[Federal Register Volume 77, Number 76 (Thursday, April 19, 2012)]
[Rules and Regulations]
[Pages 23391-23395]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-9520]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 31
[TD 9584]
RIN 1545-BJ01
Guidance on Reporting Interest Paid to Nonresident Aliens
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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SUMMARY: This document contains final regulations regarding the
reporting requirements for interest that relates to deposits maintained
at U.S. offices of certain financial institutions and is paid to
certain nonresident alien individuals. These regulations will affect
commercial banks, savings institutions, credit unions, securities
brokerages, and insurance companies that pay interest on deposits.
DATES: Effective Date: These regulations are effective April 19, 2012.
Applicability Date: These regulations apply to payments of interest
made on or after January 1, 2013.
FOR FURTHER INFORMATION CONTACT: Kathryn Holman, (202) 622-3840 (not a
toll free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in these final regulations
has been reviewed and approved by the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)) under control number 1545-1725. The collection of
information in these proposed regulations is in Sec. 1.6049-4(b)(5)(i)
and Sec. 1.6049-6(e)(4)(i) and (ii). The collection of information is
mandatory and the respondents are commercial banks, savings
institutions, credit unions, securities brokerages, and insurance
companies that maintain deposit accounts for nonresident alien
individuals.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Information collected under
these regulations will be return information as defined in 26 U.S.C.
6103. Tax returns and return information are confidential as required
by 26 U.S.C. 6103.
Background
On January 7, 2011, the Treasury Department and the IRS published a
notice of proposed rulemaking (REG 146097-09) (the 2011 proposed
regulations) in the Federal Register (76 FR 1105, corrected by 76 FR
2852, 76 FR 20595, and 76 FR 22064) under section 6049 of the Internal
Revenue Code (Code). The 2011 proposed regulations withdrew proposed
regulations that had been issued on August 2, 2002 (67 FR 50386) (the
2002 proposed regulations). The 2002 proposed regulations would have
required reporting of interest payments to nonresident alien
individuals that are residents of certain specified countries. The 2011
proposed regulations provide that payments of interest aggregating $10
or more on a deposit maintained at a U.S. office of a financial
institution and paid to any nonresident alien individual are subject to
information reporting.
Written comments were received by the Treasury Department and the
IRS in response to the 2011 proposed regulations. A public hearing on
the 2011 proposed regulations was held on May 18, 2011, at which
further comments were received. All comments were considered and are
available for public inspection at http://www.regulations.gov or upon
request. After consideration of the written comments and the comments
provided at the public hearing, the 2011 proposed regulations are
adopted as revised by this Treasury decision.
Explanation and Summary of Comments
Objectives of This Regulatory Action
The reporting required by these regulations is essential to the
U.S. Government's efforts to combat offshore tax evasion for several
reasons. First, it ensures that the IRS can, in appropriate
circumstances, exchange information relating to tax enforcement with
other jurisdictions. In order to ensure that U.S. taxpayers cannot
evade U.S. tax by hiding income and assets offshore, the United States
must be able to obtain information from other countries regarding
income earned and assets held in those countries by U.S. taxpayers.
Under present law, the measures available to assist the United States
in obtaining this information include both treaty relationships and
statutory provisions. The effectiveness of these measures depends
significantly, however, on the United States' ability to reciprocate.
The United States has constructed an expansive network of
international agreements, including income tax or other conventions and
bilateral agreements relating to the exchange of tax information
(collectively referred to as information exchange agreements), which
provide for the exchange of information related to tax enforcement
under appropriate circumstances. These information exchange
relationships are based on cooperation and reciprocity. A
jurisdiction's willingness to share information with the IRS to combat
offshore tax evasion by U.S. taxpayers depends, in large part, on the
ability of the IRS to exchange information that will assist that
jurisdiction in combating offshore tax evasion by its own residents.
These regulations, by requiring reporting of deposit interest to the
IRS, will ensure that the IRS is in a position to exchange such
information reciprocally with a treaty partner when it is appropriate
to do so.
