Foreign Person's U.S. Source Income Subject to Withholding

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Instructions for Form 1042-S

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2008

Department of the Treasury
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 Code unless otherwise noted.

General Instructions
Use the 2008 Form 1042-S only
for income paid during 2008. Do
CAUTION not use the 2008 Form 1042-S for
income paid during 2007.

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What’s New
Changes to form. Changes have been
made to Form 1042-S for 2008. The
major changes are as follows.
Boxes 7 through 9. These boxes
are used to show the amount you
withheld, the amount withheld by other
withholding agents, and the total amount
of tax withheld.
Box 15. This box is used to show
the recipient’s foreign tax identifying
number, if any.
Box 22. This box is used to show
the recipient’s account number (optional).
Qualified intermediary branch rule. A
branch of a financial institution may not
act as a qualified intermediary after
December 31, 2007, in a country that
does not have approved
know-your-customer rules. See Qualified
intermediary (QI), under Definitions, later.
Magnetic media. Beginning with tax
year 2008, processing year 2009, the IRS
no longer accepts tape cartridges. You
cannot use magnetic media to file Form
1042-S.

Reminders
FIRE System. For files submitted on the
FIRE System, it is the responsibility of the
filer to check the status within 5 business
days to verify the results of the
transmission. The IRS no longer mails
error reports for files that are bad.

Purpose of Form
Use Form 1042-S to report income
described under Amounts Subject to
Reporting on Form 1042-S on page 4 and
to report amounts withheld under Chapter
3 of the Internal Revenue Code.
Also use Form 1042-S to report
distributions of effectively connected
income by a publicly traded partnership or
nominee. See Publicly Traded
Partnerships (Section 1446 Withholding
Tax) on page 6.

Every person required to deduct
and withhold any tax under
CAUTION Chapter 3 of the Code is liable for
such tax.

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Copy A is filed with the Internal
Revenue Service. Copies B, C, and D are
for the recipient. Copy E is for your
records.
Do not use Form 1042-S to report an
item required to be reported on —
• Form W-2 (wages and other
compensation made to employees (other
than compensation for dependent
personal services for which the beneficial
owner is claiming treaty benefits)
including wages in the form of group-term
life insurance),
• Form 1099, or
• Form 8288-A, Statement of Withholding
on Dispositions by Foreign Persons of
U.S. Real Property Interests, or Form
8805, Foreign Partner’s Information
Statement of Section 1446 Withholding
Tax. Withholding agents otherwise
required to report a distribution partly on a
Form 8288-A or Form 8805 and partly on
a Form 1042-S may instead report the
entire amount on Form 8288-A or
Form 8805.

Who Must File
Every withholding agent (defined on
page 2) must file an information return on
Form 1042-S to report amounts paid
during the preceding calendar year that
are described under Amounts Subject to
Reporting on Form 1042-S on page 4.
However, withholding agents who are
individuals are not required to report a
payment on Form 1042-S if they are not
making the payment as part of their trade
or business and no withholding is
required to be made on the payment. For
example, an individual making a payment
of interest that qualifies for the portfolio
interest exception from withholding is not
required to report the payment if the
portfolio interest is paid on a loan that is
not connected to the individual’s trade or
business. However, an individual paying
an amount that has actually been subject
to withholding is required to report the
payment. Also, an individual paying an
amount on which withholding is required
must report the payment, whether or not
the individual actually withholds. See
Multiple Withholding Agent Rule on page
11 for exceptions to reporting when
another person has reported the same
payment to the recipient. Also see
Publicly Traded Partnerships (Section
1446 Withholding Tax) on page 6.
Cat. No. 64278A

You must file a Form 1042-S even if
you did not withhold tax because the
income was exempt from tax under a U.S.
tax treaty or the Code, including the
exemption for income that is effectively
connected with the conduct of a trade or
business in the United States, or you
released the tax withheld to the recipient.
For exceptions, see Amounts That Are
Not Subject to Reporting on Form 1042-S
on page 5.
Amounts paid to bona fide residents of
U.S. possessions and territories are not
subject to reporting on Form 1042-S if the
beneficial owner of the income is a U.S.
citizen, national, or resident alien.
If you are required to file Form
1042-S, you must also file Form
CAUTION 1042, Annual Withholding Tax
Return for U.S. Source Income of Foreign
Persons. See Form 1042 for more
information.

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Where, When, and
How To File
Forms 1042-S, whether filed on paper or
electronically, must be filed with the
Internal Revenue Service by March 16,
2009. You are also required to furnish
Form 1042-S to the recipient of the
income on or before March 16, 2009.
Send any paper Forms 1042-S with
Form 1042-T, Annual Summary and
Transmittal of Forms 1042-S, to the
address in the Form 1042-T instructions.
You must use Form 1042-T to transmit
paper Forms 1042-S. Use a separate
Form 1042-T to transmit each type of
Form 1042-S. See Payments by U.S.
Withholding Agents beginning on page 6
and the Form 1042-T instructions for
more information. If you have 250 or more
Forms 1042-S to file, follow the
instructions under Electronic Reporting on
page 2.
Beginning with tax year 2008,
processing year 2009, Form
CAUTION 1042-S can no longer be filed
using magnetic media. Form 1042-S for
2008 and later years can only be filed on
paper or electronically.
Extension of time to file. To request an
extension of time to file Forms 1042-S,
file Form 8809, Application for Extension
of Time To File Information Returns. See
the Form 8809 instructions for where to
file that form. You should request an
extension as soon as you are aware that
an extension is necessary, but no later
than the due date for filing Form 1042-S.
By filing Form 8809, you will get an

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Instructions for Form 1042-S

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automatic 30-day extension to file Form
1042-S. If you need more time, a second
Form 8809 may be submitted before the
end of the initial extended due date. See
Form 8809 for more information.
If you are requesting extensions of
time to file for more than 50
CAUTION withholding agents or payers, you
must submit the extension requests
electronically. See Pub. 1187,
Specifications for Filing Form 1042-S,
Foreign Person’s U.S. Source Income
Subject to Withholding, Electronically or
Magnetically, for more information.
Recipient copies. You may request
an extension of time to provide the
statements to recipients by sending a
letter to Enterprise Computing Center —
Martinsburg, Information Reporting
Program, Attn: Extension of Time
Coordinator, 240 Murall Drive,
Kearneysville, WV 25430. See Extension
of Time To File in Pub. 515.

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Electronic Reporting
If you file 250 or more Forms 1042-S, you
are required to submit them electronically.
Electronic submissions are filed using
the Filing Information Returns
Electronically (FIRE) System. The FIRE
System operates 24 hours a day, 7 days
a week, at http://fire.irs.gov. For more
information, see Pub. 1187.
The electronic filing requirement
applies separately to original and
amended returns. Any person, including a
corporation, partnership, individual,
estate, and trust, that is required to file
250 or more Forms 1042-S must file such
returns electronically. The filing
requirement applies individually to each
reporting entity as defined by its separate
taxpayer identification number (TIN). This
requirement applies separately to original
and amended returns. For example, if you
have 300 original Forms 1042-S, they
must be filed electronically. However, if
200 of those forms contained erroneous
information, the amended returns may be
filed on paper forms because the number
of amended Forms 1042-S is less than
the 250-or-more filing requirement.
If you file electronically, do not file
the same returns on paper.
CAUTION Duplicate filing may cause penalty
notices to be generated.
Note. Even though as many as 249
Forms 1042-S may be submitted on
paper to the IRS, the IRS encourages
filers to transmit forms electronically.

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Hardship waiver. To receive a hardship
waiver from the required filing of Forms
1042-S electronically, submit Form 8508,
Request for Waiver From Filing
Information Returns Electronically/
Magnetically. Waiver requests should be
filed at least 45 days before the due date
of the returns. See Form 8508 for more
information.
Need assistance? For additional
information and instructions on filing
Forms 1042-S electronically, extensions

of time to file (Form 8809), and hardship
waivers (Form 8508), see Pub. 1187. You
may also call the Information Reporting
Program at 866-455-7438 (toll-free) or
304-263-8700 (not a toll-free number)
Monday through Friday from 8:30 a.m. to
4:30 p.m. Eastern Standard time. The
Information Reporting Program may also
be reached by fax at 304-264-5602 (not a
toll-free number).
This call site does not answer tax
law questions concerning the
CAUTION requirements for withholding of tax
on payments of U.S. source income to
foreign persons under Chapter 3 of the
Code. If you need such assistance, you
may call 215-516-2000 (not a toll-free
number) from 6:00 a.m. to 11:00 p.m.
Eastern Standard time or write to: Internal
Revenue Service, International Section,
P.O. Box 920, Bensalem, PA
19020-8518.

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Additional Information
For more information on withholding of
tax, see Pub. 515, Withholding of Tax on
Nonresident Aliens and Foreign Entities.
To order this publication and other
publications and forms, call 1-800-TAXFORM (1-800-829-3676). You can also
download forms and publications from the
IRS website at www.irs.gov.

Record Retention
Withholding agents should retain a copy
of the information returns filed with the
IRS, or have the ability to reconstruct the
data, for at least 3 years after the
reporting due date.

Substitute Forms
The official Form 1042-S is the standard
for substitute forms. Because a substitute
form is a variation from the official form,
you should know the requirements of the
official form for the year of use before you
modify it to meet your needs. The IRS
provides several means of obtaining the
most frequently used tax forms. These
include the Internet and CD-ROM. For
details on the requirements of substitute
forms, see Pub. 1179, General Rules and
Specifications for Substitute Forms 1096,
1098, 1099, 5498, W-2G, and 1042-S.
You are permitted to use
substitute payee copies of Form
CAUTION 1042-S (that is, copies B, C, and
D) that contain more than one type of
income. This will reduce the number of
Forms 1042-S you send to the recipient.
Under no circumstances, however, may
the copy of the form filed with the IRS
(copy A) contain more than one type of
income.

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Deposit Requirements
For information and rules concerning
federal tax deposits, see Depositing
Withheld Taxes in Pub. 515 or the Form
1042 instructions.

Definitions
Withholding agent. A withholding agent
is any person, U.S. or foreign, that has

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control, receipt, or custody of an amount
subject to withholding or who can
disburse or make payments of an amount
subject to withholding. The withholding
agent may be an individual, corporation,
partnership, trust, association, or any
other entity. The term withholding agent
also includes, but is not limited to, a
qualified intermediary (QI), a nonqualified
intermediary (NQI), a withholding foreign
partnership (WP), a withholding foreign
trust (WT), a flow-through entity, a U.S.
branch of a foreign insurance company or
foreign bank that is treated as a U.S.
person, a nominee under section 1446,
and an authorized foreign agent. A
person may be a withholding agent even
if there is no requirement to withhold from
a payment or even if another person has
already withheld the required amount
from a payment.
Generally, the U.S. person who pays
(or causes to be paid) the item of U.S.
source income to a foreign person (or to
its agent) must withhold. However, other
persons may be required to withhold. For
example, if a payment is made by a QI
(whether or not it assumes primary
withholding responsibility) that knows that
withholding was not done by the person
from which it received the payment, that
QI is required to do the appropriate
withholding. In addition, withholding must
be done by any QI that assumes primary
withholding responsibility under Chapter 3
of the Code, a WP, a WT, a U.S. branch
of a foreign insurance company or foreign
bank that agrees to be treated as a U.S.
person, or an authorized foreign agent.
Finally, if a payment is made by an NQI or
a flow-through entity that knows, or has
reason to know, that withholding was not
done, that NQI or flow-through entity is
required to withhold since it also falls
within the definition of a withholding
agent.
Authorized foreign agent. An agent is
an authorized foreign agent only if all four
of the following apply.
1. There is a written agreement
between the withholding agent and the
foreign person acting as agent.
2. The IRS International Section has
been notified of the appointment of the
agent before the first payment for which
the authorized agent acts on behalf of the
withholding agent. (This notification must
be sent to the following address: Internal
Revenue Service, International Section,
P.O. Box 920, Bensalem, PA
19020-8518.)
3. The books and records and
relevant personnel of the foreign agent
are available to the IRS so that the IRS
may evaluate the withholding agent’s
compliance with its withholding and
reporting obligations.
4. The U.S. withholding agent remains
fully liable for the acts of its agent and
does not assert any of the defenses that
may otherwise be available.
For further details, see Regulations
section 1.1441-7(c).

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Instructions for Form 1042-S

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Beneficial owner. For payments other
than those for which a reduced rate of
withholding is claimed under an income
tax treaty, the beneficial owner of income
is, generally, the person who is required
under U.S. tax principles to include the
income in gross income on a tax return. A
person is not a beneficial owner of
income, however, to the extent that
person is receiving the income as a
nominee, agent, or custodian, or to the
extent the person is a conduit whose
participation in a transaction is
disregarded. In the case of amounts paid
that do not constitute income, beneficial
ownership is determined as if the
payment were income.
Foreign partnerships, foreign simple
trusts, and foreign grantor trusts are not
the beneficial owners of income paid to
the partnership or trust. The beneficial
owners of income paid to a foreign
partnership are generally the partners in
the partnership, provided that the partner
is not itself a partnership, foreign simple
or grantor trust, nominee, or other agent.
The beneficial owner of income paid to a
foreign simple trust (a foreign trust that is
described in section 651(a)) is generally
the beneficiary of the trust, if the
beneficiary is not a foreign partnership,
foreign simple or grantor trust, nominee,
or other agent. The beneficial owner of a
foreign grantor trust (a foreign trust to the
extent that all or a portion of the income
of the trust is treated as owned by the
grantor or another person under sections
671 through 679) is the person treated as
the owner of the trust. The beneficial
owner of income paid to a foreign
complex trust (a foreign trust that is not a
foreign simple trust or foreign grantor
trust) is the trust itself.
The beneficial owner of income paid to
a foreign estate is the estate itself.
A payment to a U.S. partnership, U.S.
trust, or U.S. estate is not subject to 30%
foreign-person withholding. A U.S.
partnership, trust, or estate should
provide the withholding agent with a Form
W-9, Request for Taxpayer Identification
Number and Certification. These
beneficial owners rules generally apply for
purposes of section 1446; however, there
are exceptions.
Disregarded entity. A business entity
that has a single owner and is not a
corporation under Regulations section
301.7701-2(b) is disregarded as an entity
separate from its owner.
Exempt recipient. Generally, an exempt
recipient is any payee that is not required
to provide Form W-9 and is exempt from
the Form 1099 reporting requirements.
See the Instructions for the Requester of
Form W-9 for a list of exempt recipients.
Fiscally transparent entity. An entity is
treated as fiscally transparent with
respect to an item of income for which
treaty benefits are claimed to the extent
that the interest holders in the entity must,
on a current basis, take into account
separately their shares of an item of

income paid to the entity, whether or not
distributed, and must determine the
character of the items of income as if they
were realized directly from the sources
from which realized by the entity. For
example, partnerships, common trust
funds, and simple trusts or grantor trusts
are generally considered to be fiscally
transparent with respect to items of
income received by them.
Flow-through entity. A flow-through
entity is a foreign partnership (other than
a withholding foreign partnership), a
foreign simple or grantor trust (other than
a withholding foreign trust), or, for any
payments for which a reduced rate of
withholding under an income tax treaty is
claimed, any entity to the extent the entity
is considered to be fiscally transparent
under section 894 with respect to the
payment by an interest holder’s
jurisdiction.
Foreign person. A foreign person
includes a nonresident alien individual, a
foreign corporation, a foreign partnership,
a foreign trust, a foreign estate, and any
other person that is not a U.S. person.
The term also includes a foreign branch
or office of a U.S. financial institution or
U.S. clearing organization if the foreign
branch is a QI. Generally, a payment to a
U.S. branch of a foreign person is a
payment to a foreign person.
Intermediary. An intermediary is a
person that acts as a custodian, broker,
nominee, or otherwise as an agent for
another person, regardless of whether
that other person is the beneficial owner
of the amount paid, a flow-through entity,
or another intermediary.
Qualified intermediary (QI). A QI is
an intermediary that is a party to a
withholding agreement with the IRS. An
entity must indicate its status as a QI on a
Form W-8IMY submitted to a withholding
agent. For information on a QI withholding
agreement, see Rev. Proc. 2000-12,
which is on page 387 of Internal Revenue
Bulletin (IRB) 2000-4 at www.irs.gov/pub/
irs-irbs/irb00-04.pdf. Also see Notice
2001-4 (IRB 2001-21), as amended; Rev.
Proc. 2003-64, Appendix 3 (IRB
2003-32); Rev. Proc. 2004-21 (IRB
2004-14); and Rev. Proc. 2005-77 (IRB
2005-51).
A branch of a financial institution may
not act as a QI in a country that does not
have approved know-your-customer
(KYC) rules. Countries having approved
KYC rules are listed on the IRS website at
www.irs.gov. Branches that operate in
non-KYC approved jurisdictions are
required to act as nonqualified
intermediaries.
Nonqualified intermediary (NQI). An
NQI is any intermediary that is not a U.S.
person and that is not a QI.
Private arrangement intermediary
(PAI). A QI may enter into a private
arrangement with another intermediary
under which the other intermediary
generally agrees to perform all of the

