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Department of the Treasury 2021 Internal Revenue Service Instructions for Form 1042-S Foreign Person's U.S. Source Income Subject to Withholding

Section references are to the Internal Revenue subsequent year with respect to a See also Notice 2020-2 (2020-3 I.R.B. Code unless otherwise noted. foreign partner's or beneficiary's share 327), available at IRS.gov/irb/ of income for the prior year may 2020-03_IRB#NOT-2020-2, which Future Developments designate the deposit of the withholding extends the phase-in period provided in For the latest information about as attributable to the preceding year and Notice 2018-72, 2018-40 I.R.B. 522, developments related to Form 1042-S in some cases a partnership is provided available at IRS.gov/irb/ and its instructions, such as legislation an extended due date for filing and 2018-40_IRB#NOT-2018-72, for certain enacted after they were published, go to furnishing Form 1042-S. See the provisions of the section 871(m) IRS.gov/Form1042S. instructions for Box 7c, later. regulations for two years, including for • Adjustments to overwithholding certain requirements of a qualified General Instructions under the reimbursement and set-off derivatives dealer (QDD). procedures. A withholding agent may Foreign Account Tax Compliance make adjustments to overwithholding What’s New Act (FATCA). Form 1042-S reports using either the reimbursement or payments and amounts withheld under Exemption code 02. Chapter 3 set-off procedures until the extended the provisions commonly known as exemption code 02 has been revised to due date for filing Form 1042-S (unless FATCA or Chapter 4 of the Internal read as follows “Exempt under IRC.” the Form 1042-S has already been filed Revenue Code (chapter 4) in addition to New footnote 7 has been added to or furnished). Additionally, a withholding those amounts required to be reported clarify that exemption code 02 “should agent may use the extended due date under Chapter 3 of the Internal Revenue only be used if no other specific for filing a Form 1042 to claim a credit Code (chapter 3). Form 1042-S requires chapter 3 exemption code applies.” As a for any adjustments made to the reporting of an applicable exemption result of the addition of footnote 7, all overwithholding. See the instructions for to the extent withholding under subsequent footnotes have been Box 9, later. renumbered. chapter 4 did not apply to a payment of Box 12f (country code). If the U.S. source fixed or determinable Exemption code 24. New chapter 3 withholding agent is a U.S. person or a annual or periodical (FDAP) income exemption code 24 (exempt under foreign branch of a U.S. person, filers (including deposit interest) that is section 892) has been added. must now enter “US” in box 12f (even reportable on Form 1042-S. For Requests for extension of time to though “US” is not a code on the list at payments to intermediaries, provide statements to recipients. IRS.gov/CountryCodes). See the flow-through entities, and recipients, The IRS has changed the manner in instructions for Box 12f, Country code, Form 1042-S requires that the chapter 3 which requests for an extension of time later, for details. status (or classification) and, when the payment reported is a withholdable to provide statements to recipients may Withholding rates. The rate of payment, the chapter 4 status, be be made. See Recipient copies, later, withholding under section 1446 by a reported on the form according to the for details. publicly traded partnership on a codes provided in these instructions. distribution of income effectively For the requirement of a withholding Reminders connected to a U.S. trade or business is agent to file a Form 1042-S for 21% for corporate partners and 37% for Reliance on proposed regulations chapter 4 purposes, see Regulations all other partners. reducing burden under FATCA and section 1.1474-1(d). Chapter 3. On December 18, 2018, the The rate of withholding by a Qualified Interest on deposits. Deposit interest Internal Revenue Service and Investment Entity on a distribution to a described in section 871(i)(2)(A) Department of Treasury issued nonresident alien or foreign corporation aggregating $10 or more paid to certain proposed regulations (REG-132881-17) that is treated as gain from the sale or nonresident alien individuals with to reduce taxpayer burden with respect exchange of a U.S. real property respect to a deposit maintained at an to certain requirements under Chapters interest by the shareholder is 21%. office within the United States and held 3 and 4 of the Code. The proposed Qualified derivatives dealers by a resident of certain countries must regulations provide that, under section (QDDs). These instructions provide be reported on Form 1042-S. For more 7805(b)(1)(C), taxpayers may generally guidance on how to report payments on information, see Interest on deposits rely on the proposed regulations until Form 1042-S that are made to and by paid to certain nonresident aliens in the final regulations are issued. Specifically, QDDs. See Payments by U.S. bullet list under Amounts Subject to for purposes of these instructions, a Withholding Agents and Amounts Paid Reporting on Form 1042-S, later. withholding agent may rely on the by Qualified Intermediaries, later. For following provisions in connection with more information on the withholding and Substitute forms. A substitute form completing Form 1042-S. reporting requirements associated with furnished to a recipient must conform in • Withholding and reporting in a payments made to and by QDDs, see format and size to the official IRS form subsequent year. A partnership or Rev. Proc. 2017-15, available at and contain the exact same information trust that is permitted to withhold in a IRS.gov/irb/2017-03_IRB#RP-2017-15. as the copy filed with the IRS. However,

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the size of the form may be adjusted if submitted on the FIRE System, it is the a payment on an obligation that it the substitute form is presented on a responsibility of the filer to check the maintains at its U.S. office or U.S. landscape oriented page instead of status within 5 business days to verify branch must report the recipient's portrait. Only one Form 1042-S may be the results of the transmission. The IRS foreign tax identification number (FTIN) submitted per page, regardless of will not mail error reports for files that and date of birth (if the recipient is an orientation. Withholding agents that are bad. See Pub. 1187, Specifications individual). See Box 13i, Recipient's furnish a substitute Form 1042-S (Copy for Electronic Filing of Form 1042-S, Foreign Tax Identification Number and B, C, or D) to the recipient must furnish Foreign Person’s U.S. Source Income Box 13l, Recipient’s Date of Birth, later, a separate substitute Form 1042-S for Subject to Withholding. for additional information regarding this each type of payment of income (as requirement. Unique form identifier. Withholding determined by the income code in Box agents must assign a unique identifying 1). Withholding agents are no longer number to each Form 1042-S they file. Purpose of Form permitted to combine all payments of This identifying number is used, for Use Form 1042-S to report income income on a single substitute Form example, to identify which information described under Amounts Subject to 1042-S. For more information, see return is being corrected or amended Reporting on Form 1042-S, later, and to Substitute Forms, later. when multiple information returns are report amounts withheld under Account-by-account reporting by filed by a withholding agent with respect chapter 3 or chapter 4. U.S. financial institutions. A U.S. to the same recipient. The unique Use Form 1042-S to report specified financial institution or a U.S. branch of a identifying number cannot be the federal procurement payments paid to foreign financial institution maintaining recipient's U.S. or foreign TIN. The foreign persons that are subject to an account within the United States is unique identifying number must be withholding under section 5000C. required to report payments of the same numeric. The length of a given type of income (as determined by the identifying number must be exactly 10 Use Form 1042-S to report payments income code in Box 1) made to multiple digits. The identifying number must be of eligible deferred compensation items financial accounts held by the same unique to each original Form 1042-S or distributions from nongrantor trusts to beneficial owner on separate Forms filed for the current year. The identifying covered expatriates that are subject to 1042-S for each account. See number can be used on a new original withholding under section 877A. See Account-by-Account Reporting by form in a subsequent year. Box 1, Income Code, later. Certain Financial Institutions, later. Amended forms. Withholding agents Use Form 1042-S to report certain Withholding agent's status codes. filing an amended form must indicate distributions that are made by publicly Withholding agents must enter both a the amendment number (see top of form traded trusts and qualified investment chapter 3 and a chapter 4 status code below title, to the right of the “Amended” entities (as defined under section 897(h) regardless of the type of payment being checkbox). The amendment number (4)(A)). See Distributions Attributable to made. See Boxes 12b and 12c, must be numeric and the length must be Dispositions of U.S. Real Property Withholding Agent's Chapter 3 and exactly one digit. Any amended form Interests by Publicly Traded Trusts and Chapter 4 Status Code, later. must have the same unique form Qualified Investment Entities, later. identifier as the original form that is Recipient country code. If the Also use Form 1042-S to report being amended. Each time that you recipient is unknown, leave Box 13b, distributions of effectively connected amend the same form (as determined Recipient's country code, blank and income by a publicly traded partnership by the unique form identifier), you must enter “Unknown Recipient” in Box 13a, or nominee. See Publicly Traded provide the amendment number in the Recipient's name. Partnerships (Section 1446 Withholding box provided on the form (using “1” for Tax), later. Treaty claims and limitation on ben- the first amendment and increasing efits articles. Withholding agents that sequentially for each subsequent Every person required to deduct are withholding at a reduced rate based amendment). See Amended Forms, ! and withhold any tax under on a treaty claim by an entity must later, for more information. CAUTION chapter 3 or chapter 4 is liable include a limitation on benefits code for such tax. List of foreign country codes. Form (LOB code) in Box 13j for the recipient 1042-S filers must use the same list of when they receive documentation Do not use Form 1042-S to report an country codes used on other IRS forms establishing the applicable limitation on item required to be reported on any of (for example, Forms 926, 1118, 3520, benefits provision of the treaty under the following forms. and 8805). This list of foreign country which the entity qualifies. Withholding • Form W-2 (wages and other codes may be found at IRS.gov/ agents are not, however, required to compensation made to employees CountryCodes. obtain new documentation unless they (other than compensation for dependent are otherwise required to renew such Note. Although the list of country codes personal services for which the documentation. See Box 13j, LOB is maintained by Modernized e-File, beneficial owner is claiming treaty Code, later. Form 1042-S filers who file benefits), including wages in the form of group-term life insurance). Chapter indicator. Withholding agents electronically will continue to use the Form 1099. must enter either “3” or “4” in Box 3 to FIRE System. See the instructions for • Form 8288-A, Statement of indicate the chapter with respect to Electronic Reporting, later. Also, if • Withholding on Dispositions by Foreign which a Form 1042-S is being filed. See applicable, the option to file Form Persons of U.S. Real Property Interests, Chapter indicator under Box 3, later, for 1042-S by paper is still available. or Form 8805, Foreign Partner's more information. Foreign tax identification number Information Statement of Section 1446 Filing Information Returns Electroni- and date of birth. A financial institution Withholding Tax. Withholding agents cally (FIRE) System. For files that files a Form 1042-S with respect to otherwise required to report a

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distribution partly on a Form 8288-A or beneficial owner of the income is a U.S. 1042-S, file Form 8809, Application for Form 8805 and partly on a Form 1042-S citizen, national, or resident alien (such Extension of Time To File Information may instead report the entire amount on amounts may be subject to Form 1099 Returns. See the Form 8809 Form 8288-A or Form 8805. reporting). instructions for where to file that form. Form 8966, FATCA Report. Foreign You should request an extension as • If you file Form 1042-S, you also financial institutions (FFIs), sponsoring soon as you are aware that an must file Form 1042, Annual entities of certain FFIs and other foreign ! extension is necessary, but no later than CAUTION Withholding Tax Return for U.S. entities, and withholding agents are the due date for filing Form 1042-S. By Source Income of Foreign Persons. See required to report on Form 8966 certain filing Form 8809, you will get an Form 1042 and its instructions for more account holders and payees. An FFI or automatic 30-day extension to file Form information. withholding agent may also be required 1042-S. If you need more time, you may to file Form 1042-S to report payments submit a second Form 8809 before the of U.S. source FDAP income made to Where, When, and end of the initial extended due date. See such persons and to report tax How To File Form 8809 for more information. deducted and withheld, if any. Forms 1042-S, whether filed on paper Recipient copies. You may request or electronically, must be filed with the an extension of time to provide the Who Must File IRS by March 15, 2022. You also must statements to recipients by faxing a Every withholding agent (defined in furnish Form 1042-S to the recipient of letter to: Definitions, later) must file an the income by March 15, 2022. information return on Form 1042-S to Internal Revenue Service report amounts paid during the Copy A is filed with the IRS. Send all Technical Services Operation preceding calendar year that are paper Forms 1042-S with Form 1042-T, Attn: Extension of Time described under Amounts Subject to Annual Summary and Transmittal of Coordinator Reporting on Form 1042-S, later. Forms 1042-S, to the address in the Fax: 877-477-0572 However, withholding agents who are Form 1042-T instructions. You must use (International 304-579-4105) individuals are not required to report a Form 1042-T to transmit paper Forms payment on Form 1042-S if they are not 1042-S. Use a separate Form 1042-T to The letter must include the following: making the payment as part of their transmit each type of Form 1042-S. See trade or business and no withholding is Payments by U.S. Withholding Agents, 1. Your name, required to be made on the payment. later, and the Form 1042-T instructions 2. Your TIN, For example, an individual making a for more information. 3. Your address, payment of interest that qualifies for the Electronic filing requirement. 4. Type of return (Form 1042-S), portfolio interest exception from Financial institutions must file Forms withholding is not required to report the 5. A statement that your extension 1042-S electronically. The IRS payment if the portfolio interest is paid request is for providing statements to encourages all other filers of Form on a loan that is not connected to the recipients, 1042-S to file them electronically; individual's trade or business. However, 6. Reason for delay, and however, they are not required to do so an individual who is a withholding agent unless the number of forms they are 7. The signature of the payer or paying an amount that actually has been required to file exceeds a certain authorized agent. subject to withholding is required to threshold. See Electronic Reporting, report the payment. Also, an individual Your request must be received no later later, for details. paying an amount on which withholding than the date the Forms 1042-S are due is required must report the payment, Attach only Copy A to Form to the recipients. If your request for an whether or not the individual actually TIP 1042-T. Provide Copies B, C, extension is approved, generally you withholds. See Multiple Withholding and D to the recipient of the will be granted a maximum of 30 extra Agent Rule, later, for exceptions to income. The withholding agent should days to furnish the recipient statements. reporting when another person has keep Copy E. All copies must match the See Extension to provide statements to reported the same payment to the copy filed with the IRS. Any differences recipients in Pub. 515, Withholding of recipient. between the copy of the form issued to Tax on Nonresident Aliens and Foreign recipients and the copy filed with the Entities. You must file a Form 1042-S even if IRS will lead to delays in processing the See Pub. 1187 for more you did not withhold tax under chapter 3 recipient's tax return. The IRS may information about filing because the income was exempt from disallow claims for refund or credit for extension requests tax under a U.S. tax treaty or the Code, amounts withheld reported on Form electronically instead of on a paper including the exemption for income that 1042-S if the form attached to such Form 8809. is effectively connected with the claims differs from the copy that was conduct of a trade or business in the filed with the IRS. Electronic Reporting United States, or you released the tax Forms 1042-S filed for tax year 2021 withheld to the recipient. For With respect to a withholdable must be filed electronically if: exceptions, see Amounts That Are Not payment, the recipient copy should be • You are a person (including a Subject to Reporting on Form 1042-S, provided to the intermediary or corporation, partnership, individual, later. flow-through entity named as a recipient trust, or estate) that is required to file with respect to a chapter 4 reporting Amounts paid to an individual that is 250 or more Forms 1042-S. pool, if applicable. a bona fide resident of a U.S. • You are a financial institution possession or territory are not subject to Extension of time to file. To request (whether U.S. or foreign) regardless of reporting on Form 1042-S if the an extension of time to file Forms

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the number of Forms 1042-S required to either asterisks (*) or Xs. For example, recipient (Copy B, C, or D) must be filed. an SSN or ITIN must be truncated on conform in format and size to the official the recipient's copy as XXX-XX-nnnn. IRS form and must contain the exact Section 6011(e), which was An EIN must be truncated as XX- same information as the copy filed with most recently amended by the ! XXXnnnn. the IRS. However, the size of the form CAUTION Taxpayer First Act of 2019, may be adjusted if the substitute form is enacted July 1, 2019, authorizes the Withholding agents may also presented on a landscape oriented IRS and Treasury to issue regulations truncate a recipient’s FTIN on the page instead of portrait. Only one Form that could change some of the above recipient’s copy of Form 1042-S (Copies 1042-S may be submitted per page, rules. If those regulations are issued B, C, and D), including a substitute regardless of orientation. You may be and effective for 2021 tax year returns, form. The same rules for truncating a subject to a penalty for failure to furnish we will post an article at IRS.gov/ recipient’s U.S. TIN stated above must a correct information return. See Form1042S explaining the changes. be followed if truncating a recipient’s Penalties, later. FTIN. Electronic submissions are filed Note. A withholding agent is required to using the FIRE System. The FIRE Note. The recipient's TIN and FTIN provide a recipient with a separate System operates 24 hours a day, 7 days must not be truncated on Copy A filed substitute Form 1042-S for each type of a week, at fire.irs.gov. For more with the IRS. The withholding agent's payment of income (as determined by information, see Pub. 1187. EIN cannot be truncated on any copy. the income code in Box 1). The electronic filing requirement Need assistance? For additional All of the fields on the substitute applies separately to original and information and instructions on filing form must match the copy filed amended returns. For a withholding Forms 1042-S electronically, extensions with the IRS and must comply agent other than a financial institution, of time to file (Form 8809), and hardship with IRS standards (see Pub. 1179). the filing requirement applies waivers (Form 8508), see Pub. 1187. Any differences between the substitute individually to each reporting entity as You also can call the Information form issued to recipients and the copy defined by its separate taxpayer Reporting Program at 866-455-7438 filed with the IRS will lead to delays in identification number (TIN). For (toll free) or 304-263-8700 (not a processing the recipient's tax return. example, if you have 300 original Forms toll-free number). Do not call the The IRS may disallow claims for refund 1042-S, they must be filed Information Reporting Program for tax or credit for amounts withheld reported electronically. However, if 200 of those law questions. The Information on Form 1042-S if the substitute form forms contained erroneous information, Reporting Program also can be reached attached to such claims differs from the the amended returns may be filed on by fax at 877-477-0572 (toll free) and copy that was filed with the IRS. paper forms because the number of international fax at 304-579-4105 (not a amended Forms 1042-S is less than the toll-free number). Penalty for filing incorrect 250-or-more filing requirement. If you have tax law questions substitute form. Privately printed If you file electronically, do not pertaining to Form 1042-S, call substitute Forms 1042-S must be exact file the same returns on paper. 267-941-1000 (not a toll-free number). copies of both the format and content of Duplicate filing may cause the official Form 1042-S. If you file a penalty notices to be generated. Additional Information substitute for Form 1042-S, Copy A, For more information on the withholding with the IRS that is not an exact copy of Note. Even though as many as 249 of tax, see Pub. 515. To order this the official Form 1042-S, Copy A, you Forms 1042-S may be submitted on publication and other publications and may be subject to a penalty for failure to paper, the IRS encourages filers to forms, call 800-TAX-FORM file a correct information return. See transmit forms electronically. (800-829-3676). You can download or Penalties, later. print some of the forms and publications Hardship waiver. To receive a you may need on IRS.gov/Forms. Account-by-Account Reporting hardship waiver from filing Forms Otherwise, you can go to IRS.gov/ by Certain Financial Institutions 1042-S electronically, submit Form OrderForms to place an order and have A U.S. financial institution or U.S. 8508, Request for Waiver From Filing forms mailed to you. You should receive branch of a foreign financial institution Information Returns Electronically. your order within 10 business days. maintaining an account within the Waiver requests should be filed at least Record Retention United States is required to report 45 days before the due date of the payments of the same type of income returns. See Form 8508 for more Withholding agents should retain a copy (as determined by the income code in information. of the information returns filed with the Box 1) made to multiple financial IRS, or have the ability to reconstruct Truncation of TIN Rules accounts held by the same recipient on the data, for at least 3 years after the a separate Form 1042-S for each Withholding agents may truncate the reporting due date. account. For this purpose, a financial recipient's TIN (social security number account is an account described in (SSN), individual taxpayer identification Substitute Forms Regulations section 1.1471-5(b)(1). See number (ITIN), or employer The official Form 1042-S is the standard instructions for Box 13k, Recipient’s identification number (EIN)) on the for substitute forms. All substitute forms Account Number, later, for information recipient's copy of Form 1042-S (that is, must comply with the rules set forth in on designating each account with a Copies B, C, and D), including a Pub. 1179, General Rules and separate account number. substitute form. To truncate the Specifications for Substitute Forms recipient's TIN, only the last four digits 1096, 1098, 1099, 5498, and Certain of a TIN must be displayed and the Other Information Returns. A substitute remaining digits must be replaced with of Form 1042-S that is furnished to the

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Combined Reporting (A), or an authorized agent. Finally, if a For more information on these Procedures payment is made by an NQI or a conditions, see Regulations sections flow-through entity that knows, or has 1.1441-7(c) and 1.1474-1(a)(3)(ii). Rev. Proc. 99-50 provides special reason to know, that withholding was Beneficial owner. For payments other procedures for successor entities to use not done, that NQI or flow-through entity than those for which a reduced rate of combined information reporting under is required to withhold since it also falls withholding is claimed under an income chapter 3 in certain situations following within the definition of a withholding tax treaty, the beneficial owner of a merger or acquisition. A withholding agent. agent may also use these procedures income in most cases is the person who for purposes of reporting under Account holder. Generally, the is required under U.S. tax principles to chapter 4. account holder is the person that holds include the income in gross income on a the account. See Regulations section tax return. A person is not a beneficial Deposit Requirements 1.1471-5(a). owner of income, however, to the extent For information and rules concerning that person is receiving the income as a Amount subject to withholding. federal tax deposits, see Depositing nominee, agent, or custodian, or to the Generally, an amount subject to Withheld Taxes in Pub. 515 or Deposit extent the person is a conduit whose chapter 3 withholding is an amount from Requirements in the Instructions for participation in a transaction is sources within the United States that is Form 1042. disregarded. In the case of amounts fixed or determinable annual or paid that do not constitute income, periodical (FDAP) income. FDAP beneficial ownership is determined as if Definitions income is all income included in gross the payment were income. Withholding agent. A withholding income, including interest (as well as agent is any person, U.S. or foreign, that OID), dividends, rents, royalties, and Foreign partnerships, foreign simple has control, receipt, or custody of an compensation. Amounts subject to trusts, and foreign grantor trusts are not amount subject to withholding under chapter 3 withholding do not include the beneficial owners of income paid to chapter 3 who can disburse or make amounts that are not FDAP, such as the partnership or trust. The beneficial payments of an amount subject to most gains from the sale of property owners of income paid to a foreign withholding, or who makes a (including market discount and option partnership in most cases are the withholdable payment under chapter 4. premiums), as well as other specific partners in the partnership, provided The withholding agent may be an items of income (such as interest on that the partner is not itself a individual, corporation, partnership, bank deposits and short-term OID). See partnership, foreign simple or grantor trust, association, or any other entity. Regulations section 1.1441-2. trust, nominee, or other agent. The The term “withholding agent” also beneficial owner of income paid to a Authorized agent. An agent is an foreign simple trust (a foreign trust that includes, but is not limited to, a qualified authorized agent for purposes of filing intermediary (QI), a nonqualified is described in section 651(a)) in most Form 1042 or making tax deposits and cases is the beneficiary of the trust, if intermediary (NQI), a withholding payments on behalf of its principal foreign partnership (WP), a withholding the beneficiary is not a foreign (payer) only if all five of the following partnership, foreign simple or grantor foreign trust (WT), a flow-through entity, conditions apply. a U.S. branch that is treated as a U.S. trust, nominee, or other agent. The person under Regulations section 1. There is a written agreement beneficial owner of a foreign grantor 1.1441-1(b)(2)(iv)(A), a territory FI, a between the payer and the person trust (a foreign trust to the extent that all nominee under section 1446, and an acting as agent. or a part of the income of the trust is authorized agent. A person may be a 2. A Form 8655, Reporting Agent treated as owned by the grantor or withholding agent even if there is no Authorization, is filed with the IRS if the another person under sections 671 requirement to withhold from a payment agent is filing Form 1042 (in its own through 679) is the person treated as or if another person has already name) on behalf of the payer. the owner of the trust. The beneficial owner of income paid to a foreign withheld the required amount from a 3. The books and records and complex trust (a foreign trust that is not payment. relevant personnel of the agent are a foreign simple trust or foreign grantor available to the payer. In most cases, the U.S. person who trust) is the trust itself. pays (or causes to be paid) the item of 4. The payer remains fully liable for The beneficial owner of income paid U.S. source income to a foreign person the acts of its agent and does not assert to a foreign estate is the estate itself. (or to its agent) must withhold. However, any of the defenses that otherwise may other persons may be required to be available. A payment to a U.S. partnership, withhold. For example, if a payment is U.S. trust, or U.S. estate is not subject 5. If the agent is filing Form 1042 (in made by a QI (whether or not it to withholding under chapter 3 or 4. A its own name) on behalf of the payer, assumes primary withholding U.S. partnership, trust, or estate should the agent is reported as the withholding responsibility) and the QI knows that provide the withholding agent with a agent in Boxes 12a through 12i and withholding was not done by the person Form W-9, Request for Taxpayer information about the payer is reported from which it received the payment, Identification Number and Certification. in Boxes 16a through 16e of the Form then that QI is required to do the In most cases, these beneficial owner 1042-S. appropriate withholding. In addition, rules apply for purposes of section withholding must be done by any QI that A sponsoring entity is a reporting 1446; however, there are exceptions. assumes primary withholding agent with respect to withholdable 1. Chapter 3 withholding rate pool. responsibility under chapters 3 and 4, a payments and must fulfill the above A payment of a single type of income, WP, a WT, a U.S. branch that agrees to conditions to be an authorized agent. determined in accordance with the be treated as a U.S. person under income codes used to file Form 1042-S, Regulations section 1.1441-1(b)(2)(iv) that is subject to a single rate of

