Regulations Relating to Withholding and Reporting Tax on Certain U.S. Source Income Paid to Foreign Persons

Published date02 January 2020
Citation85 FR 192
Record Number2019-27979
SectionRules and Regulations
CourtInternal Revenue Service
Federal Register, Volume 85 Issue 1 (Thursday, January 2, 2020)
[Federal Register Volume 85, Number 1 (Thursday, January 2, 2020)]
                [Rules and Regulations]
                [Pages 192-206]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2019-27979]
                [[Page 191]]
                Vol. 85
                Thursday,
                No. 1
                January 2, 2020
                Part III Department of the Treasury-----------------------------------------------------------------------Internal Revenue Service-----------------------------------------------------------------------26 CFR Part 1Regulations Relating to Withholding and Reporting Tax on Certain U.S.
                Source Income Paid to Foreign Persons; Final Rule
                Federal Register / Vol. 85, No. 1 / Thursday, January 2, 2020 / Rules
                and Regulations
                [[Page 192]]
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                DEPARTMENT OF THE TREASURY
                Internal Revenue Service
                26 CFR Part 1
                [TD 9890]
                RIN 1545-BN73, 1545-BN74, 1545-B023, 1545-BN79, 1545-BO30
                Regulations Relating to Withholding and Reporting Tax on Certain
                U.S. Source Income Paid to Foreign Persons
                AGENCY: Internal Revenue Service (IRS), Treasury.
                ACTION: Final regulations; removal of temporary regulations.
                -----------------------------------------------------------------------
                SUMMARY: This document contains final regulations that provide guidance
                on certain due diligence and reporting rules applicable to persons
                making certain U.S. source payments to foreign persons, and guidance on
                certain aspects of reporting by foreign financial institutions on U.S.
                accounts. The final regulations affect persons making certain U.S.-
                related payments to certain foreign persons and foreign financial
                institutions reporting certain U.S. accounts.
                DATES:
                 Effective date. These regulations are effective on January 2, 2020.
                 Applicability date. For dates of applicability, see Sec. Sec.
                1.1441-1(f)(1) and (3), 1.1441-2(f)(2), 1.1441-6(i)(1) and (3), 1.1441-
                7(g), 1.1471-4(j)(2), and 1.6049-6(e).
                FOR FURTHER INFORMATION CONTACT: John Sweeney at (202) 317-6942 (not a
                toll free number).
                SUPPLEMENTARY INFORMATION:
                Background
                 On January 6, 2017, the Department of the Treasury (Treasury
                Department) and the IRS published final and temporary regulations (the
                chapter 3 temporary regulations) under chapter 3 of subtitle A of the
                Internal Revenue Code (the Code) and chapter 61 of subtitle F of the
                Code (TD 9808) in the Federal Register (82 FR 2046, as corrected at 82
                FR 29719). On the same date, the Treasury Department and the IRS
                published a notice of proposed rulemaking (REG-134247-16) in the
                Federal Register (82 FR 1645, as corrected at 82 FR 43314 and 82 FR
                49549) cross-referencing the temporary regulations (the chapter 3
                proposed regulations). Also on January 6, 2017, the Treasury Department
                and the IRS published final and temporary regulations (the chapter 4
                temporary regulations) under chapter 4 of subtitle A of the Code (TD
                9809) in the Federal Register (82 FR 2124, as corrected at 82 FR
                27928). On the same date, the Treasury Department and the IRS published
                a notice of proposed rulemaking (REG-103477-14) in the Federal Register
                (82 FR 1629, as corrected at 82 FR 43314) that cross-referenced the
                temporary regulations and included other proposed regulations.\1\ The
                proposed regulations cross-referencing the chapter 4 temporary
                regulations (redesignated as REG-132857-17) are referred to in this
                preamble as the chapter 4 proposed regulations.
                ---------------------------------------------------------------------------
                 \1\ The notice of proposed rulemaking also included proposed
                regulations under chapter 4 relating to certain requirements for
                sponsoring entities, which regulations were finalized on March 25,
                2019, in a Treasury Decision (TD 9852) published in the Federal
                Register (84 FR 10976).
                ---------------------------------------------------------------------------
                 On September 25, 2017, the Treasury Department and the IRS issued
                Notice 2017-46, 2017-41 I.R.B. 275, and on March 5, 2018, the Treasury
                Department and the IRS issued Notice 2018-20, 2018-12 I.R.B. 444. These
                notices provide that the Treasury Department and the IRS intend to
                amend certain provisions in the chapter 3 temporary regulations to
                narrow the scope of certain documentation requirements and provide a
                phase-in for implementation of those rules in response to comments.
                Notices 2017-46 and 2018-20 provide that taxpayers may rely on the
                guidance provided in these notices until they are incorporated into
                final regulations. These notices are further described in Part I of the
                Summary of Comments and Explanation of Revisions section of this
                preamble.
                 On December 18, 2018, the Treasury Department and the IRS published
                a notice of proposed rulemaking (REG-132881-17) in the Federal Register
                (83 FR 64757) that proposed amendments to the regulations under
                chapters 3 and 4 to reduce burden under those regulations (the 2018
                proposed regulations). The 2018 proposed regulations respond to
                Executive Orders 13777 and 13789, which instructed the Secretary of the
                Treasury to reduce regulatory burdens on taxpayers. The 2018 proposed
                regulations proposed modifications to certain provisions that are also
                in the chapter 3 temporary regulations and the chapter 4 temporary
                regulations. Certain of the proposed modifications relate to the
                requirement that a withholding certificate or treaty statement provided
                with documentary evidence by a treaty claimant that is an entity
                identify the applicable limitation on benefits provision that the
                entity meets in order to be eligible for treaty benefits. See
                Sec. Sec. 1.1441-1(e)(4)(ii)(A)(2) and 1.1441-6(c)(5)(i) of the 2018
                proposed regulations. Other proposed modifications relate to the
                documentation that a withholding agent may rely on to treat an address
                provided by an account holder that is subject to a hold mail
                instruction as a permanent residence address for purposes of an account
                holder's claim of foreign status or benefits under an income tax
                treaty. See Sec. Sec. 1.1441-1(c)(38) and 1.1471-1(b)(62) and (99) of
                the 2018 proposed regulations. As discussed further in Parts V and VI
                of the Summary of Comments and Explanation of Revisions section of this
                preamble, these final regulations incorporate the modifications
                included in the 2018 proposed regulations with respect to those
                requirements. The Treasury Department and the IRS intend to finalize
                the remaining provisions of the 2018 proposed regulations in separate
                guidance at a future date.
                 No public hearing was requested or held with respect to the chapter
                3 proposed regulations or the chapter 4 proposed regulations, though
                written comments were received and are available at www.regulations.gov
                or upon request. A public hearing was held with respect to the 2018
                proposed regulations, but the topics raised in the hearing do not
                relate to the provisions in the 2018 proposed regulations that are
                finalized in this Treasury Decision. Written comments on the 2018
                proposed regulations were received and are available at
                www.regulations.gov or upon request. After consideration of the
                comments received, the chapter 3 proposed regulations and the chapter 4
                proposed regulations are adopted, with modifications (including the
                modifications generally described in the preceding paragraph to take
                into account certain provisions in the 2018 proposed regulations), as
                final regulations in this Treasury Decision, and the corresponding
                temporary regulations are removed.
                 This document also includes a limited number of technical
                corrections and conforming changes to final regulations under chapters
                3, 4, and 61.
                Summary of Comments and Explanation of Revisions
                I. Requirement for a Withholding Agent To Obtain a Foreign Taxpayer
                Identification Number and Date of Birth
                 Section 1.1441-1T(e)(2)(ii)(B) provides that, beginning January 1,
                2017, a beneficial owner withholding certificate provided to document
                an account that is maintained at a U.S. branch or office of a financial
                institution is required to contain the account holder's foreign
                taxpayer identification
                [[Page 193]]
                number (foreign TIN) and, in the case of an individual account holder,
                the date of birth, in order for the withholding agent to treat such
                withholding certificate as valid. A withholding certificate that does
                not contain the account holder's date of birth will not be invalid if
                the withholding agent has the account holder's date of birth in its
                files. If an account holder does not have a foreign TIN, the account
                holder is required to provide a reasonable explanation for its absence.
                A foreign TIN obtained by a withholding agent is required to be
                reported on Form 1042-S (Foreign Person's U.S. Source Income Subject to
                Withholding).
                 After publication of the chapter 3 temporary regulations, the
                Treasury Department and the IRS received comments about the difficulty
                of obtaining foreign TINs and dates of birth from account holders by
                January 1, 2017. Several comments requested a delay of one or two years
                before the foreign TIN and date of birth requirements apply. One
                comment requested a one-year extension of the validity period for
                withholding certificates that are scheduled to expire on or before
                December 31, 2017 (unless there is a change in circumstance). Several
                comments noted that the requirement to obtain additional information
                from customers who had recently provided a withholding certificate to a
                withholding agent may damage the withholding agent's customer
                relationships, and suggested transitional rules to ease the
                redocumentation burden. These comments suggested various phase-in rules
                that would allow a withholding agent to treat a withholding certificate
                provided before the foreign TIN and date of birth requirements apply
                that would otherwise be valid as continuing to be valid until the
                withholding certificate otherwise expires. For example, for withholding
                certificates that have a three-year validity period, comments suggested
                that a withholding agent be required to obtain a foreign TIN and date
                of birth at the end of the three-year period. For withholding
                certificates that are valid indefinitely, comments suggested that
                withholding agents be allowed two or three years to collect new
                withholding certificates with a foreign TIN and date of birth.
                 Comments requested that a withholding certificate not be treated as
                invalid if the withholding agent obtains an account holder's foreign
                TIN and date of birth in any manner (for example, orally, in a written
                statement, or otherwise in account files). Comments also requested
                clarifications of terms used in Sec. 1.1441-1T(e)(2)(ii)(B).
                Additionally, comments requested clarification of what constitutes a
                reasonable explanation for the absence of a foreign TIN.
                 Two comments requested that a withholding agent's failure to obtain
                an account holder's foreign TIN or date of birth not cause a
                withholding agent to treat a withholding certificate as invalid and
                withhold on payments made to the account holder. One comment suggested
                that an information reporting penalty apply instead. Another comment
                requested that the IRS waive penalties for a failure to include a
                foreign TIN on Form 1042-S for 2017 and 2018 under sections 6721 and
                6722 (relating to penalties for failing to file correct information
                returns or to furnish correct payee statements, respectively).
                 In response to these comments, the Treasury Department and the IRS
                issued Notice 2017-46, which provides that the Treasury Department and
                the IRS intend to amend Sec. 1.1441-1T(e)(2)(ii)(B) to generally
                narrow its application and provide additional time for a withholding
                agent to collect a foreign TIN (or a reasonable explanation for the
                absence of a foreign TIN) and date of birth from an account holder.
                Notice 2017-46 provides a one-year delay in the implementation of the
                foreign TIN and date of birth requirements for payments made on or
                after January 1, 2018 (rather than payments made on or after January 1,
                2017). Notice 2017-46 also provides transitional rules that phase in
                the requirement to obtain a foreign TIN for withholding certificates
                provided before January 1, 2018. These transitional rules generally
                allow a withholding agent to continue to treat an otherwise valid
                withholding certificate as valid even if it does not contain a foreign
                TIN (or a reasonable explanation for the absence of a foreign TIN)
                until January 1, 2020 (provided there is no change in circumstance and
                the withholding certificate does not expire). For payments made on or
                after January 1, 2020, the transitional rules permit a withholding
                agent to treat a withholding certificate obtained before January 1,
                2018, as valid if the withholding agent obtains the account holder's
                foreign TIN on a written statement or if the withholding agent
                otherwise has the account holder's foreign TIN in the withholding
                agent's files (provided there is no change in circumstance that
                requires a revised withholding certificate and the withholding
                certificate does not expire). These transitional rules were intended to
                align with the transitional period (the end of 2019, as also provided
                in Notice 2017-46) permitted for reporting Model 1 FFIs to obtain and
                report required U.S. TINs for their preexisting accounts that are U.S.
                reportable accounts.
