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Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. (iii) A withholding agent that makes a withholdable payment to a U. person and has actual knowledge that the person receiving the payment is acting as an intermediary or agent of a foreign person with respect to the payment must treat such foreign person, and not the intermediary or agent, as the payee of such payment. (3) If a withholding agent cannot reliably associate a payment with a valid withholding certificate or valid documentary evidence from which it is possible to determine the payee’s U. or foreign status, it must apply the presumption rules of § 1.1441–1(b)(3)(iii) to determine the U. or foreign status of the payee (substituting the term ). branch described in this paragraph (f)(6) may presume, in the absence of documentation indicating otherwise, that the U. branch is the payee of a payment that is effectively connected with the conduct of a trade or business in the United States if the withholding agent has obtained an EIN from the U. (ii) Notwithstanding the provisions of paragraph (f)(9)(i) of this section, a withholding agent that knows or has reason to know that the status or characteristics of the person are other than what is presumed under this paragraph (f) may not rely on the presumptions described in this paragraph (f) to the extent that, if it determined the status of the person based on such knowledge or reason to know, it would be required to withhold (under this section or another withholding provision of the Code) an amount greater than would be the case if it relied on the presumptions described in this paragraph (f). The applicability of this section expires on February 28, 2017. Finally, consistent with § 1.1441–1(e)(3)(iii), these temporary regulations clarify that documentary evidence is permitted to be used with respect to payments made to a foreign intermediary (in addition to a foreign partnership or foreign trust), regardless of whether the obligation with respect to which the payment is made is maintained outside the United States. The presumption rule for payments with respect to offshore obligations provided under the general presumption rules does not apply to a payment that is not subject to withholding under chapter 3. For further guidance, see § 1.1441–1T(b)(3)(ii)(A) trough (b)(3)(ii)(C). () If a payee is identified as a foreign person, the nonqualified intermediary must specify the rate of withholding to which the payee is subject, the payee’s country of residence and, if a reduced rate of withholding is claimed, the basis for that reduced rate (, treaty benefit, portfolio interest, exempt under section 501(c)(3), 892, or 895).In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. For further guidance, see § 1.1471–3(a)(1) through (2). Notwithstanding the previous sentence, a withholding agent that makes a withholdable payment to a U. In the case of a payment that a withholding agent can reliably associate with valid documentation that indicates the payment is made to a U. person but does not indicate whether the person is a specified U. person, the payment will be presumed made to a specified U. person unless the withholding agent can apply the presumption rules of § 1.6049–4(c)(1)(ii)(B), (C), (D), (E), (I), (J), (K), (L), or (N), to presume that the person is other than a specified U. person, or the person’s name reasonably indicates that the person is a bank (for example because it contains the word . In such a case, the withholding agent must rely on its knowledge or reason to know rather than on the presumptions set forth in this paragraph (f). The new definition of the term Section 1.6049–5(c)(4) of the final regulations provides special documentation rules for certain offshore accounts maintained at a bank or other financial institution, which modify the documentation standards of § 1.6049–5(c)(1) of the final regulations for payments that are not subject to withholding under chapter 3 and are not payments of certain U. source short-term OID or bank deposit interest paid to foreign intermediaries and flow-through entities. In addition, these temporary regulations, consistent with the chapter 4 regulations, add that the first exception applies to a U. These temporary regulations modify this exception (which would not apply the general presumption rules to a payment that is not subject to withholding under chapter 3) in the case of a withholdable payment made to a payee that is an entity by applying the presumption rule for payments with respect to offshore obligations under § 1.1441–1(b)(3)(iii)(D) and (b)(3)(vii)(B) regardless of whether the payment is an amount subject to withholding under chapter 3. The allocation statement must also include the taxpayer identification numbers of those foreign persons for whom such a number is required under paragraph (e)(4)(vii) of this section or § 1.1441–6(b)(1) (regarding claims for treaty benefits for which a TIN is provided unless a foreign tax identifying number described in § 1.1441–6(b)(1) is provided).The text of the temporary regulations also serves as the text of these proposed regulations. These payments may also be subject to comprehensive payee due diligence and documentation, information reporting, and tax withholding rules under chapter 4 (sections 1471–1474), Chapter 61, and section 3406. Except as otherwise provided in this paragraph (e)(4)(ii)(A), a withholding agent 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. indicia, as described in § 1.1441–7(b)(5), associated with the person and for which appropriate documentation sufficient to cure the U. indicia has not been obtained in accordance with § 1.1441–7(b) within 90 days of when the U. indicia was first identified by the withholding agent. For further guidance, see § 1.1471–4T(d)(2)(ii)(E). The first exception relates to