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withholding and a single chapter 4 Expatriate. A person is considered an Nonparticipating FFI. A exemption code. expatriate if he or she relinquishes U.S. nonparticipating FFI is an FFI that is not 2. Chapter 4 withholding rate pool. citizenship or, in the case of a long-term a participating FFI, deemed-compliant A pool of account holders or payees resident of the United States, ceases to FFI, or exempt beneficial owner. provided on an FFI withholding be a lawful permanent resident as Participating FFI. A participating statement (or a chapter 4 withholding defined in section 7701(b)(6). FFI is an FFI that has agreed to comply statement) that is described in Fiscally transparent entity. An entity with the terms of an FFI agreement with Regulations section 1.1471-1(b)(20). is treated as fiscally transparent with respect to all branches of the FFI, other than a branch that is a reporting Model 1 Disregarded entity. A business entity respect to an item of income for which treaty benefits are claimed to the extent FFI or a U.S. branch. The term that has a single owner and is not a “participating FFI” also includes a corporation under Regulations section that the interest holders in the entity must, on a current basis, take into reporting Model 2 FFI and a QI branch 301.7701-2(b) is disregarded as an of a U.S. financial institution, unless entity separate from its owner. account separately their shares of an item of income paid to the entity, such branch is a reporting Model 1 FFI. Dividend equivalent. To the extent whether or not distributed, and must Foreign person. A foreign person specified in section 871(m), and the determine the character of the items of includes a nonresident alien individual, regulations thereunder, a dividend income as if they were realized directly a foreign corporation, a foreign equivalent is a payment (within the from the sources from which realized by partnership, a foreign trust, a foreign meaning of Regulations section the entity. For example, partnerships, estate, and any other person that is not 1.871-15(i)) that, directly or indirectly, is common trust funds, and simple trusts a U.S. person. The term also includes a contingent on, or determined by or grantor trusts in most cases are foreign branch or office of a U.S. reference to, the payment of a dividend considered to be fiscally transparent financial institution or U.S. clearing from U.S. sources. Dividend equivalent with respect to items of income received organization if the foreign branch is a payments include the following by them. QI. A payment to a U.S. branch of a payments. Flow-through entity. A flow-through foreign person is treated as a payment 1. A substitute dividend made under entity is a foreign partnership (other than to a foreign person for purposes of Form a securities lending or sale-repurchase a withholding foreign partnership), a 1042-S. transaction involving a U.S. stock. foreign simple or grantor trust (other Global intermediary identification 2. A payment made under a than a withholding foreign trust), or, for number (GIIN). The GIIN is the specified notional principal contract or a any payments for which a reduced rate identification number that is assigned to specified equity-linked instrument. of withholding under an income tax a participating FFI (including a reporting treaty is claimed, any entity to the extent Model 2 FFI), registered Exempt beneficial owner. An exempt the entity is considered to be fiscally deemed-compliant FFI (including a beneficial owner means a person that is transparent under section 894 with reporting Model 1 FFI), or other entity described in Regulations section respect to the payment by an interest for chapter 4 reporting purposes. 1.1471-6 and includes a foreign holder's jurisdiction. government, a political subdivision of a Intermediary. An intermediary is a foreign government, a wholly owned Financial institution. A financial person that acts as a custodian, broker, instrumentality or agency of a foreign institution generally means an entity that nominee, or otherwise as an agent for government or governments, an is a depository institution, custodial another person, regardless of whether international organization, a wholly institution, investment entity, or an that other person is the beneficial owner owned agency or instrumentality of an insurance company (or holding of the amount paid, a flow-through international organization, a foreign company of an insurance company) that entity, or another intermediary. central bank of issue, a government of a issues cash value insurance or annuity Qualified intermediary (QI). A QI U.S. possession, certain retirement contracts. See Regulations section is an intermediary or eligible entity that funds, and certain entities wholly owned 1.1471-5(e). is a party to a withholding agreement by one or more exempt beneficial Foreign financial institution (FFI). An with the IRS. A QI that is a financial owners. In addition, an exempt FFI is an entity described in Regulations institution must have a chapter 4 status beneficial owner includes any person section 1.1471-5(d) or an entity treated described in Regulations section treated as an exempt beneficial owner as a financial institution under an 1.1441-1(e)(5)(ii). An entity must under an applicable Model 1 IGA or Intergovernmental Agreement (IGA). indicate its status as a QI on a Form Model 2 IGA. Deemed-compliant FFI. Under W-8IMY submitted to a withholding Exempt recipient. An exempt recipient section 1471(b)(2), certain FFIs are agent. For information on a QI is any payee that is exempt from the deemed to comply with the regulations withholding agreement, see Rev. Proc. Form 1099 reporting requirements. under chapter 4 without the need to 2017-15, and IRS.gov/ Exempt recipients are not enter into an FFI agreement with the QualifiedIntermediary. ! exempt from withholding under IRS. However, certain A branch of a financial institution may CAUTION chapter 3 of the Internal deemed-compliant FFIs are required to not act as a QI in a country that does not Revenue Code unless they are U.S. register with the IRS and obtain a GIIN. have approved know-your-customer persons or foreign persons entitled to an These FFIs are referred to as (KYC) rules. Countries having approved exemption from withholding under registered deemed-compliant FFIs. KYC rules are listed at IRS.gov/ chapter 3. See Regulations section 1.1471-5(f)(1). businesses/international-businesses/ Registered deemed-compliant FFIs also list-of-approved-kyc-rules. Branches include certain FFIs that satisfy the that operate in non-KYC approved requirements of an applicable IGA. jurisdictions as intermediaries are

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required to act as nonqualified Pub. 519, U.S. Tax Guide for Aliens, for W-8IMY and separately identify the intermediaries. See the Instructions for more information on resident and home office or branch as a recipient on Form W-8IMY for more information on nonresident alien status. a withholding statement (if required). the definition of a QI. Each home office or branch that obtains Even though a nonresident alien QDD status is treated as a separate individual married to a U.S. Nonqualified intermediary (NQI). ! QDD. See Regulations section CAUTION citizen or resident alien may An NQI is any intermediary that is not a 1.1441-1(e)(6) and Rev. Proc. 2017-15 choose to be treated as a resident alien U.S. person and that is not a QI. for more information. for certain purposes (for example, filing Private arrangement intermediary a joint income tax return), such Qualified securities lender (QSL). A (PAI). A QI that is an FFI may enter into individual is still treated as a QSL is a foreign financial institution that a contractual agreement with another nonresident alien for withholding tax satisfies all of the following. intermediary under which the other purposes. • It is a bank, custodian, broker-dealer, intermediary generally agrees to or clearing organization that is regulated perform all of the obligations of the QI Payee. Except as otherwise provided, by the government in its home with respect to the accounts maintained the payee is the person to whom a jurisdiction and that regularly borrows directly by the other intermediary. See payment is made, regardless of whether and lends the securities of U.S. the QI agreement for the requirements such person is the beneficial owner of corporations to unrelated customers. of a PAI and a QI's agreement with a the amount or treated as the recipient of • It is subject to audit by the IRS under PAI. the payment for purposes of reporting section 7602 or by an external auditor if Nonfinancial foreign entity (NFFE). on Form 1042-S. See Regulations it is a QI. An NFFE is a foreign entity or an entity section 1.1471-3(a). • It provides to the withholding agent incorporated or organized under the Presumption rules. For withholdable an annual certification of its QSL status. laws of any U.S. territory that is not a payments and for amounts subject to • It meets the requirements to qualify financial institution. withholding under chapter 3, the as a QSL provided in Notice 2010-46 for the transition period and until additional Excepted NFFE. The term presumption rules are those rules that a withholding agent must follow to published guidance is issued. See “excepted NFFE” means an NFFE that Notice 2010-46 at IRS.gov/irb/ is described in Regulations section determine the status of a beneficial owner or payee (for example, as a U.S. 2010-24_IRB#NOT-2010-46. See also 1.1472-1(c)(1) and generally includes a Notice 2020-2 (2020-3 I.R.B. 327). publicly traded corporation, certain person or a foreign person) when it affiliated entities related to a publicly cannot reliably associate a payment Recalcitrant account holder. traded corporation, certain territory with valid documentation. See, for Generally, a recalcitrant account holder entities, active NFFEs, and entities example, Regulations sections is an account holder of a participating or excluded from the definition of FFI 1.1441-1(b)(3), 1.1441-4(a), registered deemed-compliant FFI that (excluded FFIs) described in 1.1441-5(d) and (e), 1.1441-9(b)(3), failed to provide the documentation Regulations section 1.1471-5(e)(5). 1.1446-1(c)(3), and 1.6049-5(d). Also required under chapter 4 to determine see Pub. 515. For a withholdable the account holder's status or to report Nonexempt recipient. A nonexempt payment (defined in Regulations section the account as a U.S. account. See recipient is any person who is not an 1.1473-1(a)), the withholding agent Regulations section 1.1471-5(g). exempt recipient under chapter 61 of must also follow the presumption rules the Code. under Regulations sections 1.1471-3(f) Recipient. For chapter 3 purposes, a recipient includes any of the following. Nonresident alien individual. Any and, for an FFI, 1.1471-4(c)(4)(i) to determine the chapter 4 status of the • A beneficial owner of income. individual who is not a citizen or resident • A QI. of the United States is a nonresident payee when it cannot reliably associate a payment with valid documentation. • A WP or WT. alien individual. An alien individual • A U.S. branch that is treated as a meeting either the green card test or the Publicly traded partnership (PTP). A U.S. person under Regulations section substantial presence test for the PTP is any partnership in which 1.1441-1(b)(2)(iv)(A). calendar year is a resident alien. Any interests are regularly traded on an • A foreign partnership or a foreign trust person not meeting either test is a established securities market or are (other than a WP or WT), but only to the nonresident alien individual. readily tradable on a secondary market extent the income is effectively Additionally, an alien individual who is (regardless of the number of its connected with its conduct of a trade or treated as a nonresident alien pursuant partners). However, it does not include business in the United States. to Regulations section 301.7701(b)-(7) a PTP treated as a corporation under • A payee who is not known to be the for purposes of figuring out the section 7704. beneficial owner, but who is presumed individual’s U.S. tax liability, or an alien to be a foreign person under the individual who is a bona fide resident of Qualified derivatives dealer (QDD). A QDD is a qualified intermediary that is presumption rules. Puerto Rico, Guam, the Commonwealth • A PAI. of the Northern Mariana Islands, the an eligible entity that agrees to meet the requirements of Regulations section • A partner receiving a distribution of U.S. Virgin Islands, or American Samoa effectively connected income from a is a nonresident alien individual. An 1.1441-1(e)(6)(i) and the QI agreement. An eligible entity is defined in PTP or nominee. individual will not be treated as a U.S. • A QSL. person for a tax year or any portion of a Regulations section 1.1441-1(e)(6)(ii). tax year that the individual is a To act as a QDD, the home office or For chapter 3 purposes, a recipient dual-resident taxpayer who is treated as branch, as applicable, must qualify and does not include any of the following. a nonresident alien for purposes of be approved for QDD status and must • An NQI. figuring his or her U.S. tax liability. See represent itself as a QDD on its Form • A nonwithholding foreign partnership, if the income is not effectively

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connected with its conduct of a trade or • In connection with the termination of payment of U.S. source FDAP income, business in the United States. the contract, any short party to the subject to certain exceptions. For • A disregarded entity other than a contract transfers the underlying exceptions and additional information, hybrid entity claiming treaty benefits. security to any long party to the see Pub. 515 and Regulations section • A foreign trust that is described in contract. 1.1473-1(a). section 651(a) (a foreign simple trust) if The underlying security is not readily • Withholding certificate. The term the income is not effectively connected tradable on an established securities “withholding certificate” refers to Form with the conduct of a trade or business market. W-8 or Form W-9 in most cases. in the United States. • In connection with entering into the • A foreign trust to the extent that all or contract, the underlying security is Note. Throughout these instructions, a a part of the trust is treated as owned by posted as collateral by any short party reference to or mention of “Form W-8” is the grantor or other person under to the contract with any long party to the a reference to Forms W-8BEN, sections 671 through 679 (a foreign contract. W-8BEN-E, W-8ECI, W-8EXP, and/or grantor trust). • The IRS identifies the contract as an W-8IMY. • A U.S. branch that is not treated as a SNPC. U.S. person unless the income is, or is Withholding foreign partnership Specified U.S. person. A specified treated as, effectively connected with (WP) or withholding foreign trust U.S. person is any U.S. person other the conduct of a trade or business in the (WT). A WP or WT is a foreign than a person identified in Regulations United States. partnership or trust that has entered into section 1.1473-1(c). a withholding agreement with the IRS in For chapter 4 purposes, a recipient which it agrees to assume primary also includes any of the following. Substantial U.S. owner. A substantial withholding responsibility for all A recalcitrant account holder not U.S. owner is a specified U.S. person • payments that are made to it for its included in a chapter 4 reporting pool. described in Regulations section partners, beneficiaries, or owners under A QI. 1.1473-1(b). For purposes of filing this • chapter 3 (except for sections 1445 and A WP or WT. form, a reporting Model 2 FFI reporting • 1446) and under chapter 4. For A PAI. an account held by a passive NFFE • information on these withholding A participating FFI or a registered should substitute the term “controlling • agreements, see Rev. Proc. 2017-21 at deemed-compliant FFI that is an NQI, person that is a specified U.S. person” IRS.gov/irb/2017-06_IRB#RP-2017-21 NWP, or NWT and provides chapter 4 for “substantial U.S. owner” and refer to and Regulations section 1.1441-5. withholding rate pool information to the the applicable Model 2 IGA for the extent permissible. definition of controlling person. A Nonwithholding foreign • A participating FFI or territory NFFE that is not an excepted partnership (NWP) or deemed-compliant FFI that is the NFFE determines its substantial U.S. nonwithholding foreign trust (NWT). beneficial owner, including a owners by applying the 10% threshold An NWP or NWT is any partnership or nonreporting FFI under a Model 1 or in Regulations section 1.1473-1(b)(1). trust (other than a complex trust) that is Model 2 IGA. Territory FI. A territory FI is a financial not a U.S. person and that is not a WP • A U.S. branch or territory FI treated institution that is incorporated or or WT. as a U.S. person under Regulations organized under the laws of any U.S. section 1.1441-1(b)(2)(iv)(A). territory and is not an investment entity. Amounts Subject to • An NFFE that is not a flow-through See Regulations section 1.1471-5(e)(1) Reporting on Form 1042-S entity or acting as an intermediary. (iii) for the definition of investment entity. • A foreign partnership or a foreign trust Amounts subject to reporting on Form (other than a WP or WT), but only to the U.S. branch treated as a U.S. person. 1042-S are amounts from U.S. sources extent the income is effectively A U.S. branch may agree to be treated paid to foreign persons (including connected with its conduct of a trade or as a U.S. person if it meets the persons presumed to be foreign) or business in the United States. requirements described in the included in a U.S. payee pool that are • A partner or beneficiary of a regulations under chapter 3. See reportable under chapters 3 and 4, even flow-through entity that is an NFFE Regulations section 1.1441-1(b)(2)(iv) if no amount is deducted and withheld (other than a WP or WT). (A). Additionally, a territory FI may agree from the payment because of a treaty or • A nonparticipating FFI that is a to be treated as a U.S. person. Code exception to taxation or if any beneficial owner. The U.S. branch or territory FI must amount withheld was repaid to the • An exempt beneficial owner that is provide a Form W-8IMY evidencing that payee. Amounts subject to reporting are not a flow-through entity or acting as an it is agreeing to be treated as a U.S. amounts from sources within the United intermediary. person. States that constitute (a) fixed or determinable annual or periodical For chapter 4 purposes, a recipient is A U.S. branch that is treated as (FDAP) income (including deposit generally the same person that is a ! a U.S. person is treated as such interest); (b) certain gains from the recipient for chapter 3 purposes. CAUTION solely for purposes of disposal of timber, coal, or domestic Specified notional principal contract determining whether a payment is iron ore with a retained economic (SNPC). An SNPC is any notional subject to withholding. The branch is, interest; and (c) gains relating to principal contract that satisfies one or for purposes of information reporting, a contingent payments received from the more of the following. foreign person, and payments to such a sale or exchange of patents, copyrights, • In connection with entering into the branch must be reported on Form and similar intangible property. A contract, any long party to the contract 1042-S. payment is also subject to reporting if transfers the underlying security to any withholding under chapter 4 is applied Withholdable payment. A short party to the contract. withholdable payment is generally any

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(or required to be applied) to the United States (but only if the partnership must separately state a payment. beneficial owner is claiming treaty partner's allocable share of REMIC benefits). taxable income or net loss and the Amounts subject to reporting on • Annuities. excess inclusion amount on Form 1042-S include, but are not limited • Pension distributions and other Schedule K-1 (Form 1065). If the to, the following amounts to the extent deferred income. partnership allocates all or some part of they are from U.S. sources. • Most gambling winnings. Proceeds its allocable share of REMIC taxable Interest on deposits paid to • from a wager placed in blackjack, income to a foreign partner, the partner certain nonresident aliens. baccarat, craps, roulette, or big-6 wheel must include the partner's allocated Withholding agents must report certain are not amounts subject to reporting. amount in income as if that amount was interest described in section 871(i)(2)(A) • Cancellation of indebtedness. received on the earliest to occur of (1) aggregating $10 or more paid with Agents must report income from the the date of distribution by the respect to a deposit maintained at an cancellation of indebtedness unless the partnership, (2) the date the foreign office within the United States if such withholding agent is unrelated to the partner disposes of its indirect interest in interest is paid to a nonresident alien debtor and does not have knowledge of the REMIC residual interest, or (3) the individual who is a resident of a country the facts that give rise to the payment. last day of the partnership's tax year. identified in Rev. Proc. 2019-23, • Effectively connected income 2019-38 I.R.B. 725, available at (ECI). ECI includes amounts that are (or The partnership must withhold tax on IRS.gov/irb/2019-38_IRB#REV- are presumed to be) effectively the part of the REMIC amount that is an PROC-2019-23 (or any superseding connected with the conduct of a trade or excess inclusion. Revenue Procedure that is effective as business in the United States even if no of January 1, 2021). A payer may elect withholding certificate is required. Note An excess inclusion allocated to the to report interest described above paid that bank deposit interest is subject to following foreign persons must be to any nonresident alien individual by Form 1042-S reporting if it is ECI or included in that person's income at the reporting all such interest. otherwise reportable on Form 1042-S same time as other income from the When completing Form 1042-S, use (see Interest on deposits, earlier). ECI of entity is included in income. income code 29 in Box 1 and exemption a PTP distributed to a foreign partner • Shareholder of a real estate code 02 in Box 3a for chapter 3 must be reported on Form 1042-S. investment trust. purposes, and the applicable chapter 4 • Notional principal contract • Shareholder of a regulated exemption code in Box 4a (see the income. Income from notional principal investment company. instructions for Boxes 3a and 4a, later). contracts that the payer knows, or must • Participant in a common trust fund. • Interest on deposits subject to presume, is effectively connected with • Patron of a subchapter T cooperative chapter 4 withholding. Interest on the conduct of a U.S. trade or business organization. deposits from U.S. sources are is subject to reporting using income • Students, teachers, and withholdable payments and, therefore, code 32. The amount to be reported is researchers. Amounts paid to foreign may be subject to withholding under the amount of cash paid on the contract students, trainees, teachers, or chapter 4. If payers withhold tax, they during the calendar year. Any amount of researchers as scholarship or fellowship must report the interest and tax on Form interest determined under the provisions income, and compensation for personal 1042-S. of Regulations section 1.446-3(g)(4) services (whether or not exempt from • Corporate distributions. The entire (dealing with interest in the case of a tax under an income tax treaty) must be amount of a corporate distribution significant nonperiodic payment) is reported. However, amounts that are (whether actual or deemed) must be reportable as interest and not as exempt from tax under section 117 are reported, regardless of any estimate of notional principal contract income. See, not subject to reporting. the part of the distribution that however, the separate reporting for • Amounts paid to foreign represents a taxable dividend. Any U.S.-source dividend equivalent governments, foreign central banks distribution, however, that is treated as payments, later. of issue, and international gain from the redemption of stock is not • Insurance premiums. Insurance organizations. These amounts are an amount subject to withholding. For premiums from U.S. sources subject to reporting even if they are information on distributions from the (regardless of whether or not the exempt from chapter 3 withholding disposition of a U.S. real property premium payments are subject to the under section 892 or 895. interest paid by a publicly traded trust or section 4371 excise tax) are • Foreign targeted registered a qualified investment entity (QIE), see withholdable payments under chapter 4. obligations. Interest paid on registered Distributions Attributable to Dispositions If the payment is actually withheld upon obligations targeted to foreign markets of U.S. Real Property Interests by or should have been withheld upon (but paid by a U.S. person to a foreign Publicly Traded Trusts and Qualified the withholding agent failed to withhold), person other than a financial institution Investment Entities, later. such amount must be reported on Form or a member of a clearing organization • Interest. Interest subject to reporting 1042-S. Insurance premiums from U.S. is an amount subject to reporting. includes the part of a notional principal sources are amounts subject to • Original issue discount (OID) from contract payment that is characterized chapter 3 withholding (excluding the redemption of an OID obligation. as interest. amounts subject to the section 4371 The amount subject to reporting is the • Rents. excise tax) that must be reported on amount of OID actually includible in the • Royalties. Form 1042-S. gross income of the foreign beneficial • Compensation for independent • REMIC excess inclusions. Excess owner of the income, if known. personal services performed in the inclusions from REMICs (income code Otherwise, the withholding agent should United States. 02) and withheld tax must be reported report the entire amount of OID as if the • Compensation for dependent on Form 1042-S. A domestic recipient held the instrument from the personal services performed in the date of original issuance. See Pub.