                 Notice 2017-46 also includes exceptions for an account holder that
                is (i) resident in a jurisdiction identified by the IRS on a list of
                jurisdictions that do not issue foreign TINs, (ii) a government,
                international organization, foreign central bank, or resident of a U.S.
                territory, or (iii) resident in a jurisdiction with which the United
                States does not have an agreement relating to the exchange of tax
                information in force. In addition, the notice limits the requirement to
                obtain a foreign TIN and date of birth to payments of U.S. source
                income reportable on Form 1042-S.
                 Consistent with Sec. 1.1441-1T(e)(2)(ii)(B), Notice 2017-46
                provides that the foreign TIN and date of birth requirements apply for
                purposes of determining the validity of a withholding certificate.
                These final regulations do not adopt the comment suggesting that an
                information reporting penalty that is imposed on the withholding agent
                should apply rather than treating the withholding certificate as
                invalid and thereby requiring that withholding at the full 30-percent
                rate be applied on payments to the account holder that are reportable
                on Form 1042-S. The Treasury Department and the IRS determined that it
                is more appropriate to apply the consequences of noncompliance to the
                account holder that remains insufficiently documented rather than
                imposing a penalty on the withholding agent. Further, the amount that
                may be assessed based on a penalty for incorrect information reporting
                is in general small compared to the withholding that would result from
                an invalid withholding certificate and therefore is unlikely to be a
                sufficient incentive for an account holder to provide the missing
                information in many cases.
                 After the publication of Notice 2017-46, some jurisdictions with
                laws that restrict the collection or disclosure of foreign TINs of
                their residents requested that their residents not be required to
                provide foreign TINs to withholding agents for purposes of Sec.
                1.1441-1T(e)(2)(ii)(B). In response to those requests, the Treasury
                Department and the IRS issued Notice 2018-20, which provides that the
                IRS intends to expand its list of jurisdictions that do not issue
                foreign TINs to their residents to include jurisdictions that request
                to be included on the list, even if the jurisdiction issues foreign
                TINs to its residents. The list of jurisdictions for which a
                withholding agent is not required to collect a foreign TIN of a
                resident in such jurisdiction is available
                [[Page 194]]
                at https://www.irs.gov/businesses/corporations/list-of-jurisdictions-that-do-not-issue-foreign-tins (or at any successor website or as
                provided in subsequent published guidance).
                 These final regulations incorporate the chapter 3 temporary
                regulations and the provisions in Notice 2017-46 and Notice 2018-20
                with minor changes. Comments received after the publication of those
                notices are described in the following paragraphs.
                 Several comments requested that withholding agents be permitted to
                obtain a foreign TIN through other means (such as orally, on a
                statement, or from the withholding agent's files) when it is not
                provided on a withholding certificate signed on or after January 1,
                2018 (rather than only withholding certificates signed before January
                1, 2018, as provided in Notice 2017-46). One of those comments noted
                that a foreign TIN in a withholding agent's files may have been
                collected orally. While withholding agents may rely on foreign TINs in
                their files for withholding certificates signed before January 1, 2018
                without investigating whether they were obtained orally, the Treasury
                Department and the IRS have determined that this allowance should be
                limited to the transition period because an oral statement does not
                provide adequate assurance of accuracy and may raise recordkeeping
                concerns. However, to provide flexibility for withholding agents, the
                Treasury Department and the IRS have determined that a separate written
                statement is an acceptable way for a withholding agent to collect an
                account holder's foreign TIN, provided that the account holder
                represents its foreign TIN in a signed written statement that
                acknowledges that such statement is a part of the withholding
                certificate and the withholding agent associates the statement with the
                account holder's withholding certificate. While the Treasury Department
                and the IRS expect that withholding agents will generally obtain
                foreign TINs on withholding certificates, this allowance permits
                withholding agents to cure incomplete withholding certificates by
                obtaining the foreign TIN on a separate statement rather than having to
                obtain a new withholding certificate. The requirement that the signed
                written statement include an acknowledgment that such statement is part
                of the withholding certificate ensures that the statement is subject to
                penalties of perjury to the same extent as any other information
                provided on the withholding certificate.
                 A comment requested an exception to the foreign TIN requirement for
                ``onshore accounts that would, by analogy, qualify as excluded
                financial accounts.'' These final regulations define the term
                ``account'' for purposes of Sec. 1.1441-1(e)(2)(ii)(B) by cross-
                referencing the definition of a financial account under Sec. 1.1471-
                5(b), thereby incorporating the exceptions provided in that paragraph.
                Therefore, the Treasury Department and the IRS do not believe that
                additional changes are needed to the definition.
                 The same comment requested the elimination of the foreign TIN
                requirement for a beneficial owner withholding certificate of a foreign
                financial institution (FFI) because jurisdictions with a reciprocal
                Model 1 IGA may not need the foreign TINs of financial institutions.
                This comment is not adopted because there is no exception for an
                account held by a financial institution in the Model 1 IGA jurisdiction
                in the definition of the term ``FATCA partner reportable account''
                (which defines accounts with respect to which the United States
                provides information to the partner jurisdiction).
                 These final regulations clarify the application of the exception to
                the requirement that a withholding certificate include a foreign TIN
                for an account holder that is a government, international organization,
                foreign central bank, or resident of a U.S. territory by adding an
                example specifying that an account holder may claim foreign government
                status either under section 892 or otherwise when the withholding agent
                may rely upon a claim of exemption either under Sec. 1.1441-8
                (generally on an IRS Form W-8-EXP, Certificate of Foreign Government or
                Other Foreign Organization for United States Tax Withholding and
                Reporting) or under Sec. 1.1441-7 (generally on an IRS Form W-8BEN-E,
                Certificate of Status of Beneficial Owner for United States Tax
                Withholding and Reporting (Entities)).
                 These final regulations also clarify the standard of knowledge
                applicable to a date of birth by providing that a withholding agent may
                rely on a date of birth provided on a withholding certificate unless it
                knows or has reason to know that the date of birth is incorrect. This
                is the same standard of knowledge applicable to foreign TINs. Finally,
                these final regulations incorporate the allowance in the instructions
                for Form W-8 that a reasonable explanation may be provided on a
                separate attached statement associated with the withholding
                certificate.
                II. Nonqualified Intermediary Withholding Statements
                 Under the chapter 3 regulations, a nonqualified intermediary is
                generally required to provide to a withholding agent a Form W-8IMY
                (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or
                Certain U.S. Branches for United States Tax Withholding and Reporting),
                a withholding statement, and the documentation for each payee for which
                the intermediary receives a payment. A withholding statement must
                allocate the payment to each payee and provide each payee's name,
                address, TIN (if any), type of documentation provided, and type of
                recipient (applying the recipient category codes listed on Form 1042-
                S). Because this information may also be included on a payee's
                documentation that is associated with the withholding statement, the
                chapter 3 temporary regulations provide that a nonqualified
                intermediary may provide a withholding statement that does not include
                all of the information described in the preceding sentence, provided
                that this information can be found on withholding certificates
                associated with the nonqualified intermediary withholding statement and
                certain other requirements are met. One of those requirements is that
                the nonqualified intermediary represent to the withholding agent that
                the information on the withholding certificates associated with the
                withholding statement is not inconsistent with any other account
                information the nonqualified intermediary has for purposes of
                determining the withholding rate applicable to each payee.
                 A comment requested clarification of the standard of knowledge
                applicable to a nonqualified intermediary for purposes of the
                representation that the information on the payees' withholding
                certificates is not inconsistent with any other account information the
                nonqualified intermediary has for purposes of determining the
                withholding rate applicable to each payee. These final regulations
                clarify that the general standards of knowledge that are applicable to
                withholding agents apply to a nonqualified intermediary for reliance on
                payee documentation for purposes of making the representation described
                in the preceding sentence.
                 As noted in the first paragraph of this Part II, a nonqualified
                intermediary must provide on its withholding statement the recipient
                category code for each payee. A comment noted that nonqualified
                intermediaries generally
                [[Page 195]]
                do not have familiarity with determining the appropriate chapter 4
                recipient code for Form 1042-S reporting purposes because nonqualified
                intermediaries generally do not file Form 1042-S and the chapter 4
                recipient categories listed on Form 1042-S differ from the chapter 4
                status categories listed on a Form W-8 that may be provided by a payee.
                Because a withholding agent making a payment to the nonqualified
                intermediary is required to file Form 1042-S, the comment suggested
                that the withholding agent is better able to determine the appropriate
                chapter 4 recipient code than a nonqualified intermediary. The comment
                recommended that the requirement for chapter 4 recipient codes be
                eliminated for certain withholding statements or that the IRS provide
                information on the relationship between chapter 4 recipient status on
                Forms W-8 and Form 1042-S. The Treasury Department and the IRS have
                determined that it is important to continue to obtain chapter 4
                recipient codes but agree with the comment that withholding agents may
                be better able to determine the appropriate chapter 4 recipient code
                than a nonqualified intermediary. In response to the comment, these
                final regulations provide that a nonqualified intermediary may provide
                a withholding statement that does not include a chapter 4 recipient
                code for one or more payees if the withholding agent is able to
                determine the appropriate recipient code based on other information
                included on, or associated with, the withholding statement or that is
                otherwise contained in the withholding agent's records with respect to
                the payee. See Sec. 1.1441-1(e)(3)(iv)(C)(3)(ii).
                 The provisions described in this Part II also apply to nonqualified
                intermediary withholding statements associated with withholdable
                payments under chapter 4 by cross-reference to Sec. 1.1441-
                1(e)(3)(iv)(C)(3). See Sec. 1.1471-3(c)(3)(iii)(B)(5).
                III. Electronic Signatures for Purposes of Chapters 3 and 4
                 Section 1.1441-1T(e)(4)(i)(B) permits a withholding agent to accept
                an electronically signed withholding certificate if the withholding
                certificate reasonably demonstrates to the withholding agent that it
                has been electronically signed by the recipient identified on the form
                or a person authorized by the recipient to sign the form. The
                regulation includes an example that illustrates when a withholding
                agent may treat a withholding certificate as validly signed based on a
                review of a withholding certificate that reasonably demonstrates that
                it has been electronically signed (as opposed to appearing to have a
                typed name as a signature). This provision applies in addition to the
                allowance provided under Sec. 1.1441-1(e)(4)(iv) for a withholding
                agent to establish its own system for a beneficial owner or payee to
                electronically furnish to the withholding agent (and sign
                electronically) a Form W-8. A comment requested that the example be
                removed because it could be interpreted as providing a minimum standard
                for accepting an electronically signed withholding certificate and may
                become inconsistent with future changes in technology for providing
                electronic signatures. Two comments also requested that the final
                regulations allow reliance on an electronically signed Form W-9
                (Request for Taxpayer Identification Number and Certification), and one
                comment requested that a withholding agent be permitted to rely on a
                withholding certificate collected through an electronic system
                maintained by a nonqualified intermediary or flow-through entity if the
                nonqualified intermediary or flow-through entity provides a written
                statement confirming that the electronic system meets the requirements
                of Sec. 1.1441-1(e)(4)(iv), as described in Notice 2016-08, 2016-6
                I.R.B. 304.
