[Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)]
[Rules and Regulations]
[Pages 37181-37189]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15466]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 31
[TD 9658]
RIN 1545-BL18
Withholding of Tax on Certain U.S. Source Income Paid to Foreign
Persons, Information Reporting and Backup Withholding on Payments Made
to Certain U.S. Persons, and Portfolio Interest Treatment; 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 9658), which were published in the Federal Register on
Thursday, March 6, 2014 (79 FR 12726). The regulations relate to the
withholding of tax on certain U.S. source income paid to foreign
persons, information reporting and backup withholding with respect to
payments made to certain U.S. persons, and portfolio interest paid to
nonresident alien individuals and foreign corporations.
DATES: Effective Date: These corrections are effective on July 1, 2014,
and are applicable on March 6, 2014.
FOR FURTHER INFORMATION CONTACT: John Sweeney, (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 871, 1441, 1461, 6041, and 6049 of the Code
and the Employment Tax Regulations (26 CFR part 31) under section 3406
of the Code. The final and temporary regulations that are the subject
of these corrections are Sec. Sec. 1.871-14, 1.871-14T, 1.1441-1,
1.1441-1T, 1.1441-5T, 1.1441-6T, 1.1441-7T, 1.1461-1, 1.1461-1T,
1.6041-1, 1.6049-4T, 1.6049-5T, 31.3406(g)-1T, and 31.3406(h)-2T. These
regulations affect persons making payments of U.S. source income to
foreign persons, persons making payments to certain U.S. persons
subject to reporting and backup withholding, and foreign persons
claiming the exclusion from tax provided for portfolio interest.
Need for Correction
As published, the final and temporary regulations contain a number
of items that need to be corrected or clarified. Several citations and
cross references are corrected. The correcting amendments also include
the addition, deletion, or modification of regulatory language to
clarify the relevant provisions to meet their intended purposes or for
consistency with other related provisions of these regulations. The
addition of final regulatory language only includes language that was
inadvertently removed in the final and temporary regulations.
List of Subjects
26 CFR 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.
Correction of Publication
Accordingly, 26 CFR parts 1 and 31 are corrected by making the
following correcting amendments:
[[Page 37182]]
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. Section 1.871-14 is amended by revising paragraphs (c)(2)
through (c)(3)(i) to read as follows:
Sec. 1.871-14 Rules relating to repeal of tax on interest of
nonresident alien individuals and foreign corporations received from
certain portfolio debt investments.
* * * * *
(c) * * *
(2) through (c)(2)(iv) [Reserved]. For further guidance, see Sec.
1.871-14T(c)(2) through (c)(2)(iv).
(v) The U.S. person receives a statement from a securities clearing
organization, a bank, or another financial institution that holds
customers' securities in the ordinary course of its trade or business.
In such case the statement must be signed under penalties of perjury by
an authorized representative of the financial institution and must
state that the institution has received from the beneficial owner a
withholding certificate described in Sec. 1.1441-1(e)(2)(i) (a Form W-
8 or an acceptable substitute form as defined Sec. 1.1441-1(e)(4)(vi))
or that it has received from another financial institution a similar
statement that it, or another financial institution acting on behalf of
the beneficial owner, has received the Form W-8 from the beneficial
owner. In the case of multiple financial institutions between the
beneficial owner and the U.S. person, this statement must be given by
each financial institution to the one above it in the chain. No
particular form is required for the statement provided by the financial
institutions. However, the statement must provide the name and address
of the beneficial owner, and a copy of the Form W-8 provided by the
beneficial owner must be attached. The statement is subject to the same
rules described in Sec. 1.1441-1(e)(4) that apply to intermediary
Forms W-8 described in Sec. 1.1441-1(e)(3)(iii). If the information on
the Form W-8 changes, the beneficial owner must so notify the financial
institution acting on its behalf within 30 days of such changes, and
the financial institution must promptly so inform the U.S. person. This
notice also must be given if the financial institution has actual
knowledge that the information has changed but has not been so informed
by the beneficial owner. In the case of multiple financial institutions
between the beneficial owner and the U.S. person, this notice must be
given by each financial institution to the institution above it in the
chain.
(vi) The U.S. person complies with procedures that the U.S.
competent authority may agree to with the competent authority of a
country with which the United States has an income tax treaty in
effect.
(3) [Reserved]. For further guidance, see Sec. 1.871-14T(c)(3).
(i) [Reserved]. For further guidance, see Sec. 1.871-14T(c)(3)(i).
* * * * *
0
Par. 3. Section 1.871-14T is amended by adding paragraphs (c)(2)(v) and
(vi) to read as follows:
Sec. 1.871-14T Rules relating to repeal of tax on interest of
nonresident alien individuals and foreign corporations received from
certain portfolio debt investments (temporary).
* * * * *
(c) * * *
(2) * * *
(v) and (vi) [Reserved]. For further guidance, see Sec. 1.871-
14(c)(2)(v) and (vi).
* * * * *
0
Par. 4. Section 1.1441-1 is amended by revising paragraph (b)(2)(vii)
and the introductory text of paragraph (e)(4)(ii)(B) to read as
follows:
Sec. 1.1441-1 Requirement for the deduction and withholding of tax on
payments to foreign persons.
* * * * *
(b) * * *
(2) * * *
(vii) Rules for reliably associating a payment with a withholding
certificate or other appropriate documentation--(A) Generally. The
presumption rules of paragraph (b)(3) of this section and Sec. Sec.
1.1441-5(d) and (e)(6) and 1.6049-5(d) apply to any payment, or portion
of a payment, that a withholding agent cannot reliably associate with
valid documentation. Generally, a withholding agent can reliably
associate a payment with valid documentation if, prior to the payment,
it holds valid documentation (either directly or through an agent), it
can reliably determine how much of the payment relates to the valid
documentation, and it has no actual knowledge or reason to know that
any of the information, certifications, or statements in, or associated
with, the documentation are incorrect. Special rules apply for payments
made to intermediaries, flow-through entities, and certain U.S.
branches. See paragraph (b)(2)(vii)(B) through (F) of this section. The
documentation referred to in this paragraph (b)(2)(vii) is
documentation described in paragraphs (c)(16) and (17) of this section
upon which a withholding agent may rely to treat the payment as a
payment made to a payee or beneficial owner, and to ascertain the
characteristics of the payee or beneficial owner that are relevant to
withholding or reporting under chapter 3 of the Internal Revenue Code
and the regulations thereunder. A withholding agent that is not
required to obtain documentation with respect to a payment is
considered to lack documentation for purposes of this paragraph
(b)(2)(vii). For example, a withholding agent paying U.S. source
interest to a person that is an exempt recipient, as defined in Sec.