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1212, Guide to Original Issue Discount Bearer obligations targeted to for- 1.1445-8(f) and other requirements of (OID) Instruments. eign markets. Do not file Form 1042-S Regulations section 1.1445-8(b)(1) are • Certain distributions attributable to report interest not subject to satisfied. to dispositions of U.S. real property withholding on bearer obligations if a The amount subject to withholding interests. See Distributions Attributable Form W-8 is not required. for a distribution by a publicly traded to Dispositions of U.S. Real Property trust is determined under the rules of Withholding is required on Interests by Publicly Traded Trusts and Regulations section 1.1445-5(c)(3). Qualified Investment Entities, later. interest paid on any bearer • Other U.S.-source dividend obligations targeted to foreign Qualified investment entities (QIEs). equivalent payments. Other markets if the obligation is issued after Special rules apply to QIEs. A QIE is U.S.-source dividend equivalent March 18, 2012. You must file Form one of the following. payments are payments other than 1042-S to report this interest paid on an • A real estate investment trust (REIT). substitute dividends that qualify as obligation issued after that date. • A regulated investment company U.S.-source dividends under section (RIC) that is treated as a U.S. real 871(m) and the regulations thereunder. Notional principal contract pay- property holding corporation (after Report these amounts using income ments that are not ECI or dividend applying certain rules in section 897(h) code 40 or 53. equivalents. Do not report on Form (4)(A)(ii)). 1042-S amounts paid on a notional • Guarantee of indebtedness. This Look-through rule for QIEs. In most includes amounts paid, directly or principal contract, other than a specified notional principal contract (SNPC), if the cases, any distribution from a QIE to a indirectly, for the provision of a nonresident alien, foreign corporation, guarantee of indebtedness issued after amounts are not effectively connected with the conduct of a trade or business or other QIE that is attributable to the September 27, 2010. They must be paid QIE’s gain from the sale or exchange of by a noncorporate resident or U.S. in the United States. All amounts paid on an SNPC that are treated as dividend a U.S. real property interest is treated as corporation or by any foreign person if gain recognized by the nonresident equivalent payments should be reported the amounts are effectively connected alien, foreign corporation, or other QIE as such on Form 1042-S. with the conduct of a U.S. trade or from the sale or exchange of a U.S. real business. Report these amounts using Accrued interest and OID. Interest property interest. income code 41. paid on obligations sold between A distribution by a QIE to a Specified federal procurement • interest payment dates and the part of nonresident alien or foreign corporation payments. Report specified federal the purchase price of an OID obligation that is treated as gain from the sale or procurement payments subject to that is sold or exchanged in a exchange of a U.S. real property withholding under section 5000C. transaction other than a redemption is interest by the shareholder is subject to not subject to reporting unless the sale withholding at 21%. Amounts That Are Not or exchange is part of a plan, the Subject to Reporting principal purpose of which is to avoid Certain exceptions apply to the look- tax, and the withholding agent has through rule for distributions by QIEs. on Form 1042-S actual knowledge or reason to know of Any distribution by a QIE with respect to stock regularly traded on an established Interest and OID from short-term ob- such plan. securities market in the United States is ligations. Interest and OID from any Certain withholdable payments. not treated as gain from the sale or obligation payable 183 days or less from Withholdable payments not subject to exchange of a U.S. real property the date of original issue are generally reporting for chapter 3 purposes (other interest if the shareholder did not own not required to be reported on Form than bank deposit interest paid to more than 5% of that stock (or 10% of 1042-S. See, however, the reporting certain nonresident aliens) are not that stock in the case of REITs) at any requirements for deposit interest required to be reported if withholding is time during the 1-year period ending on described in Interest on deposits paid to not applied (or required to be applied) the date of the distribution. A distribution certain nonresident aliens in the bullet under chapter 4. by a REIT generally is not treated as list under Amounts Subject to Reporting gain from the sale or exchange of a U.S. on Form 1042-S, earlier. Distributions Attributable real property interest if the shareholder Registered obligations targeted to to Dispositions of U.S. is a qualified shareholder (as described foreign markets. Interest on a in section 897(k)(3)). These registered obligation that is targeted to Real Property Interests by distributions may be included in the foreign markets and that qualifies as Publicly Traded Trusts shareholder's gross income as a portfolio interest is not subject to and Qualified Investment dividend (income code 06) from the reporting if it is paid to a registered Entities QIE, not as long-term capital gain. owner that is a financial institution or In addition, a qualified foreign member of a clearing organization and Publicly traded trusts. In general, pension fund or an entity all of the you have received the required when a publicly traded trust makes a interests of which are held by a qualified certifications. distribution to a foreign person foreign pension fund generally is not Reporting will be required on attributable to the disposition of a U.S. subject to the look-through rule for interest paid on any registered real property interest, it must withhold distributions by QIEs for purposes of ! tax under section 1445. However, this CAUTION obligation (regardless of section 897(h). whether targeted to foreign markets) if withholding liability is shifted to the person who pays the distribution to a Use Forms 1042-S and 1042 to the registered obligation is issued after report and pay over the withheld December 31, 2015. foreign person (or to the account of the foreign person) if the special notice amounts. All other withholding required requirement of Regulations section under section 1445 is reported and paid

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over using Form 8288, U.S. Withholding W-8 in the Instructions for the Requester Step 3. Determine the chapter indicator Tax Return for Dispositions by Foreign of Forms W-8BEN, W-8BEN-E, to be entered in Box 3. The chapter Persons of U.S. Real Property Interests, W-8ECI, W-8EXP, and W-8IMY. Also indicator is generally based on whether and Form 8288-A. see Pub. 515. amounts were withheld (or paid by the For more information on reporting Chapter 4 withholding. For purposes withholding agent) under chapter 3 or income from real property interests, see of chapter 4, a withholding agent must chapter 4. For example, if the payment U.S. Real Property Interest in Pub. 515. withhold 30% of a withholdable payment is a withholdable payment and it is (defined earlier) made to an FFI that is subject to chapter 4 withholding (see Publicly Traded or is presumed to be a nonparticipating Requirement To Withhold, earlier), enter Partnerships (Section FFI (defined earlier). It also applies to “4” in Box 3. If no withholding was withholdable payments made to certain required on the payment, enter “3” in 1446 Withholding Tax) NFFEs that fail to identify their Box 3. For additional information, see A publicly traded partnership (PTP) substantial U.S. owners (or to certify the instructions for Box 3, later. (defined under Definitions, earlier) that that they have none) under Regulations has effectively connected income must section 1.1472-1(b). For more Note. You must always complete pay a withholding tax under section information, see Chapter 4 Boxes 4a (chapter 4 exemption code) 1446 on distributions of that income Responsibilities under Responsibilities and 4b (chapter 4 withholding tax rate) made to its foreign partners and file of a Withholding Agent To Obtain Form regardless of the chapter indicator Form 1042-S using income code 27 and W-8 in the Instructions for the Requester entered in Box 3. chapter 4 exemption code 14. A of Forms W-8BEN, W-8BEN-E, Note. If a payment is a withholdable nominee that receives a distribution of W-8ECI, W-8EXP, and W-8IMY. Also payment under chapter 4, you must effectively connected income from a see Pub. 515. PTP is treated as the withholding agent complete Boxes 4a (chapter 4 to the extent of the amount specified in A payment will be subject to exemption code), 4b (chapter 4 the qualified notice received by the withholding under either chapter 3 or withholding tax rate), and 13g (recipient nominee. For this purpose, a nominee is chapter 4 but not both. If the payment is chapter 4 status code), even if the a domestic person that holds an interest of an amount subject to both chapter 3 payment is properly classified with a in a PTP on behalf of a foreign person. and chapter 4 withholding, chapter 4 chapter 3 indicator in Box 3. See Regulations section 1.1446-4 and withholding takes precedence. Pub. 515 for details. Note. If a payment is properly classified Before Completing Form with a chapter 3 indicator in Box 3, the If you are a nominee that is the 1042-S withholding agent is not required to TIP withholding agent under section complete Boxes 12e, 13h, 15e, and You must complete the following steps 1446, enter the PTP's name and 16c, all of which request a GIIN. other required information in Boxes 15a before completing Form 1042-S. Be sure to complete a separate Form through 15i on Form 1042-S. Step 1. Determine if you have a Form 1042-S for: 1042-S filing obligation. If you make a Each recipient of income, Partnerships (other than PTPs) that • payment described under Amounts Each income type paid to the same have effectively connected gross • Subject to Reporting on Form 1042-S, recipient, and income allocable to foreign partners earlier, you are required to file Form Each amount to which a separate tax must file Form 8804, Annual Return for • 1042-S for that payment. Note that you rate was applied (if you withheld at more Partnership Withholding Tax (Section may have a Form 1042-S reporting than one tax rate for a specific type of 1446). If these partnerships have obligation even if withholding is not income that you paid to the same effectively connected taxable income required. recipient). allocable to foreign partners, they must also pay a withholding tax under section Step 2. Determine whether the 1446 and report these amounts on Form payment is: Payments by U.S. 8804 and the partners' allocable shares • A “withholdable payment” under Withholding Agents of these amounts on Form 8805. chapter 4, • An “amount subject to withholding In general. U.S. withholding agents Requirement To Withhold under chapter 3,” making payments described under • Both a withholdable payment and an Amounts Subject to Reporting on Form Chapter 3 withholding. For purposes amount subject to withholding under 1042-S, earlier, must file a separate of sections 1441 and 1442, a chapter 3, or Form 1042-S for each recipient who withholding agent must withhold 30% of • Neither a withholdable payment nor receives the income. Furthermore, any payment of an amount subject to an amount subject to withholding under withholding agents are not permitted to withholding under chapter 3 (defined chapter 3. report multiple types of income on a single Form 1042-S (or substitute Form above) made to a payee that is a foreign Be sure to carefully read through the 1042-S) furnished to a recipient or on person (or is presumed to be a foreign exceptions to “withholdable payment” Copy A filed with the IRS. These filers person) unless it can associate the and the exemptions from withholding or must use a separate Form 1042-S (or payment with documentation to treat the taxation provided under chapter 3 that substitute form) for information payment as made to a foreign person are included in Pub. 515. Note that reportable on a single type of income. entitled to a reduced rate of or reporting and withholding are done exemption from withholding. For more either under chapter 3 or chapter 4, not See Payments Made to Persons information, see Chapter 3 both. However, even if reporting is done Who Are Not Recipients, later, if the Responsibilities under Responsibilities under chapter 3, you may be required to payment is made to a foreign person of a Withholding Agent To Obtain Form provide certain chapter 4 information. that is not a recipient.

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Payments to Recipients for a reduced rate of chapter 3 information to a withholding agent but withholding under a treaty. WA must file will report such information directly to Payments directly to beneficial own- a Form 1042-S for A, enter “3” in Box 3, the IRS. ers. A U.S. withholding agent making a “06” in Box 1 (income code), “00” in Box A U.S. withholding agent making a payment directly to a beneficial owner 3a (chapter 3 exemption code), “30.00” must complete Form 1042-S and treat withholdable payment to an FFI that is a in Box 3b (chapter 3 tax rate), “15” in QI (that assumes primary withholding the beneficial owner as the recipient. Box 4a (payee not subject to chapter 4 Boxes 15a through 15i should be left responsibility), a WP, or a WT must use withholding), “00.00” in Box 4b recipient code 12 (qualified blank. The Form 1042-S must also (chapter 4 tax rate), “16” in Box 13f include the appropriate chapter 3 and intermediary), 09 (withholding foreign (individual), and “23” in Box 13g partnership), or 11 (withholding foreign chapter 4 exemption codes, if (individual). applicable, in boxes 3a and 4a, as well trust) as the chapter 3 status code and as the appropriate recipient codes for See Appendix C for a must use recipient code 05 the chapter 3 and chapter 4 status TIP comprehensive analysis of this (participating FFI - other), 06 codes for a payment that is a Example 1 fact pattern, (participating FFI - reporting Model 2 withholdable payment and an amount including a step-by-step guide on how FFI), 07 (registered deemed-compliant subject to chapter 3 withholding. A U.S. to complete Form 1042-S in its entirety. FFI - reporting Model 1 FFI), 09 withholding agent should complete (registered deemed-compliant FFI - Boxes 16a through 16e only if it is Payments to a qualified intermediary other) for an FFI treated as completing Form 1042-S as a paying (including a qualified derivatives deemed-compliant under an IGA, 31 agent acting pursuant to an agreement dealer), withholding foreign partner- (nonreporting IGA FFI) or, for a payment to act as an authorized agent for filing ship, or withholding foreign trust. A to a QI, 27 (exempt beneficial owner) as and reporting Form 1042 and 1042-S. U.S. withholding agent that makes the chapter 4 status code. A U.S. payments to a QI (whether or not the QI withholding agent must use chapter 4 In the case of foreign joint owners, assumes primary withholding recipient code 48 (U.S. Payees Pool) you may provide a single Form 1042-S responsibility), a QI acting as a QDD when reporting a reportable amount made out to the owner whose status you with respect to a payment, a withholding allocated to a chapter 4 withholding rate relied upon to determine the applicable foreign partnership (WP), or a pool of U.S. payees of a QI and report rate of withholding (the owner subject to withholding foreign trust (WT) should the chapter 3 recipient code 12 the highest rate of withholding). If, complete Form 1042-S in most cases, (qualified intermediary). A U.S. however, any one of the owners treating the QI, QDD, WP, or WT as the withholding agent must not use any requests its own Form 1042-S, you recipient. chapter 3 pooled reporting code (codes must furnish a Form 1042-S to the If a payment is being made to a QI 27 through 32) as such codes are only person who requests it. If the request is to be used by a withholding agent that is made after a Form 1042-S was filed that is acting as a QDD with respect to the payment, a U.S. withholding agent a QI, QSL, WP, or WT. See Amounts reporting the payment and tax withheld Paid by Qualified Intermediaries, later, to only one of the joint owners, you should report the QDD as the recipient showing the QDD as the recipient in and the instructions for Boxes 13f and should amend the originally filed Form 13g, later. Use of an inappropriate 1042-S to allocate the payment and tax Box 13a (including any branch identifier included on the withholding certificate recipient code may cause a notice to be withheld among the joint owners generated. accordingly and provide copies of the provided by the QDD) and using amended forms to each recipient. If recipient code 35 (qualified derivatives A QI is required to act in such more than one Form 1042-S is issued dealer) as the chapter 3 status code. capacity only for designated for a single payment, the aggregate See Payments allocated, or presumed accounts. Therefore, such an amount paid and tax withheld that is made, to U.S. nonexempt recipients, entity also may provide a Form W-8IMY reported on all Forms 1042-S cannot later, for exceptions. in which it certifies that it is acting as an exceed the total amounts paid to joint A QI that does not assume primary NQI for other accounts and, if it is an FFI owners and the tax withheld on those withholding responsibility is required to that is receiving a withholdable payments. In any event, each Form provide information regarding the payment, that it is a participating FFI, 1042-S can only include the recipient allocations of income subject to a registered deemed-compliant FFI, or information (Boxes 13a through 13d) for particular withholding rate to the FFI treated as deemed-compliant under one of the beneficial owners. Form withholding agent on the withholding an IGA. A U.S. withholding agent that 1042-S must not be completed with statement associated with its Form receives a Form W-8IMY on which the more than one of the joint owners as the W-8IMY. In such a case, the U.S. foreign person providing the form recipient. withholding agent must complete a indicates that it is not acting as a QI may separate Form 1042-S for each not treat the foreign person as a In the case of joint owners, withholding rate pool associated with recipient except as otherwise provided Form 1042-S can only list one of ! the QI. For purposes of chapter 4, a QI in these instructions. A withholding CAUTION the owners as the recipient in may provide a single pool of recalcitrant agent must not use the EIN that a QI Box 13a. Form 1042-S must not be account holders (rather than separate provides in its capacity as such to report completed with more than one of the pools for each class). In such a case, payments that are treated as made to joint owners as the recipient. the withholding agent may use an entity in its capacity as an NQI. In that case, use the GIIN, if any, and EIN Example 1. WA, a U.S. withholding chapter 4 pooled reporting code 49 that is provided by the entity on its Form agent, makes a withholdable payment (QI-Recalcitrant Pool-General). A QI W-8IMY in which it claims that it is of U.S. source dividends to A, a foreign that assumes primary withholding acting as an NQI or flow-through entity. individual from whom it has received a responsibility, a WP, or a WT is not Form W-8BEN and who is not eligible required to provide withholding rate pool

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Note. A withholding agent is required to Payments allocated, or presumed recipient in Box 13a, and WA should use chapter 4 reporting pool codes as made, to U.S. nonexempt recipients. use recipient code 12 (qualified the chapter 4 status code in the case of A QI may provide Forms W-9 or other intermediary) as the chapter 3 status withholdable payments made to: information regarding U.S. nonexempt code and recipient code 09 (registered • A QI that does not assume primary recipients that the QI (or other entity deemed-compliant FFI – other) as the withholding responsibility; maintaining the account) is required to chapter 4 status code for the dividends • A participating FFI or registered report under chapter 61 and for which allocated to the 15% withholding rate deemed-compliant FFI that is an NQI, the QI does not assume primary Form pool. WA also must complete a Form NWP, or NWT; or 1099 reporting responsibility. A QI may 1099-DIV issued to C reporting the part • An NQI, NWP, or NWT (other than a also provide information regarding U.S. of the dividend allocated to C. nonparticipating FFI) that provides a nonexempt recipients on whom the QI pool of nonparticipating FFIs, elects to backup withhold under section Example 4. WA, a withholding if the QI, NQI, NWP, or NWT provides 3406 instead of withholding under agent, makes a withholdable payment chapter 4 withholding rate pool chapter 4 on payments made to an of U.S. source dividends to QI, a information in the withholding statement account holder. If Forms W-9 or other qualified intermediary that is a reporting associated with its Form W-8IMY. See information is provided together with Model 1 FFI. QI provides WA with a Amounts paid to a nonqualified information allocating all or a part of the valid Form W-8IMY with which it intermediary or flow-through entity, later, payment to U.S. nonexempt recipients, associates a withholding statement that and the presumption rules under you must report income allocable to the allocates 40% of the payment to a Regulations section 1.1471-3(f) when U.S. nonexempt recipients on the chapter 3, 15% withholding rate pool such information is not provided for a appropriate Form 1099 and not on Form and 40% to a chapter 3, 30% withholdable payment made to an 1042-S even though you are paying that withholding rate pool. QI does not entity. income to a QI. The QI may also provide provide any withholding rate pool information regarding U.S. nonexempt information regarding the remaining Example 2. WA, a U.S. withholding recipients in a chapter 4 withholding rate 20% of the payment. WA must apply the agent, makes a withholdable payment pool that the withholding agent must presumption rule to the part of the of U.S. source dividends to QI, a report on Form 1042-S. payment (20%) that has not been qualified intermediary that does not allocated. Under the presumption rules assume primary chapters 3 and 4 You also may be required under the of Regulations section 1.1471-3(f) for a withholding responsibility and that is a presumption rules to treat a payment withholdable payment made to an participating FFI. QI provides WA with a made to a QI as made to a payee that is entity, 20% of the payment is treated as valid Form W-8IMY with which it a U.S. nonexempt recipient from which paid to a nonparticipating FFI. WA must associates a withholding statement that you must withhold on the payment complete three Forms 1042-S. First, a allocates 95% of the payment to a under the backup withholding provisions Form 1042-S for dividends subject to chapter 3, 15% withholding rate pool of the Code. In this case, you must 15% withholding, showing “3” in Box 3, with a single chapter 4 exemption code, report the payment on the appropriate “00” in Box 3a (chapter 3 exemption and 5% of the payment to a chapter 4, Form 1099. See the General code), “15.00” in Box 3b (chapter 3 tax 30% withholding rate pool of recalcitrant Instructions for Certain Information rate), chapter 4 exemption code 15 account holders. WA must complete a Returns, available at IRS.gov/ (payee not subject to chapter 4 Form 1042-S for the dividends allocated 1099GeneralInstructions. withholding) in Box 4a, “00.00” in Box to the chapter 3, 15% withholding rate Example 3. WA, a U.S. withholding 4b (chapter 4 tax rate), QI as the pool, showing “3” in Box 3, “00” in Box agent, makes a withholdable payment recipient in Box 13a, recipient code 12 3a (chapter 3 exemption code), “15.00” of U.S. source dividends to QI, a (qualified intermediary) as the chapter 3 in Box 3b (chapter 3 tax rate), chapter 4 qualified intermediary and registered status code, and recipient code 07 exemption code 15 (payee not subject deemed-compliant FFI that is a local FFI (registered deemed-compliant to chapter 4 withholding) in Box 4a, described in Regulations section FFI-reporting Model 1 FFI) as the “00.00” in Box 4b (chapter 4 tax rate) 1.1471-5(f)(1)(i)(A). QI provides WA chapter 4 status code (because the and QI as the recipient in Box 13a along with a valid Form W-8IMY certifying that payment is a withholdable payment). with recipient code 12 (qualified it is transmitting Forms W-9 for U.S. Second, a Form 1042-S for dividends intermediary) as the chapter 3 status nonexempt recipients and with which it subject to 30% withholding, showing “3” code, and recipient code 05 associates a withholding statement that in Box 3, “00” in Box 3a (chapter 3 (participating FFI-other) as the chapter 4 allocates 95% of the payment to a exemption code), “30.00” in Box 3b status code. WA must also complete a chapter 3, 15% withholding rate pool (chapter 3 tax rate), chapter 4 Form 1042-S for the dividends allocated with a single chapter 4 exemption code, exemption code 15 (payee not subject to the chapter 4, 30% withholding rate and 5% of the payment to C, a U.S. to chapter 4 withholding) in Box 4a, pool, showing “4” in Box 3, chapter 3 individual. QI also provides WA with C's “00.00” in Box 4b (chapter 4 tax rate), QI exemption code 12 (payee subjected to Form W-9. C is a direct account holder as the recipient in Box 13a, recipient chapter 4 withholding) in Box 3a, of QI and a U.S. citizen that is a resident code 12 (qualified intermediary) as the “00.00” in Box 3b (chapter 3 tax rate), of QI's local jurisdiction that QI is not chapter 3 status code, and recipient “00” in Box 4a (chapter 4 exemption required to report under chapter 4 (see code 07 (registered deemed-compliant code), and “30.00” in Box 4b with QI as Regulations section 1.1471-5(f)(1)(i)(A)) FFI – reporting Model 1 FFI) as the the recipient in Box 13a, and recipient and thus cannot be included in a chapter 4 status code. Third, a Form code 12 (qualified intermediary) as the chapter 4 withholding rate pool of U.S. 1042-S for dividends subject to 30% chapter 3 status code, and recipient payees. See Regulations section withholding, showing “4” in Box 3, code 49 (QI-Recalcitrant Pool-General) 1.6049-4(c)(4). WA must complete a chapter 3 exemption code 12 (payee as the chapter 4 status code. Form 1042-S, showing QI as the subjected to chapter 4 withholding) in Box 3a, “00.00” in Box 3b (chapter 3 tax