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obligations of the QI. See Section 4 of
Rev. Proc. 2000-12 for details.
Non-exempt recipient. A non-exempt
recipient is any person who is not an
exempt recipient.
Nonresident alien individual. Any
individual who is not a citizen or resident
of the United States is a nonresident alien
individual. An alien individual meeting
either the “green card test” or the
“substantial presence test” for the
calendar year is a resident alien. Any
person not meeting either test is a
nonresident alien individual. Additionally,
an alien individual who is a resident of a
foreign country under the residence
article of an income tax treaty, or an alien
individual who is a bona fide resident of
Puerto Rico, Guam, the Commonwealth
of the Northern Mariana Islands, the U.S.
Virgin Islands, or American Samoa, is a
nonresident alien individual. See Pub.
519, U.S. Tax Guide for Aliens, for more
information on resident and nonresident
alien status.
Even though a nonresident alien
individual married to a U.S. citizen
CAUTION or resident alien may choose to be
treated as a resident alien for certain
purposes (for example, filing a joint
income tax return), such individual is still
treated as a nonresident alien for
withholding tax purposes.
Payer. A payer is the person for whom
the withholding agent acts as a paying
agent pursuant to an agreement whereby
the withholding agent agrees to withhold
and report a payment.
Presumption rules. The presumption
rules are those rules prescribed under
Chapter 3 and Chapter 61 of the Code
that a withholding agent must follow to
determine the status of a beneficial owner
(for example, as a U.S. person or a
foreign person) when it cannot reliably
associate a payment with valid
documentation. See, for example,
Regulations sections 1.1441-1(b)(3),
1.1441-4(a), 1.1441-5(d) and (e),
1.1441-9(b)(3), 1.1446-1(c)(3), and
1.6049-5(d). Also see Pub. 515.
Publicly traded partnership (PTP). A
PTP is any partnership in which interests
are regularly traded on an established
securities market (regardless of the
number of its partners). However, it does
not include a PTP treated as a
corporation under section 7704.
Recipient. A recipient is any of the
following:
• A beneficial owner of income.
• A QI.
• A WP or WT.
• An authorized foreign agent.
• A U.S. branch of certain foreign banks
or insurance companies that is treated as
a U.S. person.
• A foreign partnership or a foreign trust
(other than a WP or WT), but only to the
extent the income is effectively connected
with its conduct of a trade or business in
the United States.

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• A payee who is not known to be the

beneficial owner, but who is presumed to
be a foreign person under the
presumption rules.
• A PAI.
• A partner receiving a distribution of
effectively connected income from a PTP
or nominee.
A recipient does not include any of the
following:
• An NQI.
• A nonwithholding foreign partnership, if
the income is not effectively connected
with its conduct of a trade or business in
the United States.
• A disregarded entity.
• A foreign trust that is described in
section 651(a) (a foreign simple trust) if
the income is not effectively connected
with the conduct of a trade or business in
the United States.
• A foreign trust to the extent that all or a
portion of the trust is treated as owned by
the grantor or other person under
sections 671 through 679 (a foreign
grantor trust).
• A U.S. branch that is not treated as a
U.S. person unless the income is, or is
treated as, effectively connected with the
conduct of a trade or business in the
United States.
U.S. branch treated as a U.S. person.
The following types of U.S. branches (of
foreign entities) may reach an agreement
with the withholding agent to treat the
branch as a U.S. person: (a) a U.S.
branch of a foreign bank subject to
regulatory supervision by the Federal
Reserve Board or (b) a U.S. branch of a
foreign insurance company required to file
an annual statement on a form approved
by the National Association of Insurance
Commissioners with the Insurance
Department of a State, Territory, or the
District of Columbia.
The U.S. branch must provide a Form
W-8IMY evidencing the agreement with
the withholding agent.
A U.S. branch that is treated as a
U.S. person is treated as such
CAUTION solely for purposes of determining
whether a payment is subject to
withholding. The branch is, for purposes
of information reporting, a foreign person
and payments to such a branch must be
reported on Form 1042-S.
Withholding certificate. The term
“withholding certificate” generally refers to
Form W-8 or Form W-9.
Note. Throughout these instructions, a
reference to or mention of “Form W-8” is
a reference to Forms W-8BEN, W-8ECI,
W-8EXP, and/or W-8IMY.
Withholding foreign partnership (WP)
or withholding foreign trust (WT). A
WP or WT is a foreign partnership or trust
that has entered into a withholding
agreement with the IRS in which it agrees
to assume primary withholding
responsibility for all payments that are
made to it for its partners, beneficiaries,
or owners. For information on these
withholding agreements, see Rev. Proc.

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2003-64, which is on page 306 of Internal
Revenue Bulletin (IRB) 2003-32 at www.
irs.gov/pub/irs-irbs/irb03-32.pdf. Also see
Rev. Proc. 2004-21 (IRB 2004-14) and
Rev. Proc. 2005-77 (IRB 2005-51).

Amounts Subject to
Reporting on Form 1042-S
Amounts subject to reporting on Form
1042-S are amounts paid to foreign
persons (including persons presumed to
be foreign) that are subject to withholding,
even if no amount is deducted and
withheld from the payment because of a
treaty or Code exception to taxation or if
any amount withheld was repaid to the
payee. Amounts subject to withholding
are amounts from sources within the
United States that constitute (a) fixed or
determinable annual or periodical (FDAP)
income; (b) certain gains from the
disposal of timber, coal, or domestic iron
ore with a retained economic interest; and
(c) gains relating to contingent payments
received from the sale or exchange of
patents, copyrights, and similar intangible
property. Amounts subject to withholding
also include distributions of effectively
connected income by a publicly traded
partnership. Amounts subject to reporting
include, but are not limited to, the
following U.S. source items.
• Corporate distributions. The entire
amount of a corporate distribution
(whether actual or deemed) must be
reported, irrespective of any estimate of
the portion of the distribution that
represents a taxable dividend. Any
distribution, however, that is treated as
gain from the redemption of stock is not
an amount subject to withholding. For
information on dividends paid by a
qualified investment entity (QIE), see
Pub. 515.
• Interest. This includes the portion of a
notional principal contract payment that is
characterized as interest.
• Rents.
• Royalties.
• Compensation for independent
personal services performed in the
United States.
• Compensation for dependent
personal services performed in the
United States (but only if the beneficial
owner is claiming treaty benefits).
• Annuities.
• Pension distributions and other
deferred income.
• Most gambling winnings. However,
proceeds from a wager placed in
blackjack, baccarat, craps, roulette, or
big-6 wheel are not amounts subject to
reporting.
• Cancellation of indebtedness.
Income from the cancellation of
indebtedness must be reported unless the
withholding agent is unrelated to the
debtor and does not have knowledge of
the facts that give rise to the payment.
• Effectively connected income (ECI).
ECI includes amounts that are (or are
presumed to be) effectively connected
with the conduct of a trade or business in

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the United States even if no withholding
certificate is required, as, for example,
with income on notional principal
contracts. Note that bank deposit interest,
which generally is not subject to Form
1042-S reporting, is subject to Form
1042-S reporting if it is effectively
connected income. ECI of a PTP
distributed to a foreign partner must be
reported on Form 1042-S.
• Notional principal contract income.
Income from notional principal contracts
that the payer knows, or must presume, is
effectively connected with the conduct of
a U.S. trade or business is subject to
reporting. The amount to be reported is
the amount of cash paid on the contract
during the calendar year. Any amount of
interest determined under the provisions
of Regulations section 1.446-3(g)(4)
(dealing with interest in the case of a
significant non-periodic payment) is
reportable as interest and not as notional
principal contract income.
• REMIC excess inclusions. Excess
inclusions from REMICs (income code
02) and withheld tax must be reported on
Form 1042-S. A domestic partnership
must separately state a partner’s
allocable share of REMIC taxable income
or net loss and the excess inclusion
amount on Schedule K-1 (Form 1065). If
the partnership allocates all or some
portion of its allocable share of REMIC
taxable income to a foreign partner, the
partner must include the partner’s
allocated amount in income as if that
amount was received on the earlier of the
following dates.
• The date of distribution by the
partnership.
• The date the foreign partner disposes
of its indirect interest in the REMIC
residual interest.
• The last day of the partnership’s tax
year.
The partnership must withhold tax on
the portion of the REMIC amount that is
an excess inclusion.
An excess inclusion allocated to the
following foreign persons must be
included in that person’s income at the
same time as other income from the entity
is included in income.
• Shareholder of a real estate investment
trust.
• Shareholder of a regulated investment
company.
• Participant in a common trust fund.
• Patron of a subchapter T cooperative
organization.
• Students, teachers, and researchers.
Amounts paid to foreign students,
trainees, teachers, or researchers as
scholarship or fellowship income, and
compensation for personal services
(whether or not exempt from tax under an
income tax treaty), must be reported.
However, amounts that are exempt from
tax under section 117 are not subject to
reporting.
• Amounts paid to foreign
governments, foreign controlled banks
of issue, and international

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organizations. These amounts are
subject to reporting even if they are
exempt under section 892 or 895.
• Foreign targeted registered
obligations. Interest paid on registered
obligations targeted to foreign markets
paid to a foreign person other than a
financial institution or a member of a
clearing organization is an amount
subject to reporting.
• Original issue discount (OID) from
the redemption of an OID obligation.
The amount subject to reporting is the
amount of OID actually includible in the
gross income of the foreign beneficial
owner of the income, if known. Otherwise,
the withholding agent should report the
entire amount of OID as if the recipient
held the instrument from the date of
original issuance. See Pub. 1212, Guide
to Original Issue Discount (OID)
Instruments.
• Certain dispositions of U.S. real
property interests. See Withholding on
Dispositions of U.S. Real Property
Interests by Publicly Traded Trusts and
Qualified Investment Entities (QIEs)
beginning on this page.
For more details on the types of
income that are subject to withholding,
see Pub. 515.

1042-S. You must also include a
statement that the information on the form
is being furnished to the United States
Internal Revenue Service and may be
provided to the government of Canada.

Form 1042-S reporting the amount of
bank deposit interest paid to each of X
and Y and the proportionate amount of
withholding that occurred.

Interest and OID from short-term
obligations. Interest and OID from any
obligation payable 183 days or less from
the date of original issue should not be
reported on Form 1042-S.

Withholding on
Dispositions of U.S. Real
Property Interests by
Publicly Traded Trusts
and Qualified Investment
Entities (QIEs)

Amounts That Are Not
Subject to Reporting
on Form 1042-S

Accrued interest and OID. Interest paid
on obligations sold between interest
payment dates and the portion of the
purchase price of an OID obligation that is
sold or exchanged in a transaction other
than a redemption is not subject to
reporting unless the sale or exchange is
part of a plan, the principal purpose of
which is to avoid tax, and the withholding
agent has actual knowledge or reason to
know of such plan.

Interest on deposits. Generally, no
withholding (or reporting) is required on
interest paid to foreign persons on
deposits if such interest is not effectively
connected with the conduct of a trade or
business in the United States. For this
purpose, the term “deposits” means
amounts that are on deposit with a U.S.
bank, savings and loan association, credit
union, or similar institution, and from
certain deposits with an insurance
company.
Exception for interest payments to
Canadian residents who are not U.S.
citizens. If you pay $10 or more of U.S.
source bank deposit interest to a
nonresident alien who is a resident of
Canada, you generally must report the
interest on Form 1042-S. This reporting
requirement applies to interest on a
deposit maintained at a bank’s office in
the United States. However, this reporting
requirement does not apply to interest
paid on certain bearer certificates of
deposit if paid outside the United States.
Although you only have to report
payments you make to residents of
Canada, you can comply by reporting
bank deposit interest to all foreign
persons if that is easier.
When completing Form 1042-S, use
income code 29 in box 1 and exemption
code 02 in box 6.
On the statements furnished to the
Canadian recipients, you must include an
information contact phone number in
addition to the name in box 12a on Form

Registered obligations targeted to
foreign markets. Interest on a
registered obligation that is targeted to
foreign markets and qualifies as portfolio
interest is not subject to reporting if it is
paid to a registered owner that is a
financial institution or member of a
clearing organization and you have
received the required certifications.
Bearer obligations targeted to foreign
markets. Do not file Form 1042-S to
report interest not subject to withholding
on bearer obligations if a Form W-8 is not
required.
Notional principal contract payments
that are not ECI. Amounts paid on a
notional principal contract that are not
effectively connected with the conduct of
a trade or business in the United States
should not be reported on Form 1042-S.