                 The Treasury Department and the IRS are of the view that a clear
                illustration of when a withholding agent can readily determine that a
                withholding certificate is electronically signed under current
                technology that is frequently used in the industry is warranted as it
                demonstrates the difference between an acceptable electronic signature
                in contrast to merely having a printed name or unrecognizable notation
                in place of a name. Further, Sec. 1.1441-1T(e)(4)(i)(B) clearly states
                that this illustration is simply an example of one set of facts that
                satisfies the rule. Thus, this example is retained in these final
                regulations. To provide additional flexibility, these final regulations
                permit a withholding agent to consider, in addition to the withholding
                certificate itself, other documentation or information the withholding
                agent has that supports that a withholding certificate was
                electronically signed, provided that the withholding agent does not
                have actual knowledge that the documentation or information is
                incorrect. These final regulations do not add a specific allowance for
                Form W-9 in Sec. 1.1441-1(e)(4)(i)(B) because rules regarding reliance
                on an electronically signed Form W-9 are provided in separate guidance,
                such as the Requestor Instructions to Form W-9. Additionally, in light
                of the general rule in Sec. 1.1441-1(e)(4) that provides that the
                rules in such paragraph are applicable to Form W-8, Form 8233, and
                certain documentary evidence, the specific exclusion in Sec. 1.1441-
                1T(e)(4)(i)(B) for Form W-9 is unnecessary and therefore not included
                in these final regulations.
                 The provisions described in this Part III also apply to chapter 4
                by cross-reference to Sec. 1.1441-1(e)(4)(i)(B). See Sec. 1.1471-
                3(c)(3)(i).
                IV. Withholding Certificates and Withholding Statements Furnished
                Through a Third Party Repository for Purposes of Chapters 3 and 4
                 Section 1.1441-1T(e)(4)(iv)(E) provides the circumstances under
                which a withholding certificate (and in certain circumstances a
                withholding statement) received electronically by a withholding agent
                from a third party repository will be considered furnished to the
                withholding agent by the person whose name is on the certificate. These
                circumstances include that a withholding agent be able to associate a
                withholding certificate received from a third party repository with a
                specific request for the withholding certificate and a specific
                authorization from the person (or agent of the person) providing the
                certificate with respect to each specific payment or each specific
                obligation maintained by the withholding agent. A comment requested
                clarification on whether a specific request and specific authorization
                is required each time a withholding agent makes a payment. The
                standards for requiring a separate request and separate authorization
                to obtain a withholding certificate from a third party repository were
                not intended to deviate from the standards for when a withholding agent
                may continue to rely on a withholding certificate furnished directly by
                the person providing the withholding certificate (or such person's
                agent). Therefore, these final regulations clarify that a separate
                request and separate authorization to obtain a withholding certificate
                from a third party repository is not required for each payment made by
                a withholding agent when the withholding agent is otherwise permitted
                to rely on the withholding certificate on an obligation-by-obligation
                basis or as otherwise permitted under Sec. 1.1441-1(e)(4)(ix).
                 Other comments requested that Sec. 1.1441-1T(e)(4)(iv)(E)
                specifically provide that a withholding agent may rely on a Form W-9
                obtained from a third party repository. However, the
                [[Page 196]]
                validity requirements for reliance on a Form W-9 are contained in the
                section 3406 regulations (and related guidance under that section) and
                are not generally amended solely for purposes of a withholding agent's
                reliance in the case of a payment subject to withholding under section
                1441. As a result, these final regulations are not amended to add an
                allowance for a withholding agent's reliance on a Form W-9 obtained
                from a third party repository, and taxpayers should continue to refer
                to the other guidance applicable to reliance on a Form W-9.
                Additionally, the specific exclusion in Sec. 1.1441-1T(e)(4)(iv)(E)
                for Form W-9 is not included in these final regulations for the same
                reason that the exclusion for Form W-9 is not included in Sec. 1.1441-
                1(e)(4)(i)(B), as described in Part III of this Summary of Comments and
                Explanation of Revisions of this preamble.
                 As the final chapter 4 regulations adopted by this Treasury
                Decision cross reference the final chapter 3 regulations for when a
                withholding agent may treat a withholding certificate received from a
                third party repository as provided by a payee, the above-described
                modifications to Sec. 1.1441-1T(e)(4)(iv)(E) also apply to a
                withholding certificate or withholding statement relied upon for
                chapter 4 purposes.
                V. Limitation on Benefits for Treaty Claims on Withholding Certificates
                and Treaty Statements Provided With Documentary Evidence for Purposes
                of Chapter 3
                 Under the regulations under chapter 3, in order for a withholding
                agent to apply a reduced rate of withholding based on an entity's claim
                for benefits under a tax treaty, the withholding agent must obtain
                either (i) a withholding certificate that includes a treaty claim on
                the certificate, or (ii) documentary evidence and a separate treaty
                statement. Under the chapter 3 temporary regulations, a treaty
                statement must, among other things, identify the specific limitation on
                benefits (LOB) provision of the applicable treaty on which the
                beneficial owner relies to claim the treaty benefit. Section 1.1441-
                6(b)(1) provides that generally, 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 the withholding agent can reliably
                associate the payment with a beneficial owner withholding certificate,
                or, in the case of a payment made outside the United States with
                respect to an offshore obligation, documentary evidence and a treaty
                statement. This general standard of knowledge is modified in two
                situations in the chapter 3 temporary regulations. First, Sec. 1.1441-
                6T(b)(1)(ii) provides that a withholding agent's reason to know that a
                beneficial owner's claim to a reduced rate of withholding under an
                income tax treaty is unreliable or incorrect includes when the
                beneficial owner claims benefits under an income tax treaty that does
                not exist or is not in force, and that a withholding agent may
                determine whether a tax treaty exists or in force by checking a list
                maintained on the IRS website. Second, Sec. 1.1441-6T(b)(1)(i)
                provides that a withholding agent may rely on a beneficial owner's
                claim regarding its reliance on a specific LOB provision absent actual
                knowledge that such claim is unreliable or incorrect.
                 The chapter 3 temporary regulations also add a validity period of
                three years for a treaty statement provided with documentary evidence
                in order to provide parity with the validity period for a withholding
                certificate containing a treaty claim, enhance the reliability and
                increase the accuracy of the claims, and help ensure that information
                is updated when ownership thresholds or activity requirements in a
                particular treaty have changed. The chapter 3 temporary regulations
                provide a transitional rule under which accounts opened and documented
                with documentary evidence and a treaty statement prior to January 6,
                2017 (preexisting accounts) will expire on January 1, 2019.
                 A comment requested that the standard of knowledge applicable to a
                LOB provision should be limited to determining whether a tax treaty
                exists and is in force. The Treasury Department and IRS are of the view
                that such limitation would be inappropriate because a determination of
                whether a treaty exists and is in force is a general rule applicable to
                a treaty claim and not specifically related to a limitation on benefits
                provision. Moreover, the actual knowledge standard applicable to a
                limitation on benefits provision is already sufficiently limited as it
                should not generally require a withholding agent to obtain facts it
                does not normally request or render a conclusion it could not readily
                make from the information it already has otherwise collected. Thus,
                this comment is not adopted, and these final regulations adopt the
                standard of knowledge in the chapter 3 temporary regulations for
                reliance on a LOB provision associated with a treaty claim made on a
                withholding certificate without modification. See Sec. 1.1441-
                6(b)(1)(i) and (ii).
                 Comments also noted the burden of complying with the new LOB
                requirement for treaty statements associated with documentary evidence,
                including difficulties in obtaining new treaty statements by the
                January 1, 2019, expiration date given the large number of account
                holders providing treaty statements before January 6, 2017. The
                comments requested an additional one-year period for withholding agents
                to obtain new treaty statements with LOB representations to replace
                treaty statements obtained before January 6, 2017. A comment also
                requested a further explanation of the reasoning for the three-year
                validity period for a treaty statement.
                 In response to these comments, the 2018 proposed regulations
                include revisions to the LOB requirement and validity period for treaty
                statements in the chapter 3 temporary regulations. The 2018 proposed
                regulations extend the time for withholding agents to obtain treaty
                statements with the specific LOB provisions identified for preexisting
                accounts to January 1, 2020 (rather than the January 1, 2019 date
                included in the chapter 3 temporary regulations). These final
                regulations incorporate this extension for preexisting accounts.
                 The 2018 proposed regulations also add an exception to the three-
                year validity period for treaty statements associated with documentary
                evidence provided by tax-exempt organizations (other than tax-exempt
                pension trusts or pension funds), governments, and publicly traded
                corporations. With this exception, the validity period for treaty
                statements is more closely aligned with the validity period for treaty
                claims on withholding certificates. The Treasury Department and the IRS
                have also determined that, apart from this exception, three years is an
                appropriate validity period for treaty statements and treaty claims
                because it requires the entity to periodically redetermine whether it
                continues to meet the LOB provision.
                 A comment to the 2018 proposed regulations requested that the
                exception to the three-year validity period for treaty statements
                provided by tax-exempt organizations, governments, and publicly traded
                corporations, be extended to apply to withholding certificates used by
                such entities to make treaty claims. However, a withholding certificate
                contains not only a treaty claim, but also information and
                representations about the entity making the treaty claim (including
                representations relevant for chapter 4 purposes). Therefore, it is not
                appropriate for this exception to be
                [[Page 197]]
                extended to withholding certificates used to make treaty claims.
                Therefore, these final regulations do not adopt this comment and
                generally incorporate the same exception to the three-year validity
                period for treaty statements that is provided in the 2018 proposed
                regulations. However, these final regulations do not include the record
                retention requirement included in the 2018 proposed regulations for
                treaty statements from publicly traded corporations because the
                Treasury Department and the IRS have determined that a retention
                requirement in this case is unnecessary for information that is
                publicly available.
                 These final regulations also include the same modification included
                in the 2018 proposed regulations to correct an inadvertent omission of
                the applicable standard for a withholding agent's reliance on the
                beneficial owner's identification of a LOB provision on a treaty
                statement, incorporating the same actual knowledge standard that
                applies to a withholding certificate used for a treaty claim.
                 A qualified intermediary, withholding foreign partnership, and
                withholding foreign trust may rely on the amendments described in this
                Part V until they are incorporated into the applicable withholding
                agreement.
                VI. Permanent Residence Address Subject To Hold Mail Instruction for
                Purposes of Chapters 3 and 4
                 Sections 1.1441-1T(c)(38)(ii) and 1.1471-1T(b)(99) allow a
                withholding agent to treat an address provided by a beneficial owner or
                account holder as that person's permanent residence address even if the
                address is subject to a hold mail instruction, provided that the
                withholding agent obtains documentary evidence establishing the
                person's residence in the country in which the person claims to be a
                resident for tax purposes. Comments requested that the hold mail rule
                be eliminated, and if it is not eliminated that a withholding agent be
                allowed to rely on documentary evidence establishing a person's foreign
                status (rather than the person's residency in a particular country)
                unless the person is claiming treaty benefits, and requested
                clarification on the definition of the term ``hold mail instruction''
                and the categories of documentary evidence that can be relied upon.
                 The Treasury and the IRS have determined that the hold mail rule is
                necessary in order to ensure that taxpayers identify a true permanent
                residence address. In response to the other comments, the 2018 proposed
                regulations included proposed modifications to the requirements for
                reliance on an address subject to a hold mail instruction. The 2018
                proposed regulations provide that the documentary evidence required in
                order to treat an address that is provided subject to a hold mail
                instruction as a permanent residence address is documentary evidence
                that supports the person's claim of foreign status or, for a person
                claiming treaty benefits, documentary evidence that supports the
                person's residence in the country where the person claims treaty
                benefits. Regardless of whether the person claims treaty benefits, the
                2018 proposed regulations allow a withholding agent to rely on
                documentary evidence described in Sec. 1.1471-3(c)(5)(i), without
                regard to whether the documentation contains a permanent residence
                address.