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rate), “00” in Box 4a (chapter 4 reporting pools when the payment is a status of the payee (including the exemption code), “30.00” in Box 4b withholdable payment or the branch applicable chapter 4 exemption). If the (chapter 4 tax rate), “Unknown provides a chapter 4 withholding rate claims are consistent but the Recipient” as the recipient name in Box pool of U.S. payees and, to the extent withholding agent has not chosen to 13a, recipient code 21 (unknown applicable, recipient specific information accept the multiple claims, or if the recipient) as the chapter 3 status code, for chapter 3 purposes, the U.S. claims are inconsistent, a separate and recipient code 29 (unknown withholding agent must complete a Form 1042-S must be filed for the recipient) as the chapter 4 status code. separate Form 1042-S for each person(s) being treated as the Also, QI's name, status codes, country chapter 4 reporting pool treating the recipient(s). code, address, GIIN, and QI-EIN must U.S. branch as the recipient or, for Special instructions for U.S. trusts be entered in Boxes 15a through 15i. chapter 3 purposes, for each recipient and estates. Report the entire amount that is a foreign person whose Substitute dividends paid to quali- of income subject to reporting, documentation is associated with the fied securities lenders (QSLs). A regardless of estimates of distributable U.S. branch's Form W-8IMY. If a withholding agent that makes payments net income. payment cannot be reliably associated of substitute dividends to a QSL should with recipient documentation, the U.S. complete Form 1042-S treating the QSL Payments Made to Persons withholding agent must complete Form as the recipient. Use income code 34. Who Are Not Recipients 1042-S in accordance with the Use recipient code 13 or 14 (qualified presumption rules. If a U.S. branch not Disregarded entities and hybrid enti- securities lender – qualified intermediary treated as a U.S. person fails to certify ties. If a U.S. withholding agent makes or qualified securities lender – other) as that it will meet the requirements under a payment to a disregarded entity that is the chapter 3 status code and include Regulations section 1.1471-4(d)(2)(iii) not a hybrid entity making a treaty claim, the applicable chapter 4 status code of (C), a withholding agent must report the and receives a valid Form W-8BEN-E or the QSL. branch as an NPFFI. W-8ECI from a foreign person that is the The withholding agent is not required • If a withholding agent cannot reliably single owner of the disregarded entity, to withhold on a substitute dividend associate a payment with a Form the withholding agent must file a Form payment if it receives, at least annually, W-8IMY from a U.S. branch, and if a 1042-S in the name of the foreign single a certificate from the QSL that includes withholding agent has an EIN for the owner. The taxpayer identification a statement with the following branch, then the payment may be number (TIN) on the Form 1042-S, if information. reported on a single Form 1042-S required, must be the foreign single • The recipient of the substitute treating the U.S. branch as the recipient owner's TIN. However, in Box 13h, dividend is a QSL. and reporting the income as effectively include the GIIN of the disregarded • With respect to the substitute connected income. entity provided in Part II of Form dividend it receives from the withholding W-8BEN-E if the owner is an FFI. agent, the QSL states that it will Amounts paid to a foreign estate. If a U.S. withholding agent makes a Example 5. WA, a withholding withhold and remit or pay the proper agent, makes a withholdable payment amount of U.S. gross-basis tax. payment to a foreign estate, a Form 1042-S must be completed showing the of interest to LLC, a foreign limited If the withholding agent receives a estate as the recipient. Use recipient liability company that is not an FFI. LLC certificate from the QSL that includes a code 17 (estate) as the chapter 3 status is wholly owned by FC, a foreign statement that contains the above code and the applicable recipient code corporation that is an excepted information, use chapter 3 exemption for the chapter 4 status code. nonfinancial foreign entity. LLC is code 11. treated as a disregarded entity. WA has If the QSL is also a QI with primary Dual claims. A U.S. withholding agent a Form W-8BEN-E from FC on which it withholding responsibility, use chapter 3 may make a payment to a foreign entity states that it is the beneficial owner of exemption code 11 and not exemption (for example, a hybrid entity) that is the income paid to LLC. WA reports the code 06 for chapter 3 purposes. simultaneously claiming an exemption interest payment on Form 1042-S from chapter 4 withholding and a showing FC as the recipient. The result Amounts paid to certain U.S. branch- reduced rate of tax under chapter 3 on would be the same if LLC was a es. A U.S. withholding agent making a its own behalf for a part of the payment domestic entity. payment to a U.S. branch of an FFI or and an exemption from chapter 4 A disregarded entity can, however, NFFE completes Form 1042-S as withholding and a reduced rate of tax claim to be the beneficial owner of a follows. under chapter 3 on behalf of persons in payment if it is a hybrid entity claiming • If a withholding agent makes a their capacity as interest holders in that treaty benefits. See Form W-8BEN and payment to a U.S. branch that has entity on the remaining part. If the its instructions for more information. If a provided the withholding agent with a claims are consistent and the disregarded entity claims on a valid Form W-8IMY stating that it has agreed withholding agent has accepted the Form W-8BEN-E to be the beneficial to be treated as a U.S. person, the U.S. multiple claims, a separate Form owner, the U.S. withholding agent must withholding agent treats the U.S. branch 1042-S must be filed for the entity for complete a Form 1042-S treating the as the recipient using chapter 3 those payments for which the entity is disregarded entity as a recipient and recipient code 05 (U.S. branch - treated treated as claiming a reduced rate of using recipient code 26 (hybrid entity as a U.S. person) and chapter 4 withholding, and separate Forms making treaty claim) as the chapter 3 recipient code 17 (U.S. branch - treated 1042-S must be filed for each of the status code and the applicable recipient as a U.S. person). interest holders for those payments for code for the chapter 4 status code of the • If a withholding agent makes a which the interest holders are claiming a single owner when the payment is a payment to a U.S. branch that has reduced rate of withholding. The Forms withholdable payment and chapter 4 provided a Form W-8IMY to transmit 1042-S must include the chapter 4 information regarding its chapter 4 withholding does not apply.

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A hybrid entity with multiple owners Country X for Country X purposes. WA registered deemed-compliant FFI as the may also claim treaty benefits. See has a Form W-8BEN-E from FP on recipient and must include the GIIN and Form W-8BEN-E and its instructions for which it claims treaty benefits. WA also chapter 3 status code of the FFI and the more information on documentation has a Form W-8IMY from FP that applicable chapter 4 reporting pool code requirements that apply in such cases. If includes its chapters 3 and 4 statuses as the chapter 4 status code. If a a hybrid entity treated as a resident of a and a W-8BEN-E from each of FP's payment is made through tiers of NQIs treaty country claims treaty benefits on owners, FC1 and FC2, which certify that or flow-through entities that are a valid Form W-8BEN-E associated with FC1 is a PFFI and FC2 is an NPFFI. The participating FFIs or registered a withholdable payment (and chapter 4 attached withholding statement deemed-compliant FFIs, the withholding withholding does not apply with respect allocates 80% of the payment to FC1 agent must nevertheless complete Form to any of its owners to such payment or and 20% of the payment to FC2. WA 1042-S for each chapter 4 reporting portion of such payment), the U.S. must issue a Form 1042-S for 80% of pool to which the payments are withholding agent should complete a the payment to FP as the recipient using allocated and must report, as the Form 1042-S treating the hybrid entity recipient code 26 (hybrid entity making recipient, the FFI from whom the as a recipient, use code 26 (hybrid treaty claim) as the chapter 3 status recipients included in the chapter 4 entity making treaty claim) as the code, and leaving blank the recipient reporting pool directly receive the chapter 3 recipient status code, and code for the chapter 4 status code. WA payment. leave blank the chapter 4 recipient must withhold under chapter 4 on the Example 7. WA, a withholding status code. To the extent, however, remaining 20% of the payment allocated agent, makes a withholdable payment that a portion of a withholdable payment to FC2 and issue a Form 1042-S to FC2 of interest to FFI1, a reporting Model 1 is allocated to an owner of the hybrid as the recipient using recipient code 15 FFI. FFI1 provides WA with a valid Form entity for which chapter 4 withholding (corporation) as the chapter 3 status W-8IMY with which it associates a must be applied, the U.S. withholding code and recipient code 15 withholding statement that allocates agent must issue a separate Form (nonparticipating FFI) as the chapter 4 80% of the payment to FFI2, a 1042-S to such owner using the status code and must report FP as the participating FFI, and 20% of the applicable recipient codes for the intermediary in Boxes 15a through 15i. payment to a pool of nonparticipating owner's chapters 3 and 4 status codes Amounts paid to a nonqualified in- FFIs. FFI1 also provides WA with FFI2's and report the hybrid entity as the termediary or flow-through entity. If Form W-8IMY with which it associates a intermediary. The withholding agent a U.S. withholding agent makes a withholding statement that allocates must do so for each such owner for payment to an NQI or a flow-through 100% of the payment to recalcitrant which chapter 4 withholding applies and entity (other than a nonparticipating FFI) pool-no U.S. indicia. WA must complete must exclude amounts allocable to such with respect to a withholdable payment, a Form 1042-S for the interest allocated owners from the Form 1042-S issued to it must complete a separate Form to a pool of nonparticipating FFIs with the hybrid entity. 1042-S for each recipient on whose FFI1 as the recipient and must complete If an owner of a reverse hybrid entity behalf the NQI or flow-through entity another Form 1042-S for the interest claims treaty benefits on a valid Form acts as indicated by its withholding allocated to a pool of recalcitrant W-8BEN-E or W-8BEN (and chapter 4 statement and the documentation account holders-no U.S. indicia with withholding does not apply with respect associated with its Form W-8IMY. If a FFI2 as the recipient. to the payment to the reverse hybrid payment is made through tiers of NQIs If a U.S. withholding agent makes a entity), the U.S. withholding agent or flow-through entities, the withholding withholdable payment to an NQI or should issue a Form 1042-S for the agent must nevertheless complete Form flow-through entity that is a participating portion of the payment allocable to each 1042-S for the recipients to which the FFI or deemed-compliant FFI, and such owner treating the owner as the payments are remitted. A withholding cannot reliably associate the payment, recipient, using the applicable recipient agent completing Form 1042-S for a or any part of the payment, with a codes for the chapter 3 and 4 status recipient that receives a payment withholding statement, or to the extent codes, and report the reverse hybrid through an NQI or a flow-through entity required, a valid withholding certificate entity as the intermediary in Boxes 15a must include in Boxes 15a through 15i (Form W-8 or W-9) or other valid through 15i. In such a case, the U.S. of Form 1042-S the name, country appropriate documentation from a withholding agent must issue a Form code, address, TIN (if any), GIIN (if recipient, the withholding agent must 1042-S to the reverse hybrid entity for any), and status codes of the NQI or follow the appropriate presumption rules the remainder of the payment treating flow-through entity from whom the for that payment which, if the payment is such entity as the recipient and using recipient directly receives the payment. a withholdable payment, will generally the applicable chapters 3 and 4 status If, however, a U.S. withholding agent require the withholding agent to codes. However, if chapter 4 makes withholdable payments to an withhold 30% under chapter 4 because withholding applies with respect to the NQI or a flow-through entity that is a such payment is presumed made to a payment to the reverse hybrid entity, the participating FFI or registered nonparticipating FFI. See Regulations U.S. withholding agent must instead deemed-compliant FFI that is allocable section 1.1471-3(f)(5). For this purpose, issue a Form 1042-S to the reverse to a chapter 4 withholding rate pool as if the allocation information provided to hybrid entity for the entire payment and indicated by the FFI’s withholding the withholding agent indicates an withhold accordingly. statement, the U.S. withholding agent allocation of more than 100% of the Example 6. WA, a withholding should complete a separate Form payment, then no part of the payment agent, makes a withholdable payment 1042-S for each chapter 4 reporting should be considered to be associated of interest to FP, a hybrid entity pool (that is, pool of recalcitrant account with a Form W-8, Form W-9, or other organized in Country X. FP is treated as holders, pool of nonparticipating FFIs, appropriate documentation. The Form a partnership under the Code but is or pool of payees that are U.S. persons) 1042-S should be completed by treated as a company resident in treating the participating FFI or entering “Unknown Recipient” in Box

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13a and recipient code 21 (unknown applicable chapter 4 withholding rate addition, FP provides a complete recipient) as the chapter 3 status code pool, the withholding agent must file a withholding statement in association and recipient code 29 (unknown Form 1042-S for each recipient in the with its Form W-8IMY that allocates the recipient) as the chapter 4 status code. pool on a pro-rata basis. The interest payments among A, B, and C. Also, the name, country code, address, withholding agent must check Box 15 WA must file two Forms 1042-S, one TIN (if any), GIIN (if any), and status (pro-rata basis reporting) on each Form each for A and B, treating FP as the codes of the FFI should be entered in 1042-S. For example, if there are four intermediary in Boxes 15a through 15i. Boxes 15a through 15i. account holders in a withholding rate WA should also file a Form 1099-INT for If a U.S. withholding agent makes a pool that receives a $100 payment and C. withholdable payment to an NQI or the NQI fails to allocate more than $10 Example 9. The facts are the same flow-through entity that is a of the payment, the withholding agent as in Example 8, except that FP does nonparticipating FFI, the withholding must file four Forms 1042-S, one for not provide any documentation from its agent must treat the payments as made each account holder in the pool, partners. Because WA cannot reliably to an unknown recipient regardless of showing $25 of the income to each and associate the withholdable payment of whether it can reliably associate the Box 15 checked. If, instead, the NQI interest with documentation from a payment, or any part of the payment, fails to timely allocate 10% or less of the payee, it must apply the presumption with a valid withholding certificate (Form payment in a withholding rate pool to rules of Regulations section 1.1471-3(f) W-8 or W-9) or other valid appropriate the specific recipients in a pool, the to treat the interest as paid to a documentation from a recipient (see withholding agent must file a Form nonparticipating FFI. A Form 1042-S Regulations section 1.1471-3(d)(8)). 1042-S for each recipient for which it should be completed by entering “4” in The withholding agent should complete has allocation information and report the Box 3, “Unknown Recipient” in Box 13a, a Form 1042-S showing “Unknown unallocated part of the payment on a recipient code 21 (unknown recipient) Recipient” in Box 13a and recipient Form 1042-S as made to an “unknown as the chapter 3 status code, and code 21 (unknown recipient) as the recipient.” In this case, the withholding recipient code 29 (unknown recipient) chapter 3 status code and recipient agent does not check Box 15 on any of as the chapter 4 status code. Also, the code 29 (unknown recipient) as the the Forms 1042-S. name, country code, address, status chapter 4 status code. Also, the name, Payments allocated, or presumed codes, and TIN (if any) of FP should be country code, address, chapter 4 status made, to U.S. nonexempt recipients. entered in Boxes 15a through 15i. code, and TIN (if any) of the You may be given Forms W-9 or other Example 10. The facts are the same nonparticipating FFI should be entered information regarding U.S. nonexempt as in Example 9, except that FP is a on Form 1042-S in Boxes 15a through recipients from an NQI or flow-through participating FFI and provides WA with 15i. entity together with information a Form W-8IMY certifying that it is If, however, an NQI or flow-through allocating all or a part of the payment to reporting its U.S. accounts under entity that is a nonparticipating FFI U.S. nonexempt recipients. You must chapter 4 and a withholding statement provides documentation described in report income allocable to a U.S. allocating 33% of the payment to a pool Regulations section 1.1471-3(d)(8)(ii) to nonexempt recipient on the appropriate of U.S. payees. With respect to the U.S. establish that the withholdable payment Form 1099 and not on Form 1042-S, pool of payees, WA must file a Form or a portion of the payment is even though you are paying that income 1042-S showing FP as the recipient in beneficially owned by an exempt to an NQI or a flow-through entity. If, Box 13a and include FP's GIIN, beneficial owner, then the withholding however, a participating FFI or recipient code 08 as the chapter 3 agent should complete a Form 1042-S registered deemed-compliant FFI status code (partnership other than a for each exempt beneficial owner provides a withholding statement withholding foreign partnership), and showing the chapter 4 exemption code allocating all or part of the payment to a recipient code 48 (U.S. payees pool) as 15 (payee not subject to chapter 4 chapter 4 withholding rate pool of U.S. the chapter 4 status code. WA should withholding), the exempt beneficial payees along with the certification enter “3” in Box 3 as the chapter owner as the recipient in Box 13a, and provided on Form W-8IMY required for indicator, leave Boxes 3a and 3b blank, the name, country code, address, reporting such pool (as described in and enter exemption code 18 (U.S. chapter 4 status code, and TIN (if any) Regulations section 1.1471-3(c)(3)(iii) payees of a participating FFI or of the nonparticipating FFI in Boxes 15a (B)), you must report the income registered deemed-compliant FFI) in through 15i. For any remaining portion allocable to such pool on Form 1042-S. Box 4a and “00.00” in Box 4b. of the payment, the withholding agent Example 8. FP is a nonwithholding Specified Federal Procurement should complete a Form 1042-S to an foreign partnership (flow-through entity) unknown recipient as described directly that is a certified deemed-compliant FFI. Payments Made to Foreign above. FP receives from WA, a U.S. Persons Pro-rata reporting. If the withholding agent, a withholdable Section 5000C imposes a 2% tax on withholding agent has agreed that an payment of interest described by any foreign person that receives a NQI (other than a nonparticipating FFI) income code 01 (interest paid by U.S. specified federal procurement payment. may provide information allocating a obligors – general). FP has three A specified federal procurement payment to its account holders under partners, A, B, and C, all of whom are payment is a payment made to a foreign the alternative procedure of Regulations individuals. FP provides WA with a person pursuant to a contract with the section 1.1441-1(e)(3)(iv)(D) (no later Form W-8IMY certifying that it is U.S. government for (1) the provision of than February 14, 2022) and the NQI transmitting Forms W-9 for U.S. goods that are manufactured or fails to allocate more than 10% of the nonexempt recipients and Forms produced in a country that does not payment in a withholding rate pool to W-8BEN from A and B and a Form W-9 have an international procurement the specific recipients in the pool or an from C, a U.S. nonexempt recipient. In agreement with the United States, or (2)

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the provision of services in a country applicable recipient code for such entity pool code 27 (withholding rate pool – that does not have an international as the chapter 3 status code. For general) as the chapter 3 status code, procurement agreement with the United payments that are exempt from and a blank chapter 4 status code. QI States. chapter 4 withholding and made by the also must file one Form 1042-S for the QI directly to foreign beneficial owners 30% withholding rate pool that contains For purposes of section 5000C, a (or that are treated as paid directly to the same information as the Form payer of a specified federal beneficial owners), the QI may report on 1042-S filed for the 15% withholding procurement payment to a foreign the basis of chapter 3 reporting pools, in rate pool, except that it will show “30.00” person must complete a Form 1042-S most cases. A QI may not report on the in Box 3b (chapter 3 tax rate). for payments withheld upon in the name basis of reporting pools in the of the foreign person. Use income code Example 12. The facts are the same circumstances described in 44 to report payments subject to as in Example 11, except that Y is an Recipient-by-Recipient Reporting, later. withholding under section 5000C. Box 2 organization that has tax-exempt status For payments not subject to chapter 4 should include the amount of the in the United States and in the country in withholding, a QI may use a single specified federal procurement payments which it is located, and B is a chapter 4 exemption code 15 (payee subject to withholding and Box 7 should recalcitrant account holder with U.S. not subject to chapter 4 withholding) include the amount of tax withheld indicia. QI must file three Forms 1042-S. and a single chapter 3 reporting pool under section 5000C. One Form 1042-S (for amounts code 27 (withholding rate pool – allocable to A and X) will contain the If you are reporting tax withheld general) as the chapter 3 status code same information as in Example 11. The under section 5000C, enter “3” in Box 3 for all reporting pools, except for second Form 1042-S (for amounts as if the tax were a chapter 3 tax, enter amounts paid to foreign tax-exempt allocable to Y) will contain information “00” in Box 3a, and report the tax recipients for which chapter 3 reporting for the withholding rate pool consisting withheld in Box 7. You do not need to pool code 28 should be used. Note, of the amounts paid to Y. This Form complete Box 4a, 4b, or any Box for a however, that a QI should use recipient 1042-S will show income code 06 chapter 3 or 4 status code. In Boxes 13a code 28 only for pooled account holders (dividends paid by U.S. corporations – through 13d, include the name and the that have claimed an exemption based general) in Box 1, exemption code 02 address of the foreign person withheld on their tax-exempt status and not some (exempt under IRC) in Box 3a, “00.00” upon. If known, include the TIN (if any) other exemption (tax treaty or other in Box 3b (chapter 3 tax rate), chapter 4 in Box 13e. Code section). If a QI uses a chapter 3 exemption code 15 (payee not subject pooled reporting code (because to chapter 4 withholding) in Box 4a, Amounts Paid by chapter 4 withholding does not apply “00.00” in Box 4b (chapter 4 tax rate), Qualified Intermediaries and the QI is not allocating the payment “Zero rate withholding pool-exempt to a U.S. pool of payees), it should leave organizations” or similar designation in In general. For purposes of chapter 4, blank the recipient code for the Box 13a (recipient's name), chapter 3 a QI must complete a Form 1042-S for chapter 4 status code. code 28 (withholding rate pool – exempt payments withheld under chapter 4 Example 11. QI, a qualified organization) in Box 13f, and a blank determined in accordance with the intermediary and participating FFI, has chapter 4 status code in Box 13g. The income codes used to file Form 1042-S. four direct account holders, A and B, third Form 1042-S will contain A QI that is a participating FFI or foreign individuals, and X and Y, foreign information for the recalcitrant pool registered deemed-compliant FFI may corporations. The withholdable consisting of amounts paid to B. This use the chapter 4 pooled reporting payments made to these direct account Form 1042-S will show income code 06 codes 42 through 48 to allocate holders are exempt from chapter 4 (dividends paid by U.S. payments made to its recalcitrant withholding because of the chapter 4 corporations-general) in Box 1, code 12 account holders, payees that are status of each account holder. A and X (payee subjected to chapter 4 nonparticipating FFIs, and payees that are residents of a country with which the withholding) in Box 3a (chapter 3 are U.S. persons. A QI should not use United States has an income tax treaty exemption code), “00.00” in Box 3b chapter 4 reporting pool 49 (QI- and have provided documentation that (chapter 3 tax rate), “00” in Box 4a Recalcitrant Pool-General) to report its establishes that they are entitled to a (chapter 4 exemption code), “30.00” in accounts but may use it to report lower treaty rate of 15% on withholding Box 4b (chapter 4 tax rate), “recalcitrant accounts maintained by another QI. A of dividends from U.S. sources. B and Y pool – U.S. indicia” or similar QI that is an NFFE or an FFI treated as are not residents of a treaty country and designation in Box 13a (recipient's deemed-compliant under an applicable are subject to 30% withholding on name), chapter 4 recipient code 43 IGA (as described in Regulations dividends. QI receives U.S. source (recalcitrant pool-U.S. indicia) as the section 1.1441-1(e)(5)(ii)(A)) may use dividends on behalf of its four chapter 4 status code in Box 13g, and a chapter 4 reporting pool code 47 to customers. QI must file one Form blank chapter 3 status code in Box 13f. report payments allocable to a pool of 1042-S for the 15% withholding rate nonparticipating FFIs. A QI may also Under the terms of its Qualified pool. This Form 1042-S must show use the chapter 4 pooled reporting Intermediary (QI) agreement income code 06 (dividends paid by U.S. ! codes to report payments allocable to CAUTION with the IRS, a QI that is an FFI corporations – general) in Box 1, “00” in account holders, payees, or owners of may be required to report the amounts Box 3a (chapter 3 exemption code), another participating FFI or registered paid to U.S. nonexempt recipients on “15.00” in Box 3b (chapter 3 tax rate), deemed-compliant FFI that is an NQI, Form 1099 or Form 8966 using the chapter 4 exemption code 15 (payee NWP, or NWT, and it must provide its name, address, and TIN of the payee to not subject to chapter 4 withholding) in chapter 4 withholding rate pools on its the extent those items of information are Box 4a, “00.00” in Box 4b (chapter 4 tax withholding statement. In such case, the known. These amounts must be rate), “Withholding rate pool” in Box 13a QI must include the NQI, NWP, or NWT reported on Form 1042-S if allocated to (recipient's name), chapter 3 reporting as the recipient in Box 13a and the

