFI shares a common elec-
tronic account system with the sponsoring
entity that enables the sponsoring entity
to identify all account holders and payees
of the FFI and to access all account and
customer information maintained by the
FFI including, but not limited to, customer
identification information, customer doc-
umentation, account balance, and all pay-
ments made to the account holder or payee.
(3) A sponsoring entity described
in paragraph (f)(1)(i)(F)(1)(ii)or
(f)(1)(i)(F)(2)(ii) of this section meets
the requirements of this paragraph
(f)(1)(i)(F)(3) if the sponsoring entity—
(
i) Is authorized to manage the FFI and
enter into contracts on behalf of the FFI
(such as a fund manager, trustee, corporate
director, or managing partner);
(ii) Has registered with the IRS as a
sponsoring entity;
(iii) Has registered the FFI with the IRS;
(iv) Agrees to perform, on behalf of the
FFI, all due diligence, withholding, report-
ing, and other requirements that the FFI
would have been required to perform if it
were a participating FFI;
(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; and
(vi) Has not had its status as a sponsor
revoked.
(4) The IRS may revoke a sponsoring
entity’s status as a sponsor with respect to
all sponsored FFIs if there is a material
failure by the sponsoring entity to com-
ply with its obligations under paragraph
(f)(1)(i)(F)(3) of this section with respect
to any sponsored FFI.
(5) A sponsored FFI will remain liable
for any failure of its sponsoring entity to
comply with the obligations contained in
paragraph (f)(1)(i)(F)(3)ofthissection
that the sponsoring entity has agreed to
undertake on behalf of the FFI.
(ii)Procedural requirements for reg-
istered deemed-compliant FFIs.Areg-
istered deemed-compliant FFI described
in paragraph (f)(1)(i)(A) through (E) of
this section may use one or more agents
to perform the necessary due diligence to
identify its account holders and to take any
required action associated with obtaining
and maintaining its deemed-compliant
status. The FFI, however, remains respon-
sible for ensuring that the requirements
for its deemed-compliant status are met.
Unless otherwise provided in this section,
a registered deemed-compliant FFI de-
scribed in paragraph (f)(1)(i)(A) through
(E)ofthissectionisrequiredto—
(A) Register with the IRS pursuant
to procedures prescribed by the IRS and
agree to comply with the terms of its reg-
istered deemed-compliant status.
(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 re-
quirements for the deemed-compliant cat-
egory claimed by the FFI have been satis-
fied since the later of the date the FFI regis-
ters as a deemed-compliant FFI or Decem-
ber 31, 2013;
(C) Maintain in its records the confir-
mation from the IRS of the FFI’s registra-
tion as a deemed-compliant FFI and GIIN
or such other information as the IRS spec-
ifies in forms or other guidance; and
(D) Agree to notify the IRS if there is a
change in circumstances that would make
the FFI ineligible for the deemed-com-
pliant status for which it has registered,
and to do so within six months of the
change in circumstances unless the FFI is
able to resume its eligibility for its regis-
tered-deemed compliant status within the
six month notification period.
(iii)Deemed-compliant FFI that is
merged or acquired. A deemed-compliant
FFI that becomes a participating FFI or a
member of a participating FFI group as a
2013–15 I.R.B.875April 8, 2013

result of a merger or acquisition will not be
required to redetermine the chapter 4 sta-
tus of any account maintained by the FFI
prior to the date of the merger or acquisi-
tion unless that account has a subsequent
change in circumstances.
(2)Certified deemed-compliant FFIs.
A certified deemed-compliant FFI means
an FFI described in any of paragraphs
(f)(2)(i) through (iv) of this section that has
certified as to its status as a deemed-com-
pliant FFI by providing a withholding
agent with the documentation described
in §1.1471–3(d)(6) applicable to the rele-
vant deemed-compliant category. An FFI
that is described in paragraph (f)(2)(iv)
of this section (a limited life debt invest-
ment entity) will be treated as a certified
deemed-compliant FFI prior to January 1,
2017. A certified deemed-compliant FFI
also includes any nonreporting IGA FFI.
A certified deemed-compliant FFI is not
required to register with the IRS.
(i)Nonregistering local bank.AnFFIis
described in this paragraph (f)(2)(i) if the
FFI meets the following requirements.
(A)TheFFIoperatessolelyas(andis
licensed and regulated under the laws of
its country of incorporation or organization
as)—
(1) A bank; or
(2) A credit union or similar cooper-
ative credit organization that is operated
without profit.
(B) The FFI’s business consists primar-
ily of receiving deposits from and making
loans to unrelated retail customers.
(C) The FFI does not have a fixed place
of business outside its country of incorpo-
ration or organization. For this purpose, a
fixed place of business does not include a
location that is not advertised to the pub-
lic and from which the FFI performs solely
administrative support functions.
(D) The FFI does not solicit customers
or account holders outside its country of
incorporation or organization. For this
purpose, an FFI will not be considered to
have solicited customers or account hold-
ers outside its country of incorporation or
organization merely because it operates a
website, provided that the website does
not permit account opening, does not in-
dicate that the FFI maintains accounts for
or provides services to nonresidents, and
does not otherwise target or solicit U.S.
customers or account holders. An FFI
will also not be considered to have so-
licited customers or account holders out-
side its country of incorporation or organi-
zation merely because it advertises in print
media or on a radio or television station
that is distributed or aired primarily within
its country of incorporation or organiza-
tion but is also incidentally distributed or
aired in other countries, provided that the
advertisement does not indicate that the
FFI maintains accounts for or provides ser-
vices to nonresidents and does not other-
wise target or solicit U.S. customers or ac-
count holders.
(E) The FFI does not have more than
$175 million in assets on its balance sheet
and, if the FFI is a member of an expanded
affiliated group, the group does not have
more than $500 million in total assets on its
consolidated or combined balance sheets.
(F) With respect to an FFI that is part of
an expanded affiliated group, each mem-
ber of the expanded affiliated group is in-
corporated or organized in the same coun-
try and does not have a fixed place of busi-
ness outside of that country. For this pur-
pose, a fixed place of business does not in-
clude a location that is not advertised to
the public and from which the FFI per-
forms solely administrative support func-
tions. Further, each FFI in the group,
other than an FFI described in paragraph
(f)(2)(ii) of this section or §1.1471–6(f),
meets the requirements set forth in this
paragraph (f)(2)(i). For this purpose, a
fixed place of business does not include a
location that is not advertised to the pub-
lic and from which the FFI performs solely
administrative support functions.
(ii)FFIs with only low-value accounts.
An FFI is described in this paragraph
(f)(2)(ii) if the FFI meets the following
requirements:
(A) The FFI is not an investment entity.
(B) No financial account maintained by
the FFI (or, in the case of an FFI that is a
member of an expanded affiliated group,
by any member of the expanded affiliated
group) has a balance or value in excess
of $50,000. The balance or value of a
financial account shall be determined by
applying the rules described in paragraph
(b)(4) of this section, substituting the term
financial accountfor the termdepository
accountand the termpersonfor the term
individual.
(C) The FFI does not have more than
$50 million in assets on its balance sheet
as of the end of its most recent account-
ing year. In the case of an FFI that is a
member of an expanded affiliated group,
the entire expanded affiliated group does
not have more than $50 million in assets on
its consolidated or combined balance sheet
as of the end of its most recent accounting
year.
(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 para-
graphs (f)(2)(iii)(A) through (E) 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) The FFI has a contractual arrange-
ment with a sponsoring entity that is a par-
ticipating FFI, reporting Model 1 FFI, or
U.S. financial institution and that is au-
thorized to manage the FFI and enter into
contracts on behalf of the FFI (such as a
professional manager, trustee, or manag-
ing partner), under which the sponsoring
entity agrees to fulfill all due diligence,
withholding, and reporting responsibilities
that the FFI would have assumed if it were
a participating FFI.
(C) The FFI does not hold itself out as
an investment vehicle for unrelated parties.
(D) Twenty or fewer individuals own all
of the debt and equity interests in the FFI
(disregarding debt interests owned by par-
ticipating FFIs, registered deemed-com-
pliant FFIs, and certified deemed-compli-
ant FFIs and equity interests owned by an
entity if that entity owns 100 percent of
the equity interests in the FFI and is it-
self a sponsored FFI under this paragraph
(f)(2)(iii)).
(E) The sponsoring entity complies
with the following requirements—
(1) The sponsoring entity has registered
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 partici-
pating FFI and retains documentation col-
lected 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;
and
April 8, 20138762013–15 I.R.B.

(4) The sponsoring entity has not had its
status as a sponsor revoked.
(F) The IRS may revoke a sponsoring
entity’s status as a sponsor with respect to
all sponsored FFIs if there is a material
failure by the sponsoring entity to com-
ply with its obligations under paragraph
(f)(2)(iii)(E) of this section with respect to
any sponsored FFI. A sponsored FFI will
remain liable for any failure of its spon-
soring entity to comply with the obliga-
tions contained in paragraph (f)(2)(iii)(E)
of this section that the sponsoring entity
has agreed to undertake on behalf of the
FFI.
(iv)Limited life debt investment entities
(transitional). An FFI is described in this
paragraph (f)(2)(iv) if the FFI is the ben-
eficial owner of the payment (or of pay-
ments made with respect to the account)
and the FFI meets the following require-
ments. An FFI that meets the requirements
of this paragraph (f)(2)(iv) will be treated
as a certified deemed-compliant FFI prior
to January 1, 2017.
(A) The FFI is a collective investment
vehicle formed pursuant to a trust inden-
ture or similar fiduciary arrangement that
is an FFI solely because it is an investment
entity that offers interests primarily to un-
related investors.
(B) The FFI was in existence as of De-
cember 31, 2011, and the FFI’s organiza-
tional documents require that the entity liq-
uidate on or prior to a set date, and do not
permit amendments tothe organizational
documents, including the trust indenture,
without the agreement of all of the FFI’s
investors.
(C) The FFI was formed for the purpose
of purchasing (and did in fact purchase)
specific types of indebtedness and holding
those assets (subject to reinvestment only
under prescribed circumstances) until the
termination of the asset or the vehicle.
(D) All payments made to the investors
of the FFI are cleared through a clearing
organization that is a participating FFI, re-
portingModel1FFI,or U.S. financial in-
stitution or made through a trustee that is a
participating FFI, reporting Model 1 FFI,
or U.S. financial institution.
(E) The FFI’s trust indenture or similar
fiduciary arrangement only authorizes the
trustee or fiduciary to engage in activities
specifically designated in the trust inden-
ture, and the trustee or fiduciary is not au-
thorized through a fiduciary duty or other-
wise to fulfill the obligations that a partic-
ipating FFI is subject to under §1.1471–4
absent a legal requirement to fulfill them,
even if the consequence of the trustee fail-
ing to fulfill these obligations is to cause
the FFI to be withheld upon. Further, no
other person has the authority to fulfill the
obligations that a participating FFI is sub-
ject to under §1.1471–4 on behalf of the
FFI.
(3)Owner-documented FFIs—(i)In
general. An owner-documented FFI
means an FFI that meets the requirements
of paragraph (f)(3)(ii) of this section. An
FFI may only be treated as an owner-doc-
umented FFI with respect to payments
received from and accounts held with a
designated withholding agent (or with
respect to payments received from and
accounts held with another FFI that is also
treated as an owner-documented FFI by
such designated withholding agent). A
designated withholding agent is a U.S.
financial institution, participating FFI,
or reporting Model 1 FFI that agrees to
undertake the additional due diligence
and reporting required under paragraphs
(f)(3)(ii)(D)and(E)ofthissectioninorder
to treat the FFI as an owner-documented
FFI. An FFI meeting the requirements of
this paragraph (f)(3) will only be treated
as a deemed-compliant FFI with respect
to a payment or account for which it does
not act as an intermediary.
(ii)Requirements of owner-documented
FFI status. An FFI meets the requirements
of this paragraph (f)(3)(ii) only if—
(A) The FFI is an FFI solely because it
is an investment entity;
(B) The FFI is not owned by or in an ex-
panded affiliated group with any FFI that
is a depository institution, custodial insti-
tution, or specified insurance company;
(C) The FFI does not maintain a finan-
cial account for any nonparticipating FFI;
(D) The FFI provides the designated
withholding agent with all of the documen-
tation described in §1.1471–3(d)(6) and
agrees to notify the withholding agent if
there is a change in circumstances; and
(E) The designated withholding agent
agrees to report to the IRS (or, in the
case of a reporting Model 1 FFI, to the
relevant foreign government or agency
thereof) all of the information described
in §1.1471–4(d) or §1.1474–1(i) (as
appropriate) with respect to any speci-
fied U.S. persons that are identified in
§1.1471–3(d)(6)(iv)(A)(1). Notwithstand-
ing the previous sentence, the designated
withholding agent is not required to re-
port information with respect to an in-
direct owner of the FFI that holds its
interest through a participating FFI, a
deemed-compliant FFI (other than an
owner-documented FFI), an entity that is a
U.S. person, an exempt beneficial owner,
or an excepted NFFE.
(4)Definition of a restricted distributor.
An entity is a restricted distributor for pur-
poses of paragraph (f)(1)(i)(D) of this sec-
tion (relating to registered deemed-com-
pliant restricted funds) if it operates as a
distributor that holds debt or equity inter-
ests in a restricted fund as a nominee and
meets the following requirements.
(i) The distributor provides investment
services to at least 30 unrelated customers
and less than half of the distributor’s cus-
tomers are related persons.
(ii) The distributor is required to per-
form AML due diligence procedures un-
der the anti-money laundering laws of its
country of incorporation or organization
(which must be a FATF-compliant jurisdic-
tion).
(iii) The distributor operates solely in its
country of incorporation or organization,
does not have a fixed place of business out-
side that country, and, if such distributor
belongstoanexpandedaffiliatedgroup,
has the same country of incorporation or
organization as all other members of its ex-
panded affiliated group. For this purpose,
a fixed place of business does not include
a location that is not advertised to the pub-
lic and from which the FFI performs solely
administrative support functions.
(iv) The distributor does not solicit cus-
tomers or account holders outside its coun-
try of incorporation or organization. For
this purpose, a distributor will not be con-
sideredtohavesolicitedcustomersorac-
count holders outside its country of organ-
ization merely because it operates a web-
site, provided that the website does not
permit account opening by persons identi-
fied as nonresidents, does not specifically
state that nonresidentsmay acquire securi-
ties from the distributor, and does not oth-
erwise target U.S. customers or account
holders. A distributor will also not be con-
sideredtohavesolicitedcustomersorac-
count holders outside its country of incor-
poration or organization merely because it
advertises in print media or on a radio or
2013–15 I.R.B.877April 8, 2013

television station that is distributed or aired
primarily within its country of incorpora-
tion or organization but is also inciden-
tally distributed or aired in other countries,
provided that the advertisement does not
indicate that the distributor maintains ac-
counts for or provides services to nonresi-
dents and does not otherwise target or so-
licit U.S. customers or account holders.
(v) The distributor does not have more
than $175 million in total assets under
management and has no more than $7
million in gross revenue on its income
statement for the most recent financial
accounting year and, if the distributor be-
longs to an expanded affiliated group, the
entire group does not have more than $500
million in total assets under management
or more than $20 million in gross revenue
for its most recent financial accounting
year on a combined or consolidated in-
come statement.
(vi) The distributor provides the re-
stricted fund (or another distributor of the
restricted fund thatis a participating FFI
or registered deemed-compliant FFI, and
with which the distributor has entered into
its distribution agreement) with a valid
Form W–8 indicating that the distributor
satisfies the requirements to be a restricted
distributor.
(vii) The agreement governing the dis-
tributor’s distribution of debt or equity in-
terests of the restricted fund—
(A) Prohibits the distributor from dis-
tributing any securities to specified U.S.
persons, passive NFFEs that have one or
more substantial U.S. owners, and nonpar-
ticipating FFIs;
(B) Requires that if the distributor does
distribute securities to any of the persons
described in this paragraph (f)(4)(vii), it
will cause the restricted fund to redeem
or retire those interests, or it will trans-
fer those interests to a distributor that is
a participating FFI or reporting Model 1
FFI, within six months and the commis-
sion paid to the distributor will be forfeited
to the restricted fund or to the participat-
ing FFI to which those interests are trans-
ferred; and
(C) Requires the distributor to notify the
restricted fund (or another distributor of
the restricted fund that is a participating
FFI, reporting Model 1 FFI, or registered
deemed-compliant FFI and with which the
distributor has entered into its distribution
agreement) of a change in the distribu-
tor’s chapter 4 status within 90 days of the
change in status.
(viii) With respect to sales after Decem-
ber 31, 2011, and prior to the time the re-
strictions described in paragraph (f)(4)(vii)
of this section were incorporated into the
distribution agreement, either the agree-
ment governing the distributor’s distribu-
tion of debt or equity interests of the rele-
vant FFI contained a prohibition of the sale
of such securities to U.S. entities or U.S.
resident individuals, or the distributor re-
views all accounts relating to such sales in
accordance with the procedures (and time
frames) described in §1.1471–4(c) appli-
cable to preexistingaccounts and certifies
that it has caused the restricted fund to re-
deem or retire, or it has transferred all secu-
rities sold to any of the persons described
in paragraph (f)(4)(vii) of this section. If
the distribution agreement addressed in the
prior sentence contained only a prohibition
on the sale of securities to U.S. resident
individuals, the distributor will not be re-
quired to review the individual accounts
relating to such sales but must review and
make certifications with respect to all en-
tity accounts in the manner described in the
previous sentence.
(g)Recalcitrant account holders—(1)
Scope. This paragraph (g) provides
rules for determining when an account
holder of a participating FFI or registered
deemed-compliant FFI is a recalcitrant
account holder. Paragraph (g)(2) of this
section defines the term recalcitrant ac-
count holder. Paragraphs (g)(3) and (4)
of this section provide timing rules for
when an account holder will begin to be
treated as a recalcitrant account holder
by a participating FFI and when an ac-
count holder will cease to be treated as
a recalcitrant account holder by such in-
stitution. For rulesfor determining the
holder of an account, see paragraph (a)(3)
of this section. For the withholding re-
quirements of an FFI with respect to its
recalcitrant account holders, see para-
graph (f) of this section and §1.1471–4(b).
For the reporting requirements of an FFI
with respect to its recalcitrant account
holders, see §1.1471–4(d)(6), and, for the
reporting required with respect to pay-
ments made to such account holders, see
§1.1474–1(d)(4)(iii). The rules provided
in this paragraph (g) to classify certain
account holders as recalcitrant account
holders shall not, however, apply to a U.S.
branch of a participating FFI. Instead, a
U.S. branch of a participating FFI or regis-
tered deemed-compliant FFI that is treated
as a U.S. person shall apply the presump-
tion rules of §1.1471–3(f) (for foreign
entity account holders) and chapter 3 or
61 (for individual payees) to determine
the status of a payee if it cannot reliably
associate a reportable payment made to
the payee with valid documentation.
(2)Recalcitrant account holder.The
termrecalcitrant account holdermeans
any holder of an account maintained by
an FFI if such account holder is not an
FFI (or presumed to be an FFI under
§1.1471–3(f)), theaccount does not meet
the requirements of the exception to U.S.
account status described in paragraph
(a)(4) of this section (for depository ac-
counts with a balance of $50,000 or less)
and does not qualify for any of the ex-
ceptions from the documentation require-
ments described in §1.1471–4(c)(3)(iii),
(c)(4)(iii), (c)(5)(iii), (c)(5)(iv)(E) (or the
participating FFI elects to forego such
exceptions) and—
(i) The account holder fails to comply
with requests by the FFI for the documen-
tation or information that is required un-
der §1.1471–4(c) for determining the sta-
tus of such account as a U.S. account or
other than a U.S. account;
(ii) The account holder fails to provide
a valid Form W–9 upon request from the
FFI or fails to provide a correct name and
TIN combination upon request from the
FFI when the FFI has received notice from
the IRS indicating that the name and TIN
combination reported by the FFI for the
account holder is incorrect;
(iii) If foreign law would (but for a
waiver) prevent reporting by the FFI (or
branch or division thereof) of the informa-
tion described in §1.1471–4(d)(3) or (5)
with respect to suchaccount, the account
holder (or substantial U.S. owner of an ac-
count holder that is a U.S. owned foreign
entity) fails to provide a valid and effective
waiver to permit such reporting; or
(iv) The account holder pro-
vides the documentation described in
§1.1471–3(d)(12) to establish its status
as a passive NFFE (other than a WP or
WT) but fails to provide the informa-
tion regarding its owners required under
§1.1471–3(d)(12)(iii).
(3)Start of recalcitrant account holder
status—(i)Preexisting accounts identi-
April 8, 20138782013–15 I.R.B.