Exception for amounts previously
withheld upon. A withholding agent
should report on Form 1042-S any
amounts, whether or not subject to
withholding, that are paid to a foreign
payee and that have been withheld upon,
including backup withholding, by another
withholding agent under the presumption
rules.
Example. A withholding agent (WA)
makes a payment of bank deposit interest
to a foreign intermediary that is a
nonqualified intermediary (NQI-B). NQI-B
failed to provide any information
regarding the beneficial owners to whom
the payment was attributable. Under the
presumption rules, WA must presume
that the amounts are paid to a U.S.
non-exempt recipient. WA withholds 28%
of the payment under the backup
withholding provisions of the Code and
files a Form 1099-INT reporting the
interest as paid to an unknown recipient.
A copy of Form 1099-INT is sent to
NQI-B. The beneficial owners of the bank
deposit interest are two customers of
NQI-B, X and Y. Both X and Y have
provided NQI-B with documentary
evidence establishing that they are
foreign persons and therefore not subject
to backup withholding. NQI-B must file a

-5-

In general, when a publicly traded trust
makes a distribution to a foreign person
attributable to the disposition of a U.S.
real property interest, it must withhold tax
under section 1445. However, this
withholding liability is shifted to the person
who pays the distribution to a foreign
person (or to the account of the foreign
person) if the special notice requirement
of Regulations section 1.1445-8(f) and
other requirements of Regulations section
1.1445-8(b)(1) are satisfied.
The amount subject to withholding for
a distribution by a publicly traded trust is
determined under the large trust rules of
Regulations section 1.1445-5(c)(3).
The rate of withholding is as follows:
1. Distribution by a publicly traded
trust that makes recurring sales of
growing crops and timber — 10%.
2. Distribution by a publicly traded
trust not described in (1) above — 35%.
Special rules apply to qualified
investment entities (QIEs). A QIE is any
real estate investment trust (REIT) or any
regulated investment company (RIC) that
is a U.S. real property holding
corporation. Generally, any distribution
from a QIE attributable to gain from the
sale or exchange of a U.S. real property
interest is treated as such gain by the
nonresident alien, foreign corporation, or
other QIE receiving the distribution.
A distribution by a QIE to a
nonresident alien or foreign corporation
that is treated as gain from the sale or
exchange of a U.S. real property interest
by the shareholder is subject to
withholding at 35%.
Any distribution by a QIE on stock
regularly traded on a securities market in
the United States is not treated as gain
from the sale or exchange of a U.S. real
property interest if the shareholder did not
own more than 5% of that stock at any
time during the 1-year period ending on
the date of the distribution. These
distributions are included in the
shareholder’s gross income as a dividend
(income code 06) from the QIE, not as
long-term capital gain.
After 2007, a RIC will be treated as a
QIE only on distributions the RIC makes
to a nonresident alien or foreign
corporation that are attributable to
distributions the RIC received from a
REIT.

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At the time these instructions went
to print, Congress was considering
CAUTION legislation that would extend the
QIE treatment for RICs. To find out if this
legislation was enacted, see Pub. 515.

!

Use Forms 1042-S and 1042 to report
and pay over the withheld amounts. All
other withholding required under section
1445 is reported and paid over using
Form 8288, U.S. Withholding Tax Return
for Dispositions by Foreign Persons of
U.S. Real Property Interests, and Form
8288-A, Statement of Withholding on
Dispositions by Foreign Persons of U.S.
Real Property Interests.
For more information on reporting
income from real property interests, see
U.S. Real Property Interest in Pub. 515.

Publicly Traded
Partnerships (Section
1446 Withholding Tax)
A publicly traded partnership (PTP)
(defined on page 3) that has effectively
connected income, gain, or loss must pay
a withholding tax on distributions of that
income made to its foreign partners and
file Form 1042-S using income code 27. A
nominee that receives a distribution of
effectively connected income from a PTP
is treated as the withholding agent to the
extent of the amount specified in the
qualified notice received by the nominee.
For this purpose, a nominee is a domestic
person that holds an interest in a PTP on
behalf of a foreign person. See
Regulations section 1.1446-4 and Pub.
515 for details.
If you are a nominee that is the

TIP withholding agent under section
1446, enter the PTP’s name and
other required information in boxes 17
through 20 on Form 1042-S.
Other partnerships that have
effectively connected gross income
allocable to foreign partners must pay a
withholding tax under section 1446.
These amounts are reported on Form
8804, Annual Return for Partnership
Withholding Tax (Section 1446), and
Form 8805, Foreign Partner’s Information
Statement of Section 1446 Withholding
Tax.

Payments by U.S.
Withholding Agents
In general. U.S. withholding agents
making payments described under
Amounts Subject to Reporting on Form
1042-S beginning on page 4 must file a
separate Form 1042-S for each recipient
who receives the income. Furthermore,
withholding agents filing paper Forms
1042-S are not permitted to report
multiple types of income on copy A filed
with the IRS. These filers must use a
separate Form 1042-S for information
reportable on a single type of income.

These filers cannot use a single
Form 1042-S to report income if
CAUTION that income is reportable under
different income, recipient, or exemption
codes, or is subject to different rates of
withholding.
A withholding agent may be permitted
to use substitute payee copies of Form
1042-S (copies B, C, and D) that contain
more than one type of income. See
Substitute Forms on page 2 for details.
See Payments Made to Persons Who
Are Not Recipients beginning on page 7 if
the payment is made to a foreign person
that is not a recipient.

!

Payments to Recipients
Payments directly to beneficial
owners. A U.S. withholding agent
making a payment directly to a beneficial
owner must complete Form 1042-S and
treat the beneficial owner as the recipient.
Boxes 17 through 20 should be left blank.
A U.S. withholding agent should complete
box 21 only if it is completing Form
1042-S as a paying agent acting pursuant
to an agreement.
Under a grace period rule, a U.S.
withholding agent may, under certain
circumstances, treat a payee as a foreign
person while the withholding agent waits
for a valid withholding certificate. A U.S.
withholding agent who relies on the grace
period rule to treat a payee as a foreign
person must file Form 1042-S to report all
payments during the period that person
was presumed to be foreign even if that
person is later determined to be a U.S.
person based on appropriate
documentation or is presumed to be a
U.S. person after the grace period ends.
In the case of foreign joint owners, you
may provide a single Form 1042-S made
out to the owner whose status you relied
upon to determine the applicable rate of
withholding (the owner subject to the
highest rate of withholding). If, however,
any one of the owners requests its own
Form 1042-S, you must furnish a Form
1042-S to the person who requests it. If
more than one Form 1042-S is issued for
a single payment, the aggregate amount
paid and tax withheld that is reported on
all Forms 1042-S cannot exceed the total
amounts paid to joint owners and the tax
withheld on those payments.
Payments to a qualified intermediary,
withholding foreign partnership, or
withholding foreign trust. A U.S.
withholding agent that makes payments
to a QI (whether or not the QI assumes
primary withholding responsibility), a
withholding foreign partnership (WP), or a
withholding foreign trust (WT) should
generally complete Forms 1042-S treating
the QI, WP, or WT as the recipient.
However, see Payments allocated, or
presumed made, to U.S. non-exempt
recipients on this page for exceptions.
The U.S. withholding agent must
complete a separate Form 1042-S for
each withholding rate pool of the QI, WP,
or WT. For this purpose, a withholding

-6-

rate pool is a payment of a single type of
income, determined in accordance with
the income codes used to file Form
1042-S, that is subject to a single rate of
withholding. A QI that does not assume
primary withholding responsibility
provides information regarding the
proportions of income subject to a
particular withholding rate to the
withholding agent on a withholding
statement associated with Form W-8IMY.
A U.S. withholding agent making a
payment to a QI, WP, or WT must use
recipient code 12 (qualified intermediary)
or 04 (withholding foreign partnership or
withholding foreign trust). A U.S.
withholding agent must not use recipient
code 13 (private arrangement
intermediary withholding rate pool —
general), 14 (private arrangement
intermediary withholding rate pool —
exempt organizations), 15 (qualified
intermediary withholding rate pool —
general), or 16 (qualified intermediary
withholding rate pool — exempt
organizations). Use of an inappropriate
recipient code may cause a notice to be
generated.
A QI, WP, or WT is required to act
in such capacity only for
CAUTION designated accounts. Therefore,
such an entity may also provide a Form
W-8IMY in which it certifies that it is
acting as an NQI or flow-through entity for
other accounts. A U.S. withholding agent
that receives a Form W-8IMY on which
the foreign person providing the form
indicates that it is not acting as a QI, WP,
or WT may not treat the foreign person as
a recipient. A withholding agent must not
use the EIN that a QI, WP, or WT
provides in its capacity as such to report
payments that are treated as made to an
entity in its capacity as an NQI or
flow-through entity. In that case, use the
EIN, if any, that is provided by the entity
on its Form W-8IMY in which it claims that
it is acting as an NQI or flow-through
entity.
Payments allocated, or presumed
made, to U.S. non-exempt recipients.
You may be given Forms W-9 or other
information regarding U.S. non-exempt
recipients from a QI together with
information allocating all or a portion of
the payment to U.S. non-exempt
recipients. You must report income
allocable to a U.S. non-exempt recipient
on the appropriate Form 1099 and not on
Form 1042-S, even though you are
paying that income to a QI.
You may also be required under the
presumption rules to treat a payment
made to a QI as made to a payee that is a
U.S. non-exempt recipient from which you
must withhold 28% of the payment under
the backup withholding provisions of the
Code. In this case, you must report the
payment on the appropriate Form 1099.
See the General Instructions for Forms
1099, 1098, 5498, and W-2G.
Example 1. WA, a U.S. withholding
agent, makes a payment of U.S. source
dividends to QI, a qualified intermediary.

!

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QI provides WA with a valid Form
W-8IMY with which it associates a
withholding statement that allocates 95%
of the payment to a 15% withholding rate
pool and 5% of the payment to C, a U.S.
individual. QI provides WA with C’s Form
W-9. WA must complete a Form 1042-S,
showing QI as the recipient in box 13a
and recipient code 12 (qualified
intermediary) in box 13b, for the dividends
allocated to the 15% withholding rate
pool. WA must also complete a Form
1099-DIV reporting the portion of the
dividend allocated to C.
Example 2. WA, a withholding agent,
makes a payment of U.S. source
dividends to QI, a qualified intermediary.
QI provides WA with a valid Form
W-8IMY with which it associates a
withholding statement that allocates 40%
of the payment to a 15% withholding rate
pool and 40% to a 30% withholding rate
pool. QI does not provide any withholding
rate pool information regarding the
remaining 20% of the payment. WA must
apply the presumption rules to the portion
of the payment (20%) that has not been
allocated. Under the presumption rules,
that portion of the payment is treated as
paid to an unknown foreign payee. WA
must complete three Forms 1042-S: one
for dividends subject to 15% withholding,
showing QI as the recipient in box 13a
and recipient code 12 (qualified
intermediary) in box 13b; one for
dividends subject to 30% withholding,
showing QI as the recipient in box 13a
and recipient code 12 (qualified
intermediary) in box 13b; and one for
dividends subject to 30% withholding,
showing QI as the recipient in box 13a
and recipient code 20 (unknown recipient)
in box 13b.
Amounts paid to certain U.S.
branches. A U.S. withholding agent
making a payment to a “U.S. branch
treated as a U.S. person” (defined on
page 4) completes Form 1042-S as
follows:
• If a withholding agent makes a
payment to a U.S. branch that has
provided the withholding agent with a
Form W-8IMY that evidences its
agreement with the withholding agent to
be treated as a U.S. person, the U.S.
withholding agent treats the U.S. branch
as the recipient.
• If a withholding agent makes a
payment to a U.S. branch that has
provided a Form W-8IMY to transmit
information regarding recipients, the U.S.
withholding agent must complete a
separate Form 1042-S for each recipient
whose documentation is associated with
the U.S. branch’s Form W-8IMY. If a
payment cannot be reliably associated
with recipient documentation, the U.S.
withholding agent must complete Form
1042-S in accordance with the
presumption rules.
• If a withholding agent cannot reliably
associate a payment with a Form W-8IMY
from a U.S. branch, the payment must be
reported on a single Form 1042-S treating

the U.S. branch as the recipient and
reporting the income as effectively
connected income.
The rules above apply only to U.S.
branches treated as U.S. persons
CAUTION (defined on page 4). In all other
cases, payments to a U.S. branch of a
foreign person are treated as payments to
the foreign person.
Amounts paid to authorized foreign
agents. If a withholding agent makes a
payment to an authorized foreign agent
(defined on page 4), the withholding
agent files Forms 1042-S for each type of
income (determined by reference to the
income codes used to complete Form
1042-S) treating the authorized foreign
agent as the recipient, provided that the
authorized foreign agent reports the
payments on Forms 1042-S to each
recipient to which it makes payments. If
the authorized foreign agent fails to report
the amounts paid on Forms 1042-S for
each recipient, the U.S. withholding agent
remains responsible for such reporting.
In box 13b, use recipient code 17
(authorized foreign agent).
Amounts paid to a complex trust or an
estate. If a U.S. withholding agent
makes a payment to a foreign complex
trust or a foreign estate, a Form 1042-S
must be completed showing the complex
trust or estate as the recipient. Use
recipient code 05 (trust) or 10 (estate).
See Payments Made to Persons Who Are
Not Recipients beginning on this page for
the treatment of payments made to
foreign simple trusts and foreign grantor
trusts.
Dual claims. A withholding agent may
make a payment to a foreign entity (for
example, a hybrid entity) that is
simultaneously claiming a reduced rate of
tax on its own behalf for a portion of the
payment and a reduced rate on behalf of
persons in their capacity as interest
holders in that entity on the remaining
portion. If the claims are consistent and
the withholding agent has accepted the
multiple claims, a separate Form 1042-S
must be filed for the entity for those
payments for which the entity is treated
as claiming a reduced rate of withholding
and separate Forms 1042-S must be filed
for each of the interest holders for those
payments for which the interest holders
are claiming a reduced rate of
withholding. If the claims are consistent
but the withholding agent has not chosen
to accept the multiple claims, or if the
claims are inconsistent, a separate Form
1042-S must be filed for the person(s)
being treated as the recipient(s).
Special instructions for U.S. trusts and
estates. Report the entire amount of
income subject to reporting, irrespective
of estimates of distributable net income.

!