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a chapter 4 withholding rate pool of U.S. PAI2. The private arrangement Recipient-by-Recipient payees. intermediaries pay the dividends they Reporting receive from QI to foreign persons that A QI acting as a QDD must are beneficial owners and direct If a QI is not permitted to report on the separately report on Forms 1042-S account holders of PAI1 or PAI2. All basis of reporting pools, it must follow payments that it makes in its QDD payees are exempt from chapter 4 the same rules that apply to a U.S. capacity. The QI should report the name withholding based on their respective withholding agent. For chapter 3 of the QDD that makes the payment as chapter 4 statuses and the dividends purposes, a QI may not report the the withholding agent in Box 12d paid are subject to a 15% rate of following payments on a reporting pool (following the naming protocol used for withholding. QI must file a Form 1042-S basis, but rather must complete Form applying to be a QDD) and should use for the dividends paid to its own direct 1042-S for each appropriate recipient withholding agent code 35 as the account holders that are beneficial and must provide the applicable chapter 3 status code. owners. QI also must file two Forms chapter 4 exemption code. A QI acting as a QDD with 1042-S, one for the dividends paid to Payments made to another QI, QDD, ! respect to a payment may only the direct account holders of each of QSL, WP, or WT. The QI must CAUTION use chapter 3 pooled reporting PAI1 and PAI2. Each of the Forms complete a Form 1042-S treating the codes 27 and 28. 1042-S that QI files for payments made other QI, QDD (when a QI is acting as a to PAI1 and PAI2 must contain the QDD with respect to a payment), QSL, Amounts Paid to Private name and address of PAI1 or PAI2, WP, or WT as the recipient. recipient code 29 (PAI withholding rate Arrangement Intermediaries Payments made to an NQI (including pool – general) as the chapter 3 status an NQI that is an account holder of a In most cases, a QI must report code, and a blank chapter 4 status PAI). For chapter 3 purposes, the QI payments made to each private code, and should use chapter 4 must complete a Form 1042-S for each arrangement intermediary (PAI) exemption code 15 (payee not subject recipient who receives the payment (defined under Definitions, earlier) as if to chapter 4 withholding) in Box 4a. the PAI's direct account holders were its from the NQI. A QI that is completing own. For purposes of chapter 4, a QI Amounts Paid to Form 1042-S for a recipient that that is a participating FFI, registered Certain Partnerships receives a payment through an NQI deemed-compliant FFI, or an FFI and Trusts must include in Boxes 15a through 15i treated as deemed-compliant under an the name, country code, address, TIN (if applicable IGA (as described in A QI that is applying the special pool any), GIIN (if any), and status codes of Regulations section 1.1441-1(e)(5)(ii) reporting allowance provided in the QI the NQI from whom the recipient directly (A)) may use the chapter 4 reporting agreement for certain partnerships or receives the payment. In the case of an pool code 47 to allocate payments trusts (Agency Option) must file NQI that is a participating FFI or made to the PAI's payees that are separate Forms 1042-S reflecting registered deemed-compliant FFI, the nonparticipating FFIs, and may treat the reporting pools for each partnership or QI must complete a Form 1042-S for the PAI as the recipient on Form 1042-S trust that has provided reporting pool chapter 4 withholding rate pool of the with respect to each such pool. For information in its withholding statement. NQI provided in a withholding statement chapter 3 purposes, if the payment is For purposes of chapter 4, a QI that is associated with its Form W-8IMY and made directly by the PAI to the recipient, an FFI may use the chapter 4 reporting must report the NQI as the recipient. In the QI may report the payment on a pool code 47 to allocate payments such a case, the QI must include the pooled basis. A separate Form 1042-S made to the partnership’s or trust's name and address of the NQI as the is required for each withholding rate payees that are nonparticipating FFIs recipient and use chapter 4 pool pool of each PAI (unless the QI is acting and should report the partnership or reporting codes 42 through 48 as the as a QDD with respect to the payment). trust as the recipient on Form 1042-S. chapter 4 status code and chapter 3 However, the QI must include the name For chapter 3 purposes, if the payment status code 25 (nonqualified and address of the PAI and use is made directly by the partnership or intermediary). If the NQI fails to provide reporting pool code 29 or 30 (PAI trust to the recipient, the QI may use sufficient allocation information with withholding rate pool – general and reporting pool code 31 (Agency respect to a withholdable payment, the PAI-withholding rate pool-exempt withholding rate pool - general) or 32 QI must complete a Form 1042-S with organization) as the chapter 3 status (Agency withholding rate pool - exempt the recipient as “Unknown Recipient” code. If the PAI is providing recipient organization) as the chapter 3 status using chapter 4 status code 29 information from an NQI or flow-through code (unless the QI is acting as a QDD (unknown recipient) and must include entity, the QI may not report the with respect to the payment). However, the NQI's information in Boxes 15a payments on a pooled basis for to the extent required in the QI through 15i. agreement, the QI must file separate chapter 3 purposes. Instead, it must Example 14. QI, a qualified follow the same procedures as a U.S. Forms 1042-S for partners, beneficiaries, or owners of such intermediary, has NQI, a nonqualified withholding agent making a payment to intermediary that is a participating FFI, an NQI or flow-through entity. partnership or trust that are indirect partners, beneficiaries, or owners, and as an account holder. NQI has two Example 13. QI, a qualified for direct partners, beneficiaries, or account holders, A and B, both intermediary, pays U.S. source owners of such partnership or trust that recalcitrant account holders with U.S. dividends to direct account holders that are intermediaries or flow-through indicia who receive a withholdable are foreign persons and beneficial entities. payment of U.S. source dividends from owners. It also pays a part of the U.S. QI. NQI provides QI with a valid Form source dividends to two private W-8IMY and a complete withholding arrangement intermediaries, PAI1 and statement that allocates the dividends

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paid to NQI to recalcitrant pool – U.S. W-8IMY of the flow-through entity. The partner, beneficiary, or owner that is indicia for both A and B. QI must QI must include the name, address, and exempt from chapter 4 withholding and complete one Form 1042-S reporting GIIN of the flow-through entity as the to whom the WP or WT distributes, or in NQI as the recipient and using reporting recipient and the applicable chapter 3 whose distributive share is included, an pool code 43 (recalcitrant pool – U.S. status code for the flow-through entity amount subject to withholding under indicia) as the chapter 4 status code. and use pooled reporting codes 42 chapter 3, in the same manner as a U.S. Example 15. QI has NQI, a through 48 as the chapter 4 status code. withholding agent. However, if the WP nonqualified intermediary that is a Example 16. QI, a qualified or WT has made a pooled reporting reporting Model 2 FFI, as an account intermediary, has FP, a nonwithholding election in its WP or WT agreement, the holder. NQI has two account holders, A foreign partnership that is a registered WP or WT may instead report payments and B, who receive a withholdable deemed-compliant FFI, as an account to such direct partners, beneficiaries, or payment of U.S. source dividends from holder. QI pays interest that is a owners on the basis of chapter 3 QI. A is a nonparticipating FFI. NQI withholdable payment described by reporting pools and file a separate Form treats B as a nonconsenting U.S. income code 01 (interest paid by U.S. 1042-S for each reporting pool. For account under the applicable IGA and is obligors – general) to FP. FP has three payments not subject to chapter 4 not required to withhold on payments to partners, A, B, and C, all of whom are withholding, a WP or WT may use a B under chapter 4. NQI provides QI with exempt from withholding under single chapter 4 exemption code 15 a valid Form W-8IMY and a complete chapter 4 based on their respective (payee not subject to chapter 4 withholding statement that allocates chapter 4 statuses. FP provides QI with withholding) and a single chapter 3 50% of the dividends paid to A and 50% a Form W-8IMY with which it associates reporting pool code 27 (withholding rate to B. NQI designates B as an individual the Forms W-8BEN from each of A, B, pool – general) as the chapter 3 status exempt from withholding under an IGA and C. In addition, FP provides a code for all chapter 3 reporting pools, but cannot include B in a chapter 4 complete withholding statement in except for amounts paid to foreign withholding rate pool of U.S. payees association with its Form W-8IMY that tax-exempt recipients for which a because the payment is subject to allocates the interest payments among separate recipient code 28 must be chapter 3 withholding and under the A, B, and C. QI must file three Forms used. For this purpose, a foreign presumption rules of Regulations 1042-S, one each for A, B, and C. The tax-exempt recipient includes any section 1.1441-1(b)(3) the payment is Forms 1042-S must show information organization that is not subject to presumed made to an unknown, relating to FP in Boxes 15a through 15i withholding and is not liable to tax in its undocumented foreign payee. QI must along with the chapter 3 and 4 status country of residence because it is a complete two Forms 1042-S. One Form codes and chapter 4 exemption code 15 charitable organization, pension fund, or 1042-S must show NQI as the recipient (payee not subject to chapter 4 foreign government. See the WP and and use reporting pool code 47 withholding) for A, B, and C. WT agreements for when a WP and WT (nonparticipating FFI pool). The second can pool report payments to an indirect Form 1042-S must show the recipient Amounts Paid by partner, a beneficiary, or an owner. See as “Unknown Recipient,” NQI's Withholding Foreign section 9 of the WP or WT agreement. information in Boxes 15a through 15i, Partnerships and Trusts chapter 4 exemption code 19 (exempt Amounts Paid In general. For chapter 4 purposes, from withholding under IGA), chapter 4 by Nonqualified payments that are made by a status code 34 (nonconsenting U.S. withholding foreign partnership (WP) or Intermediaries and account), chapter 3 status code 21 withholding foreign trust (WT) that is a (unknown recipient), and 30% Flow-Through Entities participating FFI or a registered withholding under chapter 3 for the An NQI and a flow-through entity are deemed-compliant FFI directly to its payment allocated to B as a presumed withholding agents and must file Forms partners, owners, or beneficiaries that foreign person under chapter 3. 1042-S for amounts paid to recipients. are recalcitrant account holders, payees However, an NQI or flow-through entity Payments made to a flow-through that are nonparticipating FFIs, and is not required to file Form 1042-S if it is entity. The QI must complete a Form payees that are U.S. persons may be not required to file Form 1042-S under 1042-S for each recipient who receives reported on the basis of chapter 4 the Multiple Withholding Agent Rule, the payment from the flow-through reporting pools. A WP or WT may also later. An NQI or flow-through entity may entity. A QI that is completing a Form use the chapter 4 pooled reporting report payments made to recipients to 1042-S for a recipient that receives a codes to report payments allocable to the extent it has failed to provide to payment through a flow-through entity account holders, payees, or owners of another withholding agent the must include in Boxes 15a through 15i another participating FFI or registered appropriate documentation and the name, country code, address, TIN (if deemed-compliant FFI that is an NQI, complete withholding statement for any), GIIN (if any), and status codes of NWP, or NWT and provides its either chapter 3 or 4 purposes. If the the flow-through entity from which the chapter 4 withholding rate pools on its NQI or flow-through entity chooses to or recipient directly receives the payment. withholding statement when the WP or must file Form 1042-S, as described For chapter 4 purposes and in the WT applies section 9.03 of its above, the NQI or flow-through entity case of a flow-through entity that is a agreement to such entity. In such case, must also file Form 1042 and, if participating FFI or registered the WP or WT must include the NQI, applicable, attach the Form 1042-S it deemed-compliant FFI (other than a WP NWP, or NWT as the recipient in Box received from the withholding agent to or WT), the QI must complete a Form 13a. If a WP or WT has not made a establish any credit for amounts 1042-S for each chapter 4 withholding pooled reporting election for chapter 3 withheld by the withholding agent. See rate pool provided in the withholding purposes, a WP or WT must file a the Instructions for Form 1042. statement associated with the Form separate Form 1042-S for each direct

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If another withholding agent has amounts withheld by another entitled to a 15% rate of withholding withheld tax on an amount that should withholding agent must use Box 8 (Tax under chapter 3, and B, documented as have been exempt (for example, where withheld by other agents) to report such a foreign individual exempt from the withholding agent applied the amounts and must provide the name chapter 4 withholding and a resident of presumption rules because it did not and EIN of the withholding agent that a country that does not have a tax treaty receive proper documentation or other withheld in Boxes 14a and 14b (Primary with the United States and who is required information from the NQI or Withholding Agent's Name and EIN). subject to 30% withholding under flow-through entity), and the payee or See the instructions for Boxes 14a and chapter 3. NQI provides WA with its beneficial owner will make a claim for 14b, later. Form W-8IMY that certifies its status as refund, the NQI or flow-through entity Example 17. NQI, a foreign bank a participating FFI to which it associates must report on Form 1042-S the correct that is a participating FFI, acts as a the Forms W-8BEN from both A and B tax rate and the combined amount of nonqualified intermediary for four and a complete withholding statement U.S. federal tax withheld with respect to different foreign persons (A, B, C, and that allocates 50% of the dividend to A all recipients and should enter the D) who own securities from which they and 50% to B. A's Form W-8BEN claims applicable chapter 3 and 4 exemption receive interest that is a withholdable a 15% treaty rate of withholding. B's codes. payment. The interest is paid by a U.S. Form W-8BEN does not claim a reduced rate of withholding. WA, If another withholding agent withholding agent (WA) as custodian of the securities for NQI. A, B, C, and D however, mistakenly withholds only underwithholds, regardless of whether it 15%, $15, from the entire $100 received proper documentation from the each own a 25% interest in the securities. NQI has furnished WA with a payment. WA completes a Form 1042-S NQI or flow-through entity, the NQI or for each A and B as the recipients, flow-through entity must withhold Form W-8IMY to which it certifies its status as a participating FFI and has showing on each form $50 of dividends additional amounts to bring the total in Box 2, a withholding rate of “15.00” in withholding to the correct amount. attached Forms W-8BEN from A and B. NQI's Form W-8IMY contains an Box 3b (chapter 3 tax rate), and $7.50 as the amount withheld in Boxes 7 and Multiple Withholding attachment stating that 25% of the securities are allocable to each of A and 10. Under the multiple withholding agent Agent Rule B and 50% to a pool of recalcitrant rule, NQI is not required to file a Form A withholding agent is not required to account holders with U.S. indicia. WA 1042-S for A. However, because NQI file Form 1042-S if a return is filed by pays $100 of interest during the knows (or should know) that B is subject another withholding agent reporting the calendar year. WA treats the $25 of to a 30% rate of withholding, and same amount and the withholding agent interest allocable to A and the $25 of assuming it knows that WA only has withheld correctly. interest allocable to B as portfolio withheld 15%, the multiple withholding interest and completes Forms 1042-S agent rule does not apply to the The multiple withholding agent rule for A and for B as the recipients. WA dividend paid to B, and NQI must does not relieve withholding agents includes information relating to NQI in withhold an additional 15% from the from Form 1042-S reporting Boxes 15a through 15i on the Forms payment to B. NQI then must file a Form responsibility in the following 1042-S for A and B. WA subjects the 1042-S for B showing $50 of dividends circumstances. remaining $50 of interest to 30% in Box 2, “00” in Box 3a (chapter 3 exemption code), “30.00” in Box 3b (the Any withholding agent making a withholding under chapter 4 and reports • correct chapter 3 tax rate), $7.50 payment to a QI, QSL, WP, or WT must the interest on a Form 1042-S by withheld by NQI in Box 7, $7.50 report that payment as made to the QI, treating NQI as the recipient in Box 13a withheld by WA in Box 8, and $15 in QSL, WP, or WT. and uses chapter 3 status code 25 Box 10 (the combined amount Any withholding agent making a (nonqualified intermediary), chapter 4 • withheld). NQI also must enter chapter 4 payment to a U.S. branch treated as a status code 43 (recalcitrant pool – U.S. exemption code 15 (payee not subject U.S. person must report the payment as indicia), “30.00” in Box 4b (chapter 4 tax to chapter 4 withholding) in Box 4a and made to that branch. rate), and $15 as the amount withheld in “00.00” in Box 4b (chapter 4 tax rate). Any withholding agent that withholds Boxes 7 and 10. Under the multiple • See the instructions for Box 3b, later. an amount from a payment under withholding agent rule, NQI is not chapter 3 or 4 must report that amount required to file a Form 1042-S, but must to the recipient from whom it was file a Form 1042-S if, for example, C Penalties withheld. and D seek to make a claim for refund The following penalties apply to the and NQI has not filed a collective refund person required to file Form 1042-S. Furthermore, the multiple withholding claim on behalf of C and D for the tax The penalties apply to both paper filers agent rule does not relieve the following withheld under chapter 4 on the and electronic filers. from Form 1042-S reporting payment (see Regulations section Late filing of correct Form 1042-S. A responsibility. 1.1471-4(h)). penalty may be imposed for failure to file • Any QI, WP, or WT required to report each correct and complete Form an amount to a chapter 4 withholding Example 18. WA, a U.S. 1042-S when due (including rate pool or chapter 3 withholding rate withholding agent, makes a $100 extensions), unless you can show that pool. dividend payment that is a withholdable the failure was due to reasonable cause • An NQI or flow-through entity that payment to a foreign bank (NQI) that is and not willful neglect. The penalty, knows, or has reason to know, that the a participating FFI and acts as a based on when you file a correct Form correct amount has not been withheld nonqualified intermediary. NQI receives 1042-S, is the following. by another withholding agent. the payment on behalf of A, documented as a foreign individual • $50 per Form 1042-S if you correctly Under the multiple withholding agent exempt from chapter 4 withholding and file within 30 days after the required rule, a withholding agent reporting a resident of a treaty country who is filing date; the maximum penalty is

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$571,000 per year ($199,500 for a small • Comply with the requirements in Pub. • The income code you report in Box 1 business). A small business, for this 1187 if you are an electronic filer. must correctly reflect the type of income purpose, is defined as having average • Complete all required fields. At a you pay to the recipient. annual gross receipts of $5 million or minimum, you must provide your unique • The withholding agent's name, less for the 3 most recent tax years (or form identifier at the top of the form as address, chapter 3 and 4 status codes, for the period of its existence, if shorter) well as the information requested in EIN, QI-EIN, WP-EIN, WT-EIN, and ending before the calendar year in Boxes 1, 2, 3, 7a, 12a, 12b, 12c, 12d, GIIN (if any) must be reported in Boxes which the Forms 1042-S are due. 12f, 12h, 12i, 13a, 13b, 13c, and 13d. 12a–i. • $110 per Form 1042-S if you correctly Other Boxes must be completed if the • The recipient's name, address, U.S. file more than 30 days after the due date nature of the payment requires it. TIN (if any), GIIN (if any), and country but by August 1; the maximum penalty • If the amount reported in Box 2 is a code must be reported in Boxes 13a–e is $1,713,000 per year ($571,000 for a withholdable payment, you must also and 13h. In most cases, you must report small business). enter information in Boxes 4a, 4b, and a foreign address. See the instructions • $280 per Form 1042-S if you file after 13g. If the amount reported in Box 2 is for Box 13, later. August 1 or you do not file correct an amount subject to chapter 3 • In the case of joint owners, Form Forms 1042-S; the maximum penalty is withholding, you must enter information 1042-S can only list one of the owners $3,426,000 per year ($1,142,000 for a in Boxes 12b, 12c, and 13f. as the recipient in Box 13a. Form small business). • If the amount reported in Box 2 is not 1042-S must not be completed with If you intentionally disregard the subject to chapter 4 withholding or is not more than one of the joint owners as the requirement to report correct a withholdable payment, you must enter recipient. information, the penalty per Form “00.00” in Box 4b and provide the • The country code that you report in 1042-S is increased to the greater of applicable exemption code in Box 4a. Boxes 13b and 15f must be present and $570 or 10% of the total amount of • If the amount reported in Box 2 is a correctly coded and cannot be “US” items required to be reported, with no withholdable payment and an amount (unless the intermediary identified in maximum penalty. subject to chapter 3 withholding and the line 15 is a U.S. branch that is not tax rate in Box 4b is 00.00, you must treated as a U.S. person). Additionally, Failure to furnish correct Form enter information in Boxes 3a and 3b. If do not use “OC” or “UC” except as 1042-S to recipient. If you fail to the rate entered in Box 4b is 30.00, you specifically allowed in these provide Forms 1042-S to recipients and may enter information in Boxes 3a and instructions. cannot show reasonable cause, a 3b. • For direct account holders, you must penalty of up to $280 may be imposed • If you are a QI, WP, or WT that is pool report the recipient's account number in for each failure to furnish Form 1042-S reporting for its direct account holders Box 13k. You may also be required to to the recipient when due. The penalty only, either a chapter 3 status code (Box report the recipient's foreign TIN, an may also be imposed for failure to 13f) or chapter 4 status code (Box 13g) LOB code (for an entity claiming treaty include all required information or for is required. benefits), and the recipient's date of furnishing incorrect information on Form • If the recipient in Box 13 or entity in birth in Boxes 13j and 13l (see the 1042-S. The maximum penalty is Box 15 is a participating FFI, registered instructions for Box 13j and Box 13l, $3,426,000 for all failures to furnish deemed-compliant FFI, sponsored FFI, later). correct recipient statements during a direct reporting NFFE, or sponsored • The exemption code you report in calendar year. If you provide the correct direct reporting NFFE, you must enter Box 3a must correctly identify the proper statement on or before August 1, the entity's GIIN or the GIIN of the tax status for the type of income you pay reduced penalties similar to those for sponsoring entity in Box 13h or 15e (to to the recipient. The exemption code failing to file a correct Form 1042-S with the extent that you may rely on a you report in Box 4a must correctly the IRS may be imposed. See Late filing sponsored entity's GIIN under the identify the proper tax status for the type of correct Form 1042-S, earlier. If you chapter 4 regulations or an applicable of income you pay to the recipient or if intentionally disregard the requirement IGA for withholding purposes). exemption code 15 is used (payee not to report correct information, each $280 • Use only income, status, and subject to chapter 4 withholding), the penalty is increased to the greater of exemption codes specifically listed in chapter 4 status code of the recipient $570 or 10% of the total amount of these instructions. must correctly reflect this exemption. items required to be reported, with no • Use only tax rates that are allowed by maximum penalty. statute, regulations, or treaty. Do not Note. If you use exemption code 04 Failure to file electronically. If you attempt to “blend” rates. Instead, if (exempt under tax treaty), the country are required to file electronically but fail necessary, submit multiple Forms code that you report in Box 13b must be to do so, and you do not have an 1042-S to show changes in tax rate. a valid treaty country. Countries with approved waiver on record, penalties See the Valid Tax Rate Table. which the United States has a tax treaty are listed at IRS.gov/Businesses/ may apply unless you establish All information you enter when reasonable cause for your failure. International-Businesses/United-States- reporting the payment must correctly Income-Tax-Treaties-A-to-Z. reflect the intent of the statute and Avoid Common Errors regulations. In most cases, you should You, the withholding agent, are To ensure that your Forms 1042-S can rely on the withholding documentation ! liable for the tax if you know, or be correctly processed, be sure that you you have collected (Form W-8 series, CAUTION should have known, that do the following. Form 8233, etc.) to complete your Form underwithholding on a payment has • Carefully read the information 1042-S submissions. occurred. provided in Pub. 515 and these Also note the following. instructions. • The gross income you report in Box 2 cannot be zero.