1.6049-4(c)(1)(ii), is not required to obtain documentation from that
person in order to determine whether an amount paid to that person is
reportable under an applicable information reporting provision under
chapter 61 of the Internal Revenue Code. The withholding agent must,
however, treat the payment as made to an undocumented person for
purposes of chapter 3 of the Internal Revenue Code. Therefore, the
presumption rules of paragraph (b)(3)(iii) of this section apply to
determine whether the person is presumed to be a U.S. person (in which
case, no withholding is required under this section), or whether the
person is presumed to be a foreign person (in which case 30-percent
withholding is required under this section). See paragraph (b)(3)(v) of
this section for special reliance rules in the case of a payment to a
foreign intermediary and Sec. 1.1441-5(d) and (e)(6) for special
reliance rules in the case of a payment to a flow-through entity.
(B) through (F) [Reserved]. For further guidance, see Sec. 1.1441-
1T(b)(2)(vii)(B) through (F).
* * * * *
(e) * * *
(4) * * *
(ii) * * *
(B) [Reserved]. For further guidance, see Sec. 1.1441-
1T(e)(4)(ii)(B).
* * * * *
0
Par. 5. Section 1.1441-1T is amended by:
0
1. Correcting the language ``Sec. 1.1471-1(b)(16)'' in the eighth
sentence of paragraph (b)(2)(iv)(A) to read ``Sec. 1.1471-1(b)(18)''.
0
2. Correcting the language ``paragraphs (e)(5)(iv)(C)(1) and (2)'' in
the last sentence of paragraph (b)(2)(vii)(C)(1) to read ``paragraphs
(e)(5)(v)(C)(1) and (2)''.
0
3. Revising paragraphs (e)(2)(ii), (e)(3)(ii)(A), (e)(3)(ii)(D),
(e)(3)(iii)(A), (e)(3)(iii)(D), (e)(3)(iv)(C)(2)(i),
(e)(3)(iv)(C)(2)(iv), (e)(3)(iv)(D)(2)(ii).
[[Page 37183]]
0
4. Correcting the language ``paragraph (c)(3)(iv)(D)(2)(ii)'' in the
first sentence of paragraph (e)(3)(iv)(D)(3) to read ``paragraph
(e)(3)(iv)(D)(2)(ii)''.
0
5. Correcting the language ``Sec. 1.1471-1(d)(2)'' in the last
sentence of paragraph (e)(3)(iv)(D)(6) to read ``Sec. 1.1474-
1(d)(2)''.
0
6. Revising paragraphs (e)(3)(v)(A), (e)(3)(v)(C), (e)(3)(v)(D),
(e)(4)(ii)(B) introductory text, (e)(4)(ii)(B)(2), and
(e)(4)(ix)(C)(1).
0
7. At the end of paragraphs (e)(4)(iv)(C) and (e)(4)(ix)(D), adding the
language ``Notwithstanding the effective date of this section, the
provisions of this paragraph apply for payments made on or after March
6, 2014.''
0
8. Revising paragraphs (e)(5)(ii)(A), (e)(5)(iv), (e)(5)(v)(C)(1), and
(e)(5)(v)(C)(2)(i).
The revisions read as follows:
Sec. 1.1441-1T Requirement for the deduction and withholding of tax
on payments to foreign persons (temporary).
* * * * *
(e) * * *
(2) * * *
(ii) Requirements for validity of certificate. A beneficial owner
withholding certificate is valid for purposes of a payment of an amount
subject to chapter 3 withholding only if it is provided on a Form W-8,
or a Form 8233 in the case of personal services income described in
Sec. 1.1441-4(b) or certain scholarship or grant amounts described in
Sec. 1.1441-4(c) (or a substitute form described in paragraph
(e)(4)(vi) of this section or such other form as the IRS may
prescribe). A Form W-8 is valid only if its validity period has not
expired, it is signed under penalties of perjury by the beneficial
owner, and it contains all of the information required on the form. The
required information is the beneficial owner's name, permanent
residence address (as defined in Sec. 1.1441-1(c)(38)), TIN (if
required), a certification that the person is not a U.S. citizen (if
the person is an individual) or a certification of the country under
the laws of which the beneficial owner is created, incorporated, or
governed (if a person other than an individual), the classification of
the entity, and such other information as may be required by the
regulations under section 1441 or by the form or accompanying
instructions in addition to, or in lieu of, the information described
in this paragraph (e)(2)(ii) (including when a foreign TIN and an
individual's date of birth are required). A beneficial owner
withholding certificate must also include the chapter 4 status of a
beneficial owner when required for chapter 4 purposes in order to be
valid. See paragraph (e)(4)(vii) of this section for circumstances in
which a TIN is required on a beneficial owner withholding certificate.
* * * * *
(3) * * *
(ii) * * *
(A) The name, permanent residence address, qualified intermediary
employer identification number (QI-EIN), and the country under the laws
of which the intermediary is created, incorporated, or governed. If
required for purposes of chapter 4 or if the qualified intermediary is
a participating FFI or registered deemed-compliant FFI and certifies
that it is providing (or will provide) a chapter 4 withholding rate
pool of U.S. payees under Sec. 1.6049-4(c)(4) with respect to accounts
that the qualified intermediary maintains, the withholding certificate
must also include the chapter 4 status of the qualified intermediary
and its GIIN (if applicable). See paragraph (e)(5)(ii) for the chapter
4 status required of a qualified intermediary, including when a
qualified intermediary withholding certificate may include a chapter 4
status of limited FFI (as defined in Sec. 1.1471-1(b)(77)). A
qualified intermediary that does not act in its capacity as a qualified
intermediary must not use its QI-EIN. Rather, the intermediary should
provide a nonqualified intermediary withholding certificate, if it is
acting as an intermediary, and should use the taxpayer identification
number (if any) and GIIN (if applicable) that it uses for all other
purposes;
* * * * *
(D) A certification that the qualified intermediary meets the
requirements of Sec. 1.6049-4(c)(4) when the qualified intermediary
provides (or will provide) a withholding statement associated with its
Form W-8 that allocates a payment to a chapter 4 withholding rate pool
of U.S. payees that hold accounts with the qualified intermediary.