                 A comment also requested the removal of any limitations on reliance
                on a permanent residence address subject to a hold mail instruction
                because many account holders prefer to receive electronic
                correspondence rather than paper mail. In response to this comment, the
                2018 proposed regulations added a definition of a hold mail instruction
                to clarify that a hold mail instruction does not include a request to
                receive all correspondence (including account statements)
                electronically. Because no comments were received on the 2018 proposed
                regulations specific to the modified requirements for reliance on an
                address subject to a hold mail instruction, those provisions of the
                2018 proposed regulations are included in these final regulations. A
                qualified intermediary, withholding foreign partnership, and
                withholding foreign trust may rely on the amendments described in this
                Part VI until they are incorporated into the applicable withholding
                agreement.
                VII. Technical Corrections, Conforming Change, and Applicability Dates
                 The final regulations in TD 9808 modified Sec. 1.1441-
                1(e)(3)(iv)(B) (general requirements for withholding statements
                provided by nonqualified intermediaries) and (f)(1) (applicability
                date) of the chapter 3 regulations. The last sentence of modified Sec.
                1.1441-1(e)(3)(iv)(B) and the first sentence of (f)(1), however,
                include typographical errors, which are corrected in these final
                regulations. In addition, the final regulations in TD 9808 modified
                Sec. 1.1461-1(c)(1)(i) to allow a withholding agent to furnish a
                recipient copy of Form 1042-S electronically. These final regulations
                make a conforming change to Sec. 1.6049-6(e)(4) to allow a payor to
                furnish a recipient copy of Form 1042-S electronically to a nonresident
                alien individual that is paid deposit interest reportable under Sec.
                1.6049-4(b)(5). To clarify that the 90-day grace period applies to a
                change in circumstance that results from a jurisdiction ceasing to be
                treated as having an IGA in effect, the text in Sec. 1.1471-
                3T(c)(6)(ii)(E)(4) is moved to Sec. 1.1471-3(c)(6)(ii)(E)(3) (which
                provides the 90-day period for changes in circumstance). Finally, these
                final regulations make ministerial changes to the applicability date
                provision in Sec. 1.1441-1(f) to combine the applicability dates of
                these final regulations with regulations issued under section 871(m)
                that previously were contained in Sec. 1.1441-1(f)(3) and (f)(5) in
                Sec. 1.1441-1(f)(3), and clarify the applicability dates of Sec. Sec.
                1.1441-2 (with respect to certain payments) and 1.1441-6 (with respect
                to identification of limitation on benefits provisions).
                Special Analyses
                I. Regulatory Planning and Review
                 This regulation is not subject to review under section 6(b) of
                Executive Order 12866 pursuant to the Memorandum of Agreement (April
                11, 2018) between the Treasury Department and the Office of Management
                and Budget regarding review of tax regulations.
                II. Paperwork Reduction Act
                 These final regulations reduce certain information collection
                burdens that were included in the chapter 3 temporary regulations. For
                purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d))
                (PRA), these reductions in reporting burdens will be reflected in the
                PRA submissions associated with Forms W-8 and 1042-S.
                 In response to comments on the chapter 3 proposed regulations,
                these final regulations reduce the information collection burden by
                permitting taxpayers to use alternative methods of providing
                documentation to withholding agents and to provide less information on
                certain documentation. These final regulations also reduce information
                collection burden by permitting taxpayers to provide certain
                documentation in a less burdensome manner. The provisions reducing
                collections of information are in Sec. Sec. 1.1441-1(e)(2)(ii)(B),
                (e)(3)(iv)(C)(3)(ii) and (e)(4)(i)(B) and 1.6049-6(e)(4). Section
                1.1441-1(e)(2)(ii)(B) allows payees to provide to a withholding agent
                their foreign TIN on a separate statement rather than on a withholding
                certificate, for withholding certificates provided after January 1,
                [[Page 198]]
                2018. This allowance provides flexibility for a payee to use other
                methods of transmitting information and permits a withholding agent to
                continue to treat a withholding certificate as valid rather than
                requesting a new withholding certificate from the payee. Section
                1.1441-1(e)(3)(iv)(C)(3)(ii) permits nonqualified intermediaries to
                provide withholding statements to withholding agents that omit certain
                information (a chapter 4 recipient code) that was previously required.
                This allowance provides more flexibility for a nonqualified
                intermediary to provide to a withholding agent a Form W-8IMY that is
                treated as valid. Section 1.1441-1(e)(4)(i)(B) provides an alternative
                method for a withholding agent to determine whether a withholding
                certificate is electronically signed, which provides flexibility for
                withholding agents that are verifying the validity of such
                certificates. Section 1.6049-6(e)(4) permits withholding agents to
                provide Form 1042-S to a payee electronically rather than in hard copy.
                 The reductions in reporting burden provided in these final
                regulations will be reflected in the PRA submission associated with
                Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY (OMB control number
                1545-1621) and the PRA submission associated with Form 1042-S (OMB
                control number 1545-0096).
                 An agency may not conduct or sponsor, and a person is not required
                to respond to, a collection of information unless it displays a valid
                control number assigned by the Office of Management and Budget. Books
                and records relating to a collection of information must be retained as
                long as their contents may become material in the administration of any
                internal revenue law. Generally, tax returns and tax return information
                are confidential, as required by 26 U.S.C. 6103.
                III. Regulatory Flexibility Act
                 It is hereby certified that these final regulations will not have a
                significant economic impact on a substantial number of small entities
                within the meaning of section 601(6) of the Regulatory Flexibility Act
                (RFA) (5 U.S.C. chapter 6).
                 This rule primarily affects withholding agents, such as financial
                institutions, that make U.S.-connected payments to foreign payees. For
                purposes of the RFA, small financial institutions are those with less
                than $600 million in assets. The Treasury Department and the IRS do not
                have data readily available to assess the number of small entities
                potentially affected by these regulations. Even if a substantial number
                of domestic small entities were affected by the final regulations, the
                Treasury Department and the IRS have determined that the economic
                impact to these entities will not be significant. These final
                regulations reduce the collection of information requirements that are
                currently applicable under existing rules under chapters 3 and 4 in TDs
                9808 and 9809. Those rules include detailed requirements for how a
                withholding agent identifies a payee, documents the payee's status, and
                reports to the IRS and the payee. Those information collections were
                certified previously by the Treasury Department and the IRS as not
                resulting in a significant economic impact on a substantial number of
                small business entities. The final regulations include a limited number
                of changes to the temporary regulations that reduce the burden of
                withholding agents. The burden-reducing revisions of these final
                regulations provide benefits for both small and large entities because
                these final regulations allow a withholding agent to collect a foreign
                TIN from a payee on a separate statement; allow certain intermediaries
                to provide withholding statements that omit certain information
                (specifically, a chapter 4 recipient code) that was previously
                required; provide an alternative method for a withholding agent to
                determine whether a withholding certificate is electronically signed;
                and allow withholding agents to provide payee statements electronically
                rather than in paper form.
                 Pursuant to section 7805(f) of the Code, the proposed regulations
                preceding these final regulations were submitted to the Chief Counsel
                for Advocacy of the Small Business Association for comment on its
                impact on small business, and no comments were received.
                IV. Unfunded Mandates Reform Act
                 Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
                requires that agencies assess anticipated costs and benefits and take
                certain other actions before issuing a final rule that includes any
                Federal mandate that may result in expenditures in any one year by a
                state, local, or tribal government, in the aggregate, or by the private
                sector, of $100 million in 1995 dollars, updated annually for
                inflation. In 2019, that threshold is approximately $154 million. This
                rule does not include any Federal mandate that may result in
                expenditures by state, local, or tribal governments, or by the private
                sector in excess of that threshold.
                V. Executive Order 13132: Federalism
                 Executive Order 13132 (titled ``Federalism'') prohibits an agency
                from publishing any rule that has federalism implications if the rule
                either imposes substantial, direct compliance costs on state and local
                governments, and is not required by statute, or preempts state law,
                unless the agency meets the consultation and funding requirements of
                section 6 of the Executive Order. This final rule does not have
                federalism implications and does not impose substantial direct
                compliance costs on state and local governments or preempt state law
                within the meaning of the Executive Order.
                Drafting Information
                 The principal authors of these regulations are Charles Rioux, Nancy
                Erwin, and John Sweeney, Office of Associate Chief Counsel
                (International). However, other personnel from the IRS and the Treasury
                Department participated in the development of these regulations.
                Effect on Other Documents
                 Section 4 of Notice 2016-08 (2016-6 I.R.B. 304) is obsolete as of
                January 2, 2020.
                 Sections 4 and 5 of Notice 2017-46 (2017-41 I.R.B. 275) are
                obsolete as of January 2, 2020.
                Statement of Availability of IRS Documents
                 The IRS notices cited in this preamble are published in the
                Internal Revenue Bulletin and are available from the Superintendent of
                Documents, U.S. Government Printing Office, Washington, DC 20402, or by
                visiting the IRS website at https://www.irs.gov.
                List of Subjects in 26 CFR Part 1
                 Income taxes, Reporting and recordkeeping requirements.
                Adoption of Amendments to the Regulations
                 Accordingly, 26 CFR part 1 is amended as follows:
                PART 1--INCOME TAXES
                0
                Paragraph 1. The authority citation for part 1 continues to read in
                part as follows:
                 Authority: 26 U.S.C. 7805 * * *
                0
                Par. 2. Section 1.1441-0 is amended by:
                0
                1. Revising the entry for Sec. 1.1441-1(e)(2)(ii)(B).
                [[Page 199]]
                0
                2. Adding entries for Sec. 1.1441-1(e)(2)(ii)(B)(1) through (6) and
                (e)(4)(iv)(F).
                0
                3. Revising the entry for Sec. 1.1441-1(f)(3).
                 The revision and additions read as follows:
                Sec. 1.1441-0 Outline of regulation provisions for section 1441.
                * * * * *
                Sec. 1.1441-1 Requirement for the deduction and withholding of tax on
                payments to foreign persons.
                * * * * *
                 (e) * * *
                 (2) * * *
                 (ii) * * *
                 (B) Requirement to collect foreign TIN and date of birth.
                 (1) In general.
                 (2) Definitions.
                 (3) Requirements for reasonable explanation of the absence of a
                foreign TIN.
                 (4) Exceptions to the requirement to obtain a foreign TIN (or
                reasonable explanation for its absence).
                 (i) Jurisdictions with which the United States does not have an
                agreement relating to the exchange of tax information.
                 (ii) Jurisdictions that do not issue foreign TINs.
                 (iii) Account holder that is a government, international
                organization, foreign central bank of issue, or resident of a U.S.
                territory.
                 (5) Transition rules for the foreign TIN requirement for a
                beneficial owner withholding certificate signed before January 1, 2018.
                 (i) Payments made before January 1, 2020.
                 (ii) Payments made after December 31, 2019.
                 (iii) Limitation on standard of knowledge.
                 (6) Transition rule for the date of birth requirement for a
                beneficial owner withholding certificate signed before January 1, 2018.
                * * * * *
                 (4) * * *
                 (iv) * * *
                 (F) Examples.
                 (1) Example 1.
                 (2) Example 2.
                 (3) Example 3.
                * * * * *
                 (f) * * *
                 (1) In general.
                * * * * *
                 (3) Special rules related to section 871(m).
                * * * * *
                0
                Par. 3. Section 1.1441-1 is amended by:
                0
                1. Revising paragraphs (b)(7)(ii)(B), (c)(2)(ii), (c)(3)(ii), (c)(38),
                and (e)(2)(ii)(B).