[[Page 23392]]
Second, in 2010, Congress supplemented the established network of
information exchange agreements by enacting, as part of the Hiring
Incentives to Restore Employment Act of 2010 (Pub. L. 111-147),
provisions commonly known as the Foreign Account Tax Compliance Act
(FATCA) that require overseas financial institutions to identify U.S.
accounts and report information (including interest payments) about
those accounts to the IRS. In many cases, however, the implementation
of FATCA will require the cooperation of foreign governments in order
to overcome legal impediments to reporting by their resident financial
institutions. Like the United States, those foreign governments are
keenly interested in addressing offshore tax evasion by their own
residents and need tax information from other jurisdictions, including
the United States, to support their efforts. These regulations will
facilitate intergovernmental cooperation on FATCA implementation by
better enabling the IRS, in appropriate circumstances, to reciprocate
by exchanging information with foreign governments for tax
administration purposes.
Finally, the reporting of information required by these regulations
will also directly enhance U.S. tax compliance by making it more
difficult for U.S. taxpayers with U.S. deposits to falsely claim to be
nonresidents in order to avoid U.S. taxation on their deposit interest
income.
International Standard for Transparency and Information Exchange
Under the international standard for transparency and exchange of
information, which is reflected in the Organisation for Economic
Cooperation and Development (OECD) Model Agreement on Exchange of
Information on Tax Matters, the OECD Model Tax Convention, and the
United Nations Model Double Tax Convention between Developed and
Developing Countries, exchange of tax information cannot be limited by
domestic bank secrecy laws or the absence of a specific domestic tax
interest in the information to be exchanged. Accordingly, under this
global standard a country cannot refuse to share tax information based
on domestic laws that do not require banks to share the information. In
addition, under the global standard, a country cannot opt out of
information exchange based on the fact that the country does not itself
need the information to enforce its own tax rules. Thus, even countries
that do not impose income taxes, and therefore do not have tax
enforcement concerns, have entered into information exchange agreements
to provide information about the accounts of nonresidents.
Comments Regarding Confidentiality and Improper Use of Information
Some comments on the 2011 proposed regulations expressed concerns
that the information required to be reported under those regulations
might be misused. For example, comments expressed concern that deposit
interest information may be shared with a country that does not have
laws in place to protect the confidentiality of the information
exchanged or that would use the information for purposes other than the
enforcement of its tax laws. These comments further suggested that
these concerns could affect nonresident alien investors' decisions
about the location of their deposits.
The Treasury Department and the IRS believe that the concerns
raised by the comments are addressed by existing legal limitations and
administrative safeguards governing tax information exchange. As
discussed herein, information reported pursuant to these regulations
will be exchanged only with foreign governments with which the United
States has an agreement providing for the exchange and when certain
additional requirements are satisfied. Even when such an agreement
exists, the IRS is not compelled to exchange information, including
information collected pursuant to these regulations, if there is
concern regarding the use of the information or other factors exist
that would make exchange inappropriate.
First, information reported pursuant to these regulations is return
information under section 6103. Section 6103 imposes strict
confidentiality rules with respect to all return information. Moreover,
section 6103(k)(4) allows the IRS to exchange return information with a
foreign government only to the extent provided in, and subject to the
terms and conditions of an information exchange agreement. Thus, the
IRS can share the information reported under these regulations only
with foreign governments with which the United States has an
information exchange agreement. Absent such an agreement, the IRS is
statutorily barred from sharing return information with another
country, and these regulations cannot and do not change that rule.
Second, consistent with established international standards, all of
the information exchange agreements to which the United States is a
party require that the information exchanged under the agreement be
treated and protected as secret by the foreign government. In addition,
information exchange agreements generally prohibit foreign governments
from using any information exchanged under such an agreement for any
purpose other than the purpose of administering, collecting, and
enforcing the taxes covered by the agreement. Accordingly, under these
agreements, neither country is permitted to release the information
shared under the agreement or use it for any other law enforcement
purposes.
Third, consistent with the international standard for information
exchange and United States law, the United States will not enter into
an information exchange agreement unless the Treasury Department and
the IRS are satisfied that the foreign government has strict
confidentiality protections. Specifically, prior to entering into an
information exchange agreement with another jurisdiction, the Treasury
Department and the IRS closely review the foreign jurisdiction's legal
framework for maintaining the confidentiality of taxpayer information.