dividend payments made by a paying agent on behalf of a PFIC as described in § 1.6042–2(a)(1)(i)(B). See paragraph (e)(5)(v) of this section for the requirements of a withholding statement associated with the qualified intermediary withholding certificate. A nonqualified intermediary shall provide a nonqualified intermediary withholding certificate for reportable amounts received by the nonqualified intermediary.Temporary regulations in TD 9658 provide guidance coordinating and conforming the due diligence, information reporting, and tax withholding rules under chapter 3 and 61 and section 3406 with the requirements under chapter 4. See also § 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 § 1.1441–1(b)(3)(iv). The second exception relates to certain payments made by a stock transfer agent with respect to a redemption of PFIC stock as described in § 1.6045–1(c)(3)(xiv). See paragraph (e)(3)(vi) of this section for the definition of reportable amount.While many of these comments reiterate comments that were received and considered prior to the publication of the final regulations or suggest changes to the final regulations that are outside the scope of these temporary regulations, a number of comments proposed changes to the final regulations that the Treasury Department and the IRS believe warrant inclusion in these temporary regulations. In addition, these temporary regulations clarify that the presumption rule under § 1.6049–5(d)(3)(ii), applicable to payments not subject to withholding under chapter 3, does not apply to amounts that are withholdable payments under chapter 4, consistent with the presumption rule under chapter 4. These temporary regulations under § 1.6049–5(d)(3)(iii) remove bank deposit interest from the existing rule to make it consistent with the chapter 4 presumption rule applicable to withholdable payments (which includes such interest) made to a foreign intermediary or flow-through entity. To use the alternative procedure of this paragraph (e)(3)(iv)(D), the nonqualified intermediary must inform the withholding agent on a statement associated with its nonqualified intermediary withholding certificate that it is using the procedure under this paragraph (e)(3)(iv)(D) and the withholding agent must agree to the procedure.The Treasury Department and the IRS will accept comments and engage with interested stakeholders in connection with finalizing these temporary regulations. The chapter 61 regulations also provide a presumption rule for payments of certain U. source short-term interest or OID and bank deposit interest paid to a foreign intermediary or flow-through entity that treats the payment as made to a U. See § 1.1471–3(f)(5) (treating the payment as made to a nonparticipating FFI). See § 1.6049–5(e)(1)(i) through (e)(1)(ii) and (e)(2) through (e)(4) of the final regulations. If the requirements of the alternative procedure are met, a withholding agent, including the nonqualified intermediary using the procedures, can treat the payment as reliably associated with documentation and, therefore, the presumption rules of paragraph (b)(3) of this section and §§ 1.1441–5(d) and (e)(6) and 1.6049–5(d) do not apply even though information allocating the payment to each payee has not been received prior to the payment.

All published rulings apply retroactively unless otherwise indicated. insurance broker will not comply with its obligations to withhold under sections 14. The rules under § 1.1471–3(d)(4) and (e)(3) apply to determine the circumstances under which a withholding agent may treat a payment made to a disregarded entity owned by an FFI as made to a payee that is a participating FFI or registered deemed-compliant FFI, and not as a payment made to a payee that is a nonparticipating FFI. ( A withholding agent that receives documentation from a participating FFI or registered deemed-compliant FFI that is not the payee must apply the requirements of paragraph (e)(4)(vi)(A) of this section, except that the withholding agent may rely upon the chapter 4 status provided by the participating FFI or registered deemed-compliant FFI in the withholding statement unless the withholding agent has information that conflicts with the chapter 4 status provided. For further guidance, see § 1.1471–3(e)(4)(viii)(A). Paragraph (f)(3) of this section provides the presumption rules to determine a payee’s U. Paragraph (f)(5) of this section provides the presumption rules with respect to an intermediary or flow-through entity. Paragraph (f)(7) of this section provides the presumption rules that apply to a payment made to joint payees. (7) If a withholding agent makes a payment to joint payees and cannot reliably associate the payment with valid documentation from each payee but all of the joint payees appear to be individuals, then the payment is presumed made to an unidentified U. However, if one of the joint payees provides a Form W–9 in accordance with the procedures described in §§ 31.3406(d)–1 through 31.3406(d)-5, the payment shall be treated as made to that payee. Fourth, the requirements for payors to maintain documentary evidence under § 1.6049–5(c)(1) of the final regulations are also modified by these temporary regulations to be consistent with the requirements for maintaining documentary evidence applicable to withholding agents in the chapter 4 regulations. A withholding statement may otherwise be transmitted by a nonqualified intermediary via e-mail or facsimile to a withholding agent under the requirements specified in paragraph (e)(4)(iv)(C) of this section (substituting the term withholding statement for the term Form W–8 or the term document, as applicable). See paragraphs (c)(2), (20), and (21) of this section for the definitions of foreign person, U. For this purpose, a type of income is determined by the types of income required to be reported on Forms 1042–S or 1099, as