Withholding of tax on nonresident aliens and foreign corporations

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Withholding of tax on
nonresident aliens and
foreign corporations
Treasury Regulations
§1.1441 - §1.1446 and §1.1461 - §1.1464
Incorporating updates through 1 July 2014
Ver. 1.0
1 August 2014
No claim to original U.S. Government works
This page intentionally blank
Withholding of tax on nonresident aliens and foreign corporations
Treasury Regulations §1.1441 - §1.1444 and §1.1461 - §1.1464
Incorporating updates through 1 July 2014
The documents referenced by this document are
Text in blue italic
26 CFR Parts 1, 31, and 301
[TD 9658]
RIN 1545–BL18
Published in the Federal Register / Vol. 79, No. 44 / Thursday, March 6, 2014
https://federalregister.gov/a/2014-03991
Text in green italic
26 CFR Parts 1 and 31
[TD 9658]
RIN 1545–BL18
Published in the Federal Register / Vol. 79, No. 126 / Tuesday, July 1, 2014
https://federalregister.gov/a/2014-15466
This document was prepared as a courtesy and should not be regarded as an authoritative
reference to the Internal Revenue Code, Income Tax Regulations or the publications cited
above. This document is for general information purposes only, and should not be used as a
substitute for consultation with professional advisors.
PwC is not responsible for any errors or omissions, or for the results obtained from the use of
this document. All information in this document is provided "as is", with no guarantee of
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and without warranty of any kind, express or implied.
Formatting copyright © 2014 PricewaterhouseCoopers LLP. All rights reserved.
"PwC" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which
is a member firm of PricewaterhouseCoopers International Limited, each member firm of
which is a separate legal entity.
No claim to original U.S. Government works.
Version 1.0
1 August 2014
Withholding of tax on nonresident aliens and foreign corporations (July 1, 2014) Contents
Background ............................................................................................................................................................................................... 1
Information Reporting and Withholding Regimes ................................................................................................................................. 1
Explanation of Provisions ........................................................................................................................................................................ 4
I. Overview of Changes to Coordinate Chapter 4 (Including Information Reporting Provided by FFIs under an IGA) with
the Regulations under Chapters 3 and 61 [I] ............................................................................................................................ 4
I.A. Identification of Payee Status [I.A] ............................................................................................................................ 4
I.B. Information Reporting with Respect to U.S. Persons [I.B] ....................................................................................... 4
I.C. Withholding [I.C] ......................................................................................................................................................... 5
II. Changes to Chapter 3 Withholding Provisions [II] .................................................................................................................. 5
II.A. U.S. agent of a foreign person [II.A] .......................................................................................................................... 5
II.B. U.S. branch treated as a U.S. person [II.B] ................................................................................................................. 6
II.C. Other payees (authorized foreign agents) [II.C] ......................................................................................................... 6
II.D. Reliable association with documentation [II.D] ......................................................................................................... 7
II.E. Presumption rules and joint payees [II.E] .................................................................................................................. 7
II.F. Grace period [II.F] ....................................................................................................................................................... 8
II.G. Exemptions from chapter 3 withholding [II.G] .......................................................................................................... 8
II.H. Establishing foreign status under chapter 61 [II.H] ................................................................................................... 8
II.I. Curing late or incomplete documentation [II.I] ......................................................................................................... 8
II.J. Definitions [II.J] .......................................................................................................................................................... 9
II.K. Withholding certificates [II.K] .................................................................................................................................... 9
II.L. Withholding statement of a nonqualified intermediary [II.L] ................................................................................ 13
II.M. Qualified intermediaries [II.M] ................................................................................................................................. 14
II.N. Coordination of §1.1441-3 with chapter 4 withholding [II.N].................................................................................. 15
II.O. Presumption rule for payments to U.S. branches and removal of transitional documentation rules
