Internal Revenue Bulletin 2015-19 (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.

# INTERNAL REVENUE BULLETIN

IRS

Bulletin No.

2015-19

May

11, 2015

## HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

## INCOME TAX

Notice 2015-37, page 947.

Eligibility for Minimum Essential Coverage for Purposes of the
Premium Tax Credit. This notice provides guidance on whether
or when, for purposes of the premium tax credit under § 36B
of the Code, an individual is eligible for minimum essential
coverage under a "Children's Health Insurance buy-in program"
that has been designated as minimum essential coverage.

## EXCISE TAX

### REG-103281-11, page 948.

Section 301 of James Zadroga 9/11 Health and Compensation
Act of 2010, Public Law 111-347 (124 Stat. 3623) (the "Act")
added section 5000C to the Internal Revenue Code that im-
poses a 2 percent tax on payments made by the U.S. govern-
ment to foreign persons pursuant to certain contracts. These
proposed regulations provide guidance to U.S. government
acquiring agencies and foreign persons to determine what
goods or services are subject to the section 5000C; and how
to remit the 2 percent tax by U.S. government acquiring agen-
cies or foreign persons, if the section 5000C tax is applicable.

## The IRS Mission

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

## Introduction

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

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

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

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

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

The Bulletin is divided into four parts as follows:

### Part I .- 1986 Code.

This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.

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

This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.

Part III .- Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury's Office of the Assistant Sec-
retary (Enforcement).

### Part IV .- Items of General Interest.

This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.

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

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

## Part III. Administrative, Procedural, and Miscellaneous

### Eligibility for Minimum Essential Coverage for Purposes of the Premium Tax Credit

Notice 2015-37

This notice provides guidance on eligi-
bility for minimum essential coverage un-
der § 36B of the Internal Revenue Code
for individuals who may enroll in cover-
age under "Children's Health Insurance
(CHIP) buy-in programs" that the Depart-
ment of Health and Human Services
(HHS) designates as minimum essential
coverage.

#### BACKGROUND

Beginning in 2014, certain individuals
covered under a qualified health plan
through the Health Insurance Market-
place, also called the Affordable Insur-
ance Exchange, are allowed a premium
tax credit under § 36B. Under § 36B and
§ 1.36B-2 of the Income Tax Regulations,
coverage of an individual (who may be
the taxpayer claiming the premium tax
credit or a member of the taxpayer's fam-
ily) may be subsidized by the premium tax
credit only for months the individual is not
eligible for other minimum essential cover-
age, except coverage in the individual mar-
ket. Minimum essential coverage is defined
in § 5000A(f) and includes coverage under
certain government-sponsored programs, in-
cluding CHIP coverage under title XXI of

the Social Security Act, and coverage HHS
designates as minimum essential coverage.

In general, an individual is treated as
eligible for minimum essential coverage
under a government-sponsored program if
the individual meets the eligibility criteria
for coverage under the program. How-
ever, the Commissioner may define eligi-
bility for minimum essential coverage
under specific government-sponsored pro-
grams in additional published guidance.
Section 1.36B-2(c)(2)(i). The regulations
under § 36B provide that, for purposes of
the premium tax credit, an individual is
eligible for minimum essential coverage
under a health care program under chapter
17 or 18 of Title 38, U.S.C. (programs
administered by the Department of Veter-
ans Affairs) only if the individual is en-
rolled in the program. Section 1.36B-
2(c)(2)(iii). Under Notice 2014-71,
2014-49 I.R.B. 912, and Notice 2013-
41, 2013-29 I.R.B. 60, for purposes of the
premium tax credit, individuals are eligi-
ble for minimum essential coverage under
certain other government-sponsored pro-
grams and certain programs HHS has des-
ignated as minimum essential coverage
only if they are enrolled in the program.

In certain states, certain individuals in
households with income exceeding eligi-
bility levels for CHIP may enroll in cov-
erage resembling coverage under the
state's CHIP program. These programs,
commonly called "CHIP buy-in pro-
grams", generally require the payment of
premiums with little or no government
subsidy. The programs are not authorized

or funded under title XXI of the Social
Security Act and therefore are not
government-sponsored minimum essen-
tial coverage under § 5000A(f)(1)(A). Ad-
ditionally, a segment of the population
who otherwise would be eligible for sub-
sidized qualified health plan coverage
could enroll in coverage through a CHIP
buy-in program only at high cost. HHS
will consider recognizing CHIP buy-in
programs as minimum essential coverage
when an application is filed under 45 CFR
§ 156.604 on behalf of a program.

#### GUIDANCE

An individual who may enroll in a
CHIP buy-in program that HHS has des-
ignated as minimum essential coverage is
eligible for minimum essential coverage
under the program for purposes of the
premium tax credit only for the period the
individual is enrolled.

#### EFFECTIVE DATE

This notice is effective for coverage on
or after January 1, 2015.

#### DRAFTING INFORMATION

The principal author of this notice is
Arvind Ravichandran of the Office of the
Associate Chief Counsel (Income Tax and
Accounting). For further information re-
garding this notice, contact Mr. Ravichan-
dran at (202) 317-4718 (not a toll-free
number).

## Part IV. Items of General Interest

### Notice of Proposed Rulemaking Tax on Certain Foreign Procurement

#### REG-103281-11

AGENCY: Internal Revenue Service (IRS),
Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains
proposed regulations under section 5000C
of the Internal Revenue Code relating to
the 2 percent tax on payments made by the
U.S. government to foreign persons pur-
suant to certain contracts. The proposed
regulations affect U.S. government ac-
quiring agencies and foreign persons pro-
viding certain goods or services to the
U.S. government pursuant to a contract.
This document also contains proposed
regulations under section 6114, with re-
spect to foreign persons claiming an ex-
emption from the tax under an income tax
treaty.

DATES: Written or electronic comments
and requests for a public hearing must be
received by July 21, 2015.

ADDRESSES: Send submissions to: CC:
PA:LPD:PR (REG-103281-11), Internal
Revenue Service, Room 5203, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand-
delivered Monday through Friday be-
tween the hours of 8 a.m. and 4 p.m. to
CC:PA:LPD:PR (REG-103281-11), Couri-
er's Desk, Internal Revenue Service, 1111
Constitution Avenue, NW, Washington,
DC 20224; or sent electronically via the
Federal eRulemaking Portal at http://
www.regulations.gov (REG-103281-11).

#### FOR FURTHER INFORMATION

CONTACT: Concerning the proposed
regulations, Kate Hwa at (202) 317-6934,
or for questions related to tax treaties,
Rosy Lor at (202) 317-6933; concerning
submissions of comments, Oluwafunmi-
layo Taylor, (202) 317-5179, (not toll-free
numbers).

SUPPLEMENTARY INFORMATION:

### Paperwork Reduction Act

The collection of information con-
tained in this notice of proposed rulemak-
ing has been submitted to the Office of
Management and Budget (OMB) for review
in accordance with the Paperwork Reduc-
tion Act of 1995 (44 U.S.C. 3507(d)). Com-
ments on the collection of information
should be sent to the Office of Manage-
ment and Budget, Attn: Desk Officer for
the Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503, with copies to the
Internal Revenue Service, Attn: IRS Re-
ports Clearance Officer, SE:W:CAR:MP:
T:T:SP, Washington, DC 20224. Com-
ments on the collection of information
should be received by June 22, 2015.
Comments are specifically requested con-
cerning:

Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the IRS, in-
cluding whether the information will have
practical utility;

The accuracy of the estimated burden
associated with the proposed collection of
information;

How the quality, utility, and clarity of
the information to be collected may be
enhanced;

How the burden of complying with the
proposed collection of information may
be minimized, including through the ap-
plication of automated collection tech-
niques or other forms of information tech-
nology; and

Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of services to provide informa-
tion.

The collection of information in the pro-
posed regulations is contained in a number
of provisions including §§ 1.5000C-2,
1.5000C-3, and 1.5000C-4. Responses to
these collections of information are required
to verify the status of foreign persons to
whom specified Federal procurement pay-
ments subject to the section 5000C tax are
made; to obtain a benefit (to claim an
exemption to, or a reduction in, withhold-
ing); and to facilitate tax compliance (to

verify entitlement to an exemption). The
IRS intends that these information collec-
tion requirements will be satisfied primar-
ily on existing chapter 3 withholding
forms by U.S. government acquiring
agencies, along with Form 1120-F, "U.S.
Income Tax Return of a Foreign Corpora-
tion," and Form 1040NR, "U.S. Nonresi-
dent Alien Income Tax Return." How-
ever, in certain circumstances, foreign
persons must collect certain information
in order to demonstrate to an acquiring
agency the appropriate amount to with-
hold, if any, on a Section 5000C Certificate.
This reporting burden will be reflected in a
new Form W-14, "Certificate of Party Re-
ceiving Federal Procurement Payment," or
the Section 5000C Certificate.

The likely respondents are the U.S.
government and foreign persons that enter
into contracts with the U.S. government.

Estimated total annual reporting or re-
cordkeeping burden: 11,840 hours.

Estimated average annual burden hours
per respondent or recordkeeper varies
from .5 hours to 40 hours, depending on
individual circumstances, with an esti-
mated average of 5 hours, 55 minutes.

Estimated number of respondents or
recordkeepers: 2,000.

An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less it displays a valid control number
assigned by the OMB.

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

### Background

This document contains proposed
amendments to 26 CFR part 1 under sec-
tion 5000C of the Internal Revenue Code
(Code). On January 2, 2011, section 301
of the James Zadroga 9/11 Health and
Compensation Act of 2010, Public Law
111-347 (the Act), 124 Stat. 3623, added
section 5000C to the Code. Section 5000C
imposes on any foreign person a 2 percent
tax on certain payments received from the

Government of the United States (U.S.
government) for goods and services. Sec-
tion 301(a)(3) of the Act provides that
section 5000C applies to payments re-
ceived pursuant to contracts entered into
on and after January 2, 2011. Addition-
ally, section 301(b)(1) of the Act stipu-
lates that no funds are to be disbursed to
any foreign contractor in order to reim-
burse the tax imposed under section
5000C. The Federal Acquisition Regula-
tion (FAR) is the body of rules that gen-
erally governs acquisitions and contract-
ing procedures for federal agencies. See
48 CFR Chapter 1. To comply with sec-
tion 301(b)(1) of the Act, the Federal Ac-
quisition Regulation Council has amended

the FAR to reflect that the 2 percent tax
imposed under section 5000C is disal-
lowed as a contract cost, excluded from
the contract price, and not reimbursed un-
der the contract. See 48 CFR 31.205-
41(b), 52.229-3(b)(2), 52.229-4(b)(2),
52.229-6(c)(2), and 52.229-7(b)(2).

Section 301(c) of the Act provides that
section 5000C shall be applied in a man-
ner consistent with United States obliga-
tions under international agreements.

This document also contains amend-
ments to 26 CFR part 301 under section
6114 of the Code. Section 6114(a) gener-
ally requires reporting when a taxpayer
takes the position that a treaty of the
United States overrules (or otherwise
modifies) an internal revenue law. Section
6114(b) provides that the Secretary may
waive the reporting requirement under
section 6114(a) with respect to classes of
cases for which the Secretary determines
that the waiver will not impede the assess-
ment and collection of tax.

### Explanation of Provisions

The proposed regulations provide rules
relating to the imposition of, and exemp-
tion from, the tax under section 5000C.
They also contain rules relating to the
obligation of the U.S. government to with-
hold, deposit, and report amounts to the
IRS under section 5000C. Further, they
provide guidance to foreign persons who
must report and pay the tax under section
5000C in certain circumstances. If the
U.S. government fails to withhold an
amount equal to the tax due under section
5000C, the foreign person must file a U.S.
return and pay the tax due. In addition, the

proposed regulations provide guidance as
to when the imposition of tax would be
inconsistent with U.S. treaty obligations.
Proposed regulations under section
6114(b) generally waive the reporting re-
quirements under section 6114(a) when a
taxpayer takes the position that a nondis-
crimination provision of an income tax
treaty exempts a payment from tax under
section 5000C, provided that certain other
requirements are satisfied.

#### I. Payments Subject to Section 5000C Tax

Section 5000C(a) applies to foreign
persons that are party to certain contracts
with the U.S. government entered into on
and after January 2, 2011. In particular,
section 5000C imposes on the foreign per-
son a tax equal to 2 percent of the amount
of a specified Federal procurement pay-
ment in certain circumstances. Section
5000C(b) defines the term specified Fed-
eral procurement payment as any pay-
ment made pursuant to a contract with the
U.S. government for goods or services if
the goods are manufactured or produced
in or the services are provided in any
country that is not a party to an interna-
tional procurement agreement with the
United States.

##### II. Definitions

Proposed § 1.5000C-1(c) sets forth
definitions that apply solely for purposes
of section 5000C and the proposed regu-
lations, several of which are described as
follows.

###### A. Contracting party, foreign contracting party

Under the proposed regulations, the
term contracting party means any person
that is a party to a contract with the U.S.
government entered into on and after Jan-
uary 2, 2011. The term foreign contract-
ing party means a contracting party that is
not a U.S. person.