Additionally, when the qualified intermediary provides a chapter 4
withholding rate pool of U.S. payees that do not hold accounts
maintained by the qualified intermediary, the qualified intermediary
provides a certification on the Form W-8 that the qualified
intermediary has obtained (or will obtain) documentation from the
intermediary or flow through entity allocating the payment to the pool
to establish that the entity's status is as a participating FFI,
registered deemed-compliant FFI, or qualified intermediary under Sec.
1.1471-3(d)(4) (or, as applicable, Sec. 1.1471-3(e)(4)(vi)(B) or Sec.
1.1441-1(b)(2)(vii)); and
* * * * *
(iii) * * *
(A) The name and permanent resident address of the nonqualified
intermediary, chapter 4 status (if required for chapter 4 purposes or
if the nonqualified intermediary provides the certification described
in paragraph (e)(3)(iii)(D) of this section,), GIIN (if applicable),
and the country under the laws of which the nonqualified intermediary
is created, incorporated, or governed;
* * * * *
(D) If the nonqualified intermediary provides a withholding
statement associated with the Form W-8 allocating a payment to a
chapter 4 withholding rate pool of U.S. payees, a certification that
the nonqualified intermediary meets the requirements of Sec. 1.6049-
4(c)(4) with respect to any payees included in such pool that hold
accounts maintained (as defined in Sec. 1.1471-5(b)(5)) by the
nonqualified intermediary; and
* * * * *
(iv) * * *
(C) * * *
(2) * * *
(i) The withholding statement must include the chapter 4 status
(using the applicable status code used for filing Form 1042-S) and GIIN
(when required for chapter 4 purposes under Sec. 1.1471-3(d)) of each
other intermediary or flow-through entity that is a foreign person and
that receives the payment, excluding an intermediary or flow-through
entity that is an account holder of or interest holder in a withholding
foreign partnership, withholding foreign trust, or qualified
intermediary;
* * * * *
(iv) For a payment allocated to a payee that is a foreign person
(other than a person included in a chapter 4 withholding rate pool
described in paragraphs (e)(3)(iv)(C)(2)(ii) and (iii) of this section)
that is reported on a withholding statement described in Sec. 1.1471-
3(c)(3)(iii)(B)(2) or (c)(3)(iii)(B)(3), the withholding statement must
include the chapter 4 status of the payee (unless an exception applies
for purposes of providing such status under chapter 4) and, for a payee
other than an individual, the recipient code for chapter 4 purposes
used for filing Form 1042-S.
(D) * * *
(2) * * *
(ii) Withholding rate pools for chapter 4 purposes. This paragraph
(e)(3)(iv)(D)(2)(ii) modifies the provisions of paragraph
[[Page 37184]]
(e)(3)(iv)(D)(2)(i) of this section with respect to the withholding
rate pools permitted for the alternative procedures described in
paragraph (e)(3)(iv)(D)(1) of this section in the case of a payment
that is allocable on a withholding statement to a chapter 4 withholding
rate pool as described in this paragraph. In the case of a withholdable
payment, a nonqualified intermediary may include reportable amounts
allocable to a chapter 4 withholding rate pool (other than a chapter 4
withholding rate pool of U.S. payees) in a 30-percent rate pool
together with a withholding rate pool for amounts subject to chapter 3
withholding at the 30-percent rate. For a payment of a reportable
amount that is allocable to a chapter 4 withholding rate pool of U.S.
payees on a withholding statement, a nonqualified intermediary may
include such amount in a single withholding rate pool with the amount
of the payment that is exempt from withholding under chapter 3 instead
of providing documentation regarding U.S. non-exempt recipients
included in the pool or separately allocating the amount to the chapter
4 withholding rate pool. To the extent that a nonqualified intermediary
allocates an amount to any chapter 4 withholding rate pool, the
nonqualified intermediary is required to notify the withholding agent
of the allocation before receiving the payment and is not required to
provide documentation with respect to the payees included in such pool.
The nonqualified intermediary shall determine the chapter 4 withholding
rate pools permitted to be used under this paragraph
(e)(3)(iv)(D)(2)(ii) in accordance with the nonqualified intermediary's
applicable chapter 4 status and under Sec. 1.1471-3(c)(3)(iii)(B)(2)
(for an FFI withholding statement) or (c)(3)(iii)(B)(3) (for a chapter
4 withholding statement) or under Sec. 1.6049-4(c)(4) for a chapter 4
withholding rate pool of U.S. payees (or similar applicable
coordination rule in chapter 61 for payments other than interest).
Additionally, the nonqualified intermediary shall identify those payees
to which withholding under chapter 4 applies that are not included in a
chapter 4 reporting pool (including payees that could be included in a
chapter 4 withholding rate pool for whom the nonqualified intermediary
chooses to provide payee specific information).
* * * * *
(v) * * *
(A) The name of the territory financial institution or person of
which the U.S. branch is a part, the address of the territory financial
institution or U.S. branch, and, for a withholding certificate provided
by a U.S. branch, a certification that the person of which the branch
is a part is a participating FFI, registered deemed-compliant FFI, or
NFFE;
* * * * *
(C) The EIN of the U.S. branch or territory financial institution;
(D) When required for chapter 4 purposes, the chapter 4 status and
GIIN (if applicable) of the entity of which the U.S. branch is a part;
and
* * * * *
(4) * * *
(ii) * * *
(B) Indefinite validity period. Notwithstanding paragraph
(e)(4)(ii)(A) of this section, the following certificates (or parts of
certificates) and documentary evidence described in paragraphs
(e)(4)(ii)(B)(1) through (11) of this section shall remain valid until
a change in circumstances makes the information on the documentation
incorrect under paragraph (e)(4)(ii)(D)(3). See, however, Sec. 1.1471-
3(c)(6)(ii) for when a withholding certificate or documentary evidence
remains valid (or is subject to renewal) when also provided with
respect to a withholdable payment made to an entity (including an
intermediary) for purposes of whether a withholding agent may continue
to rely on the entity's claim of chapter 4 status. Additionally, the
provisions of paragraphs (e)(4)(ii)(B)(1), (2), and (12) of this
section do not apply to documentary evidence or a withholding
certificate furnished prior to July 1, 2014. (For documentary evidence
or a withholding certificate furnished after December 31, 2000, and
before July 1, 2014, see this section as in effect and contained in 26
CFR part 1, as revised April 1, 2013.)