Payments Made to Persons
Who Are Not Recipients
Disregarded entities. If a U.S.
withholding agent makes a payment to a
disregarded entity but receives a valid

-7-

Form W-8BEN or W-8ECI from a foreign
person that is the single owner of the
disregarded entity, the withholding agent
must file a Form 1042-S in the name of
the foreign single owner. The taxpayer
identifying number (TIN) on the Form
1042-S, if required, must be the foreign
single owner’s TIN.
Example. A withholding agent (WA)
makes a payment of interest to LLC, a
foreign limited liability company. LLC is
wholly-owned by FC, a foreign
corporation. LLC is treated as a
disregarded entity. WA has a Form
W-8BEN from FC on which it states that it
is the beneficial owner of the income paid
to LLC. WA reports the interest payment
on Form 1042-S showing FC as the
recipient. The result would be the same if
LLC was a domestic entity.
A disregarded entity can claim to be
the beneficial owner of a payment if it is a
hybrid entity claiming treaty benefits. See
Form W-8BEN and its instructions for
more information. If a disregarded entity
claims on a valid Form W-8BEN to be the
beneficial owner, the U.S. withholding
agent must complete a Form 1042-S
treating the disregarded entity as a
recipient and use recipient code 02
(corporation).
Amounts paid to a nonqualified
intermediary or flow-through entity. If
a U.S. withholding agent makes a
payment to an NQI or a flow-through
entity, it must complete a separate Form
1042-S for each recipient on whose
behalf the NQI or flow-through entity acts
as indicated by its withholding statement
and the documentation associated with its
Form W-8IMY. If a payment is made
through tiers of NQIs or flow-through
entities, the withholding agent must
nevertheless complete Form 1042-S for
the recipients to which the payments are
remitted. A withholding agent completing
Form 1042-S for a recipient that receives
a payment through an NQI or a
flow-through entity must include in boxes
17 through 20 of Form 1042-S the name,
country code, address, and TIN, if any, of
the NQI or flow-through entity from whom
the recipient directly receives the
payment. A copy of the Form 1042-S
need not be provided to the NQI or
flow-through entity unless the withholding
agent must report the payment to an
unknown recipient. See Example 4 on
page 8.
If a U.S. withholding agent makes
payments to an NQI or flow-through entity
and cannot reliably associate the
payment, or any portion of the payment,
with a valid withholding certificate (Forms
W-8 or W-9) or other valid appropriate
documentation from a recipient (either
because a recipient withholding certificate
has not been provided or because the
NQI or flow-through entity has failed to
provide the information required on a
withholding statement), the withholding
agent must follow the appropriate
presumption rules for that payment. If,
under the presumption rules, an unknown

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recipient of the income is presumed to be
foreign, the withholding agent must
withhold 30% of the payment and report
the payment on Form 1042-S. For this
purpose, if the allocation information
provided to the withholding agent
indicates an allocation of more than 100%
of the payment, then no portion of the
payment should be considered to be
associated with a Form W-8, Form W-9,
or other appropriate documentation. The
Form 1042-S should be completed by
entering “Unknown Recipient” in box 13a
and recipient code 20 in box 13b.
Pro-rata reporting. If the withholding
agent has agreed that an NQI may
provide information allocating a payment
to its account holders under the
alternative procedure of Regulations
section 1.1441-1(e)(3)(iv)(D) (no later
than February 14, 2009) and the NQI fails
to allocate more than 10% of the payment
in a withholding rate pool to the specific
recipients in the pool, the withholding
agent must file Forms 1042-S for each
recipient in the pool on a pro-rata basis.
If, however, the NQI fails to timely
allocate 10% or less of the payment in a
withholding rate pool to the specific
recipients in the pool, the withholding
agent must file Forms 1042-S for each
recipient for which it has allocation
information and report the unallocated
portion of the payment on a Form 1042-S
issued to “Unknown Recipient.” In either
case, the withholding agent must include
the NQI information in boxes 17 through
20 on that form. See Example 6
(beginning on this page) and Example 7
(on page 9).
The following examples illustrate Form
1042-S reporting for payments made to
NQIs and flow-through entities.
Example 1. NQI, a nonqualified
intermediary, has three account holders,
A, B, and QI. All three account holders
invest in U.S. securities that produce
interest and dividends. A and B are
foreign individuals and have provided NQI
with Forms W-8BEN. QI is a qualified
intermediary and has provided NQI with a
Form W-8IMY and the withholding
statement required from a qualified
intermediary. QI’s withholding statement
states that QI has two withholding rate
pools: one for interest described by
income code 01 (interest paid by U.S.
obligors — general) and one for dividends
described by income code 06 (dividends
paid by U.S. corporations — general). NQI
provides WA, a U.S. withholding agent,
with its own Form W-8IMY, with which it
associates the Forms W-8BEN of A and B
and the Form W-8IMY of QI. In addition,
NQI provides WA with a complete
withholding statement that allocates the
payments of interest and dividends WA
makes to NQI among A, B, and QI. All of
the interest and dividends paid by WA to
NQI is described by income code 01
(interest paid by U.S. obligors — general)
and income code 06 (dividends paid by
U.S. corporations — general). WA must
file a total of six Forms 1042-S: two

Forms 1042-S (one for interest and one
for dividends) showing A as the recipient,
two Forms 1042-S (one for interest and
one for dividends) showing B as the
recipient, and two Forms 1042-S (one for
interest and one for dividends) showing
QI as the recipient. WA must show
information relating to NQI in boxes 17
through 20 on all six Forms 1042-S.
Example 2. The facts are the same
as in Example 1, except that A and B are
account holders of NQI2, which is an
account holder of NQI. NQI2 provides
NQI with a Form W-8IMY with which it
associates the Forms W-8BEN of A and B
and a complete withholding statement
that allocates the interest and dividend
payments it receives from NQI to A and
B. NQI provides WA with its Form
W-8IMY and the Forms W-8IMY of NQI2
and QI and the Forms W-8BEN of A and
B. In addition, NQI associates a complete
withholding statement with its Form
W-8IMY that allocates the payments of
interest and dividends to A, B, and QI.
WA must file six Forms 1042-S: two
Forms 1042-S (one for interest and one
for dividends) showing A as the recipient,
two Forms 1042-S (one for interest and
one for dividends) showing B as the
recipient, and two Forms 1042-S (one for
interest and one for dividends) showing
QI as the recipient. The Forms 1042-S
issued to A and B must show information
relating to NQI2 in boxes 17 through 20
because A and B receive their payments
directly from NQI2, not NQI. The Forms
1042-S issued to QI must show
information relating to NQI in boxes 17
through 20.
Example 3. FP is a nonwithholding
foreign partnership and therefore a
flow-through entity. FP establishes an
account with WA, a U.S. withholding
agent, from which FP receives interest
described by income code 01 (interest
paid by U.S. obligors — general). FP has
three partners, A, B, and C, all of whom
are individuals. FP provides WA with a
Form W-8IMY with which it associates the
Forms W-8BEN from each of A, B, and C.
In addition, FP provides a complete
withholding statement with its Form
W-8IMY that allocates the interest
payments among A, B, and C. WA must
file three Forms 1042-S, one each for A,
B, and C. The Forms 1042-S must show
information relating to FP in boxes 17
through 20.
Example 4. NQI is a nonqualified
intermediary. It has four customers: A, B,
C, and D. NQI receives Forms W-8BEN
from each of A, B, C, and D. NQI
establishes an account with WA, a U.S.
withholding agent, in which it holds
securities on behalf of A, B, C, and D.
The securities pay interest that is
described by income code 01 (interest
paid by U.S. obligors — general) and that
may qualify for the portfolio interest
exemption from withholding if all of the
requirements for that exception are met.
NQI provides WA with a Form W-8IMY
with which it associates the Forms

-8-

W-8BEN of A, B, C, and D. However, NQI
does not provide WA with a complete
withholding statement in association with
its Form W-8IMY. Because NQI has not
provided WA with a complete withholding
statement, WA cannot reliably associate
the payments of interest with the
documentation of A, B, C, and D, and
must apply the presumption rules. Under
the presumption rules, WA must treat the
interest as paid to an unknown recipient
that is a foreign person. The payments of
interest are subject to 30% withholding.
WA must complete one Form 1042-S,
entering “Unknown Recipient” in box 13a
and recipient code 20 in box 13b. WA
must include information relating to NQI in
boxes 17 through 20 and must provide
the recipient copies of the form to NQI.
Because NQI has failed to provide all the
information necessary for WA to
accurately report the payments of interest
to A, B, C, and D, NQI must report the
payments on Form 1042-S. See Amounts
Paid by Nonqualified Intermediaries and
Flow-Through Entities on page 10. The
results would be the same if WA’s
account holder was a flow-through entity
instead of a nonqualified intermediary.
Example 5. The facts are the same
as in Example 4, except that NQI
provides the Forms W-8BEN of A and B,
but not the Forms W-8BEN of C and D.
NQI also provides a withholding
statement that allocates a portion of the
interest payment to A and B but does not
allocate the remaining portion of the
payment. WA must file three Forms
1042-S: one showing A as the recipient in
box 13a, one showing B as the recipient
in box 13a and one showing “Unknown
Recipient” in box 13a (and recipient code
20 in box 13b) for the unallocated portion
of the payment that cannot be associated
with valid documentation from a recipient.
In addition, WA must send the Form
1042-S for the unknown recipient to NQI.
All Forms 1042-S must contain
information relating to NQI in boxes 17
through 20. The results would be the
same if WA’s account holder was a
flow-through entity instead of a
nonqualified intermediary.
Example 6. NQI is a nonqualified
intermediary. It has four customers: A, B,
C, and D. NQI receives Forms W-8BEN
from each of A, B, C, and D. NQI
establishes an account with WA, a U.S.
withholding agent, in which it holds
securities on behalf of A, B, C, and D.
The securities pay interest that is
described by income code 01 (interest
paid by U.S. obligors — general) and that
may qualify for the portfolio interest
exemption from withholding if all of the
requirements for that exception are met.
NQI provides WA with a Form W-8IMY
with which it associates the Forms
W-8BEN of A, B, C, and D. WA and NQI
agree that they will apply the alternative
procedures of Regulations section
1.1441-1(e)(3)(iv)(D). Accordingly, NQI
provides a complete withholding
statement that indicates that it has one

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0% withholding rate pool. WA pays $100
of interest to NQI. NQI fails to provide WA
with the allocation information by
February 14, 2009. Therefore, WA must
report 25% of the payment to each of A,
B, C, and D using pro-rata basis
reporting. Accordingly, for each of the
Forms 1042-S, WA must enter $25 in box
2 (gross income),“30.00” in box 5 (tax
rate), $0 in box 7 (federal tax withheld),
and $0 in box 9 (total withholding credit).
In addition, WA must check the
PRO-RATA BASIS REPORTING box at
the top of the form and include NQI’s
name, address, country code, and TIN, if
any, in boxes 17 through 20. WA must
enter “30.00” in box 5 (tax rate) because
without allocation information, WA cannot
reliably associate the payment of interest
with documentation from a foreign
beneficial owner and therefore may not
apply the portfolio interest exception. See
the instructions for box 6 (exemption
code) on page 14 for information on
completing that box.
Example 7. The facts are the same
as in Example 6, except that NQI timely
provides WA with information allocating
70% of the payment to A, 10% of the
payment to B, and 10% of the payment to
C. NQI fails to allocate any of the
payment to D. Because NQI has allocated
90% of the payment made to the 0%
withholding rate pool, WA is not required
to report to NQI’s account holders on a
pro-rata basis. Instead, WA must file
Forms 1042-S for A, B, and C, entering
$70, $10, and $10, respectively, in box 2
(gross income), “00.00” in box 5 (tax
rate), exemption code 05 (portfolio
interest) in box 6, $0 in box 7 (federal tax
withheld), and $0 in box 9 (total
withholding credit). WA must apply the
presumption rules to the $10 that NQI has
not allocated and file a Form 1042-S
showing “Unknown Recipient” in box 13a
and recipient code 20 in box 13b. On that
Form 1042-S, WA must also enter “30.00”
in box 5 (tax rate) because the portfolio
interest exemption is unavailable, $0 in
box 7 (federal tax withheld), and $0 in box
9 (total withholding credit) because no
amounts were actually withheld from the
interest. In addition, WA must send the
Form 1042-S for the unknown recipient to
NQI. All Forms 1042-S must contain
information relating to NQI in boxes 17
through 20.
Payments allocated, or presumed
made, to U.S. non-exempt recipients.
You may be given Forms W-9 or other
information regarding U.S. non-exempt
recipients from an NQI or flow-through
entity together with information allocating
all or a portion of the payment to U.S.
non-exempt recipients. You must report
income allocable to a U.S. non-exempt
recipient on the appropriate Form 1099
and not on Form 1042-S, even though
you are paying that income to an NQI or a
flow-through entity.
You may also be required under the
presumption rules to treat a payment
made to an NQI or flow-through entity as

made to a payee that is a U.S.
non-exempt recipient from which you
must withhold 28% of the payment under
the backup withholding provisions of the
Code. In this case, you must report the
payment on the appropriate Form 1099.
See the General Instructions for Forms
1099, 1098, 5498, and W-2G.
Example 1. FP is a nonwithholding
foreign partnership and therefore a
flow-through entity. FP establishes an
account with WA, a U.S. withholding
agent, from which FP receives interest
described by income code 01 (interest
paid by U.S. obligors — general). FP has
three partners, A, B, and C, all of whom
are individuals. FP provides WA with a
Form W-8IMY with which it associates
Forms W-8BEN from A and B and a Form
W-9 from C, a U.S. person. In addition,
FP provides a complete withholding
statement in association with its Form
W-8IMY that allocates the interest
payments among A, B, and C. WA must
file two Forms 1042-S, one each for A
and B, and a Form 1099-INT for C.
Example 2. The facts are the same
as in Example 1, except that FP does not
provide any documentation from its
partners. Because WA cannot reliably
associate the interest with documentation
from a payee, it must apply the
presumption rules. Under the
presumption rules, the interest is deemed
paid to an unknown U.S. non-exempt
recipient. WA must, therefore, apply
backup withholding at 28% to the
payment of interest and report the
payment on Form 1099-INT. WA must file
a Form 1099-INT and send a copy to FP.

Amounts Paid by
Qualified Intermediaries
In general. A QI reports payments on
Form 1042-S in the same manner as a
U.S. withholding agent. However,
payments that are made by the QI directly
to foreign beneficial owners (or that are
treated as paid directly to beneficial
owners) may generally be reported on the
basis of reporting pools. A reporting pool
consists of income that falls within a
particular withholding rate and within a
particular income code, exemption code,
or recipient code as determined on Form
1042-S. A QI may not report on the basis
of reporting pools in the circumstances
described in Recipient-by-Recipient
Reporting on page 10. A QI may use a
single recipient code 15 (qualified
intermediary withholding rate pool —
general) for all reporting pools, except for
amounts paid to foreign tax-exempt
recipients for which recipient code 16
should be used. Note, however, that a QI
should only use recipient code 16 for
pooled account holders that have claimed
an exemption based on their tax-exempt
status and not some other exemption (tax
treaty or other Code exception). See
Amounts Paid to Private Arrangement
Intermediaries on this page, if a QI is
reporting payments to a PAI.

