[Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)]
[Rules and Regulations]
[Pages 37175-37181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15465]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9657]
RIN 1545-BL73
Regulations Relating to Information Reporting by Foreign
Financial Institutions and Withholding on Certain Payments to Foreign
Financial Institutions and Other Foreign Entities; Correction
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Correcting amendments.
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SUMMARY: This document contains corrections to final and temporary
regulations (TD 9657), which were published in the Federal Register on
Thursday, March 6, 2014 (79 FR 12812). The regulations relate to
information reporting by foreign financial institutions (FFIs) with
respect to U.S. accounts and withholding on certain payments to FFIs
and other foreign entities.
DATES: Effective Date: These corrections are effective on July 1, 2014.
Applicability Date: These corrections are applicable on March 6,
2014.
[[Page 37176]]
FOR FURTHER INFORMATION CONTACT: Nancy Lee, (202) 317-6942 (not a toll-
free call).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Income Tax Regulations (26
CFR part 1) under sections 1471 through 1474 of the Internal Revenue
Code. Sections 1471 through 1474 were added to the Code, as Chapter 4
of Subtitle A, by the Hiring Incentives to Restore Employment Act of
2010 (Pub. L. 111-147, 124 Stat. 71).The final and temporary
regulations that are the subject of these corrections are Sec. Sec.
1.1471-1T, 1.1471-2, 1.1471-2T, 1.1471-3T, 1.1471-4, 1.1471-4T, 1.1471-
5T, 1.1471-6T, 1.1472-1T, 1.1473-1T, and 1.1474-1T. These regulations
affect persons making certain U.S.-related payments to FFIs and other
foreign entities, and affect payments by FFIs to other persons.
Need for Correction
As published, the final and temporary regulations under chapter 4
contain a number of items that need to be corrected or clarified.
Several citations and cross references are corrected. These correcting
amendments also include the addition, deletion, or modification of
temporary regulatory language to clarify the relevant provisions to
meet their intended purposes. The addition of final regulatory language
only includes language that was inadvertently removed in the final and
temporary regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Correction of Publication
Accordingly, 26 CFR part 1 is corrected by making the following
correcting amendments:
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 * * *
Section 1.1471-1 is also issued under 26 U.S.C. 1471
Section 1.1471-2 is also issued under 26 U.S.C. 1471
Section 1.1471-3 is also issued under 26 U.S.C. 1471
Section 1.1471-4 is also issued under 26 U.S.C. 1471
Section 1.1471-5 is also issued under 26 U.S.C. 1471
Section 1.1471-6 is also issued under 26 U.S.C. 1471
Section 1.1472-1 is also issued under 26 U.S.C. 1472
Section 1.1473-1 is also issued under 26 U.S.C. 1473
Section 1.1474-1 is also issued under 26 U.S.C. 1474
0
Par. 2. Section 1.1471-1T is amended by revising paragraphs (b)(20) and
(b)(98).
The revisions read as follows:
Sec. 1.1471-1T Scope of chapter 4 and definitions (temporary).
* * * * *
(b) * * *
(20) Chapter 4 withholding rate pool. The term chapter 4
withholding rate pool means a pool of payees that are nonparticipating
FFIs provided on a chapter 4 withholding statement (as described in
Sec. 1.1471-3(c)(3)(iii)(B)(3)) to which a withholdable payment is
allocated. The term chapter 4 withholding rate pool also means a pool
provided on an FFI withholding statement (as described in Sec. 1.1471-
3(c)(3)(iii)(B)(2)) to which a withholdable payment is allocated to--
(i) A pool of payees consisting of each class of recalcitrant
account holders described in Sec. 1.1471-4(d)(6) (or with respect to
an FFI that is a QI, a single pool of recalcitrant account holders
without the need to subdivide into each class of recalcitrant account
holders described in Sec. 1.1471-4(d)(6)), including a separate pool
of account holders to which the escrow procedures for dormant accounts
apply; or
(ii) A pool of payees that are U.S. persons as described in Sec.
1.1471-3(c)(3)(iii)(B)(2).
* * * * *
(98) Payor. The term payor has the meaning set forth in Sec. Sec.
31.3406(a)-2 and 1.6049-4(a)(2) and generally includes a withholding
agent.
* * * * *
Par. 3. Section 1.1471-2 is amended by revising paragraph
(a)(2)(ii) and adding paragraphs (a)(2)(iii)(A)(1) through (4) and
(a)(4)(ii)(B)(1) through (2).