fied under the procedures described in
§1.1471–4(c) for identifying U. S. ac-
counts—(A)In general. An account
holder of a preexisting account described
in paragraph (g)(2) of this section main-
tained by a participating FFI will be treated
as a recalcitrant account holder begin-
ning on the dates provided in paragraphs
(g)(3)(B) through (D) of this section. An
account holder of a preexisting account
described in paragraph (g)(2) of this sec-
tion that is maintained by a registered
deemed-compliant FFI will be treated as
a recalcitrant account holder beginning
on the dates provided in paragraph (f)
of this section (setting forth the time by
which the FFI must identify its accounts
in accordance with the requirements of
§1.1471–4(c) in order to meet the re-
quirements of its applicable registered
deemed-compliant status).
(B)Accounts other than high-value ac-
counts. Account holders of preexisting ac-
counts maintained by a participating FFI
that are not high-value accounts (as de-
scribed in §1.1471–4(c)(8)) and that are
described in paragraph (g)(2) of this sec-
tion will be treated asrecalcitrant account
holders beginning on the date that is two
years after the effective date of the FFI
agreement.
(C)High-value accounts. Account
holders of preexisting accounts main-
tained by a participating FFI that are
high-value accounts (as described in
§1.1471–4(c)(5)(iv)(D)) and that are de-
scribed in paragraph (g)(2) of this section
will be treated as recalcitrant account
holders beginning on the date that is one
year after the effective date of the FFI
agreement.
(D)Preexisting accounts that become
high-value accounts. With respect to a
calendar year beginning after the later of
the effective date of the FFI agreement
and December 31, 2014, an account holder
that is described in paragraph (g)(2) of
this section and that holds a preexisting
account that a participating FFI identi-
fies as a high-value account pursuant to
§1.1471–4(c)(5)(iv)(D) will be treated as
a recalcitrant account holder beginning
on the earlier of the date a withholdable
payment is made to the account following
the calendar year end in which the account
is identified as a high-value account or the
date that is six months after the calendar
year end.
(ii)Accounts that are not preexist-
ing accounts and accounts requiring
name/TIN correction. An account holder
of an account that is not a preexisting ac-
count and that is described in paragraph
(g)(2) of this section will be treated as a re-
calcitrant account holder beginning on the
earlier of the date a withholdable payment
or a foreign passthru payment is made to
the account or 90 days after the date the
account is opened by the participating FFI.
An account holder for which the partici-
pating FFI received a notice from the IRS
indicating that the name and TIN com-
bination provided for the account holder
is incorrect will be treated as a recalci-
trant account holder following the date of
such notice within the time prescribed in
§31.3406(d)–5(a) of this chapter.
(iii)Accounts with changes in circum-
stances. An account holder holding an ac-
count that is described in paragraph (g)(2)
of this section following a change in cir-
cumstances (other than a change in ac-
count balance or value in a subsequent
year that causes an individual account to
be identified as a high-value account) will
be treated as a recalcitrant account holder
beginning on the earlier of the date a with-
holdable payment or a foreign passthru
payment is made to the account or the date
that is 90 days after the change in circum-
stances. For the definition of a change in
circumstances with respect to an account,
see §1.1471–4(c)(2)(iii).
(4)End of recalcitrant account holder
status. An account holder that is treated as
a recalcitrant account holder under para-
graphs (g)(2) and (3) of this section will
cease to be so treated as of the date on
which the account holder is no longer de-
scribed in paragraph (g)(2) of this section.
(h)Passthru payment—(1)Defined.
The termpassthru paymentmeans any
withholdable payment and any foreign
passthru payment.
(2)Foreign passthru payment.[Re-
served].
(i)Expanded affiliated group—(1)
Scope of paragraph. This paragraph (i)
defines the termexpanded 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).
(2)Expanded affiliated group de-
fined—(i)In general. Except as other-
wise provided in this paragraph (i), an
expanded affiliated groupmeans an affili-
ated group as definedin section 1504(a),
determined—
(A) By substituting “more than 50 per-
cent” for “at least 80 percent” each place it
appears;
(B) Without regard to paragraphs (2)
and (3) of section 1504(b);
(C) Without application of section
1504(a)(3); and
(DWithoutapplicationof
§1.1504–4(b)(2)(i)(A).
(ii)Partnerships and entities other than
corporations. A partnership or any entity
other than a corporation shall be treated
as a member of an expanded affiliated
group if such entity is controlled (within
the meaning of section 954(d)(3), without
regard to whether such entity is foreign
or domestic) by members of such group
(including any entity treated as a member
of such group by reason of this sentence).
(3)Exception for FFIs holding cer-
tain capital investments. Notwithstanding
paragraph (i)(2) of this section, an in-
vestment entity will not be considered 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 busi-
ness of providing seed capital to form in-
vestment entities, the interests in which it
intends to sell to unrelated investors;
(ii) The investment entity is created in
the ordinary course of such other FFI’s
business described in paragraph (i)(3)(i) of
this section;
(iii) As of the date the FFI acquired the
equity interest, any equity interest in the in-
vestment entity in excess of 50 percent of
the total value of the stock of the invest-
ment entity is intended to be held by such
other FFI (including ownership by other
members of such other FFI’s expanded af-
filiated group) for no more than three years
from the date on which such other FFI first
acquired an equity interest in the invest-
ment 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)(3)(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 af-
filiated group is 50 percent or less of the
2013–15 I.R.B.879April 8, 2013

total value of the stock of the investment
entity.
(4)Seed capital. For purposes of this
paragraph (i), the termseed capitalmeans
an initial capital contribution made to an
investment entity that is intended as a tem-
porary investment and is deemed by the
manager of the entity to be necessary or
appropriate for the establishment of the en-
tity, such as for the purpose of establishing
a track record of investment performance
for such entity, achieving economies of
scale for diversified investment, avoiding
an artificially high expense to return ratio,
or similar purposes.
(5)Anti-abuse rule. A change in own-
ership, voting rights, or the form of an en-
tity that results in an entity meeting or not
meeting the ownership requirements de-
scribed in paragraph (i)(2) of this section
will be disregarded for purposes of deter-
mining whether an entity is a member of
an expanded affiliated group if the change
is pursuant to a plan a principal purpose
of which is to avoid reporting or withhold-
ing that would otherwise be required un-
der any chapter 4 provision. For purposes
of this paragraph (i)(5), a change in voting
rights includes a separation of voting rights
and value.
(j)Effective/applicability date.This
section generally applies on January 28,
2013. For other dates of applicability, see
§1.1471–5(f)(2)(iv).
Par. 10. Section 1.1471–6 is added to
read as follows:
§1.1471–6 Payments beneficially owned
by exempt beneficial owners.
(a)In general. This section describes
classes of beneficial owners that are iden-
tified in section 1471(f) (exempt beneficial
owners). Except as otherwise provided
in paragraphs (d) (regarding securities
held by foreign central banks of issue)
and (f) (regarding retirement funds) of
this section, a person must be a benefi-
cial owner of a payment to be treated as
an exempt beneficial owner with respect
to the payment. The following classes
of persons are exempt beneficial own-
ers: any foreign government, any political
subdivision of a foreign government, or
any wholly owned agency or instrumen-
tality of any one or more of the foregoing
described in paragraph (b) of this sec-
tion; any international organization or any
wholly owned agency or instrumental-
ity thereof described in paragraph (c) of
this section; any foreign central bank of
issue described in paragraph (d) of this
section; any government of a U.S. ter-
ritory described in paragraph (e) of this
section; certain foreign retirement funds
described in paragraph (f) of this section;
and certain entities described in paragraph
(g) of this section that are wholly owned
by one or more other exempt beneficial
owners. In addition, an exempt benefi-
cial owner includes any person treated
as an exempt beneficial owner pursuant
to a Model 1 IGA or Model 2 IGA. See
§§1.1471–2(a)(4)(v) and 1.1472–1(c)(2)
for the exemptions from withholding for
payments beneficially owned by an ex-
empt beneficial owner; §1.1471–3(d)(9)
for the documentation requirements appli-
cable to a withholding agent for purposes
of determining when a withholdable pay-
ment is beneficially owned by an exempt
beneficial owner; and §1.1471–3(d)(8)(ii)
for when a withholding agent may treat a
payment made to a nonparticipating FFI
as beneficially owned by an exempt ben-
eficial owner.
(b)Any foreign government, any polit-
ical subdivision of a foreign government,
or any wholly owned agency or instrumen-
tality of any one or more of the foregoing.
Solely for purposes of this section and ex-
cept as provided in paragraph (h) of this
section, the termany foreign government,
any political subdivision of a foreign gov-
ernment, or any wholly owned agency or
instrumentality of any one or more of the
foregoingmeans only the integral parts,
controlled entities, and political subdivi-
sions of a foreign sovereign.
(1)Integral part. Solely for purposes
of this paragraph (b), anintegral partof
a foreign sovereign is any person, body
of persons, organization, agency, bureau,
fund, instrumentality, or other body, how-
ever designated, that constitutes a govern-
ing authority of a foreign country. The net
earnings of the governing authority must
be credited to its own account or to other
accounts of the foreign sovereign, with no
portion inuring to the benefit of any pri-
vate person as defined in paragraph (b)(3)
of this section. An integral part does not
include any individual who is a sovereign,
official, or administrator acting in a private
or personal capacity. All the facts and cir-
cumstances will be taken into account in
determining whether an individual is act-
ing in a private or personal capacity.
(2)Controlled entity. Solely for pur-
poses of this paragraph (b), acontrolled
entitymeans an entity that is separate in
form from a foreign sovereign or that oth-
erwise constitutes a separate juridical en-
tity, provided that—
(i) The entity is wholly owned and con-
trolled by one or more foreign sovereigns
directly or indirectly through one or more
controlled entities;
(ii) The entity’s net earnings are cred-
ited to its own account or to other accounts
of one or more foreign sovereigns, with no
portion of its income inuring to the benefit
of any private person as defined in para-
graph (b)(3) of this section; and
(iii) The entity’s assets vest in one or
more foreign sovereigns upon dissolution.
(3)Inurementtothebenefitofprivate
persons. Solely for purposes of this para-
graph (b)—
(i) Income does not inure to the benefit
of private persons if such persons (within
the meaning of section 7701(a)(1)) are the
intended beneficiaries of a governmental
program carried on by a foreign sovereign,
and the program activities constitute gov-
ernmental functions under the regulations
under section 892.
(ii) Income is considered to inure to the
benefit of private persons if such income
benefits—
(A) Private persons through the use of
a governmental entityas a conduit for per-
sonal investment;
(B) Private persons through the use of a
governmental entity to conduct a commer-
cial business, such as a commercial bank-
ing business, that provides financial ser-
vices to private persons; or
(C) Private persons who divert such in-
come from its intended use by exerting in-
fluence or control through means explic-
itly or implicitly approved of by the for-
eign sovereign.
(c)Any international organization
or any wholly owned agency or instru-
mentality thereof. Except as provided in
paragraph (h) of this section, the termany
international organization or any wholly
owned agency or instrumentality thereof
means any entity described in section
7701(a)(18). The termalso includes any
intergovernmental or supranational organ-
ization—
April 8, 20138802013–15 I.R.B.

(1) That is comprised primarily of for-
eign governments;
(2) That is recognized as an intergov-
ernmental or supranational organization
underaforeignlawsimilarto22U.S.C.
288–288f or that has in effect a headquar-
ters agreement with a foreign government;
and
(3) Whose income does not inure to the
benefit of private persons under the prin-
ciples of paragraph (b)(3)(ii) of this sec-
tion, as applied to the intergovernmental or
supranational organization in place of the
government or governmental entity.
(d)Foreign central bank of issue—(1)
In general. Solely for purposes of this sec-
tion and except as provided in paragraph
(h) of this section, the termforeign cen-
tral bank of issuemeans a bank that is by
law or government sanction the principal
authority, other than the government itself,
issuing instruments intended to circulate as
currency. Such a bank is generally the cus-
todian of the banking reserves of the coun-
try under whose law it is organized.
(2)Separate instrumentality. A foreign
central bank of issue may include an in-
strumentality that is separate from a for-
eign government, whether or not owned
inwholeorinpartbyaforeigngovern-
ment. For example, foreign banks orga-
nized along the lines of, and performing
functions similar to, the Federal Reserve
System qualify as foreign central banks of
issue for purposes of this section.
(3)Bank for International Settlements.
The Bank for International Settlements is a
foreign central bank of issue for purposes
of this section.
(4)Income on certain collateral.Solely
for purposes of determining whether an
entity is an exempt beneficial owner of a
payment under this paragraph (d), a for-
eign central bank of issue is a beneficial
owner with respect to income earned on se-
curities, including securities held as collat-
eral or in connection with a securities lend-
ing transaction, held by the foreign central
bank of issue in the normal course of its
operations as a central bank of issue.
(e)Governments of U.S. territories.Ex-
cept as provided in paragraph (h) of this
section, whether a person or entity consti-
tutes a government of a U.S. territory for
purposes of this section is determined by
applying principles analogous to those set
forth in paragraph (b) of this section.
(f)Certain retirement funds.Afundis
described in this paragraph (f) if it is de-
scribed in paragraphs (f)(1) through (6) of
this section. In addition, if a withholding
agent may treat a withholdable payment as
made to a payee that is a retirement fund in
accordance with §1.1471–3, then the with-
holding agent may also treat such retire-
ment fund as the beneficial owner of the
payment. See §1.1471–3(d)(9)(ii).
(1)Treaty-qualified retirement fund.A
fund established in a country with which
the United States has an income tax treaty
in force, provided that the fund is enti-
tled to benefits under such treaty on in-
come that it derives from sources within
the United States (or would be entitled to
such benefits if it derived any such in-
come) as a resident of the other country
that satisfies any applicable limitation on
benefits requirement, and is operated prin-
cipally to administer or provide pension or
retirement benefits;
(2)Broad participation retirement fund.
A fund established to provide retirement,
disability, or death benefits, or any com-
bination thereof, to beneficiaries that are
current or former employees (or persons
designated by such employees) of one or
more employers in consideration for ser-
vices rendered, provided that the fund—
(i) Does not have a single beneficiary
with a right to more than five percent of
the fund’s assets;
(ii) Is subject to government regulation
and provides annual information reporting
about its beneficiaries to the relevant tax
authorities in the country in which the fund
is established or operates; and
(iii) Satisfies one or more of the follow-
ing requirements—
(A) The fund is generally exempt from
tax on investment income under the laws
of the country in which it is established or
operates due to its status as a retirement or
pension plan;
(B) The fund receives at least 50 percent
of its total contributions (other than trans-
fers of assets from accounts described in
§1.1471–5(b)(2)(i)(A) (referring to retire-
ment and pension accounts) or from other
plans described in this paragraph (f)) 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) or other re-
tirement funds described in this paragraph
(f)), or penalties apply to distributions or
withdrawals made before such specified
events; or
(D) Contributions (other than certain
permitted make-up contributions) by em-
ployees to the fund are limited by reference
to earned income of the employee or may
not exceed $50,000 annually.
(3)Narrow participation retirement
funds. A fund established to provide re-
tirement, disability, or death benefits to
beneficiaries that are current or former
employees (or persons designated by such
employees) of one or more employers in
consideration for prior services rendered,
provided that—
(i) The fund has fewer than 50 partici-
pants;
(ii) The fund is sponsored by one or
more employers that are not investment
entities or passive NFFEs;
(iii) Employee and employer contribu-
tions to the fund (other than transfers of
assets from other funds described in para-
graph (f)(1) of this section or accounts
described in §1.1471–5(b)(2)(i)(A) (refer-
ring to retirement and pension accounts))
are limited by reference to earned income
and compensation of the employee, re-
spectively;
(iv) Participants that are not residents of
the country in which the fund is established
or operated are not entitled to more than 20
percent of the fund’s assets; and
(v) The fund is subject to government
regulation and provides annual informa-
tion reporting about its beneficiaries to the
relevant tax authorities in the country in
which the fund is established or operates.
(4)Fund formed pursuant to a plan
similar to a section 401(a) plan.Afund
formedpursuanttoapensionplanthat
would meet the requirements of section
401(a), other than the requirement that the
plan be funded by a trust created or orga-
nized in the United States.
(5)Investment vehicles exclusively
for retirement funds. A fund established
exclusively to earn income for the ben-
efit of one or more retirement funds de-
scribed in paragraphs (f)(1) through (5)
of this section or accounts described in
§1.1471–5(b)(2)(i)(A) (referring to retire-
ment and pension accounts).
2013–15 I.R.B.881April 8, 2013

(6)Pension fund of an exempt benefi-
cial owner. A fund established and spon-
soredbyanexemptbeneficialownerde-
scribed in paragraph (b), (c), (d), or (e)
of this section to provide retirement, dis-
ability, or death benefits to beneficiaries or
participants that are current or former em-
ployees 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 benefi-
ciaries or participants are in consideration
of personal services performed for the ex-
empt beneficial owner.
(7)Example. FP, a foreign pension fund estab-
lished in Country X, is generally exempt from in-
come taxation in Country X, and is operated princi-
pally to provide retirement benefits in such country.
The U.S.-Country X income tax treaty is identical in
all material respects to the 2006 U.S. model income
tax convention. FP is a resident of Country X un-
der Article 4(2)(a) and a qualified person under Arti-
cle 22(2)(d) of the U.S.-Country X income tax treaty.
Therefore, FP is a pension fund described in para-
graph (f)(1) of this section.
(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 di-
rect holder of an equity interest in the in-
vestment company is an exempt beneficial
owner described in paragraph (b), (c), (d),
(e), (f), or (g) of this section, and each di-
rect holder of a debt interest in the invest-
ment entity is either a depository institu-
tion (with respect to a loan made to such
entity) or an exempt beneficial owner de-
scribed in paragraph (b), (c), (d), (e), (f),
or(g)ofthissection.
(h)Exception for commercial activi-
ties—(1)General rule.Anexemptben-
eficial owner described in paragraph (b),
(c), (d), or (e) of this section will not be
treated as an exempt beneficial owner
with respect to a payment that is derived
from an obligation held in connection
with a commercial financial activity of a
type engaged in by an insurance company,
custodial institution, or depository institu-
tion (including the accepting of deposits).
Thus, for example, a central bank of issue
that conducts a commercial financial ac-
tivity, such as acting as an intermediary on
behalf of persons other than in the bank’s
capacity as a central bank of issue, is not
an exempt beneficial owner under para-
graph (d)(1) of this section with respect
to payments received in connection with
an account held in connection with such
activity.
(2)Limitation. Paragraph (h)(1) of this
section will not apply if—
(i) An entity undertakes commercial
financial activity described in paragraph
(h)(1) of this section solely for or at the di-
rection 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); and
(iii) The entity otherwise maintains fi-
nancial accounts only for exempt benefi-
cial owners.
(i)Effective/applicability date.This
section applies January 28, 2013.
Par. 11. Section1.1472–1isaddedto
read as follows:
§1.1472–1 Withholding on NFFEs.
(a)In general. This section provides
rules that a withholding agent must ap-
ply to determine its obligations to with-
hold under section 1472 on withholdable
payments made to a payee that is an
NFFE. A participating FFI that complies
with its withholding obligations under
§1.1471–4(b) will be deemed to satisfy
its obligations under section 1472 with
respect to withholdable payments made
to NFFEs that are account holders. The
rules of this section will apply, however,
in the case of a participating FFI acting
as a withholding agent with respect to
a payment made to an NFFE that is not
an account holder (for example, a pay-
ment with respect to a contract that does
not constitute a financial account). See
§1.1473–1(a)(4)(vi), however, for rules
excepting from the definition of withhold-
able payment certain payments of U.S.
source FDAP income made prior to Jan-
uary 1, 2017, with respect to an offshore
obligation.
(b)Withholdable payments made to an
NFFE—(1)In general. Except as other-
wise provided in paragraph (b)(2) of this
section (providing transitional relief) or
paragraph (c) of this section (providing
exceptions for payments to an excepted
NFFE, a WP or WT, or an exempt ben-
eficial owner), a withholding agent must
withhold 30 percent of any withholdable
payment made after December 31, 2013,
to a payee that is an NFFE unless—
(i) The beneficial owner of such pay-
ment is the NFFE or any other NFFE;
(ii) The withholding agent can, pur-
suant to paragraph (d) of this section, treat
the beneficial owner of the payment as an
NFFE that does not have any substantial
U.S. owners, or as an NFFE that has iden-
tified its substantial U.S. owners; and
(iii) The withholding agent reports the
information described in §1.1474–1(i)(2)
relating to any substantial U.S. owners of
the beneficial owner of such payment.
(2)Transitional relief.Foranywith-
holdable payment made prior to January
1, 2015, with respect to a preexisting obli-
gation to a payee that is not aprima fa-
cieFFI and for which a withholding agent
does not have documentation indicating
the payee’s status as a passive NFFE with
one or more substantial U.S. owners, the
withholding agent is not required to with-
hold under this section or report under
§1.1474–1(i)(2) (describing the reporting
obligations of withholding agents with re-
spect to NFFEs).
(c)Exceptions—(1)Beneficial owner
that is an excepted NFFE. A withholding
agent is not required to withhold under sec-
tion 1472(a) and paragraph (b) of this sec-
tion on a withholdable payment (or portion
thereof) if the withholding agent can treat
the payment as beneficially owned by an
excepted NFFE. Anexcepted NFFEmeans
an NFFE that is—
(i)Publicly traded corporation.Acor-
poration the stock of which is regularly
traded on one or more established securi-
ties markets for the calendar year.
(A)Regularly traded. For purposes of
this section, stock of a corporation isreg-
ularly tradedon one or more established
securities markets for a calendar year if—
(1) One or more classes of stock of the
corporation that, in the aggregate, repre-
sent more than 50 percent of the total com-
bined voting power of all classes of stock
of such corporation entitled to vote and of
the total value of the stock of such corpo-
ration are listed on such market or markets
during the prior calendar year; and
(2) With respect to each class relied on
to meet the more-than–50-percent listing
requirement of paragraph (c)(1)(i)(A)(1)
of this section—
(
i) Trades in each such class are ef-
fected, other than inde minimisquantities,
on such market or markets on at least 60
days during the prior calendar year; and
April 8, 20138822013–15 I.R.B.