* * * * *
(2) A beneficial owner withholding certificate (other than the
portion of the certificate making a claim for treaty benefits)
described in Sec. 1.1471-3(c)(6)(ii)(C)(2) and documentary evidence
provided by an entity supporting the entity's claim of foreign status
when both are provided together.
* * * * *
(ix) * * *
(C) * * *
(1) Withholding agent as agent. A withholding agent that acts on
behalf of a principal may rely upon documentation (or copies of
documentation) obtained from the principal, and, with respect to a
principal that is a U.S. withholding agent, a qualified intermediary
(when acting as such for determining a payee's status), or a
withholding foreign partnership or withholding foreign trust with
respect to a partner, owner, or beneficiary in the partnership or
trust, the withholding agent may rely upon certification provided by
the principal for purposes of determining a payee's chapter 3 status.
Thus an agent (such as a paying agent or transfer agent) may not rely
upon a certification provided by a principal that is a participating
FFI but is not also a qualified intermediary, withholding foreign
partnership, or withholding foreign trust for purposes of this section,
even though it may rely on the certification when provided solely for
purposes of chapter 4 under Sec. 1.1471-3(c)(9)(iv).
* * * * *
(5) * * *
(ii) * * *
(A) A foreign financial institution that is a participating FFI
(including a reporting Model 2 FFI), a registered deemed-compliant FFI
(including a reporting Model 1 FFI), an FFI treated as a deemed-
compliant FFI under an applicable IGA that is subject to due diligence
and reporting requirements with respect to its U.S. accounts similar to
those applicable to a registered deemed-compliant FFI under Sec.
1.1471-5(f)(1), excluding a U.S. branch of any of the foregoing
entities, or any other category of FFI identified in a qualified
intermediary agreement as eligible to act as a qualified intermediary;
* * * * *
(iv) Assignment of primary withholding responsibility. Any person
who meets the definition of a withholding agent under Sec. 1.1441-7(a)
(for payments subject to chapter 3 withholding) and Sec. 1.1473-1(d)
(for withholdable payments) (whether a U.S. person or a foreign person)
is required to withhold and deposit any amount withheld under
Sec. Sec. 1.1461-1(a) and 1.1474-1(b) and to make the returns
prescribed by Sec. Sec. 1.1461-1(b) and (c), and by 1.1474-1(c), and
(d). Under its qualified intermediary agreement, a qualified
intermediary may, however, inform a withholding agent from which it
receives a payment that it will assume the primary obligation to
withhold, deposit, and report amounts under chapters 3 and 4 of the
Internal Revenue Code and/or under chapter 61 of the Internal Revenue
Code and section 3406. For assuming withholding obligations as
described in the previous sentence, a qualified intermediary that
assumes primary withholding responsibility for payments made to an
account under chapter 3 is also required to assume primary withholding
responsibility under chapter 4 for
[[Page 37185]]
payments made to the account that are withholdable payments.
Additionally, a qualified intermediary may represent that it assumes
chapter 61 reporting and section 3406 obligations for a payment when
the qualified intermediary meets the requirements to have provided a
chapter 4 withholding rate pool of U.S. payees with respect to the
payment under Sec. 1.6049-4(c)(4)(iii) had the qualified intermediary
not assumed these obligations. If a withholding agent makes a payment
of an amount subject to withholding under chapter 3, a reportable
payment (as defined in section 3406(b)), or a withholdable payment to a
qualified intermediary that represents to the withholding agent that it
has assumed primary withholding responsibility for the payment, the
withholding agent is not required to withhold on the payment. The
withholding agent is not required to determine that the qualified
intermediary actually performs its primary withholding
responsibilities. A qualified intermediary that assumes primary
withholding responsibility under chapters 3 and 4 or primary reporting
and backup withholding responsibility under chapter 61 and section 3406
is not required to assume primary withholding responsibility for all
accounts it has with a withholding agent but must assume primary
withholding responsibility for all payments made to any one account
that it has with the withholding agent.
(v) * * *
(C) * * *
(1) In general. Except to the extent it has assumed both primary
withholding responsibility under chapters 3 and 4 of the Internal
Revenue Code and primary reporting and backup withholding
responsibility under chapter 61 and section 3406 with respect to a
payment, a qualified intermediary shall provide as part of its
withholding statement the chapter 3 withholding rate pool information
that is required for the withholding agent to meet its withholding and
reporting obligations under chapters 3 and 61 of the Internal Revenue
Code and section 3406. See, however, paragraph (e)(5)(v)(C)(2) of this
section for when a qualified intermediary may provide a chapter 4
withholding rate pool (as described in paragraph (c)(48) of this
section) with respect to a payment that is a withholdable payment. A
chapter 3 withholding rate pool is a payment of a single type of
income, determined in accordance with the categories of income reported
on Form 1042-S, that is subject to a single rate of withholding paid to
a payee that is a foreign person and for which withholding under
chapter 4 does not apply. A chapter 3 withholding rate pool may be
established by any reasonable method on which the qualified
intermediary and a withholding agent agree (e.g., by establishing a
separate account for a single chapter 3 withholding rate pool, or by
dividing a payment made to a single account into portions allocable to
each chapter 3 withholding rate pool). A qualified intermediary may
include a separate pool for account holders that are U.S. exempt
recipients or may include such accounts in a chapter 3 withholding rate
pool to which withholding does not apply. The withholding statement
must identify the chapter 4 exemption code (as provided in the
instructions to Form 1042-S) applicable to the chapter 3 withholding
rate pools contained on the withholding statement. To the extent a
qualified intermediary does not assume primary reporting and backup
withholding responsibility under chapter 61 and section 3406, a
qualified intermediary's withholding statement must establish a
separate withholding rate pool for each U.S. non-exempt recipient
account holder that the qualified intermediary has disclosed to the
withholding agent unless the qualified intermediary uses the
alternative procedures in paragraph (e)(5)(v)(C)(3) of this section or
the account holder is a payee that the qualified intermediary is
permitted to include in a chapter 4 withholding rate pool of U.S.
payees. A qualified intermediary that is a participating FFI or
registered deemed-compliant FFI may include a chapter 4 withholding
rate pool of U.S. payees on a withholding statement by applying the
rules under paragraph (e)(3)(iv)(A) of this section (by substituting
``qualified intermediary'' for ``nonqualified intermediary'') with
respect to an account that it maintains (as described in Sec. 1.1471-
5(b)(5)) for the payee of the payment. A qualified intermediary shall
determine withholding rate pools based on valid documentation that it
obtains under its withholding agreement with the IRS, or if a payment
cannot be reliably associated with valid documentation, under the
applicable presumption rules. If a qualified intermediary has an
account holder that is another intermediary (whether a qualified
intermediary or a nonqualified intermediary) or a flow-through entity,
the qualified intermediary may combine the account holder information
provided by the other intermediary or flow-through entity with the
qualified intermediary's direct account holder information to determine
the qualified intermediary's chapter 3 withholding rate pools and each
of the qualified intermediary's chapter 4 withholding rate pools to the
extent provided in the agreement described in (e)(5)(iii) of this
section.