-9-

Example 1. QI, a qualified
intermediary, has four direct account
holders, A and B, foreign individuals, and
X and Y, foreign corporations. A and X
are residents of a country with which the
United States has an income tax treaty
and have provided documentation that
establishes that they are entitled to a
lower treaty rate of 15% on withholding of
dividends from U.S. sources. B and Y are
not residents of a treaty country and are
subject to 30% withholding on dividends.
QI receives U.S. source dividends on
behalf of its four customers. QI must file
one Form 1042-S for the 15% withholding
rate pool. This Form 1042-S must show
income code 06 (dividends paid by U.S.
corporations — general) in box 1, “15.00”
in box 5 (tax rate), “Withholding rate pool”
in box 13a (recipient’s name), and
recipient code 15 (qualified intermediary
withholding rate pool — general) in box
13b. QI must also file one Form 1042-S
for the 30% withholding rate pool that
contains the same information as the
Form 1042-S filed for the 15% withholding
rate pool, except that it will show “30.00”
in box 5 (tax rate).
Example 2. The facts are the same
as in Example 1, except that Y is an
organization that has tax-exempt status in
the United States and in the country in
which it is located. QI must file three
Forms 1042-S. Two of the Forms 1042-S
will contain the same information as in
Example 1. The third Form 1042-S will
contain information for the withholding
rate pool consisting of the amounts paid
to Y. This Form 1042-S will show income
code 06 (dividends paid by U.S.
corporations — general) in box 1, “00.00”
in box 5 (tax rate), exemption code 02
(exempt under an Internal Revenue Code
section (income other than portfolio
interest)) in box 6, “Zero rate withholding
pool — exempt organizations,” or similar
designation, in box 13a (recipient’s
name), and recipient code 16 (qualified
intermediary withholding rate pool —
exempt organizations) in box 13b.
Under the terms of its withholding
agreement with the IRS, the QI
CAUTION may be required to report the
amounts paid to U.S. non-exempt
recipients on Form 1099 using the name,
address, and TIN of the payee to the
extent those items of information are
known. These amounts must not be
reported on Form 1042-S. In addition,
amounts paid to U.S. exempt recipients
are not subject to reporting on Form
1042-S or Form 1099.

!

Amounts Paid to Private
Arrangement Intermediaries
A QI generally must report payments
made to each private arrangement
intermediary (PAI) (defined on page 3) as
if the PAI’s direct account holders were its
own. Therefore, if the payment is made
directly by the PAI to the recipient, the QI
may report the payment on a pooled
basis. A separate Form 1042-S is
required for each withholding rate pool of

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each PAI. The QI must, however, include
the name and address of the PAI and use
recipient code 13 or 14 in boxes 13a-13e.
If the PAI is providing recipient
information from an NQI or flow-through
entity, the QI may not report the
payments on a pooled basis. Instead, it
must follow the same procedures as a
U.S. withholding agent making a payment
to an NQI or flow-through entity.
Example. QI, a qualified
intermediary, pays U.S. source dividends
to direct account holders that are foreign
persons and beneficial owners. It also
pays a portion of the U.S. source
dividends to two private arrangement
intermediaries, PAI1 and PAI2. The
private arrangement intermediaries pay
the dividends they receive from QI to
foreign persons that are beneficial owners
and direct account holders in PAI1 and
PAI2. All of the dividends paid are subject
to a 15% rate of withholding. QI must file
a Form 1042-S for the dividends paid to
its own direct account holders that are
beneficial owners. QI must also file two
Forms 1042-S, one for the dividends paid
to the direct account holders of each of
PAI1 and PAI2. Each of the Forms
1042-S that QI files for payments made to
PAI1 and PAI2 must contain the name
and address of PAI1 or PAI2 and
recipient code 13 (private arrangement
intermediary withholding rate pool —
general) in boxes 13a-13e.

Amounts Paid to
Certain Related Partnerships
and Trusts
A QI that is applying the rules of Section
4A.02 of the QI agreement to a
partnership or trust must file separate
Forms 1042-S reflecting reporting pools
for each partnership or trust that has
provided reporting pool information in its
withholding statement. However, the QI
must file separate Forms 1042-S for
partners, beneficiaries, or owners of such
partnership or trust that are indirect
partners, beneficiaries, or owners, and for
direct partners, beneficiaries, or owners of
such partnership or trust that are
intermediaries or flow-through entities.

Recipient-by-Recipient
Reporting
If a QI is not permitted to report on the
basis of reporting pools, it must follow the
same rules that apply to a U.S.
withholding agent. A QI may not report
the following payments on a reporting
pool basis, but rather must complete
Form 1042-S for each appropriate
recipient.
Payments made to another QI, WP, or
WT. The QI must complete a Form
1042-S treating the other QI, WP, or WT
as the recipient.
Payments made to an NQI (including
an NQI that is an account holder of a
PAI). The QI must complete a Form
1042-S for each recipient who receives
the payment from the NQI. A QI that is
completing Form 1042-S for a recipient

that receives a payment through an NQI
must include in boxes 17 through 20 the
name, country code, address, and TIN, if
any, of the NQI from whom the recipient
directly receives the payment.
Example. QI, a qualified
intermediary, has NQI, a nonqualified
intermediary, as an account holder. NQI
has two account holders, A and B, both
foreign persons who receive U.S. source
dividends from QI. NQI provides QI with a
valid Form W-8IMY, with which it
associates Forms W-8BEN from A and B
and a complete withholding statement
that allocates the dividends paid to NQI
between A and B. QI must complete two
Forms 1042-S, one for A and one for B,
and include information relating to NQI in
boxes 17 through 20.
Payments made to a flow-through
entity. The QI must complete a Form
1042-S for each recipient who receives
the payment from the flow-through entity.
A QI that is completing a Form 1042-S for
a recipient that receives a payment
through a flow-through entity must include
in boxes 17 through 20 the name, country
code, address, and TIN, if any, of the
flow-through entity from which the
recipient directly receives the payment.
Example. QI, a qualified
intermediary, has FP, a nonwithholding
foreign partnership, as an account holder.
QI pays interest described by income
code 01 (interest paid by U.S. obligors —
general) to FP. FP has three partners, A,
B, and C, all of whom are individuals. FP
provides QI with a Form W-8IMY with
which it associates the Forms W-8BEN
from each of A, B, and C. In addition, FP
provides a complete withholding
statement in association with its Form
W-8IMY that allocates the interest
payments among A, B, and C. QI must
file three Forms 1042-S, one each for A,
B, and C. The Forms 1042-S must show
information relating to FP in boxes 17
through 20.

Amounts Paid by
Withholding Foreign
Partnerships and Trusts
In general. Generally, a withholding
foreign partnership (WP) or withholding
foreign trust (WT) is required to file a
separate Form 1042-S for each direct
partner, beneficiary, or owner to whom
the WP or WT distributes, or in whose
distributive share is included, an amount
subject to withholding under Chapter 3 of
the Code, in the same manner as a U.S.
withholding agent. However, if the WP or
WT has made a pooled reporting election
in its WP or WT agreement, the WP or
WT may instead report payments to such
direct partners, beneficiaries, or owners
on the basis of reporting pools and file a
separate Form 1042-S for each reporting
pool. A reporting pool consists of income
that falls within a particular withholding
rate and within a particular income code,
exemption code, and recipient code, as
determined on Form 1042-S. A WP or WT
may use a single recipient code 15

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(qualified intermediary withholding rate
pool — general) for all reporting pools,
except for amounts paid to foreign
tax-exempt recipients for which a
separate recipient code 16 must be used.
For this purpose, a foreign tax-exempt
recipient includes any organization that is
not subject to withholding and is not liable
to tax in its country of residence because
it is a charitable organization, pension
fund, or foreign government.
Amounts paid to certain related
partnerships and trusts. A WP or WT
that is applying the rules of Section 10.02
of the WP or WT agreement to a
partnership or trust must file separate
Forms 1042-S reflecting reporting pools
for each partnership or trust that has
provided reporting pool information in its
withholding statement. However, the WP
or WT must apply the provisions of
Regulations sections 1.1441-1 and
1.1441-5 to partners, beneficiaries, or
owners of such partnership or trust that
are indirect partners, beneficiaries, or
owners, and to direct partners,
beneficiaries, or owners of such
partnership or trust that are intermediaries
or flow-through entities.

Amounts Paid
by Nonqualified
Intermediaries and
Flow-Through Entities
An NQI and a flow-through entity are
withholding agents and must file Forms
1042-S for amounts paid to recipients.
However, an NQI or flow-through entity is
not required to file Form 1042-S if it is not
required to file Form 1042-S under the
Multiple Withholding Agent Rule on page
11. An NQI or flow-through entity must
report payments made to recipients to the
extent it has failed to provide to another
withholding agent the appropriate
documentation and complete withholding
statement, including information allocating
the payment to each recipient.
If another withholding agent withheld
tax but did not report the payment on
Form 1042-S to the recipient, even if the
recipient should have been exempt from
taxation, the NQI or flow-through entity
must file Form 1042-S. Failure to file
Forms 1042-S may not only result in
penalties for the NQI or flow-through
entity, but may result in the denial of any
refund claim made by a recipient.
If another withholding agent has
withheld tax on an amount that should
have been exempt (for example, where
the withholding agent applied the
presumption rules because it did not
receive proper documentation or other
required information from the NQI or
flow-through entity), the NQI or
flow-through entity should report the
correct tax rate and the combined amount
of U.S. federal tax withheld by the NQI or
flow-through entity and any other
withholding agent and should enter the

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applicable exemption code using the
instructions for box 6 on page 14.
If another withholding agent
underwithholds, even though it received
proper documentation from the NQI or
flow-through entity, the NQI or
flow-through entity must withhold
additional amounts to bring the total
withholding to the correct amount.
Furthermore, the NQI or flow-through
entity must complete Form 1042-S and
must include the correct tax rate and the
combined amount of U.S. federal tax
withheld by the NQI or flow-through entity.
Example 1. A foreign bank acts as a
nonqualified intermediary (NQI) for four
different foreign persons (A, B, C, and D)
who own securities from which they
receive interest. The interest is paid by a
U.S. withholding agent (WA) as custodian
of the securities for NQI. A, B, C, and D
each own a 25% interest in the securities.
NQI has furnished WA a Form W-8IMY to
which it has attached Forms W-8BEN
from A and B. NQI’s Form W-8IMY
contains an attachment stating that 25%
of the securities are allocable to each of A
and B, and 50% to undocumented
owners. WA pays $100 of interest during
the calendar year. WA treats the $25 of
interest allocable to A and the $25 of
interest allocable to B as portfolio interest
and completes a Form 1042-S for A and
for B as the recipients. WA includes
information relating to NQI in boxes 17
through 20 on the Forms 1042-S for A
and B. WA subjects the remaining $50 of
interest to 30% withholding under the
presumption rules and reports the interest
on a Form 1042-S by entering “Unknown
Recipient” in box 13a (and recipient code
20 in box 13b), “30.00” in box 5 (tax rate),
and $15 as the amount withheld in box 7
and box 9. WA also includes information
relating to NQI in boxes 17 through 20 of
the Form 1042-S and sends a copy of the
form to NQI. Because NQI has not
provided WA with beneficial owner
information for C and D, NQI must report
the interest paid to C and D on Forms
1042-S. (Note that under the multiple
withholding agent rule, NQI is not
required to file a Form 1042-S for A or B.)
The Forms 1042-S for C and D should
show $25 in box 2 (gross income) and
$7.50 in boxes 7 and 9. The rate of tax
NQI includes on the Form 1042-S for C
and D depends on the rate of withholding
to which they should be subject. Thus, if
C and D provided NQI with
documentation prior to the payment of
interest that would qualify the interest as
portfolio interest, the rate entered in box 5
should be “00.00.” If they do not qualify
for a reduced rate of withholding, NQI
should enter “30.00” in box 5. In any
event, NQI must also enter “99” in box 6
(exemption code) of the Forms 1042-S it
prepares for C and D. See the
instructions for box 6 on page 14.
Example 2. A U.S. withholding agent
(WA) makes a $100 dividend payment to
a foreign bank (NQI) that acts as a
nonqualified intermediary. NQI receives

the payment on behalf of A, a resident of
a treaty country who is entitled to a 15%
rate of withholding, and B, a resident of a
country that does not have a tax treaty
with the United States and who is subject
to 30% withholding. NQI provides WA
with its Form W-8IMY to which it
associates the Forms W-8BEN from both
A and B and a complete withholding
statement that allocates 50% of the
dividend to A and 50% to B. A’s Form
W-8BEN claims a 15% treaty rate of
withholding. B’s Form W-8BEN does not
claim a reduced rate of withholding. WA,
however, mistakenly withholds only 15%,
$15, from the entire $100 payment. WA
completes a Form 1042-S for each A and
B as the recipients, showing on each form
$50 of dividends in box 2, a withholding
rate of “15.00” in box 5 (tax rate), and
$7.50 as the amount withheld in boxes 7
and 9. Under the multiple withholding
agent rule, NQI is not required to file a
Form 1042-S for A. However, because
NQI knows (or should know) that B is
subject to a 30% rate of withholding, and
assuming it knows that WA only withheld
15%, the multiple withholding agent rule
does not apply to the dividend paid to B
and NQI must withhold an additional 15%
from the payment to B. NQI must then file
a Form 1042-S for B showing $50 of
dividends in box 2, “30.00” in box 5 (the
correct tax rate), and $7.50 withheld by
NQI in box 7, $7.50 withheld by WA in
box 8, and $15 in box 9 (the combined
amount withheld). NQI must also enter
“00” in box 6 (exemption code). See the
instructions for box 6 on page 14.
Example 3. A withholding agent (WA)
receives a Form W-8IMY from a
nonqualified intermediary (NQI). NQI’s
Form W-8IMY relates to payments of
bank deposit interest. NQI collects the
bank deposit interest on behalf of A, B, C,
and D, but does not associate Forms
W-8, W-9, or other documentary evidence
with the Form W-8IMY that NQI provides
WA. A, B, and C are foreign persons for
whom NQI has valid documentation
establishing their foreign status. D is a
U.S. person and has provided NQI with a
Form W-9. Under the presumption rules,
WA must treat the bank deposit interest
as being paid to an unknown U.S. person
and apply backup withholding at 28%.
WA must complete one Form 1099 for an
unknown payee showing 28% backup
withholding. A copy of the form must be
sent to NQI. Because NQI failed to
provide the requisite documentation to
WA and because the amounts have been
subject to withholding, NQI must report
the amounts paid to A, B, C, and D.
Accordingly, NQI must file a Form 1042-S
for each A, B, and C showing deposit
interest (income code 29) as the type of
payment in box 1; “00.00” in box 5 (the
correct tax rate); “0” in box 7 (the amount
withheld by NQI); the actual amount
withheld by WA that is allocable to A, B,
and C in box 8; the total withheld (box 7
plus box 8) in box 9; and exemption code
99 in box 6. (See the instructions for box

-11-

6 on page 14.) NQI must also file a Form
1099 for D to report the actual amounts
paid and withheld.