###### B. U.S. government

For purposes of section 5000C, the
proposed regulations define the term Gov-
ernment of the United States or U.S. gov-

ernment as the executive departments
specified in 5 U.S.C. 101 (such as the
Department of Agriculture and the De-
partment of Transportation), the military
departments specified in 5 U.S.C. 102
(which includes the Department of the
Army, the Department of the Navy, and
the Department of the Air Force), the in-
dependent establishments specified in 5
U.S.C. 104(1), and wholly owned Gov-
ernment corporations specified in 31
U.S.C. 9101(3) (such as the Export-
Import Bank of the United States and the
Pension Benefit Guaranty Corporation).
Unless otherwise specified in 5 U.S.C.
101, 102, or 104(1), or 31 U.S.C. 9101(3),
the term U.S. government does not in-
clude any quasi-governmental entities or
instrumentalities of the U.S. government.
The proposed regulations refer to U.S.
government departments or agencies that
are party to a contract as acquiring agen-
cies. Moreover, to the extent that a U.S.
government department or agency other
than the acquiring agency is making the
payments pursuant to the contract, that
department or agency is also treated as the
acquiring agency for purposes of the pro-
posed regulations.

###### C. International procurement agreement

The proposed regulations define the
term international procurement agreement
as the World Trade Organization Govern-
ment Procurement Agreement within the
meaning of 48 CFR 25.400(a)(1) and any
Free Trade Agreement to which the United
States is a party that includes government
procurement obligations that provide ap-
propriate competitive government pro-
curement opportunities to U.S. goods, ser-
vices, and suppliers. For purposes of this
definition, a party to an agreement is a
signatory to the agreement and does not
include a country that is merely an ob-
server with respect to the agreement.

###### D. Contract

The proposed regulations provide that
the term contract has the same meaning as
provided in § 2.101 of the FAR. Under the
FAR, a contract does not include a grant
agreement or cooperative agreement
within the meaning of 31 U.S.C. 6304 and
6305, respectively. A grant agreement is

an agreement between the U.S. govern-
ment and a recipient when: (1) the princi-
pal purpose of the relationship is to trans-
fer a thing of value to the recipient to
carry out a public purpose of support or
stimulation authorized by a law of the
United States instead of acquiring (by pur-
chase, lease, or barter) property or ser-
vices for the direct benefit or use of the
U.S. government; and (2) substantial in-
volvement is not expected between the
executive agency and the recipient when
carrying out the activity contemplated in
the agreement. See 31 U.S.C. 6304. A
cooperative agreement is similar to a grant
agreement except that substantial involve-
ment is expected between the U.S. gov-
ernment and the recipient when carrying
out the activity contemplated in the agree-
ment. See 31 U.S.C. 6305. Thus, consis-
tent with the FAR, the proposed regula-
tions provide that the tax imposed under
section 5000C does not apply to grant or
cooperative agreements with the U.S.
government.

#### III. Exemptions from Section 5000C Tax

The proposed regulations provide five
exemptions from the tax imposed under
section 5000C. The first exemption ex-
cludes payments for purchases under the
simplified acquisitions procedures that do
not exceed the simplified acquisitions
threshold (as described in the FAR). The
second exemption excludes payments pur-
suant to contracts for certain emergency
acquisitions (as defined in the FAR). The
third exemption excludes payments if the
imposition of the tax would be inconsis-
tent with any international agreement with
the United States, including for example,
when a foreign contracting party is enti-
tled to the benefit of a nondiscrimination
provision of an international agreement
with the United States, such as a qualified
income tax treaty. The fourth exemption
applies if the goods are manufactured or
produced, or services are provided, in the
United States. The final exemption is for
goods manufactured or produced or ser-
vices provided in a country that is a party
to an international procurement agreement
with the United States. Sections III.A-C
of this preamble discuss several of the
exemptions.

##### A. Payments for simplified acquisitions

The IRS and the Department of the
Treasury (Treasury Department) recog-
nize that withholding under section 5000C
on contracts in certain circumstances may
be administratively burdensome and, in
some cases, more costly than the tax ac-
tually collected. Accordingly, the pro-
posed regulations provide that the tax im-
posed under section 5000C will not apply
to payments for purchases under the sim-
plified acquisition procedures described in
the FAR that do not exceed the simplified
acquisition threshold. See 48 CFR 2.101.
In general, simplified acquisition proce-
dures apply when the U.S. government
makes purchases of supplies or services of
$150,000 or less.

##### B. Emergency acquisitions

From time to time, the U.S. govern-
ment makes purchases in emergency situ-
ations. The IRS and Treasury Department
recognize that in those emergency situa-
tions it may not be practicable to impose
tax on payments otherwise subject to sec-
tion 5000C because it may impede the
ability of the U.S. government to make
certain acquisitions that are necessary to
prevent serious injury, financial or other,
to the U.S. government. Therefore,
§ 1.5000C-1(d)(2) exempts payments
pursuant to contracts (1) awarded under
the "unusual and compelling urgency" au-
thority of 48 CFR 6.302-2, and (2) en-
tered into under the emergency acquisi-
tion flexibilities as defined in 48 CFR Part
18. Acquisitions pursuant to the unusual
and compelling urgency authority of 48
CFR 6.302-2 are subject to special rules
and procedures when the need for supplies
or services is of such an urgency that
serious injury, financial or other, could
result for the U.S. government if the spe-
cial procedures did not apply. Certain
written justifications and approvals de-
scribed in 48 CFR 6.303 and 6.304 are
required for acquisitions in these circum-
stances. Acquisitions entered into under
the emergency acquisition flexibilities of
48 CFR Part 18 refer to acquisitions of
supplies or services by the U.S. govern-
ment that, as determined by the head of
an executive agency, may be used (1) in
support of a contingency operation (as

defined in 48 CFR 2.101), (2) to facili-
tate the defense against or recovery from
nuclear, biological, chemical, or radio-
logical attack against the United States,
or (3) when the President issues an
emergency declaration, or a major disas-
ter declaration.

##### C. Certain international agreements

Section 301(c) of the Act requires that
section 5000C be applied in a manner
consistent with United States obligations
under international agreements. The refer-
ence to "international agreements" in-
cludes income tax treaties to which the
United States is a party. The General Ex-
planation of Tax Legislation prepared by
the Joint Committee on Taxation accom-
panying section 5000C explains that trea-
ties generally provide that neither country
may subject nationals of the other country
to taxation more burdensome than the tax
it imposes on its own nationals. This ex-
planation by the Joint Committee on Tax-
ation refers to the nondiscrimination pro-
visions of tax treaties. See Staff of the
Joint Committee on Taxation, General Ex-
planation of Tax Legislation Enacted in
the 111th Congress, at 693-4.

The United States currently has 58
comprehensive income tax treaties in
force that cover 66 countries. Virtually all
nondiscrimination articles in these treaties
contain provisions that prohibit the impo-
sition of tax on a foreign national that is
more burdensome than the taxation to
which a U.S. national under similar cir-
cumstances may be subjected. A national
is generally defined in tax treaties to in-
clude both individuals possessing citizen-
ship and legal persons whose status is
derived from the laws of that country.
Some of these income tax treaties only
prohibit discrimination against foreign na-
tionals who are individuals, and a few
provide protection only for foreign na-
tionals who are also U.S. residents. The
majority of nondiscrimination articles
contain provisions that prohibit discrim-
ination against all foreign nationals of
the treaty country, regardless of whether
the national is a resident of the treaty
country.

Many of these income tax treaties have
a nondiscrimination article that applies to
"taxes of every kind and description,"

whether or not an income tax, and are
broad enough to apply to the tax imposed
under section 5000C. Consistent with sec-
tion 301(c) of the Act, any foreign con-
tracting party that is entitled to the bene-
fits of such a nondiscrimination article is
not subject to tax under section 5000C.
The proposed regulations refer to a treaty
with such an article as a qualified income
tax treaty. The term is defined as a U.S.
income tax treaty in force that contains a
nondiscrimination provision that applies
to the tax imposed under section 5000C
and prohibits taxation that is more burden-
some on a foreign national than a U.S.
national (or in the case of some income
tax treaties, taxation that is more burden-
some on a foreign citizen than a U.S.
citizen), regardless of residence. Notice
2015-35, 2015-18 IRB, identifies income
tax treaties in force, as of the date the
proposed regulations are issued, that are
qualified income tax treaties (available on
www.irs.gov). This Notice may be up-
dated or amended in subsequent IRS
Forms, Instructions, Publications, or other
media (including electronic media).

###### IV. Rules for Determining Where Goods Are Manufactured or Produced, and Where Services Are Performed

Section 5000C(b) applies when pay-
ments are made pursuant to a contract for
goods or services if the goods are manu-
factured or produced in or the services are
provided in a country that is not a party to
an international procurement agreement
with the United States. Solely for pur-
poses of section 5000C, the proposed reg-
ulations provide rules for determining
where goods are manufactured or pro-
duced, and where services are performed.
In particular, the proposed regulations
provide that goods are manufactured or
produced in the country (or countries)
where property has been substantially
transformed into the goods that are pro-
cured, or alternatively, where there has
been assembly or conversion of compo-
nent parts into the final product. Further,
the proposed regulations provide that ser-
vices will be considered to be provided in
the country where the individuals per-
forming the services are physically lo-
cated when they perform their duties pur-
suant to the contract.

If, pursuant to a single contract, goods
are manufactured or produced or services
are provided in multiple countries, the
proposed regulations provide that a for-
eign contracting party may use a reason-
able allocation method to determine how
the goods or services must be allocated to
each country for purposes of applying the
relevant exemptions for payments pursu-
ant to that contract. A reasonable alloca-
tion method would include taking into ac-
count the proportionate costs (including
the cost of labor and raw materials) in-
curred to manufacture or produce the
goods in each country, or taking into ac-
count the proportionate costs incurred to
provide the services in each country.

###### V. Withholding by the U.S. Government on Specified Federal Procurement Payments

###### A. Increase amount deducted and withheld under chapter 3

Section 5000C(d)(1) provides that the
amount deducted and withheld under
chapter 3 shall be increased by the amount
of tax imposed under section 5000C. Ac-
cordingly, the proposed regulations gen-
erally follow the procedural requirements
in the Code and Treasury regulations for
situations in which withholding is re-
quired under chapter 3 on fixed or deter-
minable annual or periodical income
(FDAP). For example, similar to with-
holding agents under chapter 3, acquiring
agencies with an obligation to withhold
under section 5000C must file 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,"
to report amounts withheld. However, the
proposed regulations differ from the with-
holding and reporting rules under chapter
3 to take into account the differences be-
tween the tax imposed under section
5000C and the tax imposed under subtitle
A to which chapter 3 applies. Thus, a
foreign contracting party is not required to
submit a Form W-8BEN, "Certificate of
Foreign Status of Beneficial Owner for
United States Tax Withholding," or Form
W-8BEN-E, "Certificate of Status of
Beneficial Owner for United States Tax
Withholding and Reporting (Entities)," to

an acquiring agency under the proposed
regulations to certify its foreign status or
claim a reduction in withholding under an
applicable income tax treaty.

The proposed regulations require in-
stead that a foreign contracting party must
submit a "Section 5000C Certificate,"
signed under penalties of perjury, that pro-
vides all of the information required by
the proposed regulations to claim an ex-
emption from section 5000C. The term
"Section 5000C Certificate" also includes
any form that the IRS may prescribe as a
substitute for the certificate. Under the
proposed regulations, an acquiring agency
may generally rely on a claim made in a
Section 5000C Certificate if the foreign
contracting party provides complete infor-
mation in the time and manner required by
the regulations. However, an acquiring
agency may not rely on the information
provided by the foreign contracting party
if it has reason to know that the informa-
tion is incorrect or unreliable. An acquir-
ing agency has reason to know that the
information is incorrect or unreliable if it
has knowledge of relevant facts or state-
ments contained in the submitted informa-
tion such that a reasonably prudent person
in the position of the acquiring agency
would know that the information provided
is incorrect or unreliable.

For the convenience of both acquiring
agencies and foreign contracting parties, a
model Section 5000C Certificate is in-
cluded as part of the proposed regulations.
A foreign contracting party may choose
not to use the format of the model certif-
icate, but in all cases it must submit all the
necessary information required by the
proposed regulations accompanied by a
signed penalties of perjury statement.
Each Section 5000C Certificate applies to
a single contract, and thus a foreign con-
tracting party with multiple contracts with
the U.S. government must complete a new
certificate for each contract, if necessary.

#### B. Steps for acquiring agencies

The proposed regulations provide steps
that an acquiring agency must follow to
comply with its withholding obligations
under section 5000C. Applying these
steps will identify the payments that are
subject to withholding under section
5000C and eliminate those that are not.

The steps are organized so that if an acquir-
ing agency already possesses information
that establishes that the payment is not sub-
ject to the tax imposed under section 5000C
(because, for example, the payment is made
to a U.S. person), the acquiring agency may
conclude based on that particular informa-
tion that the payment is not subject to with-
holding and will not have to continue to
evaluate the other steps.