[II.O] ........................................................................................................................................................................... 16
II.P. Coordination of §1.1441-5 with chapter 4 withholding and removal of transitional documentation rules
[II.P] ............................................................................................................................................................................ 16
II.Q. Coordination with chapter 4 withholding for payments subject to reduced withholding under an
income tax treaty [II.Q] ..............................................................................................................................................1 7
II.R. U.S. TIN requirement and removal of transitional documentation rules [II.R]......................................................1 7
II.S. Coordination of §1.1441-7 with chapter 4 withholding [II.S] .................................................................................. 18
II.T. Coordination of §1.1461-1 with chapter 4 withholding [II.T]................................................................................... 19
III. Changes to Information Reporting Provisions Under Chapter 61 [III] ................................................................................. 20
III.A. General coordination of information reporting under §1.6049-4 with chapter 4 [III.A]....................................... 20
III.B. Further coordination of interest reporting under §1.6049-5(b) with chapter 4 [III.B] ......................................... 21
III.C. Exceptions to reporting for certain payments made on behalf of a PFIC [III.C] .................................................... 22
III.D. Reliance on documentary evidence under §1.6049-5(c) [III.D] .............................................................................. 23
III.E. Coordination of chapter 4 with presumption rules under §1.6049-5(d) [III.E] ..................................................... 24
III.F. Paid outside the United States under §1.6049-5(e) [III.F] ...................................................................................... 26
IV. Other Changes With Respect to Backup Withholding Under Section 3406, Claims for Refund or Credit Under Section
6402, and Repeal of Portfolio Interest Treatment for Certain Obligations Under Section 871 [IV] ................................... 26
IV.A. Coordination of withholding under §31.3406(g)-1(e) with chapter 4 [IV.A] .......................................................... 26
IV.B. Claims for credit or refund of chapter 4 withholding under §301.6402-3(e) [IV.B] .............................................. 26
IV.C. Repeal of portfolio interest treatment for foreign-targeted obligations under §1.871-14 [IV.C] ........................... 27
IV.D. Removal of example in §1.6045-1(g)(4) [IV.D] ........................................................................................................ 27
Special Analyses ...................................................................................................................................................................................... 28

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Withholding of tax on nonresident aliens and foreign corporations (July 1, 2014) Contents
Regulations
1 Withholding of tax on nonresident aliens [§1.1441] ...................................................................................................................... 29
1-1 Requirement for the deduction and withholding of tax on payments to foreign persons [§1.1441-1] .......................... 29
1-1(a) Purpose and scope [§1.1441-1(a)] ....................................................................................................................... 29
1-1(b) General rules of withholding [§1.1441-1(b)] ...................................................................................................... 29
1-1(c) Definitions [§1.1441-1(c)] .................................................................................................................................... 59
1-1(d) Beneficial owner's or payee's claim of U.S. status [§1.1441-1(d)] ..................................................................... 67
1-1(e) Beneficial owner's claim of foreign status [§1.1441-1(e)] .................................................................................. 68
1-1(f) Effective date [§1.1441-1(f)] .............................................................................................................................. 104
1-1(g) Expiration date. [§1.1441-1(g)] ......................................................................................................................... 104
1-2 Amounts subject to withholding [§1.1441-2] ................................................................................................................. 105
1-2(a) In general [§1.1441-2(a)] ................................................................................................................................... 105
1-2(b) Fixed or determinable annual or periodical income [§1.1441-2(b)] ............................................................... 105
1-2(c) Other income subject to withholding [§1.1441-2(c)] ....................................................................................... 108
1-2(d) Exceptions to withholding where no money or property is paid or lack of knowledge [§1.1441-2(d)]......... 108
1-2(e) Payment [§1.1441-2(e)] ..................................................................................................................................... 109
1-2(f) Effective/applicability date. [§1.1441-2(f)] .......................................................................................................110
1-2(g) Expiration date. [§1.1441-2T(g)] .......................................................................................................................110
1-3 Determination of amounts to be withheld [§1.1441-3] ................................................................................................... 111