Multiple Withholding
Agent Rule
A withholding agent is not required to file
Form 1042-S if a return is filed by another
withholding agent reporting the same
amount to the same recipient (the multiple
withholding agent rule). If an NQI or
flow-through entity has provided another
withholding agent with the appropriate
documentation and complete withholding
statement, including information allocating
the payment to each recipient, the NQI or
flow-through entity may presume that the
other withholding agent filed the required
Forms 1042-S unless the NQI or
flow-through entity knows, or has reason
to know, that the required Form 1042-S
reporting has not been done.
The multiple withholding agent rule
does not relieve withholding agents from
Form 1042-S reporting responsibility in
the following circumstances.
• Any withholding agent making a
payment to a QI, WP, or WT must report
that payment as made to the QI, WP, or
WT.
• Any U.S. withholding agent making a
payment to an authorized foreign agent
must report that payment to the
authorized foreign agent.
• Any withholding agent making a
payment to a U.S. branch treated as a
U.S. person must report the payment as
made to that branch.
• Any withholding agent making a
payment to a flow-through entity must
report the payment as made to a
beneficial owner, QI, WP, or WT that has
a direct or indirect interest in that entity.
• Any withholding agent that withholds an
amount from a payment under Chapter 3
of the Code must report that amount to
the recipient from whom it was withheld,
unless the payment is reportable on
another IRS form.
Furthermore, the multiple withholding
agent rule does not relieve the following
from Form 1042-S reporting
responsibility.
• Any QI, WP, or WT required to report
an amount to a withholding rate pool.
• An NQI or flow-through entity that has
not transmitted a valid Form W-8 or other
valid documentation to another
withholding agent together with the
required withholding statement.

Penalties
The following penalties apply to the
person required to file Form 1042-S. The
penalties apply to both paper filers and to
electronic filers.
At the time these instructions went
to print, Congress was considering
CAUTION legislation that would increase
some of the penalties listed below. To find
out if this legislation was enacted, see
Pub. 515.

!

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Late filing of correct Form 1042-S. A
penalty may be imposed for failure to file
each correct and complete Form 1042-S
when due (including extensions), unless
you can show that the failure was due to
reasonable cause and not willful neglect.
The penalty, based on when you file a
correct Form 1042-S, is:
• $15 per Form 1042-S if you correctly
file within 30 days; maximum penalty
$75,000 per year ($25,000 for a small
business). A small business, for this
purpose, is defined as having average
annual gross receipts of $5 million or less
for the 3 most recent tax years (or for the

period of its existence, if shorter) ending
before the calendar year in which the
Forms 1042-S are due.
• $30 per Form 1042-S if you correctly
file more than 30 days after the due date
but by August 1; maximum penalty
$150,000 per year ($50,000 for a small
business).
• $50 per Form 1042-S if you file after
August 1 or you do not file correct Forms
1042-S; maximum penalty $250,000 per
year ($100,000 for a small business).
If you intentionally disregard the
requirement to report correct information,
the penalty per Form 1042-S is increased

to $100 or, if greater, 10% of the total
amount of items required to be reported,
with no maximum penalty.
Failure to furnish correct Form 1042-S
to recipient. If you fail to provide
correct statements to recipients and
cannot show reasonable cause, a penalty
of $50 may be imposed for each failure to
furnish Form 1042-S to the recipient when
due. The penalty may also be imposed for
failure to include all required information
or for furnishing incorrect information on
Form 1042-S. The maximum penalty is
$100,000 for all failures to furnish correct
recipient statements during a calendar

Income Codes, Exemption Codes, and Recipient Codes
Box 1. Enter the appropriate income code.
Code
01
02
03
04
05
29
30
31
33

Interest Income
Interest paid by U.S. obligors — general
Interest paid on real property mortgages
Interest paid to controlling foreign corporations
Interest paid by foreign corporations
Interest on tax-free covenant bonds
Deposit interest
Original issue discount (OID)
Short-term OID
Substitute payment — interest

Code
06
07
08
34

Dividend Income
Dividends paid by U.S. corporations — general
Dividends qualifying for direct dividend rate
Dividends paid by foreign corporations
Substitute payment — dividends

Code
09
10
11
12
13
14
15
16
17
18
19
20
24
25
26

Other Income
Capital gains
Industrial royalties
Motion picture or television copyright royalties
Other royalties (e.g., copyright, recording, publishing)
Real property income and natural resources royalties
Pensions, annuities, alimony, and/or insurance premiums
Scholarship or fellowship grants
Compensation for independent personal services1
Compensation for dependent personal services1
Compensation for teaching1
Compensation during studying and training1
Earnings as an artist or athlete2
Real estate investment trust (REIT) distributions of capital gains
Trust distributions subject to IRC section 1445
Unsevered growing crops and timber distributions by a trust
subject to IRC section 1445
Publicly traded partnership distributions subject to IRC
section 1446
Gambling winnings6
Notional principal contract income3
Substitute payment — other
Capital gains distributions
Return of capital
Other income

27
28
32
35
36
37
50

Box 6. If the tax rate entered in box 5 is 00.00, you must
generally enter the appropriate exemption code from the list below
(but see the Caution below).
Code
Authority for Exemption
01
Income effectively connected with a U.S. trade or business
02
Exempt under an Internal Revenue Code section (income other
than portfolio interest)
03
Income is not from U.S. sources4
04
Exempt under tax treaty
05
Portfolio interest exempt under an Internal Revenue Code
section
06
Qualified intermediary that assumes primary withholding
responsibility
07
Withholding foreign partnership or withholding foreign trust
08
U.S. branch treated as a U.S. person
09
Qualified intermediary represents income is exempt
Caution: See the instructions for box 6 on page 14 for information on
additional codes (“00” and “99”) that may be required.
Box 13b. Enter the appropriate recipient code.
Code
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
20

1

Type of Recipient
Individual2
Corporation2
Partnership other than a withholding foreign partnership2
Withholding foreign partnership or withholding foreign trust
Trust
Government or international organization
Tax-exempt organization (IRC section 501(a))
Private foundation
Artist or athlete2
Estate
U.S. branch treated as U.S. person
Qualified intermediary
Private arrangement intermediary withholding rate
pool — general5
Private arrangement intermediary withholding rate
pool — exempt organizations5
Qualified intermediary withholding rate pool — general5
Qualified intermediary withholding rate pool — exempt
organizations5
Authorized foreign agent
Public pension fund
Unknown recipient

If compensation that otherwise would be covered under Income Codes 16 – 19 is directly attributable to the recipient’s occupation as an artist or
athlete, use Income Code 20 instead.
2 If Income Code 20 is used, Recipient Code 09 (artist or athlete) should be used instead of Recipient Code 01 (individual), 02 (corporation), or 03
(partnership other than withholding foreign partnership).
3 Use appropriate Interest Income Code for embedded interest in a notional principal contract.
4 Non-U.S. source income paid to a nonresident alien is not subject to U.S. tax. Use Exemption Code 03 when entering an amount for information
reporting purposes only.
5 May be used only by a qualified intermediary.
6 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.

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year. If you intentionally disregard the
requirement to report correct information,
each $50 penalty is increased to $100 or,
if greater, 10% of the total amount of
items required to be reported, with no
maximum penalty.
Failure to file electronically. If you are
required to file electronically but fail to do
so, and you do not have an approved
waiver on record, you may be subject to a
$50 penalty per return unless you
establish reasonable cause. The penalty
applies separately to original returns and
amended returns.

Avoid Common Errors
To ensure that your Forms 1042-S can be
correctly processed, be sure that you:
• Carefully read the information provided
in Pub. 515 and these instructions.
• If you are an electronic filer, comply
with the requirements in Pub. 1187.
• Complete all required fields. At a
minimum, you must enter information in
boxes 1, 2, 5, 6, 7, 9, 11, 12a-12d,13a,
13b, and 16. Other boxes must be
completed if the nature of the payment
requires it.
Note. You may leave box 6 blank if you
are applying backup withholding to the
payment being reported.
• Use only income, recipient, exemption,
and country codes specifically listed in
these instructions.
• Use only tax rates that are allowed by
statute, regulation, or treaty. Do not
attempt to “blend” rates. Instead, if
necessary, submit multiple Forms 1042-S
to show changes in tax rate. See the
Valid Tax Rate Table on page 14.
All information you enter when
reporting the payment must correctly
reflect the intent of statute and
regulations. Generally, you should rely on
the withholding documentation you have
collected (Form W-8 series, Form 8233,
etc.) to complete your Form 1042-S
submissions.
Also note the following:
• The gross income you report in box 2
cannot be zero.
• The income code you report in box 1
must correctly reflect the type of income
you pay to the recipient.
• The withholding agent’s name,
address, and EIN, QI-EIN, WP-EIN, or
WT-EIN must be reported in boxes 11,
12a, 12b, 12c, and 12d in all cases.
• The recipient’s name, recipient code,
address, and TIN, if any, must be
reported in boxes 13 and 14. You must
generally report a foreign address. See
the instructions for box 13 on page 15. If
you want, you can put the recipient’s
account number in box 22.
• The recipient code you report in box
13b must correctly identify the recipient’s
status. Use recipient code 20 only if you
do not know who the recipient is.
Note. If you cannot identify the recipient,
the tax withheld must be 30%.
• The recipient’s country code that you
report in box 16 must be present and

correctly coded and cannot be “US.”
Additionally, do not use “OC” or “UC”
except as specifically allowed in these
instructions.
• The exemption code you report in
box 6 must correctly identify the proper
tax status for the type of income you pay
to the recipient.
Note. If you use exemption code 04
(exempt under tax treaty), the country
code that you report in box 16 must be a
valid treaty country. Countries with which
the United States has a tax treaty are
shown in bold italics in the country code
list beginning on page 17.
You, the withholding agent, are
liable for the tax if you know, or
CAUTION should have known, that
underwithholding on a payment has
occurred.

!

Specific Instructions
for
Withholding Agents

!

All amounts must be reported in
U.S. dollars.

to or on behalf of the same recipient, you
must complete a separate Form 1042-S
for each income type.
Substitute payment income codes are
to be used for all substitute payment
transactions. For more information, see
Regulations sections 1.861-2(a)(7) and
1.861-3(a)(6) and Notice 97-66.
Note. Although income codes are
provided for deposit interest, short-term
OID, and notional principal contract
income, those items are not always
subject to reporting on Form 1042-S. For
example, bank deposit interest is
reportable if it is effectively connected
with the conduct of a U.S. trade or
business or is paid to a resident of
Canada. Short-term OID or bank deposit
interest may need to be reported by an
NQI or flow-through entity if those
amounts are paid to foreign persons and
another withholding agent backup
withheld on those amounts under the
presumption rules. (See Example 3 on
page 11.) Notional principal contract
income is reportable if it is effectively
connected with the conduct of a trade or
business in the United States. For more
information, see the regulations under
Chapter 3 of the Code and Pub. 515.

CAUTION

Box 2, Gross Income
Rounding Off
to Whole Dollars
You may round off cents to whole dollars.
If you do round to whole dollars, you must
round all amounts. To round off amounts
to the nearest whole dollar, drop amounts
under 50 cents and increase amounts
from 50 to 99 cents to the next dollar. For
example, $1.39 becomes $1 and $2.50
becomes $3. If you have to add two or
more amounts to figure the amount to
enter on a line, include cents when
adding and only round off the total.

AMENDED Box
at Top of Form
See Amended Returns on page 16.

PRO-RATA BASIS
REPORTING Box
Withholding agents must check this box
to notify the IRS that an NQI that used the
alternative procedures of Regulations
section 1.1441-1(e)(3)(iv)(D) failed to
properly comply with those procedures.
See Pro-rata reporting beginning on page
8 for additional information and examples.

Box 1, Income Code
All filers must enter the appropriate 2-digit
income code from the list on page 12.
Use the income code that is the most
specific. For example, if you are paying
bank deposit interest, you should use
code 29 (deposit interest), not code 01
(interest paid by U.S. obligors — general).
If you paid more than one type of income

-13-

For each income type, enter the gross
amount you paid to or on behalf of the
recipient during calendar year 2008,
including withheld tax. The following
special procedures apply to the reporting
of gross income.
• You must report the entire amount of a
corporate distribution made with respect
to stock even if you elect to reduce the
amount of withholding on the distribution
because all or a portion of the distribution
is nontaxable or represents a capital gain
dividend.
• You must report the entire amount of a
payment if you do not know at the time of
payment the amount that is subject to
withholding because the determination of
the source of the income or the
calculation of the amount of income
subject to tax depends upon facts that are
not known at the time of payment.
• You must report the entire amount of
gains relating to the disposal of timber,
coal, or domestic iron ore with a retained
economic interest and gains relating to
contingent payments received from the
sale or exchange of patents, copyrights,
and similar intangible property.
• You must report only the amount of
cash paid on notional principal contracts.

Box 3, Withholding
Allowances
This box should only be completed if the
income code reported in box 1 is 15
(scholarship or fellowship grants) or 16
(compensation for independent personal
services). See Pub. 515 for more
information.

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Box 4, Net Income
Complete this box only if you entered an
amount in box 3. Otherwise, leave it
blank.

Box 5, Tax Rate
Enter the correct rate of withholding that
applies to the income in box 2 (gross
income) or box 4 (net income), as
appropriate. (See Valid Tax Rate Table
on this page.) The correct tax rate should
be included even if you withheld less than
that rate. For example, if an NQI is
reporting dividends paid to a beneficial
owner who is a resident of a country with
which the United States does not have a
tax treaty and a U.S. withholding agent
paid the dividend and withheld only 15%
(rather than the required 30%) and the
NQI withholds an additional 15%, the NQI
should report “30.00” in box 5. See
Example 2 on page 11.
The tax rate on dividends paid to a
corporation created or organized in, or
under the law of, the Commonwealth of
Puerto Rico may be 10%, rather than
30%. See Pub. 515 for more information.
Enter the tax rate using the following
format: two digits, a decimal, and two
digits (for example, “30.00” for 30%).
However, if the income is exempt from tax
under a U.S. tax treaty or the Code, enter
“00.00.” If the tax rate is less than 10%,
enter a zero before the tax rate (for
example, “04.00” for 4%).
If you withheld at more than one
tax rate for a specific type of
CAUTION income that you paid to the same
recipient, you must file a separate Form
1042-S for each amount to which a
separate rate was applied.

!

Valid Tax Rate Table
00.00

07.00

14.00

27.50

04.00

08.00

15.00

28.00

04.90

10.00

17.50

30.00

04.95

12.00

20.00

33.00

05.00

12.50

25.00

35.00

Box 6, Exemption Code
Note. If you are filing a Form 1042-S to
correct certain information already
provided to you by another withholding
agent on a Form 1099 or Form 1042-S
(for example, as required under Amounts
Paid by Nonqualified Intermediaries and
Flow-Through Entities beginning on page
10), see item 5 on this page.
Generally, if the tax rate you entered in
box 5 is 00.00, you should enter the
appropriate exemption code (01 through
09) from the list on page 12.
If an amount was withheld under
Chapter 3 of the Code (the tax rate you
entered in box 5 is greater than zero and
is not due to backup withholding), enter
“00” in box 6. If the tax rate you entered in

box 5 is due to backup withholding, leave
box 6 blank.
1. If exemption code 01 (income
effectively connected with a U.S. trade or
business) may apply, you must enter the
recipient’s U.S. TIN in box 14. If the
recipient’s U.S. TIN is unknown or
unavailable, you must withhold tax at the
foreign-person rate of 30% (30.00) and
enter “00” in box 6.
2. A withholding agent should use
exemption code 06 (qualified intermediary
that assumes primary withholding
responsibility) only if it is making a
payment to a QI that has represented on
its Form W-8IMY that it is assuming
primary withholding responsibility under
Chapter 3 of the Code.
3. A withholding agent should use
exemption code 07 (withholding foreign
partnership or withholding foreign trust)
only if it is making a payment to a foreign
partnership or trust that has represented
that it is a withholding foreign partnership
or trust.
4. A withholding agent should use
exemption code 09 (qualified intermediary
represents income is exempt) only if it
makes a payment to a QI that has not
assumed primary withholding
responsibility under Chapter 3 of the
Code or primary backup withholding
responsibility, but has represented on a
withholding statement associated with its
Form W-8IMY that the income is exempt
from withholding.
5. If you have failed to provide
another withholding agent with
appropriate information regarding the
status of the person to whom you are
making a payment, the other withholding
agent may be required to withhold on the
payment based on the presumption rules.
If the income is in fact exempt from
withholding, you must submit a Form
1042-S providing the correct information.
In this situation, you must:
a. Indicate the correct rate at which
the income should have been subject to
withholding in box 5 (usually 00.00),
b. Enter “99” in box 6, and
c. Enter the actual amount of U.S.
federal tax withheld by the other
withholding agent in box 8.
You must also provide the correct
recipient code and the name and address
of the actual recipient in boxes 13a-e.