(2) * * *
(i) If the qualified intermediary provides a withholding statement
described in Sec. 1.1471-3(c)(3)(iii)(B)(2) (describing an FFI
withholding statement), the withholding statement may include a chapter
4 withholding rate pool with respect to the portion of the payment
allocated to a single pool of recalcitrant account holders (without the
need to subdivide into the pools described in Sec. 1.1471-4(d)(6)),
including both account holders of the qualified intermediary and of any
participating FFI, registered deemed-compliant FFI, or other qualified
intermediary for whom the first-mentioned qualified intermediary
receives the payment, and nonparticipating FFIs (to the extent
permitted) in lieu of reporting chapter 3 withholding rate pools with
respect to such persons as described in paragraph (e)(5)(v)(C)(1) of
this section); or
* * * * *
0
Par. 6. Section 1.1441-5T is amended by revising paragraphs
(c)(2)(iv)(A), (d)(2), (e)(5)(iii)(A), and (e)(6)(ii) to read as
follows:
Sec. 1.1441-5T Withholding on payments to partnerships, trusts, and
estates (temporary).
* * * * *
(c) * * *
(2) * * *
(iv) * * *
(A) The name, permanent residence address (as described in Sec.
1.1441-1(e)(2)(ii)), the employer identification number of the
partnership, the country under the laws of which the partnership is
created or governed, the chapter 4 status of the partnership if
required for purposes of chapter 4 or if the partnership provides (or
will provide) a withholding statement associated with the Form W-8
allocating a payment to a chapter 4 withholding rate pool of U.S.
payees under Sec. 1.6049-4(c)(4) with respect to its partners, and the
GIIN of the partnership (if applicable). If the partnership provides
(or will provide) a chapter 4 withholding rate pool of U.S. payees as
described in the preceding sentence, the partnership must certify to
its chapter 4 status as a participating FFI (including a reporting
Model 2 FFI) or registered deemed-compliant FFI (including a reporting
Model 1 FFI);
* * * * *
(d) * * *
(2) Determination of partnership status as U.S. or foreign in the
absence
[[Page 37186]]
of documentation. In the absence of a valid representation of U.S.
partnership status in accordance with paragraph (b)(1) of this section
or of foreign partnership status in accordance with paragraph (c)(2)(i)
or (c)(3)(i) of this section, the withholding agent shall determine the
classification of the payee under the presumptions set forth in Sec.
1.1441-1(b)(3)(ii). If the withholding agent treats the payee as a
partnership under Sec. 1.1441-1(b)(3)(ii), the withholding agent shall
apply the presumptions set forth in Sec. 1.1441-1(b)(3)(iii)(A)(1)
(applied by substituting the term partnership for the term exempt
recipient) to determine whether to treat the partnership as a U.S.
person or foreign person. For rules regarding reliable association with
a withholding certificate from a domestic or a foreign partnership, see
Sec. 1.1441-1(b)(2)(vii).
* * * * *
(e) * * *
(5) * * *
(iii) * * *
(A) The name, permanent residence address (as described in Sec.
1.1441-1(e)(2)(ii)), the employer identification number, if required,
of the trust, the country under the laws of which the trust is created,
the chapter 4 status of the trust if required for purposes of chapter 4
or if the trust provides (or will provide) a withholding statement
associated with the Form W-8 allocating a payment to a chapter 4
withholding rate pool of U.S. payees under Sec. 1.6049-4(c)(4) with
respect to the nonwithholding foreign trust's owners and beneficiaries,
and the GIIN of the trust (if applicable). If a nonwithholding foreign
trust provides (or will provide) a chapter 4 withholding rate pool of
U.S. payees as described in the preceding sentence, the trust must
certify to its chapter 4 status as a participating FFI (including a
reporting Model 2 FFI) or registered deemed-compliant FFI (including a
reporting Model 1 FFI);
* * * * *
(6) * * *
(ii) Determination of status as U.S. or foreign trust or estate in
the absence of documentation. In the absence of valid documentation
that establishes the U.S. status of a trust or estate under paragraph
(b)(1) of this section and of documentation that establishes the
foreign status of a trust or estate under paragraph (e)(4) or
(e)(5)(iii) of this section, the withholding agent shall determine the
classification of the payee based upon the presumptions set forth in
Sec. 1.1441-1(b)(3)(ii). If, based upon those presumptions, the
withholding agent classifies the payee as a trust or estate, the
withholding agent shall apply the presumptions set forth in Sec.
1.1441-1(b)(3)(iii)(A)(1) (applied by substituting the term trust for
the term exempt recipient) to determine whether the trust or estate is
a U.S. person or foreign person. An undocumented payee presumed to be a
foreign trust shall be presumed to be a foreign complex trust. If a
withholding agent has documentary evidence that establishes that an
entity is a foreign trust, but the withholding agent cannot determine
whether the foreign trust is a complex trust, a simple trust, or
foreign grantor trust, the withholding agent shall presume that the
trust is a foreign complex trust. Notwithstanding the preceding
sentence, in the case of a foreign trust with a settlor that is a U.S.
person for which a withholding agent has both a U.S. address and TIN,
the withholding agent shall presume that the trust is a grantor trust
when it cannot determine the status of the trust as a simple trust,
complex trust, or grantor trust. See Sec. 1.1471-3(f)(4) and (5) to
determine the status of the payee for purposes of chapter 4.
* * * * *
0
Par. 7. Section 1.1441-6T is amended by:
0
1. Revising paragraphs (a) and (b)(1).
0
2. At the end of paragraph (c)(1), adding the language
``Notwithstanding the effective date of this section, the provisions of
this paragraph apply for payments made on or after March 6, 2014.''
The revisions read as follows:
Sec. 1.1441-6T Claim of reduced withholding under an income tax
treaty (temporary).