The first of these steps instructs an ac-
quiring agency to determine whether the
payment is made pursuant to a contract for
goods or services. If the U.S. government is
making a payment for any other purpose,
there will not be an obligation to withhold
under section 5000C on the payment. Thus,
this step will eliminate from withholding
payments made pursuant to grant or coop-
erative agreements, and payments made
pursuant to contracts that are not for goods
or services, such as a contract for the pur-
chase or lease of land or an interest in land.

Under the second step, an acquiring
agency must determine whether the pay-
ment is made to a U.S. person. This step
takes into account that only foreign persons
are subject to tax under section 5000C and
§ 1.5000C-1(b). Under this step, if the ac-
quiring agency determines that the contract-
ing party is a U.S. person based on its TIN
as reflected in a U.S. government informa-
tion system, such as the System for Award
Management (or because there is a com-
pleted Form W-9, "Request for Taxpayer
Identification Number (TIN) and Certifica-
tion," on file), payments made pursuant to
this contract are not subject to withholding
under section 5000C.

Under the third step, an acquiring
agency determines whether the payment is
for purchases under the simplified acquisi-
tion procedures as described in the FAR. If
it is, the acquiring agency does not have an
obligation to withhold under section 5000C
on the payment. This step takes into account
the exemption from tax for simplified acqui-
sitions in § 1.5000C-1(d)(1).

Under the fourth step, the acquiring
agency determines whether the payment is
made for certain emergency acquisitions.
If it is, the acquiring agency does not have
an obligation to withhold under section
5000C on the payment. This step takes
into account the exemption from tax for
emergency acquisitions as described in
§ 1.5000C-1(d)(2).

Under the fifth and sixth steps, the ac-
quiring agency determines whether the
payment is subject to withholding (in
whole or in part) based on the information
contained in a Section 5000C Certificate,
if one has been provided by the foreign
contracting party. Under the fifth step, if
the acquiring agency determines that the
foreign contracting party is exempt from
the tax under section 5000C by reason of
an international agreement with the
United States, as represented on a com-
pleted Section 5000C Certificate, the ac-
quiring agency does not have an obliga-
tion to withhold. For example, under this
step, the acquiring agency does not have
an obligation to withhold if a foreign con-
tracting party provides a completed Sec-
tion 5000C Certificate that accurately
identifies the nondiscrimination article of
a qualified income tax treaty on which it is
relying to claim an exemption and the
basis for that reliance.

Under the sixth step, the acquiring
agency must determine from the Section
5000C Certificate if the payments are (in
whole or part) made pursuant to a contract
for goods manufactured or produced or ser-
vices provided in the United States, or in a
foreign country that is a party to an interna-
tional procurement agreement and therefore
exempt (to that extent) from withholding
under Section 5000C.

Under the seventh step, if the acquiring
agency determines that it has an obliga-
tion to withhold, the acquiring agency
computes the amount of withholding
based on the information contained in the
Section 5000C Certificate, including a
claim for a partial exemption from with-
holding, and withholds that amount from
the payment.

Under the final step, the acquiring
agency must deposit and report any
amounts withheld.

##### VI. Procedure for the Foreign Contracting Party to Request Offset for Underwithholding or Overwithholding

Under certain circumstances, the pro-
posed regulations provide that the foreign
contracting party may request that the ac-
quiring agency increase or decrease the
amount of withholding on future pay-
ments for which withholding is required
under section 5000C. The IRS and Trea-

sury Department intend for this procedure
to provide flexibility for foreign contracting
parties that discover that the previous
amounts withheld did not satisfy, or ex-
ceeded, their tax liability under section
5000C and the proposed regulations. These
requests must be in writing, and provide an
explanation, signed under penalties of
perjury. Any increase or decrease in
amounts withheld under this procedure
may occur only if the payments to which
it applies are made on or before the date
on which the acquiring agency must file
Form 1042 for the year with respect to
the payment for which the overwith-
holding or underwithholding occurred.

##### VII. Administrative Provisions Relating to Withholding by U.S. Government

Under § 1.6302-2 of the Income Tax
Regulations, the amount of tax under
chapter 3 that U.S. withholding agents are
required to withhold determines the fre-
quency of their deposits: monthly, quarter-
monthly, or annual. Section 5000C(d)(1)
instructs acquiring agencies to increase
amounts deducted and withheld under chap-
ter 3 by amounts withheld under section
5000C. Therefore, for purposes of determin-
ing the frequency of their deposits, the pro-
posed regulations require acquiring agencies
that have chapter 3 deposit obligations for a
period to add amounts withheld under sec-
tion 5000C to the amounts withheld under
chapter 3. This rule applies regardless of
whether the chapter 3 deposit obligation is
with respect to the contracting party or any
other person. However, to reduce the burden
on acquiring agencies that have no chapter 3
withholding obligations, the proposed regu-
lations require these acquiring agencies to
make deposits monthly, regardless of the
amount of tax withheld. Acquiring agencies
must deposit all withheld amounts by elec-
tronic funds transfer, as that term is defined
in § 31.6302-1(h)(4)(i).

##### VIII. Special Arrangement for Certain Contracts and Classified Contracts

The IRS and Treasury Department
have determined that, in limited circum-
stances, it may be in the interest of sound
tax administration to allow flexibility in
some of the rules provided in the proposed
regulations. Thus, the proposed regula-

tions authorize the IRS to consent to al-
ternative means for depositing the tax due
under section 5000C when agreed to by
the acquiring agency and the foreign con-
tracting party subject to tax under section
5000C. In these situations, the IRS may
also modify any reporting or return re-
quirements of the acquiring agency or the
foreign contracting party. Similarly,
§ 1.5000C-3 provides that an acquiring
agency is not required to report informa-
tion on Form 1042-S for payments made
pursuant to classified contracts, as de-
scribed in section 6050M(e)(3), unless the
acquiring agency determines that the in-
formation reported on the Form 1042-S
does not compromise the safeguarding of
classified information or national security.

###### IX. Requirement for Foreign Contracting Party to File a Return and Pay Tax, and Procedures for Contracting Party to Seek a Refund

Section 5000C(d)(2) provides that for
purposes of subtitle F of the Code (relat-
ing to procedure and administration), the
tax imposed under section 5000C on for-
eign contracting parties is treated as a tax
imposed under subtitle A (rather than as
an excise tax under subtitle D). As such,
and because section 5000C(d)(1) provides
only that the amount deducted and with-
held under chapter 3 shall be increased by
the amount of tax imposed under section
5000C, the proposed regulations treat the
tax imposed on foreign contracting parties
under section 5000C as administered in a
manner similar to gross basis income
taxes. Thus, if a payment is subject to the
tax imposed under section 5000C and the
foreign contracting party remains liable
for the tax because, for example, it was
not fully satisfied by withholding by the
acquiring agency, the foreign contracting
party must make an income tax return (for
example, Form 1120-F, "U.S. Income
Tax Return of a Foreign Corporation")
and remit payment by the due date of that
income tax return. See sections 6012 and
6072 and the regulations thereunder. Pen-
alties may apply for the foreign contract-
ing party's failure to comply, including
those in sections 6651 and 6662.

If the acquiring agency has overwith-
held under section 5000C and has made a
deposit of the amount withheld, the con-

tracting party may claim a refund of the
amount overwithheld pursuant to the pro-
cedures described in chapter 65. See sec-
tion 6402 and the regulations thereunder
for refund procedures. See section 6511
and the regulations thereunder for the stat-
ute of limitations on refund claims.

#### X. Anti-Abuse Rule

The proposed regulations contain an
anti-abuse rule to prevent circumvention of
the tax under section 5000C. Under this
rule, if a foreign person engages in a trans-
action (or series of transactions) with a prin-
cipal purpose of avoiding the tax imposed
under section 5000C, the transaction (or se-
ries of transactions) may be disregarded or
the arrangement may be recharacterized in
accordance with its substance.

##### XI. Section 6114 Reporting

Ordinarily any foreign person claiming
that a nondiscrimination provision of an
income tax or any other treaty obligation
precludes the application of an otherwise
applicable Code provision is required to re-
port that position under § 301.6114-1(b)(1).
Proposed § 301.6114-1(c)(1)(ix) provides
that this reporting obligation is waived when
a foreign person is claiming that a qualified
income tax treaty precludes the application
of section 5000C, but only if the foreign
person has provided a Section 5000C Cer-
tificate (or such other form as may be pre-
scribed by the Commissioner pursuant to
section 5000C) in accordance with section
5000C and the regulations thereunder. Ac-
cordingly, if a foreign person relying on a
qualified income tax treaty has not provided
the certificate or is relying on a treaty obli-
gation other than an income tax treaty to
claim an exemption from the tax, reporting
is not waived.

### Proposed Effective/Applicability Date

Section 5000C applies to specified Fed-
eral procurement payments received pursuant
to contracts entered into on and after January
2, 2011. Proposed §§ 1.5000C-1 through
1.5000C-7 and proposed § 301.6114-
1(c)(1)(ix) will apply on and after the date
that is 90 days after the date they are
published as final regulations in the Fed-
eral Register.

Contracting parties and acquiring
agencies may generally rely upon the rules
in the proposed regulations until the date
they become effective/applicable as final
regulations. To the extent that a foreign con-
tracting party is eligible for an exemption
under the proposed regulations that would
eliminate the tax imposed under section
5000C for any specified Federal procure-
ment payments received on or before April
22, 2015, no further action is required, and
the requirement to provide a Section 5000C
Certificate is waived. Further, prior to the
date these rules become effective/applicable
as final regulations, the requirement to file a
Form 8833, "Treaty-Based Return Position
Disclosure Under Section 6114 or 7701(b),"
under section 6114 and the regulations
thereunder (with respect to relief pursuant to
the nondiscrimination provision of a quali-
fied income tax treaty) is waived for posi-
tions related to the tax imposed under sec-
tion 5000C (and thus no information
reporting penalties will be imposed under
section 6712).

If a foreign contracting party has a tax
liability under section 5000C for any
specified Federal procurement payment
received before the date these rules be-
come effective/applicable as final regula-
tions (taking into account any exemptions
in the proposed regulations as finalized)
that has not been satisfied by withholding,
the foreign contracting party should file a
tax return and pay the tax in accordance
with applicable IRS forms, such as Form
1120-F. If a foreign contracting party
fully satisfies its tax and filing obligations
under section 5000C with respect to any
payments received before the date these
rules become effective/applicable as final
regulations, penalties will not be asserted
with respect to those payments. However,
with respect to tax due under section
5000C, a foreign contracting party is sub-
ject to applicable interest on the underpay-
ments (as described in Subchapter A of
Chapter 67 of the Code).

### Special Analyses

It has been determined that this proposed
regulation is not a significant regulatory ac-
tion as defined in Executive Order 12866, as
supplemented by Executive Order 13563.
Therefore, a regulatory assessment is not
required. It also has been determined that
section 553(b) of the Administrative Proce-

dure Act (5 U.S.C. chapter 5) does not apply
to the proposed regulations. The collection
of information requirement in the proposed
regulations will not have a significant eco-
nomic impact on a substantial number of
small entities because a limited number of
foreign contracting parties that are small en-
tities will be subject to the tax. Pursuant to
section 7805(f) of the Code, the proposed
regulations have been submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its im-
pact on small business.

### Comments and Public Hearing

Before the proposed regulations are ad-
opted as final regulations, consideration
will be given to any written (a signed
original and eight (8) copies) or electronic
comments that are submitted timely to the
IRS. The IRS and Treasury Department
request comments on all aspects of the
proposed rules, including comments on
the clarity of the proposed rules and how
they may be made easier with which to
comply. All comments will be available
for public inspection and copying at www.
regulations. gov or upon request.

### Drafting Information

The principal authors of the proposed
regulations are Kate Hwa, Brad McCormack,
and Rosy Lor, Office of Associate Chief
Counsel (International). However, other
personnel from the IRS and Treasury De-
partment participated in their develop-
ment.

* * * * *

### Proposed Amendments to the Regulations

Accordingly, 26 CFR parts 1, 301,
and 602 are proposed to be amended as
follows:

### PART I-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U. S. C. 7805 * * *

Par. 2. An undesignated center heading is
revised immediately following § 1.5000A-5
to read as follows:

Tax on Certain Foreign Procurement
Par. 3. Section 1.5000C-0 is added to
read as follows:

§ 1.5000C-0 Table of contents.

This section lists the table of contents
for §§ 1.5000C-1 through 1.5000C-7.

§ 1.5000C-1 Tax on specified Federal
procurement payments.

(a) Overview.

(b) Imposition of tax.

(d) Exemptions.

(1) Simplified acquisitions.

(2) Emergency acquisitions.

(3) Certain international agreements.

(4) Goods manufactured or produced
or services provided in the United
States.

(5) Goods manufactured or produced
or services provided in a country
that is a party to an international
procurement agreement.

(e) Country in which goods are manu-
factured or produced or services
provided.

(1) Goods manufactured or produced.

(2) Provision of services.

(3) Allocation of total contract price to
determine the nonexempt amount.

(4) Reduction or elimination of with-
holding by an acquiring agency.

#### § 1.5000C-2 Withholding on specified Federal procurement payments.

(a) In general.

(b) Steps in determining the obligation
to withhold under section 5000C.