1-3(a) General rule [§1.1441-3(a)] ................................................................................................................................ 111
1-3(b) Withholding on payments on certain obligations [§1.1441-3(b)] .................................................................... 111
1-3(c) Corporate distributions [§1.1441-3(c)] .............................................................................................................. 112
1-3(d) Withholding on payments that include an undetermined amount of income [§1.1441-3(d)] ....................... 116
1-3(e) Payments other than in U.S. dollars [§1.1441-3(e)] ......................................................................................... 117
1-3(f) Tax liability of beneficial owner satisfied by withholding agent [§1.1441-3(f)] .............................................. 117
1-3(g) Conduit financing arrangements [§1.1441-3(g)] ..............................................................................................1 18
1-3(h) Dividend equivalents [§1.1441-3(h)] ................................................................................................................. 119
1-3(i) Effective date [§1.1441-3(i)] ............................................................................................................................... 119
1-3(j) Effective/applicability date. [§1.1441-3(j)] ....................................................................................................... 119
1-4 Exemptions from withholding for certain effectively connected income and other amounts [§1.1441-4] ................. 120
1-4(a) Certain income connected with a U.S. trade or business [§1.1441-4(a)] ........................................................ 120
1-4(b) Compensation for personal services of an individual [§1.1441-4(b)] .............................................................. 121
1-4(c) Special rules for scholarship and fellowship income [§1.1441-4(c)] .............................................................. 128
1-4(d) Annuities received under qualified plans [§1.1441-4(d)] ................................................................................ 128
1-4(e) Per diem of certain alien trainees [§1.1441-4(e)] ............................................................................................. 129
1-4(f) Failure to receive withholding certificates timely or to act in accordance with applicable
presumptions [§1.1441-4(f)] ............................................................................................................................. 129
1-4(g) Effective/applicability date [§1.1441-4(g)]....................................................................................................... 129
1-4(h) Expiration date. [§1.1441-4(h)] ........................................................................................................................ 129
1-5 Withholding on payments to partnerships, trusts, and estates [§1.1441-5] ................................................................. 130
1-5(a) In general [§1.1441-5(a)] ................................................................................................................................... 130
1-5(b) Rules applicable to U.S. partnerships, trusts, and estates [§1.1441-5(b)] ...................................................... 130
1-5(c) Foreign partnerships [§1.1441-5(c)] ................................................................................................................. 132
1-5(d) Presumption rules [§1.1441-5(d)] ..................................................................................................................... 140
1-5(e) Foreign trusts and estates [§1.1441-5(e)] .......................................................................................................... 141
1-5(f) Failure to receive withholding certificate timely or to act in accordance with applicable
presumptions. [§1.1441-5(f)] ............................................................................................................................ 147
1-5(g) Effective date [§1.1441-5(g)] ............................................................................................................................. 147
1-5(h) Expiration date. [§1.1441-5(g)(4)] .................................................................................................................... 147
1-6 Claim of reduced withholding under an income tax treaty [§1.1441-6] ........................................................................ 148
1-6(a) In general [§1.1441-6(a)] ................................................................................................................................... 148
1-6(b) Reliance on claim of reduced withholding under an income tax treaty [§1.1441-6(b)] ................................. 148

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Withholding of tax on nonresident aliens and foreign corporations (July 1, 2014) Contents
1-6(c) Exemption from requirement to furnish a taxpayer identifying number and special documentary
evidence rules for certain income - [§1.1441-6(c)] ......................................................................................... 153
1-6(d) Joint owners [§1.1441-6(d)] .............................................................................................................................. 154
1-6(e) Competent authority [§1.1441-6(e)] ................................................................................................................. 154
1-6(f) Failure to receive withholding certificate timely [§1.1441-6(f)] ...................................................................... 154
1-6(g) Special taxpayer identifying number rule for certain foreign individuals claiming treaty benefits