The revisions and additions read as follows:
Sec. 1.1471-2 Requirement to deduct and withhold tax on withholdable
payments to certain FFIs.
(a) * * *
(2) * * *
(ii) [Reserved]. For further guidance, see Sec. 1.1471-
2T(a)(2)(ii).
* * * * *
(iii) * * *
(A) * * *
(1) The withholding agent is a participating FFI, reporting Model 1
FFI, QI, or a U.S. withholding agent;
(2) The person who receives the payment is a participating FFI or
registered deemed-compliant FFI that acts as a QI with respect to the
payment;
(3) The person who receives the payment provides the withholding
agent, at or before the time of the payment, with a valid intermediary
withholding certificate with respect to the payment that notifies the
withholding agent that it has elected to be withheld upon, certifies
that it is not assuming primary withholding responsibility under
chapter 3, and designates whether such election is made for all
accounts held with the withholding agent or for the specific accounts
identified on the withholding certificate; and
(4) The intermediary withholding certificate is accompanied by a
withholding statement described in Sec. 1.1471-3(c)(3)(iii)(B).
* * * * *
(4) * * *
(ii) * * *
(B) * * *
(1) The withholding agent has available as part of its
electronically searchable information a designation for the payee as a
QI or NQI; or
(2) For an account maintained in the United States, the payee is
presumed to be a foreign entity under Sec. 1.1471-3(f) or is
documented as a foreign entity for purposes of chapter 3 or 61, and the
withholding agent has recorded as part of its electronically searchable
information one of the following North American Industry Classification
System or Standard Industrial Classification codes indicating that the
payee is a financial institution:
(i) Commercial Banking (NAICS 522110).
(ii) Savings Institutions (NAICS 522120).
(iii) Credit Unions (NAICS 522130).
(iv) Other Depositary Credit Intermediation (NAICS 522190).
(v) Investment Banking and Securities Dealing (NAICS 523110).
(vi) Securities Brokerage (NAICS 523120).
(vii) Commodity Contracts Dealing (NAICS 523130).
(viii) Commodity Contracts Brokerage (NAICS 523140).
(ix) Miscellaneous Financial Investment Activities (NAICS 523999).
(x) Open-End Investment Funds (NAICS 525910).
(xi) Commercial Banks, NEC (SIC 6029).
(xii) Branches and Agencies of Foreign Banks (branches) (SIC 6081).
(xiii) Foreign Trade and International Banking Institutions (SIC
6082).
[[Page 37177]]
(xiv) Asset-Backed Securities (SIC 6189).
(xv) Security & Commodity Brokers, Dealers, Exchanges & Services
(SIC 6200).
(xvi) Security Brokers, Dealers & Flotation Companies (SIC 6211).
(xvii) Commodity Contracts Brokers & Dealers (SIC 6221).
(xviii) Unit Investment Trusts, Face-Amount Certificate Offices,
and Closed-End Management Investment Offices (SIC 6726).
* * * * *
0
Par. 4. Section 1.1471-2T is amended by revising paragraph (a)(2)(i) to
read as follows:
Sec. 1.1471-2T Requirement to deduct and withhold tax on withholdable
payments to certain FFIs (temporary).
(a) * * *
(2) * * *
(i) Requirement to withhold on payments of U.S. source FDAP income
to participating FFIs and deemed-compliant FFIs that are NQIs, NWPs, or
NWTs. A withholding agent that, after June 30, 2014, makes a payment of
U.S. source FDAP income to a participating FFI or deemed-compliant FFI
that is an NQI receiving the payment as an intermediary, or a NWP or
NWT, must withhold 30 percent of the payment unless the withholding is
reduced under this paragraph (a)(2)(i). A withholding agent is not
required to withhold on a payment, or portion of a payment, that it can
reliably associate, in the manner described in Sec. 1.1471-3(c)(2),
with a valid intermediary or flow-through withholding certificate that
meets the requirements of Sec. 1.1471-3(d)(4) and a withholding
statement that meets the requirements of Sec. 1.1471-3(c)(3)(iii)(B)
and that allocates the payment or portion of the payment to payees for
which no withholding is required under chapter 4. Further, a
withholding agent is not required to withhold on a payment that it can
reliably associate with documentation indicating that the payee is a
U.S. branch treated as a U.S. person (as defined in Sec. 1.1471-
1(b)(135)).