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amendment and increasing sequentially paid by U.S. obligors-general) (use Specific Instructions for each subsequent amendment). exemption code 02 (exempt under IRC) for Withholding in Box 3a). Agents Box 1, Income Code 6. Use code 28 for gambling All filers must enter the appropriate winnings. These are proceeds from a All amounts must be reported in two-digit income code from the list in game other than blackjack, baccarat, ! U.S. dollars. Appendix A, later. Use the income code craps, roulette, or big-6 wheel. For more CAUTION that is the most specific. See Pub. 515 information, see Pub. 515. for further explanation of the income 7. Use code 33, 34, 35, 53, or 54 for Rounding Off codes. Below are examples on how to all substitute payment transactions. For to Whole Dollars use some of the income codes. more information, see Regulations You must round off cents to whole 1. Use code 06 for dividends, sections 1.861-2(a)(7) and 1.861-3(a) dollars. To round off amounts to the including any deemed dividends (such (6). For payments of interest or nearest whole dollar, drop amounts as deemed dividends arising under substitute interest made by a under 50 cents and increase amounts section 305(c)). However, use other withholding agent to a QI that assumes from 50 to 99 cents to the next dollar. codes for dividends (including deemed primary withholding responsibilities for For example, $1.39 becomes $1 and dividends) paid on actively traded substitute interest, the withholding agent $2.50 becomes $3. If you have to add securities. and the QI should use code 33 or 54. two or more amounts to figure the 2. Use code 09 for the following For payments of dividend equivalent amount to enter on a line, include cents types of capital gain. payments made by a withholding agent to a QI acting as a QDD, a withholding when adding and only round off the a. Gains on disposal of timber, coal, agent and a QI should use code 34 or total. or domestic iron ore with a retained 53. See Rev. Proc. 2017-15 for more economic interest, unless an election is information on when a QI assumes Unique Form Identifier made to treat those gains as income primary withholding responsibilities for A withholding agent must provide a effectively connected with a U.S. trade substitute interest or dividend equivalent unique form identifier number on each or business. Form 1042-S that it files in the Box payments. b. Gains on contingent payments provided at the top of the form. The 8. Use code 37 (return of capital) for received from the sale or exchange after unique form identifier must: a nondividend distribution. This is a October 4, 1966, of patents, copyrights, Be numeric (for example, distribution that is not paid out of the • secret processes and formulas, 1234567891), earnings and profits of a corporation. It goodwill, trademarks, trade brands, Be exactly 10 digits, and represents a distribution in part or full • franchises, and other like property. • Not be the recipient's U.S. or foreign payment in exchange for stock. c. Gains on certain transfers of all TIN. 9. Use codes 38 and 39 for substantial rights to, or an undivided payments to covered expatriates. Use If a withholding agent is filing an interest in, patents if the transfers were code 38 for a payment of eligible amended Form 1042-S, it must include made before October 5, 1966. the same unique form identifier that was deferred compensation subject to reported by the withholding agent on the d. Certain gains from the sale or section 877A(d)(1) and use code 39 for original Form 1042-S that is being exchange of original issue discount a distribution from a nongrantor trust amended. The unique form identifier will obligations issued after March 31, 1972. subject to section 877A(f)(1). For more be used to identify which information 3. Use code 17 for payments for information, see Notice 2009-85 return is being corrected or amended independent personal services (2009-45 I.R.B. 598), available at when multiple information returns are performed by a foreign person IRS.gov/irb/2020-03_IRB#NOT-2020-2. filed by a withholding agent with respect (including payments made to an entity). 10. Use code 40 (other dividend to the same recipient. The identifying This includes payments that are subject equivalents under IRC section 871(m)) number must be unique to each original to the business profits article of a treaty. for other U.S.-source dividend Form 1042-S filed for the current year. 4. Use code 29 (deposit interest) if equivalents. These are dividend The identifying number can be used on you are paying bank deposit interest, equivalent payments under section a new original form in a subsequent not code 01 (interest paid by U.S. 871(m) that are not substitute dividend year. obligors-general). payments identified with income code 5. Use code 24 (qualified 34 or 53. Amended Checkbox investment entity (QIE) distributions of 11. Use code 41 (guarantee of See Amended Forms, later. capital gains) for distributions of capital indebtedness) for certain guarantee of gains from a QIE. Use code 36 (capital indebtedness payments. These are Amendment Number gains distributions) for capital gain amounts paid for the provision of a If you are filing an amended Form distributions (dividends) paid or credited guarantee of indebtedness that was 1042-S, you must provide an by mutual funds (or other regulated issued after September 27, 2010. amendment number. The amendment investment companies). Include 12. Use either code 42 (earnings as number must be numeric and the length long-term and short-term capital gain an artist or athlete – no central must be exactly one digit. Each time dividends (use exemption code 02 withholding agreement) or 43 (earnings that you amend the same form (as (exempt under IRC) in Box 3a). as an artist or athlete – central determined by the unique form withholding agreement) for payments to identifier), you must provide the Note. Exempt-interest dividends and an artist or athlete. A central withholding amendment number in the box provided interest-related dividends should be agreement is Form 13930, Application on the form (using “1” for the first reported under income code 01 (interest

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for Central Withholding Agreement, plus Note. Although income codes are withholding agreement (income code additional information specified in the provided for short-term OID and 43), you must report the gross amount instructions to such form, that is entered notional principal contract income, paid to the artist or athlete in Box 2 into by the artist or athlete, a designated those items are not always subject to (without any consideration to the withholding agent, and the IRS. For reporting on Form 1042-S. For example, expenses to be taken into account for more details, see Pub. 515. short-term OID may need to be reported purposes of determining the amount of 13. Use code 50 (income previously by an NQI or flow-through entity if those withholding tax pursuant to the central reported under escrow procedure) with amounts are paid to foreign persons withholding agreement). respect to a recalcitrant account holder and another withholding agent backup of a dormant account for which a withheld on those amounts under the Box 3 participating FFI reported the income on presumption rules. Notional principal contract income is reportable if it is Chapter indicator. If you are reporting Form 1042-S in a prior calendar year amounts in Boxes 7 through 9, enter but for which the participating FFI was effectively connected with the conduct of a trade or business in the United either a “3” or “4” to indicate whether the not required to deposit the tax withheld amounts were withheld (or paid by the or determined that withholding was not States or results in the payment of interest under Regulations section withholding agent) pursuant to chapter 3 required until the current calendar year or chapter 4. If you are reporting tax under an applicable escrow procedure. 1.446-3(g)(4) or a dividend equivalent under section 871(m) and the withheld under section 5000C, or For additional information on the escrow backup withholding was applied under procedure for dormant accounts, see regulations thereunder (for which a Form 1042-S is required). For more the presumption rules, enter “3” as if the Regulations section 1.1471-4(b)(6). tax were a chapter 3 tax. Also use code 50 for income reported information, see the regulations under chapter 3 and Pub. 515. on a Form 1042-S in a prior calendar Note. Either a “3” or “4” (but not both) year for which tax withheld was not must be entered on each Form 1042-S. deposited pursuant to the escrow Box 2, Gross Income If you are not reporting amounts in procedure for undetermined amounts of For each income type, enter the gross Boxes 7 through 9 because you did not income and such withheld tax is now amount you paid (in whole dollars) to or withhold under chapter 3 or 4, you required to be deposited in the current on behalf of the recipient during the should enter “3.” calendar year. For additional calendar year, including withheld tax. If you are reporting payments to U.S. information on the escrow procedure for The following special procedures apply payees, enter “3” and leave Boxes 3a undetermined amounts of income, see to the reporting of gross income. and 3b blank. Regulations section 1.1441-3(d)(1). For • You must report the entire amount of instructions on reporting amounts a corporate distribution made with Boxes 3a and 4a, Chapter 3 and withheld during the current calendar respect to stock even if you elect to Chapter 4 Exemption Codes year that you are not depositing reduce the amount of withholding on the In most cases, if the tax rate you pursuant to the escrow procedure, see distribution because all or a part of the entered in Box 3b or 4b is 00.00, you the instructions for Box 7, later. distribution is nontaxable or represents a capital gain dividend. may be required to enter the appropriate 14. Use code 52 (dividends paid on exemption code (01 through 23) from certain actively traded or publicly • You must report the entire amount of a payment if you do not know at the time Appendix B, later, as applicable for offered securities), 53 (substitute chapter 3 and 4 purposes. In certain payments-dividends paid from certain of payment the amount that is subject to withholding because the determination cases, more than one exemption code actively traded or publicly offered will apply. See the instructions below for securities), 51 (interest paid on certain of the source of the income or the calculation of the amount of income the applicable codes to determine which actively traded or publicly offered code to use. securities), 54 (substitute subject to tax depends upon facts that payments-interest from certain actively are not known at the time of payment. If an amount was withheld under traded or publicly offered securities), • If you applied the escrow procedure chapter 4 (the tax rate you entered in and 13 (royalties paid on certain publicly under chapters 3 and 4, report the entire Box 4b is greater than zero and is not offered securities) if the income paid is amount of a payment that you due to backup withholding), enter “00” in described in Regulations section previously reported in a prior calendar Box 4a. If the tax rate you entered in 1.1441-6(c)(2) and you have reduced year for which you withheld tax but did Box 4b is 00.00, you must enter the the rate of withholding under an income not deposit such tax under the escrow applicable exemption code (13 through tax treaty without the recipient providing procedure if the liability is due in the 21) in Box 4a. If an amount was withheld a U.S. or foreign TIN. current calendar year. under chapter 3 (the tax rate you • You must report the entire amount of entered in Box 3b is greater than zero 15. Use code 55 (taxable death gains relating to the disposal of timber, benefits on life insurance contracts) to and is not due to backup withholding), coal, or domestic iron ore with a enter “00” in Box 3a. If the tax rate you report taxable death benefits, such as retained economic interest and gains benefits paid on an insurance contract entered in Box 3b is due to backup relating to contingent payments withholding, leave Box 3a blank. that was acquired on a transfer for received from the sale or exchange of valuable consideration. See section 101 patents, copyrights, and similar for when death benefits are taxable. If exemption code 01 or 14 intangible property. (effectively connected income) applies, If you paid more than one type of • You must report only the amount of you must enter the recipient's U.S. TIN income to or on behalf of the same cash paid on notional principal in Box 13e if you report the income as recipient, you must complete a separate contracts. effectively connected with a U.S. trade Form 1042-S for each income type. • If reporting payments to artists or or business. If the recipient's U.S. TIN is athletes who have signed a central unknown or unavailable, you must

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withhold tax at the rate of 30% (30.00) withheld upon under chapter 4 and thus A withholding agent should use and enter “00” in Boxes 3a and 4a. chapter 3 withholding does not apply. exemption code 18 (U.S. payees – of See Special instructions for use of participating FFI or registered Chapter 3 Exemption Codes chapter 3 exemption codes, later. deemed-compliant FFI) for chapter 4 purposes only if it makes a payment to a A withholding agent should use A withholding agent should use participating FFI or registered chapter 3 exemption code 02, Exempt chapter 3 exemption code 23 for deemed-compliant FFI and only to the under IRC, only if none of the other distributions made by a real estate extent represented on such FFI's chapter 3 exemption codes apply. investment trust (REIT) to a qualified withholding statement associated with foreign pension fund (or an entity all of its Form W-8IMY that the payment is A withholding agent should use the interests of which are held by a allocable to a chapter 4 withholding rate exemption code 06 (QI that assumes qualified foreign pension fund) that are pool of U.S. payees and FFI certifies on primary withholding responsibility) only exempt under section 897(l). its withholding certificate that the FFI if it is making a payment to a QI that has meets the requirements to include the represented on its Form W-8IMY that it A withholding agent should use account holder in a withholding rate is assuming primary withholding chapter 3 exemption code 24 for income pool of U.S. payees. responsibility under chapters 3 and 4. paid to a foreign government or an However, if the payment is made to a QI international organization that is exempt A withholding agent should use that is acting as a QDD with respect to under section 892. exemption code 20 (dormant account) the payment, the withholding agent for chapter 4 purposes only if it makes a should instead use exemption code 22 Chapter 4 Exemption Codes withholdable payment to a participating (QDD that assumes primary withholding FFI or registered deemed-compliant FFI responsibility). A withholding agent should use exemption code 13 (grandfathered that represented on its withholding A withholding agent should use payment) for chapter 4 purposes only if statement associated with its Form exemption code 07 (WP or WT) only if it the withholding agent makes a payment W-8IMY that the payment is allocable to is making a payment to a foreign under a grandfathered obligation (as a dormant account holder for which the partnership or trust that has represented defined in Regulations section escrow procedure of Regulations on its Form W-8IMY that it is a 1.1471-2(b)(2)) and exemption code 13 section 1.1471-4(b)(6) applies. withholding foreign partnership or trust. is the only exemption code that applies. If another exemption code applies, it A withholding agent should use A withholding agent should use should be used instead of exemption exemption code 21 (Other–payment not exemption code 08 (U.S. branch treated code 13. subject to chapter 4 withholding) for as U.S. person) or 09 (territory FI chapter 4 purposes if the payment is treated as U.S. person) (as applicable) A withholding agent should use exempt from chapter 4 withholding and for chapter 3 purposes only if it is exemption code 15 (payee not subject no other chapter 4 exemption code making a payment to a U.S. branch or to to chapter 4 withholding) for chapter 4 applies. A withholding agent should also a territory FI and it has represented on purposes if the payment is a use exemption code 21 (Other–payment its Form W-8IMY that it agrees to be withholdable payment (as defined in not subject to chapter 4 withholding) treated as a U.S. person. Regulations section 1.1473-1(a)), but when using income code 37 (return of has not been withheld upon under capital) to report nondividend payments. A withholding agent should use chapter 4 because of the payee's exemption code 10 (QI represents that chapter 4 status. Also, if the withholding If you have failed to provide a income is exempt) for chapter 3 agent applies the 90-day grace period withholding agent with appropriate purposes only if it makes a payment to a for a withholdable payment following a information regarding the status of the QI that has not assumed primary change in circumstances, use person to whom you are making a withholding responsibility under exemption code 15 (payee not subject payment, the other withholding agent chapters 3 and 4 or primary backup to chapter 4 withholding). may be required to withhold on the withholding responsibility, but has payment based on the presumption represented on a withholding statement A withholding agent should use rules. If the income is in fact exempt associated with its Form W-8IMY that exemption code 16 (excluded from withholding or subject to a reduced the income is exempt from withholding. nonfinancial payment) for chapter 4 rate of withholding, and the account purposes for payments described in holder requests a corrected form, you A withholding agent should use Regulations section 1.1473-1(a)(4)(iii). must submit a Form 1042-S providing exemption code 11 (QSL that assumes However, the withholding agent should the correct information. In this situation, primary withholding responsibility) for only use exemption code 16 if it is the you must: chapter 3 purposes only if the only exemption code that applies. If • Indicate the correct rate of withholding agent makes a substitute another exemption code applies, it withholding that should have been dividend payment to a financial should be used instead of exemption applied to the income in Boxes 3b or 4b; institution (including a QI) that code 16. • Enter the appropriate exemption represented on its Form W-8IMY that it codes, if any, in Boxes 3a and 4a; is acting as a QSL for the account A withholding agent should use • Enter the actual amount of U.S. associated with the form. exemption code 17 (foreign entity that federal tax withheld by the other assumes primary withholding withholding agent in Box 8; A withholding agent should use responsibility) for chapter 4 purposes • Provide the name and address of the exemption code 12 (payee subjected to only if it makes a payment to a QI that actual recipient in Boxes 13a–d along chapter 4 withholding) for chapter 3 assumes primary withholding with the other required information for purposes if the recipient has been responsibility, a WP, or a WT. the recipient; and

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• Provide the name and EIN of the 5000C withholding, the correct rate of Box 2. See Pub. 515 for more other withholding agent that actually withholding is 2% or “02.00.” For Form information. withheld and deposited the tax (primary 1042-S purposes, report tax withheld withholding agent) in Boxes 14a and b. under section 5000C in Box 3b as if the Box 6, Net Income tax were a chapter 3 tax. If you submit Form 1042-S as Complete this box only if you entered an ! described above, you must also Enter the tax rate using the following amount in Box 5. Otherwise, leave it CAUTION submit Form 1042 and issue a format: two digits, a decimal, and two blank. Form 1042-S to each recipient digits (for example, “30.00” for 30%). (including any unknown recipient or U.S. However, if the income is exempt from Boxes 7a Through 11, payee) of the income to which tax under a U.S. tax treaty or the Code, Federal Tax Withheld withholding was applied. enter “00.00.” If the tax rate is less than 10%, enter a zero before the tax rate Box 7a. Enter the total amount of U.S. Special instructions for use of chap- (for example, “04.00” for 4%). federal tax you actually withheld in Box ter 3 exemption codes. If an amount 7a under chapter 3 or 4. If you did not was withheld under chapter 4, you may If you withheld at more than one withhold any tax, enter “-0-.” tax rate for a specific type of also include a chapter 3 exemption Box 7a must be completed in all code and tax rate in Boxes 3a and 3b to income that you paid to the same recipient, you must file a separate cases, even if no tax has been show the rate that would otherwise deposited. apply as if the payment had been later Form 1042-S for each amount to which a separate rate was applied. determined to be exempt from Box 7b. A withholding agent that withholding under chapter 4. This may withheld tax during the calendar year be done, for example, to assist the Valid Tax Rate Table and that was not required to deposit beneficial owner in pursuing a claim for with the IRS the tax withheld during the refund. In such a case, enter “4” as the 00.00 10.00 24.00 calendar year pursuant to the escrow chapter indicator in Box 3 to show that 02.00 12.00 25.00 procedure under Regulations sections withholding was applied under 1.1471-2(a)(5)(ii) and/or 1.1441-3(d) chapter 4. 04.00 12.50 27.50 must check Box 7b (federal tax withheld Boxes 3b and 4b, Chapter 3 04.90 14.00 28.00 was not deposited with the IRS because escrow procedures were applied). A and Chapter 4 Tax Rates 04.95 15.00 30.00 withholding agent reporting payments Enter the correct rate of withholding that 05.00 17.50 37.00 pursuant to the escrow procedure must applies to the income in Box 2 (gross report such payments on separate income) or Box 6 (net income), as 07.00 20.00 Forms 1042-S. Box 7b must only be appropriate. In the case of a payment 08.00 21.00 checked when using the escrow subject to chapter 4 withholding, the procedures as specified above. correct rate of withholding is “30.00.” If Exception for central withholding If you are a participating FFI or the amount reported in Box 2 is not agreements. If you are the designated registered deemed-compliant FFI that, subject to chapter 4 withholding or is not withholding agent who has entered into for chapter 4 purposes, applied the a withholdable payment, you must enter a central withholding agreement and escrow procedure for dormant “00.00” in Box 4b and provide the you report an amount in Box 2 using accounts, if the payment is also an applicable exemption code in Box 4a. income code 43 (earnings as an artist or amount subject to chapter 3 withholding For purposes of chapter 3 withholding, athlete—central withholding and tax is withheld and deposited under see Valid Tax Rate Table. The correct agreement), you must enter a tax rate in chapter 3, do not check Box 7b. tax rate should be included even if you Box 3b and you must include a Instead, enter “3” in Box 3 and complete withheld at a different rate. For example, chapter 4 exemption code 16 (excluded Box 3b to report the tax withheld under if an NQI that is a participating FFI is nonfinancial payment) in Box 4a. chapter 3. reporting dividends paid to a beneficial owner who is exempt from withholding Box 7c. Check Box 7c if you are a under chapter 4 and a resident of a Box 5, Withholding partnership that received an amount country with which the United States Allowance subject to withholding during the 2021 does not have a tax treaty and a U.S. This box should be completed only if the calendar year (preceding year) and you withholding agent paid the dividend and income code reported in Box 1 is 16 are withholding on the amount includible incorrectly withheld only 15% under (scholarship or fellowship grants), 17 in a foreign partner’s share after March chapter 3 (rather than the required 30%) (compensation for independent 15 of the subsequent year (2022). Only and the NQI withholds an additional personal services), 18 (compensation check this box if you designated the 15% under chapter 3, the NQI should for dependent personal services), 19 deposit as attributable to the preceding report “30.00” in Box 3b. See (compensation for teaching), 20 year (2021). In such a case, the Example 18, earlier, under Multiple (compensation during studying and partnership will be required to report the Withholding Agent Rule. The tax rate on training), or 42 (earnings as an artist or associated income and tax withheld on dividends paid to a corporation created athlete-no central withholding Forms 1042 and 1042-S for the or organized in, or under the law of, the agreement). If you are a designated preceding year. If a partnership Commonwealth of Puerto Rico may be withholding agent that has entered into withholds on a foreign partner’s share of 10%, rather than 30%. See Pub. 515 for a central withholding agreement with the income after March 15 of the more information. IRS, leave this box blank and report the subsequent year, the due date for filing and furnishing the applicable Form(s) In the case of a specified federal gross amount paid to the recipient in 1042-S is September 15 of the procurement payment subject to section

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subsequent year (2022). For example, if overwithholding using either the Boxes 12b and 12c, a partnership withholds on April 1, 2022, reimbursement or set-off procedures with respect to a foreign partner’s share until the extended due date for filing Withholding Agent's of undistributed income for the 2021 Form 1042-S (or, if earlier, the date on Chapter 3 and Chapter 4 calendar year, the partnership may which the Form 1042-S is either filed or Status Code designate the deposit as made for 2021 furnished). Additionally, a withholding Enter the withholding agent status and report the liability and tax withheld agent may use the extended due date code(s) from the list of Recipient Status on the 2021 Form 1042 and the 2021 for filing a Form 1042 to claim a credit Codes in Appendix B, later. You must Form 1042-S for the partner. The for any adjustments made to enter both a chapter 3 and a chapter 4 partnership must also ensure that its overwithholding. withholding agent status code Chapter 3 status code on such forms Box 10. Enter in Box 10 the combined regardless of the type of payment being properly reflects its status as a amounts reported in Box 7a (federal tax made. If you are a U.S. financial partnership (including as a Withholding withheld), Box 8 (tax withheld by other institution (USFI), indicate your Foreign Partnership (WP)). The agents), and Box 9 (overwithheld tax chapter 4 status code as 01, except extended deadline of September 15, repaid to recipient pursuant to when a foreign branch of a USFI issues 2021, is also applicable when a adjustment procedures). Form 1042-S (in such a case, indicate partnership is reporting on Form 1042-S the chapter 4 status code as 50). an allocation of income made after Example. If the box 7a amount is March 15 of the subsequent year to a $600, the box 8 amount is $120, and the Note. Withholding agents that are U.S. foreign partner for the prior year, but no box 9 amount is ($50), the box 10 governmental entities or U.S. withholding is required on the income. In amount will equal $670. tax-exempt entities, including colleges such a case, box 7c must also be Box 10 must be completed in all and universities, and other U.S. checked even if there is no withholding. cases, even if no tax has been tax-exempt entities under the Internal For more information, see proposed deposited. Revenue Code other than under section regulations issued on December 18, 501(c), may use chapter 3 status code 2018 (REG-132881-17). Box 11, Tax paid by withholding 20 (Tax exempt organization (Section Box 8. If you are a withholding agent agent (amounts not withheld). Enter 501(c) entities) for box 12b. filing a Form 1042-S to report income the total amount of tax paid by you and Note. A withholding agent should in that has already been subject to not withheld from the payment to the general select the chapter 3 status code withholding by another withholding recipient. The amounts reported in Box that most closely applies with its status agent, enter the amount actually 11 should be the amounts paid by the based on the available codes. For withheld by the other agent(s) in Box 8. withholding agent from its own funds rather than through withholding from the example, if a U.S. financial institution Box 9, Overwithheld tax repaid to re- payment to the recipient. Any amount (which checks chapter 4 status code 01, cipient pursuant to adjustment pro- reported in this box must not be as such, unless it is a foreign branch) is cedures. This box should be included in Box 10. a corporation, it should use chapter 3 completed only if you repaid a recipient status code 15 (Corporation). under the reimbursement or set-off Box 12a, Withholding procedures during the 2022 calendar Agent's Employer Boxes 12d Through 12i, year in accordance with the Withholding Agent's requirements of Regulations section Identification Number 1.1461-2(a)(2) or (3) (for withholding (EIN) Name, GIIN, Country Code, under chapter 3), or Regulations section You are required to enter your EIN. Foreign TIN (if any), and 1.1474-2(a)(3) or (4) (for withholding However, if you are filing Form 1042-S Address under chapter 4). as a QI, WP, or WT, enter your QI-EIN, Enter your name and address in the If you repaid the recipient under the WP-EIN, or WT-EIN. The withholding appropriate boxes. If your post office reimbursement or set-off procedure agent's EIN cannot be truncated. does not deliver mail to the street during the 2021 calendar year, do not address and you have a P.O. box, show If you don’t have an EIN, you may complete Box 9. Instead, reduce the the box number instead of the street apply for one online by visiting IRS.gov/ amount of withholding reported in Box address. 7a. EIN. If you are outside the United States, you may also apply for an EIN If you are a nominee that is the In most cases, an intermediary or by calling 267-941-1099 (not a toll-free withholding agent under section 1446, flow-through entity should not enter an number). You may also apply for an EIN enter the PTP's name and other amount in Box 9 unless it is a QI that by faxing or mailing Form SS-4 to the information in Boxes 15a through 15i. represented on its Form W-8IMY that it IRS. File amended Forms 1042-S when is assuming primary withholding you receive your EIN. Note. On statements furnished to responsibility or is a WP or WT. individual recipients of U.S. source To get a QI-EIN, WP-EIN, or WT-EIN, The adjustment for amounts deposit interest, in addition to your submit Form SS-4 with your application overwithheld does not apply to name and address, you must include ! for that status. (See the definitions for CAUTION partnerships or nominees the telephone number of a person to Qualified intermediary (QI) and required to withhold under section 1446. contact. This number must provide Withholding foreign partnership (WP) or direct access to an individual who can withholding foreign trust (WT) under Note. If the withholding agent meets answer questions about the statement. Definitions, earlier, for more The telephone number is not required the above requirements, the withholding information.) agent may make adjustments to on Copy A of paper forms or on electronically filed forms.