[§1.1441-6(g)] .................................................................................................................................................... 155
1-6(h) Dividend equivalents [§1.1441-6(h)] .................................................................................................................1 57
1-6(i) Effective/applicability dates [§1.1441-6(i)] .......................................................................................................1 57
1-6(j) Expiration date. [§1.1441-6(j)] ......................................................................................................................... 158
1-7 General provisions relating to withholding agents [§1.1441-7] ..................................................................................... 159
1-7(a) Withholding agent defined [§1.1441-7(a)] ....................................................................................................... 159
1-7(b) Standards of knowledge [§1.1441-7(b)] ............................................................................................................ 160
1-7(c) Agent - [§1.1441-7(c)] ........................................................................................................................................173
1-7(d) United States obligations [§1.1441-7(d)] .......................................................................................................... 174
1-7(e) Assumed obligations [§1.1441-7(e)] ................................................................................................................. 174
1-7(f) Conduit financing arrangements [§1.1441-7(f)] .............................................................................................. 174
1-7(g) Effective/applicability date [§1.1441-7(g)] ........................................................................................................ 177
1-7(h) Effective date/Applicability. [§1.1441-7(h)] ...................................................................................................... 177
1-7(i) Expiration date. [§1.1441-7T(i)] ........................................................................................................................ 177
1-8 Exemption from withholding for payments to foreign governments, international organizations, foreign
central banks of issue, and the Bank for International Settlements [§1.1441-8] ......................................................... 178
1-8(a) Foreign governments [§1.1441-8(a)] ................................................................................................................ 178
1-8(b) Reliance on claim of exemption by foreign government [§1.1441-8(b)] ........................................................ 178
1-8(c) Income of a foreign central bank of issue or the Bank for International Settlements [§1.1441-8(c)]........... 178
1-8(d) Exemption for payments to international organizations [§1.1441-8(d)]........................................................ 178
1-8(e) Failure to receive withholding certificate timely and other applicable procedures [§1.1441-8(e)] .............. 179
1-8(f) Effective date [§1.1441-8(f)] ............................................................................................................................. 179
1-9 Exemption from withholding on exempt income of a foreign tax-exempt organization, including foreign
private foundations [§1.1441-9] ...................................................................................................................................... 180
1-9(a) Exemption from withholding for exempt income [§1.1441-9(a)] ................................................................... 180
1-9(b) Reliance on foreign organization's claim of exemption from withholding [§1.1441-9(b)] ............................ 180
1-9(c) Failure to receive withholding certificate timely and other applicable procedures [§1.1441-9(c)] ................ 181
1-9(d) Effective date [§1.1441-9(d)] ..............................................................................................................................1 81
1-10 Withholding agents with respect to fast-pay arrangements [§1.1441-10] .................................................................... 182
1-10(a) In general [§1.1441-10(a)] ................................................................................................................................. 182
1-10(b) Exception [§1.1441-10(b)] ................................................................................................................................. 182
1-10(c) Liability [§1.1441-10(c)] .................................................................................................................................... 182
1-10(d) Examples [§1.1441-10(d)] ................................................................................................................................. 182
1-10(e) Effective date [§1.1441-10(e)] ........................................................................................................................... 182
2 Withholding of tax on foreign corporations [§1.1442] ................................................................................................................. 183
2-1 Withholding of tax on foreign corporations [§1.1442-1] ............................................................................................... 183
2-1(a) Exemption under a tax treaty [§1.1442-1(a)] ................................................................................................... 183
2-1(b) Tax exempt income of a foreign tax-exempt corporation [§1.1442-1(b)] ....................................................... 183
3 Foreign tax-exempt organizations [§1.1443] ................................................................................................................................ 183
3-1 Foreign tax-exempt organizations [§1.1443-1] .............................................................................................................. 183