* * * * *
0
Par. 5. Section 1.1471-3T is amended by:
0
1. Revising paragraphs (a)(3)(vi), (c)(3)(iii)(A)(5),
(c)(3)(iii)(B)(1), (c)(6)(iv), (d)(4)(i), (d)(11)(xii)(B),
(e)(4)(ii)(A), (e)(4)(iv)(A), and (e)(4)(vii)(B).
0
2. Adding paragraphs (e)(4)(vii)(C) and (D).
The revisions and additions read as follows:
Sec. 1.1471-3T Identification of payee (temporary).
(a) * * *
(3) * * *
(vi) U.S. branch of certain foreign banks or foreign insurance
companies. A withholdable payment to a U.S. branch of either a
participating FFI, registered deemed-compliant FFI, or NFFE is a
payment to a U.S. person if the U.S. branch is treated as a U.S. person
under Sec. 1.1441-1(b)(2)(iv)(A). In such case, the U.S. branch is
treated as the payee. A U.S. branch treated as a U.S. person (as
defined in Sec. 1.1471-1(b)(135)), however, is not treated as a U.S.
person for purposes of the withholding certificate it may provide to a
withholding agent for purposes of chapter 4. Accordingly, a U.S. branch
treated as a U.S. person must furnish a withholding certificate on a
Form W-8 to certify its chapter 4 status (and not a Form W-9, ``Request
for Taxpayer Identification Number and Certification''). See also
paragraph (f)(6) of this section for the rules under which a
withholding agent can presume a payment constitutes income that is
effectively connected with a U.S. trade or business. A U.S. branch
treated as a U.S. person may not make an election to be withheld upon,
as described in section 1471(b)(3) and Sec. 1.1471-2(a)(2)(iii), for
purposes of chapter 4. See Sec. 1.1471-4(c)(2)(v) for the rule
requiring a U.S. branch that has elected to be treated as a U.S. person
to apply the due diligence rules applicable to a U.S. withholding agent
in lieu of those otherwise applicable to a participating FFI. See also
Sec. 1.1474-1(i)(1) and (2) for the requirement of a U.S. branch to
report information regarding certain U.S. owners of owner documented
FFIs and passive NFFEs. See Sec. 1.1471-4(d) for rules for when a U.S.
branch reports as a U.S. person.
* * * * *
(c) * * *
(3) * * *
(iii) * * *
(A) * * *
(5) A GIIN, in the case of a participating FFI or a registered
deemed-compliant FFI (including a U.S. branch of such an entity,
whether or not such branch is treated as a U.S. person, and including a
QI, WP, or WT that is a participating FFI or registered deemed-
compliant FFI), and an EIN in the case of a QI, WP, or WT.
Additionally, if a branch (other than a U.S. branch) of a participating
FFI or registered deemed-compliant FFI outside of its country of
residence acts as an intermediary, a GIIN of such branch must be
provided on the withholding certificate. In the case of a U.S. branch,
the GIIN provided must be the GIIN assigned to the participating FFI or
registered deemed-compliant FFI.
* * * * *
(B) * * *
(1) In general. A withholding statement forms an integral part of
the withholding certificate and the penalties of perjury statement
provided on the withholding certificate applies to the withholding
statement as well. The withholding statement may be provided in any
manner, and in any form, to which the person submitting the form and
the withholding agent mutually agree, including electronically. A
withholding statement may be provided electronically only if it meets
the requirements of Sec. 1.1441-1(e)(3)(iv)(B). The withholding
statement must be updated as often as necessary for the withholding
agent to meet its reporting and withholding obligations under chapter
4. A withholding agent will be liable for tax, interest, and penalties
under Sec. 1.1474-1(a) to the extent it does not follow the
presumption rules of paragraph (f) of this section for any payment, or
portion thereof, for which a withholding statement is required and the
withholding agent does not have a valid withholding statement prior to
making a payment. A withholding agent that is making a withholdable
payment for which a withholding statement is also required for purposes
of chapter 3 may only rely upon the withholding statement if, in
addition to providing the information required by paragraph
(c)(3)(iii)(B) of this section, the withholding statement also includes
all of the information required for purposes of chapter 3 and specifies
the chapter 4 status of each payee or pool of payees identified on the
withholding statement for purposes of chapter 3.
* * * * *
(6) * * *
(iv) Electronic transmission of withholding certificate, written
statement, and documentary evidence. A withholding agent may accept a
withholding certificate (including an acceptable substitute form), a
written statement, or other such form as the IRS may prescribe,
electronically in accordance with the requirements set forth in Sec.
1.1441-1(e)(4)(iv).