(ii) The aggregate number of shares in
each such class that are traded on such mar-
ket or markets during the prior year are at
least 10 percent of the average number of
shares outstanding in that class during the
prior calendar year.
(B)Special rules regarding the regu-
larly traded requirement—(1)Year of ini-
tial public offering. For the calendar year
in which a corporation initiates a public
offering of a class of stock for trading on
one or more established securities markets,
as defined in paragraph (c)(1)(i)(C) of this
section, such class of stock meets the re-
quirements of this paragraph (c)(1)(i) for
such year if the stock is regularly traded in
more thande minimisquantities on
1
/6of
the days remaining after the date of the of-
fering in the quarter during which the of-
fering occurs, and on at least 15 days dur-
ing each remaining quarter of the calendar
year. If a corporation initiates a public of-
fering of a class of stock in the fourth quar-
ter of the calendar year, such class of stock
meets the requirements of this paragraph
(c)(1)(i) in the calendar year of the offer-
ing if the stock is regularly traded on such
established securities market, other than in
de minimisquantities, on the greater of
1
/6
of the days remaining after the date of the
offering in the quarter during which the of-
fering occurs, or 5 days.
(2)Classes of stock treated as meeting
the regularly traded requirement. A class
of stock meets the trading requirements of
this paragraph (c)(1)(i) for a calendar year
if the stock is traded during such year on
an established securities market located in
the United States and is regularly quoted
by dealers making a market in the stock.
A dealer makes a market in a stock only if
the dealer regularly and actively offers to,
and in fact does, purchase the stock from,
and sell the stock to, customers who are
not related persons (as defined in section
954(d)(3)) with respect to the dealer in the
ordinary course of a trade or business.
(3)Anti-abuse rule.Anytradecon-
ducted with a principal purpose of meeting
the regularly traded requirements of this
paragraph (c)(1)(i) shall be disregarded.
Further, a class of stock shall not be treated
as regularly traded if there is a pattern
of trades conducted to meet the require-
ments of this paragraph (c)(1)(i). Simi-
larly, paragraph (c)(1)(i)(B)(1)ofthissec-
tion shall not apply to a public offering of
stock that has as one of its principal pur-
poses qualification of the class of stock as
regularly traded under the reduced regu-
larly traded requirements for the calendar
year of an initial public offering. For pur-
poses of applying the immediately preced-
ing sentence, consideration will be given to
whether the regularly traded requirements
of this paragraph (c)(1)(i) are satisfied in
the calendar year immediately following
the initial public offering.
(C)Established securities market—(1)
In general. For purposes of this paragraph
(c)(1)(i), the termestablished securities
marketmeans, for any calendar year—
(i) A foreign securities exchange that is
officially recognized, sanctioned, or super-
vised by a governmental authority of the
foreign country in which the market is lo-
cated, and has an annual value of shares
traded on the exchange (or a predeces-
sor exchange) exceeding $1 billion during
each of the three calendar years immedi-
ately preceding the calendar year in which
the determination is being made;
(ii) A national securities exchange that
is registered under section 6 of the Securi-
ties Exchange Act of 1934 (15 USC 78f)
with the Securities and Exchange Com-
mission;
(iii) Any exchange designated under a
Limitation on Benefits article of an income
tax treaty with the United States that is in
force; or
(iv) Any other exchange that the Secre-
tary may designate in published guidance.
(2)Foreign exchange with multiple
tiers. If an exchange in a foreign country
has more than one tier or market level on
which stock may be separately listed or
traded, each such tier shall be treated as a
separate exchange.
(3)Computation of dollar value of
stock traded. For purposes of paragraph
(c)(1)(i)(C)(1)(i) of this section, the value
in U.S. dollars of shares traded during a
calendar year shall be determined on the
basis of the dollar value of such shares
traded as reported by the World Federation
of Exchanges located in Paris (or a suc-
cessor institution), or, if not so reported,
by converting into U.S. dollars the aggre-
gate value in local currency of the shares
traded using an exchange rate equal to the
average of the spot rates on the last day of
each month of the calendar year.
(ii)Certain affiliated entities related to
a publicly traded corporation.Anycor-
poration that is a member of the same
expanded affiliated group (as defined in
§1.1471–5(i)) as a corporation described in
paragraph (c)(1)(i) of this section.
(iii)Certain territory entities.Anyter-
ritory 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 organized. The
termbona fide resident of a U.S. terri-
torymeans an individual who qualifies as
abona fideresident under section 937(a)
and §1.937–1.
(iv)Active NFFEs. Any entity (an
ac-
tive NFFE) if less than 50 percent of its
gross income for the preceding calendar
year is passive income and less than 50 per-
cent of the weighted average percentage of
assets (tested quarterly) held by it are as-
sets that produce or are held for the produc-
tion of passive income, as determined after
the application of paragraph (c)(1)(iv)(B)
of this section (passive assets).
(A)Passive income. Except as provided
in paragraph (c)(1)(iv)(B) of this section,
the termpassive incomemeans the portion
of gross income that consists of—
(1) Dividends, including substitute div-
idend amounts;
(2) Interest;
(3) Income equivalent to interest, in-
cluding substitute interest and amounts re-
ceived from or with respect to a pool of in-
surance contracts if the amounts received
depend in whole or part upon the perfor-
mance of the pool;
(4) Rents and royalties, other than rents
and royalties derived in the active conduct
of a trade or business conducted, at least in
part, by employees of the NFFE;
(5) Annuities;
(6) The excess of gains over losses from
the sale or exchange of property that gives
rise to passive income described in para-
graphs (c)(1)(iv)(A)(1) through (5)ofthis
section;
(7) The excess of gains over losses from
transactions (including futures, forwards,
and similar transactions) in any commodi-
ties, but not including—
(i) Any commodity hedging transaction
described in section 954(c)(5)(A), deter-
mined by treating the entity as a controlled
foreign corporation; or
(ii) Active business gains or losses from
the sale of commodities, but only if sub-
stantially all the foreign entity’s commodi-
ties are property described in paragraph
(1), (2), or (8) of section 1221(a);
2013–15 I.R.B.883April 8, 2013

(8) The excess of foreign currency gains
over foreign currency losses (as defined in
section 988(b)) attributable to any section
988 transaction;
(9) Net income from notional principal
contracts as defined in §1.446–3(c)(1);
(10) Amounts received under cash
value insurance contracts; or
(11) Amounts earned by an insurance
company in connection with its reserves
for insurance and annuity contracts.
(B)Exceptions from passive income
treatment. Notwithstanding paragraph
(c)(1)(iv)(A) of this section, the termpas-
sive incomedoes not include—
(1) Any income from interest, divi-
dends, rents, or royalties that is received
or accrued from a related person to the
extent such amount is properly allocable
to income of such related person that is not
passive income. For purposes of this para-
graph (c)(1)(iv)(B)(1), the term “related
person” has the meaning given such term
by section 954(d)(3) determined by sub-
stituting “foreign entity” for “controlled
foreign corporation” each place it appears
in section 954(d)(3); or
(2)Inthecaseofaforeignentitythat
regularly acts as a dealer in property
described in paragraph (c)(1)(iv)(A)(6)
of this section (referring to the sale or
exchange of property that gives rise to
passive income), forward contracts, option
contracts, or similar financial instruments
(including notional principal contracts and
all instruments referenced to commodi-
ties)—
(i) Any item of income or gain (other
than any dividends or interest) from any
transaction (including hedging transac-
tions and transactions involving physical
settlement) entered into in the ordinary
course of such dealer’s trade or business
as such a dealer; and
(ii) If such dealer is a dealer in securities
(within the meaning of section 475(c)(2)),
any income from any transaction entered
into in the ordinary course of such trade or
business as a dealer in securities.
(C)Methods of measuring assets.For
purposes of this paragraph (c)(1)(iv), the
value of an 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.
(v)Excepted nonfinancial entities.Any
entity described in §1.1471–5(e)(5) (re-
ferring to holding companies, treasury
centers, and captive finance companies
that are members of a nonfinancial group;
start-up companies; entities that are liqui-
dating or emerging from bankruptcy; and
non-profit organizations).
(2)Payments made to a WP, WT, or an
exempt beneficial owner. A withholding
agent is not required to withhold on a with-
holdable payment (or portion thereof) un-
der section 1472(a) and paragraph (b) of
this section if the withholding agent may—
(i) Treat the payee as an NFFE that is a
WP or WT; or
(ii) Treat the payment as made to an
exempt beneficial owner.
(d)Rules for determining payee and
beneficial owner—(1)In general. For pur-
poses of this section, except in the case of
a payee that is a WP or WT, a withholding
agent may treat a withholdable payment as
beneficially owned by the payee as deter-
mined under §1.1471–3. Thus, a withhold-
ing agent may treat a withholdable pay-
ment as beneficially owned by an excepted
NFFE if the withholding agent can reli-
ably associate the payment with valid doc-
umentation to determine the payee’s sta-
tus as an excepted NFFE under the rules
of §1.1471–3(d).
(2)Payments made to an NFFE that is
aWPorWT. A withholding agent may
treat the payee of a withholdable payment
as an NFFE that is a 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)Payments made to a partner or ben-
eficiary of an NFFE that is an NWP or
NWT. A withholding agent may treat a
partner or beneficiary of an NFFE that
is an NWP or NWT, respectively, as the
payee of a withholdable payment under
this section if the withholding agent can re-
liably associate the payment with a valid
Form W–8 or written notification that the
NFFE is a flow-through entity as described
in §1.1471–3(c)(2), including valid docu-
mentation sufficient to establish the chap-
ter 4 status of each payee of the payment
that is a partner or beneficiary, respec-
tively, by applying the rules described in
§1.1471–3(d).
(4)Payments made to a beneficial
owner that is an NFFE. A withholding
agent may treat the beneficial owner of
a withholdable payment as an NFFE that
does not have any substantial U.S. owners
or that has identified all of its substantial
U.S. owners if it can reliably associate the
payment with valid documentation iden-
tifying the beneficial owner as an NFFE
that does not have any substantial U.S.
owners or that has identified all of its sub-
stantial U.S. owners by applying the rules
described in §1.1471–3(d).
(5)Absence of valid documentation.
A withholding agent that cannot reliably
associate the payment with documentation
as described in any of paragraphs (d)(2)
through (4) of this section must treat the
payment as made to a payee in accor-
dance with the presumption rules under
§1.1471–3(f).
(e)Information reporting require-
ments—(1)Reporting on withholdable
payments. A withholding agent that
treats a withholdable payment as made
to any payee described in paragraph (d)
of this section must provide information
about such payee on Form 1042–S and
file a withholding income tax return on
Form 1042 to the extent required under
§1.1474–1(d) and (c), respectively.
(2)Reporting on substantial U.S. own-
ers. A withholding agent that receives
information about any substantial U.S.
owners of an NFFE that is not an ex-
cepted NFFE must report information
about the NFFE’s substantial U.S. owners
in accordance with §1.1474–1(i)(2). See
§1.1471–4(d) for the reporting require-
ments of a participating FFI with respect
to the substantial U.S. owners of account
holders that are NFFEs.
(f)Effective/applicability date.This
section generally applies January 28,
2013. For other dates of applicability, see
§1.1472–1(b).
Par. 12. Section 1.1473–1 is added to
read as follows:
§1.1473–1 Section 1473 definitions.
(a)Definition of withholdable pay-
ment—(1)In general. Except as other-
wise provided in this paragraph (a) and
§1.1471–2(b) (regarding grandfathered
obligations), the termwithholdable pay-
mentmeans—
(i) Any payment of U.S. source FDAP
income (as defined in paragraph (a)(2) of
this section); and
(ii) For any sales or other dispositions
occurring after December 31, 2016, any
gross proceeds from the sale or other dis-
April 8, 20138842013–15 I.R.B.

position (as defined inparagraph (a)(3)(i)
of this section) of any property of a type
that can produce interest or dividends that
are U.S. source FDAP income.
(2)U.S. source FDAP income de-
fined—(i)In general—(A)FDAP in-
come defined. For purposes of chapter
4, the termFDAP incomemeans fixed
or determinable annual or periodic in-
come that is described in §1.1441–2(b)(1)
or §1.1441–2(c) (excluding income de-
scribed in paragraph (a)(2)(vi) of this
section or §1.1441–2(b)(2) (such as gains
derived from the sale of certain property))
and including the types of income enu-
merated in paragraphs (a)(2)(iii) through
(v) of this section.
(B)U.S. source.ThetermU.S. source
means derived from sources within the
United States. A payment is derived from
sources within the United States if it is
income treated as derived from sources
within the United States under sections
861 through 865 and other relevant provi-
sions of the Code. In the case of a payment
of FDAP income for which the source can-
not be determined at the time of payment,
see §1.1471–2(a)(5).
(C)Exceptions to withholding on U.S.
source FDAP income not applicable under
chapter 4. Except as otherwise provided
in paragraph (a)(4) of this section, no
exception to withholding on U.S. source
FDAP income for purposes other than
chapter 4 applies for purposes of deter-
mining whether a payment of such income
is a withholdable payment under chapter
4. Thus, for example, an exclusion from
an amount subject to withholding under
§1.1441–2(a) or an exclusion from taxa-
tion under section 881 does not apply for
purposes of determining whether such in-
come constitutes a withholdable payment.
(ii)Special rule for certain inter-
est. Interest that is described in section
861(a)(1)(A) (relating to interest paid by
foreign branches of domestic corporations
and partnerships) is treated as U.S. source
FDAP income.
(iii)Original issue discount.Therules
described in §1.1441–2(b)(3)(ii) for deter-
mining when an amount representing orig-
inal issue discount is subject to withhold-
ing for chapter 3 purposes apply for pur-
poses of determining when original issue
discount from sources within the United
States is U.S. source FDAP income.
(iv)REMIC residual interests.U.S.
source FDAP incomeincludes an amount
described in §1.1441–2(b)(5).
(v)Withholding liability of payee that
is satisfied by withholding agent.Ifa
withholding agent satisfies a withholding
liability arising under chapter 4 with re-
spect to a withholdable payment from the
withholding agent’s own funds, the sat-
isfaction of such liability is treated as an
additional payment of U.S. source FDAP
income to the payee to the extent that the
withholding agent’s satisfaction of such
withholding liability also satisfies a tax
liability of the payee under section 881
or 871 with respect to the same payment,
and the satisfaction of the tax liability
constitutes additional income to the payee
under §1.1441–3(f) that is U.S. source
FDAP income. In such case, the amount
of any additional payment treated as made
by the withholding agent for purposes of
this paragraph (a)(2)(v) and any tax lia-
bility resulting from such payment shall
be determined under §1.1441–3(f). See
§1.1474–6 regarding the coordination of
the withholding requirements under chap-
ters 3 and 4 in the case of a withholdable
payment that is also subject to withholding
under chapter 3.
(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 inter-
est payment dates.
(vii)Payment of U.S. source FDAP
income—(A)Amount of payment of U.S.
source FDAP income. The amount of U.S.
source FDAP income is the gross amount
of the payment of such income, unreduced
by any deductions or offsets. The rules of
§1.1441–3(b)(1) shall apply to determine
the amount of an interest payment on an
interest-bearing obligation. In the case of
a corporate distribution, the distributing
corporation or intermediary shall deter-
mine the portion of the distribution that
is treated as U.S. source FDAP income
under this paragraph (a)(2) in the same
manner as the distributing corporation or
intermediary determines the portion of the
distribution subject to withholding under
§1.1441–3(c). Any portion of a payment
on a debt instrument or a corporate distri-
bution that does not constitute U.S. source
FDAP income under this paragraph (a)(2)
solely because of a provision other than
the source rules of sections 861 through
865 shall be taken into account as gross
proceeds under paragraph (a)(3) of this
section. For rules regarding the determi-
nation of the amount of a payment of U.S.
source FDAP income under paragraph
(a)(2) of this section made in a medium
other than U.S. dollars, see §1.1441–3(e).
For determining the amount of a pay-
ment of a dividend equivalent, see section
871(m) and the regulations thereunder.
(B)When payment of U.S. source FDAP
income is made. A payment is considered
made when the amount would be includi-
ble in the income of the beneficial owner
under the U.S. tax principles governing
the cash method of accounting. If an FFI
acts as an intermediary with respect to a
payment of U.S. source FDAP income, the
FFI will be treated as making a payment of
such U.S. source FDAP income to the per-
son with respect to which the FFI acts as an
intermediary when itpays or credits such
amount to such person. The following
rules also apply for purposes of this para-
graph (a)(2)(vii)(B): §§1.1441–2(e)(2)
(regarding when a payment is consid-
ered made in the case of income allocated
under section 482); 1.1441–2(e)(3) (re-
garding blocked income); 1.1441–2(e)(4)
(regarding when a dividend is consid-
ered paid); and 1.1441–2(e)(5) (regarding
when interest is considered paid if a for-
eign person has made an election under
§1.884–4(c)(1)).
(3)Gross proceeds defined—(i)Sale
or other disposition—(A)In general.
Except as otherwise provided in this para-
graph (a)(3)(i), the termsale or other
dispositionmeans any sale, exchange, or
disposition of property described in para-
graph (a)(3)(ii) of this section that requires
recognition of gain or loss under section
1001(c), determined without regard to
whether the owner of such property is
subject to U.S. federal income tax with
respect to such sale, exchange, or dispo-
sition. The term sale or other disposition
includes (but is not limited to) sales of se-
curities; redemptions of stock; retirements
and redemptions of indebtedness; entering
into short sales; and a closing transaction
under a forward contract, option, or other
instrumentthatisotherwise a sale. Such
term further includes a distribution from a
2013–15 I.R.B.885April 8, 2013

corporation to the extent the distribution
is a return of capital or a capital gain to
the beneficial owner of the payment. Such
term does not include grants or purchases
of options, exercises of call options for
physical delivery, transfers of securities
for which gain or loss is excluded from
recognition under section 1058, or mere
executions of contracts that require de-
livery of personal property or an interest
therein. For purposes of this section only,
aconstructivesaleunder section 1259 or
a mark to fair market value under section
475 or 1296 is not a sale or disposition.
(B)Special rule for sales effected by
brokers. In the case of a sale effected by
abroker(withthetermeffectdefined in
§1.6045–1(a)(10)), a sale means a sale as
defined in §1.6045–1(a)(9) with respect to
property described in paragraph (a)(3)(ii)
of this section.
(C)Special rule for gross proceeds from
sales settled by a clearing organization.In
the case of a clearing organization that set-
tles sales and purchases of securities be-
tween members of such organization on a
net basis, the gross proceeds from sales or
dispositions are limited to the net amount
paid or credited to a member’s account that
is associated with sales or other disposi-
tions of property described in paragraph
(a)(3)(ii) of this section by such member
as of the time that such transactions are
settled under the settlement procedures of
such organization.
(ii)Property of a type that can produce
interest or dividend payments that would
be U.S. source FDAP income—(A)In gen-
eral. Property is of a type that can pro-
duce interest or dividends payments that
would be U.S. source FDAP income if the
property is of a type that ordinarily gives
rise to the payment of interest or dividends
that would constitute U.S. source FDAP
income, regardless of whether any such
payment is made during the period such
property is held by the person selling or
disposing of such property. Thus, for ex-
ample, stock issued by a domestic corpo-
ration is property of a type that can pro-
duce dividends from sources within the
United States if a dividend from such cor-
poration would be from sources within the
United States, regardless of whether the
stock pays dividends at regular intervals
and regardless of whether the issuer has
any plans to pay dividends or has ever paid
a dividend with respect to the stock.
(B)Contracts producing dividend
equivalent payments. In the case of any
contract that results in the payment of a
dividend equivalent as defined in section
871(m) and the regulations thereunder (in-
cluding as part of a termination payment),
such contract shall be treated as property
that is described in paragraph (a)(3)(ii)(A)
of this section, without regard to whether
the taxpayer is a foreign person subject
to U.S. federal income tax with respect
to such transaction. To the extent that
the proceeds from a termination payment
include the payment of a dividend equiv-
alent, the gross amount of such proceeds
will not include the amount of such divi-
dend equivalent.
(C)Regulated investment company dis-
tributions. The amount of a distribution
that is designated as a capital gain dividend
under section 852(b)(3)(C) or 871(k)(2) is
a payment of gross proceeds to the extent
attributable to property described in para-
graph (a)(3)(ii)(A) of this section.
(iii)Payment of gross proceeds—(A)
When gross proceeds are paid.Withre-
spect to a sale that is effected by a bro-
ker that results in a payment of gross pro-
ceeds as defined in this paragraph (a)(3),
the date the gross proceeds are considered
paid is the date that the proceeds of such
sale are credited to the account of or other-
wise made available to the person entitled
to the payment. If gross proceeds are paid
to a financial institution or other entity act-
ing as an intermediary for the person sell-
ing or otherwise disposing of the property,
the gross proceeds are considered paid to
such person on the date that the proceeds
are credited to the account of or otherwise
made available to such institution.
(B)Amount of gross proceeds. Except
as otherwise provided in this paragraph
(a)(3)—
(1) The amount of gross proceeds from
a sale or other disposition means the total
amount realized as a result of a sale or
other disposition of property described in
paragraph (a)(3)(ii) under section 1001(b);
(2) In the case of a sale effected by
a broker, the amount of gross proceeds
from a sale or other disposition means the
total amount paid or credited to the ac-
count of the person entitled to the payment
increased by any amount not so paid by
reason of the repayment of margin loans.
The broker may (but is not required to)
take commissions with respect to the sale
into account in determining the amount of
gross proceeds;
(3) In the case of a corporate distribu-
tion, the amount treated as gross proceeds
excludes the amount described in para-
graph (a)(2)(vii)(A) of this section that is
treated as U.S source FDAP income;
(4) In the case of a sale of an obli-
gation described in paragraph (a)(2)(vi),
gross proceeds includes any interest ac-
crued between interest payment dates; and
(5) In the case of a sale, retirement, or
redemption of a debt obligation, gross pro-
ceeds excludes the amount of original is-
sue discount treated as U.S. source FDAP
income under paragraph (a)(2)(iii) of this
section.
(4)Payments not treated as withhold-
able payments. The following payments
are not withholdable payments under para-
graph (a)(1) of this section—
(i)Certain short-term obligations.A
payment of interest or original issue dis-
count on short-term obligations described
in section 871(g)(1)(B)(i).
(ii)Effectively connected income.Any
payment to the extent it gives rise to an
item of income that is taken into account
under section 871(b)(1) or 882(a)(1) for
the taxable year. An item of income is
taken into account under section 871(b)(1)
or 882(a)(1) when the income is (or is
deemed to be) effectively connected with
the conduct of a trade or business in the
United States and is includible in the ben-
eficial owner’s gross income for the tax-
able year. An amount of income shall not
be treated as taken into account under sec-
tion 871(b)(1) or 882(a)(1) if the income is
(or is deemed to be) effectively connected
with the conduct of a trade or business in
the United States and the beneficial owner
claims an exception from tax under an in-
come tax treaty because the income is not
attributable to a permanent establishment
in the United States.
(iii)Excluded nonfinancial payments.
Payments for the following: services
(including wages and other forms of
employee compensation (such as stock
options)), the use of property, office and
equipment leases, software licenses, trans-
portation, freight, gambling winnings,
awards, prizes, scholarships, and interest
on outstanding accounts payable arising
from the acquisition of goods or ser-
vices. Notwithstanding the preceding
sentence and except as otherwise provided
April 8, 20138862013–15 I.R.B.