(a) In general. The rate of withholding on a payment of income
subject to withholding may be reduced to the extent provided under an
income tax treaty in effect between the United States and a foreign
country. Most benefits under income tax treaties are to foreign persons
who reside in the treaty country. In some cases, benefits are available
under an income tax treaty to U.S. citizens or U.S. residents or to
residents of a third country. See paragraph (b)(5) of this section for
claims of benefits by U.S. persons. If the requirements of this section
are met, the amount withheld from the payment may be reduced at source
to account for the treaty benefit. See, however, Sec. 1.1471-2(a) and
Sec. 1.1472-1(b) for when withholding at source on a withholdable
payment may not be reduced to account for a treaty benefit and the
beneficial owner of the payment may need to file a claim for refund to
obtain a refund for the overwithheld amount of tax. See also Sec.
1.1441-4(b)(2) for rules regarding claims of a reduced rate of
withholding under an income tax treaty in the case of compensation from
personal services and Sec. 1.1441-4(c)(1) for rules regarding claims
of a reduced rate of withholding under an income tax treaty in the case
of scholarship and fellowship income.
(b) * * *
(1) In general. The withholding imposed under section 1441, 1442,
or 1443 on any payment to a foreign person is eligible for reduction
under the terms of an income tax treaty only to the extent that such
payment is treated as derived by a resident of an applicable treaty
jurisdiction, such resident is a beneficial owner, and all other
requirements for benefits under the treaty are satisfied. See section
894 and the regulations under section 894 to determine whether a
resident of a treaty country derives the income. Absent actual
knowledge or reason to know otherwise, a withholding agent may rely on
a claim that a beneficial owner is entitled to a reduced rate of
withholding based upon an income tax treaty if, prior to the payment,
the withholding agent can reliably associate the payment with a
beneficial owner withholding certificate, as described in Sec. 1.1441-
1(e)(2), that contains the information necessary to support the claim,
or, in the case of a payment of income described in paragraph (c)(2) of
this section made outside the United States with respect to an offshore
obligation, documentary evidence described in paragraphs (c)(3),
(c)(4), and (c)(5) of this section. See Sec. 1.6049-5(e) for the
definition of payments made outside the United States and Sec. 1.6049-
5(c)(1) for the definition of an offshore obligation. For purposes of
this paragraph (b)(1), a beneficial owner withholding certificate
described in Sec. 1.1441-1(e)(2)(i) contains information necessary to
support the claim for a treaty benefit only if it includes the
beneficial owner's taxpayer identifying number (except as otherwise
provided in paragraph (c)(1) and (g) of this section, or the beneficial
owner provides its foreign tax identifying number issued by its country
of residence and such country has with the United States an income tax
treaty or information exchange agreement in effect) and the
representations that the beneficial owner derives the income under
section 894 and the regulations under section 894, if required, and
meets the limitation on benefits provisions of the treaty, if any. For
claims for treaty benefits for scholarship and fellowship income, the
beneficial owner withholding certificate must contain the beneficial
owner's U.S. taxpayer identifying number (not a foreign taxpayer
identifying number).
[[Page 37187]]
The withholding certificate must also contain any other representations
required by this section and any other information, certifications, or
statements as may be required by the form or accompanying instructions
in addition to, or in place of, the information and certifications
described in this section. Absent actual knowledge or reason to know
that the claims are incorrect (applying the standards of knowledge in
Sec. 1.1441-7(b)), a withholding agent may rely on the claims made on
a withholding certificate or on documentary evidence. A withholding
agent may also rely on the information contained in a withholding
statement provided under Sec. Sec. 1.1441-1(e)(3)(iv) and 1.1441-
5(c)(3)(iv) and (e)(5)(iv) to determine whether the appropriate
statements regarding section 894 and limitation on benefits have been
provided in connection with documentary evidence. The Internal Revenue
Service (IRS) may apply the provisions of Sec. 1.1441-1(e)(1)(ii)(B)
to notify the withholding agent that the certificate cannot be relied
upon to grant benefits under an income tax treaty. See Sec. 1.1441-
1(e)(4)(viii) regarding reliance on a withholding certificate by a
withholding agent. The provisions of Sec. 1.1441-1(b)(3)(iv) dealing
with a 90-day grace period shall apply for purposes of this section.
* * * * *
0
Par. 8. Section 1.1441-7T is amended by revising paragraphs (b)(2),
(b)(3)(i), and (b)(11)(ii) to read as follows:
Sec. 1.1441-7T General provisions relating to withholding agents
(temporary).
* * * * *
(b) * * *
(2) Reason to know. A withholding agent shall be considered to have
reason to know if its knowledge of relevant facts or of statements
contained in the withholding certificates or other documentation is
such that a reasonably prudent person in the position of the
withholding agent would question the chapter 3 claims made. For an
obligation other than a preexisting obligation, a withholding agent
will have reason to know that a chapter 3 claim made by the holder of
the obligation (account holder) is unreliable or incorrect if any
information contained in its account opening files or other files
pertaining to the obligation (account information), including
documentation collected for purposes of AML due diligence (as defined
under Sec. 1.1471-1(b)(4)), conflicts with the account holder's claim.
A withholding agent will not, however, be considered to have reason to
know that a person's chapter 3 claim is unreliable or incorrect based
on documentation collected for AML due diligence until the date that is
30 days after the obligation is executed (or the account is opened for
an obligation that is an account with a financial institution).
(3) * * *
(i) In general. For purposes of this paragraph (b)(3) and
paragraphs (b)(4) through (10) of this section, the terms withholding
certificate, documentary evidence, and documentation are defined in
Sec. 1.1441-1(c)(16), (17) and (18). Except as otherwise provided in
paragraphs (b)(4) through (9) of this section, a withholding agent that
is a financial institution under Sec. 1.1471-5(e), an insurance
company (without regard to whether such company is a specified
insurance company), or a broker or dealer in securities that maintains
or opens an account for a beneficial owner (a direct account holder)
has reason to know that documentation provided by the direct account
holder is unreliable or incorrect only if one or more of the
circumstances described in paragraphs (b)(4) through (9) of this
section exist. If a direct account holder has provided documentation
that is unreliable or incorrect under the rules of paragraph (b)(4)
through (9) of this section, the withholding agent may require new
documentation. Alternatively, the withholding agent may rely on the
documentation originally provided if the rules of paragraphs (b)(4)
through (9) of this section permit such reliance based on additional
statements and documentation obtained by the withholding agent from the
beneficial owner. Paragraph (b)(10) of this section provides rules
regarding reason to know for withholding agents that receive beneficial
owner documentation from persons (indirect account holders) that have
an account relationship with, or an ownership interest in, a direct
account holder of the withholding agent. Paragraph (b)(11) of this
section provides limitations on a withholding agent's reason to know
for multiple obligations held by the same person. Paragraph (b)(12) of
this section defines a reasonable explanation provided by an individual
with respect to the individual's claim of foreign status. For rules
regarding reliance on Form W-9, see Sec. 31.3406(g)-3(e)(2) of this
chapter. For payments that are withholdable payments, see Sec. 1.1471-
3(e)(3) and (4) for additional rules regarding a withholding agent's
reason to know with respect to a payee's claim of chapter 4 status and
Sec. 1.1471-3(f) for presumption rules that apply when the claim of
chapter 4 status is unreliable or incorrect.