* * * * *
(d) * * *
(4) * * *
(i) In general. Except as otherwise provided in paragraphs
(d)(4)(ii) through (iv) or paragraphs (e)(3)(i) and (ii) of this
section, a withholding agent may treat a payee as a participating FFI
or registered deemed-compliant FFI
[[Page 37178]]
only if the withholding agent has a withholding certificate identifying
the payee as a participating FFI, registered deemed-compliant FFI, or
branch thereof (including an entity that is disregarded as an entity
separate from the FFI), and the withholding certificate contains a GIIN
for the payee that is verified against the published IRS FFI list in
the manner described in paragraph (e)(3) of this section (indicating
when a withholding agent may rely upon a GIIN). For payments made prior
to January 1, 2016, a registered deemed-compliant FFI that is a
sponsored FFI must provide the GIIN of its sponsoring entity on the
withholding certificate if the sponsored FFI has not obtained a GIIN,
which the withholding agent has verified against the published IRS FFI
list in the manner described in paragraph (e)(3) of this section
(substituting the term sponsored FFI for the term sponsored direct
reporting NFFE). See paragraph (c)(3)(iii) of this section for
additional requirements that apply to a valid withholding certificate
provided by a participating FFI or registered deemed-compliant FFI that
is a flow-through entity or is acting as an intermediary with respect
to the payment, or by a U.S. branch of a participating FFI or
registered deemed-compliant FFI (including a U.S. entity that is
disregarded as an entity separate from the FFI).
* * * * *
(11) * * *
(xii) * * *
(B) Offshore obligations. A participating FFI that makes a payment
with respect to an offshore obligation may treat the payment as made to
an excepted inter-affiliate FFI described in Sec. 1.1471-5(e)(5)(iv)
if the participating FFI obtains a written statement in which the payee
certifies that it is a foreign entity operating as an excepted inter-
affiliate FFI and that it is a member of an expanded affiliated group
of participating FFIs or registered deemed-compliant FFIs. In the case
of a payment of U.S. source FDAP income, the written statement must
also indicate that the payee is the beneficial owner and must be
supplemented with documentary evidence supporting the payee's claim of
foreign status (as described in paragraph (c)(5)(i) of this section).
* * * * *
(e) * * *
(4) * * *
(ii) * * *
(A) In general. A withholding agent has reason to know that a
withholding certificate provided by a person is unreliable or incorrect
if the withholding certificate is incomplete with respect to any item
on the certificate that is relevant to the claims made by the person,
the withholding certificate contains any information that is
inconsistent with the person's claim, the withholding agent has other
account information that is inconsistent with the person's claim, or
the withholding certificate lacks information necessary to establish
entitlement to an exemption from withholding for chapter 4 purposes.
Except as otherwise provided in this paragraph (e)(4)(ii)(A), a
withholding agent that is a financial institution or other entity
described in Sec. 1.1441-7(b)(3) and that has obtained a withholding
certificate to reliably associate a payment to a foreign person under
paragraph (c) of this section has reason to know that the person's
claim of foreign status is unreliable or incorrect only if there are
U.S. indicia, as described in Sec. 1.1441-7(b)(5), associated with the
person and for which appropriate documentation sufficient to cure the
U.S. indicia has not been obtained in accordance with Sec. 1.1441-7(b)
within 90 days of when the U.S. indicia was first identified by the
withholding agent. See also Sec. 1.1441-1(e)(4)(ii)(D) for
requirements that apply when a change in circumstances occurs for
purposes of chapter 3 and the related grace period allowed under Sec.
1.1441-1(b)(3)(iv). A withholding agent that relies on an agent to
review and maintain a withholding certificate is considered to know or
have reason to know the facts within the knowledge of the agent.
* * * * *
(iv) * * *
(A) In general. A withholding agent may not treat documentary
evidence provided by a person as valid if the documentary evidence does
not reasonably establish the identity of the person presenting the
documentary evidence. For example, documentary evidence is not valid if
it is provided in person by an individual and the photograph or
signature on the documentary evidence does not match the appearance or
signature of the person presenting the document. A withholding agent
may not treat documentary evidence as valid if the documentary evidence
contains information that is inconsistent with the person's claim as to
its chapter 4 status, the withholding agent has other account
information that is inconsistent with the person's chapter 4 status, or
the documentary evidence lacks information necessary to establish the
person's chapter 4 status. Additionally, a withholding agent that is a
financial institution under Sec. 1.1471-5(e), or other entity as
described in Sec. 1.1441-7(b)(3) that has obtained documentary
evidence to reliably associate a payment to a foreign person under
paragraph (c) of this section has reason to know that the person's
claim of foreign status is unreliable or incorrect only if there are
U.S. indicia, as described in Sec. 1.1441-7(b)(8), associated with the
person and appropriate documentation sufficient to cure the U.S.