(1) Determine whether the payment is
pursuant to a contract for goods or services.

(2) Determine whether the payment is
made pursuant to a contract with a U.S.
person.

(3) Determine whether the payment is
for purchases under the simplified acqui-
sition procedures.

(4) Determine whether the payment is
for emergency acquisitions.

(5) Determine whether the foreign con-
tracting party is entitled to relief pursuant
to an international agreement.

(6) Determine whether the contract is
for goods manufactured or produced or
services provided in the United States or
in a foreign country that is a party to an
international procurement agreement.

(7) Compute amounts to withhold.

(8) Deposit and report amounts with-
held.

(1) In general.

(2) Determination based on Taxpayer
Identification Number (TIN).

(3) Determination based on the Form
W-9.

(4) Contracting party treated as a for-
eign contracting party.

(d) Withholding when a foreign con-
tracting party submits a Section 5000C
Certificate.

(1) In general.

(2) Exemption for a foreign contracting
party entitled to the benefit of relief pur-
suant to certain international agreements.

(3) Exemption when goods are manu-
factured or produced or services provided
in the United States, or in a foreign coun-
try that is a party to an international pro-
curement agreement.

(4) Information required for Section
5000C Certificate.

(5) Validity period of Section 5000C
Certificate.

(6) Change in circumstances.

(7) Model Section 5000C Certificate.

(8) Time for submitting Section 5000C
Certificate or Form W-9, "Request for
Taxpayer Identification Number and Cer-
tification".

(e) Offset for underwithholding or
overwithholding.

(1) In general.

(2) Underwithholding.

(3) Overwithholding.

#### § 1.5000C-3 Payment and returns of tax withheld by the acquiring agency.

(a) In general.

(b) Deposit rules.

(1) Acquiring agency with a chapter 3
deposit requirement treats amounts with-
held as under chapter 3.

(2) Acquiring agency with no chapter 3
filing obligation deposits withheld amounts
monthly.

(1) In general.

(2) Classified contracts.

(d) Special arrangement for certain
contracts.

§ 1.5000C-4 Requirement for the
foreign contracting party to file a return
and pay tax, and procedures for the
contracting party to seek a refund.

(a) In general.

(b) Tax obligation of foreign contract-
ing party independent of withholding.

(d) Time and manner of paying tax.

(e) Refund requests when amount
withheld exceeds tax liability.

§ 1.5000C-5 Anti-abuse rule.

§ 1.5000C-6 Examples.

§ 1.5000C-7 Effective/applicability date.

(a) In general.

(b) Reliance on proposed regulations.

(d) Waiver of penalties under certain
circumstances.

Par. 4. Sections 1.5000C-1 through
1.5000C-7 are added to read as follows:

§ 1.5000C-1 Tax on specified Federal
procurement payments.

(a) Overview. This section provides
definitions and general rules relating to
the imposition of, and exemption from,
the tax on specified Federal procurement
payments under section 5000C. Section
1.5000C-2 provides rules concerning
withholding under section 5000C(d)(1),
including the steps that must be taken to
determine the obligation to withhold and
whether an exemption from withholding
applies. Section 1.5000C-3 provides the
time and manner for depositing the
amounts withheld under section 5000C
and the related reporting requirements.
Section 1.5000C-4 contains the rules for
a foreign contracting party that must pay
and report the tax under section 5000C
when the tax obligation under section
5000C is not fully satisfied by withhold-
ing, as well as procedures by which a
contracting party may seek a refund when
the amount withheld exceeds its tax lia-
bility under section 5000C. Section
1.5000C-5 contains an anti-abuse rule.
Section 1.5000C-6 contains examples il-
lustrating the principles of §§ 1.5000C-1

through 1.5000C-7. Finally, § 1.5000C-7
contains the effective/applicability date
for §§ 1.5000C-1 through 1.5000C-7.

(b) Imposition of tax. Except as other-
wise provided, section 5000C imposes on
any foreign contracting party a tax equal
to 2 percent of the amount of a specified
Federal procurement payment. In general,
the tax imposed under section 5000C ap-
plies to specified Federal procurement
payments received pursuant to contracts
entered into on and after January 2, 2011.
Specified Federal procurement payments
received by a nominee or agent on behalf
of a contracting party are considered to be
received by that contracting party. The tax
imposed under section 5000C is to be
applied in a manner consistent with U.S.
obligations under international agree-
ments. Payments for the purchase or lease
of land or an interest in land are not sub-
ject to the tax imposed under section
5000C.

(c) Definitions. Solely for purposes of
section 5000C and §§ 1.5000C-1 through
1.5000C-7, the following definitions apply:

(1) The term acquiring agency means
the U.S. government department, agency,
independent establishment, or corporation
described in paragraph (c)(7) of this sec-
tion that is a party to the contract. To the
extent that a U.S. government department
or agency, other than the acquiring
agency, is making the payments pursuant
to the contract, that department or agency
is also considered to be the acquiring
agency.

(2) The term contract has the same
meaning as provided in 48 CFR 2.101,
and thus does not include a grant agree-
ment or a cooperative agreement within
the meaning of 31 U.S.C. 6304 and 6305,
respectively.

(3) The term contract ratio refers to the
nonexempt amount over the total contract
price.

(4) The term contracting party means
any person that is a party to a contract
with the U.S. government that is entered
into on or after January 2, 2011.

(5) The term foreign contracting party
means a contracting party that is a foreign
person.

(6) The term foreign person means any
person other than a United States person
(as defined in section 7701(a)(30)).

(7) The term Government of the United
States or U.S. government means the ex-
ecutive departments specified in 5 U.S.C.
101, the military departments specified in
5 U.S.C. 102, the independent establish-
ments specified in 5 U.S.C. 104(1), and
wholly owned government corporations
specified in 31 U.S.C. 9101(3). Unless
otherwise specified in 5 U.S.C. 101, 102,
or 104(1), or 31 U.S.C. 9101(3), the term
Government of the United States or U.S.
government does not include any quasi-
governmental entities or instrumentalities
of the U.S. government.

(8) The term international procure-
ment agreement means the World Trade
Organization Government Procurement
Agreement within the meaning of 48 CFR
25.400(a)(1) and any Free Trade Agree-
ment to which the United States is a party
that includes government procurement ob-
ligations that provide appropriate compet-
itive government procurement opportuni-
ties to U.S. goods, services, and suppliers.
A party to an international procurement
agreement is a signatory to the agreement
and does not include a country that is
merely an observer with respect to the
agreement.

(9) The term nonexempt amount means
the portion of the contract price allocated
to nonexempt goods and nonexempt ser-
vices.

(10) The term nonexempt goods means
goods manufactured or produced in a for-
eign country that is not a party to an
international procurement agreement with
the United States.

(11) The term nonexempt services
means services provided in a foreign
country that is not a party to an interna-
tional procurement agreement with the
United States.

(12) The term outlying areas has the
same meaning as set forth in 48 CFR
2.101(b), which includes Puerto Rico, the
Northern Mariana Islands, American Sa-
moa, Guam, the Virgin Islands, Baker Is-
land, Howland Island, Jarvis Island, John-
ston Atoll, Kingman Reef, Midway
Islands, Navassa Island, Palmyra Atoll,
and Wake Atoll.

(13) The term qualified income tax
treaty means a U.S. income tax treaty in
force that contains a nondiscrimination
provision that applies to the tax imposed
under section 5000C and prohibits taxa-

tion that is more burdensome on a foreign
national than a U.S. national (or in the
case of certain income tax treaties, taxa-
tion that is more burdensome on a foreign
citizen than a U.S. citizen), regardless of
its residence.

(14) The term Section 5000C Certifi-
cate means a written statement that in-
cludes the information described in
§ 1.5000C-2(d) that the foreign contract-
ing party submits to an acquiring agency
for the purposes of demonstrating that the
foreign contracting party is eligible for
certain exemptions from withholding (in
whole or in part) under section 5000C
with respect to a contract. The term also
includes any form that the Internal Reve-
nue Service may prescribe as a substitute
for the Section 5000C Certificate.

(15) The term specified Federal pro-
curement payment means any payment
made pursuant to a contract with a foreign
contracting party that is for goods manu-
factured or produced or services provided
in a foreign country that is not a party to
an international procurement agreement
with the United States. For purposes of the
prior sentence, a foreign country does not
include an outlying area.

(16) The term Taxpayer Identification
Number or TIN means the identifying
number assigned to a person under section
6109, as defined in section 7701(a)(41).

(17) The term total contract price
means the total cost to the U.S. Govern-
ment of the goods and services procured
under a contract and paid to the contract-
ing party.

(d) Exemptions. The tax imposed under
paragraph (b) of this section does not ap-
ply to the payments made in the following
situations. For the exemptions in para-
graphs (d)(3), (4) and (5) of this section,
see § 1.5000C-2(d) for the procedures to
eliminate withholding by an acquiring
agency.

(1) Simplified acquisitions. Payments
for purchases under the simplified acqui-
sition procedures that do not exceed the
simplified acquisition threshold as de-
scribed in 48 CFR 2.101.

(2) Emergency acquisitions. A pay-
ment made pursuant to a contract if the
contract is-

(i) Awarded under the "unusual and
compelling urgency" authority of 48 CFR
6.302-2, or

(ii) Entered into under the emergency
acquisition flexibilities as defined in 48
CFR Part 18.

(3) Certain international agreements.
A payment made by the U.S. government
pursuant to a contract with a foreign con-
tracting party when the payment is enti-
tled to relief from the tax imposed under
section 5000C pursuant to an international
agreement with the United States, includ-
ing relief pursuant to a nondiscrimination
provision of a qualified income tax treaty,
because the foreign contracting party is
entitled to the benefit of that provision.

(4) Goods manufactured or produced
or services provided in the United States.
A payment made pursuant to a contract to
the extent that the payment is for goods
manufactured or produced or services pro-
vided in the United States.

(5) Goods manufactured or produced
or services provided in a country that is a
party to an international procurement
agreement. A payment made pursuant to a
contract to the extent the payment is for
goods manufactured or produced or ser-
vices provided in a country that is a party
to an international procurement agree-
ment, as defined in paragraph (c)(8) of this
section.

(e) Country in which goods are manu-
factured or produced or services provid-
ed-(1) Goods manufactured or pro-
duced. Solely for purposes of section
5000C, goods are manufactured or pro-
duced in the country (or countries)-

(i) Where property has been substan-
tially transformed into the goods that are
procured pursuant to a contract; or

(ii) Where there has been assembly or
conversion of component parts (involving
activities that are substantial in nature and
generally considered to constitute the
manufacture or production of property)
into the final product that constitutes the
goods procured pursuant to a contract.

(2) Provision of services. Solely for
purposes of section 5000C, services are
considered to be provided in the country
where the individuals performing the ser-
vices are physically located when they
perform their duties pursuant to the contract.

(3) Allocation of total contract price to
determine the nonexempt amount. If, pur-
suant to a contract, goods are manufac-
tured or produced, or services are pro-
vided, in multiple countries and only a

portion of the goods manufactured or pro-
duced or the services provided pursuant to
the contract are nonexempt goods or non-
exempt services, a foreign contracting
party may use a reasonable allocation
method to determine the nonexempt
amount. A reasonable allocation method
would include taking into account the pro-
portionate costs (including the cost of la-
bor and raw materials) incurred to manu-
facture or produce the goods in each
country, or taking into account the propor-
tionate costs incurred to provide the ser-
vices in each country.

(4) Reduction or elimination of with-
holding by an acquiring agency. For pro-
cedures to reduce or eliminate withhold-
ing by an acquiring agency based on
where goods are manufactured or pro-
duced or where services are provided, in-
cluding as a result of an allocation under
this paragraph (e), see § 1.5000C-2(d).

§ 1.5000C-2 Withholding on specified
Federal procurement payments.

(a) In general. Except as otherwise
provided in this section, every acquiring
agency making a specified Federal pro-
curement payment on which tax is im-
posed under section 5000C and
§§ 1.5000C-1 through 1.5000C-7 must
deduct and withhold an amount equal to 2
percent of the payment. For rules relating
to the liability of a foreign contracting
party with respect to specified Federal
procurement payments not fully withheld
upon at source, see § 1.5000C-4. An ac-
quiring agency may rely upon any infor-
mation furnished by a contracting party
under this section unless the acquiring
agency has reason to know that the infor-
mation is incorrect or unreliable. An ac-
quiring agency has reason to know that
the information is incorrect or unreliable
if it has knowledge of relevant facts or
statements contained in the submitted in-
formation such that a reasonably prudent
person in the position of the acquiring
agency would know that the information
provided is incorrect or unreliable.

(b) Steps in determining the obligation
to withhold under section 5000C. An ac-
quiring agency generally determines its
obligation to withhold under section
5000C according to the steps described in
this paragraph (b). See, however, para-

graph (e) of this section for situations in
which withholding may be increased in
the case of underwithholding, or may be
decreased in the case of overwithholding.

(1) Determine whether the payment is
pursuant to a contract for goods or ser-
vices. The acquiring agency determines
whether it is making a payment pursuant
to a contract for goods or services. If the
acquiring agency is making a payment for
any other purpose, it does not have an
obligation to withhold under section
5000C on the payment.