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Box 12e, Withholding agent's GIIN. • If a disregarded entity (or a branch) Boxes 13e and 13h, The GIIN provided, if any, should be the that is required to provide a TIN on Recipient's U.S. TIN and GIIN issued to the branch of, or Form W-8IMY is identified in Part II of disregarded entity owned by, the the Form W-8BEN-E, include the name GIIN participating FFI or registered of the disregarded entity (or the You must obtain and enter a U.S. TIN deemed-compliant FFI that is making jurisdiction of the branch) in a for any of the following recipients. the payment. parenthetical after the name of the • Any recipient whose income is recipient. effectively connected with the conduct Box 12f, Country code. You must of a trade or business in the United Box 13b, Recipient's country code. enter the code (from the list at IRS.gov/ States. For these recipients, enter You must enter the code (from the list at CountryCodes) for the country for which exemption code 01 in Box 3a or IRS.gov/CountryCodes) for the country you are resident under that country's tax exemption code 14 in Box 4a. of which the recipient claims residency laws. Enter “OC” (other country) only Any foreign person claiming a under that country's tax laws. Enter • when the country of residence does not reduced rate of, or exemption from, tax “OC” (other country) only when the appear on the list. under a tax treaty between a foreign country of residence does not appear country and the United States, unless on the list or the payment is made to an Note. If the withholding agent is a U.S. the recipient provides a foreign TIN (in international organization (for example, person or a foreign branch of a U.S. such case, use Box 13i), or unless the the United Nations). If the recipient is person, enter “US” in box 12f (even income is an unexpected payment (as unknown, leave Box 13b blank and though “US” is not a code on the list at described in Regulations section enter "Unknown Recipient" in Box 13a, IRS.gov/CountryCodes). 1.1441-6(g)) or consists of dividends Recipient's name. If you are making a and interest from stocks and debt payment to a QI, QSL, WP, or WT, or if Boxes 13a Through 13d, obligations that are actively traded; you are a QI, QSL, WP, or WT and are dividends from any redeemable security Recipient's Name, Country making a payment to a QI, WP, or WT issued by an investment company Code, and Address withholding rate pool, enter the country registered under the Investment code of the QI, QSL, WP, or WT. Also, if Box 13a, Recipient's name. Enter the Company Act of 1940 (mutual fund); you are making a payment to a complete name of the recipient in Box dividends, interest, or royalties from participating FFI or registered 13a. units of beneficial interest in a unit deemed-compliant FFI's chapter 4 • If you do not know the name of the investment trust that are (or were, upon reporting pool, enter the country code of recipient, or are required to use the issuance) publicly offered and are the participating FFI or registered recipient status codes for an unknown registered with the Securities and deemed-compliant FFI or branch of or recipient, enter “Unknown Recipient.” Exchange Commission under the disregarded entity owned by such FFI • If Form 1042-S is being completed by Securities Act of 1933; and amounts receiving the withholdable payment and a QI, WP, or WT for a chapter 3 paid with respect to loans of any of the that was listed on Part II of either the withholding rate pool or chapter 4 above securities. In the latter case, you Form W-8BEN-E or W-8IMY. withholding pool, enter “Withholding must use income code 13, 51, 52, 53, or rate pool” if withholding under chapter 3 If exemption code 04 (exempt 54. was applied, or if chapter 4 withholding ! under tax treaty) appears in Box • Any nonresident alien individual was applied, a description of the CAUTION 3a or if a reduced rate of claiming exemption from tax under chapter 4 reporting pool (for example, withholding based on a tax treaty is section 871(f) for certain annuities “Nonparticipating FFI Pool”) in Box 13a. entered in Box 3b, the country code received under qualified plans. • A withholding agent reporting entered in Box 13b must be a country • A foreign organization claiming an payments made to a participating FFI or with which the United States has exemption from tax solely because of its registered deemed-compliant FFI with entered into an income tax treaty. status as a tax-exempt organization respect to a chapter 4 reporting pool under section 501(c) or as a private must include the name and address of Boxes 13c and 13d, Recipient's ad- foundation. the FFI in Boxes 13a through 13g as dress. In most cases, you must enter a • Any QI. well as the FFI's GIIN and country code. foreign address in Boxes 13c and 13d. • Any WP or WT. The GIIN reported must be the GIIN of However, there are limited exceptions. • Any nonresident alien individual the branch to whom the withholding For example, you may enter a U.S. claiming exemption from withholding on agent is making the payment. address when reporting payments of compensation for independent personal • A QI reporting payments made to a scholarship or fellowship grants (income services. PAI on a withholding rate pool basis code 16). • Any U.S. branch of an FFI or territory must include the name and address of For addresses outside the United FI that is treated as a U.S. person. the PAI in Boxes 13a through 13g. States or its commonwealths and • Any QSL that was paid a substitute • In the case of foreign joint owners, possessions, follow the foreign dividend. Form 1042-S can only list one of the country's practice for entering the postal In all other cases, if you know the owners as the recipient in Box 13a. code. Form 1042-S must not be completed recipient's TIN or if a foreign person with more than one of the joint owners For addresses within the United provides a TIN on Form W-8, but is not as the recipient. States, use the U.S. Postal Service required to do so, you must include the • If the recipient is a QI acting as a two-letter abbreviation for the state TIN on Form 1042-S. QDD with respect to the payment, enter name. Do not enter “United States” or You must include a GIIN if you are the name of the QDD (including any “U.S.” required to collect a GIIN for the branch identifier included on the Form If you want to enter the recipient's recipient under the requirements W-8IMY provided by the QDD). account number, use Box 13k. documenting the payee under

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chapter 4. If you make a payment to a • Only a QI may use recipient codes 29 account holder) if you are reporting disregarded entity or branch that is (PAI withholding rate pool – general) directly to the recipient. See Amounts identified in Part II of Form W-8BEN-E, and 30 (PAI withholding rate pool – paid to a nonqualified intermediary or then report the GIIN of the disregarded exempt organizations). Only a QI, WP, flow-through entity, earlier. If you are entity or branch provided in that section. or WT that made a pooled reporting reporting the chapter 4 reporting pools election for chapter 3 purposes may use of recalcitrant account holders of a Boxes 13f and 13g, recipient codes 31 (agency withholding participating FFI, registered Recipient’s Chapter 3 and rate pool – general), 32 (agency deemed-compliant FFI, or QI, use withholding rate pool – exempt codes 42 through 49. Only use Chapter 4 Status Codes organization), 27 (withholding rate pool chapter 4 reporting pool code 48 (U.S. Enter the recipient status code from the – general), and 28 (withholding rate pool payees pool) if a participating FFI or list of Recipient Status Codes in – exempt organization) for chapter 3 registered deemed-compliant FFI has Appendix B, later. The following special purposes. Recipient code 28 or 30 provided a Form W-8IMY certifying that instructions apply for chapter 3 status should be used only for pooled account it meets the requirements to include the codes. holders that have claimed an exemption account holder in a withholding rate • If income code 42 (earnings as an based on their tax-exempt status and pool of U.S. payees and that is artist or athlete - no central withholding not some other exemption (for example, associated with a withholding statement agreement) or 43 (earnings as an artist treaty or other Code exception). A QI allocating the payment or a portion of or athlete - central withholding acting as a QDD should only use pooled the payment to a chapter 4 withholding agreement) is used in Box 1, use reporting codes 27 and 28. If you are a rate pool of U.S. payees. Only use recipient code 22 (artist or athlete) QI (including a QI acting as a QDD), chapter 4 reporting pool code 49 instead of recipient code 16 (individual), WP, WT, or QSL using a chapter 3 (QI-Recalcitrant Pool-General) if you are 15 (corporation), or 08 (partnership pooled reporting code with respect to a reporting recalcitrant account holders of other than withholding foreign payment, do not include a chapter 4 a QI. partnership). status code unless making such • Use recipient code 17 (U.S. branch - • If you are making a payment to an payment to a PAI or certain partnerships treated as a U.S. person) if you are NQI or flow-through entity, in most or trusts. See Amounts Paid to Private making a payment to a U.S branch cases you must use the recipient code Arrangement Intermediaries and treated as a U.S. person. that applies to the type of recipient who Amounts Paid to Certain Partnerships • Use recipient code 26 (excepted receives the income from the NQI or and Trusts, earlier. NFFE – other) if you are reporting to an flow-through entity. • Use recipient code 35 (qualified NFFE treated as a U.S. person. • Use recipient code 08 (partnership derivatives dealer) if you make a • Only use recipient code 29 (unknown other than withholding foreign payment to a QI that is acting as a QDD recipient) if you have not received a partnership) only if you are reporting a with respect to the payment (or recipient withholding certificate or other payment of income that is effectively code 13 if you make a payment to a QI documentation with respect to a connected with the conduct of a trade or that is acting as a QSL). withholdable payment from an business of a nonwithholding foreign • A U.S. withholding agent making a intermediary or flow-through entity. Only partnership in the United States. You payment to a QI should use recipient use this code if you also used recipient may, however, use recipient code 08 as code 12 and recipient code 09 or 11 if it code 21 (unknown recipient) as the the chapter 3 status code if you are is making a payment to a WP or WT, chapter 3 status code. If you have not using a chapter 4 pooled reporting code respectively. received a withholding certificate or with respect to a payment made to a other documentation from an nonwithholding foreign partnership. See A chapter 4 status code is required intermediary or flow-through entity, you the instructions later on use of recipient only if the payment is a withholdable must include the entity’s information in codes when reporting pools. Otherwise, payment or when a participating FFI or Boxes 15a through 15i. You may also follow the rules that apply to payments registered deemed-compliant FFI use recipient code 29 if you are to flow-through entities. provides a chapter 4 withholding rate reporting a withholdable payment to a • Use recipient code 21 (unknown pool of U.S. payees. The chapter 4 recipient that is not subject to recipient) only if you have not received a status code may be determined under withholding under the terms of an IGA withholding certificate or other the applicable intergovernmental and the recipient's account is not documentation for a recipient or you agreement (IGA) by a withholding agent required to be reported as a U.S. cannot determine how much of a that is an FFI subject to such an account or nonconsenting U.S. account payment is reliably associated with a agreement. The following special (for example, an undocumented specific recipient. Do not use this code instructions apply for chapter 4 status individual with no U.S. indicia). because you cannot determine the codes. • Use recipient code 33 (U.S. recipient's status as an individual, • If you are making a withholdable reportable account) if you are reporting corporation, etc. The regulations under payment to a U.S. branch of an FFI, use the recipient's account as a U.S. chapter 3 provide rules on how to the applicable chapter 4 status code for reportable account under the terms of a determine a recipient's status when a the country of residence for an entity Model 1 IGA and the recipient does not withholding agent does not have the that is a participating FFI or registered meet the applicable requirements to be necessary information. deemed-compliant FFI. Otherwise, use included in a pool of U.S. payees • Use recipient code 13 (qualified the chapter 4 status code for any other because the account holder is subject to securities lender – qualified foreign branch of the entity that is a chapter 3 withholding. intermediary) or 14 (qualified securities participating FFI or registered • Use recipient code 34 lender – other) if you make a payment to deemed-compliant FFI. (Nonconsenting U.S. account) if you are a QSL. • Only use recipient code 15 reporting the recipient's account as a (nonparticipating FFI) or 30 (recalcitrant

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nonconsenting U.S. account under the • If you are making a withholdable Box 13k, Recipient’s terms of a Model 2 IGA and the recipient payment to a recipient that is a does not meet the applicable restricted distributor (as defined in Account Number requirements to be included in a pool of Regulations section 1.1471-5(f)(4)), use If you are a financial institution reporting U.S. payees because the account recipient code 10 (certified amounts paid to your direct account holder is subject to chapter 3 deemed-compliant FFI - other). holder with respect to an account withholding. maintained by you at your U.S. office or • Use recipient code 37 Box 13i, Recipient's U.S. branch, you must report the (undocumented preexisting obligation) Foreign Tax Identification recipient’s account number in Box 13k. for an obligation that a withholding If the amount is paid through a agent has not documented and the Number nonqualified intermediary or payment being reported was made Use Box 13i to enter the recipient’s flow-through entity, you are not required before the expiration of the time period identification number used in the to use this box. allowed for documenting the obligation recipient’s country of residence for tax Note. A U.S. financial institution or a and thus the withholding agent was not purposes. U.S. branch of an FFI is required to required to apply the presumption rules You must obtain and enter an FTIN report payments of the same type of to determine the payee's chapter 4 for any of the following recipients. income (as determined by the income status. • Any foreign person claiming a code in Box 1) made to multiple • Use recipient code 39 (account reduced rate of, or exemption from, tax financial accounts held by the same holder of excluded financial account) if under a tax treaty between a foreign beneficial owner at a U.S. office of such you are reporting amounts paid with country and the United States if such institution on a separate Form 1042-S respect to an obligation that is excluded person did not provide a U.S. TIN and for each account. For this purpose, a from the definition of financial account the income is not the type for which an financial account is an account for chapter 4 purposes (see Regulations exemption from the TIN requirement described in Regulations section section 1.1471-5(b)(2)). applies (see instructions for Boxes 13e 1.1471-5(b)(1). Report the identifying • Use recipient code 41 (NFFE subject and 13h, earlier). number assigned to such account (or its to 1472 withholding) if you are reporting • Any recipient of a payment made with functional equivalent in the absence of amounts paid to a specific recipient that respect to a financial account (as an account number for the recipient). is an NFFE that you (or another defined in Regulations section withholding agent) withheld upon under 1.1471-5(b)) maintained at your U.S. Box 13l, Recipient’s Date section 1472 (that is, you are reporting office or branch, if you are a financial amounts in Boxes 7 through 9) unless institution, to the extent that such of Birth the NFFE is treated as a recalcitrant recipient has furnished a withholding Use Box 13l to enter the recipient’s date account holder under Regulations certificate that provides an FTIN, or you of birth. The correct format if entered is section 1.1471-5(g), in which case, use obtain the FTIN under the alternative YYYYMMDD (for example, enter code 30 (recalcitrant account holder). procedures described in Regulations “20001205” for a date of birth of • If you received a withholding section 1.1441-1(e)(2)(ii)(B), or the December 5, 2000). A financial certificate or other documentation with recipient's FTIN is identified in any of institution making a payment with respect to a withholdable payment from your electronically searchable respect to a financial account (as an intermediary or flow-through entity information. See Regulations section defined in Regulations section that is a participating FFI or 1.1441-1(e)(2)(ii) for more information 1.1471-5(b)) maintained at its U.S. deemed-compliant FFI (other than a regarding a withholding agent's office or U.S. branch must report the WP, WT, or QI that assumes primary obligation to obtain and report a recipient's date of birth (if the recipient is withholding responsibility) and cannot recipient's FTIN. an individual) to the extent that such reliably associate the payment with recipient has furnished documentation documentation to determine the payee's Box 13j, LOB Code that provides a date of birth or the chapter 4 status (or with a chapter 4 recipient's date of birth is identified in withholding rate pool), you must report If you are making a payment for which a any of the withholding agent's files. See the recipient as “Unknown Recipient” beneficial owner that is an entity has Regulations section 1.1441-1(e)(2)(ii) and include the entity's information in claimed a reduced rate of withholding (B) for more information regarding a Boxes 15a through 15i (to the extent under an income tax treaty and has withholding agent's obligation to obtain provided). provided documentation that and report a recipient's date of birth. • If you are reporting a chapter 4 establishes the limitation on benefits pooled reporting code with respect to a (LOB) article under which the beneficial Boxes 14a and 14b, withholdable payment to an owner qualifies, enter the applicable intermediary or flow-through entity, use LOB code from Appendix B, later. See Primary Withholding the chapter 3 status code for the the instructions for Form W-8BEN-E for Agent's Name and EIN intermediary or flow-through entity as a description of each of the LOB codes. If you are an intermediary or the recipient code. If you are a QI, WP, or WT reporting a flow-through entity reporting amounts • If you are a QI, WP, or WT reporting chapter 3 pool for which a reduced rate withheld by another withholding agent direct account holders, do not include a of withholding under an income tax (the primary withholding agent) in Box 8, chapter 3 status code for the recipient if treaty applies, do not include an LOB you must provide the name and EIN of you are using a chapter 4 reporting pool code. the withholding agent that withheld the code as the recipient’s chapter 4 status tax. If multiple withholding agents code. withheld amounts reported on the same Form 1042-S, report the name of any

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one of the withholding agents that Box 15g, Intermediary or (copies B, C, and D) and need to make withheld amounts. Otherwise, leave flow-through entity's foreign tax corrections to such form prior to filing blank. identification number. Use Box 15g with the IRS. In such a case, you should to enter the intermediary or flow-through file an original Form 1042-S with the Box 15, Pro-Rata Basis entity's identifying number used in the correct information. Do not check the Reporting Checkbox country of residence for tax purposes. Amended box or indicate any amendment number. Provide a copy of Withholding agents must check Box 15 Box 15g is optional. the corrected Form 1042-S to the to notify the IRS that an NQI that used If you are a nominee that is the recipient. Note that the copies of the the alternative procedures of withholding agent under section 1446, Form 1042-S provided to the recipients Regulations section 1.1441-1(e)(3)(iv) enter the PTP's name and other (copies B, C, and D) must match the (D) failed to properly comply with those information in these boxes. copy of the Form 1042-S that is filed procedures. See Pro-rata reporting, with the IRS. earlier, for additional information. Boxes 16a Through 16e, If any information you correct on Boxes 15a Through 15i, Payer's Name, TIN, GIIN, Form(s) 1042-S changes the Intermediary/ and Status Code information you previously reported on Flow-Through Entity's See the definition of Authorized agent, Form 1042, you also must correct the earlier, under Definitions. Include the Form 1042 by filing an amended return. Name, Status Code, payer's name, TIN, and GIIN if different To do this, see the Form 1042 Country Code, Address, from the withholding agent shown in instructions. Boxes 12a, 12d, and 12e. EIN, GIIN, and Foreign Tax If you are not filing electronically, Identification Number If payment is being made by a follow these steps to amend a If you are reporting amounts paid to a transfer agent or a paying agent acting previously filed Form 1042-S. recipient whose withholding certificates as a withholding agent on behalf of a Step 1. Prepare a paper Form 1042-S. payer, enter the chapter 3 and 4 status or other documentation has been • Enter all the correct information on submitted to you (or should have been codes applicable to the status of the payer in Boxes 16d and 16e. the form, including the recipient name submitted to you) with a Form W-8IMY and address, money amounts, and provided by an intermediary or Boxes 17a Through 17c, codes. flow-through entity, you must include the • Enter an “X” in the amended box at name and address of the intermediary State Income Tax Withheld the top of the form and enter the or flow-through entity with whose Form amendment number. W-8IMY the recipient's Form W-8 or and Related Information other documentation is associated. Include in these boxes information Amended checkbox. Enter an “X” in relating to any state income tax the amended checkbox of Copy A, B, C, You must also include the withheld. D, and E only if you are amending a intermediary or flow-through entity's Form 1042-S you previously filed with chapter 3 and chapter 4 status codes Amended Forms the IRS. You must provide statements to and, if any, the TIN and GIIN of the If you filed a Form 1042-S with the IRS recipients showing the corrections as intermediary or flow-through entity when and later discover you made an error on soon as possible regardless of the provided or required to be collected by it, you must correct it as soon as change to the Form 1042-S. the withholding agent. If the possible. To correct a previously filed intermediary or flow-through entity Step 2. File the amended paper Form Form 1042-S, you will need to file an 1042-S with a Form 1042-T. See the completed Part II of Form W-8IMY, then amended Form 1042-S. The amended report the GIIN provided in that section. Form 1042-T instructions for information form must have the same unique form on filing these forms. If you are making a payment to a U.S. identifier as the original form that is branch not treated as a U.S. person that being amended. You must check the If you fail to correct Form(s) has certified that it is applying the rules “Amended” box and provide the 1042-S, you may be subject to a in Regulations section 1.1471-4(d)(2)(iii) amendment number. The amendment penalty. See Penalties, earlier. (C) (in order to avoid being withheld number must be numeric and the length upon under chapter 4), use chapter 4 must be exactly one digit. Each time intermediary code 18 (U.S. branch - not Privacy Act and Paperwork Reduc- that you amend the same form (as tion Act Notice. We ask for the treated as a U.S. person (reporting determined by the unique form under section 1471)). information on this form to carry out the identifier), you must provide the Internal Revenue laws of the United amendment number in the box provided Note. A withholding agent that is an States. Sections 1441, 1442, 1446 (for on the form (using “1” for the first intermediary or flow-through entity will PTPs), 1471, and 1472 require amendment and increasing sequentially leave these boxes blank unless it is withholding agents to report and pay for each subsequent amendment). making the payment to an intermediary over to the IRS taxes withheld from or flow-through entity. certain U.S. source income. Form If you provide an amended 1042-S is used to report the amount of Box 15f, Country code. You must ! Form 1042-S to a recipient, you income and withholding to the payee. enter the country code (from the list at CAUTION must also file the amended form Form 1042 is used to report the amount IRS.gov/CountryCodes) for the country with the IRS. of withholding that must be paid over to where the intermediary or flow-through the IRS. Section 6109 requires you to entity is located. Do not file an amended return if you provide your identification number. provided Form 1042-S to the recipient Routine uses of this information include

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giving it to the Department of Justice for subject to the Paperwork Reduction Act If you have comments concerning the civil and criminal litigation, and to cities, unless the form displays a valid OMB accuracy of these time estimates or states, the District of Columbia, and control number. Books or records suggestions for making this form U.S. commonwealths and possessions relating to a form or its instructions must simpler, we would be happy to hear for use in administering their tax laws. be retained as long as their contents from you. You can send us comments We may also disclose this information to may become material in the from IRS.gov/FormComments. Or you other countries under a tax treaty, to administration of any Internal Revenue can write to Internal Revenue Service, federal and state agencies to enforce law. Generally, tax returns and return Tax Forms and Publications, 1111 federal nontax criminal laws, or to information are confidential, as required Constitution Ave. NW, IR-6526, federal law enforcement and by section 6103. Washington, DC 20224. Do not send intelligence agencies to combat the form to this address. Instead, see terrorism. If you fail to provide this The time needed to complete and file Where, When, and How To File, earlier. information in a timely manner, you may this form will vary depending on be liable for penalties and interest. individual circumstances. The estimated average time is 34 minutes. You are not required to provide the information requested on a form that is

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Appendix A

Box 1 Income Codes

Code Interest Income 16 Scholarship or fellowship grants 01 Interest paid by U.S. obligors – general 17 Compensation for independent personal services2 02 Interest paid on real property mortgages 18 Compensation for dependent personal services2 03 Interest paid to controlling foreign corporations 19 Compensation for teaching2 04 Interest paid by foreign corporations 20 Compensation during studying and training2 05 Interest on tax-free covenant bonds 23 Other income 22 Interest paid on deposit with a foreign branch of a 24 Qualified investment entity (QIE) distributions of capital gains domestic corporation or partnership 29 Deposit interest 25 Trust distributions subject to IRC section 1445 30 Original issue discount (OID) 26 Unsevered growing crops and timber distributions by a trust subject to IRC section 1445 31 Short-term OID 27 Publicly traded partnership distributions subject to IRC section 1446 33 Substitute payment – interest 28 Gambling winnings3 51 Interest paid on certain actively traded or publicly offered securities1 54 Substitute payments – interest from certain actively 32 Notional principal contract income4 traded or publicly offered securities1 35 Substitute payment – other Code Dividend Income 36 Capital gains distributions 06 Dividends paid by U.S. corporations – general 37 Return of capital 07 Dividends qualifying for direct dividend rate 38 Eligible deferred compensation items subject to IRC section 877A(d)(1) 08 Dividends paid by foreign corporations 39 Distributions from a nongrantor trust subject to IRC section 877A(f) (1) 34 Substitute payment–dividends 41 Guarantee of indebtedness 40 Other dividend equivalents under IRC section 871(m) 42 Earnings as an artist or athlete – no central withholding (formerly 871(l)) agreement5 52 Dividends paid on certain actively traded or publicly 43 Earnings as an artist or athlete – central withholding agreement5 offered securities1 53 Substitute payments–dividends from certain actively 44 Specified federal procurement payments traded or publicly offered securities 1 50 Income previously reported under escrow procedure6 Code Other Income 55 Taxable death benefits on life insurance contracts 09 Capital gains 10 Industrial royalties 11 Motion picture or television copyright royalties 12 Other royalties (for example, copyright, software, broadcasting, endorsement payments) 13 Royalties paid on certain publicly offered securities1 14 Real property income and natural resources royalties 15 Pensions, annuities, alimony, and/or insurance premiums

1This code should only be used if the income paid is described in Regulations section 1.1441-6(c)(2) and withholding agent has reduced the rate of withholding under an income tax treaty without the recipient providing a U.S. or foreign TIN. 2 If compensation that otherwise would be covered under Income Codes 17 through 20 is directly attributable to the recipient's occupation as an artist or athlete, use Income Code 42 or 43 instead. 3 Subject to 30% withholding rate unless the recipient is from one of the treaty countries listed under Gambling winnings (Income Code 28) in Pub. 515. 4 Use appropriate Interest Income Code for interest from a notional principal contract where nonperiodic payment(s) are treated as a loan. 5 Income Code 43 should only be used if Letter 4492, Venue Notification, has been issued by the IRS (otherwise, use Income Code 42 for earnings as an artist or athlete). If Income Code 42 or 43 is used, Recipient Code 22 (artist or athlete) should be used instead of Recipient Code 16 (individual), 15 (corporation), or 08 (partnership other than withholding foreign partnership). 6 Use only to report gross income the tax for which is being deposited in the current year because such tax was previously escrowed for chapters 3 and 4 and the withholding agent previously reported the gross income in a prior year and checked the box to report the tax as not deposited under the escrow procedure. See the instructions for this form for further explanation.