3-1(a) Income includible in computing unrelated business taxable income [§1.1443-1(a)] .................................... 183
3-1(b) Income subject to tax under section 4948 [§1.1443-1(b)] ............................................................................... 183
3-1(c) Effective date [§1.1443-1(c)] ............................................................................................................................. 184
4 Withholding on Virgin Islands source income [§1.1444] ............................................................................................................ 184

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Withholding of tax on nonresident aliens and foreign corporations (July 1, 2014) Contents
5 Withholding of tax on dispositions of United States real property interests [§1.1445] ............................................................. 185
5-1 Withholding on dispositions of U.S. real property interests by foreign persons: In general [§1.1445-1] ................... 185
5-1(a) Purpose and scope of regulations [§1.1445-1(a)] ............................................................................................. 185
5-1(b) Duty to withhold [§1.1445-1(b)] ....................................................................................................................... 185
5-1(c) Reporting and paying over of withheld amounts [§1.1445-1(c)] .................................................................... 186
5-1(d) Contents of Forms 8288 and 8288-A [§1.1445-1(d)] ...................................................................................... 188
5-1(e) Liability of transferee upon failure to withhold [§1.1445-1(e)] ....................................................................... 189
5-1(f) Effect of withholding on transferor [§1.1445-1(f)]............................................................................................ 191
5-1(g) Definitions [§1.1445-1(g)] ................................................................................................................................. 192
5-1(h) Effective date for taxpayer identification numbers [§1.1445-1(h)] ................................................................. 193
5-2 Situations in which withholding is not required under section 1445(a) [§1.1445-2] ................................................... 194
5-2(a) Purpose and scope of section [§1.1445-2(a)] ................................................................................................... 194
5-2(b) Transferor not a foreign person [§1.1445-2(b)] ............................................................................................... 194
5-2(c) Transferred property not a U.S. real property interest [§1.1445-2(c)] ........................................................... 197
5-2(d) Exceptions to requirement of withholding [§1.1445-2(d)] ............................................................................. 199
5-2(e) Effective date for taxpayer identification numbers [§1.1445-2(e)] .................................................................204
5-3 Adjustments to amount required to be withheld pursuant to withholding certificate [§1.1445-3] ............................ 205
5-3(a) In general [§1.1445-3(a)] ..................................................................................................................................2 05
5-3(b) Applications for withholding certificates [§1.1445-3(b)] ................................................................................ 205
5-3(c) Adjustment of amount required to be withheld [§1.1445-3(c)] ...................................................................... 207
5-3(d) Transferor's exemption from U.S. tax [§1.1445-3(d)] .....................................................................................209
5-3(e) Agreement for the payment of tax [§1.1445-3(e)] ...........................................................................................209
5-3(f) Amendments to application for withholding certificate [§1.1445-3(f)] ......................................................... 212
5-3(g) Early refund of overwithheld amounts [§1.1445-3(g)] .................................................................................... 213
5-3(h) Effective date for taxpayer identification numbers [§1.1445-3(h)] ................................................................ 213
5-4 Liability of agents [§1.1445-4] ........................................................................................................................................ 214
5-4(a) Duty to provide notice of false certification or statement to transferee [§1.1445-4(a)] ................................ 214
5-4(b) Duty to provide notice of false certification or statement to entity or fiduciary [§1.1445-4(b)] ................... 214
5-4(c) Procedural requirements [§1.1445-4(c)] .......................................................................................................... 214
5-4(d) Effect on recipient [§1.1445-4(d)] .................................................................................................................... 215
5-4(e) Failure to provide notice [§1.1445-4(e)] .......................................................................................................... 215
5-4(f) Definition of transferor's or transferee's agent [§1.1445-4(f)] ........................................................................ 215
5-5 Special rules concerning distributions and other transactions by corporations, partnerships, trusts, and
estates [§1.1445-5] ........................................................................................................................................................... 217
5-5(a) Purpose and scope [§1.1445-5(a)] .................................................................................................................... 217