indicia has not been obtained in accordance with Sec. 1.1441-7(b)
within 90 days of when the U.S. indicia was first identified by the
withholding agent. See also Sec. 1.1441-1(e)(4)(ii)(D) for
requirements when a change in circumstances occurs for purposes of
chapter 3 and the related grace period allowed under Sec. 1.1441-
1(b)(3)(iv).
* * * * *
(vii) * * *
(B) Reason to know there are U.S. indicia associated with
preexisting obligations. With respect to a preexisting obligation, a
withholding agent may apply the limits on reason to know described in
Sec. 1.1441-7(b)(3)(ii) for a person that the withholding agent has
previously documented for purposes of chapters 3 or 61. A withholding
agent that applies the limits on reason to know described in Sec.
1.1441-7(b)(3)(ii) must, however, review for U.S. indicia any
additional documentation upon which the withholding agent is relying to
determine the chapter 4 status of the person, if any.
(C) and (D) [Reserved]. For further guidance, see Sec. 1.1471-
3(e)(4)(vii)(C) and (D).
* * * * *
0
Par. 6. Section 1.1471-4 is amended by revising paragraphs (d)(6)(vi)
and (vii) and adding paragraphs (d)(7)(ii)(A)(1) through (3) to read as
follows:
Sec. 1.1471-4 FFI agreement.
* * * * *
(d) * * *
(6) * * *
(vi) [Reserved]. For further guidance, see Sec. 1.1471-
4T(d)(6)(vi).
(vii) Record retention requirements. A participating FFI that
produces, in the ordinary course of its business, account statements
that summarize the activity (including withdrawals, transfers, and
closures) of an account held by a recalcitrant account holder described
in paragraph (d)(6)(i)(B) of this section for any calendar year in
which the account was required to be reported under paragraph (d)(6) of
this section must retain a record of such account
[[Page 37179]]
statements. Such record must be retained for the longer of six years or
the retention period under the FFI's normal business procedures. A
participating FFI may be required to extend the six year retention
period if the IRS requests such an extension prior to the expiration of
the six year period.
* * * * *
(7) * * *
(ii) * * *
(A) * * *
(1) The name, address, and TIN of each specified U.S. person who is
an account holder and, in the case of any account holder that is an
NFFE that is a U.S. owned foreign entity or that is an owner-documented
FFI, the name of such entity and the name, address, and TIN of each
substantial U.S. owner of such NFFE or, in the case of an owner-
documented FFI, of each specified U.S. person identified in Sec.
1.1471-3(d)(6)(iv)(A)(1) and (2);
(2) The account balance or value as of the end of the relevant
calendar year, or if the account was closed after the effective date of
the FFI agreement, the amount or value withdrawn or transferred from
the account in connection with closure; and
(3) The account number of the account.
* * * * *
0
Par. 7. Section 1.1471-4T is amended by revising paragraphs
(b)(3)(iii), (d)(2)(ii)(F), (d)(2)(iii)(B) introductory text, and
(d)(7)(iv)(B) to read as follows:
Sec. 1.1471-4T FFI agreement (temporary).
* * * * *
(b) * * *
(3) * * *
(iii) Election to withhold under section 3406. A participating FFI
may elect to satisfy its withholding obligation under paragraph (b)(1)
of this section with respect to recalcitrant account holders that are
also U.S. non-exempt recipients subject to backup withholding under
section 3406 receiving withholdable payments, to the extent that the
payments also constitute reportable payments, by applying withholding
under section 3406 at the backup withholding rate to such withholdable
payments. A participating FFI may make the election described in this
paragraph only if it complies with the information reporting rules
under chapter 61 with respect to payments to which backup withholding
applies. Nothing in this paragraph relieves a participating FFI of its
requirement to backup withhold under section 3406 with respect to
reportable payments that are not also withholdable payments. See Sec.
1.1474-6(f) for the general rule that satisfying withholding
requirements under chapter 4 will satisfy backup withholding
requirements under section 3406 for a payment that is both a
withholdable payment and a reportable payment.