In order to conclude an information exchange agreement with another
country, the Treasury Department and the IRS must be satisfied that the
foreign jurisdiction has the necessary legal safeguards in place to
protect exchanged information and that adequate penalties apply to any
breach of that confidentiality.
Finally, even if an information exchange agreement is in effect,
the IRS will not exchange information on deposit interest or otherwise
with a country if the IRS determines that the country is not complying
with its obligations under the agreement to protect the confidentiality
of information and to use the information solely for collecting and
enforcing taxes covered by the agreement. The IRS also will not
exchange any return information with a country that does not impose tax
on the income being reported because the information could not be used
for the enforcement of tax laws within that country.
In addition, the IRS has options regarding the appropriate form of
exchange. For example, the IRS might exchange information with another
jurisdiction only upon specific request. In the case of specific
exchange requests, the IRS evaluates the requesting country's current
practices with respect to information confidentiality. The IRS also
requires the requesting country to explain the intended permitted use
of the information and justify the relevance of that information to the
permitted use.
[[Page 23393]]
Alternatively, in appropriate circumstances, the IRS might exchange
certain information on an automatic basis. The IRS currently exchanges
deposit interest information on an automatic basis with only one
jurisdiction (Canada). The IRS will not enter into a new automatic
exchange relationship with a jurisdiction unless it has reviewed the
country's policies and practices and has determined that such an
exchange relationship is appropriate. Further, the IRS generally will
not enter into an automatic exchange relationship with respect to the
information collected under these regulations unless the other
jurisdiction is willing and able to reciprocate effectively.
The Treasury Department and the IRS believe that the legal and
administrative safeguards described in the preceding paragraphs
regarding the use of information collected under these regulations
should adequately address the concerns identified by the comments and,
therefore, these regulations should not significantly impact the
investment and savings decisions of the vast majority of nonresidents
who are aware of and understand these safeguards and existing law and
practice. Nevertheless, to enhance awareness and further address
concerns, these final regulations revise the 2011 proposed regulations
to require reporting only in the case of interest paid to a nonresident
alien individual resident in a country with which the United States has
in effect an information exchange agreement pursuant to which the
United States agrees to provide, as well as receive, information and
under which the competent authority is the Secretary of the Treasury or
his delegate.
For this purpose, the Treasury Department and the IRS will publish
a Revenue Procedure contemporaneously with these final regulations
specifically identifying the countries with which the United States has
in force such an information exchange agreement. The Revenue Procedure
will be updated as appropriate. With respect to any calendar year,
payors will only be required to report interest on deposits maintained
at an office within the United States and paid to a nonresident alien
individual who is a resident of a country identified in the Revenue
Procedure as of December 31 of the prior calendar year as being a
country with which the United States has in effect such an information
exchange agreement. To address any potential burden associated with
reporting on this basis, the final regulations provide that for any
year for which the information return under Sec. 1.6049-4(b)(5) is
required, a payor may elect to report interest payments to all
nonresident alien individuals.
As previously discussed, the identification of a country as having
an information exchange agreement with the United States does not
necessarily mean that the information collected under these regulations
will be reported to such foreign jurisdiction. As an additional measure
to further increase awareness among concerned nonresidents regarding
the IRS' use of information collected under these regulations, the
Revenue Procedure also will include a second list identifying the
countries with which the Treasury Department and the IRS have
determined that it is appropriate to have an automatic exchange
relationship with respect to the information collected under these
regulations. This determination will be made only after further
assessment of a country's confidentiality laws and practices and the
extent to which the country is willing and able to reciprocate.