(2) Determine whether the payment is
made pursuant to a contract with a U.S.
person. The acquiring agency determines
whether the payment is made pursuant to a
contract with a person considered to be a
United States person (U.S. person) in accor-
dance with paragraph (c) of this section. If
the contracting party is a U.S. person, the
acquiring agency does not have an obliga-
tion to withhold under section 5000C on the
payment.

(3) Determine whether the payment is
for purchases under the simplified acqui-
sition procedures. The acquiring agency
determines whether the payment is for
purchases under the simplified acquisi-
tions procedures that do not exceed the
simplified acquisition threshold as de-
scribed in 48 CFR 2.101. If it is, the
acquiring agency does not have an obli-
gation to withhold under section 5000C
on the payment.

(4) Determine whether the payment is
for emergency acquisitions. The acquiring
agency determines whether the payment is
made for certain emergency acquisitions
within the meaning of § 1.5000C-1(d)(2).
If it is, the acquiring agency does not have
an obligation to withhold under section
5000C on the payment.

(5) Determine whether the foreign con-
tracting party is entitled to relief pursuant to
an international agreement. If the foreign
contracting party submits a Section 5000C
Certificate in accordance with paragraph (d)
of this section representing that the foreign
contracting party is entitled to relief from
the tax imposed under section 5000C pur-
suant to an international agreement with the
United States (such as relief pursuant to the
nondiscrimination provision of a qualified
income tax treaty), the acquiring agency
does not have an obligation to withhold
under section 5000C on the payment.

(6) Determine whether the contract is
for goods manufactured or produced or
services provided in the United States or
in a foreign country that is a party to an
international procurement agreement. If
the foreign contracting party submits a
Section 5000C Certificate in accordance
with paragraph (d) of this section that
represents that the contract is for goods
manufactured or produced or services pro-
vided in the United States, or in a foreign
country that is a party to an international
procurement agreement, the acquiring
agency does not have an obligation to
withhold. If the Section 5000C Certificate
provides that payments under the contract
are only partially exempt from withhold-
ing under section 5000C, the acquiring
agency must withhold to the extent de-
scribed in paragraph (b)(7).

(7) Compute amounts to withhold. If,
after evaluating each step described in this
paragraph (b), the acquiring agency deter-
mines that it has an obligation to withhold,
the acquiring agency computes the
amount of withholding by multiplying the
amount of the payment by 2 percent, un-
less the foreign contracting party has pro-
vided a Section 5000C Certificate. In
cases in which the Section 5000C Certif-
icate demonstrates that the exemption in
Step 6 applies, the acquiring agency gen-
erally computes the amount of withhold-
ing by multiplying the amount of the pay-
ment by the contract ratio provided on the
most recent Section 5000C Certificate, the
product of which is multiplied by 2 per-
cent. However, in cases in which the ex-
emption in Step 6 applies and the require-
ments of paragraph (d)(4)(iii)(B)(2) of
this section are met, the acquiring agency
computes the amount of withholding
based on the payment for the specifically
identified items, which may be identified
by the contract line item number, or
CLIN. The acquiring agency withholds
the computed amount from the payment.

(8) Deposit and report amounts with-
held. The acquiring agency deposits and re-
ports the amounts determined in the prior
step in accordance with § 1.5000C-3.

(c) Determining whether the contract-
ing party is a U.S. person-(1) In general.
An acquiring agency must rely on the
provisions of this paragraph (c) to deter-
mine the status of the contracting party as

a U.S. person for purposes of withholding
under section 5000C.

(2) Determination based on Taxpayer
Identification Number (TIN). An acquir-
ing agency must treat a contracting party
as a U.S. person if the U.S. government
information system (such as the System
for Award Management (SAM)) indicates
that the contracting party is a corporation
(for example, because the name listed in
SAM contains the term "Corporation,"
"Inc," or "Corp") and that it has a TIN that
begins with two digits other than "98" (a
limited liability company or LLC is not
treated as a corporation for purposes of
this paragraph (c)(2)). Further, an acquir-
ing agency must treat a contracting party
as a U.S. person if the acquiring agency
has access to a U.S. government informa-
tion system that indicates that the con-
tracting party is an individual with a TIN
that begins with a digit other than "9".

(3) Determination based on the Form
W-9. An acquiring agency must treat a
contracting party as a U.S. person if the
person has submitted to it a valid Form
W-9, "Request for Taxpayer Identifica-
tion Number (TIN) and Certificate" (or
valid substitute form described in
§ 31.3406(h)-3(c)(2) of this chapter),
signed under penalties of perjury.

(4) Contracting party treated as a for-
eign contracting party. If an acquiring
agency cannot determine that a contract-
ing party is a U.S. person based on appli-
cation of paragraph (c)(2) or (3) of this
section, then the contracting party is
treated as a foreign contracting party for
purposes of this section.

(d) Withholding when a foreign con-
tracting party submits a Section 5000C
Certificate-(1) In general. Unless the ac-
quiring agency has reason to know that the
information is incorrect or unreliable, the
acquiring agency may rely on a claim that a
foreign contracting party is entitled to an
exemption (in whole or in part) from with-
holding on payments pursuant to a contract
if the foreign contracting party provides a
Section 5000C Certificate to the acquiring
agency as prescribed in this paragraph (d).
When a Section 5000C Certificate is fur-
nished, the acquiring agency is not required
to withhold, or must reduce the amount of
withholding, on payments made to a foreign
person if the certificate establishes that the
foreign person is wholly or partially exempt

from withholding. An acquiring agency
may establish a system for a foreign con-
tracting party to electronically furnish a Sec-
tion 5000C Certificate.

(2) Exemption for a foreign contracting
party entitled to the benefit of relief pursuant
to certain international agreements. An ac-
quiring agency is not required to withhold
on payments pursuant to a contract with a
foreign contracting party when the payment
is entitled to relief from the tax imposed
under section 5000C pursuant to an interna-
tional agreement, including relief pursuant
to a nondiscrimination provision of a qual-
ified income tax treaty, because the foreign
contracting party is entitled to the benefit of
that agreement and the foreign contracting
party has submitted a Section 5000C Certif-
icate that includes all of the information
described in paragraphs (d)(4)(i) and (ii) of
this section.

(3) Exemption when goods are manu-
factured or produced or services provided
in the United States, or in a foreign coun-
try that is a party to an international
procurement agreement. An acquiring
agency is not required to withhold on pay-
ments pursuant to a contract with a foreign
contracting party to the extent that the pay-
ments are for goods manufactured or pro-
duced or services provided in the United
States or in a foreign country that is a party
to an international procurement agreement
with the United States, provided that the
foreign contracting party has submitted a
Section 5000C Certificate that includes all
of the information described in paragraphs
(d)(4)(i) and (iii) of this section. If the Sec-
tion 5000C Certificate provides that the pay-
ment is only partially exempt from with-
holding under section 5000C, the acquiring
agency must withhold to the extent that the
payment is not exempt.

(4) Information required for Section
5000C Certificate-(i) In general. The
Section 5000C Certificate, entitled “Sec-
tion 5000C Certificate," must be signed
under penalties of perjury by the foreign
contracting party, and contain-

(A) The name of the foreign contract-
ing party, country of organization (if ap-
plicable), and permanent residence ad-
dress of the foreign contracting party;

(B) The mailing address of the foreign
contracting party (if different than the per-
manent residence address);

(D) The identifying or reference num-
ber on the contract (if known);

(E) The name and address of the ac-
quiring agency;

(F) A statement that the person signing
the Section 5000C Certificate is the for-
eign contracting party listed in paragraph
(d)(4)(i)(A) of this section (or is autho-
rized to sign on behalf of the foreign con-
tracting party);

(G) A statement that the foreign con-
tracting party is not acting as an agent or
nominee for another foreign person with
respect to the goods manufactured or pro-
duced or services provided under the con-
tract;

(H) A statement that the foreign con-
tracting party agrees to pay an amount
equal to any tax (including any applicable
penalties and interest) due under section
5000C that the acquiring agency does not
withhold under section 5000C;

(I) A statement that the foreign con-
tracting party acknowledges and under-
stands the rules in § 1.5000C-4 relating to
procedural obligations related to section
5000C; and

(J) A statement that the foreign con-
tracting party has not engaged in a trans-
action (or series of transactions) with a
principal purpose of avoiding the tax im-
posed under section 5000C as defined in
§ 1.5000C-5.

(ii) Additional information required for
claiming an exemption based on the cer-
tain international agreements with the
United States. In addition to the informa-
tion required by paragraph (d)(4)(i) of this
section, a foreign contracting party claim-
ing an exemption from withholding in re-
liance on a provision of an international
agreement with the United States, includ-
ing a qualified income tax treaty, must
provide-

(A) The name of the international
agreement under which the foreign con-
tracting party is claiming benefits;

(B) The specific provision of the inter-
national agreement relied upon (for exam-
ple, the nondiscrimination article of a
qualified income tax treaty); and

(C) The basis on which it is entitled to
the benefits of that provision (for example,
because the foreign contracting party is a
corporation organized in a foreign country

that has in force a qualified income tax
treaty with the United States that covers
all nationals, regardless of their resi-
dence).

(iii) Additional required information
for claiming exemption based on country
where goods are manufactured or ser-
vices provided. (A) In general. In addition
to the information required by paragraph
(d)(4)(i) of this section, a foreign contract-
ing party claiming an exemption from
withholding (in whole or in part) because
payments will be pursuant to a contract
for goods manufactured or produced or
services provided in the United States or
a foreign country that is party to an
international procurement agreement,
the information submitted on the Sec-
tion 5000C Certificate must describe the
relevant goods or services and the coun-
try (or countries) in which they are man-
ufactured or produced or are provided
and include the name of the interna-
tional procurement agreement or agree-
ments (if relevant).

(B) Information on allocation to ex-
empt and nonexempt amounts. (1) In gen-
eral. In situations in which a foreign con-
tracting party claims the exemption in
paragraph (d)(3) of this section with re-
spect to only a portion of the payments
received under the contract, the Section
5000C Certificate must include an expla-
nation of the method used by the foreign
contracting party to allocate the total con-
tract price among the countries, as de-
scribed in § 1.5000C-1(e)(3), if applica-
ble. In general, the Section 5000C
Certificate also must include the total con-
tract price and the nonexempt amount;
however, when necessary, an estimate of
the total contract price or the nonexempt
amount may be used. For example, total
contract price may be estimated when a
Section 5000C Certificate is being com-
pleted with respect to payments to be
made pursuant to a cost-reimbursement
contract that is paid on the basis of actual
incurred costs and the total amount of
such costs is not known at the time the
certificate is provided.

(2) Specific identification of exempt
items. If agreed to by the acquiring
agency, the Section 5000C Certificate
may identify specific exempt and nonex-
empt amounts. For example, specific con-
tract line items (such as a contract line

item number or CLIN) identified in the
contract may be listed on the Section
5000C Certificate as exempt and nonex-
empt amounts (in whole or in part), as
applicable. When this paragraph applies,
and whether or not the contract identifies
exempt and nonexempt amounts, a foreign
contracting party must provide the informa-
tion required by paragraphs (d)(4)(iii)(A)
and (d)(4)(iii)(B)(1) of this section, on the
Section 5000C Certificate to explain why
the contract line items are eligible for an
exemption; however, the foreign contracting
party is not required to include information
about the total contract price under this para-
graph. In these circumstances, only one Sec-
tion 5000C Certificate is required to be pro-
vided identifying the exempt and
nonexempt contract line items that relate to
the contract (for example, a spreadsheet

may be attached to the Section 5000C Cer-
tificate that identifies the contract line items
with an explanation for the treatment as
exempt or nonexempt).

(5) Validity period of Section 5000C
Certificate. Except as otherwise provided
in paragraph (d)(6) of this section, the
Section 5000C Certificate is valid for the
term of the contract.

(6) Change in circumstances. A for-
eign contracting party must submit a re-
vised Section 5000C Certificate within 30
days of a change in circumstances that
causes the information in a Section 5000C
Certificate held by the acquiring agency to
be incorrect with respect to the acquiring
agency's determination of whether to
withhold or the amount of withholding
under Section 5000C. An acquiring
agency must request a new Section 5000C

Certificate from a contracting party in cir-
cumstances in which it knows (or has rea-
son to know) that a previously submitted
Section 5000C Certificate becomes incor-
rect or unreliable. An acquiring agency
may request an updated Section 5000C
Certificate at any time, including when
other documentation is required under the
contract, such as the annual representa-
tions and certifications required in 48 CFR
4.1201.

(7) Model Section 5000C Certificate.
The following is a sample of a Section
5000C Certificate. A foreign contracting
party that chooses to use this model as a
template for the Section 5000C Certificate
must include all the necessary information
required by this paragraph (d) on the com-
pleted model Section 5000C Certificate it
submits to the acquiring agency.