in §1.1471–2(b) (regarding grandfathered
obligations), withholdable payments in-
clude: payments in connection with a
lending transaction (including loans of
securities), a forward, futures, option, or
notional principal contract, or a similar
financial instrument; premiums for in-
surance contracts or annuity contracts;
amounts paid under cash value insurance
or annuity contracts; dividends; interest
(including substitute interest described
in §1.861–2(a)(7)) other than interest
described in the preceding sentence; in-
vestment advisory fees; custodial fees;
and bank or brokerage fees.
(iv)Gross proceeds from sales of ex-
cluded property. Gross proceeds from the
sale or other disposition of any property
that can produce U.S. source FDAP in-
come if all such U.S. source FDAP in-
come would be excluded from the defini-
tion of withholdable payment under para-
graphs (a)(4)(i) through (iii) of this section.
(v)Fractional shares. Payments arising
in sales described in §1.6045–1(c)(3)(ix).
(vi)Offshore payments of U.S. source
FDAP income prior to 2017 (transitional).
A payment of U.S. source FDAP income
made prior to January 1, 2017, with respect
to an offshore obligation if such payment
is made by a person that is not acting as an
intermediary with respect to the payment.
The exception for offshore payments of
U.S. source FDAP income provided in the
preceding sentence shall not apply, how-
ever, in the case of a flow-through en-
tity that has a residual withholding require-
ment with respect to its partners, owners,
or beneficiaries under §1.1471–2(a)(2)(ii).
For purposes of this paragraph (a)(4)(vi),
an intermediary includes a person that acts
as a qualified securities lender as defined
for purposes of chapter 3.
(5)Special payment rules for
flow-through entities, complex trusts,
and estates—(i)In general. This para-
graph (a)(5) provides special rules for a
flow-through entity, complex trust, or es-
tate to determine when such entity must
treat U.S. source FDAP income as having
been paid by such entity to its partners,
owners, or beneficiaries (as applicable
depending on the type of entity).
(ii)Partnerships. An amount of U.S.
source FDAP income is treated as being
paid to a partner under rules similar to the
rules prescribing when withholding is re-
quired 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 is treated as being
paid to a beneficiary of a simple trust under
rules similar to the rules prescribing when
withholding is required for chapter 3 pur-
poses as described in §1.1441–5(b)(2)(ii).
(iv)Complex trusts and estates.An
amount of U.S. source FDAP income is
treated as 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.IfanamountofU.S.
source FDAP income 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 is treated as paid to
the partner or beneficiary at the time the
income is paid to the partnership or trust,
respectively.
(vii)Special rule for determining when
gross proceeds are treated as paid to a
partner, owner, or beneficiary of a flow-
through entity. [Reserved].
(6)Reporting of withholdable pay-
ments. See §1.1474–1(c) and (d) for a
description of the income tax return and
information reporting requirements appli-
cable to a withholding agent that has made
a withholdable payment.
(7)Example.Satisfaction of payee’s chapter 4
liability by withholding agent. Recalcitrant account
holder (RA) is entitled to receive a payment of $100
of U.S. source interest from withholding agent, WA.
The payment is subject to withholding under chap-
ter 4, but is not subject to withholding under section
1442, and RA has no substantive tax liability under
section 881 with respect to this payment. WA pays
the full $100 to RA and, after the date of payment,
pays the $30 of tax due under chapter 4 to the IRS
from its own funds. Because no underlying tax lia-
bility of RA is satisfied, and further because WA and
RA did not execute any agreement for WA to pay this
tax and WA did not have an obligation to pay this tax
apart from the requirements of chapter 4, WA’s pay-
ment of the tax does not give rise to a deemed pay-
ment of U.S. source FDAP income to RA under para-
graph (a)(2)(v) of this section. Thus, WA is not re-
quired to pay any additional tax with respect to this
payment for purposes of chapter 4.
(b)Substantial U.S. owner—(1)Defini-
tion. Except as otherwise provided in para-
graph (b)(4) or (5) of this section, the term
substantial United States owner(orsub-
stantial U.S. owner) means:
(i) With respect to any foreign corpora-
tion, any specified U.S. person that owns,
directly or indirectly, more than 10 percent
of the stock of such corporation (by vote or
value);
(ii) With respect to any foreign partner-
ship, any specified U.S. person that owns,
directly or indirectly, more than 10 percent
of the profits interests or capital interests in
such partnership; and
(iii) In the case of a trust—
(A) Any specified U.S. person treated
as an owner of any portion of the trust
under sections 671 through 679; and
(B) Any specified U.S. person that
holds, directly or indirectly, more than 10
percent of the beneficial interests of the
trust.
(2)Indirect ownership of foreign enti-
ties. For purposes of determining a per-
son’s interest in a foreign entity, the fol-
lowing rules shall apply.
(i)Indirect ownership of stock.Stock
of a foreign corporation that is owned
directly or indirectly by an entity (other
than a participating FFI, a deemed-compli-
ant FFI (excluding an owner-documented
FFI), a U.S. financial institution, a U.S.
person that is not a specified U.S. per-
son, an exempt beneficial owner, or an
excepted NFFE) that is a corporation,
partnership, or trust shall be considered as
being owned proportionately by such en-
tity’s shareholders, partners, or, in the case
of a trust, persons treated as owners under
sections 671 through 679 of any portion
of the trust that includes the stock, and the
beneficiaries of the trust. Stock consid-
ered to be owned by a person by reason
of the application of the preceding sen-
tence shall, for purposes of applying such
sentence, be treated as actually owned by
such person.
(ii)Indirect ownership in a foreign part-
nership or ownership of a beneficial inter-
est in a foreign trust. A capital or profits
interest in a foreign partnership or an own-
ership or beneficial interest (as described
in paragraph (b)(3) of this section) in a for-
eign trust that is owned or held directly or
indirectly by an entity (other than a partic-
ipating FFI, a deemed-compliant FFI (ex-
cluding an owner-documented FFI), a U.S.
2013–15 I.R.B.887April 8, 2013

financial institution, a U.S. person that is
not a specified U.S. person, an exempt ben-
eficial owner, or an excepted NFFE) that
is a corporation, partnership, or trust shall
be considered as being owned or held pro-
portionately by such entity’s shareholders,
partners, or, in the case of a trust, per-
sons treated as owners under sections 671
through 679 of any portion of the trust
that includes the partnership or beneficial
trust interest, and the beneficiaries of the
trust. Partnership or beneficial trust inter-
ests considered to be owned or held by a
person by reason of the application of the
preceding sentence shall, for purposes of
applying such sentence, be treated as actu-
allyownedorheldbysuchperson.
(iii)Ownership and holdings through
options. If a specified U.S. person holds,
directly or indirectly (applying the princi-
ples of paragraphs (b)(2)(i) and (ii) of this
section) an option to acquire stock in a for-
eign corporation, a capital or profits inter-
est in a foreign partnership, or an owner-
ship or beneficial interest in a foreign trust,
such person is considered to own the un-
derlying equity or other ownership interest
in such foreign entity for purposes of this
paragraph (b). For purposes of the preced-
ing sentence, an option to acquire such an
option, and each one of a series of such op-
tions, shall be considered an option to ac-
quire such stock or other ownership inter-
est described in this paragraph (b)(2)(iii).
(iv)Determination of proportionate in-
terest. For purposes of this paragraph (b),
and except as otherwise provided in para-
graph (b)(3) of this section, the determina-
tion of a person’s proportionate interest in
a foreign corporation,partnership, or trust
is based on all of the relevant facts and cir-
cumstances. In making this determination,
any arrangement that artificially decreases
a specified U.S. person’s proportionate in-
terest in any such entity will be disregarded
in determining whether such person is a
substantial U.S. owner. In lieu of apply-
ing the rules of this paragraph (b)(2) to de-
termine whether an owner’s proportionate
interest in a foreign entity meets the 10
percent threshold described in paragraph
(b)(1) of this section, the entity or its with-
holding agent may opt to treat the owner as
a substantial U.S. owner.
(v)Interests owned or held by a re-
lated person. For purposes of determining
whether a person has more than a 10
percent interest in a foreign corporation,
foreign partnership, or foreign trust, the
person must aggregate the ownership or
beneficial interests in the foreign corpora-
tion, foreign partnership, or foreign trust
that are owned or held by any person
related to such person. For purposes of
the preceding sentence, a person is re-
lated to another person if the relationship
between such persons would result in a
disallowance of losses under §§1.267(a)–1
through 1.267(f)–1 or §1.707–1(b). Sec-
tion 1.267(c)–1(a)(4) is applied as if
the family of an individual includes the
spouses of the members of the individual’s
family.
(3)Beneficial interest in a foreign
trust—(i)In general. For purposes of
paragraph (b)(1)(iii)(B) of this section,
a person holds a beneficial interest in a
foreign trust if such person has the right to
receive directly or indirectly (for example,
through a nominee) a mandatory distribu-
tion or may receive, directly or indirectly,
a discretionary distribution from the trust.
For purposes of this section, amandatory
distributionmeans a distribution that is
required to be made pursuant to the terms
of the trust document. Adiscretionary
distributionmeans a distribution that is
made to a person at the discretion of the
trustee or a person with a limited power of
appointment of such trust.
(ii)Determining the 10 percent thresh-
old in the case of a beneficial interest in a
foreign trust. A person will be treated as
holding directly or indirectly more than 10
percent of the beneficial interest in a for-
eign trust if—
(A) The beneficiary receives, directly
or indirectly, only discretionary distribu-
tions from the trust and the fair market
value of the currency or other property dis-
tributed, directly or indirectly, from the
trust to such person during the prior cal-
endar year exceeds 10 percent of the value
of either all of the distributions made by
the trust during that year or all of the assets
held by the trust at the end of that year;
(B) The person is entitled to receive,
directly or indirectly, mandatory distribu-
tions from the trust and the value of the
person’s interest in the trust, as determined
under section 7520, exceeds 10 percent of
the value of all the assets held by the trust;
or
(C) The person is entitled to receive,
directly or indirectly, mandatory distribu-
tions and may receive, directly or indi-
rectly, discretionary distributions from the
trust, and the value of the person’s inter-
est in the trust, determined as the sum of
the fair market value of all of the currency
or other property distributed from the trust
at the discretion of the trustee during the
prior calendar year to the person and the
value of the person’s interest in the trust as
determined under section 7520 at the end
of that year, exceeds either 10 percent of
the value of all distributions made by such
trust during the prior calendar year or 10
percent of the value of all the assets held
by the trust at the end of that year.
(4)Exceptions—(i)De minimis amount
or value exception. A specified U.S. per-
son is not treated as a substantial U.S.
owner if—
(A) The fair market value of the cur-
rency or other property distributed, di-
rectly or indirectly, from the trust to such
specified U.S. person during the prior cal-
endar year is $5,000 or less and,
(B) In the case of a specified U.S. per-
son that is entitled to receive mandatory
distributions, the value of such person’s in-
terest in the trust is $50,000 or less.
(ii)Trusts wholly owned by certain U.S.
persons. A trust that is treated as owned
only by U.S. persons under sections 671
through 679 is not required to treat any of
its beneficiaries as substantial U.S. own-
ers.
(5)Special rule for certain financial
institutions. In the case of any financial in-
stitution described in §1.1471–5(e)(1)(iii)
or (iv) (referring to investment entities
and specified insurance companies), this
section shall be applied by substituting “0
percent” for “10 percent” in each place
that it appears. Additionally, in the case
of a financial institution described in
§1471–5(e)(1)(iii) that is a trust, the rules
of paragraph (b)(3) and (4) of this section
(referring to beneficial interests in a trust)
shall be applied by substituting “calendar
year” for “prior calendar year” in each
place that it appears.
(6)Determination dates for substan-
tial U.S. owners. A foreign entity may
make the determination of whether it has
one or more direct or indirect substantial
U.S. owners as of the last day of such
entity’s accounting year or as of the date
on which such foreign entity provides the
documentation described in §1.1471–3(d)
to the withholding agent for which such
determinationisrequiredtobemade.See
April 8, 20138882013–15 I.R.B.

§1.1471–4(c) for when a participating FFI
is required to obtain documentation with
respect to its account holders.
(7)Examples. The following examples
illustrate the provisions of paragraph (b) of
this section:
Example 1.Indirect ownership. U, a specified
U.S. person, owns directly 100% of the sole class of
stock of F1, a foreign corporation. F1 owns directly
90% of the sole class of stock of F2, a foreign cor-
poration, and U owns directly the remaining 10% of
the sole class of stock of F2. F2 owns directly 10%
of the sole class of stock of F3, a foreign corporation,
and U owns directly 3% of the sole class of stock of
F3. U is treated as owning 13% (3% directly and 10%
indirectly) of the sole class of stock of F3 and 100%
(10% directly and 90% indirectly) of the sole class of
stock of F2 for purposes of this paragraph (b). U is a
substantial U.S. owner of F1, F2, and F3.
Example 2.Indirect ownership through entities
that are specified U.S. persons. U, a specified U.S.
person, owns directly 100% of the sole class of stock
of US1, a U.S. corporation that is a specified U.S.
person. US1 owns directly 100% of the sole class of
stock of US2, a U.S. corporation that is a specified
U.S. person. US2 owns directly 15% of the sole class
of stock of FC, a foreign corporation. For purposes
of this paragraph (b), U, US1, and US2 are all sub-
stantial U.S. owners of FC.
Example 3.Determining the 10% threshold in
the case of a beneficial interest in a foreign trust.
U, a U.S. citizen, holds an interest in FT1, a for-
eign trust, under which U may receive discretionary
distributions from FT1. U also holds an interest in
FT2, a foreign trust, and FT2, in turn, holds an in-
terest in FT1 under which FT2 may receive discre-
tionary distributions from FT1. U receives $25,000
from FT1 in Year 1. FT2 receives $120,000 from
FT1 in Year 1 and distributes the entire amount to its
beneficiaries in Year 1. The distribution from FT1
is FT2’s only source of income and FT2’s distribu-
tions in Year 1 total $120,000. U receives $40,000
from FT2 in Year 1. FT1’s distributions in Year 1
total $750,000. U’s discretionary interest in FT1 is
valued at $65,000 at the end of Year 1 and therefore
does not meet the 10% threshold as determined un-
der paragraph (b)(3)(ii)(A). U’s discretionary interest
in FT2, however, is valued at $40,000 at the end of
Year 1 and therefore meets the 10% threshold as de-
termined under paragraph (b)(3)(ii)(A).
Example 4.Determining ownership (determina-
tion date). F, a foreign corporation that is an NFFE,
has a calendar year accounting year. On December
31 of Year 1, U, a specified U.S. person, owns 12%
of the sole class of outstanding stock of F. In March
of Year 2, F redeems a portion of U’s stock and re-
duces U’s ownership of F to 9%. In May of Year
2, F opens an account with P, a participating FFI,
and delivers to P the documentation required under
§1.1471–3(d). At the time F opens its account with
P, U is the only specified U.S. person that directly or
indirectly owns stock in F. Because of the redemp-
tion, U’s interest in F is 9% on the date F opens its
account with P. Pursuant to paragraph (b)(6) of this
section, F may determine whether it has a substantial
U.S. owner as of the date it provides the documenta-
tion required under §1.1471–3(d) to P, which would
be the day it opens the account. As a result, F may
indicate in its §1.1471–3(d) documentation that it has
no substantial U.S. owners.
(c)Specified U.S. person.Theterm
specified United States person(orspeci-
fied U.S. person) means any U.S. person
other than—
(1) A corporation the stock of which
is regularly traded on one or more estab-
lished securities markets, as described in
§1.1472–1(c)(1)(i);
(2) Any corporation that is a mem-
ber of the same expanded affiliated
group as a corporation described in
§1.1472–1(c)(1)(i);
(3) Any organization exempt from tax-
ation under section 501(a) or an individ-
ual retirement plan as defined in section
7701(a)(37);
(4) The United States or any wholly
owned agency or instrumentality thereof;
(5) Any State, the District of Colum-
bia, any U.S. territory, any political sub-
division of any of the foregoing, or any
wholly owned agency or instrumentality of
any one or more of the foregoing;
(6) Any bank as defined in section 581;
(7) Any real estate investment trust as
definedinsection856;
(8) Any regulated investment company
asdefinedinsection851oranyentityreg-
istered with the Securities Exchange Com-
mission under the Investment Company
Act of 1940 (15 U.S.C. 80a–64);
(9) Any common trust fund as defined
in section 584(a);
(10) Any trust thatis exempt from tax
under section 664(c) or is described in sec-
tion 4947(a)(1);
(11) A dealer in securities, commodi-
ties, or derivative financial instruments
(including notional principal contracts,
futures, forwards, and options) that is
registered as such under the laws of the
United States or any State;
(12) A broker; and
(13) Any tax exempt trust under a sec-
tion 403(b) plan or section 457(g) plan.
(d)Withholding agent—(1)In general.
Except as provided in this paragraph (d),
the termwithholding agentmeans any per-
son, U.S. or foreign, in whatever capacity
acting, that has the control, receipt, cus-
tody, disposal, or payment of a withhold-
able payment or foreign passthru payment.
(2)Participating FFIs and regis-
tered deemed-compliant FFIs as with-
holding agents. The term withholding
agent includes a participating FFI that
has the control, receipt, custody, dis-
posal, or payment of a passthru payment
(as defined in §1.1471–5(h)). The term
withholding agent also includes a reg-
istered deemed-compliant FFI to the
extent that such FFI is required to with-
hold on a passthru payment as part of
the conditions for maintaining its sta-
tus as a deemed-compliant FFI under
§1.1471–5(f)(1)(ii). For the withholding
requirements of a participating FFI, in-
cluding the requirement to withhold with
respect to limited branches and limited
FFIs that are in the same expanded affil-
iated group as the participating FFI, see
§§1.1471–4(b) and 1.1472–1(a).
(3)Grantor trusts as withholding
agents. The term withholding agent in-
cludes a grantor trust with respect to
a withholdable payment or a foreign
passthru payment (in the case of a grantor
trust that is a participating FFI) made to
a person treated as an owner of the trust
under sections 671 through 679. For pur-
poses of determining when a payment
is treated as made to such a person, see
§1.1473–1(a)(5)(v).
(4)Deposit and return requirements.
See §1.1474–1(b) for a withholding
agent’s requirement to deposit any tax
withheld, and §1.1474–1(c) and (d) for
the requirement to file income tax and
information returns (including the special
allowance in §1.1474–1(b)(2) for par-
ticipating FFIs with respect to dormant
accounts).
(5)Multiple withholding agents.When
several persons qualify as a withholding
agent with respect to a single payment,
only one tax is required to be withheld
and deposited. See §1.1474–1(a). A
person who, as a nominee described in
§1.6031(c)–1T, has furnished to a partner-
shipalloftheinformationrequiredtobe
furnished under §1.6031(c)–1T(a) shall
not be treated as a withholding agent if the
person has notified the partnership that it
is treating the provision of information to
the partnership as a discharge of its obli-
gations as a withholding agent.
(6)Exception for certain individuals.
An individual is not a withholding agent
with respect to a withholdable payment
made by the individual outside the course
of such individual’s trade or business (in-
cludingasanagentwithrespecttomaking
or receiving such payment).
2013–15 I.R.B.889April 8, 2013

(e)Foreign entity.Thetermforeign
entitymeans any entity that is not a U.S.
person and includes a territory entity.
(f)Effective/applicability date.This
section generally applies January 28,
2013. For other dates of applica-
bility see §§1.1473–1(a)(1)(ii) and
1.1473–1(a)(4)(vi).
Par. 13. Section 1.1474–1 is added to
read as follows:
§1.1474–1 Liability for withheld tax and
withholding agent reporting.
(a)Payment and returns of tax with-
held—(1)In general. A withholding agent
is required to deposit any tax withheld pur-
suanttochapter4asprovidedunderpara-
graph (b) of this section and to make the re-
turns prescribed by paragraphs (c) and (d)
of this section. When several persons qual-
ify as withholding agents with respect to a
single payment, only one tax is required to
be withheld and deposited.
(2)Withholding agent liability.A
withholding agent that is required to with-
hold with respect to a payment under
§1.1471–2(a), 1.1471–4(b) (in the case of
a participating FFI), or 1.1472–1(b) but
fails either to withhold or to deposit any
tax withheld with an authorized financial
institution, as required under paragraph
(b) of this section, is liable for the amount
of tax not withheld and deposited.
(3)Use of agents—(i)In general.Ex-
cept as otherwise provided in this para-
graph (a)(3), a withholding agent may au-
thorize an agent to fulfill its obligations
under chapter 4. The acts of an agent
of a withholding agent (including the re-
ceipt of withholding certificates, the pay-
ment of amounts subject to withholding,
the withholding and deposit of tax with-
held, and the reporting required on the rel-
evant form) are imputed to the withholding
agent on whose behalf it is acting.
(ii)Authorized agent.Anagentisau-
thorized only if—
(A) There is a written agreement be-
tween the withholding agent and the per-
son acting as agent;
(B) 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;
(C) 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 chapter
4; and
(D) The withholding agent remains
fully liable for the acts of its agent (or 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 Code.
(iii)Liability of withholding agent act-
ing through an agent. A withholding agent
acting through an agent is liable for any
failure of the agent, such as a failure to
withhold an amount or make a 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. Except as otherwise
provided in the QI, WP, or WT agreement,
an agent of a withholding agent is sub-
ject to the same withholding and report-
ing obligations that apply to any withhold-
ing agent under the provisions of chapter 4
and does not benefit from the special pro-
cedures or exceptionsthatapplytoaQI,
WP, or WT. If the agent is a foreign person,
however, a U.S. withholding agent may
treat the acts of the foreign agent as its own
for purposes of determining whether it has
complied with the provisions of chapter
4. The withholding agent’s liability un-
der paragraph (a)(2) of this section will ex-
ist even if the agent is also a withholding
agent and is itself separately liable for fail-
ure to comply with the provisions of chap-
ter 4. The same tax, interest, or penalties,
however, shall not be collected more than
once.
(4)Liability for failure to obtain docu-
mentation timely or to act in accordance
with applicable presumptions—(i)In gen-
eral. A withholding agent that cannot
reliably associate a payment with docu-
mentation on the date of payment and that
does not withhold under §1.1471–2(a),
1.1471–4(b), or 1.1472–1(b), or withholds
at less than the 30 percent rate prescribed,
is liable under this section for the tax re-
quired to be withheld under §1.1471–2(a),
1.1471–4(b), or 1.1472–1(b) (including
interest, penalties, or additions to tax oth-
erwise applicable in respect of the failure
to deduct and withhold) unless—
(A) The withholding agent has ap-
propriately relied on the presumptions
described in §1.1471–3(f) in order to treat
the payment as exempt from withholding;
or
(B) The withholding agent obtained
after the date of payment valid docu-
mentation that meets the requirements
of §1.1471–3(c)(7) to establish that the
payment was, in fact, exempt from with-
holding.
(ii)Withholding satisfied by another
withholding agent. If a withholding
agent fails to deduct and withhold any
amount required to be deducted and with-
held under §1.1471–2(a), 1.1471–4(b), or
1.1472–1(b), and the tax is satisfied by
another withholding agent or is otherwise
paid, then the amount of tax required to
be deducted and withheld shall not be
collected from the first-mentioned with-
holding agent. However, the withholding
agent is not relieved from liability in any
such case for any interest or penalties or
additions to tax otherwise applicable in re-
spect of the failure to deduct and withhold.
(b)Payment of withheld tax—(1)In
general. Except as otherwise provided
in this paragraph (b), every withhold-
ing agent who withholds tax pursuant to
chapter 4 shall deposit such tax with an au-
thorized financial institution as provided
in §1.6302–2(a) or by electronic funds
transfer as provided under §31.6302–1(h)
of this chapter. If for any reason the total
amount of tax required to be deposited for
any calendar year pursuant to the income
tax return described in paragraph (c) of
this section has not been deposited pur-
suant to §1.6302–2, the withholding agent
shall pay the balance of such tax due for
such year at such place as the IRS shall
specify. The tax shall be paid when filing
the return described in paragraph (c)(1) of
this section for such year, unless the IRS
specifies otherwise. See §1.1471–4(b)(6)
for the special rule allowing participating
FFIs to set aside in escrow amounts with-
held with respect to dormant accounts.
(2)Special rule for foreign passthru
payments and payments of gross proceeds
that include an undetermined amount of
income subject to tax. [Reserved].
(c)Income tax return—(1)In general
.
Every withholding agent shall file an in-
cometaxreturnonForm1042,“Annual
April 8, 20138902013–15 I.R.B.