In addition, in response to comments, and given the information
exchange practices described in the preceding paragraphs and the
information that will be available in the Revenue Procedure, these
final regulations eliminate the requirement in the 2011 proposed
regulations for financial institutions to include in the information
statement provided to nonresident alien individuals a statement
informing the individual that the information may be furnished to the
government of the country where the recipient resides. In addition,
these final regulations clarify that a payor or middleman may rely on
the permanent residence address provided on a valid Form W-8BEN,
``Beneficial Owners Certificate of Foreign Status for U.S. Tax
Withholding'', for purposes of determining the country of residence of
a nonresident alien to whom reportable interest is paid unless the
payor or middleman knows or has reason to know that such documentation
of the country of residence is unreliable or incorrect. The final
regulations also modify Sec. 31.3406(g)-1 of the proposed regulations
to clarify that, consistent with the backup withholding rules
generally, a payment of interest described in Sec. 1.6049-8(a) is not
subject to withholding under section 3406 if the payor may treat the
payee as a foreign person, without regard to whether the payor reported
such interest (although a payor may be subject to penalties if it fails
to report as required). As under the prior regulations requiring the
reporting of interest paid to Canadian non-resident alien individuals,
the final regulations define interest subject to reporting to mean
interest paid on deposits as defined under section 871(i)(2)(A)
(including deposits with persons carrying on a banking business,
deposits with certain savings institutions, and certain amounts held by
insurance companies under agreements to pay interest thereon).
Comments Regarding Authority and Congressional Intent
Some comments expressed the view that the Treasury Department and
the IRS lack the authority to require the reporting required under the
2011 proposed regulations, or that the 2011 proposed regulations are
contrary to Congressional intent. The relevant statutory provisions
expressly contemplate that the Treasury Department and the IRS have
authority to require reporting on deposit interest paid to
nonresidents. Section 6049(a) provides generally for reporting with
respect to interest payments. Section 6049(b)(2)(B) and (5) provides
that, except to the extent otherwise provided in regulations,
reportable interest does not include interest paid to nonresident alien
individuals on deposits described in section 871(i)(2)(A). Section
6049(b)(2)(B) and (5) thus provides express authority for the Treasury
Department and the IRS to issue regulations requiring reporting of such
interest.
Special Analyses
It has been determined that these regulations are not a significant
regulatory action 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 Procedure Act (5 U.S.C. chapter 5) does not apply to
these regulations.
When an agency promulgates a final rule, the Regulatory Flexibility
Act, 5 U.S.C. chapter 6 (RFA), requires the agency to prepare a final
regulatory flexibility analysis describing the impact of the final rule
on small entities. 5 U.S.C. 604. Section 605 of the RFA allows an
agency to certify a rule, in lieu of preparing a regulatory flexibility
analysis, if the final rule is not expected to have a significant
economic impact on a substantial number of small entities.
These regulations impose a collection of information, and thus, the
Regulatory Flexibility Act (5 U.S.C. chapter 6) applies. It is hereby
certified that the collection of information contained in these
regulations will not have a
[[Page 23394]]
significant economic impact on a substantial number of small entities.
The preamble to the 2011 proposed regulations sets forth an
analysis of the number of small entities that may be required to report
under these regulations. Although this rule may affect a substantial
number of small entities, the IRS has determined that the impact on
entities affected by these final regulations will not be significant.
Some comments expressed concern that the regulations would impose a
new administrative burden on U.S. financial institutions. In addition,
some comments objected that collecting and reporting this information
imposes burdens on certain types of financial institutions, including
community banks and banks in certain states that have a larger
percentage of customers who are nonresident alien individuals.
The Treasury Department and the IRS disagree. Under existing law,
all U.S. financial institutions have responsibilities to withhold on
and report with respect to depositors who are U.S. citizens, U.S.
resident individuals, and Canadian resident individuals, and have
developed the systems to perform such withholding and reporting.
All nonresident alien individual account holders who maintain
accounts in the United States are already required to complete a Form
W-8BEN, declaring their non-U.S. status and the country in which they
reside. U.S. financial institutions can use their existing W-8
information to produce Form 1042-S disclosures for the relevant
nonresident alien individual account holders. Nearly all U.S. banks and
other financial institutions have automated systems to produce Form
1099-INT, ``Interest Income'', for U.S. accountholders and Form 1042-S,
``Foreign Person's U.S. Source Income Subject to Withholding'', for
Canadian accountholders. As a result, the information collection
requirements in these regulations build on reporting and information
collection systems familiar to and currently used by U.S. financial
institutions, including small business entities. The amount of time
required to complete the Form 1042 and Form 1042-S is minimal, and the
statement that is required to be collected is brief. Accordingly, it
should not be a significant burden to adapt those systems to report
with respect to depositors who are resident in other countries with
which the United States has an information exchange agreement.
Therefore, a regulatory flexibility analysis is not required.
Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking preceding these final regulations was submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on its impact on small businesses. The Chief Counsel for Advocacy of
the Small Business Administration did not comment on the notice of
proposed rulemaking.
Drafting Information
The principal author of the regulations is Kathryn Holman, Office
of Associate Chief Counsel (International). However, other personnel
from the Treasury Department and the IRS participated in their
development.
List of Subjects
26 CRF Part 1
Income taxes, Reporting and recordkeeping requirements.
26 CFR Part 31
Employment taxes, Income taxes, Penalties, Pensions, Railroad
retirement, Reporting and recordkeeping requirements, Social Security,
Unemployment compensation.
Adoption of Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 31 are amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. In Sec. 1.6049-4, paragraph (b)(5) is revised to read as
follows:
Sec. 1.6049-4 Return of information as to interest paid and original
issue discount includible in gross income after December 31, 1982.
* * * * *
(b) * * *
(5) Interest payments to certain nonresident alien individuals--(i)
General rule. In the case of interest aggregating $10 or more paid to a
nonresident alien individual (as defined in section 7701(b)(1)(B)) that
is reportable under Sec. 1.6049-8(a), the payor shall make an
information return on Form 1042-S, ``Foreign Person's U.S. Source
Income Subject to Withholding,'' for the calendar year in which the
interest is paid. The payor or middleman shall prepare and file Form
1042-S at the time and in the manner prescribed by section 1461 and the
regulations under that section and by the form and its accompanying
instructions. See Sec. Sec. 1.1461-1(b) (rules regarding the
preparation of a Form 1042) and 1.6049-6(e)(4) (rules for furnishing a
copy of the Form 1042-S to the recipient). To determine whether an
information return is required for original issue discount, see
Sec. Sec. 1.6049-5(f) and 1.6049-8(a).
(ii) Effective/applicability date. Paragraph (b)(5)(i) of this
section shall be applicable for payments made on or after January 1,
2013. (For interest paid to a Canadian nonresident alien individual on
or before December 31, 2012, see paragraph (b)(5) of this section as in
effect and contained in 26 CFR part 1 revised April 1, 2000.)
* * * * *
0
Par. 3. Section 1.6049-5 is amended as follows:
0
1. In paragraph (b)(12), the last sentence is revised.
0
2. In paragraph (f), the last sentence is revised.
The revisions read as follows:
Sec. 1.6049-5 Interest and original issue discount subject to
reporting after December 31, 1982.
* * * * *
(b) * * *
(12) * * * This paragraph (b)(12) does not apply to interest paid
on or after January 1, 2013, to a nonresident alien individual to the
extent provided in Sec. 1.6049-8.
* * * * *
(f) * * * Original issue discount on an obligation (including an
obligation with a maturity of not more than six months from the date of
original issue) held by a nonresident alien individual or foreign
corporation is interest described in paragraph (b)(1)(vi)(A) or (B) of
this section and, therefore is not interest subject to reporting under
section 6049 unless it is described in Sec. 1.6049-8(a) (relating to
deposit interest paid on or after January 1, 2013, to certain
nonresident alien individuals).
* * * * *
0
Par. 4. Section 1.6049-6 is amended as follows:
0
1. The paragraph heading and text of paragraph (e)(4) is revised.
0
2. In paragraph (e)(5), the paragraph heading and first sentence are
revised and a new sentence is added at the end of the paragraph.
The additions and revisions read as follows:
Sec. 1.6049-6 Statements to recipients of interest payments and
holders of obligations for attributed original issue discount.
* * * * *
(e) * * *
(4) Special rule for amounts described in Sec. 1.6049-8(a). In the
case of amounts described in Sec. 1.6049-8(a) (relating to
[[Page 23395]]
payments of deposit interest to certain nonresident alien individuals)
paid on or after January 1, 2013, any person who makes a Form 1042-S,
``Foreign Person's U.S. Source Income Subject to Withholding,'' under
section 6049(a) and Sec. 1.6049-4(b)(5) shall furnish a statement to
the recipient either in person or by first class mail to the
recipient's last known address. The statement shall include a copy of
the Form 1042-S required to be prepared pursuant to Sec. 1.6049-
4(b)(5) and a statement to the effect that the information on the form
is being furnished to the United States Internal Revenue Service.