* * * * *
(d) * * *
(2) * * *
(ii) * * *
(F) Reporting by participating FFIs (including QIs, WPs, WTs, and
certain U.S. branches not treated as U.S. persons) for accounts of
nonparticipating FFIs (transitional). Except as otherwise provided in
the instructions to Form 8966, ``FATCA Report,'' if a participating FFI
(including a QI, WP, WT, or U.S. branch of a participating FFI or
registered deemed-compliant FFI that is not treated as a U.S. person)
maintains an account for a nonparticipating FFI (including a limited
branch and limited FFI treated as a nonparticipating FFI), the
participating FFI must report on Form 8966 the name and address of the
nonparticipating FFI, and the aggregate amount of foreign source
payments, as described in paragraph (d)(4)(iv) of this section, paid to
or with respect to each such account (foreign reportable amount) for
each of the calendar years 2015 and 2016. If, however, the
participating FFI is prohibited under domestic law from reporting on a
specific payee basis without consent from the nonparticipating FFI
account holder and the participating FFI has not been able to obtain
such consent, the participating FFI may instead report the aggregate
number of accounts held by such non-consenting nonparticipating FFIs
and the aggregate amount of foreign reportable amounts paid with
respect to such accounts, as described in paragraph (d)(4)(iv) of this
section, during the calendar year. A participating FFI may, in lieu of
reporting only foreign reportable amounts, report all income, gross
proceeds, and redemptions (irrespective of the source) paid to the
nonparticipating FFI's account by the participating FFI during the
calendar year. In addition, the participating FFI must retain the
account statements related to such nonparticipating FFI accounts. See
paragraphs (d)(6)(iv), (v), (vi) and (vii) of this section for rules
relating to reporting on recalcitrant account holders. Form 8966 shall
be filed electronically with the IRS on or before March 31 of the year
following the end of the calendar year to which the form relates.
(iii) * * *
(B) Special reporting rules for U.S. branches treated as U.S.
persons. A U.S. branch treated as a U.S. person (as defined in Sec.
1.1471-1(b)(135)) shall be treated as having satisfied the reporting
requirements described in paragraph (d)(2)(i) of this section if it
reports under--
* * * * *
(7) * * *
(iv) * * *
(B) Special determination date and timing for reporting with
respect to the 2014 calendar year. With respect to the 2014 calendar
year, a participating FFI must report under paragraph (d)(3) or (5) of
this section on all accounts that are identified and documented under
paragraph (c) of this section as U.S. accounts or accounts held by
owner-documented FFIs as of December 31, 2014, (or as of the date an
account is closed if the account is closed prior to December 31, 2014)
if such account was outstanding on July 1, 2014. Reporting for the 2014
calendar year shall be filed with the IRS on or before March 31, 2015.
However, a U.S. payor (including a U.S. branch treated as a U.S. person
(as defined in Sec. 1.1471-1(b)(135))) that reports in accordance with
paragraph (d)(2)(iii) of this section may report all or a portion of
its U.S. accounts and accounts held by owner-documented FFIs in
accordance with the dates otherwise applicable to reporting under
chapter 61 with respect to the 2014 calendar year.
* * * * *
0
Par. 8. Section 1.1471-5T is amended by revising paragraph (f)(2)(iii)
introductory text and the heading of paragraph (i), removing paragraph
(i) introductory text, and revising paragraph (i)(1) to read as
follows:
Sec. 1.1471-5T Definitions applicable to section 1471 (temporary).
* * * * *
(f) * * *
(2) * * *
(iii) Sponsored, closely held investment vehicles. Subject to the
provisions of paragraph (f)(2)(iii)(E) of this section, an FFI is
described in this paragraph (f)(2)(iii) if it meets the requirements
described in paragraphs (f)(2)(iii)(A) through (D) of this section.
* * * * *
(i) Expanded affiliated group--(1) Scope of paragraph. This
paragraph (i) defines the term expanded affiliated group for purposes
of chapter 4. For the requirements of a participating FFI with respect
to members of its expanded affiliated group that are FFIs, see Sec.
1.1471-4(e).
* * * * *
[[Page 37180]]
0
Par. 9. Section 1.1471-6T is amended by revising paragraph (h)(2) to
read as follows:
Sec. 1.1471-6T Payments beneficially owned by exempt beneficial
owners (temporary).