Section 5000C Certificate

Part I. Identification of Foreign Contracting Party

1 Name of foreign contracting party

2 Country of organization if applicable (do not abbreviate)

3 Permanent residence address (street, apt. no. or rural route). Do not use P.O. Box or in-care-of address

City or town, state or province (include postal code, if applicable)

Country (do not abbreviate)

4 Mailing address (if different from above)

City or town, state or province (include postal code, if applicable)

Country (do not abbreviate)

5 U.S. TIN, if any 6 Contract/reference number (if known)

7 Name and address of the acquiring agency

City or town, state or province (including the postal code, if applicable)

Country (do not abbreviate)

Part II. Exemption Based on an International Agreement (If Applicable)

8 ☐ Check this box if claiming relief from the tax under section 5000C pursuant to an international agreement with the United States (such as a qualified income tax treaty), and complete Part IV.

Part III. Exemption Based on an International Procurement Agreement or because Goods/Services Produced/Performed in the U.S.

9 ☐ Check this box if identifying specific 10 exempt and nonexempt amounts (for example, Price by CLIN) and skip Lines 10 through 14 and complete Part IV, Line 15.

Total Contract Price or Estimated Total Contract

11 Nonexempt Amount or Estimated Nonexempt 12 Amount

Contract Ratio (Line 11 over Line 10)

### Part IV. Explanation (Complete if Part II or Part III Is Applicable)

13 If you checked the box in Part II, state the name of the agreement and specific provision relied upon (for example, the
nondiscrimination article of a qualified income tax treaty); and the basis on which you are entitled to the benefits of that
provision (for example, because you are a corporation organized in a foreign country with which the United States has a
qualified income tax treaty that covers all nationals). (Use additional sheets as necessary.)

14 If you completed Part III, but did not check the box on Line 9, state the relevant countries where the goods are
manufactured or produced or services provided and the international procurement agreements relied upon, if relevant.
If applicable, explain the method relied upon to allocate the total contract price between exempt and nonexempt amounts.
(Use additional sheets as necessary.)

15 If you checked the box on Line 9, provide an explanation for each item by stating the relevant countries where the goods
are manufactured or produced or services provided and the international procurement agreements relied upon, if relevant.
If applicable, explain the method relied upon to allocate the total contract price between exempt and nonexempt amounts.
For example, you may attach a spreadsheet listing the various contract line items with an explanation for the treatment of
each line item as exempt or nonexempt. If the contract includes details necessary to complete this section (such as exempt or
nonexempt amounts by contract line item), you may incorporate by reference the relevant information in the explanation.
(Use additional sheets as necessary.)

### Part V. Certificate

Under penalties of perjury, I declare that I have examined the information on this certificate (and in the contract, if relevant)
and to the best of my knowledge and belief it is true, correct, and complete. I further certify under penalties of perjury that:

1 I am the foreign person (or am authorized to sign on behalf of the foreign person) identified in Line 1 above,

2 I am not acting as an agent or nominee for another foreign person,

3 I agree to pay an amount equal to any tax due under section 5000C that the acquiring agency does not withhold under
section 5000C and pay any applicable penalties and interest,

4 I acknowledge and understand the rules in § 1.5000C-4 relating to procedural obligations under section

5 I have not engaged in any transaction (or series of transactions) with a principal purpose of avoiding the tax imposed under
section 5000C as defined in § 1.5000C-5.

Sign Here

►

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_

_
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_

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Signature of Foreign Person (or Authorized Representative) Date Capacity to Act

(8) Time for submitting Section 5000C
Certificate or Form W-9, "Request for
Taxpayer Identification Number and Cer-
tification." A contracting party must sub-
mit the Section 5000C Certificate or Form
W-9 (as applicable) as early as practica-
ble (for example, when the offer for the
contract is submitted to the U.S. govern-
ment). In all cases, however, the Section
5000C Certificate or Form W-9 must be
submitted to the acquiring agency no later
than the date of execution of the contract.

(e) Offset for underwithholding or
overwithholding-(1) In general. If the

foreign contracting party discovers that
amounts withheld on prior payments ei-
ther were insufficient or in excess of the
amount required to satisfy its tax liability
under section 5000C, the foreign contract-
ing party may request the acquiring
agency to increase or decrease the amount
of withholding on future payments for
which withholding is required under sec-
tion 5000C. The request must be in writ-
ing, signed under penalties of perjury,
contain the amount by which the foreign
contracting party requests to increase or
decrease future amounts withheld under

section 5000C, and explain the reason for
the request. The request may be submitted
in conjunction with an original or updated
Section 5000C Certificate.

(2) Underwithholding. Upon receipt of
a request described in paragraph (e)(1) of
this section, acquiring agencies may in-
crease the amount of withholding under
this paragraph to correct underwithhold-
ing only if the payment for which the
increase is applied is otherwise subject to
withholding under section 5000C and
made before the date that Form 1042,
"Annual Withholding Tax Return for U.S.

_
_

Source Income of Foreign Persons," is
required to be filed (not including exten-
sions) with respect to the payment for
which the underwithholding occurred.
Amounts withheld under this paragraph
must be deposited and reported in the time
and manner as prescribed by § 1.5000C-3.
See § 1.5000C-4 for procedures for a for-
eign contracting party that must pay tax due
when its tax liability under section 5000C
was not fully satisfied by withholding by an
acquiring agency.

(3) Overwithholding. Upon receipt of a
request described in paragraph (e)(1) of
this section, acquiring agencies may de-
crease the amount of withholding on sub-
sequent payments made to the foreign
contracting party that are otherwise sub-
ject to withholding under section 5000C
provided that the payment for which the
decrease is applied is made on or before
the date on which Form 1042, "Annual
Withholding Tax Return for U.S. Source
Income of Foreign Persons," is required to
be filed (not including extensions) with re-
spect to the payment for which the over-
withholding occurred. See § 1.5000C-4(e)
for procedures for foreign contracting par-
ties to file a claim for refund for the over-
withheld amount under section 5000C.

§ 1.5000C-3 Payment and returns of tax
withheld by the acquiring agency.

(a) In general. This section provides
administrative procedures that acquiring
agencies must follow to satisfy their obli-
gations to deposit and report amounts
withheld under § 1.5000C-2. An acquir-
ing agency with a section 5000C with-
holding obligation must increase the
amount it deducts and withholds under
chapter 3 for fixed or determinable annual
or periodical income (FDAP income) by
the amount it must withhold under
§ 1.5000C-2. Accordingly, this section
generally applies the administrative provi-
sions of chapter 3 for FDAP income relating
to the deposit, payment, and reporting for
amounts withheld under § 1.5000C-2, and
contains some variation from those provi-
sions to take into account the nature of the
tax imposed under section 5000C.

(b) Deposit rules-(1) Acquiring
agency with a chapter 3 deposit require-
ment treats amounts withheld as under
chapter 3. If an acquiring agency has a

chapter 3 deposit obligation for a period, it
must treat any amount withheld under
§ 1.5000C-2 as an additional amount of
tax withheld under chapter 3 for purposes
of the deposit rules of § 1.6302-2. Thus,
depending on the combined amount with-
held under chapter 3 and § 1.5000C-2, an
acquiring agency subject to this paragraph
(b)(1) must make monthly deposits,
quarter-monthly deposits, or annual de-
posits under the rules in § 1.6302-2. To
the extent provided in forms, instructions,
or publications prescribed by the Internal
Revenue Service (IRS), acquiring agen-
cies must deposit all withheld amounts by
electronic funds transfer, as that term is
defined in § 31.6302-1(h)(4)(i) of this
chapter.

(2) Acquiring agency with no chapter 3
filing obligation deposits withheld
amounts monthly. If an acquiring agency
has no chapter 3 deposit obligation to
which the deposit rules of § 1.6302-2
apply for a calendar month, it must make
monthly deposits of the amounts withheld
under the rules in this paragraph (b)(2).
Thus, an acquiring agency with no chapter
3 deposit obligations and that has with-
held any amount under § 1.5000C-2 dur-
ing any calendar month must deposit that
amount by the 15th day of the month
following the payment. To the extent pro-
vided in forms, instructions, or publica-
tions prescribed by the Internal Revenue
Service (IRS), acquiring agencies must
deposit all withheld amounts by electronic
funds transfer, as that term is defined in
§ 31.6302-1(h)(4)(i) of this chapter.

(c) Return requirements. (1) In gen-
eral. Except as provided in paragraph
(c)(2) of this section, an acquiring agency
that withholds an amount pursuant to sec-
tion 5000C generally must file Form
1042-S, "Foreign Person's U.S. Source
Income Subject to Withholding," and
Form 1042, "Annual Withholding Tax
Return for U.S. Source Income of Foreign
Persons," each year, or other such forms
as the IRS may prescribe, to report infor-
mation related to amounts withheld under
section 5000C. The acquiring agency
must prepare a Form 1042-S for each
contracting party reporting the amount
withheld under section 5000C for the pre-
ceding calendar year. The Form 1042
must show the aggregate amounts with-
held under section 5000C that were re-

quired to be reported on Forms 1042-S
(including those amounts withheld under
section 5000C for which a Form 1042-S
is not required to be filed pursuant to
paragraph (c)(2) of this section). The
Form 1042 must also include the informa-
tion required by the form and accompany-
ing instructions. Further, any forms re-
quired under this paragraph (c) are due at
the same time, at the same place, and
eligible for the same extended due dates
and may be amended in the same manner
as Form 1042 and Form 1042-S (or such
other forms as the IRS may prescribe re-
lated to chapter 3). The acquiring agency
must furnish a copy of the Form 1042-S
(or such other form as the IRS may pre-
scribe for the same purpose) to the con-
tracting party for whom the form is pre-
pared on or before March 15 of the
calendar year following the year in which
the amount subject to reporting under sec-
tion 5000C was paid. It must be filed with
a transmittal form as provided in instruc-
tions to the Form 1042-S and to the trans-
mittal form. Section 5000C Certificates or
other statements or information as pre-
scribed by § 1.5000C-2 that are provided
to the acquiring agency are not required to
be attached to the Form 1042 filed with
the IRS. However, an acquiring agency
that is required to file Form 1042 must
retain a copy of Form 1042, Form
1042-S, the Section 5000C Certificates,
or other statements or information pre-
scribed by § 1.5000C-2 for at least three
years from the original due date of Form
1042 or the date it was filed, whichever is
later. An acquiring agency that is not re-
quired to file Form 1042 must retain any
Section 5000C Certificates or other state-
ments or information as prescribed by
§ 1.5000C-2 for at least three years from
the date the Form 1042 would have been
due had the acquiring agency had an ob-
ligation to file.

(2) Classified contracts. An acquiring
agency is not required to report informa-
tion otherwise required by this section on
Form 1042-S for payments made pursu-
ant to classified contracts (as described in
section 6050M(e)(3)), unless the acquir-
ing agency determines that the informa-
tion reported on the Form 1042-S does
not compromise the safeguarding of clas-
sified information or national security.

(d) Special arrangement for certain
contracts. In limited circumstances, the
IRS may authorize the amount otherwise
required to be withheld under section
5000C to be deposited in the time and
manner mutually agreed upon by the ac-
quiring agency and the foreign contracting
party. In these circumstances, the IRS
may in its sole discretion also modify any
reporting or return requirements of the
acquiring agency or the foreign contract-
ing party.

§ 1.5000C-4 Requirement for the
foreign contracting party to file a return
and pay tax, and procedures for the
contracting party to seek a refund.

(a) In general. For purposes of subtitle
F of the Internal Revenue Code ("Proce-
dure and Administration"), the tax im-
posed under section 5000C on foreign
persons is treated as a tax imposed under
subtitle A. Except as provided elsewhere
in the regulations under section 5000C,
forms, or accompanying instructions, the
tax imposed on foreign contracting parties
under section 5000C is administered in a
manner similar to gross basis income
taxes. This section provides procedures
that a foreign contracting party must fol-
low to satisfy its obligations to report and
deposit tax due under § 1.5000C-1 as well
as procedures for contracting parties to
seek a refund of amounts overwithheld.

(b) Tax obligation of foreign contract-
ing party independent of withholding. A
foreign contracting party subject to tax
under section 5000C and §§ 1.5000C-1
through 1.5000C-7 remains liable for the
tax unless its tax obligation was fully sat-
isfied by withholding by an acquiring
agency in accordance with §§ 1.5000C-2
and 1.5000C-3.

(c) Return of tax by the foreign con-
tracting party. If the tax liability under
§ 1.5000C-1 relating to a payment is not
fully satisfied by withholding in accor-
dance with §§ 1.5000C-2 and 1.5000C-3
(including as a result of the use of an
estimated nonexempt amount or estimated
total contract price in computing the con-
tract ratio), a foreign contracting party
subject to tax under § 1.5000C-1 during a
calendar year must make a return of tax
on, for example, Form 1120-F, "U.S. In-
come Tax Return of a Foreign Corpora-

tion," or such other form as the Internal
Revenue Service (IRS) may prescribe to
report the amount of tax due under section
5000C (required return). A foreign con-
tracting party with no other U.S. tax filing
obligation other than with respect to its
liability for the tax imposed under section
5000C must file its required return on or
before the fifteenth day of the sixth month
following the close of its taxable year. The
required return must include the informa-
tion required by the form and accompany-
ing instructions. The required return must
be filed at the place and time (including
any extension of time to file) provided by
the form and accompanying instructions.
Penalties for failure to file contained in
Subtitle F can apply to foreign contracting
parties who fail to file the required return.
A foreign contracting party must attach
copies of all Forms 1042-S, "Foreign Per-
son's U.S. Source Income Subject to
Withholding," received from acquiring
agencies (if any) to the required return.