Withholding Tax Return for U.S. Source
Income of Foreign Persons,” (or such other
form as the IRS may prescribe) to report
chapter 4 reportable amounts (as defined
in paragraph (d)(2)(i) of this section). This
incometaxreturnshallbefiledonthesame
incometaxreturnusedtoreportamounts
subject to reporting for chapter 3 pur-
poses as described in §1.1461–1(b). The
return must show the aggregate amount
of payments that are chapter 4 reportable
amounts and must report the tax with-
held for the preceding calendar year by
the withholding agent, in addition to any
information required by the form and its
accompanying instructions. Withholding
certificates and other statements or infor-
mation provided to a withholding agent
are not required to be attached to the re-
turn. A Form 1042 must be filed under
this paragraph (c)(1) even if no tax was
required to be withheld for chapter 4 pur-
poses during the preceding calendar year.
The withholding agent must retain a copy
of Form 1042 for the applicable period of
limitations on assessment and collection
with respect to the amounts required to
be reported on the Form 1042. See sec-
tion 6501 and the regulations thereunder
for the applicable period of limitations.
Adjustments to the total amount of tax
withheld described in §1.1474–2 shall be
stated on the return as prescribed by the
form and its accompanying instructions.
(2)Participating FFIs, registered
deemed-compliant FFIs, and U.S.
branches treated as U.S. persons.Ex-
cept as otherwise provided under an FFI
agreement, a participating FFI or reg-
istered deemed-compliant FFI shall file
Form 1042 in accordance with paragraph
(c)(1) of this section to report chapter 4
reportable amounts for which the partici-
pating FFI or registered deemed-compliant
FFI is required to file Form 1042–S, as
described in paragraph (d)(4)(iii) of this
section. A participating FFI or registered
deemed-compliant FFI with a U.S. branch
that is treated as a U.S. person must ex-
clude from Form 1042 payments made
and taxes withheld by such U.S. branch.
A U.S. branch that is treated as a U.S.
person shall file a separate Form 1042 in
accordance with paragraph (c)(1) of this
section and the instructions on the form to
report chapter 4 reportable amounts.
(3)Amended returns.Anamendedre-
turn under this paragraph (c)(3) must be
filed on Form 1042. An amended return
must include such information as the form
or its accompanying instructions shall re-
quire, including, with respect to any infor-
mation that has changed from the time of
the filing of the return, the information that
was shown on the original return and the
corrected information.
(d)Information returns for payment
reporting—(1)Filing requirement—(i)In
general. Every withholding agent must
file an information 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 preceding calendar year. Ex-
cept as otherwise provided in paragraphs
(d)(4)(ii)(B) (certain unknown recipients)
and (d)(4)(i)(B) and (d)(4)(iii)(A) of this
section (describing payees includable in
reporting pools of a participating FFI or
registered deemed-compliant FFI), a sep-
arate Form 1042–S must be filed with the
IRS for each recipient of an amount sub-
ject to reporting under paragraph (d)(2)(i)
of this section and for each separate type
of payment made to a single recipient in
accordance with paragraph (d)(4)(i) of
this section. The Form 1042–S shall be
prepared in such manner as the form and
its accompanying instructions prescribe.
One copy of the Form 1042–S shall be
filed with the IRS on or before March 15
of the calendar year following the year
in which the amount subject to report-
ing was paid, with a transmittal form as
provided in the instructions to the form.
Withholding certificates, certifications,
documentary evidence, or other state-
ments or documentation provided to a
withholding agent are not required to be
attached to the form. A copy of the Form
1042–S must be furnished to the recip-
ient 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 copy provided to the per-
sons described in the preceding sentence
may show more than one type of income
or other payment subject to reporting on
the Form 1042–S. The withholding agent
must retain a copy of each Form 1042–S
for the period of limitations on assess-
ment and collection applicable to the tax
reportable 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 requirements of
participating FFIs and deemed-compliant
FFIs.
(ii)Recipient—(A)Defined.Ex-
cept as otherwise provided in paragraph
(d)(1)(ii)(B) of this section, the termre-
cipientunder this paragraph (d) means a
person that is a recipient of a chapter 4
reportable amount, and includes—
(1) With respect to a payment of U.S.
source FDAP income—
(i) A QI (including a QI that is a foreign
branch of a U.S. person);
(ii) A WP or WT;
(iii) A participating FFI or a registered
deemed-compliant FFI that is an NQI,
NWP, or NWT (including its U.S. branch
that is not treated as a U.S. person) and that
provides its withholding agent with suffi-
cient information to determine the portion
of the payment allocable to its reporting
pools of recalcitrantaccount holders, pay-
ees that are nonparticipating FFIs, and
payees that are U.S. persons described in
paragraph (d)(4)(i)(B) of this section;
(iv) An account holder or payee to the
extent that the withholding agent issues a
Form 1042–S to such account holder or
payee;
(v) An FFI that is a beneficial owner of
the payment (includinga limited branch of
the FFI);
(vi) A U.S. branch of a participating FFI
or registered deemed-compliant FFI that is
treated as a U.S. person;
(vii) A territory financial institution
treated as a U.S. person;
(viii) An excepted NFFE that is not act-
ing as an agent or intermediary with re-
spect to the payment;
(ix) A passive NFFE except to
the extent described in paragraph
(d)(1)(ii)(A)(1)(x
) (certain flow-through
NFFEs) of this section;
(x) A foreign person that is a partner
or beneficiary in a flow-through entity
that is an NFFE when the withholding
agent treats such partner or beneficiary as
a payee and beneficial owner because the
requirements of §1.1472–1(d)(3) are met;
2013–15 I.R.B.891April 8, 2013

(xi) An exempt beneficial owner of a
payment, including when the payment is
made to such owner through an FFI (in-
cluding a nonparticipating FFI) that pro-
vides documentation and information suf-
ficient for a withholding agent to deter-
mine the portion of the payment allocable
to such owner; and
(xii) Any person (including a
flow-through entity) or U.S. branch of a
participating FFI or reporting Model 1
FFI receiving such income that is (or is
deemed to be) effectively connected with
the conduct of its trade or business in the
United States;
(2) With respect to a payment other than
U.S. source FDAP income. [Reserved];
and
(3)Anyotherpersonrequiredtobere-
ported as a recipient by Form 1042–S, its
accompanying instructions, under an FFI
agreement, or paragraph (d)(4)(iii) of this
section with respect to the Form 1042–S
reporting requirements of a participating
FFI.
(B)Persons that are not recipients.Per-
sons that are not recipients include—
(1) With respect to a payment of U.S.
source FDAP income—
(i) A participating FFI, registered
deemed-compliant FFI, or certified
deemed-compliant FFI that is an NQI,
NWP, or NWT (including its U.S. branch
that is not treated as a U.S. person) and
that fails to provides its withholding agent
with sufficient information to allocate the
payment to its account holders and payees;
(ii) A financial institution (other than a
nonparticipating FFI) to the extent that the
withholding agent issues a Form 1042–S to
the FFI’s account holder or payee;
(iii) A participating FFI or a registered
deemed-compliant FFI that is an NQI,
NWP, or NWT (including its U.S. branch
that is not treated as a U.S. person) to the
extent it provides its withholding agent
with sufficient information to allocate the
payment to its account holders and payees
that are exempt from withholding under
chapter 4;
(iv) An account holder or payee of a par-
ticipating FFI or registered deemed-com-
pliant FFI (including an account holder or
payee of a U.S. branch of such FFI that
is not treated as a U.S. person) that is in-
cluded in the FFI’s reporting pools de-
scribed in paragraph (d)(4)(i)(B) of this
section;
(v) A nonparticipating FFI that acts as
an intermediary with respect to a payment
or that is a flow-through entity (including
a limited branch);
(vi) An account holder or payee of a
nonparticipating FFI except to the extent
described in paragraph (d)(1)(ii)(A)(1)(xi)
of this section for anexempt beneficial
owner;
(vii) Except as provided in paragraph
(d)(1)(ii)(A)(1)(i) of this section (referring
to a QI that is a foreign branch of a U.S.
person), a wholly owned entity that is
disregarded under §301.7701–2(c)(2) of
this chapter as an entity separate from its
owner;
(viii) A territory financial institu-
tion to the extent provided in paragraph
(d)(4)(i)(D)(2)and(3) of this section; and
(ix) A flow-through entity that is a
passive NFFE to the extent that the with-
holding agent treats a foreign person
that is a partner or beneficiary of the
NFFE as a recipient pursuant to paragraph
(d)(1)(ii)(A)(1)(x) of this section;
(2) With respect to a payment other than
U.S. source FDAP income. [Reserved];
and
(3) Any other person not treated as a re-
cipient on Form 1042–S, its accompanying
instructions, or under an FFI agreement.
(2)Amounts subject to reporting—(i)In
general. Subject to paragraph (d)(2)(iii) of
this section, the termchapter 4 reportable
amountmeans each of the following
amounts reportable on a Form 1042–S for
purposes of chapter 4 —
(A) U.S. source FDAP income that
is reportable on Form 1042–S under
§1.1461–1(c)(2)(i) or that is otherwise
subject to withholding under chapter 4
paid on or after January 1, 2014;
(B) Gross proceeds subject to withhold-
ing under chapter 4;
(C) A foreign passthru payment subject
to withholding under chapter 4; and
(D) A foreign reportable amount paid
by a participating FFI to the extent re-
porting of such amount is required un-
der paragraph (d)(4)(iii)(C) of this section.
The termforeign reportable amountmeans
a payment of FDAP income as defined
in §1.1473–1(a)(2)(i)(A) that would be a
withholdable payment if paid by a U.S.
person.
(ii)Exception to reporting. Except
as otherwise provided in this paragraph
(d)(2)(ii), a chapter 4 reportable amount
does not include an amount paid to a U.S.
person if the withholding agent treats such
U.S. person as a payee for purposes of de-
termining whether withholding is required
under §§1.1471–2 and 1.1472–1. A chap-
ter 4 reportable amount does, however,
include an amount paid to a participating
FFI or registered deemed-compliant FFI to
the extent allocable to its reporting pool of
payees that are U.S. persons as described
in paragraph (d)(4)(i)(B) of this section.
(iii)Coordination with chapter 3.A
payment that is not subject to reporting
under this paragraph (d)(2) may be subject
to chapter 3 reporting on Form 1042–S
to the extent provided on such form and
its accompanying instructions or under
§1.1461–1(c)(2). The recipient informa-
tion and other information required to be
reported on Form 1042–S for purposes of
chapter 4 shall be in addition to the infor-
mationrequiredtobeprovidedonForm
1042–S for purposes of chapter 3.
(3)Required information.Theinfor-
mation required to be furnished under this
paragraph (d)(3) shall be based upon the
informationprovidedbyoronbehalfofthe
recipient of an amount subject to reporting
(as corrected and supplemented based on
the withholding agent’s actual knowledge)
or the presumption rules provided under
§1.1471–3(f) for a U.S. withholding agent
and under §1.1471–4(c)(3)(ii) and (c)(4)(i)
for a participating FFI. The Form 1042–S
must include the following information, if
applicable—
(i) The name, address, and EIN or GIIN
(as applicable) of the withholding agent
(as required on the instructions to the
form) and the withholding agent’s status
for chapter 3 and chapter 4 purposes (as
defined in the instructions to the form);
(ii) A description of each category of
income or payment made based on the in-
come and payment codes provided on the
form (for example, interest, dividends, and
gross proceeds) and the aggregate amount
in each category expressed in U.S. dollars;
(iii) For the reporting required by
a participating FFI under paragraph
(d)(4)(iii)(C) of this section, the aggregate
amount of foreign reportable amounts paid
to a nonparticipating FFI in addition to the
information described in this paragraph
(d)(3);
(iv) The rate and amount of withhold-
ing applied or, in the case of a payment
of U.S. source FDAP income not subject
April 8, 20138922013–15 I.R.B.

to withholding and reportable under para-
graph (d)(2)(i)(A) of this section, the ba-
sis for exempting the payment from with-
holding under chapter 4 based on exemp-
tion codes provided on the form);
(v) The name and address of the recipi-
ent and its TIN or GIIN (as applicable) and
foreign taxpayer identification number and
date of birth (as required on the instruc-
tions to the form);
(vi) In the case of a payment to a person
(including a flow-through entity or U.S.
branch) for which the payment is reported
as effectively connected with its conduct of
a trade or business in the United States or,
in the case of a U.S. branch that is treated
as a U.S. person, the EIN used by the per-
son or U.S. branch to file its U.S. income
tax returns;
(vii) The name, address of any FFI,
flow-through entity that is an NFFE, or
U.S. branch or territory financial institu-
tion that is not treated as a U.S. person
when an account holder or owner of such
entity (including an unknown recipient or
owner) is treated as the recipient of the
payment;
(viii) The EIN or GIIN (as applicable),
status for chapter 3 and chapter 4 pur-
poses (as required on the instructions to
the form) of an entity reported under para-
graph (d)(3)(vii) of this section;
(ix) The country of incorporation or or-
ganization (based on the country codes
provided on the form) of any entity the
name of which appears on the form; and
(x) Such information as the form or in-
structions may require in addition to, or
in lieu of, information required under this
paragraph (d)(3).
(4)Method of reporting—(i)Payments
by U.S. withholding agent to recipients.
Except as otherwise provided in this para-
graph (d)(4) or on the Form 1042–S and
its accompanying instructions, a withhold-
ing agent that is a U.S. person (including a
U.S. branch that is treated as a U.S. per-
sonandexcludingaforeignbranchofa
U.S. person that is a QI) and that makes a
payment of a chapter 4 reportable amount
must file a separate form for each recipi-
ent that receives such amount. Except as
otherwise provided on Form 1042–S or its
instructions, only payments for which the
income or payment code, exemption code,
withholding rate, and recipient code are
the same may be reported on a single form
filed with the IRS. See paragraph (d)(4)(ii)
of this section for reporting of payments
made to a person that is not a recipient and
that is otherwise required to be reported on
Form 1042–S.
(A)Payments to certain entities that are
beneficial owners. If the beneficial owner
of a payment made by a U.S. withhold-
ing agent is an exempt beneficial owner,
an FFI, an NFFE, or a territory entity, it
must complete Form 1042–S treating such
entity as the recipient of the payment.
(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 withholding agent
receives pooled information regarding
such FFI’s account holders and payees, a
U.S. withholding agent must complete a
separate Form 1042–S issued to the partic-
ipating FFI, registered deemed-compliant
FFI, or QI (as applicable) as the recipient
with respect to each such pool of account
holders or payees. See §1.1471–2(a)(2)(i)
for the requirement of a withholding
agenttowithholdonpaymentsofU.S.
source FDAP income made to a partic-
ipating FFI or registered deemed-com-
pliant 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 section
for U.S. source FDAP income that is re-
portable 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 partici-
pating FFIs, deemed-compliant FFIs, or
QIs 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)AmountspaidtoaU.S.branchof
a participating FFI or registered deemed-
compliant FFI. A U.S. withholding agent
making a payment of U.S. source FDAP
income to a U.S. branch of a participating
FFI or registered deemed-compliant FFI
shall complete Form 1042–S as follows—
(1) If the U.S. branch is treated as a
U.S. person, the withholding agent treats
amounts paid as effectively connected
with the conduct of the branch’s trade
or business in the United States, or the
U.S. branch is the beneficial owner of the
payment, the withholding agent must file
Form 1042–S reporting the U.S. branch as
the recipient;
(2) If the U.S. branch is not treated
as a U.S. person and provides the with-
holding agent with a withholding certifi-
cate that transmits information regarding
itsreportingpoolsasdescribed in para-
graph (d)(4)(i)(B) of this section or in-
formation regarding each recipient that is
an account holder or payee of the U.S.
branch, the withholding agent must com-
plete a separate Form 1042–S issued to the
U.S. branch for each such pool to the ex-
tent required on the form and its accom-
panying instructions or must complete a
separate Form 1042–S issued to each re-
cipient whose documentation is associated
with the U.S. branch’s withholding certifi-
cate as described in paragraph (d)(4)(ii)(A)
of this section and report the U.S. branch as
an entity not treated as a recipient; or
(3) If the U.S. branch is not treated as a
U.S. person, to the extent its fails to pro-
vide sufficient information regarding its
account holders or payees, the withholding
agent shall report the recipient of the pay-
ment as an unknown recipient to the ex-
tent recipient information is not provided
and report the U.S. branch as provided in
paragraph (d)(4)(ii)(A) of this section for
an entity not treated as a recipient.
(D)Amounts paid to territory financial
institutions that are flow-through entities
or acting as intermediaries.AU.S.with-
holding agent making a withholdable pay-
ment to a territory financial institution that
is a flow-through entity or that acts as an
intermediary must complete Form 1042–S
as follows—
(1) If the territory financial institution
is treated as a U.S. person or is the bene-
ficial owner of the payment, the withhold-
2013–15 I.R.B.893April 8, 2013

ing agent must file Form 1042–S treating
the territory financial institution as the re-
cipient;
(2) If the territory financial institu-
tion is not treated as a U.S. person and
provides the withholding agent with a
withholding certificate that transmits in-
formation regarding each recipient that
is an partner, beneficiary, owner, account
holder, or payee, the withholding agent
must complete a separate Form 1042–S
for each recipient whose documentation
is associated with the territory financial
institution’s withholding certificate as de-
scribed in paragraph (d)(4)(ii)(A) of this
section and must report the territory finan-
cial institution under that paragraph; or
(3) If the territory financial institution is
not treated as a U.S. person, to the extent
its fails to provide sufficient information
regarding its partners, beneficiaries, own-
ers, account holders or payees, the with-
holding agent shall report the recipient of
the payment as an unknown recipient and
report the territory financial institution as
provided in paragraph (d)(4)(ii)(A) of this
section for an entity not treated as a recip-
ient.
(E)Amounts paid to NFFEs.AU.S.
withholding agent that makes payments of
chapter 4 reportable amounts to a passive
NFFE shall complete Forms 1042–S treat-
ing the passive NFFE as the recipient, ex-
cept to the extent such withholding agent
treats a partner, beneficiary, or owner in a
flow-through entity that is a passive NFFE
as a payee. In the case of an excepted
NFFE that is a flow-through entity, see
§1.1461–1(c)(4)(A) for the extent to which
reporting is required with respect to the
partners, beneficiaries, or owners of such
entities.
(ii)Payments made by withholding
agents to certain entities that are not re-
cipients—(A)Entities that provide infor-
mation for a withholding agent to perform
specific payee reporting. If a U.S. with-
holding agent makes a payment of a chap-
ter 4 reportable amount to a flow-through
entity that is a passive NFFE, a nonpar-
ticipating FFI receiving a payment on
behalf of an exempt beneficial owner, or
a participating FFI or deemed-compliant
FFI that is an NQI, NWP, or NWT, ex-
cept as otherwise provided in paragraph
(d)(4)(i)(B) of this section, the withhold-
ing agent must complete a separate Form
1042–S for each recipient that is a partner,
beneficiary, owner, or account holder of
such entity to the extent the withholding
agent can reliably associate the payment
with valid documentation (under the rules
of §1.1471–3(c) and (d)) provided by
such entity, as applicable, with respect to
each such recipient. If a payment is made
through tiers of such entities, the with-
holding agent must nevertheless complete
Form 1042–S for the recipient to the extent
it can reliably associate the payment with
documentation provided with respect to
that recipient. A withholding agent that is
completing a Form 1042–S for a recipient
described in this paragraph (d)(4)(ii)(A)
must include on the form the information
described in paragraph (d)(3)(vii) of this
section for the entity through which the
recipient directly receives the payment.
(B)Nonparticipating FFI that is a flow-
through entity or intermediary. If a with-
holding agent makes a payment of a chap-
ter 4 reportable amount to a nonpartici-
pating 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)(2)(iii), and ex-
cept as otherwise provided in paragraph
(d)(1)(ii)(A)(1)(xi) 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. with-
holding agent makes a payment to a dis-
regarded entity but receives a valid with-
holding certificate or other documentary
evidence from a person that is the single
owner of a disregarded entity, the with-
holding agent must file a Form 1042–S
treating the single owner as the recipient.
The GIIN on the form, or TIN, if required,
must be the single owner’s reporting iden-
tification number or TIN.
(iii)Reporting by participating FFIs
and deemed-compliant FFIs (including
QIs, WPs, and WTs)—(A)In general.Ex-
cept as otherwise provided in paragraphs
(d)(4)(iii)(B) (relating to NQIs, NWPs,
NWTs, and FFIs electing under section
1471(b)(3)) and (d)(4)(iii)(C) of this sec-
tion (relating to transitional payee specific
reporting for payments to nonparticipating
FFIs), a participating FFI or deemed-com-
pliant FFI (including a QI, WP, WT, or
U.S. branch of such FFIs that is not treated
as a U.S. person) that makes a payment
that is a chapter 4 reportable amount to a
recalcitrant account holder or nonpartici-
pating FFI, must complete a Form 1042–S
to report such payments. A participating
FFI or registered deemed-compliant FFI
(including a QI, WP, WT or U.S. branch
of such FFI that is not treated as a U.S.
person) may report in pools consisting of
its recalcitrant account holders and pay-
ees that are nonparticipating FFIs. With
respect to recalcitrant account holders,
the FFI may report in pools consisting of
recalcitrant account holders within a par-
ticular status described in §1.1471–4(d)(6)
and within a particular income code. Ex-
cept as otherwise provided in paragraph
(d)(4)(iii)(C) of this section, 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 such FFI that
is not treated as a U.S. person) may (and
a certified deemed-compliant FFI is re-
quired to) perform specific payee reporting
to report a chapter 4 reportable amount
made 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
under section 1471(b)(3). Except as other-
wise provided in paragraph (d)(4)(iii)(C)
of this section, a participating FFI or
deemed-compliant FFI that is an NQI,
NWP, NWT (including a U.S. branch of
such FFI that is not treated as a U.S. per-
son), or an FFI that has made an election
under section 1471(b)(3) and has provided
sufficient 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
April 8, 20138942013–15 I.R.B.