* * * * *
(h) * * *
(2) Limitation. Paragraph (h)(1) of this section will not apply to
treat an exempt beneficial owner as engaged in a commercial financial
activity if--
(i) The entity undertakes commercial financial activity described
in paragraph (h)(1) of this section solely for or at the direction of
other exempt beneficial owners and such commercial financial activity
is consistent with the purposes of the entity;
(ii) The entity has no outstanding debt that would be a financial
account under Sec. 1.1471-5(b)(1)(iii); and
(iii) The entity otherwise maintains financial accounts only for
exempt beneficial owners, or, in the case of a foreign central bank of
issue as described in paragraph (d), the entity only maintains
financial accounts that are depository accounts for current or former
employees of the entity (and the spouses and children of such
employees) or financial accounts for exempt beneficial owners.
* * * * *
0
Par. 10. Section 1.1472-1T is amended by revising paragraphs (c)(1)(ii)
and (c)(3)(iii) to read as follows:
Sec. 1.1472-1T Withholding on NFFEs (temporary).
* * * * *
(c) * * *
(1) * * *
(ii) Certain affiliated entities related to a publicly traded
corporation. A NFFE is described in this paragraph (c)(1)(ii) if it is
a corporation that is a member of the same expanded affiliated group
(as defined in Sec. 1.1471-5(i)) as a corporation described in
paragraph (c)(1)(i) of this section (without regard to whether such
corporation is a NFFE).
* * * * *
(3) * * *
(iii) The NFFE must obtain a written certification (contained on a
withholding certificate or in a written statement) from each person
that would be treated as a substantial U.S. owner of the NFFE if such
person were a specified U.S. person. Such written certification must
indicate whether the person is a substantial U.S. owner of the NFFE,
and if so, the name, address and TIN of the person. If the NFFE has
reason to know that such written certification is unreliable or
incorrect, it must contact the person and request a revised written
certification. If no revised written certification is received, the
NFFE must treat the person as a substantial U.S. owner and report on
Form 8966 the information required under paragraph (c)(3)(ii) of this
section. The NFFE has reason to know that such a written certification
is unreliable or incorrect if the certification is inconsistent with
information in the NFFE's possession, including information that the
NFFE provides to a financial institution in order for the financial
institution to meet its AML or other account identification due
diligence procedures with respect to the NFFE's account, information
that is publicly available, or U.S. indicia as described in Sec.
1.1441-7(b) for which appropriate documentation sufficient to cure the
U.S. indicia in the manner set forth in Sec. 1.1441-7(b)(8) has not
been obtained.
* * * * *
0
Par. 11. Section 1.1473-1T is amended by revising paragraphs (a)(4)(vi)
and (a)(4)(vii) to read as follows:
Sec. 1.1473-1T Section 1473 definitions (temporary).
(a) * * *
(4) * * *
(vi) Offshore payments of U.S. source FDAP income prior to 2017
(transitional). A payment with respect to an offshore obligation (as
defined in Sec. 1.1471-1(b)(88)) made prior to January 1, 2017, if
such payment is U.S. source FDAP income and made by a person that is
not acting as an intermediary or as a WP or WT with respect to the
payment. Additionally, a payment with respect to an account,
obligation, contract, or other instrument that is issued or maintained
by an entity other than a financial institution and that would be
treated as an offshore obligation under Sec. 1.6049-5(c)(1) (applied
by substituting the term entity for the term financial institution (as
defined in Sec. 1.1471-5(e)) in each place that it appears), made
prior to January 1, 2017, if such payment is U.S. source FDAP and made
by a person that is not acting as an intermediary or as a WP or WT with
respect to the payment is not a withholdable payment under paragraph
(a)(1) of this section. The exception for offshore payments of U.S.
source FDAP income provided in the preceding sentences shall not apply,
however, in the case of a flow-through entity that has a residual
withholding requirement with respect to its partners, owners, or
beneficiaries under Sec. 1.1471-2(a)(2)(ii), or in the case of
payments made with respect to debt or equity issued by a U.S. person
(excluding interest payments made by a foreign branch of a U.S.
financial institution with respect to depository accounts it
maintains). For purposes of this paragraph (a)(4)(vi), an intermediary
includes a person that acts as a qualified securities lender as defined
for purposes of chapter 3 and does not include a person acting as an
insurance broker with respect to premiums.
(vii) Collateral arrangements prior to 2017 (transitional). A
payment made prior to January 1, 2017, by a secured party, or to a
secured party other than a nonparticipating FFI, with respect to
collateral securing one or more transactions under a collateral
arrangement, provided that only a commercially reasonable amount of
collateral is held by the secured party (or by a third party for the
benefit of the secured party) as part of the collateral arrangement.