* * * * *
(11) * * *
(ii) The withholding agent has treated the obligations as
consolidated obligations for purposes of sharing documentation pursuant
to Sec. 1.1441-1(e)(4)(ix).
* * * * *
0
Par. 9. Section 1.1461-1 is amended by revising paragraph (i) to read
as follows:
Sec. 1.1461-1 Payments and returns of tax withheld.
* * * * *
(i) Effective/applicability date. (1) Unless otherwise provided in
this section, this section shall apply to returns required for payments
made after December 31, 2000.
(2) [Reserved]. For further guidance, see Sec. 1.1461-1T(i)(2).
0
Par. 10. Section 1.1461-1T is amended by:
0
1. Revising paragraphs (c)(1)(ii)(A)(6) and (c)(1)(ii)(B)(1).
0
2. Correcting the language ``(c)(1)(ii)(9) or (c)(1)(ii)(10)'' in
paragraphs (c)(1)(ii)(B)(3) and (4) to read ``(c)(1)(ii)(A)(9) or
(c)(1)(ii)(A)(10)''.
0
3. Revising paragraphs (d) through (i).
The revisions read as follows:
Sec. 1.1461-1T Payments and returns of tax withheld (temporary).
* * * * *
(c) * * *
(1) * * *
(ii) * * *
(A) * * *
(6) A nonwithholding foreign partnership or a foreign simple trust
as defined in Sec. 1.1441-1(c)(24), but only to the extent the income
is (or is treated as) effectively connected with the conduct of a trade
or business in the United States by such entity, or if the
nonwithholding foreign partnership or foreign simple trust is also
described in paragraph (c)(1)(ii)(A)(9) or (c)(1)(ii)(A)(10) of this
section;
* * * * *
(B) * * *
(1) A nonqualified intermediary, except with respect to a payment
(or portion of a payment) for which a nonqualified intermediary that is
an FFI is a recipient reporting as described in Sec. 1.1474-
1(d)(1)(ii)(A)(1)(iii), or if the nonqualified intermediary is also
described in paragraph (c)(1)(ii)(A)(9) or (c)(1)(ii)(A)(10) of this
section;
* * * * *
(d) through (i)(1) [Reserved]. For further guidance, see Sec.
1.1461-1(d) through (i)(1).
[[Page 37188]]
(2) Unless otherwise provided in this section, this section shall
apply to payments made after June 30, 2014.
* * * * *
0
Par. 11. Section 1.6041-1 is amended by adding paragraphs (d)(5)(ii)(A)
and (B) to read as follows:
Sec. 1.6041-1 Return of information as to payments of $600 or more.
* * * * *
(d) * * *
(5) * * *
(i) and (ii) * * *
(A) A U.S. payor or U.S. middleman that is not a U.S. person (such
as a controlled foreign corporation defined in section 957(a) or
certain foreign corporations or foreign partnerships engaged in a U.S.
trade or business); or
(B) A foreign branch of a U.S. bank. See Sec. 1.6049-5(c)(5) for a
definition of a U.S. payor, a U.S. middleman, a non-U.S. payor, and a
non-U.S. middleman.
* * * * *
0
Par. 12. Section 1.6049-4T is amended by revising paragraph (c)(4)(i)
introductory text and (c)(4)(ii) introductory text to read as follows:
Sec. 1.6049-4T Return of information as to interest paid and original
issue discount includible in gross income after December 31, 1982
(temporary).
* * * * *
(c) * * *
(4) * * *
(i) U.S. accounts reported by FFIs that are non-U.S. payors. An
information return shall not be required with respect to an interest
payment made by a participating FFI (including a reporting Model 2
FFI), or registered deemed-compliant FFI (including a reporting Model 1
FFI), that is a non-U.S. payor (as defined in Sec. 1.6049-5(c)(5)) to
an account holder of an account maintained by the FFI, when the payment
is not subject to withholding under chapter 4 or to backup withholding
under section 3406, and the conditions of paragraphs (c)(4)(i)(A), (B),
or (C), as applicable, are met. See paragraph (c)(4)(iii) of this
section for circumstances in which an FFI may allocate a payment
described in this paragraph (c)(4)(i) to a chapter 4 withholding rate
pool of U.S. payees.
* * * * *
(ii) Other accounts reported by FFIs under chapter 4. An
information return shall not be required under this section with
respect to a payment that is not subject to withholding under chapter 3
(as defined in Sec. 1.1441-2(a)) or backup withholding under Sec.
31.3406(g)-1(e) and that is made to a recalcitrant account holder of a
participating FFI or registered deemed-compliant FFI (or non-consenting
U.S. account of a reporting Model 2 FFI), provided that the FFI reports
such account holder in accordance with the classes of account holders
described in Sec. 1.1471-4(d)(6) for the year in which the payment is
made. See paragraph (c)(4)(iii) of this section for circumstances in
which an FFI may allocate a payment described in this paragraph
(c)(4)(ii) to a chapter 4 withholding rate pool of U.S. payees. In the
case of a payment made by an FFI that is a reporting Model 1 FFI, an
information return shall not be required with respect to a payment that
is not subject to withholding under chapter 3 or backup withholding
under Sec. 31.3406(g)-1(e) and that is made to an account holder of
the FFI if the account--
* * * * *
0
Par. 13. Section 1.6049-5T is amended by revising paragraph (b)(14) and
paragraph (d)(4) Example 11 to read as follows:
Sec. 1.6049-5T Interest and original issue discount subject to
reporting after December 31, 1982 (temporary).