or, has reason to know, that less than the
required amount hasbeen withheld by
the withholding agent on the payment or
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
paragraph (d)(4)(iii)(A) of this section.
See, however, §1.1471–4(d)(6) for the
requirement to report certain aggregate
information 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 participating FFIs
and registered deemed-compliant FFIs
(including QIs, WPs, and WTs) for cer-
tain payments made to nonparticipating
FFIs (transitional). Except as other-
wise provided in the instructions to Form
1042–S, if a participating FFI or registered
deemed-compliant FFI (including a QI,
WP, WT, or U.S. branch of such FFI that is
not treated as a U.S. person) makes a pay-
ment to a nonparticipating FFI of a foreign
reportable amount as defined in paragraph
(d)(2)(i)(D) of this section, the FFI must
report on Form 1042–S on a payee specific
basis the aggregate amount of all foreign
reportable amounts paid by the FFI to the
nonparticipating FFI and any payment of
U.S. source FDAP income made to such
nonparticipating FFI for whom the FFI
receives the payment (and tax withheld)
for each of the calendar years 2015 and
2016.
(D)Reporting by U.S. branches of a
participating FFI or registered deemed-
compliant FFI that is treated as a U.S.
person. A U.S. branch of a participating
FFI or registered deemed-compliant FFI
that is treated as a U.S. person must re-
port amounts paid to recipients on Forms
1042–S in the same manner as a U.S. with-
holding agent under paragraph (d)(4)(i) of
this section.
(iv)Reporting by territory financial in-
stitutions. A territory financial institution
that is not treated as a U.S. person will not
be required to report on Form 1042–S if
another withholding agent has reported the
same amount with regard to the same re-
cipient for which such entity would other-
wise be required to file a return under this
paragraph (d)(4)(iv) and such withholding
agent has withheld the entire amount re-
quired to be withheld from such payment.
A territory financial institution must, how-
ever, report payments made to recipients
for whom it has failed to provide the ap-
propriate documentation to another with-
holding agent or to the extent it knows, or
has reason to know, that less than the re-
quired amount has been withheld. A terri-
tory financial institution that is treated as a
U.S. person or is otherwise required under
this paragraph (d)(4)(iv) to report amounts
paid to recipients on Forms 1042–S must
report in the same manner as a U.S. with-
holding agent.
(v)Nonparticipating FFIs. A nonpar-
ticipating FFI that is a flow-through en-
tity or that acts as an intermediary with re-
spect to a payment may file Forms 1042
and 1042–S only to report and allocate tax
withheld to the account holders, partners,
owners, or beneficiaries of the nonpartici-
pating FFI.
(vi)Other withholding agents.Any
person that is a withholding agent that is
not described in any of paragraphs (d)(4)(i)
through (v) of this section shall file Forms
1042–S in the same manner as a U.S. with-
holding agent and in accordance with the
instructions to the form.
(e)Magnetic media reporting. A with-
holding agent that is not a financial in-
stitution and that is required to file 250
or more Form 1042–S information re-
turns for a taxable year must file Form
1042–S returns on magnetic media. See
§301.6011–2(b) of this chapter for the re-
quirements of a withholding agent that is
not a financial institution with respect to
the filing of Forms 1042–S on magnetic
media. See §301.1474–1(a) of this chapter
for the requirements applicable to a with-
holding agent that is a financial institution
with respect to the filing of Forms 1042–S
on magnetic media.
(f)Indemnification of withholding
agent. A withholding agent is indemni-
fied against the claims and demands of
any person for the amount of any tax it
deducts and withholds in accordance with
the provisions of chapter 4 and the regula-
tions thereunder. A withholding agent that
withholds based on a reasonable belief
that such withholding is required under
chapter 4 and the regulations thereunder
is treated for purposes of section 1474 and
this paragraph (f) as having withheld tax
in accordance with the provisions of chap-
ter 4 and the regulations thereunder. This
paragraph (f) does not relieve a withhold-
ing agent from tax liability under chapter 3
or chapter 4 or the regulations under those
chapters.
(g)Extensions of time to file Forms
1042 and 1042–S. The IRS may grant an
extensionoftimetofileForm1042or
1042–S as described in §1.1461–1(g).
(h)Penalties. For penalties and addi-
tions to tax for failure to file returns or
file and furnish statements in accordance
with this section, see sections 6651, 6662,
6663, 6721, 6722, 6723, 6724(c), 7201,
7203, and the regulations under those sec-
tions. For penalties and additions to tax
for failure to timely pay the tax required to
be withheld under chapter 4, see sections
6656, 6672, 7202, and the regulations un-
der those sections.
(i)Additional reporting requirements
with respect to U.S. owned foreign en-
tities and owner-documented FFIs—(1)
Reporting by certain withholding agents
with respect to owner-documented FFIs.
Beginning in calendar year 2014, if a
withholding agent (other than an FFI
reporting accounts held by owner-docu-
mented FFIs under §1.1471–4(d)) makes
during a calendar year a payment of a
chapter 4 reportable amount to an entity
account holder or payee of an obligation
and the withholding agent treats the en-
tity as an owner-documented FFI under
§1.1471–3(d)(6), the withholding agent is
required to report for such calendar year
with respect to each specified U.S. person
that has a direct or indirect debt or equity
interest in such entity. Such report must be
made on Form 8966 (or such other form
as the IRS may prescribe) and filed on
or before March 31 of the calendar year
following the year in which the withhold-
able payment was made. The report must
contain the following information—
(i) The name of the owner-documented
FFI;
(ii) The name, address, and TIN of
each specified U.S. person identified in
§1.1471–3(d)(6)(iv)(A)(1);
(iii) The total of all payments made to
the owner-documented FFI;
(iv) The account balance or value of
the account held by the owner-documented
FFI; and
(v) Any other information required on
Form 8966 and its accompanying instruc-
tions provided for purposes of such report-
ing.
2013–15 I.R.B.895April 8, 2013

(2)Reporting by certain withholding
agents with respect to U.S. owned for-
eign entities that are NFFEs. Beginning
in calendar year 2014, in addition to the
reporting on Form 1042–S required un-
der paragraph (d)(4)(i)(E) of this section,
a withholding 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 an
NFFE that is not an excepted NFFE as
defined in §1.1472–1(c) shall file a report
with the IRS for such 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 prescribe) and filed on or before
March 31 of the calendar year following
the year in which the withholdable pay-
ment was made. The report must contain
the following information—
(i) Name of the NFFE that is owned by
a substantial U.S. owner;
(ii) The name, address, and TIN of each
substantial U.S. owner of such NFFE;
(iii) The total of all payments made to
the NFFE; and
(iv) Any other information as required
by the form and its accompanying instruc-
tions.
(3)Cross reference to reporting by par-
ticipating FFIs.For the reporting require-
ments of a participating FFI with respect to
an account holder that is a U.S. owned for-
eign entity or that it treats as an owner-doc-
umented FFI, see §1.1471–4(d).
(j)Effective/applicability date.This
section generally applies on January 28,
2013. For other dates of applicability see
§§1.1474–1(d)(4)(iii)(C) and 1.1474–1(i).
Par. 14. Section 1.1474–2 is added to
read as follows:
§1.1474–2 Adjustments for
overwithholding or underwithholding of
tax.
(a)Adjustments of overwithheld
tax—(1)In general. Except as otherwise
provided by this section, a withholding
agent that has overwithheld tax under
chapter 4 and made a deposit of the tax
as provided in §1.6302–2(a) may adjust
the amount of overwithheld tax either
pursuant to the reimbursement procedure
described in paragraph (a)(3) of this sec-
tion or pursuant to the set-off procedure
described in paragraph (a)(4) of this sec-
tion. Adjustments under this paragraph
(a) may only be made within the time pre-
scribed under paragraph (a)(3) or (a)(4) of
this section. After such time, a refund of
the amount of overwithheld tax can only
be claimed pursuant to the procedures de-
scribed in §1.1474–5 and chapter 65 of the
Code and the regulations thereunder.
(2)Overwithholding. For purposes
of this section, the termoverwithholding
means an amount actually withheld (deter-
mined before application of the adjustment
procedures under this section and regard-
less of whether such overwithholding was
in error or appeared correct at the time it
occurred) from an item of income or other
payment pursuant to chapter 4 that is in
excess of the greater of—
(i) The amount required to be withheld
with respect to such item of income or
other payment under chapter 4; and
(ii) The actual tax liability of the ben-
eficial owner that is attributable to the in-
come or payment from which the amount
was withheld.
(3)Reimbursement of tax—(i)General
rule. Under the reimbursement procedure,
the withholding agent may repay the ben-
eficial owner or payee for an amount of
overwithheld tax. In such case, the with-
holding agent may reimburse itself by re-
ducing, by the amount actually repaid to
the beneficial owner or payee, the amount
of any deposit of tax made by the with-
holding agent under §1.6302–2(a)(1)(iii)
for any subsequent payment period occur-
ring before the end of the calendar year
following the calendar year of overwith-
holding. A withholding agent must ob-
tain valid documentation as described un-
der §1.1471–3(c)(6) with respect to the
beneficial owner or payee supporting a re-
duced rate of withholding before reducing
the amount of any deposit of tax under this
paragraph (a)(3)(i). Any such reduction
that occurs for a payment period in the cal-
endar year following the calendar year of
overwithholding shall be allowed only if—
(A) The repayment of the beneficial
owner or payee occurs before the earlier of
the due date (without regard to extensions)
for filing the Form 1042–S for the calen-
dar year of overwithholding or the date that
the Form 1042–S is actually filed with the
IRS;
(B) The withholding agent states on
a timely filed (not including extensions)
Form 1042–S the amount of tax withheld
and the amount of any actual repayment;
and
(C) The withholding agent states on
a timely filed (not including extensions)
Form1042forthecalendaryearofover-
withholding that the filing of the Form
1042 constitutes a claim for credit in ac-
cordance with §1.6414–1.
(ii)Record maintenance. If the bene-
ficial owner or payee is repaid an amount
of overwithheld tax under the provisions
of this paragraph (a)(3), the withholding
agent shall keep as part of its records a re-
ceipt showing the date and amount of re-
payment, and the withholding agent must
provide a copy of such receipt to the ben-
eficial owner or payee. For this purpose, a
canceled check or an entry in a statement is
sufficient, provided that the check or state-
ment contains a specific notation that it is
a refund of tax overwithheld.
(4)Set-offs. Under the set-off proce-
dure, the withholding agent may repay the
beneficial owner or payee for an amount of
overwithheld tax by applying the amount
overwithheld against any amount which
otherwise would be required under chapter
3 or 4 to be withheld from the amount paid
by the withholding agent to such person
before the earlier of the due date (without
regard to extensions) for filing the Form
1042–S for the calendar year of overwith-
holding or the date that the Form 1042–S
is actually filed with the IRS. For pur-
poses of making a return on Form 1042 or
1042–S (or an amended form) for the cal-
endar year of overwithholding and for pur-
poses of making a deposit of the amount
withheld, the reduced amount shall be con-
sidered the amount required to be withheld
from such payment under chapter 3 or 4,
respectively.
(5)Examples. The principles of this
paragraph (a) are illustrated by the follow-
ing examples:
Example 1. (i) Fund A is a unit investment trust
that is an FFI and a resident of Country X. Fund A
also qualifies for the benefits of the income tax treaty
between the United States and Country X. On Decem-
ber 1, 2016, domestic corporation C pays a dividend
of $100 to Fund A, at which time C withholds $30
of tax pursuant to §1.1471–2(a) and remits the bal-
ance of $70 to Fund A, because it does not hold valid
documentation that Fund A is a participating FFI or
deemed-compliant FFI. On February 10, 2017, prior
to the time that C is obligated to file its Form 1042,
Fund A furnishes a valid Form W–8BEN described
in §§1.1441–1(e)(2)(i) and 1.1471–3(c)(3)(ii) upon
which C may rely to treat Fund A as the beneficial
owner of the income and as a participating FFI so that
April 8, 20138962013–15 I.R.B.

C may reduce the rate of withholding to 15% under
the provisions of the United States-Country X income
tax treaty with respect to the payment. C repays the
excess tax withheld of $15 to Fund A.
(ii) During the 2016 calendar year, C makes no
other payments upon which tax is required to be with-
held under chapter 3 or 4; accordingly, its Form 1042
for such year, filed on March 15, 2017, shows total
tax withheld of $30, an adjusted total tax withheld of
$15, and tax deposited of $30 for such year. Pursuant
to §1.6414–1, C claims a credit for the overpayment
of $15 shown on the Form 1042 for 2016. Accord-
ingly, C is permitted to reduce by $15 any deposit re-
quired by §1.6302–2 to be made of tax withheld dur-
ing the 2017 calendar year with respect to taxes due
under chapter 3 or 4. The Form 1042–S required to be
filed by C with respect to the dividend of $100 paid
to Fund A in 2016 is required to show tax withheld of
$30 and tax repaid of $15 to Fund A.
Example 2. (i) In November 2016, Bank A, a for-
eign bank organized in Country X that is an NQI, re-
ceives on behalf of one of its account holders, Z, an
individual, a $100 dividend payment from C, a do-
mestic corporation. At the time of payment, C with-
holds $30 pursuant to §1.1471–2(a) and remits the
balance of $70 to Bank A, because it does not hold
valid documentation that it may rely on to treat Bank
A as a participating FFI or deemed-compliant FFI.
In December 2016, prior to the time that C files its
Forms 1042 and 1042–S, Bank A furnishes a valid
Form W–8IMY and FFI withholding statement de-
scribed in §1.1471–3(c)(3)(iii) that establishes Bank
A’s status as a participating FFI that is an NQI, as
well as a valid Form W–8BEN that has been com-
pleted by Z as described in §1.1471–3(c)(3)(ii) and
§1.1441–1(e)(2)(i) upon which C may rely to treat
the payment as made to Z, a nonresident alien indi-
vidual who is a resident of Country X eligible for a
reduced rate of withholding of 15% under the income
tax treaty between the United States and Country X.
Although C has already deposited the $30 that was
withheld, as required by §1.6302–2(a)(1)(iv), C re-
mits the amount of $15 to Bank A for the benefit of
Z.
(ii) During the 2016 calendar year, C makes no
other payments upon which tax is required to be with-
held under chapter 3 or 4; accordingly, its return on
Form 1042 for such year, which is filed on March
15, 2017, shows total tax withheld of $30, an ad-
justed total tax withheld of $15, and tax deposited of
$30. Pursuant to §1.6414–1(b), C claims a credit for
the overpayment of $15 shown on the Form 1042 for
2014. Accordingly, it is permitted to reduce by $15
any deposit required by §1.6302–2 to be made of tax
withheld during the 2017 calendar year. The Form
1042–S required to be filed by C for 2016 with re-
spect to the dividend of $100 beneficially owned by
Z is required to show tax withheld of $30 and tax re-
paid of $15 to Z.
(b)Withholding of additional tax when
underwithholding occurs. A withholding
agent that has underwithheld under chap-
ter 4 may apply the procedures described
in §1.1461–2(b) (by substituting the term
“chapter 4” for “chapter 3”) to satisfy its
withholding obligations under chapter 4
with respect to a payee or beneficial owner.
(c)Effective/applicability date.This
section applies January 28, 2013.
Par. 15. Section 1.1474–3 is added to
read as follows:
§1.1474–3 Withheld tax as credit to
beneficial owner of income.
(a)Creditable tax. The entire amount
of the income, if any, attributable to a pay-
ment from which tax is required to be with-
held under chapter 4 (including income
deemed paid by a withholding agent un-
der §1.1473–1(a)(2)(v)) shall be included
in gross income in a return required to be
made by the beneficial owner of the in-
come, without deduction for the amount
required to be or actually withheld, but the
amount of tax actually withheld shall be al-
lowed as a credit against the total income
tax computed in the beneficial owner’s re-
turn.
(b)Amounts paid to persons that are not
the beneficial owners. Amounts actually
deducted and withheld under chapter 4 on
payments made to a fiduciary, agent, part-
nership, trust, or intermediary are deemed
to have been paid by the beneficial owner
of the item of income or other payment
subject to withholding under chapter 4, ex-
cept when the fiduciary, agent, partner-
ship, trust, or intermediary pays the tax
from its own funds and does not in turn
withhold with respect to the payment made
to such person. Thus, for example, if a
beneficiary of a trust is subject to the taxes
imposedbysection1,2,3,or11upon
any amount of distributable net income or
other taxable distribution received from a
foreign trust, the part of any amount with-
held at source under chapter 4 that is prop-
erly allocable to the income so taxed to
such beneficiary shall be credited against
the amount of the income tax computed
upon the beneficiary’s return, and any ex-
cess shall be refunded to the beneficiary in
accordance with §1.1474–5 and chapter 65
of the Code.
(c)Effective/applicability date.This
section applies January 28, 2013.
Par. 16. Section 1.1474–4 is added to
read as follows:
§1.1474–4 Tax paid only once.
(a)Tax paid. Ifthetaxrequiredtobe
withheld under chapter 4 on a payment is
paid by the payee, beneficial owner, or the
withholding agent, it shall not be re-col-
lected from any other, regardless of the
original liability therefor. However, this
section does not relieve a person that was
required to, but did not, withhold tax from
liability for interest or any penalties or ad-
ditions to tax otherwise applicable.
(b)Effective/applicability date.This
section applies January 28, 2013.
Par. 17. Section 1.1474–5 is added to
read as follows:
§1.1474–5 Refunds or credits.
(a)Refund and credit—(1)In general.
Except to the extent otherwise provided in
this section, a refund or credit of tax which
has actually been withheld at the source
at the time of payment under chapter 4
shall be made to the beneficial owner of the
payment to which the amount of withheld
tax is attributable if the beneficial owner
or payee meets the requirements of this
paragraph (a) and any other requirements
that may be required under chapter 65. To
the extent that the amount withheld under
chapter 4 is not actually withheld at source,
but is later paid by the withholding agent to
the IRS, the refund or credit under chapter
65 of the Code shall be made to the with-
holding agent to the extent the withholding
agent provides documentation with respect
to the beneficial owner or payee described
in paragraphs (a)(2) and (3) of this section
sufficient for the beneficial owner or payee
to have obtained a refund of the tax and
sufficient for the withholding agent to have
applied a reduced rate or exemption from
withholding under chapter 4. The preced-
ing sentence shall not, however, apply to
a nonparticipating FFI that is acting as a
withholding agent with respect to one or
more of its account holders. In such a case,
only the account holders of the nonpartici-
pating FFI will be entitled to a credit or re-
fund of an amount withheld under chapter
4, to the extent otherwise allowable under
this section. Additionally, there are collec-
tive refund procedures for a participating
FFI or reporting Model 1 FFI to claim a
refund or credit on behalf of certain direct
account holders that are beneficial owners
of the payment under §1.1471–4(h) (in lieu
of such account holders claiming refund or
credit under this paragraph (a)(1)).
(2)Limitation to refund and credit for
a nonparticipating FFI. Notwithstanding
paragraph (a)(1) of this section, a nonpar-
ticipating FFI (determined as of the time
2013–15 I.R.B.897April 8, 2013