(d) Time and manner of paying tax. A
foreign contracting party must pay the tax
imposed under section 5000C in the man-
ner provided and in the time prescribed in
the required return and accompanying in-
structions. In general, the foreign con-
tracting party must pay the tax at the time
that the required return is due, excluding
extensions. To the extent provided in
forms, instructions, or publications pre-
scribed by the IRS, each foreign contract-
ing party must deposit tax due under sec-
tion 5000C by electronic funds transfer, as
that term is defined in § 31.6302-
1(h)(4)(i) of this chapter. A foreign con-
tracting party that fails to pay tax in the
time and manner prescribed in this section
(or under forms, instructions, or publica-
tions prescribed by the IRS under this
section) may be subject to penalties and
interest under Subtitle F.

(e) Refund requests when amount with-
held exceeds tax liability. After taking into
account any offsets pursuant to § 1.5000C-
2(e)(3), if the acquiring agency has over-
withheld amounts under section 5000C
and has made a deposit of the amounts
under § 1.5000C-3(b), the contracting
party may claim a refund of the amount
overwithheld pursuant to the procedures
described in chapter 65. The contracting
party's claim for refund must meet the
requirements of section 6402 and the reg-

ulations thereunder, as applicable, and
must be filed before the expiration of the
period of limitations on refund in section
6511 and the regulations thereunder. In
general, the contracting party making a
refund claim must file the required return
to claim a refund, stating the grounds
upon which the claim is based. A Section
5000C Certificate and a copy of the Form
1042-S received from the acquiring
agency must be attached to the required
return. For purposes of this section, an
amount is overwithheld if the amount
withheld from the payment pursuant to
section 5000C and §§ 1.5000C-1 through
1.5000C-7 exceeds the contracting par-
ty's tax liability under § 1.5000C-1, re-
gardless of whether the overwithholding
was in error or appeared correct when it
occurred. A U.S. person may seek a re-
fund under this paragraph (e) even if it
was treated as a foreign person under the
rules in § 1.5000C-2 (for example, be-
cause it neither had a taxpayer identifica-
tion number on file in the System for
Award Management nor submitted Form
W-9, "Request for Taxpayer Identifica-
tion Number (TIN) and Certification," to
the acquiring agency).

§ 1.5000C-5 Anti-abuse rule.

If a foreign person engages in a trans-
action (or series of transactions) with a
principal purpose of avoiding the tax im-
posed under section 5000C, the transac-
tion (or series of transactions) may be
disregarded or the arrangement may be
recharacterized (including disregarding an
intermediate entity), in accordance with
its substance. If this section applies, the
foreign person remains liable for any tax
(including any tax obligation unsatisfied
as a result of underwithholding) and the
Internal Revenue Service retains all other
rights and remedies under any applicable
law available to collect any tax imposed
on the foreign contracting party by section
5000C.

§ 1.5000C-6 Examples.

The rules of §§ 1.5000C-1 through
1.5000C-4 are illustrated by the follow-
ing examples. For purposes of the exam-
ples: all contracts are executed with ac-
quiring agencies on or after January 2,

2011, and are for the provision of either
goods or services; none of the contracts
are for emergency acquisitions described
in § 1.5000C-1(d)(2); the acquiring agen-
cies have no other withholding obligations
under chapter 3 of the Code and have no
other contracts subject to section 5000C;
the foreign contracting parties do not have
any U.S. source income or a U.S. tax
return filing obligation other than a tax
return filing obligation that arises based
on the facts described in the particular
example; and none of the contracts are
classified contracts as described in section
6050M(e)(3).

Example 1. U.S. person not subject to tax; no
withholding. (i) Facts. Company A Inc., a U.S. cor-
poration and the contracting party, enters into a
contract with Agency L, the acquiring agency. Be-
fore making its first payment under the contract (for
example, on the date of execution of the contract),
pursuant to the first step in § 1.5000C-2(b) Agency
L determines that the contract will be for services.
Under the second step, Agency L reviews Company
A Inc.'s record in the System for Award Manage-
ment (SAM) and determines that Company A is a
corporation and is considered to be a U.S. person
because Agency L's records demonstrate that Com-
pany A Inc. is a business entity treated as a corpo-
ration for tax purposes that has a TIN that does not
begin with "98."

(ii) Analysis. Company A Inc. is a U.S. person
and thus is not subject to the tax under section
5000C. Moreover, because Company A Inc. is a
corporation for tax purposes that has a TIN that does
not begin with "98," Agency L is able to determine
that it has no obligation to withhold any amounts
under section 5000C on the payment made to
Company A Inc. For purposes of section 5000C,
Company A Inc. could also establish that it is a
U.S. person by providing a Form W-9, "Request
for Taxpayer Identification Number (TIN) and
Certification," to Agency L. Company A Inc. does
not need to file a Section 5000C Certificate to
demonstrate its eligibility for an exemption from
withholding.

Example 2. Foreign national entitled to the ben-
efit of a nondiscrimination provision of a treaty; no
withholding. (i) Facts. Company B, a foreign con-
tracting party and a national of Country T, provides
goods to Agency M, the acquiring agency. Company
B determines that it is exempt from tax under section
5000C because it is entitled to the benefit of the
nondiscrimination article of a qualified income tax
treaty between the United States and Country T.
Company B submits a Section 5000C Certificate to
Agency M when the contract is executed. Company
B uses the model Section 5000C Certificate and
properly fills out Sections II and IV stating the name
of the treaty, the specific article relied upon, and the
basis on which it is entitled to the benefits of that
article. Following the steps in § 1.5000C-2, Agency
M determines that the nondiscrimination provision
of the Country T-United States income tax treaty
applies to exempt Company B from the tax imposed

under section 5000C. Agency M makes one lump
sum payment of $50 million to Company B pursuant
to the contract.

(ii) Analysis. Company B has no liability for tax
under section 5000C because it is entitled to the
benefit of a nondiscrimination article of a qualified
income tax treaty. Because Company B submitted a
Section 5000C Certificate meeting the requirements
in § 1.5000C-2 and Agency M does not have reason
to know that the submitted information is incorrect
or unreliable, Agency M is not required to withhold
under section 5000C. Agency M must retain the
Section 5000C Certificate for at least three years
pursuant to § 1.5000C-3(c)(1).

Example 3. Foreign treaty beneficiary does not
submit Section 5000C Certificate; withholding re-
quired. (i) Facts. The facts are the same as in Ex-
ample 2, except that Company B does not submit a
Section 5000C Certificate to Agency M before
Agency M makes the $50 million payment.

(ii) Analysis. Company B is not subject to tax
under section 5000C, but Agency M must neverthe-
less withhold on the payment made to Company B
because Agency M did not receive a Section 5000C
Certificate from Company B in the time and manner
required pursuant to § 1.5000C-2(d). Agency M
must withhold $1 million (2 percent of $50 million)
on the payment, and deposit that amount under the
rules in § 1.5000C-3 no later than the 15th day of the
month following the month in which the payment
was made. Agency M must also complete Forms
1042, "Annual Withholding Tax Return for U.S.
Source Income of Foreign Persons," and 1042-S,
"Foreign Person's U.S. Source Income Subject to
Withholding," on or before the date specified on
those forms and the accompanying instructions.
Agency M must furnish copies of Form 1042-S to
Company B. Agency M must retain a copy of the
Form 1042 and the Form 1042-S for 3 years from
the due date for the Form 1042 pursuant to
§ 1.5000C-3(c)(1). As Company B is not liable for
the tax, it may later file a claim for refund pursuant
to the procedures described in chapter 65.

Example 4. Foreign contracting party partially
exempt from tax under section 5000C when goods
are manufactured in different countries. (i) Facts.
Company C, a foreign contracting party, provides
goods to Agency N in 2015. The terms of the con-
tract require that payment be made to Company C by
Agency N in two $5 million installments in 2015.
Company C has a TIN that begins with "98" and is
not entitled to relief pursuant to an international
agreement with the United States, such as relief
pursuant to a nondiscrimination provision of a qual-
ified income tax treaty. Some of the goods are man-
ufactured in Country R, which is a party to an
international procurement agreement with the United
States, with the remainder being manufactured in
Country S, a country that is not a party to an inter-
national procurement agreement with the United
States. Company C uses a reasonable allocation
method based on the information available to it at the
time in accordance with § 1.5000C-1(e)(3) to esti-
mate that $3 million is the nonexempt amount pro-
duced in Country S. Company C submits a valid and
complete Section 5000C Certificate to Agency N in
the time and manner required by §§ 1.5000C-1
through 1.5000C-7 that provides that the nonexempt

amount is $3 million. In 2015, Agency N pays Com-
pany C in two installments pursuant to the terms of
the contract.

(ii) Analysis. Using a reasonable allocation
method to determine the estimated nonexempt
amount, Company C determines that pursuant to
section 5000C and §§ 1.5000C-1 through
1.5000C-7, tax of $30,000 (2 percent of the $5
million payment, multiplied by a fraction (the nu-
merator of which is the estimated nonexempt
amount, $3 million, and the denominator of which
is the estimated total contract price, or $10 mil-
lion)) is imposed on each payment made to Com-
pany C. Because Company C has timely submitted
a Section 5000C Certificate explaining the basis
for this allocation, Agency N withholds $30,000
on each payment made to Company C. Agency N
must deposit each $30,000 withholding tax no
later than the 15th day of the month following the
month in which each payment is made. Agency N
must also complete Forms 1042 and 1042-S and
furnish copies of Form 1042-S to Company C.
Provided that Agency N properly withholds on the
nonexempt portion as required under section
5000C and §§ 1.5000C-1 through 1.5000C-7 and
that Company C's estimate of the nonexempt
amount is the actual nonexempt amount, Company
C does not have an additional tax liability or a
U.S. tax return filing obligation as a result of
receiving the payment.

Example 5. Foreign contracting party liable for
additional tax under Section 5000C not fully with-
held upon due to errors on the Section 5000C Cer-
tificate. (i) Facts. The facts are the same as in Ex-
ample 4, except that the Section 5000C Certificate
submitted to Agency N by Company C erroneously
provides that the estimated nonexempt amount is
$1.5 million instead of $3 million. As a result,
Agency N only withholds $15,000 (2 percent of the
$5 million payment multiplied by a fraction (the
numerator of which is the estimated nonexempt
amount stated on the Section 5000C Certificate, $1.5
million, and the denominator of which is the esti-
mated total contract price, or $10 million)) on each
payment made to Company C. Agency N neither
discovered nor had reason to know that the informa-
tion on the Section 5000C Certificate was incorrect
or unreliable. After both payments have been made
and after the filing due date for Form 1042 for 2015,
Company C determines that the estimated nonex-
empt amount should have been stated as $3 million
on the Section 5000C Certificate.

(ii) Analysis. The tax imposed under section
5000C on Company C as a result of the receipt of
specified Federal procurement payments is $60,000
and this amount has not been fully satisfied by with-
holding by Agency N. Accordingly, Company C
must remit additional tax of $30,000 ($60,000 tax
liability less $30,000 amounts already withheld by
Agency N) and file its required return, a Form
1120-F, "U.S. Income Tax Return of a Foreign
Corporation," for 2015 to report this tax liability, as
required by § 1.5000C-4. Company C must explain
its corrected allocation method in its Form 1120-F.
Company C must also attach a copy of the Form
1042-S it received from Agency N to Form 1120-F.

§ 1.5000C-7 Effective/applicability date.

Section 5000C applies to specified
Federal procurement payments received
pursuant to contracts entered into on and
after January 2, 2011. Sections 1.5000C-1
through 1.5000C-7 apply on and after the
date that is 90 days after the date they are
published as final regulations in the Fed-
eral Register.

#### PART 301-PROCEDURE AND ADMINISTRATION

Par. 5. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *

Par. 6. Section 301.6114-1 is amended
by adding paragraph (c)(1)(ix) and revis-
ing paragraph (e) to read as follows:

§ 301.6114-1 Treaty-based return
positions.

* * * * *

(1) * * *

(ix) Notwithstanding paragraph (b)(1)
of this section, that a nondiscrimination
provision of an income tax treaty exempts
a payment from tax under section 5000C,
but only if the foreign person claiming
such relief has provided a Section 5000C
Certificate (or such other form as may be
prescribed by the Commissioner pursuant
to section 5000C) in accordance with sec-
tion 5000C and the regulations thereun-
der.