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Appendix B

Exemption Codes, Recipient Status Codes, and Box 13j LOB Codes

Boxes 3a Exemption code (applies if the tax rate entered in and 4a. Box 3b or 4b is 00.00).

Code Authority for Exemption

Chapter 3

01 Effectively connected income 11 Withholding Foreign Trust 02 Exempt under IRC7 12 Qualified Intermediary 03 Income is not from U.S. sources 13 Qualified Securities Lender – Qualified Intermediary 04 Exempt under tax treaty 14 Qualified Securities Lender – Other 05 Portfolio interest exempt under IRC 15 Corporation 06 QI that assumes primary withholding responsibility 16 Individual 07 WFP or WFT 17 Estate 08 U.S. branch treated as U.S. Person 18 Private Foundation 09 Territory FI treated as U.S. Person 19 International Organization 10 QI represents that income is exempt 20 Tax Exempt Organization (Section 501(c) entities) 11 QSL that assumes primary withholding responsibility 21 Unknown Recipient 12 Payee subjected to chapter 4 withholding 22 Artist or Athlete 22 QDD that assumes primary withholding responsibility 23 Pension 23 Exempt under section 897(l) 24 Foreign Central Bank of Issue 24 Exempt under section 892 25 Nonqualified Intermediary

Chapter 4 26 Hybrid entity making Treaty Claim

13 Grandfathered payment 35 Qualified Derivatives Dealer

14 Effectively connected income 36 Foreign Government – Integral Part 15 Payee not subject to chapter 4 withholding 37 Foreign Government – Controlled Entity 16 Excluded nonfinancial payment 17 Foreign Entity that assumes primary withholding Pooled Reporting Codes10 responsibility 18 U.S. Payees – of participating FFI or registered deemed-compliant FFI 19 Exempt from withholding under IGA8 27 Withholding Rate Pool – General 20 Dormant account9 28 Withholding Rate Pool – Exempt Organization 21 Other – payment not subject to chapter 4 withholding 29 PAI Withholding Rate Pool – General 30 PAI Withholding Rate Pool – Exempt Organization Boxes 12b, 12c, 13f, 13g, 15b, 15c, 16d, and 16e. 31 Agency Withholding Rate Pool – General Chapter 3 and Chapter 4 Status Codes (used to identify the type of Withholding Agent, Recipient, Intermediary, or Payer). 32 Agency Withholding Rate Pool – Exempt Organization

Chapter 3 Status Codes 03 Territory FI treated as U.S. Person 04 Territory FI – not treated as U.S. Person 05 U.S. branch – treated as U.S. Person 06 U.S. branch – not treated as U.S. Person 07 U.S. branch – ECI presumption applied 08 Partnership other than Withholding Foreign Partnership 09 Withholding Foreign Partnership 10 Trust other than Withholding Foreign Trust 7 This code should only be used if no other specific chapter 3 exemption code applies. 8 Use only to report a U.S. reportable account or nonconsenting U.S. account that is receiving a payment subject to chapter 3 withholding. 9 Use only if applying the escrow procedure for dormant accounts under Regulations section 1.1471-4(b)(6). 10 Codes 27 through 32 should only be used by a QI, QSL, WP, or WT. A QI acting as a QDD may use code 27 or 28.

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Appendix B (continued)

Recipient Status Codes (continued) and Box 13j LOB Codes

Chapter 4 Status Codes Pooled Reporting Codes

01 U.S. Withholding Agent – FI 42 Recalcitrant Pool – No U.S. Indicia 02 U.S. Withholding Agent – Other 43 Recalcitrant Pool – U.S. Indicia 03 Territory FI – not treated as U.S. Person 44 Recalcitrant Pool – Dormant Account 04 Territory FI – treated as U.S. Person 45 Recalcitrant Pool – U.S. Persons 05 Participating FFI – Other 46 Recalcitrant Pool – Passive NFFEs 06 Participating FFI – Reporting Model 2 FFI 47 Nonparticipating FFI Pool 07 Registered Deemed-Compliant FFI – Reporting Model 1 48 U.S. Payees Pool FFI 08 Registered Deemed-Compliant FFI – Sponsored Entity 49 QI-Recalcitrant Pool-General13 09 Registered Deemed-Compliant FFI – Other 10 Certified Deemed-Compliant FFI – Other Box 13j. LOB Code (enter the code that best describes the applicable limitation on benefits (LOB) category that qualifies the taxpayer for the requested treaty benefits). 11 Certified Deemed-Compliant FFI – FFI with Low Value Accounts 12 Certified Deemed-Compliant FFI – Nonregistering Local Code LOB Treaty Category Bank 13 Certified Deemed-Compliant FFI – Sponsored Entity 14 Certified Deemed-Compliant FFI – Investment entity that 02 Government – contracting state/political subdivision/local does not maintain financial accounts authority 15 Nonparticipating FFI 03 Tax exempt pension trust/Pension fund 16 Owner-Documented FFI 04 Tax exempt/Charitable organization 17 U.S. Branch – treated as U.S. person 05 Publicly traded corporation 18 U.S. Branch – not treated as U.S. person (reporting 06 Subsidiary of publicly traded corporation under section 1471) 19 Passive NFFE identifying Substantial U.S. Owners 07 Company that meets the ownership and base erosion test 20 Passive NFFE with no Substantial U.S. Owners 08 Company that meets the derivative benefits test 21 Publicly Traded NFFE or Affiliate of Publicly Traded 09 Company with an item of income that meets the active NFFE trade or business test 22 Active NFFE 10 Discretionary determination 23 Individual 11 Other 24 Section 501(c) Entities 25 Excepted Territory NFFE 26 Excepted NFFE – Other 27 Exempt Beneficial Owner 28 Entity Wholly Owned By Exempt Beneficial Owners 29 Unknown Recipient 30 Recalcitrant Account Holder 31 Nonreporting IGA FFI 32 Direct reporting NFFE 33 U.S. reportable account 34 Nonconsenting U.S. account 35 Sponsored direct reporting NFFE 36 Excepted Inter-affiliate FFI 37 Undocumented Preexisting Obligation 38 U.S. branch – ECI presumption applied 39 Account Holder of Excluded Financial Account11 40 Passive NFFE reported by FFI12 41 NFFE subject to 1472 withholding 50 U.S. Withholding Agent–Foreign branch of FI

11 This code should only be used if income is paid to an account that is excluded from the definition of financial account under Regulations section 1.1471-5(b)(2) or under Annex II of the applicable Model 1 IGA or Model 2 IGA. 12 This code should only be used when the withholding agent has received a certification on the FFI withholding statement of a participating FFI or registered deemed-compliant FFI that maintains the account that the FFI has reported the account held by the passive NFFE as a U.S. account (or U.S. reportable account) under its FATCA requirements. The withholding agent must report the name and GIIN of such FFI in Boxes 15d and 15e. 13 This code should only be used by a withholding agent that is reporting a payment (or portion of a payment) made to a QI with respect to the QI’s recalcitrant account holders.

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Appendix C Comprehensive analysis of Example 1 in Payments directly to beneficial owners.

DIRECT PAYMENT TO BENEFICIAL OWNER WA, a U.S. corporate withholding agent who is an issuer of stock and not a financial institution, makes a $1,000 payment of U.S. source dividends to A, a foreign individual who has provided a Form W-8BEN to WA and who is not eligible for a reduced rate of chapter 3 withholding under a treaty. Before completing Form 1042-S, WA takes the following steps: Step 1: Because the payment is a payment described in Amounts Subject to Reporting on Form 1042-S, WA determines it has a Form 1042-S filing obligation. Step 2: Because WA is making a payment of U.S. source FDAP income, WA determines the payment meets the definition of both a “withholdable payment” under chapter 4 and “an amount subject to withholding” under chapter 3. Step 3: Because the payment is being made to an individual (and not a nonparticipating FFI or an NFFE that is not an excepted NFFE that has failed to disclose its substantial U.S. owners (or certify that it has no substantial U.S. owners) (see definitions of these terms)), WA determines that the payment is not subject to chapter 4 withholding. Because the payment is not subject to chapter 4 withholding but is an amount subject to withholding under chapter 3, WA determines that chapter 3 is the correct chapter indicator. WA will thus enter a "3" in Box 3 (chapter indicator). Note. Although the payment is properly classified as a chapter 3 payment, WA must complete certain Boxes on Form 1042-S that pertain to chapter 4 (see explanations for Boxes 4a, 4b, and 13g below). WA must file a Form 1042-S for A and complete it as follows. Caution: Be sure to read the instructions for each box or field in its entirety before completing a box or field on Form 1042-S. WA must provide a unique form identifier (UFI) in the applicable entry field at the top of Form 1042-S. For additional information, including UFI requirements, see the instructions for Unique form identifier. Box Description Required Entry Comments WA enters “06” (dividends paid by U.S. corporations - general), which is the appropriate 1 Income code “06” two-digit code from the list of Income Codes provided in Appendix A. 2 Gross income “1000” WA enters the gross amount paid (in whole dollars), including withheld tax. 3 Chapter indicator “3” WA enters “3” to indicate that amounts were withheld pursuant to chapter 3. WA enters “00” because an amount was withheld under chapter 3 and the tax rate is greater Chapter 3 exemption than zero and is not due to backup withholding (see the instructions for Boxes 3a and 4a, 3a code “00” earlier). WA enters “30.00” consistent with the formatting specified in the instructions for Boxes 3b 3b Chapter 3 tax rate “30.00” and 4b, earlier. WA enters “15” (payee not subject to chapter 4 withholding), which is the appropriate two-digit code from the list of Exemption Codes provided in these instructions. Note. WA uses exemption code 15 because the payment is a withholdable payment, but has not been withheld upon under chapter 4 because of the payee's chapter 4 status (an Chapter 4 exemption individual and not a person subject to chapter 4 withholding as explained in the instructions 4a code “15” for Boxes 3a and 4a, earlier). WA enters “00.00” because the amount reported in Box 2 is not subject to chapter 4 4b Chapter 4 tax rate “00.00” withholding. See the instructions for Boxes 3b and 4b, earlier. WA leaves Box 5 blank because the income code it is reporting in Box 1 is not one of the 5 Withholding allowance codes specified in the instructions (see Box 5, earlier) for which Box 5 reporting is required. 6 Net income WA leaves Box 6 blank because it did not enter an amount in Box 5. 7a Federal Tax Withheld “300” WA enters “300” (30% of $1,000). Check if Federal Tax Withheld was not deposited with the IRS because escrow 7b procedures were applied WA does not check the box because it is not using an escrow procedure. Check if withholding occurred in subsequent year with respect to a 7c partnership interest WA does not check the box because it did not withhold in a subsequent year. Tax withheld by other 8 agents WA leaves Box 8 blank because tax was not withheld by other withholding agents. Overwithheld tax repaid WA leaves Box 9 blank because it did not repay overwithheld tax to the recipient under the to recipient pursuant to reimbursement procedure or the set-off procedure. For more information, see the 9 adjustment procedures instructions for Box 9, earlier. 10 Total withholding credit “300” WA enters “300” (combining Boxes 7a, 8, and 9). Tax paid by withholding WA leaves Box 11 blank because it withheld on the payment to the recipient (as opposed to agent (amounts not paying the tax from its own funds). For more information, see the instructions for Box 11, 11 withheld) earlier. Specific information Although WA's EIN is not specified in this example, this is a required field that WA would 12a Withholding agent's EIN required complete.

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Appendix C (continued)

Box Description Required Entry Comments WA enters “15” in Box 12b and “02” in Box 12c because it is a U.S. corporate withholding Withholding agent's agent that is not a financial institution. chapter 3 and chapter 4 Note. WA must enter both a chapter 3 and a chapter 4 withholding agent status code 12b–c status code “15” and “02” regardless of the type of payment being reported. Withholding agent's 12d name “WA” WA must enter its complete name. Withholding agent's WA leaves this box blank because a U.S. withholding agent is generally not required to 12e GIIN obtain a GIIN. See Global intermediary identification number and Box 12e, earlier, for details. Withholding agent's WA enters “US” as the country code because it is a U.S. withholding agent. See the 12f country code “US” instructions for Box 12f, earlier. Withholding agent's foreign tax identification WA leaves this box blank because it is a U.S. withholding agent and it does not have an 12g number, if any FTIN or a country of residence other than the United States. Specific Although WA's address is not specified in this example, this is a required field that WA Withholding agent's information would complete. See Boxes 12d Through 12i, earlier, for requirements. 12h–I address required 13a Recipient's name “A” WA enters the recipient's name. Specific Although the recipient's country of residency is not specified in this example, this is a Recipient's country information required field that WA would complete. See the instructions for Box 13b, earlier, for 13b code required requirements. Specific Although the recipient's address is not specified in this example, this is a required field that information WA would complete. See Boxes 13c and 13d for requirements. 13c–d Recipient's address required The recipient's U.S. TIN is not specified in this example. However, given the facts used in this example, the recipient's U.S. TIN is generally not required because A is not a type of recipient described in the instructions for Boxes 13e and 13h, earlier, for which this TIN is required (for example, A is not claiming a reduced rate of, or exemption from, tax under a tax Recipient's U.S. TIN, if treaty between the recipient's country of residence and the United States). However, WA 13e any must enter the recipient's U.S. TIN if WA knows it or if it was provided to WA on a Form W-8. WA enters chapter 3 status code “16” (individual), which is the appropriate two-digit code from the list of chapter 3 status codes provided in Appendix B. Recipient's chapter 3 Note. A withholding agent must enter a chapter 3 status code for all “amounts subject to 13f status code “16” reporting under chapter 3.” WA enters chapter 4 status code “23” (individual), which is the appropriate two-digit code from the list of chapter 4 status codes provided in Appendix B. Note. A withholding agent must enter a chapter 4 status code for the recipient only if the payment is a withholdable payment (as is the case in this example) or when a participating Recipient's chapter 4 FFI or registered deemed-compliant FFI is reporting a chapter 4 withholding rate pool of U.S. 13g status code “23” payees. WA leaves Box 13h blank because it only applies for chapter 4 reporting purposes. See 13h Recipient's GIIN Global intermediary identification number and the instructions for Boxes 13e and 13h. Recipient's foreign tax identification number, if The recipient's FTIN is not required because A is not a type of recipient described in the 13i any instructions for Box 13i for which the FTIN is required. 13j LOB code WA leaves Box 13j blank because the recipient is an individual (not an entity). Recipient's account 13k number WA leaves Box 13k blank because WA is not a financial institution. 13l Recipient's date of birth WA leaves Box 13l blank because WA is not a financial institution. Primary withholding 14a–b agent's information WA leaves these boxes blank because tax was not withheld by other withholding agents. WA leaves these boxes blank because WA is making a direct payment to the recipient and 15a–I Intermediary information there are no other withholding agents. WA leaves these boxes blank because WA is making a direct payment to the recipient and 16a–e Payer's information there are no other payers involved. Although not specified in this example, WA enters in these boxes any information relating to 17a–c State income taxes any state income tax withheld.

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Appendix D Comprehensive example of how to complete Form 1042-S for gambling winnings.

DIRECT PAYMENT TO BENEFICIAL OWNER ABC Casino ("WA"), a U.S. corporate withholding agent that is not a financial institution, makes a $10,000 payment of gambling winnings to A, a foreign individual who has provided a Form W-8BEN to WA establishing foreign status. The gambling winnings are subject to 30% withholding as there is no exemption available under the Code or applicable treaty. Before completing Form 1042-S, WA takes the following steps: Step 1: Because the payment is a payment described in Amounts Subject to Reporting on Form 1042-S, WA determines it has a Form 1042-S filing obligation. Step 2: Because WA is making a payment of U.S. source FDAP income, WA determines the payment meets the definition of “an amount subject to withholding” under chapter 3. Because gambling winnings are not treated as a “withholdable payment” under chapter 4 as it is an excluded nonfinancial payment under Regulations section 1.1473-1(a)(4)(iii), WA determines that the payment is not subject to chapter 4 withholding. Step 3: Because the payment is not subject to chapter 4 withholding but is an amount subject to withholding under chapter 3, WA determines that chapter 3 is the correct chapter indicator. WA will thus enter a "3" in Box 3 (chapter indicator). Note. Although the payment is properly classified as a chapter 3 payment, WA must complete certain boxes on Form 1042-S that pertain to chapter 4 (see explanations for Boxes 4a, 4b, and 13g below). WA must file a Form 1042-S for A, and complete it as follows. Caution: Be sure to read the instructions for each box or field in its entirety before completing a box or field on Form 1042-S. WA must provide a unique form identifier (UFI) in the applicable entry field at the top of Form 1042-S. For additional information, including UFI requirements, see the instructions for Unique form identifier. Box Description Required Entry Comments WA enters “28” (Gambling winnings), which is the appropriate two-digit code from the list of income 1 Income code “28” codes provided in Appendix A. WA enters the gross amount paid (in whole dollars), 2 Gross income “10,000” including withheld tax. WA enters “3” to indicate that amounts were withheld 3 Chapter indicator “3” pursuant to chapter 3. WA enters “00” because an amount was withheld under chapter 3 and the tax rate is greater than zero and is not due to backup withholding (see the 3a Chapter 3 exemption code “00” instructions for Boxes 3a and 4a, earlier). WA enters “30.00” consistent with the formatting specified in the instructions for Boxes 3b and 4b, 3b Chapter 3 tax rate “30.00” earlier. WA enters “16” (excluded nonfinancial payment), which is the appropriate two-digit code from the list of 4a Chapter 4 exemption code “16” Exemption Codes provided in Appendix B. WA enters “00.00” because the amount reported in Box 2 is not subject to chapter 4 withholding. See the 4b Chapter 4 tax rate “00.00” instructions for Boxes 3b and 4b. WA leaves Box 5 blank because the income code it is reporting in Box 1 is not one of the codes specified in the instructions (see Box 5, earlier) for which Box 5 5 Withholding allowance reporting is required. WA leaves Box 6 blank because it did not enter an 6 Net income amount in Box 5. 7a Federal Tax Withheld “3,000” WA enters “3,000” (30% of $10,000). Check if Federal Tax Withheld was not deposited with the IRS because escrow WA does not check the box because it is not using the 7b procedures were applied escrow procedure. Check if withholding occurred in subsequent year with respect to a WA does not check the box because it did not withhold 7c partnership interest in a subsequent year. WA leaves Box 8 blank because tax was not withheld 8 Tax withheld by other agents by other withholding agents. WA leaves Box 9 blank because it did not repay overwithheld tax to the recipient under the Overwithheld tax repaid to recipient reimbursement procedure or the set-off procedure. For 9 pursuant to adjustment procedures more information, see the instructions for Box 9. 10 Total withholding credit “3,000” WA enters “3,000” (combining Boxes 7a, 8, and 9). WA leaves Box 11 blank because it withheld on the payment to the recipient (as opposed to paying the tax from its own funds). For more information, see the Tax paid by withholding agent (amounts instructions for Box 11, tax paid by withholding agent 11 not withheld) (amounts not withheld). Although WA's EIN is not specified in this example, this 12a Withholding agent's EIN Specific information required is a required field that WA would complete. WA enters “15” in Box 12b and “02” in Box 12c because it is a U.S. corporate withholding agent that is not a financial institution. Note. WA must enter both a chapter 3 and a chapter 4 Withholding agent's chapter 3 and withholding agent status code regardless of the type of 12b–c chapter 4 status code “15” and “02” payment being reported.

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Appendix D (continued)

Box Description Required Entry Comments 12d Withholding agent's name “ABC Casino” WA must enter its complete name. WA leaves this box blank because a U.S. withholding agent is generally not required to 12e Withholding agent's GIIN obtain a GIIN. See Global intermediary identification number and Box 12e for details. Withholding agent's WA enters “US” as the country code because it is a U.S. withholding agent. See the 12f country code “US” instructions for Box 12f, earlier. Withholding agent's foreign tax identification WA leaves this box blank because it is a U.S. withholding agent and it does not have an 12g number, if any FTIN or a country of residence other than the United States. Specific Withholding agent's information Although WA's address is not specified in this example, this is a required field that WA 12h–I address required would complete. See Boxes 12d Through 12i for requirements. 13a Recipient's name “A” WA enters the recipient's name. Specific information Although the recipient's country of residency is not specified in this example, this is a 13b Recipient's country code required required field that WA would complete. See the instructions for Box 13b for requirements. Specific information Although the recipient's address is not specified in this example, this is a required field 13c–d Recipient's address required that WA would complete. See Boxes 13c and 13d for requirements. The recipient's U.S. TIN is not specified in this example. However, given the facts used in this example, the recipient's U.S. TIN is generally not required because A is not a type of recipient described in the instructions for Boxes 13e and 13h for which this TIN is required (for example, A is not claiming a reduced rate of, or exemption from, tax under a tax treaty between the recipient's country of residence and the United States). However, Recipient's U.S. TIN, if WA must enter the recipient's U.S. TIN if WA knows it or if it was provided to WA on a 13e any Form W-8. WA enters chapter 3 status code “16” (individual), which is the appropriate two-digit code from the list of chapter 3 status codes provided in Appendix B. Recipient's chapter 3 Note. A withholding agent must enter a chapter 3 status code for all “amounts subject to 13f status code “16” reporting under chapter 3.” WA is not required to provide the chapter 4 status code of the recipient given that the payment being reported is not a withholdable payment. Note. A withholding agent must enter a chapter 4 status code for the recipient only if the Recipient's chapter 4 payment is a withholdable payment or when a participating FFI or registered 13g status code deemed-compliant FFI is reporting a chapter 4 withholding rate pool of U.S. payees. WA leaves Box 13h blank because it only applies for chapter 4 reporting purposes. See 13h Recipient's GIIN Global intermediary identification number and the instructions for Boxes 13e and 13h. Recipient's foreign tax identification number, if The recipient's FTIN is not required because A is not a type of recipient described in the 13i any instructions for Box 13i for which the FTIN is required. 13j LOB code WA leaves Box 13j blank because the recipient is an individual (not an entity). Recipient's account 13k number WA leaves Box 13k blank because WA is not a financial institution. 13l Recipient's date of birth WA leaves Box 13l blank because WA is not a financial institution. Primary withholding 14a–b agent's information WA leaves these boxes blank because tax was not withheld by other withholding agents. WA leaves these boxes blank because WA is making a direct payment to the recipient 15a–I Intermediary information and there are no other withholding agents. WA leaves these boxes blank because WA is making a direct payment to the recipient 16a–e Payer's information and there are no other payers involved. Although not specified in this example, WA enters in these boxes any information relating 17a–c State income taxes to any state income tax withheld.

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