                0
                2. Removing ``Sec. 1.1471-3(c)(3)(ii)(B)(2)(iii)'' and adding in its
                place ``Sec. 1.1471-3(c)(3)(iii)(B)(2)(iii)'' at the end of the last
                sentence of paragraph (e)(3)(iv)(B).
                0
                 3. Revising paragraphs (e)(3)(iv)(C)(3), (e)(4)(i)(B), and
                (e)(4)(ii)(A)(2).
                0
                4. Adding a sentence to the end of paragraph (e)(4)(ii)(D)(1).
                0
                5. Revising paragraphs (e)(4)(iv)(C) and (E).
                0
                 6. Adding paragraph (e)(4)(iv)(F).
                0
                7. Revising paragraphs (f)(1) and (3).
                0
                 8. Removing paragraphs (f)(4) and (5).
                 The revisions and additions read as follows:
                Sec. 1.1441-1 Requirement for the deduction and withholding of tax on
                payments to foreign persons.
                * * * * *
                 (b) * * *
                 (7) * * *
                 (ii) * * *
                 (B) Special rules for establishing that income is effectively
                connected with the conduct of a U.S. trade or business. A withholding
                certificate received after the date of payment to claim under Sec.
                1.1441-4(a)(1) that income is effectively connected with the conduct of
                a U.S. trade or business will be considered effective as of the date of
                the payment if the certificate contains a signed affidavit (either at
                the bottom of the form or on an attached page) that states that the
                information and representations contained on the certificate were
                accurate as of the time of the payment. The signed affidavit must also
                state that the beneficial owner has included the income on its U.S.
                income tax return for the taxable year in which it is required to
                report the income or, alternatively, that the beneficial owner intends
                to include the income on a U.S. income tax return for the taxable year
                in which it is required to report the income and the due date for
                filing such return (including any applicable extensions) is after the
                date on which the affidavit is signed. A certificate received within 30
                days after the date of the payment will not be considered to be
                unreliable solely because it does not contain the affidavit described
                in the preceding sentences.
                * * * * *
                 (c) * * *
                 (2) * * *
                 (ii) Dual residents. Individuals will not be treated as U.S.
                persons for purposes of this section for a taxable year or any portion
                of a taxable year for which they are a dual resident taxpayer (within
                the meaning of Sec. 301.7701(b)-7(a)(1) of this chapter) who is
                treated as a nonresident alien pursuant to Sec. 301.7701(b)-7(a)(1) of
                this chapter for purposes of computing their U.S. tax liability.
                 (3) * * *
                 (ii) Nonresident alien individual. The term nonresident alien
                individual means persons described in section 7701(b)(1)(B), alien
                individuals who are treated as nonresident aliens pursuant to Sec.
                301.7701(b)-7 of this chapter for purposes of computing their U.S. tax
                liability, or an alien individual who is a resident of Puerto Rico,
                Guam, the Commonwealth of Northern Mariana Islands, the U.S. Virgin
                Islands, or American Samoa as determined under Sec. 301.7701(b)-1(d)
                of this chapter. An alien individual who has made an election under
                section 6013(g) or (h) to be treated as a resident of the United States
                is nevertheless treated as a nonresident alien individual for purposes
                of withholding under chapter 3 of the Code and the regulations
                thereunder.
                * * * * *
                 (38) Permanent residence address--(i) In general. The term
                permanent residence address is the address in the country of which the
                person claims to be a resident for purposes of that country's income
                tax. In the case of a withholding certificate furnished in order to
                claim a reduced rate of withholding under an income tax treaty, whether
                a person is a resident of a treaty country must be determined in the
                manner prescribed under the applicable treaty. See Sec. 1.1441-6(b).
                The address of a financial institution with which the person maintains
                an account, a post office box, or an address used solely for mailing
                purposes is not a permanent residence address unless such address is
                the only address used by the person and appears as the person's
                registered address in the person's organizational documents. Further,
                an address that is provided subject to a hold mail instruction (as
                defined in paragraph (c)(38)(ii) of this section) is not a permanent
                residence address unless the person provides the documentary evidence
                described in paragraph (c)(38)(ii) of this section. If the person is an
                individual who does not have a tax residence in any country, the
                permanent residence address is the place at which the person normally
                resides. If the person is an entity and does not have a tax residence
                in any country, then the permanent residence address of the entity is
                the place at which the person maintains its principal office.
                 (ii) Hold mail instruction. The term hold mail instruction means a
                current
                [[Page 200]]
                instruction by a person to keep the person's mail until such
                instruction is amended. An instruction to send all correspondence
                electronically is not a hold mail instruction. An address that is
                subject to a hold mail instruction may be used as a permanent residence
                address if the person has also provided the withholding agent with
                documentary evidence described in Sec. 1.1471-3(c)(5)(i) (without
                regard to the requirement in Sec. 1.1471-3(c)(5)(i) that the
                documentary evidence contain a permanent residence address). The
                documentary evidence described in Sec. 1.1471-3(c)(5)(i) must support
                the person's claim of foreign status or, in the case of a person that
                is claiming treaty benefits, must support residence in the country
                where the person is claiming a reduced rate of withholding under an
                income tax treaty. If, after a withholding certificate is provided, a
                person's permanent residence address is subsequently subject to a hold
                mail instruction, the addition of the hold mail instruction is a change
                in circumstances requiring the person to provide the documentary
                evidence described in this paragraph (c)(38)(ii) in order for a
                withholding agent to use the address as a permanent residence address.
                * * * * *
                 (e) * * *
                 (2) * * *
                 (ii) * * *
                 (B) Requirement to collect foreign TIN and date of birth--(1) In
                general. In addition to the general requirements of paragraph
                (e)(2)(ii)(A) of this section, except as provided in paragraphs
                (e)(2)(ii)(B)(4), through (6) of this section, a beneficial owner
                withholding certificate provided by an account holder to document an
                account that is maintained at a U.S. branch or office of a withholding
                agent that is a financial institution is valid for purposes of a
                payment of U.S. source income reportable on Form 1042-S (before the
                application of this paragraph (e)(2)(ii)(B)) made on or after January
                1, 2018, only if it contains the account holder's taxpayer
                identification number issued by the account holder's jurisdiction of
                tax residence (foreign TIN) or a reasonable explanation for the absence
                of a foreign TIN (as described in paragraph (e)(2)(ii)(B)(3) of this
                section) and, in the case of an individual account holder, the account
                holder's date of birth, unless the withholding agent has the account
                holder's date of birth in its files. A withholding agent is permitted
                to obtain a foreign TIN on a written statement signed by an account
                holder that includes an acknowledgment that such statement is part of
                the withholding certificate if the withholding agent associates such
                statement with the account holder's withholding certificate. A
                withholding agent will be treated as having the account holder's date
                of birth in its files if it obtains the date of birth on a written
                statement (including a written statement transmitted by email) from the
                account holder. A withholding agent may rely on the foreign TIN and
                date of birth contained in the withholding certificate unless it knows
                or has reason to know that the foreign TIN or date of birth is
                incorrect. Therefore, a withholding agent will not be required to
                validate the format or other specifications of the foreign TIN against
                the applicable jurisdiction's TIN system. For purposes of this
                paragraph (e)(2)(ii)(B), a change of address to another jurisdiction
                other than the United States is a change in circumstances for purposes
                of a withholding agent's reliance on a foreign TIN of the account
                holder (or reasonable explanation for its absence).
                 (2) Definitions. For purposes of this paragraph (e)(2)(ii)(B), the
                term ``account'' means a financial account as defined in Sec. 1.1471-
                5(b) (substituting ``U.S. office or branch of a financial institution''
                for ``FFI''); the term ``account holder'' has the meaning described in
                Sec. 1.1471-5(a)(3); and the term ``financial institution'' means an
                entity that is a depository institution, custodial institution,
                investment entity, or a specified insurance company, each as defined in
                Sec. 1.1471-5(e).
                 (3) Requirements for reasonable explanation of the absence of a
                foreign TIN. A withholding agent may rely on a reasonable explanation
                for the absence of a foreign TIN on a beneficial owner withholding
                certificate only if the explanation addresses why the account holder
                was not issued a foreign TIN. An explanation provided in the
                instructions for, as applicable, Forms W-8BEN, W-8BEN-E, W-8ECI, W-
                8EXP, or Form W-8IMY is a reasonable explanation. If an account holder
                provides an explanation other than as described in the preceding
                sentence, the withholding agent must determine whether the explanation
                is reasonable. A reasonable explanation may be provided on the
                withholding certificate or on a separate attached statement associated
                with the form. A withholding agent may rely on a reasonable explanation
                described in this paragraph (e)(2)(ii)(B)(3) unless it has actual
                knowledge that the account holder has a foreign TIN.
                 (4) Exceptions to the requirement to obtain a foreign TIN (or
                reasonable explanation for its absence)--(i) Jurisdictions with which
                the United States does not have an agreement relating to the exchange
                of tax information. A beneficial owner withholding certificate is not
                required to include a foreign TIN (or reasonable explanation for its
                absence) for an account holder resident of a jurisdiction that is not
                identified, in an applicable revenue procedure (see Sec. 601.601(d)(2)
                of this chapter), as a jurisdiction that has in effect with the United
                States an income tax or other convention or bilateral agreement
                relating to the exchange of tax information within the meaning of
                section 6103(k)(4), under which the United States agrees to provide, as
                well as receive, tax information. A withholding agent that applies the
                exception described in the preceding sentence is, however, required to
                obtain the foreign TIN (or reasonable explanation for its absence) of
                each account holder resident in a jurisdiction that is added to the
                list on the applicable revenue procedure, before the time for filing
                Form 1042-S (with any applicable extension) for payments made during
                the calendar year following the calendar year in which the revenue
                procedure was published that added the jurisdiction to the list.
                 (ii) Jurisdictions that do not issue foreign TINs. A beneficial
                owner withholding certificate is not required to include a foreign TIN
                (or reasonable explanation for its absence) for an account holder
                resident of a jurisdiction that has been identified by the IRS on a
                list of jurisdictions that either do not issue foreign TINs to their
                residents or have requested that their residents not be required to
                provide foreign TINs to withholding agents for purposes of this
                paragraph (e)(2)(ii)(B). A withholding agent that applies the exception
                described in the preceding sentence is, however, required to obtain the
                foreign TIN (or reasonable explanation for its absence) of each account
                holder resident in a jurisdiction that is removed from the list of
                jurisdictions referenced in the preceding sentence before the time for
                filing Form 1042-S (with any applicable extension) for payments made
                during the calendar year following the calendar year in which the
                jurisdiction is removed from the list. A list of jurisdictions that
                either do not issue taxpayer identification numbers to their residents
                or that have requested to be included on the list is available at
                https://www.irs.gov/businesses/corporations/list-of-jurisdictions-that-do-not-issue-foreign-tins (or any replacement page on the IRS website
                or as provided in published guidance).
                [[Page 201]]
                 (iii) Account holder that is a government, international
                organization, foreign central bank of issue, or resident of a U.S.
                territory. A beneficial owner withholding certificate is not required
                to include a foreign TIN (or reasonable explanation for its absence) if
                the withholding agent has obtained a valid withholding certificate
                under paragraph (e)(2)(ii)(A) of this section or other documentation on
                which it may rely for purposes of the section 1441 regulations to treat
                the account holder as a government, an international organization, a
                foreign central bank of issue, or a resident of a U.S. territory. Thus,
                for example, a withholding agent may apply the exception provided in
                this paragraph (e)(2)(ii)(B)(4)(iii) with respect to an account holder
                claiming exemption under section 892 or otherwise identifying itself as
                a foreign government on a beneficial owner withholding certificate when
                the withholding agent may rely upon the claim of exemption under Sec.