Boxes 7 Through 9,
Federal Tax Withheld
Box 7. Enter the total amount of U.S.
federal tax you actually withheld in box 7.
If you did not withhold any tax, enter “-0-.”
Box 8. If you are a withholding agent
filing a Form 1042-S to report income that
has already been subject to withholding
by another withholding agent, enter the
amount actually withheld by the other
agent(s) in box 8.
Box 9. Enter the aggregate amount of
tax withheld by you and any other
withholding agent in box 9.

-14-

!

CAUTION

Boxes 7 and 9 must be completed
in all cases, even if no tax has
actually been withheld.

Box 10, Amount Repaid
to Recipient
This box should be completed only if:
• You repaid a recipient an amount that
was overwithheld, and
• You are going to reimburse yourself by
reducing, by the amount of tax actually
repaid, the amount of any deposit made
for a payment period in the calendar year
following the calendar year of withholding.
Generally, a QI should not enter an
amount in box 10 unless it is a QI that has
represented on its Form W-8IMY that it is
assuming primary withholding
responsibility under Chapter 3 of the
Code.
You must also state on a timely filed
Form 1042 for the calendar year of
overwithholding that the filing of the Form
1042 constitutes a claim for refund.
The adjustment for amounts
overwithheld do not apply to
CAUTION partnerships or nominees required
to withhold under section 1446.

!

Box 11, Withholding
Agent’s Employer
Identification Number (EIN)
You are generally required to enter your
EIN. However, if you are filing Form
1042-S as a QI, withholding foreign
partnership, or withholding foreign trust,
enter your QI-EIN, WP-EIN, or WT-EIN
and check the QI-EIN box.
If you do not have an EIN, you can
apply for one online at
www.irs.gov/businesses/small or by
telephone at 1-800-829-4933. Also, you
can apply for an EIN by filing Form SS-4,
Application for Employer Identification
Number. File amended Forms 1042-S
when you receive your EIN.
To get a QI-EIN, WP-EIN, or WT-EIN,
submit Form SS-4 with your application
for that status. (See the definitions for
Qualified intermediary (QI) on page 3 and
Withholding foreign partnership (WP) or
withholding foreign trust (WT) on page 4
for more information.) Do not send an
application for a QI-EIN, WP-EIN, or
WT-EIN to the Ogden Service Center; it
will not be processed.

Box 12, Withholding
Agent’s Name
and Address
Enter your name and address in the
appropriate boxes. If your post office does
not deliver mail to the street address and
you have a P.O. box, show the box
number instead of the street address.
If you are a nominee that is the
withholding agent under section 1446,
enter the PTP’s name and other
information in boxes 17 through 20.

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Note. On statements furnished to
Canadian recipients of U.S. source
deposit interest, in addition to your name
and address, you must include the
telephone number of a person to contact.
This number must provide direct access
to an individual who can answer
questions about the statement. The
telephone number is not required on
Copy A of paper forms or on electronically
filed forms. You must also include a
statement that the information on the form
is being furnished to the United States
Internal Revenue Service and may be
furnished to Canada.

Box 13, Recipient’s
Name, Recipient Code,
and Address
Name. Enter the complete name of the
recipient in box 13a.
• If you do not know the name of the
recipient, enter “Unknown Recipient.”
• If Form 1042-S is being completed by a
QI, WP, or WT for a withholding rate pool,
enter “Withholding rate pool” in box 13a.
No address is necessary.
• A QI reporting payments made to a PAI
on a withholding rate pool basis must
include the name and address of the PAI
in boxes 13a through 13e.
Recipient code. Enter the recipient
code from the list on page 12 in box 13b.
The following special instructions apply.
• If applicable, use recipient code 09
(artist or athlete) instead of recipient code
01 (individual), 02 (corporation), or 03
(partnership other than a withholding
foreign partnership).
• Use recipient code 12 if you are making
a payment to a QI and 04 if you are
making a payment to a WP or a WT.
• If you are making a payment to an NQI
or flow-through entity, you generally must
use the recipient code that applies to the
type of recipient who receives the income
from the NQI or flow-through entity.
• Use recipient code 03 (partnership
other than a withholding foreign
partnership) only if you are reporting a
payment of income that is effectively
connected with the conduct of a trade or
business of a nonwithholding foreign
partnership in the United States.
Otherwise, follow the rules that apply to
payments to flow-through entities.
• Use recipient code 20 (unknown
recipient) only if you have not received a
withholding certificate or other
documentation for a recipient or you
cannot determine how much of a payment
is reliably associated with a specific
recipient. Do not use this code because
you cannot determine the recipient’s
status as an individual, corporation, etc.
The regulations under Chapter 3 of the
Code provide rules on how to determine a
recipient’s status when a withholding
agent does not have the necessary
information.
• Only QIs may use recipient codes 13
(private arrangement intermediary
withholding rate pool — general), 14

(private arrangement intermediary
withholding rate pool — exempt
organizations), 15 (qualified intermediary
withholding rate pool — general), and 16
(qualified intermediary withholding rate
pool — exempt organizations). A QI
should only use recipient code 14 or 16
for pooled account holders that have
claimed an exemption based on their
tax-exempt status and not some other
exemption (for example, treaty or other
Code exception). A U.S. withholding
agent making a payment to a QI should
use recipient code 12.
Address. You must generally enter a
foreign address in boxes 13c through
13e. However, there are limited
exceptions. For example, you may enter a
U.S. address when reporting payments of
scholarship or fellowship grants (income
code 15).
For addresses outside the United
States or its possessions, follow the
foreign country’s practice for entering the
postal code.
For addresses within the United
States, use the U.S. Postal Service
2-letter abbreviation for the state name.
Do not enter “United States” or “U.S.”
If you want to enter the recipient’s
account number, use box 22.

Box 14, Recipient’s U.S.
Taxpayer Identification
Number (TIN)
You must obtain and enter a U.S.
taxpayer identification number (TIN) for:
• Any recipient whose income is
effectively connected with the conduct of
a trade or business in the United States.
Note. For these recipients, exemption
code 01 should be entered in box 6.
• Any foreign person claiming a reduced
rate of, or exemption from, tax under a tax
treaty between a foreign country and the
United States, unless the income is an
unexpected payment (as described in
Regulations section 1.1441-6(g)) or
consists of dividends and interest from
stocks and debt obligations that are
actively traded; dividends from any
redeemable security issued by an
investment company registered under the
Investment Company Act of 1940 (mutual
fund); dividends, interest, or royalties from
units of beneficial interest in a unit
investment trust that are (or were, upon
issuance) publicly offered and are
registered with the Securities and
Exchange Commission under the
Securities Act of 1933; and amounts paid
with respect to loans of any of the above
securities.
• Any nonresident alien individual
claiming exemption from tax under
section 871(f) for certain annuities
received under qualified plans.
• A foreign organization claiming an
exemption from tax solely because of its
status as a tax-exempt organization under
section 501(c) or as a private foundation.
• Any QI.

-15-

• Any WP or WT.
• Any nonresident alien individual

claiming exemption from withholding on
compensation for independent personal
services.
• Any U.S. branch of a foreign bank or
foreign insurance company that is treated
as a U.S. person.
In all other cases, if you know the
recipient’s TIN or if a foreign person
provides a TIN on a Form W-8, but is not
required to do so, you must include the
TIN on Form 1042-S.

Box 15, Recipient’s
Foreign Tax
Identifying Number
Enter the recipient’s identifying number
used in the country of residence for tax
purposes (optional).

Box 16, Recipient’s
Country Code
You must enter the code (from the list that
begins on page 17) for the country of
which the recipient claims residency
under that country’s tax laws. Enter “OC”
(other country) only when the country of
residence does not appear on the list or
the payment is made to an international
organization (for example, the United
Nations). Enter “UC” (unknown country)
only if the payment is to an unknown
recipient. If you are making a payment to
a QI, WP, or WT or if you are a QI, WP,
or WT and are making a payment to a QI,
WP, or WT withholding rate pool, enter
the country code of the QI, WP, or WT.
If exemption code 04 (exempt
under tax treaty) appears in box 6
CAUTION or if a reduced rate of withholding
based on a tax treaty is entered in box 5,
the country code entered in box 16 must
be a country with which the United States
has entered into an income tax treaty.

!

Boxes 17 Through 20,
NQI’s/Flow-Through
Entity’s Name, Country
Code, Address, and TIN
If you are reporting amounts paid to a
recipient whose withholding certificates or
other documentation has been submitted
to you with a Form W-8IMY provided by
an NQI or flow-through entity, you must
include the name, address, and TIN, if
any, of the NQI or flow-through entity with
whose Form W-8IMY the recipient’s Form
W-8 or other documentation is
associated.
Note. An NQI or flow-through entity will
leave these boxes blank unless it is
making the payment to an NQI or
flow-through entity.
For box 18, you must enter the country
code from the list beginning on page 17
for the country where the NQI or
flow-through entity is located.

Page 16 of 18

Instructions for Form 1042-S

12:22 - 3-MAR-2008

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

If you are a nominee that is the
withholding agent under section 1446,
enter the PTP’s name and other
information in these boxes.

Box 21, Payer’s Name and
Taxpayer Identification
Number (TIN)
See the definition of a payer on page 3.
Include the payer’s name and TIN if
different from that in boxes 11 and 12.

Box 22, Recipient’s
Account Number
You may use this box to enter the
account number assigned by you to the
recipient.

Boxes 23 Through 25,
State Income Tax Withheld
and Related Information
Include in these boxes information
relating to any state income tax withheld.

Amended Returns
If you filed a Form 1042-S with the IRS
and later discover you made an error on
it, you must correct it as soon as possible.
To correct a previously filed Form 1042-S,
you will need to file an amended Form
1042-S.
You may be required to submit
amended Forms 1042-S
CAUTION electronically. See Electronic
Reporting on page 2 and Pub. 1187.
If any information you correct on
Form(s) 1042-S changes the information
you previously reported on Form 1042,
you must also correct the Form 1042 by
filing an amended return. To do this, see
the Form 1042 instructions.

!

If you are filing electronically, see
Amended Returns in Pub. 1187.
If you are not filing electronically,
follow these steps to amend a previously
filed Form 1042-S.
Step 1. Prepare a paper Form 1042-S.
• Enter all the correct information on the
form, including the recipient name and
address, money amounts, and codes.
• Enter an “X” in the AMENDED box at
the top of the form.
AMENDED box. Enter an “X” in the
AMENDED box of Copy A only if you are
amending a Form 1042-S you previously
filed with the IRS. Enter an “X” in the
AMENDED box you give to the recipient
only if you are correcting a Form 1042-S
previously furnished to the recipient. You
must provide statements to recipients
showing the corrections as soon as
possible.
Step 2. File the amended paper Form
1042-S with a Form 1042-T. See the
Form 1042-T instructions for information
on filing these forms.
If you fail to correct Form(s)
1042-S, you may be subject to a
CAUTION penalty. See Penalties beginning
on page 11.

!

Privacy Act and Paperwork Reduction
Act Notice. We ask for the information
on this form to carry out the Internal
Revenue laws of the United States.
Sections 1441, 1442, and 1446 (for
PTPs) require withholding agents to
report and pay over to the IRS taxes
withheld from certain U.S. source income
of foreign persons. Form 1042-S is used
to report the amount of income and
withholding to the payee. Form 1042 is
used to report the amount of withholding
that must be paid over to the IRS. Section

-16-

6109 requires you to provide your
taxpayer identification number (SSN, EIN,
or ITIN). Routine uses of this information
include giving it to the Department of
Justice for civil and criminal litigation, and
cities, states, and the District of Columbia
for use in administering their tax laws. We
may also disclose this information to other
countries under a tax treaty, to federal
and state agencies to enforce federal
nontax criminal laws, or to federal law
enforcement and intelligence agencies to
combat terrorism. If you fail to provide this
information in a timely manner, you may
be liable for penalties and interest.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated average
time is 36 minutes.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. You
can write to the Internal Revenue Service,
Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution
Ave. NW, IR-6526, Washington, DC
20224. Do not send the form to this
address. Instead, see Where, When, and
How To File on page 1.

Page 17 of 18

Instructions for Form 1042-S

12:22 - 3-MAR-2008

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

Country Codes
Select the appropriate code from the following
list and enter it in box 16 (country code of
recipient). Also use the following codes to
complete box 18 (country code of NQI), if
applicable. See the instructions for box 16 (and
box 18 if applicable) on page 15 before
selecting a country code. Note. Countries
bolded and italicized are those with which the
United States had entered into an income tax
treaty at the time these instructions were
printed.