appropriate.The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. Chapter 4 grants the Secretary of the Treasury broad regulatory authority to prescribe rules and procedures relating to the diligence, reporting and withholding obligations under FATCA. Consistent with the provision in the chapter 4 regulations that permits reliance on documentary evidence without a definitive renewal period for payments made with respect to offshore obligations, these temporary regulations provide the same treatment for documentation permitted to be relied upon by a payor under § 1.6049–5(c)(4). person for payments of amounts subject to withholding and is a U. The chapter 4 regulations provide that withholdable payments made to U. These temporary regulations modify the presumption rule with respect to withholdable payments made to joint owners of a joint account consistent with the presumption rule described in § 1.1471–3(f)(7). This example illustrates the principles of paragraph (e)(3)(iv)(C) of this section. NQI provides WA with a valid intermediary withholding certificate under paragraph (e)(3)(iii) of this section that includes NQI’s certification of its status for chapter 4 purposes as a participating FFI.These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period. The Treasury Department and the IRS exercised this authority by publishing final regulations that provide specific operational guidelines for implementing FATCA in a manner consistent with its policy objectives. Thus, a payor may rely upon documentation under § 1.6049–5(c)(4) if the payor does not have for the payee any of the indicia of U. status described in § 1.1471–3(c)(6)(ii)(C)() until the payor knows or has reason to know of a change in circumstances. Thus, in the case of an amount that is a withholdable payment made to a joint account, the payment is presumed made to a foreign payee that is a nonparticipating FFI if any joint payee does not appear to be an individual. For further guidance, see § 1.1441–1T(b)(2)(iv)(E). NQI provides a withholding statement on which NQI allocates 20% of the payment to a chapter 4 withholding rate pool of recalcitrant account holders of NQI for purposes of chapter 4 and allocates 80% of the payment equally to A and B, individuals that are account holders of NQI.This revenue procedure provides a determination by the Commissioner under § 1.1502–75(b) that if an affiliated group satisfies the conditions described in the revenue procedure, a subsidiary that actually failed to file a Form 1122 is treated as if it filed such form and thus joined in the making of a consolidated return by the affiliated group. (A) through (A)() of this section associated with the entity, the withholding agent may treat the entity as a foreign person only if the withholding agent obtains a withholding certificate for the entity and one form of documentary evidence, described in paragraph (c)(5) of this section, that establishes the entity’s status as a foreign person (such as a certificate of incorporation). Second, the use of documentary evidence is further expanded as a result of changes made by these temporary regulations to the description of payment outside the United States under § 1.6049–5(e), which eliminates the requirement for payors to monitor whether certain U. connections are present as a condition for using documentary evidence (see section III. The withholding statement may be provided in any manner the nonqualified intermediary and the withholding agent mutually agree, including electronically. In the case of a foreign person, the statement must indicate whether the foreign person is a beneficial owner or an intermediary, flow-through entity, U. branch, or territory financial institution described in paragraph (b)(2)(iv) of this section and include the type of recipient, based on recipient codes applicable for chapter 3 purposes used for filing Forms 1042–S, if the foreign person is a recipient as defined in § 1.1461–1(c)(1)(ii).Final regulations provide rules under section 6055 of the Code, enacted by section 1502 of the Affordable Care Act, relating to information reporting by persons that provide minimum essential coverage to individuals. () of this section associated with the entity and the withholding agent is making a payment with respect to an offshore obligation, the withholding agent may also treat the entity as a foreign person if the withholding agent obtains a withholding certificate for the entity and the withholding agent treats the entity as foreign for purposes of foreign tax reporting. (1) A withholding agent that cannot, prior to the payment, reliably associate (within the meaning of paragraph (c) of this section) the payment with valid documentation may rely on the presumptions of this paragraph (f) to determine the status of the payee (or other person receiving the payment) as a U. or foreign person and such person’s other relevant characteristics (for example, as a nonparticipating FFI). F of this preamble for a description of changes to § 1.6049–5(e)). For further guidance, see § 1.1441–1T(b)(3)(iv)(A). If the withholding statement is provided electronically as part of a system established by the withholding agent or nonqualified intermediary to provide the statement, however, there must be sufficient safeguards to ensure that the information received by the withholding agent is the information sent by the nonqualified intermediary and all occasions of user access that result in the submission or modification of the withholding statement information must be recorded. () The withholding statement must allocate each payment, by income type, to every payee required to be reported on the withholding statement for whom documentation has been provided (including U. exempt recipients except as provided in paragraph (e)(3)(iv)(A) of this section).

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