5-5(b) Rules of general application [§1.1445-5(b)] ..................................................................................................... 217
5-5(c) Dispositions of U.S. real property interests by domestic partnerships, trusts, and estates [§1.1445-
5(c)] .................................................................................................................................................................... 224
5-5(d) Distributions of U.S. real property interests by foreign corporations [§1.1445-5(d)] ................................... 228
5-5(e) Distributions to foreign persons by U.S. real property holding corporations [§1.1445-5(e)] ....................... 229
5-5(f) Taxable distributions by domestic or foreign partnerships, trusts, or estates [§1.1445-5(f)] ....................... 230
5-5(g) Dispositions of interests in partnerships, trusts, and estates [§1.1445-5(g)] .................................................2 30
5-5(h) Effective date for taxpayer identification numbers [§1.1445-5(h)] ................................................................2 30
5-6 Adjustments pursuant to withholding certificate of amount required to be withheld under section 1445(e)
[§1.1445-6] ....................................................................................................................................................................... 231
5-6(a) Withholding certificate for purposes of section 1445(e) [§1.1445-6(a)] ......................................................... 231
5-6(b) Applications for withholding certificates [§1.1445-6(b)] ................................................................................ 231
5-6(c) Adjustment of amount required to be withheld [§1.1445-6(c)] ...................................................................... 232
5-6(d) Relevant taxpayer's exemption from U.S. tax [§1.1445-6(d)] ......................................................................... 232
5-6(e) Agreement for the payment of tax [§1.1445-6(e)] ........................................................................................... 233
5-6(f) Amendments to application for withholding certificates [§1.1445-6(f)] ........................................................ 234
5-6(g) Early refund of overwithheld amounts [§1.1445-6(g)] .................................................................................... 235
5-6(h) Effective date for taxpayer identification numbers [§1.1445-6(h)] ................................................................ 235

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Withholding of tax on nonresident aliens and foreign corporations (July 1, 2014) Contents
5-7 Treatment of foreign corporation that has made an election under section 897(i) to be treated as a domestic
corporation [§1.1445-7] ................................................................................................................................................... 236
5-7(a) In general [§1.1445-7(a)] .................................................................................................................................. 236
5-7(b) Withholding under section 1445(a) [§1.1445-7(b)] ......................................................................................... 236
5-7(c) Withholding under section 1445(e) [§1.1445-7(c)] .......................................................................................... 236
5-8 Special rules regarding publicly traded partnerships, publicly traded trusts and real estate investment
trusts (REITS) [§1.1445-8] .............................................................................................................................................. 237
5-8(a) Entities to which this section applies [§1.1445-8(a)] ...................................................................................... 237
5-8(b) Obligation to withhold [§1.1445-8(b)] ............................................................................................................. 237
5-8(c) Amount to be withheld [§1.1445-8(c)] ............................................................................................................. 238
5-8(d) Definition of nominee [§1.1445-8(d)] .............................................................................................................. 239
5-8(e) Determination of non-foreign status by withholding agent [§1.1445-8(e)] ................................................... 239
5-8(f) Qualified notice [§1.1445-8(f)] ......................................................................................................................... 239
5-8(g) Reporting and paying over withheld amounts [§1.1445-8(g)] ........................................................................ 239
5-8(h) Early refund procedure not available [§1.1445-8(h)] ......................................................................................240
5-8(i) Liability upon failure to withhold [§1.1445-8(i)] .............................................................................................240
5-9 Sec. 1.1445-9T Special rule for section 1034 nonrecognition. (Temporary) ................................................................240
5-10 Special rule for foreign governments (Temporary) [§1.1445-10T] ............................................................................... 241
5-10(a) [§1.1445-10T(a)] ................................................................................................................................................ 241
5-10(b) Foreign government [§1.1445-10T(b)] ............................................................................................................. 241
5-10(c) Effective date [§1.1445-10T(c)]......................................................................................................................... 241
5-11 Special rules requiring withholding under §1.1445-5 (Temporary) [§1.1445-11T] ...................................................... 242