* * * * *
(b) * * *
(14) Payments that a payor or middleman can, prior to payment,
reliably associate with documentation upon which it may rely to treat
as made to a foreign intermediary or flow-through entity in accordance
with Sec. 1.1441-1(b) if it obtains from the foreign intermediary or
flow-through entity a withholding statement under Sec. 1.1471-
3(c)(3)(iii)(B)(2) (describing an FFI withholding statement), Sec.
1.1471-3(c)(3)(iii)(B)(3) (describing a chapter 4 withholding
statement), Sec. 1.1441-1(e)(3)(iv) (describing a withholding
statement provided by a non-qualified intermediary), Sec. 1.1441-
1(e)(5)(v) (describing a withholding statement provided by a qualified
intermediary), or under Sec. 1.1441-5 (describing a withholding
statement provided by a foreign partnership, foreign simple trust, or
foreign grantor trust), that allocates the payment (or portion of a
payment) to a chapter 4 withholding rate pool or specific payees to
which withholding applies under chapter 4. The provisions of each of
the foregoing sections shall apply by substituting the term payor for
the term withholding agent. A payor or middleman may rely on a
withholding statement provided by a foreign intermediary or flow-
through entity that identifies a chapter 4 withholding rate pool of
U.S. payees (as described in Sec. 1.6049-4(c)(4)) or, with respect to
a withholdable payment, a chapter 4 withholding rate pool of
recalcitrant account holders (as described in Sec. 1.1471-4(d)(6))
provided that the payor or middleman identifies the foreign
intermediary or flow-through entity that maintains the accounts (as
described in Sec. 1.1471-5(b)(5)) included in the chapter 4
withholding rate pool as a participating FFI (including a reporting
Model 2 FFI) or registered deemed-compliant FFI (including a reporting
Model 1 FFI) by applying the rules in Sec. 1.1471-3(d)(4) or in Sec.
1.1471-3(e)(4)(vi)(B), as applicable, for identifying the payee of a
payment (by substituting the term payor with the term withholding
agent). See, however, Sec. 1.1441-1(e)(5)(v)(C)(2)(i) for when a
qualified intermediary may provide a single pool of recalcitrant
account holders (without the need to subdivide into the pools described
in Sec. 1.1471-4(d)(6)). Additionally, when a foreign intermediary or
flow-through entity provides to a payor or middleman a withholding
statement that allocates the payment (or portion of a payment) to a
chapter 4 withholding rate pool of U.S. payees, the payor or middleman
may also rely on the withholding statement if the payor or middleman
identifies the intermediary or flow-through entity as a qualified
intermediary (as defined in Sec. 1.1441-1(c)(15) by applying the rules
described in Sec. 1.1441-1(b)(2)(vii)) that provides the certification
described in Sec. 1.1441-1(e)(3)(ii)(D) with respect to U.S. payees
that hold accounts with a foreign intermediary or flow-through entity
other than the qualified intermediary providing the certification.
* * * * *
(d) * * *
(4) * * *
Example 11. (i) Facts. USP is a U.S. payor as defined in
paragraph (c)(5) of this section that is a bank. USP pays U.S.
source original issue discount from the redemption of an obligation
described in section 871(g)(1)(B) to NQI, a foreign corporation that
is a nonqualified intermediary as defined in Sec. 1.1441-1(c)(14).
The redemption proceeds are not paid outside of the United States as
they are paid with respect to an account NQI has with a branch of a
bank in the United States. See Sec. 1.6049-5(e)(2). NQI provides a
nonqualified intermediary withholding certificate as described in
Sec. 1.1441-1(e)(3)(iii) that includes a certification of its
status as a registered deemed-compliant FFI but does not attach any
payee documentation or a withholding statement described in Sec.
1.1441-1(e)(3)(iv).
(ii) Analysis. Under paragraph (d)(3)(ii)(A) of this section,
USP must treat the payment as made to an undocumented U.S. payee
that is not an exempt recipient and report the payment on Form 1099.
Further, because the payment is made inside the United States, the
exception to backup withholding with respect to offshore obligations
contained in Sec. 31.3406(g)-1(e) of this chapter does not
[[Page 37189]]
apply, and the payment is subject to backup withholding.
* * * * *
PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE
0
Par. 14. The authority citation for part 31 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 15. Section 31.3406(g)-1T is amended by revising paragraph (e) to
read as follows:
Sec. 31.3406(g)-1T Exception for payments to certain payees and
certain other payments (temporary).
* * * * *
(e) Certain reportable payments made outside the United States by
foreign persons, foreign offices of United States banks and brokers,
and others. For reportable payments made after June 30, 2014, a payor
is not required to backup withhold under section 3406 on a reportable
payment that is paid and received outside the United States (as defined
in Sec. 1.6049-4(f)(16)) with respect to an offshore obligation (as
defined in Sec. 1.6049-5(c)(1)) or on gross proceeds from a sale
effected outside the United States (as defined in Sec. 1.6045-
1(g)(3)(iii)), unless the payor has actual knowledge that the payee is
a United States person. Further, no backup withholding is required on a
reportable payment of an amount already withheld upon by a
participating FFI (as defined in Sec. 1.1471-1(b)(91)) or another
payor in accordance with the withholding provisions under chapters 3 or
4 of the Code and the regulations under those chapters even if the
payee is a known U.S. person. For example, a participating FFI is not
required to backup withhold on a reportable payment allocable to its
chapter 4 withholding rate pool (as defined in Sec. 1.6049-4(f)(5)) of
recalcitrant account holders (as described in Sec. 1.6049-4(f)(11)),
if withholding was applied to the payment (either by the participating
FFI or another payor) pursuant to Sec. 1.1471-4(b) or Sec. 1.1471-
2(a). For rules applicable to notional principal contracts, see Sec.
1.6041-1(d)(5) of this chapter. For rules applicable to reportable
payments made before July 1, 2014, see this paragraph (e) as in effect
and contained in 26 CFR part 1 revised April 1, 2013.)
* * * * *
0
Par. 16. Section 31.3406(h)-2T is amended by revising paragraph (i) and
adding paragraph (j) to read as follows:
Sec. 31.3406(h)-2T Special rules (temporary).
* * * * *
(i) Effective/applicability date. The provisions of paragraph
(a)(3)(i) of this section apply to payments made after June 30, 2014.
(For payments made before July 1, 2014, see this section as in effect
and contained in 26 CFR part 1 revised April 1, 2013.)
(j) Expiration date. The applicability of this section expires on
February 28, 2017.
Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division,
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2014-15466 Filed 6-30-14; 8:45 am]
BILLING CODE 4830-01-P