                1.1441-8(b) or the claim of status as a foreign government under Sec.
                1.1441-7(b)(1) and (2).
                 (5) Transition rules for the foreign TIN requirement for a
                beneficial owner withholding certificate signed before January 1,
                2018--(i) Payments made before January 1, 2020. For payments made
                before January 1, 2020, an otherwise valid beneficial owner withholding
                certificate signed before January 1, 2018, is not treated as invalid if
                it does not include a foreign TIN (or a reasonable explanation for its
                absence) as required under paragraph (e)(2)(ii)(B) of this section
                until the earlier of--
                 (A) the expiration date of the validity period of the withholding
                certificate (if applicable); or
                 (B) the date when a change in circumstances (including for chapter
                4 purposes) requires a revised withholding certificate.
                 (ii) Payments made after December 31, 2019. For payments made after
                December 31, 2019, an otherwise valid beneficial owner withholding
                certificate signed before January 1, 2018, is not treated as invalid if
                it does not include a foreign TIN (or a reasonable explanation for its
                absence) as required under paragraph (e)(2)(ii)(B) of this section
                until the earlier of the date described in paragraph
                (e)(2)(ii)(B)(5)(i)(A) or (B) of this section, provided the withholding
                agent either--
                 (A) obtains from the account holder its foreign TIN (or reasonable
                explanation for its absence) on a written statement (including a
                written statement transmitted by email) which the withholding agent
                associates with the account holder's withholding certificate, or
                 (B) already has the account holder's foreign TIN in the withholding
                agent's files, which the withholding agent associates with the account
                holder's withholding certificate.
                 (iii) Limitation on standard of knowledge. If a withholding agent
                maintains an account on December 31, 2017, that is documented with a
                valid beneficial owner withholding certificate as of that date, the
                withholding agent's reason to know that the foreign TIN is incorrect,
                or actual knowledge that an account holder has a foreign TIN despite
                providing a reasonable explanation as described in paragraph
                (e)(2)(ii)(B)(3) of this section, is limited to electronically
                searchable information (as defined in Sec. 1.1471-1(b)(38)) that is in
                the withholding agent's files.
                 (6) Transition rule for the date of birth requirement for a
                beneficial owner withholding certificate signed before January 1, 2018.
                For an otherwise valid beneficial owner withholding certificate signed
                before January 1, 2018, a withholding agent is not required to treat
                the withholding certificate as invalid for payments made before January
                1, 2019, to an account holder solely because the withholding
                certificate does not include the account holder's date of birth and the
                date of birth is not in the withholding agent's files.
                 (3) * * *
                 (iv) * * *
                 (C) * * *
                 (3) Alternative withholding statement--(i) In lieu of a withholding
                statement containing all of the information described in paragraph
                (e)(3)(iv)(C)(1) and (2) of this section, a withholding agent may
                accept from a nonqualified intermediary a withholding statement that
                meets all of the requirements of this paragraph (e)(3)(iv)(C)(3)(i)
                with respect to a payment. The withholding statement described in this
                paragraph (e)(3)(iv)(C)(3)(i) may be provided only by a nonqualified
                intermediary that provides the withholding agent with the withholding
                certificates from the beneficial owners (that is, not documentary
                evidence) before the payment is made.
                 (A) The withholding statement is not required to contain all of the
                information specified in paragraphs (e)(3)(iv)(C)(1) and (2) of this
                section that is also included on a withholding certificate (for
                example, name, address, TIN (if any), chapter 4 status, GIIN (if any)).
                The withholding statement is also not required to specify the rate of
                withholding to which each foreign payee is subject, provided that all
                of the information necessary to make such determination is provided on
                the withholding certificate. A withholding agent that uses the
                withholding statement may not apply a different rate from that which
                the withholding agent may reasonably conclude from the information on
                the withholding certificate.
                 (B) The withholding statement must allocate the payment to every
                payee required to be reported as described in paragraph
                (e)(3)(iv)(C)(1)(ii) of this section.
                 (C) The withholding statement must also contain any other
                information the withholding agent reasonably requests in order to
                fulfill its obligations under chapters 3, 4, and 61, and section 3406.
                 (D) The withholding statement must contain a representation from
                the nonqualified intermediary that the information on the withholding
                certificates is not inconsistent with any other account information the
                nonqualified intermediary has for the beneficial owners for determining
                the rate of withholding with respect to each payee (applying the
                standards of knowledge applicable to a withholding agent's reliance on
                a withholding certificate in the regulations under section 1441 and,
                for a withholdable payment, the regulations under section 1471).
                 (ii) In lieu of a withholding statement that includes a recipient
                code for chapter 4 purposes used for filing Form 1042-S, a withholding
                agent may accept a nonqualified intermediary withholding statement that
                contains all of the information described in paragraph (e)(3)(iv)(C)(1)
                and (2) of this section (or an alternative withholding statement
                permitted under paragraph (e)(3)(iv)(C)(3)(i) of this section) but that
                does not provide a recipient code for chapter 4 purposes used for
                filing Form 1042-S for a payee as required in paragraph
                (e)(3)(iv)(C)(2)(iv) of this section if the withholding agent is able
                to determine such payee's recipient code based on other information
                included on or with the withholding statement or in the withholding
                agent's records with respect to the payee.
                * * * * *
                 (4) * * *
                 (i) * * *
                 (B) Electronic signatures. A withholding agent, regardless of
                whether the withholding agent has established an electronic system
                pursuant to paragraph (e)(4)(iv)(A) or (e)(4)(iv)(C) of this section,
                may accept a withholding certificate with an electronic signature,
                provided the
                [[Page 202]]
                electronic signature meets the requirements of paragraph
                (e)(4)(iv)(B)(3)(ii) of this section. In addition, the withholding
                certificate must reasonably demonstrate to the withholding agent that
                the form has been electronically signed by the recipient identified on
                the form (or a person authorized to sign for the recipient). For
                example, a withholding agent may treat as signed for purposes of the
                requirements for a valid withholding certificate, a withholding
                certificate that has in the signature block the name of the person
                authorized to sign, a time and date stamp, and a statement that the
                certificate has been electronically signed. However, a withholding
                agent may not treat a withholding certificate with a typed name in the
                signature line and no other information as signed for purposes of the
                requirements for a valid withholding certificate. A withholding agent
                may also rely upon, in addition to the contents of a withholding
                certificate, other documentation or information it has collected to
                support that a withholding certificate was electronically signed by the
                recipient identified on the form (or other person authorized to sign
                for the recipient), provided that the withholding agent does not have
                actual knowledge that the documentation or information is incorrect.
                 (ii) * * * (A) * * *
                 (2) Documentary evidence for treaty claims and treaty statements.
                Documentary evidence described in Sec. 1.1441-6(c)(3) or (4) shall
                remain valid until the last day of the third calendar year following
                the year in which the documentary evidence is provided to the
                withholding agent, except as provided in paragraph (e)(4)(ii)(B) of
                this section. A statement regarding entitlement to treaty benefits
                described in Sec. 1.1441-6(c)(5) (treaty statement) shall remain valid
                until the last day of the third calendar year following the year in
                which the treaty statement is provided to the withholding agent except
                as provided in this paragraph (e)(4)(ii)(A)(2). A treaty statement
                provided by an entity that identifies a limitation on benefits
                provision for a publicly traded corporation shall not expire at the
                time provided in the preceding sentence if a withholding agent
                determines, based on publicly available information at each time for
                which the treaty statement would otherwise be renewed, that the entity
                is publicly traded. Notwithstanding the second sentence of this
                paragraph (e)(4)(ii)(A)(2), a treaty statement provided by an entity
                that identifies a limitation on benefits provision for a government or
                tax-exempt organization (other than a tax-exempt pension trust or
                pension fund) shall remain valid indefinitely. Notwithstanding the
                validity periods (or exceptions thereto) prescribed in this paragraph
                (e)(4)(ii)(A)(2), a treaty statement will cease to be valid if a change
                in circumstances makes the information on the statement unreliable or
                incorrect. For accounts opened and treaty statements obtained prior to
                January 6, 2017 (including those from publicly traded corporations,
                governments, and tax-exempt organizations), the treaty statement will
                expire January 1, 2020.
                * * * * *
                 (D) * * * (1) * * * However, see paragraph (e)(2)(ii)(B)(1) of this
                section for a special rule for a change of address for purposes of
                reliance on a foreign TIN (or a reasonable explanation for the absence
                of a foreign TIN) included on a beneficial owner withholding
                certificate.
                * * * * *
                 (iv) * * *
                 (C) Form 8233. A withholding agent may establish a system for a
                beneficial owner or payee to provide Form 8233 electronically, provided
                the system meets the requirements of paragraph (e)(4)(iv)(B)(1) through
                (4) of this section (replacing ``Form W-8'' with ``Form 8233'' each
                place it appears).
                * * * * *
                 (E) Third party repositories. A withholding certificate will be
                considered furnished for purposes of this section (including paragraph
                (e)(1)(ii)(A)(1) of this section) by the person providing the
                certificate, and a withholding agent may rely on an otherwise valid
                withholding certificate received electronically from a third party
                repository, if the withholding certificate was uploaded or provided to
                a third party repository and there are processes in place to ensure
                that the withholding certificate can be reliably associated with a
                specific request from the withholding agent and a specific
                authorization from the person providing the certificate (or an agent of
                the person providing the certificate) for the withholding agent making
                the request to receive the withholding certificate. For purposes of the
                preceding sentence, a withholding agent must be able to reliably
                associate each payment with a specific request and authorization except
                when the withholding agent is permitted to rely on the withholding
                certificate on an obligation-by- obligation basis or as otherwise
                permitted under paragraph (e)(4)(ix) of this section (treating the
                withholding certificate as obtained by the withholding agent and
                furnished by a customer for purposes of this paragraph (e)(4)(iv)(E)).
                A third party repository may also be used for withholding statements,
                and a withholding agent may also rely on an otherwise valid withholding
                statement, if the intermediary providing the withholding certificates
                and withholding statement through the repository provides an updated
                withholding statement in the event of any change in the information
                previously provided (for example, a change in the composition of a
                partnership or a change in the allocation of payments to the partners)
                and ensures there are processes in place to update withholding agents
                when there is a new withholding statement (and withholding
                certificates, as necessary) in the event of any change that would
                affect the validity of the prior withholding certificates or
                withholding statement. A third party repository, for purposes of this
                paragraph, is an entity that maintains withholding certificates
                (including certificates accompanied by withholding statements) but is
                not an agent of the applicable withholding agent or the person
                providing the certificate.
                 (F) Examples. This paragraph contains examples to illustrate the
                rules of paragraph (e)(4)(iv)(E) of this section.
                 (1) Example 1. A, a foreign corporation, completes a Form W-
                8BEN-E and a Form W-8ECI and uploads the forms to X, a third party
                repository (X is an entity that maintains withholding certificates
                on an electronic data aggregation site). WA, a withholding agent,
                enters into a contract with A under which it will make payments to A
                of U.S. source FDAP that are not effectively connected with A's
                conduct of a trade or business in the United States. X is not an
                agent of WA or A. Before receiving a payment, A sends WA an email
                with a link that authorizes WA to access A's Form W-8BEN-E on X's
                system. The link does not authorize WA to access A's Form W-8ECI.
                X's system meets the requirements of a third party repository, and
                WA can treat the Form W-8BEN-E as furnished by A.
                 (2) Example 2. The facts are the same as Example 1 of this
                paragraph (e)(4)(iv)(F), and WA and A enter into a second contract
                under which WA will make payments to A that are effectively
                connected with A's conduct of a trade or business in the United
                States. A sends WA an email with a link that gives WA access to A's
                Form W-8ECI on X's system. The link in this second email does not
                give WA access to A's Form W-8BEN-E. A's email also clearly
                indicates that the link is associated with payments received under
                the second contract. X's system meets the requirements of a third
                party repository, and WA can treat the Form W-8ECI as furnished by
                A.