of payment) that is the beneficial owner of
an item of income or other payment that
is subject to withholding under chapter 4
shall not be entitled to any credit or re-
fund pursuant to section 1474(b)(2) and
this section unless it is entitled to a reduced
rate of tax with respect to the income or
other payment by reason of any treaty obli-
gation of the United States. If the nonpar-
ticipating FFI is entitled to a reduced rate
of tax with respect to an item of income or
other payment by reason of any treaty obli-
gation of the United States, the amount of
any credit or refund with respect to such
tax shall not exceed the amount of credit
or refund attributable to such reduction in
rate on the item of income or other pay-
ment, and no interest otherwise allowable
under section 6611 shall be allowed or paid
with respect to such credit or refund.
(3)Requirement to provide additional
documentation for certain beneficial own-
ers—(i)In general. Except as provided in
paragraph (a)(3)(ii) of this section, no re-
fund or credit shall be allowed under para-
graph (a)(1) of this section to the beneficial
owner of the income or other payment to
which the amount of such withheld tax was
attributable if such beneficial owner is an
NFFE, unless the NFFE attaches to its in-
come tax return the information described
in paragraph (a)(3)(iii) of this section.
(ii)Claim of reduced withholding under
an income tax treaty. Paragraph (a)(3)(i)
of this section does not apply to the extent
that the beneficial owner is entitled to a re-
duced rate of tax with respect to the income
or other payment by reason of any treaty
obligation of the United States.
(iii)Additional documentation to be
furnished to the IRS for certain NFFEs.
The information described in this para-
graph (a)(3)(iii) is—
(A) A certification that the beneficial
owner does not have any substantial U.S.
owners;
(B) The form described in
§1.1474–1(i)(2) relating to each substan-
tial U.S. owner of such entity; or
(C) Other appropriate documentation to
establish withholding was not required un-
der chapter 4.
(b)Tax repaid to payee. For purposes of
this section and §1.6414–1, any amount of
tax withheld under chapter 4, which, pur-
suant to §1.1474–2(a)(1), is repaid by the
withholding agent to the beneficial owner
of the income or payment to which the
withheld amount is attributable shall be
considered as tax which, within the mean-
ing of sections 1474 and 6414, was not ac-
tually withheld by the withholding agent.
(c)Effective/applicability date.This
section applies January 28, 2013.
Par. 18. Section 1.1474–6 is added to
read as follows:
§1.1474–6 Coordination of chapter 4 with
other withholding provisions.
(a)In general. This section coordi-
nates the withholding requirements of a
withholding agent when a withholdable
payment or foreign passthru payment is
subject to withholding under both chap-
ter 4 and another Code provision. See
§1.1473–1(a) for the definition of with-
holdable payment and see §1.1471–5(h)(2)
for the definition of foreign passthru pay-
ment.
(b)Coordination of withholding for
amounts subject to withholding under
sections 1441, 1442, and 1443—(1)In
general. In the case of a withholdable pay-
ment that is both subject to withholding
under chapter 4 and is an amount subject to
withholding under §1.1441–2(a), a with-
holding agent may credit the withholding
applied under chapter 4against 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 requirements 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
withholding under §1.1441–2(a).
(2)When withholding is applied.For
purposes of paragraph (b)(1) of this sec-
tion, withholding is applied by a withhold-
ing agent under section 1441 (or section
1442 or 1443) or chapter 4 (as applica-
ble) when the withholding agent has with-
held on the payment and has designated
the withholding as having been made un-
der section 1441 (or section 1442 or 1443)
or chapter 4 to the extent required in the re-
porting described in§1.1474–1(c) and (d).
For purposes of allowing an offset of with-
holding and allowing a credit to a with-
holding agent against its liability for such
tax as described in paragraph (b)(1) of this
section, withholding is treated as applied
forpurposesofparagraph(a)ofthissec-
tion only when the withholding agent has
actually withheld on a payment and has
not made any adjustment for overwithheld
tax applicable to the amount withheld that
would otherwise be permitted with respect
to the payment.
(3)Special rule for certain substitute
dividend payments. In the case of a divi-
dend equivalent under section 871(m) paid
pursuant to a securities lending transaction
described in section 1058 (or a substan-
tially similar transaction), or pursuant to a
sale-repurchase transaction, a withholding
agent may offset its obligation to withhold
under chapter 4 for amounts withheld by
another withholding agent under chapters
3 and 4 with respect to the same underlying
security in such a transaction, but only to
the extent that there is sufficient evidence
as required under chapter 3 that tax was ac-
tually withheld on a prior dividend equiva-
lent paid to the withholding agent or a prior
withholding agent with respect to the same
underlying security in such transaction.
(c)Coordination with amounts subject
to withholding under section 1445—(1)In
general. An amount subject to withhold-
ing under section 1445 is not subject to
withholding under chapter 4 as described
in paragraphs (c)(2)(i) and (ii) of this sec-
tion.
(2)Determining the amount of the dis-
tribution from certain domestic corpora-
tions subject to section 1445 or chapter
4 withholding—(i)Distribution from qual-
ified investment entity. In the case of a
passthru payment (including a withhold-
able payment) subject to withholding un-
der chapter 4 that is a distribution with re-
spect to the stock of a qualified investment
entity as described in section 897(h)(4)(A),
withholding under chapter 4 does not ap-
ply when withholding under section 1445
applies to such amounts. With respect to
the portion of such distribution that is not
subject to withholding under section 1445
but is subject to withholding under section
1441 (or section 1442 or 1443) and chapter
4, the coordination rule described in para-
graph (b)(1) of this section shall apply.
(ii)Distribution from a United States
real property holding corporation.A
distribution (or portion of a distribution)
from a United States real property holding
corporation (or from a corporation that
was a United States real property hold-
ing corporation at any time during the
five-year period ending on the date of
the distribution) with respect to its stock
that is a United States real property in-
April 8, 20138982013–15 I.R.B.

terest under section 897(c) is subject to
withholding under chapter 4 and is also
subject to the withholding provisions of
section 1441 (or section 1442 or 1443)
and section 1445. In such case, to the
extent that the United States real property
holding corporation chooses to withhold
on a distribution only under section 1441
(or section 1442 or 1443) pursuant to
§1.1441–3(c)(4)(i)(A), the coordination
rule described in paragraph (b)(1) of this
section shall apply to such distribution.
Alternatively, to the extent that the United
States real property holding corporation
chooses to withhold under both section
1441 (or section 1442 or 1443) and section
1445 pursuant to §1.1441–3(c)(4)(i)(B),
the coordination rule described in para-
graph (b)(1) of this section shall apply to
the portion of such distribution described
in §1.1441–3(c)(4)(i)(B)(1), and with-
holding under section 1445 shall apply to
the amount of such distribution described
in §1.1441–3(c)(4)(i)(B)(2). A withhold-
ing agent other than a United States real
property holding corporation may rely,
absent actual knowledge or reason to
know otherwise, on the representations
of the United States real property hold-
ing corporation making the distribution
regarding the portion of the distribution
that is estimated to be a dividend under
§1.1441–3(c)(2)(ii)(A), and in the case of
a failure by the withholding agent to with-
hold under chapter 4 due to this reliance,
the required amount shall be imputed to
the United States real property holding
corporation.
(d)Coordination with section
1446—(1)In general. Except as oth-
erwise provided in paragraph (d)(2) of
this section, a withholdable payment or
a foreign passthru payment subject to
withholding under section 1446 shall not
be subject to withholding under chapter
4. See §1.1473–1(a)(4)(ii) for the exclu-
sion from withholdable payment and the
requirements for such exclusion for any
item of income that is taken into account
under section 871(b)(1) or 882(a)(1) for
the taxable year.
(2)Determining the amount of distribu-
tion subject to section 1446. [Reserved].
(e)Example.Chapter 4 withholding satisfies
chapter 3 withholding obligation. WA, a U.S. with-
holding agent, makes a payment consisting of a
dividend from sources within the United States to
NPFFI. NPFFI is a nonparticipating FFI that is a
resident of Country X, a country that has an in-
come tax treaty in force with the United States that
would allow WA to reduce the rate of withholding
for section 1442 purposes on a payment of U.S.
source dividends paid to NPFFI to 15%. Because the
payment is a withholdable payment and NPFFI is a
nonparticipating FFI, WA withholds on the payment
at the rate of 30% under chapter 4. WA does not
make any adjustment for overwithholding that is
otherwise permitted with respect to this payment.
Although the payment is also an amount subject to
withholding under section 1442, WA is not required
to withhold any tax on this payment under section
1442. WA may credit its withholding applied under
chapter 4 against the amount of tax otherwise re-
quired to be withheld on this payment under section
1442. See §1.1474–5(a)(2) for the credit and refund
procedures for nonparticipating FFIs that are entitled
to a reduced rate of tax with respect to an amount
subject to withholding under chapter 4 by reason of
any treaty obligation of the United States.
(f)Effective/applicability date.This
section applies January 28, 2013.
Par. 19. Section 1.1474–7 is added to
read as follows:
§1.1474–7 Confidentiality of information.
(a)Confidentiality of information.Pur-
suant to section 1474(c)(1), the provisions
of §31.3406(f)–1(a) of this chapter shall
apply (substituting “sections 1471 through
1474” for “section 3406”) to information
obtained or used in connection with the re-
quirements of chapter 4.
(b)Exception for disclosure of par-
ticipating FFIs. Pursuant to section
1474(c)(2), the identity of a participating
FFI or deemed-compliant FFI shall not be
treated as return information for purposes
of section 6103.
(c)Effective/applicability date.This
section applies January 28, 2013.
PART 301 — PROCEDURE AND
ADMINISTRATION
Paragraph 20. The authority citation for
part 301 is amended by adding an entry in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805.
Section 301.1474–1 also issued under
26 U.S.C. 1474(f). * * *
Par. 21. Section 301.1474–1 is added
to read as follows:
§301.1474–1 Required use of magnetic
media for financial institutions filing Form
1042–S or Form 8966.
(a)Financial institutions filing certain
information returns. If a financial insti-
tution is required to file a Form 1042–S,
“Foreign Person’s U.S. Source Income
Subject to Withholding,” (or such other
form as the IRS may prescribe) under
§1.1474–1(d) of this chapter, the financial
institution must file the information re-
quired by the applicable forms and sched-
ules on magnetic media. Additionally, if a
financial institution is required to file Form
8966, “FATCA Report,” (or such other
form as the IRS may prescribe) to report
certain information about U.S. accounts,
substantial U.S. owners of foreign entities,
or owner-documented FFIs as required
under this chapter, the financial institution
must file the required information on mag-
netic media or other machine-readable
form. Returns filed on magnetic media
must be made in accordance with appli-
cable regulations, revenue procedures,
publications, forms, instructions, and the
IRS.gov Internet site. In prescribing regu-
lations, revenue procedures, publications,
forms, and instructions, including those
on the IRS.gov Internet site, the Commis-
sioner may direct the type of magnetic
media or other machine-readable form
used for filing.
(b)Waiver. The Commissioner may
grant waivers from the requirements of this
section in cases of undue hardship. A re-
quest for waiver must be made in accor-
dance with applicable revenue procedures
or publications. The waiver also will be
subject to such terms and conditions re-
garding the method of filing as may be pre-
scribed by the Commissioner.
(c)Failure to file. If a financial in-
stitution fails to file a Form 1042–S or
a Form 8966 on magnetic media when
requiredtodosobythissection,the
financial institution is deemed to have
failedtocomplywiththeinformationre-
porting requirements under section 6723
of the Code. See section 6724(c) for
failure to meet magnetic media require-
ments. In determining whether there is
reasonable cause for failure to file the
return, §301.6651–1(c) and rules similar
to the rules in §301.6724–1(c)(3) (undue
economic hardship related to filing infor-
mation returns on magnetic media) will
apply.
(d)Meaning of terms. The follow-
ing definitions apply for purposes of this
section—(1)Magnetic media.Theterm
magnetic mediameans any magnetic me-
dia permitted under applicable regulations,
revenue procedures, publications, forms,
2013–15 I.R.B.899April 8, 2013

or instructions. These generally include
magnetic tape, tape cartridge, and diskette,
as well as other media, such as electronic
filing, specifically permitted under the ap-
plicable regulations, revenue procedures,
publications, forms, or instructions.
(2)Financial institution.Theterm
financial institutionhas the meaning set
forth in section 1471(d)(5) of the Code
and the regulations thereunder.
(e)Effective/applicability date.This
section applies to any Form 1042–S or
Form 8966 (or any other form that the IRS
may prescribe) filed with respect to calen-
dar years ending after December 31, 2013.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved January 11, 2013.
Mark J. Mazur,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on January 17,
2013, 4:15 p.m., and published in the issue of the Federal
Register for January 28, 2013, 78 F.R. 5874)
Section 6654.—Failure by
Individual to Pay Estimated
Income Tax
26 CFR 1.6654–2: Exceptions to imposition of the
addition to the tax in the case of individuals.
T.D. 9613
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Reduced 2009 Estimated
Income Tax Payments
for Individuals with Small
Business Income
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains
final regulations under section 6654 of
the Internal Revenue Code (Code) re-
lating to reduced estimated income tax
payments for qualified individuals with
small business income for any taxable
year beginning in 2009 and does not apply
to any taxable years beginning before or
after 2009. The final regulations imple-
ment changes to section 6654 made by
the American Recoveryand Reinvestment
Act of 2009. The final regulations pro-
vide guidance for qualified individuals
with small business income to certify that
they satisfy the statutory gross income
requirement for purposes of the reduction
in their required 2009 estimated income
tax payments.
DATES:Effective Date: These regulations
are effective on February 27, 2013.
Applicability Date: These regulations
apply for any taxableyear that begins in
2009.
FOR FURTHER INFORMATION
CONTACT: Janet Engel Kidd at (202)
622–4940 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains final amend-
ments to the Income Tax Regulations (26
CFR part 1) under section 6654(d) of the
Coderelatingtotheadditiontotaxfor
failure by an individual to pay estimated
income tax. Section 6654(d)(1)(D) was
added by section 1212 of Division B of the
American Recovery and Reinvestment Act
of 2009, Public Law 111–5 (123 Stat. 336
(2009)), effective for taxable years begin-
ning in 2009. It does not apply to any tax-
able years beginning before or after 2009.
Section 6654 imposes an addition to
tax in the case of an individual taxpayer’s
underpayment of estimated tax. Estimated
tax is payable in four installments through-
out the taxable year, and the amount of
each required installment is generally
25 percent of the required annual pay-
ment of estimated tax. Under section
6654(d)(1)(B), the required annual pay-
ment is the lesser of (i) 90 percent of the
tax shown on the income tax return for the
taxable year (or, if no return is filed, 90
percent of the tax for the year), or (ii) 100
percent of the tax shown on the taxpayer’s
return for the preceding taxable year (or
110 percent if the taxpayer’s adjusted
gross income for the preceding taxable
year exceeded $150,000). The provision
allowing for the payment of 100 (or 110)
percent of the tax shown on the taxpayer’s
return for the preceding taxable year does
not apply if the preceding taxable year was
less than 12 months or if the taxpayer did
not file a return for that year.
Section 6654(d)(1)(D) provides a
“[s]pecial rule for 2009.” Under this pro-
vision, the applicable percentage of tax
shown on the return for the preceding
taxable year (either 100 or 110 percent)
is reduced to 90 percent for qualified in-
dividuals for taxable years that begin in
2009. In other words, for taxable years
that begin in 2009, a qualified individual’s
annual required payment of estimated tax
is the lesser of (i) 90 percent of the tax
shown on the return for the 2009 taxable
year (or, if no return is filed, 90 percent
of the tax for the year), or (ii) 90 percent
of the tax shown on the individual’s return
for taxable year 2008.
To implement the special rule for 2009,
the Treasury Department and the IRS
published in theFederal Register(75
FR 9141) on March 1, 2010, a notice of
proposed rulemaking (REG–117501–09,
2010–11 I.R.B. 442) proposing amend-
ments to §1.6654–2, which provides
exceptions to the addition to tax for an in-
dividual’s failure to pay estimated income
tax. The notice of proposed rulemaking
cross-referenced temporary regulations
(T.D. 9480, 2010–11 I.R.B. 439) published
in theFederal Register(75 FR 9101) on
thesameday.
The IRS received one written pub-
lic comment responding to the pro-
posed regulations.The comment
is available for public inspection at
http://www.regulations.govor upon
request.The commenter expressed
appreciation for efforts to simplify tax
reporting by small business owners. A
public hearing was not requested or held.
Explanation of Provisions
The final regulations adopt the pro-
posed regulations without change. The
final regulations explain who is a qualified
individual under section 6654(d)(1)(D)
and how a taxpayer establishes that the
taxpayer is a qualified individual. A quali-
fied individual is any individual (1) whose
adjusted gross income shown on the indi-
vidual’s return for the preceding taxable
year (prior to the taxable year that begins
April 8, 20139002013–15 I.R.B.

in 2009) is less than $500,000, and (2)
who certifies that more than 50 percent of
the gross income shown on that return was
income from a small business. See section
6654(d)(1)(D)(ii). If an individual is mar-
ried within the meaning of section 7703,
and files a separate return for a taxable year
that begins in 2009, then to qualify, the
individual’s adjusted gross income shown
on the preceding year’s return must be
less than $250,000, rather than $500,000.
See section 6654(d)(1)(D)(iv). Pursuant
to section 6654(d)(1)(D)(ii)(II), the Secre-
tary shall prescribe by regulation the form,
manner, and time for filing a certification.
Additionally, section 6654(m) authorizes
the Secretary to prescribe regulations as
necessary to carry out the purposes of sec-
tion 6654.
Income from a small business is
defined in general terms in section
6654(d)(1)(D)(iii) as income from a trade
or business the average number of em-
ployees of which was less than 500 for
calendar year 2008. The final regulations
specify that the trade or business must be
abona fidetrade or business of which the
individual was an owner. The final regula-
tions provide that a trade or business may
be organized as, or take the legal form of,
a corporation, partnership, limited liability
company, or sole proprietorship.
The final regulations also provide that
a qualified individualshall file a certifica-
tion with the IRS in the manner and at the
time prescribed in forms, publications, or
other guidance, such as Form 2210, “Un-
derpayment of Estimated Tax by Individu-
als, Estates, and Trusts” (or any successor
form and its instructions).
The final regulations will be appli-
cable for taxable years that begin in
2009. The reduced percentage in section
6654(d)(1)(D) is limited to taxable years
that begin in 2009 and does not apply to
taxable years that begin before or after
2009.
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 also has been deter-
mined that section 553(b) of the Adminis-
trative Procedure Act (5 U.S.C. chapter 5)
does not apply to these regulations, and be-
cause the regulations do not impose a col-
lection of information on small entities, the
Regulatory Flexibility Act (5 U.S.C. chap-
ter 6) does not apply. Pursuant to section
7805(f) of the Code, the notice of proposed
rulemaking that preceded these final regu-
lations was submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on its impact on
small business and no comments were re-
ceived.
Drafting Information
The principal author of these regula-
tions is Janet Engel Kidd, Office of the
Associate Chief Counsel, Procedure and
Administration.
*****
Adoption of 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 1.6654–2 also issued under 26
U.S.C. 6654(m).
Par. 2. Section 1.6654–2 is amended by
revising paragraphs (a) introductory text,
(a)(1)(ii) and (f) to read as follows:
§1.6654–2 Exceptions to imposition of
the addition to the tax in the case of
individuals.
(a)In general. The addition to the tax
under section 6654 will not be imposed for
any underpayment of any installment of
estimated tax if, on or before the date pre-
scribed for payment of the installment, the
total amount of all payments of estimated
tax made equals or exceeds the lesser of the
amount in §1.6654–2(a)(1) or the amount
in §1.6654–2(a)(2).
(1)(i) * * *
(ii)Special rule for taxable years begin-
ning in 2009. For any taxable year begin-
ning in 2009, for a qualified individual, the
amount described in §1.6654–2(a)(1)(i) is
reduced to 90 percent of that amount.
(A)Qualified individualmeans any
individual whose adjusted gross income
shown on the individual’s return for
the preceding taxable year is less than
$500,000 and who certifies, as prescribed
in paragraph (a)(1)(ii)(D) of this section,
that more than 50 percent of the gross
income shown on the return for the pre-
ceding taxable year was income from a
small business.
(B)Income from a small business
means income from the operation of a
bona fide trade or business of which the
individual was an owner during calendar
year 2009, and that on average had fewer
than 500 employees in calendar year 2008.
(C) The trade or business may be orga-
nized as, or take the legal form of, a corpo-
ration, partnership, limited liability com-
pany, or sole proprietorship.
(D) A qualified individual shall file a
certification of the individual’s qualifica-
tion in the manner and at the time pre-
scribed by the Internal Revenue Service in
forms, publications, or other guidance.
*****
(f)Effective/applicability date. Para-
graph (a)(1)(ii) of this section applies to
any taxable year beginning in 2009 and
does not apply to any taxable years begin-
ning before or after 2009.
Par. 3. Section 1.6654–2T is removed.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved February 22, 2013.
Mark J. Mazur,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on February 25,
2013, 4:15 p.m., and published in the issue of the Federal
Register for February 27, 2013, 78 F.R. 13221)
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of April 2013. See Rev. Rul. 2013-9, page 764.
2013–15 I.R.B.901April 8, 2013

Part III. Administrative, Procedural, and Miscellaneous
Allocation of Controlled Group
Research Credit
Notice 2013–20
PURPOSE
This notice provides interim guidance
relating to the allocation of the credit for
increasing research activities (research
credit) to corporations and trades or busi-
nesses under common control (controlled
groups) for purposes of § 41(f)(1)(A)(ii)
and § 41(f)(1)(B)(ii) of the Internal Rev-
enue Code, as amended by section 301(c)
of the American Taxpayer Relief Act of
2012, P.L. 112–240, H.R. 8 (the Act), for
taxable years beginning after December
31, 2011.
BACKGROUND
Under § 41(f)(1) and § 1.41–6(b) of the
Income Tax Regulations, all members of
a controlled group are treated as a single
taxpayer for purposes of computing the re-
search credit. Section 1.41–6(b) provides
that the group credit is computed by apply-
ing all of the § 41 computational rules on
an aggregate basis.
Former § 41(f)(1)(A)(ii) and former
§ 41(f)(1)(B)(ii) provided that the research
credit allowable to a controlled group
member shall be its proportionate shares
of the qualified research expenses, ba-
sic research payments, and amounts paid
or incurred to energy research consor-
tiums (collectively, “QREs”) giving rise
to the credit. Section 1.41–6(c)(1)(i) re-
quires a controlled group to allocate the
group credit in proportion to each mem-
ber’s stand-alone entity credit, as defined
in § 1.41–6(c)(2), in cases in which the
group credit does not exceed the sum of
the stand-alone entity credits of all of the
members. If the group credit does exceed
this sum, then the excess of the group
credit over the sum of the stand-alone
entity credits of all of the members is al-
located in proportion to the QREs of the
members of the controlled group. See
§ 1.41–6(c)(1)(ii).
Section 301(c) of the Act amended
§ 41(f)(1)(A)(ii) and § 41(f)(1)(B)(ii)
by requiring the allocation of research
credits to each controlled group member
“on a proportionate basis to its share of
the aggregate of the qualified research
expenses, basic research payments, and
amounts paid or incurred to energy re-
search consortiums, taken into account
by such controlled group for purposes
of this section.’’ Thus, the amendments
to § 41(f)(1)(A)(ii) and § 41(f)(1)(B)(ii)
provide that the group credit is allocated
to group members based on a member’s
share of QREs, without regard to whether
the member would have a stand-alone en-
tity credit or what the amount of any such
credit would be. Section 301(c) of the Act
applies to taxable years beginning after
December 31, 2011.
DISCUSSION
For taxable years beginning before Jan-
uary 1, 2012, the provisions of § 1.41–6
continue to apply in their entirety. For tax-
able years beginning after December 31,
2011, the provisions of § 1.41–6 continue
to apply, subject to the following excep-
tions. First, § 1.41–6(c) shall not apply.
In addition, references to § 1.41–6(c) re-
garding the allocation of the group credit,
references to the stand-alone entity credit
described in § 1.41–6(c)(2), and the exam-
ples in § 1.41–6(e) involving the allocation
of the group credit among and computation
of the stand-alone entity credits for con-
trolled group members, shall not apply.
In lieu of § 1.41–6(c), controlled groups
must allocate the group credit to each
member of the controlled group in pro-
portion to each member’s contribution
of QREs to the controlled group’s total
QREs for the taxable year. Such allocation
methodology must also be applied to de-
termine the portion of a group credit that
is allocated to, and within, a consolidated
group that is a member of a controlled
group under § 1.41–6(d)(1) and (3). For
example, X, a controlled group consisting
of 3 members, B, C, and D, has a $100
credit for the taxable year. X’s total QREs
for the taxable year is $1000. B paid $200
of the QREs, C paid $300 of the QREs,
and D paid $500 of the QREs during the
taxable year. Based on the proportion of
each member’s contribution of QREs to
the controlled group’s total QREs for the
taxable year, B is allocated a $20 credit, C
is allocated a $30 credit, and D is allocated
a $50 credit.
The Treasury Department and IRS in-
tend to revise § 1.41–6 and the examples
demonstrating the allocation of the con-
trolled group credit consistent with the al-
location methodology described in this no-
tice.
EFFECT ON OTHER CODE SECTIONS
Rules similar to the rules under
§ 41(f)(1) apply for purposes of § 45C,
Clinical Testing Expenses for Certain
Drugs for Rare Diseases or Conditions;
§ 45G, Railroad Track Maintenance
Credit; § 45O, Agricultural Chemicals
Security Credit; and § 280C, Certain Ex-
penses for Which Credits are Allowable.
Therefore, an allocation method similar
to the method required under this notice
must be used for purposes of allocating
credits to controlled group members un-
der those Code sections. Specifically,
see §§ 45C(d)(3), 45G(e)(2), 45O(g), and
280C(b)(3).
EFFECTIVE DATE
This notice is effective for taxable years
beginning after December 31, 2011.
REQUEST FOR COMMENTS
The Treasury Department and IRS in-
vite taxpayers to submit written comments
on issues relating to this notice. Send
comments to: CC:PA:LPD:RU (Notice
2013–20), Room 5203, Internal Revenue
Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044. Sub-
missions may be hand-delivered Monday
through Friday between the hours of 8
a.m. and 4 p.m. to CC:PA:LPD:RU (No-
tice 2013–20), Courier’s Desk, Internal
Revenue Service, 1111 Constitution Av-
enue, NW, Washington, DC. Submissions
may also be sent electronically via the
Internet to the following e-mail address:
Notice.comments@irscounsel.treas.gov.
Include the notice number (Notice
2013–20) in the subject line. Comments
must be received on or before June 6,
2013. All comments will be available for
public inspection and copying.
April 8, 20139022013–15 I.R.B.