5-11(a) Purpose and scope [§1.1445-11T(a)] ................................................................................................................. 242
5-11(b) Disposition of interests in partnerships, trusts, and estates [§1.1445-11T(b)] .............................................. 242
5-11(c) Transactions covered elsewhere [§1.1445-11T(c)] ........................................................................................... 242
5-11(d) Dispositions of interests in partnerships, trusts, and estates [§1.1445-11T(d)] ............................................. 242
5-11(e) Effective date [§1.1445-11T(e)] ......................................................................................................................... 243
6 Withholding tax on foreign partners' share of effectively connected income [§1.1446] ............................................................ 244
6-1 Witholding tax on foreign partners' share of effectively connected taxable income [§1.1446-1] ................................ 244
6-1(a) In general [§1.1446-1(a)] ................................................................................................................................... 244
6-1(b) Steps in determining 1446 tax obligation [§1.1446-1(b)] ................................................................................ 244
6-1(c) Determining whether a partnership has a foreign partner [§1.1446-1(c)] ..................................................... 244
6-2 Determining a partnership's effectively connected taxable income allocable to foreign partners under
section 704 [§1.1446-2] ................................................................................................................................................... 250
6-2(a) In general [§1.1446-2(a)] .................................................................................................................................. 250
6-2(b) Computation [§1.1446-2(b)] ............................................................................................................................. 250
6-3 Time and manner of calculating and paying over the 1446 tax [§1.1446-3]................................................................. 254
6-3(a) In general [§1.1446-3(a)] .................................................................................................................................. 254
6-3(b) Installment payments [§1.1446-3(b)] .............................................................................................................. 254
6-3(c) Coordination with other withholding rules [§1.1446-3(c)] ............................................................................. 258
6-3(d) Reporting and crediting the 1446 tax [§1.1446-3(d)] ...................................................................................... 259
6-3(e) Liability of partnership for failure to withhold [§1.1446-3(e)] ....................................................................... 265
6-3(f) Effect of withholding on partner [§1.1446-3(f)] .............................................................................................. 269
6-4 Publicly traded partnerships [§1.1446-4] ....................................................................................................................... 270
6-4(a) In general [§1.1446-4(a)] .................................................................................................................................. 270
6-4(b) Definitions [§1.1446-4(b)] ................................................................................................................................ 270
6-4(c) Paying and reporting 1446 tax [§1.1446-4(c)] ................................................................................................. 270
6-4(d) Rules for designation of nominees to withhold tax under section 1446 [§1.1446-4(d)] ................................ 270
6-4(e) Determining foreign status of partners [§1.1446-4(e)] ................................................................................... 271
6-4(f) Distributions subject to withholding [§1.1446-4(f)] ........................................................................................ 271
6-5 Tiered partnership structures [§1.1446-5] ..................................................................................................................... 273
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Withholding of tax on nonresident aliens and foreign corporations (July 1, 2014) Contents
6-5(a) In general [§1.1446-5(a)] .................................................................................................................................. 273
6-5(b) Reporting requirements [§1.1446-5(b)] ........................................................................................................... 273
6-5(c) Look through rules for foreign upper-tier partnerships [§1.1446-5(c)] ......................................................... 273
6-5(d) Publicly traded partnerships [§1.1446-5(d)].................................................................................................... 274
6-5(e) Election by a domestic upper-tier partnership to apply look through rules [§1.1446-5(e)] .......................... 274
6-5(f) Examples [§1.1446-5(f)].................................................................................................................................... 275
6-6 Special rules to reduce a partnership's 1446 tax with respect to a foreign partner's allocable share of
effectively connected taxable income [§1.1446-6] ......................................................................................................... 277
6-6(a) In general [§1.1446-6(a)] .................................................................................................................................. 277
6-6(b) Foreign partner to whom this section applies [§1.1446-6(b)] ........................................................................ 277