                 (3) Example 3. FP is a foreign partnership that is acting on
                behalf of its partners, A and B, who are both foreign individuals.
                FP
                [[Page 203]]
                completes a Form W-8IMY and uploads it to X, a third party
                repository. FP also uploads Forms W-8BEN from both A and B and a
                valid withholding statement allocating 50% of the payment to A and
                50% to B. WA is a withholding agent that makes payments to FP as an
                intermediary for A and B. FP sends WA an email with a link to its
                Form W-8IMY on X's system. The link also provides WA access to FP's
                withholding statement and A's and B's Forms W-8BEN. FP also has
                processes in place that ensure it will provide a new withholding
                statement or withholding certificate to X's repository in the event
                of a change in the information previously provided that affects the
                validity of the withholding statement and that ensure it will update
                WA if there is a new withholding statement. X's system meets the
                requirements of a third party repository, and WA can treat the Form
                W-8IMY (and withholding statement) as furnished by FP. In addition,
                because FP is acting as an agent of A and B, the beneficial owners,
                WA can treat the Forms W-8BEN for A and B as furnished by A and B.
                * * * * *
                 (f) * * * (1) In general. Except as otherwise provided in
                paragraphs (e)(2)(ii)(B), (e)(4)(iv)(D), (f)(2), and (f)(3) of this
                section, this section applies to payments made on or after January 6,
                2017. (For payments made after June 30, 2014 (except for payments to
                which paragraph (e)(4)(iv)(D) applies, in which case, substitute March
                5, 2014, for June 30, 2014), and before January 6, 2017, see this
                section as in effect and contained in 26 CFR part 1, as revised April
                1, 2016. For payments made 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.)
                * * * * *
                 (3) Special rules related to section 871(m). Paragraphs
                (b)(4)(xxi), (b)(4)(xxiii), (e)(3)(ii)(E), and (e)(6) of this section
                apply to payments made on or after September 18, 2015. Paragraphs
                (e)(5)(ii)(C) and (e)(5)(v)(B)(4) of this section apply to payments
                made on or after on January 19, 2017.
                Sec. 1.1441-1T [Removed]
                0
                Par. 4. Section 1.1441-1T is removed.
                0
                Par. 5. Section 1.1441-2 is amended by revising paragraphs (a)(8) and
                (f) to read as follows:
                Sec. 1.1441-2 Amounts subject to withholding.
                 (a) * * *
                 (8) Amounts of United States source gross transportation income, as
                defined in section 887(b)(1), that is taxable under section 887(a).
                * * * * *
                 (f) Effective/applicability date. This section applies to payments
                made after December 31, 2000. Paragraph (a)(8) of this section applies
                to payments made on or after January 6, 2017; however, taxpayers may
                apply paragraph (a)(8) to any open tax year. Paragraphs (b)(5) and
                (d)(4) of this section apply to payments made after August 1, 2006.
                Paragraph (b)(6) of this section applies to payments made on or after
                January 23, 2012. Paragraph (e)(7) of this section applies to payments
                made on or after January 19, 2017.
                Sec. 1.1441-2T [Removed]
                0
                 Par. 6. Section 1.1441-2T is removed.
                0
                Par. 7. Section 1.1441-4 is amended by removing paragraph (h).
                0
                Par. 8. Section 1.1441-6 is amended by:
                0
                1. Revising paragraphs (b)(1)(i) and (ii).
                0
                2. Redesignating Example 1 in paragraph (b)(2)(iv) as paragraph
                (b)(2)(iv)(A), Example 2 in paragraph (b)(2)(iv) as paragraph
                (b)(2)(iv)(B), Example 3 in paragraph (b)(2)(iv) as paragraph
                (b)(2)(iv)(C), and Example 4 as paragraph (b)(2)(iv)(D).
                0
                3. Revising paragraph (c)(5)(i).
                0
                4. Revising the first sentence of paragraph (i)(1).
                0
                5. Revising paragraph (i)(3).
                 The revisions and addition read as follows:
                Sec. 1.1441-6 Claim of reduced withholding under an income tax
                treaty.
                * * * * *
                 (b) * * *
                 (1) * * *
                 (i) Identification of limitation on benefits provisions. In
                conjunction with the representation that the beneficial owner meets the
                limitation on benefits provision of the applicable treaty, if any,
                required by paragraph (b)(1) of this section, a beneficial owner
                withholding certificate must also identify the specific limitation on
                benefits provision of the article (if any, or a similar provision) of
                the treaty upon which the beneficial owner relies to claim the treaty
                benefit. A withholding agent may rely on the beneficial owner's claim
                regarding its reliance on a specific limitation on benefits provision
                absent actual knowledge that such claim is unreliable or incorrect.
                 (ii) Reason to know based on existence of treaty. For purposes of
                this paragraph (b)(1), a withholding agent's reason to know that a
                beneficial owner's claim to a reduced rate of withholding under an
                income tax treaty is unreliable or incorrect includes a circumstance
                where the beneficial owner is claiming benefits under an income tax
                treaty that does not exist or is not in force. A withholding agent may
                determine whether a tax treaty is in existence and is in force by
                checking the list maintained on the IRS website at https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z (or any replacement page on the IRS website) or in the State
                Department's annual Treaties in Force publication.
                 (2) * * *
                 (iv) * * *
                 (D) Example 4--(i) Facts. Entity E is a business organization
                formed under the laws of Country Y. Country Y has an income tax
                treaty with the United States that contains a limitation on benefits
                provision. E receives U.S. source royalties from withholding agent
                W. E furnishes a beneficial owner withholding certificate to W
                claiming a reduced rate of withholding under the U.S.-Country Y tax
                treaty. However, E's beneficial owner withholding certificate does
                not specifically identify the limitation on benefits provision that
                E satisfies.
                 (ii) Analysis. Because E's withholding certificate does not
                specifically identify the limitation on benefits provision under the
                U.S.-Country Y tax treaty that E satisfies as required by paragraph
                (b)(1)(i) of this section, W cannot rely on E's withholding
                certificate to apply the reduced rate of withholding claimed by E.
                * * * * *
                 (c) * * *
                 (5) * * *
                 (i) Statement regarding conditions under a limitation on benefits
                provision. In addition to the documentary evidence described in
                paragraph (c)(4)(ii) of this section, a taxpayer that is not an
                individual must provide a statement that it meets one or more of the
                conditions set forth in the limitation on benefits article (if any, or
                in a similar provision) contained in the applicable tax treaty and must
                identify the specific limitation on benefits provision of the article
                (if any, or a similar provision) of the treaty upon which the taxpayer
                relies to claim the treaty benefit. A withholding agent may rely on the
                taxpayer's claim on a treaty statement regarding its reliance on a
                specific limitation on benefits provision absent actual knowledge that
                such claim is unreliable or incorrect.
                * * * * *
                 (i) * * * (1) General rule. Except as otherwise provided in
                paragraphs (i)(2) and (3) of this section, this section applies to
                payments made on or after January 6, 2017. * * *
                * * * * *
                 (3) Effective/applicability date. Paragraphs (b)(1)(i) and (ii),
                (b)(2)(iv)(D), and (c)(5)(i) of this section apply to withholding
                certificates and treaty statements provided on or after January 6,
                2017.
                Sec. 1.1441-6T [Removed]
                0
                Par. 9. Section 1.1441-6T is removed.
                [[Page 204]]
                0
                Par. 10. Section 1.1441-7 is amended by adding a new third sentence in
                paragraph (b)(4)(i) and by revising paragraphs (b)(10)(iv) and (g) to
                read as follows:
                Sec. 1.1441-7 General provisions relating to withholding agents.
                * * * * *
                 (b) * * *
                 (4) Rules applicable to withholding certificates--(i) In general. *
                * * See, however, Sec. 1.1441-1(e)(2)(ii)(B) for additional reliance
                standards that apply to a withholding certificate that is required to
                include an account holder's foreign TIN. * * *
                * * * * *
                 (10) * * *
                * * * * *
                 (iv) If the beneficial owner is claiming a reduced rate of
                withholding under an income tax treaty, the rules of Sec. 1.1441-
                6(b)(1)(ii) also apply to determine whether the withholding agent has
                reason to know that a claim for treaty benefits is unreliable or
                incorrect.
                * * * * *
                 (g) Effective/applicability date. Except as otherwise provided in
                paragraph (a)(4) of this section, this section applies to payments made
                on or after January 6, 2017. (For payments made after June 30, 2014,
                and before January 6, 2017, see this section as in effect and contained
                in 26 CFR part 1, as revised April 1, 2016. For payments made 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.)
                Sec. 1.1441-7T [Removed]
                0
                Par. 11. Section 1.1441-7T is removed.
                0
                Par. 12. Section 1.1471-0 is amended by adding entries for Sec.
                1.1471-3(c)(3)(iii)(B)(5), Sec. 1.1471-4(d)(2)(ii)(G), and Sec.
                1.1474-1(d)(4)(vii) to read as follows:
                Sec. 1.1471-0 Outline of regulation provisions for sections 1471
                through 1474.
                * * * * *
                Sec. 1.1471-3 Identification of payee.
                * * * * *
                 (c) * * *
                 (3) * * *
                 (iii) * * *
                 (B) * * *
                 (5) Nonqualified intermediary withholding statement.
                * * * * *
                Sec. 1.1471-4 FFI agreement.
                * * * * *
                 (d) * * *
                 (2) * * *
                 (ii) * * *
                 (G) Combined reporting on Form 8966 following merger or bulk
                acquisition.
                * * * * *
                Sec. 1.1474-1 Liability for withheld tax and withholding agent
                reporting.
                * * * * *
                 (d) * * *
                 (4) * * *
                 (vii) Combined Form 1042-S reporting.
                * * * * *
                0
                Par. 13. Section 1.1471-1 is amended by revising paragraph (b)(99) to
                read as follows:
                Sec. 1.1471-1 Scope of chapter 4 and definitions.
                * * * * *
                 (b) * * *
                 (99) Permanent residence address. The term permanent residence
                address has the meaning set forth in Sec. 1.1441-1(c)(38).
                * * * * *
                Sec. 1.1471-1T [Removed]
                0
                Par. 14. Section 1.1471-1T is removed.
                0
                Par. 15. Section 1.1471-3 is amended by:
                0
                1. Revising paragraphs (c)(1) and (c)(3)(iii)(B)(5).
                0
                2. Revising the third sentence of paragraph (c)(6)(ii)(E)(3).
                0
                3. Revising paragraphs (c)(7)(ii) and (d)(6)(i)(F).
                 The revisions and addition read as follows:
                Sec. 1.1471-3 Identification of payee.