(5) Effective/applicability date. Paragraph (e)(4) of this section
applies to payee statements reporting payments of deposit interest to
nonresident alien individuals paid on or after January 1, 2013. * * *
(For interest paid to a Canadian nonresident alien individual on or
before December 31, 2012, see paragraph (e)(4) of this section as in
effect and contained in 26 CFR part 1 revised April 1, 2000.)
0
Par. 5. In Sec. 1.6049-8, the section heading and paragraph (a) are
revised to read as follows:
Sec. 1.6049-8 Interest and original issue discount paid to certain
nonresident aliens.
(a) Interest subject to reporting requirement. For purposes of
Sec. Sec. 1.6049-4, 1.6049-6, and this section, and except as provided
in paragraph (b) of this section, the term interest means interest
described in section 871(i)(2)(A) that relates to a deposit maintained
at an office within the United States, and that is paid to a
nonresident alien individual who is a resident of a country that is
identified, in an applicable revenue procedure (see Sec. 601.601(d)(2)
of this chapter) as of December 31 prior to the calendar year in which
the interest is paid, as a country with which the United States has in
effect an income tax or other convention or bilateral agreement
relating to the exchange of tax information within the meaning of
section 6103(k)(4), under which the competent authority is the
Secretary of the Treasury or his delegate and the United States agrees
to provide, as well as receive, information. Notwithstanding the
foregoing, for purposes of Sec. Sec. 1.6049-4, 1.6049-6, and this
section, for any year for which the information return under Sec.
1.6049-4(b)(5) is required, a payor may elect to treat interest as
including all interest described in section 871(i)(2)(A) that relates
to a deposit maintained at an office within the United States and that
is paid to any nonresident alien individual. A payor shall make this
election by reporting all such interest. For purposes of the
regulations under section 6049 (Sec. Sec. 1.6049-1 through 1.6049-8),
a nonresident alien individual is a person described in section
7701(b)(1)(B). A payor or middleman may rely upon the permanent
residence address provided on a valid Form W-8BEN, ``Beneficial Owners
Certificate of Foreign Status for U.S. Tax Withholding'', to determine
the country in which a nonresident alien individual is resident unless
such payor or middleman knows or has reason to know that such
documentation of the country of residence is unreliable or incorrect.
Amounts described in this paragraph (a) are not subject to backup
withholding under section 3406 if the payor may treat the payee as a
foreign beneficial owner or foreign payee under the rules of Sec.
1.6049-5(b)(12). See Sec. 31.3406(g)-1(d) of this chapter. However, if
the payor or middleman does not have either a valid Form W-8BEN or
valid Form W-9, ``Request for Taxpayer Identification Number and
Certification'', the payor or middleman must report the payment as made
to a U.S. non-exempt recipient if it must so treat the payee under the
presumption rules of Sec. 1.6049-5(d)(2) and Sec. 1.1441-
1(b)(3)(iii), and the payor must also backup withhold under section
3406. (For interest paid to a Canadian nonresident alien individual on
or before December 31, 2012, see paragraph (a) of this section as in
effect and contained in 26 CFR part 1 revised April 1, 2000).
* * * * *
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT THE
SOURCE
0
Par. 6. The authority citation for part 31 continues to read in part as
follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 7. In Sec. 31.3406(g)-1, paragraph (d) is revised to read as
follows:
Sec. 31.3406(g)-1 Exception for payments to certain payees and
certain other payments.
* * * * *
(d) Reportable payments made to nonresident alien individuals. A
payment of interest to a nonresident alien individual that is described
in Sec. 1.6049-(8)(a) of this chapter is not subject to withholding
under section 3406 if the payor may treat the payee as a foreign
beneficial owner or foreign payee under the rules of Sec. 1.6049-
5(b)(12). (For interest paid to a Canadian nonresident alien individual
on or before December 31, 2012, see paragraph (d) of this section as in
effect and contained in 26 CFR part 1 revised April 1, 2000.)
* * * * *
Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
Approved: April 12, 2012.
Emily S. McMahon,
(Acting) Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2012-9520 Filed 4-17-12; 4:15 pm]
BILLING CODE 4830-01-P