6-6(c) Reduction of 1446 tax with respect to a foreign partner [§1.1446-6(c)] ....................................................... 280
6-6(d) Effect of certificate of deductions and losses on partners and partnership [§1.1446-6(d)] .......................... 285
6-6(e) Examples [§1.1446-6(e)] ................................................................................................................................... 287
6-6(f) Effective/Applicability date [§1.1446-6(f)] ...................................................................................................... 297
6-6(g) Transition rule [§1.1446-6(g)] ..........................................................................................................................2 98
6-7 Effective/Applicability date [§1.1446-7] .........................................................................................................................2 98
1 Liability for withheld tax [§1.1461] ............................................................................................................................................... 299
1-1 Payment and returns of tax withheld [§1.1461-1] .......................................................................................................... 299
1-1(a) Payment of withheld tax [§1.1461-1(a)] ............................................................................................................ 299
1-1(b) Income tax return [§1.1461-1(b)] ...................................................................................................................... 299
1-1(c) Information returns [§1.1461-1(c)] .................................................................................................................. 300
1-1(d) Report of taxpayer identifying numbers [§1.1461-1(d)] .................................................................................. 310
1-1(e) Indemnification of withholding agent [§1.1461-1(e)] ...................................................................................... 310
1-1(f) Amounts paid not constituting gross income [§1.1461-1(f)] ........................................................................... 310
1-1(g) Extensions of time to file Forms 1042 and 1042-S [§1.1461-1(g)] .................................................................. 310
1-1(h) Penalties [§1.1461-1(h)]...................................................................................................................................... 311
1-1(i) Effective/applicability date. [§1.1461-1(i)] ........................................................................................................ 311
1-1(j) Expiration date. [§1.1461-1(j)] ........................................................................................................................... 311
1-2 The applicability of this section expires on February 28, 2017.Adjustments for overwithholding or
underwithholding of tax [§1.1461-2] .............................................................................................................................. 312
1-2(a) Adjustments for overwithholding or underwithholding of tax [§1.1461-2(a)] ............................................... 312
1-2(b) Withholding of additional tax when underwithholding occurs [§1.1461-2(b)] .............................................. 314
1-2(c) Definition [§1.1461-2(c)] ................................................................................................................................... 314
1-2(d) Effective/applicability date [§1.1461-2(d)] ..................................................................................................... 314
1-2(e) Expiration date. [§1.1461-2(e)] ......................................................................................................................... 314
1-3 Internal Revenue Service,Withholding under section 1446 [§1.1461-3] ...................................................................... 315
1-4 Internal Revenue Service,Adjustments for overwithholding of tax [§1.1461-4] .......................................................... 315
1-4(a) (a)Repayment of erroneously withheld tax after payment of tax by withholding agent -- [§1.1461-
4(a)] ................................................................................................................................................................... 315
1-4(b) Adjustment of tax payments or deposits -- [§1.1461-4(b)] ............................................................................. 315
1-4(c) Definition -- [§1.1461-4(c)] ............................................................................................................................... 316
1-4(d) Effective date -- [§1.1461-4(d)] ........................................................................................................................ 316
2 Withheld tax as credit to recipient of income [§1.1462] ...............................................................................................................317
2-1 Internal Revenue Service,Withheld tax as credit to recipient of income [§1.1462-1] ..................................................317
2-1(a) Creditable tax -- [§1.1462-1(a)] .........................................................................................................................317
2-1(b) Amounts paid to persons who are not the beneficial owner -- [§1.1462-1(b)] ...............................................317
2-1(c) Effective date -- [§1.1462-1(c)] .........................................................................................................................317
3 Tax paid by recipient of income [§1.1463] .................................................................................................................................... 318
3-1 Internal Revenue Service,Tax paid by recipient of income [§1.1463-1] ........................................................................ 318

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