DRAFTING INFORMATION
The principal author of this notice
is David Selig, Office of the Associate
Chief Counsel (Passthroughs and Special
Industries). For further information
regarding this notice, please contact
Mr. Selig at (202) 622–3040 (not a
toll-free call).
Postponement of Deadline for
Making an Election to Deduct
for the Preceding Taxable
Year Losses Attributable to
Hurricane Sandy
Notice 2013–21
PURPOSE
This notice postpones until October 15,
2013, the deadline to make an election
under § 165(i) of the Internal Revenue
Code to deduct in the preceding taxable
year losses attributable to Hurricane Sandy
sustained in a federally declared disaster
area in Connecticut, Delaware, District
of Columbia, Maryland, Massachusetts,
New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island, Virginia, or
West Virginia resulting from Hurricane
Sandy. This postponement is granted un-
der § 7508A.
BACKGROUND
In late October 2012, Hurricane Sandy
struck the east coast causing severe dam-
age in a number of states. The President of
the United States issued major disaster and
emergency declarations under the author-
ity of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, 42 U.S.C.
§§ 5121–5206 (Stafford Act), for certain
areas in Connecticut, Delaware, District
of Columbia, Maryland, Massachusetts,
New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island, Virginia, and
West Virginia. The Federal Emergency
Management Agency (FEMA) determined
certain areas within those states and the
District of Columbia to be eligible for
Public Assistance or Public Assistance and
Individual Assistance under the Stafford
Act.
Section 165(i) provides that if a tax-
payer sustains a loss attributable to a
federally declared disaster occurring in a
disaster area, the taxpayer may elect to
deduct that loss on the taxpayer’s return
for the taxable year immediately preced-
ing the taxable year in which the disaster
occurred. For purposes of § 165(i), a
federally declared disaster is a disaster
determined by the President to warrant as-
sistance by the Federal Government under
the Stafford Act (including a disaster for
which the President issues a major disaster
declaration or an emergency declaration),
and a disaster area is the area so deter-
minedtobeeligibleforsuchassistance.
See§ 165(h)(3)(C) and 42 U.S.C. § 5122.
Section 1.165–11(e) of the Income Tax
Regulations requires a taxpayer to make
the § 165(i) election by filing a return, an
amended return, or a refund claim on or be-
fore the later of: (1) the due date of the
taxpayer’s income tax return (determined
without regard to any extension of time
for filing the return) for the taxable year in
which the disaster actually occurred; or (2)
the due date of the taxpayer’s income tax
return (determined with regard to any ex-
tension of time for filing the return) for the
immediately preceding taxable year. Sec-
tion 1.165–11(e) provides that the return
or claim should specify the date or dates
of the disaster that gave rise to the loss,
and the city, town, county, and State in
which the property that was damaged or
destroyed was located at the time of the
disaster. The election is irrevocable 90
days after the taxpayer makes the election.
Section 7508A provides the Secre-
tary of the Treasury with authority to
postpone the time for performing certain
acts under the internal revenue laws for
up to one year for a taxpayer affected
by a federally declared disaster. Section
301.7508A–1(c)(1) of the Regulations
on Procedure and Administration lists
several specific acts performed by tax-
payers for which § 7508A relief may
apply, and § 301.7508A–1(c)(1)(vii) au-
thorizes the IRS and Treasury Depart-
ment to specify additional acts. Sec-
tion 301.7508A–1(d)(1) describes sev-
eral types of affected taxpayers eligi-
ble for relief under § 7508A. Section
301.7508A–1(d)(1)(ix) authorizes the IRS
to determine that any other person is af-
fected by a federally declared disaster
and therefore eligible for relief. Under
§ 301.7508A–1(d)(2), the area of a feder-
ally declared disaster for which the IRS
has determined that the postponement of
one or more deadlines applies is referred
to as a covered disaster area.
AFFECTED TAXPAYERS FOR WHICH
THE SECTION 165(i) DEADLINE IS
POSTPONED
Under the authority of § 7508A
and §§ 301.7508A–1(c)(1)(vii) and
301.7508A–1(d)(1)(ix), the IRS has de-
termined that the areas that FEMA has
determined to be eligible for Public Assis-
tance or Public Assistance and Individual
Assistance pursuant to the major disas-
ter and emergency declarations issued
in response to Hurricane Sandy are cov-
ered disaster areas. A list of those areas
is available at the Federal Emergency
Management Agency (FEMA) website at
www.fema.gov/disaster.
Undertheauthorityof
§ 301.7508A–1(d)(1)(ix), a taxpayer
is an affected taxpayer to which the
postponement of the deadline for making
the § 165(i) election applies if: (1) the
taxpayer sustained a loss attributable to
Hurricane Sandy; (2) the loss occurred
in a covered disaster area for Hurricane
Sandy (regardless of whether the tax-
payer’s principal residence or principal
place of business is in one of the covered
disaster areas); and (3) the deadline for
the taxpayer to make a § 165(i) election
for that loss, but for this notice, would be
before October 15, 2013.
Affected taxpayers for purposes of this
notice are not affected taxpayers for pur-
poses of other relief provided by the IRS
unless the taxpayer separately qualifies as
an affected taxpayer under other guidance
issued by the IRS.
GRANT OF RELIEF
Under the authority of § 7508A, the
IRS grants affected taxpayers, as defined
above, a postponement to October 15,
2013, to make an election under § 165(i)
for losses attributable to Hurricane Sandy.
To assist the IRS in identifying affected
taxpayers to ensure that they receive this
postponement of the deadline to make
the § 165(i) election, affected taxpayers
should include a reference to this no-
tice, Notice 2013–21, with their return,
amended return, or refund claim on which
they are making a postponed § 165(i) elec-
tion pursuant to this notice. The return or
2013–15 I.R.B.903April 8, 2013

claim should also include the other infor-
mation requested in § 1.165–11(e).
This notice is limited to making an elec-
tion under § 165(i) and does not affect
the application of any other section of the
Code or the regulations.
DRAFTING INFORMATION
The principal author of this no-
tice is Grace H. Kim of the Office of
Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this notice, contact Ms. Kim on
(202) 622–7900 (not a toll-free call).
Public Comment Invited
on Recommendations for
2013–2014 Guidance Priority
List
Notice 2013–22
The Department of Treasury and In-
ternal Revenue Service (Service) invite
public comment on recommendations
for items that should be included on the
2013–2014 Guidance Priority List.
The Treasury Department’s Office of
Tax Policy and the Service use the Guid-
ance Priority Listeach year to identify
and prioritize the tax issues that should
be addressed through regulations, revenue
rulings, revenue procedures, notices, and
other published administrative guidance.
The 2013–2014 Guidance Priority List
will establish the guidance that the Trea-
sury Department and the Service intend
to prioritize for purposes of allocating re-
sources from July 1, 2013, through June
30, 2014. The Treasury Department and
the Service recognize the importance of
public input to formulate a Guidance Prior-
ity List that focuses resources on guidance
items that are most important to taxpayers
and tax administration. Published guid-
ance plays an important role in increasing
voluntary compliance by helping to clarify
ambiguous areas of the tax law.
As is the case whenever significant leg-
islation is enacted, the Treasury Depart-
ment and the Service have continued to
dedicate substantial resources during the
current plan year to published guidance
projects necessary to implement the provi-
sions of the multitude of tax acts that have
been enacted over the past several years
including, but not limited to, the Ameri-
can Recovery and Reinvestment Tax Act
of 2009, Pub. L. No. 111–5, 123 Stat.
115, which was enacted on February 17,
2009; the Hiring Incentives to Restore Em-
ployment Act, Pub. L. No. 111–147, 124
Stat. 71, which was enacted on March 18,
2010; the Patient Protection and Afford-
able Care Act, Pub. L. No. 111–148, 124
Stat. 119, which was enacted on March 23,
2010; the Health Care and Education Rec-
onciliation Act, Pub. L. No. 111–152, 124
Stat. 1029, which was enacted on March
30, 2010; the Tax Relief, Unemployment
Insurance Reauthorization, and Job Cre-
ation Act of 2010, Pub. L. No. 111–312,
124 Stat. 3296, which was enacted on De-
cember 17, 2010; and the American Tax-
payer Relief Act of 2012, Pub. L. No.
112–240, which was enacted on January
2, 2013. The Treasury Department and
the Service will continue to evaluate the
priority of each guidance project in light
of the above-mentioned tax legislation and
other developments occurring during the
2013–2014 plan year.
In reviewing recommendations and
selecting projects for inclusion on the
2013–2014 Guidance Priority List, the
Treasury Department and the Service will
consider the following:
1. Whether the recommended guidance
resolves significant issues relevant to
many taxpayers;
2. Whether the recommended guidance
promotes sound tax administration;
3. Whether the recommended guidance
can be drafted in a manner that will
enable taxpayers toeasily understand
and apply the guidance;
4. Whether the recommended guid-
ance involves regulations that are
outmoded, ineffective, insufficient,
or excessively burdensome and that
should be modified, streamlined, ex-
panded, or repealed;
5. Whether the Service can administer
the recommended guidance on a uni-
form basis; and
6. Whether the recommended guidance
reduces controversy and lessens the
burden on taxpayers or the Service.
Taxpayers may submit recommenda-
tions for guidance at any time during the
year. Please submit recommendations by
May 1, 2013, for possible inclusion on
the original 2013–2014 Guidance Priority
List. The Treasury Department and the
Service may update the 2013–2014 Guid-
ance Priority List periodically to reflect
additional guidance that the Treasury De-
partment and the Service intend to publish
during the plan year. The periodic updates
allow the Treasury Department and the
Service to respond to the need for addi-
tional guidance that may arise during the
plan year. Recommendations for guidance
received after May 1, 2013, will be re-
viewed for inclusion in the next periodic
update.
Taxpayers are not required to submit
recommendations for guidance in any par-
ticular format. Taxpayers should, how-
ever, briefly describe the recommended
guidance and explain the need for the guid-
ance. In addition, taxpayers may include
an analysis of how the issue should be re-
solved. It would be helpful if taxpayers
suggesting more than one guidance project
prioritize the projects by order of impor-
tance. If a large number of projects are be-
ing suggested, it also would be helpful if
the projects were grouped in terms of high,
medium, or low priority.
Taxpayers should send written com-
ments to:
Internal Revenue Service
Attn: CC:PA:LPD:PR
(Notice 2013–22)
Room 5203
P. O. Box 7604
Ben Franklin Station
Washington, DC 20044
or hand deliver comments Monday
through Friday between the hours of 8
a.m. and 4 p.m. to:
Courier’s Desk
Internal Revenue Service
Attn: CC:PA:LPD:PR
(Notice 2013–22)
1111 Constitution Avenue, N.W.
Washington, DC 20224
Alternatively, taxpayers may sub-
mit comments electronically via
e-mail to the following address:
Notice.Comments@irscounsel.treas.gov.
Taxpayers should include “Notice
2013–22” in the subject line. All
comments submitted by the public will
be available for public inspection and
copying in their entirety.
April 8, 20139042013–15 I.R.B.

For further information regarding this
notice, contact Henry Schneiderman of
the Office of Associate Chief Counsel (Procedure and Administration) at (202)
622–3400 (not a toll-free call).
2013–15 I.R.B.905April 8, 2013

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 ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
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 withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes 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
withamplifiedandclarified, 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
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes 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 pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis 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 rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis 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 fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
April 8, 2013i2013–15 I.R.B.

Numerical Finding List
1
Bulletins 2013–1 through 2013–15
Announcements:
2013-1, 2013-1 I.R.B.251
2013-2, 2013-2 I.R.B.271
2013-3, 2013-2 I.R.B.271
2013-4, 2013-4 I.R.B.440
2013-5, 2013-3 I.R.B.306
2013-6, 2013-3 I.R.B.307
2013-7, 2013-3 I.R.B.308
2013-8, 2013-4 I.R.B.440
2013-9, 2013-4 I.R.B.441
2013-10, 2013-3 I.R.B.311
2013-11, 2013-6 I.R.B.483
2013-12, 2013-11 I.R.B.651
2013-13, 2013-9 I.R.B.532
2013-14, 2013-11 I.R.B.651
2013-15, 2013-11 I.R.B.652
2013-16, 2013-14 I.R.B.738
2013-19, 2013-14 I.R.B.760
2013-20, 2013-14 I.R.B.761
Notices:
2013-1, 2013-3 I.R.B.281
2013-2, 2013-6 I.R.B.473
2013-3, 2013-7 I.R.B.484
2013-4, 2013-9 I.R.B.527
2013-5, 2013-9 I.R.B.529
2013-6, 2013-10 I.R.B.540
2013-7, 2013-6 I.R.B.477
2013-8, 2013-7 I.R.B.486
2013-9, 2013-9 I.R.B.529
2013-10, 2013-8 I.R.B.503
2013-11, 2013-11 I.R.B.610
2013-12, 2013-10 I.R.B.543
2013-13, 2013-12 I.R.B.659
2013-14, 2013-13 I.R.B.712
2013-15, 2013-14 I.R.B.739
2013-16, 2013-14 I.R.B.740
2013-18, 2013-14 I.R.B.742
2013-19, 2013-14 I.R.B.743
2013-20, 2013-15 I.R.B.902
2013-21, 2013-15 I.R.B.903
2013-22, 2013-15 I.R.B.904
Proposed Regulations:
REG-155929-06, 2013-11 I.R.B.650
REG-106918-08, 2013-13 I.R.B.714
REG-141066-09, 2013-3 I.R.B.289
REG-148873-09, 2013-7 I.R.B.494
REG-102966-10, 2013-10 I.R.B.579
REG-140649-11, 2013-12 I.R.B.666
REG-118315-12, 2013-14 I.R.B.746
REG-122707-12, 2013-5 I.R.B.450
Proposed Regulations— Continued:
REG-148500-12, 2013-13 I.R.B.716
Revenue Procedures:
2013-1, 2013-1 I.R.B.1
2013-2, 2013-1 I.R.B.92
2013-3, 2013-1 I.R.B.113
2013-4, 2013-1 I.R.B.126
2013-5, 2013-1 I.R.B.170
2013-6, 2013-1 I.R.B.198
2013-7, 2013-1 I.R.B.233
2013-8, 2013-1 I.R.B.237
2013-9, 2013-2 I.R.B.255
2013-10, 2013-2 I.R.B.267
2013-11, 2013-2 I.R.B.269
2013-12, 2013-4 I.R.B.313
2013-13, 2013-6 I.R.B.478
2013-14, 2013-3 I.R.B.283
2013-15, 2013-5 I.R.B.444
2013-16, 2013-7 I.R.B.488
2013-17, 2013-11 I.R.B.612
2013-18, 2013-8 I.R.B.503
2013-19, 2013-11 I.R.B.648
2013-20, 2013-14 I.R.B.744
2013-21, 2013-12 I.R.B.660
Revenue Rulings:
2013-1, 2013-2 I.R.B.252
2013-2, 2013-10 I.R.B.533
2013-3, 2013-8 I.R.B.500
2013-4, 2013-9 I.R.B.520
2013-5, 2013-9 I.R.B.525
2013-6, 2013-13 I.R.B.701
2013-7, 2013-11 I.R.B.608
2013-8, 2013-15 I.R.B.763
2013-9, 2013-15 I.R.B.764
Tax Conventions:
2013-16, 2013-14 I.R.B.738
Treasury Decisions:
9601, 2013-10 I.R.B.535
9603, 2013-3 I.R.B.273
9605, 2013-11 I.R.B.587
9606, 2013-11 I.R.B.586
9607, 2013-6 I.R.B.469
9608, 2013-3 I.R.B.274
9609, 2013-12 I.R.B.655
9610, 2013-15 I.R.B.765
9611, 2013-13 I.R.B.699
9612, 2013-13 I.R.B.678
9613, 2013-15 I.R.B.900
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin
2012–52, dated December 27, 2012.
2013–15 I.R.B.iiApril 8, 2013

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2013–1 through 2013–15
Announcements:
2012-42
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
Notices:
2000-45
Modified and superseded by
Notice 2013-18, 2013-14 I.R.B.742
2010-60
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
2011-14
Amplified and supplemented by
Notice 2013-7, 2013-6 I.R.B.477
2011-34
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
2011-38
Obsoleted by
REG-148873-09, 2013-7 I.R.B.494
2011-53
Obsoleted by
T.D. 9610, 2013-15 I.R.B.765
2012-60
Superseded by
Notice 2013-1, 2013-3 I.R.B.281
2013-1
Modified and superseded by
Notice 2013-16, 2013-14 I.R.B.740
Proposed Regulations:
REG-140668-07
Corrected by
Ann. 2013-6, 2013-3 I.R.B.307
Revenue Procedures:
87-57
Modified by
Rev. Proc. 2013-13, 2013-6 I.R.B.478
2004-66
Modified and superseded by
Rev. Proc. 2013-11, 2013-2 I.R.B.269
2008-35
Modified and superseded by
Rev. Proc. 2013-14, 2013-3 I.R.B.283
Revenue Procedures— Continued:
2008-50
Modified and superseded by
Rev. Proc. 2013-12, 2013-4 I.R.B.313
2011-14
Modified by
Rev. Proc. 2013-20, 2013-14 I.R.B.744
2011-49
Modified by
Rev. Proc. 2013-6, 2013-1 I.R.B.198
2011-52
Modified and partly superseded by
Rev. Proc. 2013-15, 2013-5 I.R.B.444
2011-55
Amplified and supplemented by
Notice 2013-7, 2013-6 I.R.B.477
2011-61
Superseded by
Rev. Proc. 2013-17, 2013-11 I.R.B.612
2011-62
Superseded by
Rev. Proc. 2013-18, 2013-8 I.R.B.503
2012-1
Superseded by
Rev. Proc. 2013-1, 2013-1 I.R.B.1
2012-2
Superseded by
Rev. Proc. 2013-2, 2013-1 I.R.B.92
2012-3
Superseded by
Rev. Proc. 2013-3, 2013-1 I.R.B.113
2012-4
Superseded by
Rev. Proc. 2013-4, 2013-1 I.R.B.126
2012-5
Superseded by
Rev. Proc. 2013-5, 2013-1 I.R.B.170
2012-6
Superseded by
Rev. Proc. 2013-6, 2013-1 I.R.B.198
2012-7
Superseded by
Rev. Proc. 2013-7, 2013-1 I.R.B.233
2012-8
Superseded by
Rev. Proc. 2013-8, 2013-1 I.R.B.237
2012-9
Superseded by
Rev. Proc. 2013-9, 2013-2 I.R.B.255
Revenue Procedures— Continued:
2012-10
Superseded by
Rev. Proc. 2013-10, 2013-2 I.R.B.267
2012-30
Corrected and clarified by
Ann. 2013-3, 2013-2 I.R.B.271
Updated by
Ann. 2013-10, 2013-3 I.R.B.311
2012-46
Corrected by
Ann. 2013-11, 2013-6 I.R.B.483
2013-1
Corrected by
Ann. 2013-9, 2013-4 I.R.B.441
2013-6
Revised by
Ann. 2013-15, 2013-11 I.R.B.652
Corrected by
Ann. 2013-13, 2013-9 I.R.B.532
2013-14
Modified by
Rev. Proc. 2013-19, 2013-11 I.R.B.648
Revenue Rulings:
92-19
Supplemented in part by
Rev. Rul. 2013-4, 2013-9 I.R.B.520
Treasury Decisions:
9564
Corrected by
Ann. 2013-4, 2013-4 I.R.B.440
Amended by
Ann. 2013-7, 2013-3 I.R.B.308
9604
Corrected by
Ann. 2013-19, 2013-14 I.R.B.760
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin 2012–52, dated December 27,
2012.
April 8, 2013iii2013–15 I.R.B.

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