                * * * * *
                 (c) * * *
                 (1) In general. A withholding agent can reliably associate a
                withholdable payment with valid documentation if, before the payment,
                it has obtained (either directly from the payee or through its agent)
                valid documentation appropriate to the payee's chapter 4 status as
                described in paragraph (d) of this section, it can reliably determine
                how much of the payment relates to the valid documentation, and it does
                not know or have reason to know that any of the information,
                certifications, or statements in, or associated with, the documentation
                are unreliable or incorrect. Thus, a withholding agent cannot reliably
                associate a withholdable payment with valid documentation provided by a
                payee to the extent such documentation appears unreliable or incorrect
                with respect to the claims made, or to the extent that information
                required to allocate all or a portion of the payment to each payee is
                unreliable or incorrect. A withholding agent may rely on information
                and certifications contained in withholding certificates or other
                documentation without having to inquire into the truthfulness of the
                information or certifications, unless it knows or has reason to know
                that the information or certifications are untrue. A withholding agent
                may rely upon the same documentation for purposes of both chapters 3
                and 4 provided the documentation is sufficient to meet the requirements
                of each chapter. Alternatively, a withholding agent may elect to rely
                upon the presumption rules of paragraph (f) of this section in lieu of
                obtaining documentation from the payee. A withholding certificate will
                be considered provided by a payee if a withholding agent obtains the
                certificate from a third party repository (rather than directly from
                the payee or through its agent) and the requirements in Sec. 1.1441-
                1(e)(4)(iv)(E) are satisfied. A withholding certificate obtained from a
                third party repository must still be reviewed by the withholding agent
                in the same manner as any other documentation to determine whether it
                may be relied upon for chapter 4 purposes. A withholding agent may rely
                on an electronic signature on a withholding certificate if the
                requirements in Sec. 1.1441-1(e)(4)(i)(B) are satisfied.
                * * * * *
                 (3) * * *
                 (iii) * * *
                 (B) * * *
                 (5) Nonqualified intermediary withholding statement. A withholding
                agent that is making a withholdable payment to a nonqualified
                intermediary for which a withholding statement is required under
                chapters 3 or 4 may accept a withholding statement that meets the
                requirements described in Sec. 1.1441-1(e)(3)(iv)(C)(3)(i) or (ii).
                * * * * *
                 (6) * * *
                 (ii) * * *
                 (E) * * *
                 (3) Withholding agent's obligation with respect to a change in
                circumstances. * * * A withholding agent will have reason to know of a
                change in circumstances with respect to an FFI's chapter 4 status that
                results solely because the jurisdiction in which the FFI is resident,
                organized, or located ceases to be treated as having an IGA in effect
                on the date that the jurisdiction ceases to be treated as having an IGA
                in effect. * * *
                 (7) * * *
                 (ii) Documentation received after the time of payment. Proof that
                withholding was not required under the provisions of chapter 4 and the
                regulations thereunder also may be established after
                [[Page 205]]
                the date of payment by the withholding agent on the basis of a valid
                withholding certificate and/or other appropriate documentation that was
                furnished after the date of payment but that was effective as of the
                date of payment. A withholding certificate furnished after the date of
                payment will be considered effective as of the date of the payment if
                the certificate contains a signed affidavit (either at the bottom of
                the form or on an attached page) that states that the information and
                representations contained on the certificate were accurate as of the
                time of the payment. A certificate obtained within 30 days after the
                date of the payment will not be considered to be unreliable solely
                because it does not contain an affidavit. However, in the case of a
                withholding certificate of an individual received more than a year
                after the date of payment, the withholding agent will be required to
                obtain, in addition to the withholding certificate and affidavit,
                documentary evidence described in paragraph (c)(5)(i) of this section
                that supports the individual's claim of foreign status. In the case of
                a withholding certificate of an entity received more than a year after
                the date of payment, the withholding agent will be required to obtain,
                in addition to the withholding certificate and affidavit, documentary
                evidence specified in paragraph (c)(5)(ii) of this section that
                supports the chapter 4 status claimed. If documentation other than a
                withholding certificate is submitted from a payee more than a year
                after the date of payment, the withholding agent will be required to
                also obtain from the payee a withholding certificate and affidavit
                supporting the chapter 4 status claimed as of the date of the payment.
                See, however, Sec. 1.1441-1(b)(7)(ii) for special rules that apply
                when a withholding certificate is received after the date of the
                payment to claim that income is effectively connected with the conduct
                of a U.S. trade or business (as applied for purposes of this paragraph
                (c)(7)(ii) to a claim to establish that the payment is not a
                withholdable payment under Sec. 1.1473-1(a)(4)(ii) rather than to
                claim an exemption described in Sec. 1.1441-4(a)(1)).
                * * * * *
                 (d) * * *
                 (6) * * *
                 (i) * * *
                 (F) The withholding agent does not know or have reason to know that
                the payee is a member of an expanded affiliated group with any FFI that
                is a depository institution, custodial institution, or specified
                insurance company, or that the FFI has any specified U.S. persons that
                own an equity interest in the FFI or a debt interest (other than a debt
                interest that is not a financial account or that has a balance or value
                not exceeding $50,000) in the FFI other than those identified on the
                FFI owner reporting statement described in paragraph (d)(6)(iv) of this
                section.
                * * * * *
                Sec. 1.1471-3T [Removed]
                0
                Par. 16. Section 1.1471-3T is removed.
                0
                Par. 17. Section 1.1471-4 is amended by revising paragraphs
                (c)(2)(ii)(B)(2)(iii), (d)(2)(ii)(G), (d)(4)(iv)(C), (d)(4)(iv)(D)
                introductory text, (d)(7) introductory text, and (j)(2) to read as
                follows:
                Sec. 1.1471-4 FFI agreement.
                * * * * *
                 (c) * * *
                 (2) * * *
                 (ii) * * *
                 (B) * * *
                 (2) * * *
                 (iii) In the case of a transferor FI that is a participating FFI or
                a registered deemed-compliant FFI (or a U.S. branch of either such
                entity that is not treated as a U.S. person) or that is a deemed-
                compliant FFI that applies the requisite due diligence rules of this
                paragraph (c) as a condition of its status, the transferor FI provides
                a written representation to the transferee FFI acquiring the accounts
                that the transferor FI has applied the due diligence procedures of this
                paragraph (c) with respect to the transferred accounts and, in the case
                of a transferor FI that is a participating FFI, has complied with the
                requirements of paragraph (f)(2) of this section; and
                * * * * *
                 (d) * * *
                 (2) * * *
                 (ii) * * *
                 (G) Combined reporting on Form 8966 following merger or bulk
                acquisition. If a participating FFI (successor) acquires accounts of
                another participating FFI (predecessor) in a merger or bulk acquisition
                of accounts, the successor may assume the predecessor's obligations to
                report the acquired accounts under paragraph (d) of this section with
                respect to the calendar year in which the merger or acquisition occurs
                (acquisition year), provided that the requirements in paragraphs
                (d)(2)(ii)(G)(1) through (4) of this section are satisfied. If the
                requirements of paragraphs (d)(2)(ii)(G)(1) through (4) of this section
                are not satisfied, both the predecessor and the successor are required
                to report the acquired accounts for the portion of the acquisition year
                that it maintains the account.
                 (1) The successor must acquire substantially all of the accounts
                maintained by the predecessor, or substantially all of the accounts
                maintained at a branch of the predecessor, in a merger or bulk
                acquisition of accounts for value.
                 (2) The successor must agree to report the acquired accounts for
                the acquisition year on Form 8966 to the extent required in Sec.
                1.1471-4(d)(3) or (d)(5).
                 (3) The successor may not elect to report under section 1471(c)(2)
                and Sec. 1.1471-4(d)(5) with respect to any acquired account that is a
                U.S. account for the acquisition year.
                 (4) The successor must notify the IRS on the form and in the manner
                prescribed by the IRS that Form 8966 is being filed on a combined
                basis.
                * * * * *
                 (4) * * *
                 (iv) * * *
                 (C) Other accounts. In the case of an account described in Sec.
                1.1471-5(b)(1)(iii) (relating to a debt or equity interest other than
                an interest as a partner in a partnership) or Sec. 1.1471-5(b)(1)(iv)
                (relating to cash value insurance contracts and annuity contracts), the
                payments made during the calendar year with respect to such account are
                the gross amounts paid or credited to the account holder during the
                calendar year including payments in redemption (in whole or part) of
                the account. In the case of an account that is a partner's interest in
                a partnership, the payments made during the calendar year with respect
                to such account are the amount of the partner's distributive share of
                the partnership's income or loss for the calendar year, without regard
                to whether any such amount is distributed to the partner during the
                year, and any guaranteed payments for the use of capital. The payments
                required to be reported under this paragraph (d)(4)(iv)(C) with respect
                to a partner may be determined based on the partnership's tax returns
                or, if the tax returns are unavailable by the due date for filing Form
                8966, the partnership's financial statements or any other reasonable
                method used by the partnership for calculating the partner's share of
                partnership income by such date.
                 (D) Transfers and closings of deposit, custodial, insurance, and
                annuity financial accounts. In the case of an account closed or
                transferred in its entirety during a calendar year that is a depository
                account, custodial account, or a cash value insurance contract or
                [[Page 206]]
                annuity contract, the payments made with respect to the account shall
                be--
                * * * * *
                 (7) Special reporting rules with respect to the 2014 and 2015
                calendar years--
                * * * * *
                 (j) * * *
                 (2) Special applicability date. Paragraph (d)(4)(iv)(C) of this
                section applies beginning with reporting with respect to calendar year
                2017. (For rules that apply to reporting under paragraph (d)(4)(iv)(C)
                with respect to calendar years before 2017, see this section as in
                effect and contained in 26 CFR part 1 revised April 1, 2016.)
                Sec. 1.1471-4T [Removed]
                0
                Par. 18. Section 1.1471-4T is removed.
                0
                Par. 19. Section 1.1474-1 is amended by revising paragraph (d)(4)(vii)
                to read as follows:
                Sec. 1.1474-1 Liability for withheld tax and withholding agent
                reporting.
                * * * * *
                 (d) * * *
                 (4) * * *
                 (vii) Combined Form 1042-S reporting. A withholding agent required
                to report on Form 1042-S under paragraph (d)(4) of this section (other
                than a nonparticipating FFI reporting under paragraph (d)(4)(v) of this
                section) may rely on the procedures used for chapter 3 purposes
                (provided in published guidance) for reporting on Form 1042-S (even if
                the withholding agent is not required to report under chapter 3) for
                combined reporting following a merger or acquisition, provided that all
                of the requirements for such reporting provided in the Instructions for
                Form 1042-S are satisfied.
                * * * * *
                Sec. 1.1474-1T [Removed]
                0
                Par. 20. Section 1.1474-1T is removed.
                0
                Par. 21. Section 1.6049-6 is amended by:
                0
                1. Adding a sentence to the end of paragraph (e)(4).
                0
                 2. Revising the second sentence of paragraph (e)(5) and adding a new
                third sentence to paragraph (e)(5).
                 The additions and revision read as follows:
                Sec. 1.6049-6 Statements to recipients of interest payments and
                holders of obligations for attributed original issue discount.
                * * * * *
                 (e) * * *
                 (4) Special rule for amounts described in Sec. 1.6049-8(a). * * *
                A person required by this paragraph (e)(4) to furnish a recipient copy
                of Form 1042-S may furnish such copy electronically by complying with
                the requirements provided in Sec. 1.6050W-2(a)(2) through (5)
                applicable to statements required under section 6050W (substituting the
                phrase ``Form 1042-S'' for the phrases ``statement required under
                section 6050W'' or ``statements required by section 6050W(f)'' each
                place they appear).
                 (5) Effective/applicability date. * * * Paragraph (e)(4) of this
                section applies to payee statements reporting payments of deposit
                interest to nonresident alien individuals paid on or after January 2,
                2020, but it may be applied to payments made on or after January 1,
                2016. For payee statements reporting payments of deposit interest to
                nonresident alien individuals paid on or after January 1, 2013 and
                before January 2, 2020, see paragraph (e)(4) of this section as in
                effect and contained in 26 CFR part 1 revised April 1, 2019. * * *
                Sunita Lough,
                Deputy Commissioner for Services and Enforcement.
                 Approved: December 11, 2019.
                David J. Kautter,
                Assistant Secretary of the Treasury (Tax Policy).
                [FR Doc. 2019-27979 Filed 12-27-19; 4:15 pm]
                BILLING CODE 4830-01-P
                

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