For purposes of this paragraph (a)(4)(vii), the term transaction
generally includes a debt instrument, a derivative financial instrument
(including a notional principal contract, future, forward, and option),
and any securities lending transaction, sale-repurchase transaction,
margin loan, or substantially similar transaction that is subject to a
collateral arrangement. Solely for purposes of this paragraph
(a)(4)(vii), a secured party may provide documentation to the
withholding agent indicating that it is the beneficial owner of a
payment described in this paragraph (a)(4)(vii), and a withholding
agent may rely on such certification for purposes of its requirements
under Sec. 1.1471-3(d) for determining whether withholding under
chapter 4 applies.
* * * * *
0
Par. 12. Section 1.1474-1T is amended by revising paragraphs
(d)(4)(iii)(C), (i)(1)(i), (i)(1)(ii), (i)(1)(iii)(C), (i)(2)
introductory text, and (i)(2)(iii) to read as follows:
Sec. 1.1474-1T Liability for withheld tax and withholding agent
reporting (temporary).
* * * * *
(d) * * *
(4) * * *
(iii) * * *
(C) Reporting by a U.S. branch treated as a U.S. person. A U.S.
branch treated as a U.S. person (as defined in Sec. 1.1471-1(b)(135))
must report amounts paid to recipients on Forms 1042-S in the same
manner as a U.S. withholding agent under paragraph (d)(4)(i) of this
section.
* * * * *
(i) * * *
(1) * * *
(i) Beginning on July 1, 2014, if a withholding agent (other than
an FFI reporting accounts held by owner-
[[Page 37181]]
documented FFIs under Sec. 1.1471-4(d)) makes a withholdable payment
to an entity account holder or payee of an obligation and the
withholding agent treats the entity as an owner-documented FFI under
Sec. 1.1471-3(d)(6), the withholding agent is required to report for
July 1 through December 31, 2014, with respect to each specified U.S.
person identified in Sec. 1.1471-3(d)(6)(iv)(A)(1) and (2) the
information described in paragraph (i)(1)(iii) of this section.
(ii) Beginning in calendar year 2015, if a withholding agent (other
than an FFI reporting accounts held by owner-documented FFIs under
Sec. 1.1471-4(d)) makes during a calendar year a withholdable payment
to an entity account holder or payee of an obligation and the
withholding agent treats the entity as an owner-documented FFI under
Sec. 1.1471-3(d)(6), the withholding agent is required to report for
such calendar year with respect to each specified U.S. person
identified in Sec. 1.1471-3(d)(6)(iv)(A)(1) and (2) the information
described in paragraph (i)(1)(iii) of this section.
(iii) * * *
(C) For the period from July 1 through December 31, 2014, the total
of all withholdable payments made to the owner-documented FFI and with
respect to payments made after the 2014 calendar year the total of all
withholdable payments made to the owner-documented FFI during the
calendar year;
* * * * *
(2) Reporting by certain withholding agents with respect to U.S.
owned foreign entities that are NFFEs. Beginning on July 1, 2014, in
addition to the reporting on Form 1042-S required under paragraph
(d)(4)(i)(E) of this section, a withholding agent (other than an FFI
reporting accounts held by NFFEs under Sec. 1.1471-4(d)) that makes a
withholdable payment to, and receives information about any substantial
U.S. owners of, a NFFE that is not an excepted NFFE as defined in Sec.
1.1472-1(c) shall file a report with the IRS for the period from July 1
through December 31, 2014, and in each subsequent calendar year in
which a withholdable payment is made with respect to any substantial
U.S. owners of such NFFE. Such report must be made on Form 8966 (or
such other form as the IRS may prescribe) and filed on or before March
31 of the calendar year following the year in which the withholdable
payment was made. The IRS shall grant an automatic 90-day extension of
time in which to file Form 8966. Form 8809, ``Request for Extension of
Time to File Information Returns,'' (or such other form as the IRS may
prescribe) must be used to request such extension of time and must be
filed no later than the due date of Form 8966. Under certain hardship
conditions, the IRS may grant an additional 90-day extension. A request
for extension due to hardship must contain a statement of the reasons
for requesting the extension and such other information as the form or
instructions may require. The report must contain the following
information--
* * * * *
(iii) For the period from July 1, 2014 through December 31, 2014,
the total of all withholdable payments made to the NFFE and, with
respect to payments made after the 2014 calendar year, the total of all
withholdable payments made to the NFFE during the calendar year; and
* * * * *
Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2014-15465 Filed 6-30-14; 8:45 am]
BILLING CODE 4830-01-P