(e) Effective/applicability date-(1) In
general. This section is effective for tax-

able years of the taxpayer for which the
due date for filing returns (without exten-
sions) occurs after December 31, 1988.
However, if-

(i) A taxpayer has filed a return for
such a taxable year, without complying
with the reporting requirement of this sec-
tion, before November 13, 1989, or

(ii) A taxpayer is not otherwise than by
paragraph (a) of this section required to
file a return for a taxable year before No-
vember 13, 1989, Such taxpayer must file
(apart from any earlier filed return) the
statement required by paragraph (d) of
this section before June 12, 1990, by mail-
ing the required statement to the Internal
Revenue Service, P.O. Box 21086, Phila-
delphia, PA 19114. Any such statement
filed apart from a return must be dated,
signed and sworn to by the taxpayer under
the penalties of perjury. In addition, with
respect to any return due (without exten-
sions) on or before March 10, 1990, the
reporting required by paragraph (a) of this
section must be made no later than June
12, 1990. If a taxpayer files or has filed a
return on or before November 13, 1989,
that provides substantially the same infor-
mation required by paragraph (d) of this
section, no additional submission will be
required. Foreign insurers and reinsurers
subject to reporting described in para-
graph (c)(7)(ii) of this section must so
report for calendar years 1988 and 1989
no later than August 15, 1990.

(2) Section 5000C. Paragraph (c)(1)(ix)
of this section is effective on the date
that is 90 days after the date these reg-
ulations are published as final regula-
tions in the Federal Register. However,

a foreign contracting party may rely on
§§ 1.5000C-1 through 1.5000C-7 before
that date.

* * * * *

PART 602-OMB CONTROL
NUMBERS UNDER THE
PAPERWORK REDUCTION ACT

Par. 7. The authority citation for part
602 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 8. In § 602.101, paragraph (b) is
amended by adding entries in numerical
order to the table to read as follows:

§ 602.101 OMB Control numbers.

* * * * *

(b) * * *

CFR part or section where identified and described

Current OMB control no.

* * * * *

1.5000C-2

1545-xxxx

1.5000C-3

1545-xxxx

1.5000C-4

1545-xxxx

* * * * *

John M. Dalrymple,
Deputy Commissioner
for Services and Enforcement.

(Filed by the Office of the Federal Register on April 20,
2015, 4:15 p.m., and published in the issue of the Federal
Register for April 22, 2015, 80 F.R. 22449)

# Definition of Terms

Revenue rulings and revenue procedures
(hereinafter referred to as "rulings") that
have an effect on previous rulings use the
following defined terms to describe the
effect:

Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).

Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.

Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.

Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A

and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).

Obsoleted describes 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.

Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.

Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.

Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.

Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.

# Abbreviations

The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

F.R .- Federal Register.

FUTA-Federal Unemployment Tax Act.

FX-Foreign corporation.

G.C.M .- Chief Counsel's Memorandum.

GE-Grantee.

GP-General Partner.

GR-Grantor.

IC-Insurance Company.

Ct.D .- Court Decision.

I.R.B .- Internal Revenue Bulletin.

CY-County.

LE-Lessee.

D-Decedent.

LP-Limited Partner.

LR-Lessor.

M-Minor.

Nonacq .- Nonacquiescence.

O Organization.

P-Parent Corporation.

PHC-Personal Holding Company.

PO-Possession of the U.S.

PR-Partner.

PRS-Partnership.

PTE-Prohibited Transaction Exemption.
Pub. L .- Public Law.

REIT-Real Estate Investment Trust.

Rev. Proc .- Revenue Procedure.

Rev. Rul .- Revenue Ruling.

S-Subsidiary.

S.P.R .- Statement of Procedural Rules.

Stat .- Statutes at Large.
T-Target Corporation.

T.C .- Tax Court.

T.D .- Treasury Decision.

TFE-Transferee.

TFR-Transferor.

T.I.R .- Technical Information Release.

TP-Taxpayer.
TR-Trust.

TT-Trustee.

U.S.C .- United States Code.

DC-Dummy Corporation.

DE-Donee.

Del. Order-Delegation Order.

DISC-Domestic International Sales Corporation.
DR-Donor.

E-Estate.

EE-Employee.

E.O .- Executive Order.

ER-Employer.

ERISA-Employee Retirement Income Security Act.
EX-Executor.

F-Fiduciary.

FC-Foreign Country.

FICA-Federal Insurance Contributions Act.

FISC-Foreign International Sales Company.

FPH-Foreign Personal Holding Company.

BK-Bank.

B.T.A .- Board of Tax Appeals.

C-Individual.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

CI-City.

COOP-Cooperative.

X-Corporation.

Y-Corporation.

Z-Corporation.

## Numerical Finding List1

Bulletin 2015-1 through 2015-19

### Announcements:

2015-1, 2015-11 I.R.B. 758
2015-2, 2015-3 I.R.B. 324
2015-3, 2015-3 I.R.B. 328
2015-4, 2015-5 I.R.B. 565
2015-5, 2015-7 I.R.B. 602
2015-6, 2015-8 I.R.B. 685
2015-7, 2015-13 I.R.B. 823
2015-8, 2015-9 I.R.B. 698
2015-10, 2015-11 I.R.B. 758
2015-11, 2015-15 I.R.B. 883
2015-12, 2015-12 I.R.B. 770
2015-13, 2015-15 I.R.B. 908

## Proposed Regulations:

REG-109187-11, 2015-2 I.R.B. 277
REG-132751-14, 2015-2 I.R.B. 279
REG-145878-14, 2015-2 I.R.B. 290
REG-153656-3, 2015-5 I.R.B. 566
REG-102648-15, 2015-10 I.R.B. 745
REG-136018-13, 2015-11 I.R.B. 759
REG-143416-14, 2015-11 I.R.B. 757
REG-100400-14, 2015-12 I.R.B. 779
REG-132253-11, 2015-12 I.R.B. 771
REG-143040-11, 2015-13 I.R.B. 827
REG-133489-13, 2015-16 I.R.B. 926
REG-103281-11, 2015-19 I.R.B. 948

## Notices:

2015-1, 2015-2 I.R.B. 249
2015-2, 2015-4 I.R.B. 334
2015-3, 2015-6 I.R.B. 583
2015-4, 2015-5 I.R.B. 407
2015-5, 2015-5 I.R.B. 408
2015-6, 2015-5 I.R.B. 412
2015-7, 2015-6 I.R.B. 585
2015-8, 2015-6 I.R.B. 589
2015-9, 2015-6 I.R.B. 590
2015-11, 2015-8 I.R.B. 618
2015-15, 2015-9 I.R.B. 687
2015-12, 2015-8 I.R.B. 700
2015-13, 2015-10 I.R.B. 722
2015-14, 2015-10 I.R.B. 722
2015-16, 2015-10 I.R.B. 732
2015-17, 2015-14 I.R.B. 845
2015-19, 2015-9 I.R.B. 690
2015-20, 2015-11 I.R.B. 754
2015-18, 2015-12 I.R.B. 765
2015-21, 2015-12 I.R.B. 765
2015-22, 2015-12 I.R.B. 768
2015-23, 2015-12 I.R.B. 769
2015-24, 2015-13 I.R.B. 811
2015-25, 2015-13 I.R.B. 814
2015-26, 2015-13 I.R.B. 814

Notices :- Continued

2015-27, 2015-13 I.R.B. 816
2015-28, 2015-14 I.R.B. 848
2015-29, 2015-15 I.R.B. 873
2015-30, 2015-17 I.R.B. 928
2015-31, 2015-17 I.R.B. 929
2015-33, 2015-18 I.R.B. 934
2015-34, 2015-18 I.R.B. 942
2015-35, 2015-18 I.R.B. 943
2015-37, 2015-19 I.R.B. 947

## Revenue Procedures:

2015-1, 2015-1 I.R.B. 1
2015-2, 2015-1 I.R.B. 105
2015-3, 2015-1 I.R.B. 129
2015-4, 2015-1 I.R.B. 144
2015-5, 2015-1 I.R.B. 186
2015-6, 2015-1 I.R.B. 194
2015-7, 2015-1 I.R.B. 231
2015-8, 2015-1 I.R.B. 235
2015-9, 2015-2 I.R.B. 249
2015-10, 2015-2 I.R.B. 261
2015-12, 2015-2 I.R.B. 265
2015-13, 2015-5 I.R.B. 419
2015-14, 2015-5 I.R.B. 450
2015-15, 2015-5 I.R.B. 564
2015-16, 2015-7 I.R.B. 596
2015-17, 2015-7 I.R.B. 599
2015-18, 2015-8 I.R.B. 642
2015-19, 2015-8 I.R.B. 678
2015-20, 2015-9 I.R.B. 694
2015-21, 2015-13 I.R.B. 817
2015-22, 2015-11 I.R.B. 754
2015-23, 2015-13 I.R.B. 820
2015-24, 2015-13 I.R.B. 822
2015-25, 2015-14 I.R.B. 848
2015-26, 2015-15 I.R.B. 875
2015-27, 2015-16 I.R.B. 914
2015-28, 2015-16 I.R.B. 920
2015-29, 2015-15 I.R.B. 882

## Revenue Rulings:

2015-1, 2015-4 I.R.B. 331
2015-2, 2015-3 I.R.B. 321
2015-3, 2015-6 I.R.B. 580
2015-4, 2015-10 I.R.B. 743
2015-5, 2015-13 I.R.B. 788
2015-6, 2015-13 I.R.B. 801
2015-7, 2015-14 I.R.B. 849
2015-8, 2015-18 I.R.B. 945

Treasury Decisions:

9707, 2015-2 I.R.B. 247
9708, 2015-5 I.R.B. 337
9709, 2015-7 I.R.B. 593
9710, 2015-8 I.R.B. 603
9711, 2015-11 I.R.B. 748

Treasury Decisions :- Continued

9712, 2015-11 I.R.B. 750
9713, 2015-13 I.R.B. 802
9714, 2015-14 I.R.B. 831
9715, 2015-15 I.R.B. 851
9716, 2015-15 I.R.B. 863
9717, 2015-16 I.R.B. 910
9718, 2015-15 I.R.B. 866

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2014-27 through 2014-52 is in Internal Revenue Bulletin
2014-52, dated December 28, 2014.

## Finding List of Current Actions on

## Revenue Procedures :- Continued

Notices :- Continued

Previously Published Items1

2011-14

2013-01

Bulletin 2015-1 through 2015-19

Amplified by Rev. Proc. 2015-13, 2015-5 I.R.B. 419

Superseded by Notice 2015-20, 2015-11 I.R.B. 754

Announcements:

2011-14

2014-24

2010-3

Clarified by

Obsoleted by

Amplified by

Rev. Proc. 2015-13, 2015-5 I.R.B. 419

Notice 2015-29, 2015-15 I.R.B. 882

Ann. 2015-3, 2015-3 I.R.B. 328

1997-27

Revenue Procedures:

Clarified by

Rev. Proc. 2015-13, 2015-5 I.R.B. 419

2014-01

Superseded by

1997-27

Rev. Proc. 2015-01, 2015-01 I.R.B. 1

Modified by Rev. Proc. 2015-13, 2015-5 I.R.B. 419

2014-02

Superseded by

2012-11

Rev. Proc. 2015-02, 2015-01 I.R.B. 105

Superseded by Rev. Proc. 2015-17, 2015-7 I.R.B. 599

2014-03

Superseded by

2015-9

Rev. Proc. 2015-03, 2015-01 I.R.B. 129

Modified by Rev. Proc. 2015-17, 2015-7 I.R.B. 599

2014-04

2015-14

Superseded by Rev. Proc. 2015-04, 2015-01 I.R.B. 144

Modified by Rev. Proc. 2015-20, 2015-9 I.R.B. 694

2014-05

2013-22

Superseded by

Modified by

Rev. Proc. 2015-05, 2015-01 I.R.B. 186

Rev. Proc. 2015-22, 2015-11 I.R.B. 754

2014-06

2015-8

Superseded by Rev. Proc. 2015-06, 2015-01 I.R.B. 194

Modified by Rev. Proc. 2015-22, 2015-11 I.R.B. 754

2014-07

2014-59

Superseded by

Modified by

Rev. Proc. 2015-07, 2015-01 I.R.B. 231

Rev. Proc. 2015-24, 2015-13 I.R.B. 822

2014-08

2002-43

Superseded by

Modified by

Rev. Proc. 2015-08, 2015-01 I.R.B. 235

Rev. Proc. 2015-26, 2015-15 I.R.B. 875

2014-10

2002-43

Superseded by

Obsoleted by

Rev. Proc. 2015-10, 2015-2 I.R.B. 261

Rev. Proc. 2015-26, 2015-15 I.R.B. 875

2003-63

Revenue Rulings:

Superseded by

Rev. Proc. 2015-12, 2015-2 I.R.B. 265

92-19

Supplemented by

2011-14

Rev. Rul. 2015-02, 2015-3 I.R.B. 321

Modified by

Rev. Proc. 2015-12, 2015-2 I.R.B. 265

Notices:

2011-14

2013-01

Modified by

Rev. Proc. 2015-13, 2015-5 I.R.B. 419

Notice 2015-20, 2015-11 I.R.B. 754

1A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2014-27 through 2014-52 is in Internal Revenue Bulletin 2014-52, dated December 28,
2014.

# Internal Revenue Service Washington, DC 20224

Official Business
Penalty for Private Use, $300

# INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

# We Welcome Comments About the Internal Revenue Bulletin

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Internal Revenue Bulletin 2015-19 (PDF rendition): IRS Notices

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