Country
Afghanistan . . . . . . . . . . . . . . .
Akrotiri . . . . . . . . . . . . . . . . . .
Albania . . . . . . . . . . . . . . . . . .
Algeria . . . . . . . . . . . . . . . . . .
American Samoa . . . . . . . . . . .
Andorra . . . . . . . . . . . . . . . . . .
Angola . . . . . . . . . . . . . . . . . .
Anguilla . . . . . . . . . . . . . . . . . .
Antarctica . . . . . . . . . . . . . . . .
Antigua and Barbuda . . . . . . . .
Argentina . . . . . . . . . . . . . . . .
Armenia1 . . . . . . . . . . . . . . . .
Aruba . . . . . . . . . . . . . . . . . . .
Ashmore and Cartier Islands2 .
Australia . . . . . . . . . . . . . . . . .
Austria . . . . . . . . . . . . . . . . . .
Azerbaijan1 . . . . . . . . . . . . . . .
Bahamas, The . . . . . . . . . . . . .
Bahrain . . . . . . . . . . . . . . . . . .
Baker Island . . . . . . . . . . . . . .
Bangladesh . . . . . . . . . . . . . .
Barbados . . . . . . . . . . . . . . . .
Belarus1 . . . . . . . . . . . . . . . . .
Belgium . . . . . . . . . . . . . . . . .
Belize . . . . . . . . . . . . . . . . . . .
Benin . . . . . . . . . . . . . . . . . . .
Bermuda . . . . . . . . . . . . . . . . .
Bhutan . . . . . . . . . . . . . . . . . .
Bolivia . . . . . . . . . . . . . . . . . . .
Bosnia-Herzegovina . . . . . . . . .
Botswana . . . . . . . . . . . . . . . .
Bouvet Island . . . . . . . . . . . . . .
Brazil . . . . . . . . . . . . . . . . . . .
British Indian Ocean Territory . .
Brunei . . . . . . . . . . . . . . . . . . .
Bulgaria . . . . . . . . . . . . . . . . . .
Burkina Faso . . . . . . . . . . . . . .
Burma . . . . . . . . . . . . . . . . . . .
Burundi . . . . . . . . . . . . . . . . . .
Cambodia . . . . . . . . . . . . . . . .
Cameroon . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . .
Cape Verde . . . . . . . . . . . . . . .
Cayman Islands . . . . . . . . . . . .
Central African Republic . . . . . .
Chad . . . . . . . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . .
Christmas Island2 . . . . . . . . . .
Clipperton Island . . . . . . . . . . .
Cocos (Keeling) Islands2 . . . .
Colombia . . . . . . . . . . . . . . . . .
Comoros . . . . . . . . . . . . . . . . .
Congo (Brazzaville) . . . . . . . . .
Congo, Democratic Republic of
(Kinshasa) . . . . . . . . . . . . . .
Cook Islands . . . . . . . . . . . . . .

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Code
AF
AX
AL
AG
AQ
AN
AO
AV
AY
AC
AR
AM
AA
AT
AS
AU
AJ
BF
BA
FQ
BG
BB
BO
BE
BH
BN
BD
BT
BL
BK
BC
BV
BR
IO
BX
BU
UV
BM
BY
CB
CM
CA
CV
CJ
CT
CD
CI
CH
KT
IP
CK
CO
CN
CF

. . . CG
. . . CW

Coral Sea Islands Territory2 . . . . .
Costa Rica . . . . . . . . . . . . . . . . . .
Cote D’Ivoire (Ivory Coast) . . . . . . .
Croatia . . . . . . . . . . . . . . . . . . . . .
Cuba . . . . . . . . . . . . . . . . . . . . . . .
Cyprus . . . . . . . . . . . . . . . . . . . . .
Czech Republic . . . . . . . . . . . . . .
Denmark . . . . . . . . . . . . . . . . . . . .
Dhekelia . . . . . . . . . . . . . . . . . . . .
Djibouti . . . . . . . . . . . . . . . . . . . . .
Dominica . . . . . . . . . . . . . . . . . . . .
Dominican Republic . . . . . . . . . . . .
Ecuador . . . . . . . . . . . . . . . . . . . .
Egypt . . . . . . . . . . . . . . . . . . . . . .
El Salvador . . . . . . . . . . . . . . . . . .
Equatorial Guinea . . . . . . . . . . . . .
Eritrea . . . . . . . . . . . . . . . . . . . . . .
Estonia . . . . . . . . . . . . . . . . . . . . .
Ethiopia . . . . . . . . . . . . . . . . . . . . .
Falkland Islands (Islas Malvinas) . . .
Faroe Islands . . . . . . . . . . . . . . . . .
Fiji . . . . . . . . . . . . . . . . . . . . . . . .
Finland . . . . . . . . . . . . . . . . . . . . .
France . . . . . . . . . . . . . . . . . . . . .
French Guiana3 . . . . . . . . . . . . . .
French Polynesia . . . . . . . . . . . . . .
French Southern and Antarctic
Lands . . . . . . . . . . . . . . . . . . . .
Gabon . . . . . . . . . . . . . . . . . . . . . .
Gambia, The . . . . . . . . . . . . . . . . .
Georgia1 . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . .
Ghana . . . . . . . . . . . . . . . . . . . . . .
Gibraltar . . . . . . . . . . . . . . . . . . . .
Great Britain (United Kingdom) . .
Greece . . . . . . . . . . . . . . . . . . . . .
Greenland . . . . . . . . . . . . . . . . . . .
Grenada . . . . . . . . . . . . . . . . . . . .
Guadeloupe3 . . . . . . . . . . . . . . . .
Guam . . . . . . . . . . . . . . . . . . . . . .
Guatemala . . . . . . . . . . . . . . . . . . .
Guernsey . . . . . . . . . . . . . . . . . . .
Guinea . . . . . . . . . . . . . . . . . . . . .
Guinea-Bissau . . . . . . . . . . . . . . . .
Guyana . . . . . . . . . . . . . . . . . . . . .
Haiti . . . . . . . . . . . . . . . . . . . . . . .
Heard Island and McDonald Islands
Holy See . . . . . . . . . . . . . . . . . . . .
Honduras . . . . . . . . . . . . . . . . . . .
Hong Kong5 . . . . . . . . . . . . . . . . . .
Howland Island . . . . . . . . . . . . . . .
Hungary . . . . . . . . . . . . . . . . . . . .
Iceland . . . . . . . . . . . . . . . . . . . . .
India . . . . . . . . . . . . . . . . . . . . . . .
Indonesia . . . . . . . . . . . . . . . . . . .
Iran . . . . . . . . . . . . . . . . . . . . . . . .
Iraq . . . . . . . . . . . . . . . . . . . . . . . .
Ireland . . . . . . . . . . . . . . . . . . . . .
Isle of Man . . . . . . . . . . . . . . . . . .
Israel . . . . . . . . . . . . . . . . . . . . . .
Italy . . . . . . . . . . . . . . . . . . . . . . .
Jamaica . . . . . . . . . . . . . . . . . . . .
Jan Mayen . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . .
Jarvis Island . . . . . . . . . . . . . . . . .
Jersey . . . . . . . . . . . . . . . . . . . . . .
Johnston Atoll . . . . . . . . . . . . . . . .
Jordan . . . . . . . . . . . . . . . . . . . . . .
Kazakhstan . . . . . . . . . . . . . . . . .
Kenya . . . . . . . . . . . . . . . . . . . . . .

-17-

CR
CS
IV
HR
CU
CY
EZ
DA
DX
DJ
DO
DR
EC
EG
ES
EK
ER
EN
ET
FK
FO
FJ
FI
FR
FG
FP
FS
GB
GA
GG
GM
GH
GI
UK
GR
GL
GJ
GP
GQ
GT
GK
GV
PU
GY
HA
HM
VT
HO
HK
HQ
HU
IC
IN
ID
IR
IZ
EI
IM
IS
IT
JM
JN
JA
DQ
JE
JQ
JO
KZ
KE

Kingman Reef . . . . . . . . . . . . . .
Kiribati . . . . . . . . . . . . . . . . . . . .
Korea, North . . . . . . . . . . . . . . .
Korea, South . . . . . . . . . . . . . .
Kosovo . . . . . . . . . . . . . . . . . . .
Kuwait . . . . . . . . . . . . . . . . . . . .
Kyrgyzstan1 . . . . . . . . . . . . . . .
Laos . . . . . . . . . . . . . . . . . . . . .
Latvia . . . . . . . . . . . . . . . . . . . .
Lebanon . . . . . . . . . . . . . . . . . .
Lesotho . . . . . . . . . . . . . . . . . . .
Liberia . . . . . . . . . . . . . . . . . . . .
Libya . . . . . . . . . . . . . . . . . . . . .
Liechtenstein . . . . . . . . . . . . . . .
Lithuania . . . . . . . . . . . . . . . . .
Luxembourg . . . . . . . . . . . . . . .
Macau . . . . . . . . . . . . . . . . . . . .
Macedonia . . . . . . . . . . . . . . . . .
Madagascar (Malagasy Republic)
Malawi . . . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . . . . .
Maldives . . . . . . . . . . . . . . . . . .
Mali . . . . . . . . . . . . . . . . . . . . . .
Malta . . . . . . . . . . . . . . . . . . . . .
Marshall Islands . . . . . . . . . . . . .
Martinique3 . . . . . . . . . . . . . . . .
Mauritania . . . . . . . . . . . . . . . . .
Mauritius . . . . . . . . . . . . . . . . . .
Mayotte . . . . . . . . . . . . . . . . . . .
Mexico . . . . . . . . . . . . . . . . . . .
Micronesia, Federated States of .
Midway Islands . . . . . . . . . . . . .
Moldova1 . . . . . . . . . . . . . . . . .
Monaco . . . . . . . . . . . . . . . . . . .
Mongolia . . . . . . . . . . . . . . . . . .
Montenegro . . . . . . . . . . . . . . . .
Montserrat . . . . . . . . . . . . . . . . .
Morocco . . . . . . . . . . . . . . . . . .
Mozambique . . . . . . . . . . . . . . .
Namibia . . . . . . . . . . . . . . . . . . .
Nauru . . . . . . . . . . . . . . . . . . . .
Navassa Island . . . . . . . . . . . . .
Nepal . . . . . . . . . . . . . . . . . . . .
Netherlands . . . . . . . . . . . . . . .
Netherlands Antilles . . . . . . . . . .
New Caledonia . . . . . . . . . . . . .
New Zealand . . . . . . . . . . . . . . .
Nicaragua . . . . . . . . . . . . . . . . .
Niger . . . . . . . . . . . . . . . . . . . . .
Nigeria . . . . . . . . . . . . . . . . . . .
Niue . . . . . . . . . . . . . . . . . . . . .
Norfolk Island2 . . . . . . . . . . . . .
Northern Ireland4 . . . . . . . . . . .
Northern Mariana Islands . . . . . .
Norway . . . . . . . . . . . . . . . . . . .
Oman . . . . . . . . . . . . . . . . . . . .
Pakistan . . . . . . . . . . . . . . . . . .
Palau . . . . . . . . . . . . . . . . . . . .
Palmyra Atoll . . . . . . . . . . . . . . .
Panama . . . . . . . . . . . . . . . . . .
Papua New Guinea . . . . . . . . . .
Paracel Islands . . . . . . . . . . . . .
Paraguay . . . . . . . . . . . . . . . . .
Peru . . . . . . . . . . . . . . . . . . . . .
Philippines . . . . . . . . . . . . . . . .
Pitcairn Island . . . . . . . . . . . . . .
Poland . . . . . . . . . . . . . . . . . . .
Portugal . . . . . . . . . . . . . . . . . .
Puerto Rico . . . . . . . . . . . . . . . .
Qatar . . . . . . . . . . . . . . . . . . . .

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KQ
KR
KN
KS
KV
KU
KG
LA
LG
LE
LT
LI
LY
LS
LH
LU
MC
MK
MA
MI
MY
MV
ML
MT
RM
MB
MR
MP
MF
MX
FM
MQ
MD
MN
MG
MJ
MH
MO
MZ
WA
NR
BQ
NP
NL
NT
NC
NZ
NU
NG
NI
NE
NF
UK
CQ
NO
MU
PK
PS
LQ
PM
PP
PF
PA
PE
RP
PC
PL
PO
RQ
QA

Page 18 of 18

Instructions for Form 1042-S

12:22 - 3-MAR-2008

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

Reunion3 . . . . . . . . . . . . . . .
Romania . . . . . . . . . . . . . . . .
Russia . . . . . . . . . . . . . . . . .
Rwanda . . . . . . . . . . . . . . . . .
St. Barthelemy . . . . . . . . . . . .
St. Helena . . . . . . . . . . . . . . .
St. Kitts (St. Christopher
and Nevis) . . . . . . . . . . . . .
St. Lucia . . . . . . . . . . . . . . . .
St. Martin . . . . . . . . . . . . . . .
St. Pierre and Miquelon . . . . .
St. Vincent and the Grenadines
Samoa . . . . . . . . . . . . . . . . .
San Marino . . . . . . . . . . . . . .
Sao Tome and Principe . . . . .
Saudi Arabia . . . . . . . . . . . . .
Senegal . . . . . . . . . . . . . . . .
Serbia . . . . . . . . . . . . . . . . . .
Seychelles . . . . . . . . . . . . . . .
Sierra Leone . . . . . . . . . . . . .
Singapore . . . . . . . . . . . . . . .
Slovak Republic (Slovakia) . .
Slovenia . . . . . . . . . . . . . . . .
Solomon Islands . . . . . . . . . .
Somalia . . . . . . . . . . . . . . . . .
South Africa . . . . . . . . . . . . .
South Georgia and the South
Sandwich Islands . . . . . . . .
Spain . . . . . . . . . . . . . . . . . .

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RE
RO
RS
RW
TB
SH

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SC
ST
RN
SB
VC
WS
SM
TP
SA
SG
RB
SE
SL
SN
LO
SI
BP
SO
SF

. . . . SX
. . . . SP

Spratly Islands . . . . . . . . . . . . . . . .
Sri Lanka . . . . . . . . . . . . . . . . . . .
Sudan . . . . . . . . . . . . . . . . . . . . . .
Suriname . . . . . . . . . . . . . . . . . . . .
Svalbard . . . . . . . . . . . . . . . . . . . .
Swaziland . . . . . . . . . . . . . . . . . . .
Sweden . . . . . . . . . . . . . . . . . . . .
Switzerland . . . . . . . . . . . . . . . . .
Syria . . . . . . . . . . . . . . . . . . . . . . .
Taiwan . . . . . . . . . . . . . . . . . . . . .
Tajikistan1 . . . . . . . . . . . . . . . . . .
Tanzania . . . . . . . . . . . . . . . . . . . .
Thailand . . . . . . . . . . . . . . . . . . . .
Timor-Leste . . . . . . . . . . . . . . . . . .
Togo . . . . . . . . . . . . . . . . . . . . . . .
Tokelau . . . . . . . . . . . . . . . . . . . . .
Tonga . . . . . . . . . . . . . . . . . . . . . .
Trinidad and Tobago . . . . . . . . . .
Tunisia . . . . . . . . . . . . . . . . . . . . .
Turkey . . . . . . . . . . . . . . . . . . . . .
Turkmenistan1 . . . . . . . . . . . . . . .
Turks and Caicos Islands . . . . . . . .
Tuvalu . . . . . . . . . . . . . . . . . . . . . .
Uganda . . . . . . . . . . . . . . . . . . . . .
Ukraine . . . . . . . . . . . . . . . . . . . . .
United Arab Emirates . . . . . . . . . . .
United Kingdom (England, Wales,
Scotland, No. Ireland) . . . . . . . .

-18-

PG
CE
SU
NS
SV
WZ
SW
SZ
SY
TW
TI
TZ
TH
TT
TO
TL
TN
TD
TS
TU
TX
TK
TV
UG
UP
AE
UK

Uruguay . . . . . . . . . .
Uzbekistan1 . . . . . . .
Vanuatu . . . . . . . . . .
Venezuela . . . . . . . . .
Vietnam . . . . . . . . . . .
Virgin Islands (British) .
Virgin Islands (U.S.) . .
Wake Island . . . . . . .
Wallis and Futuna . . .
Western Sahara . . . . .
Yemen . . . . . . . . . . .
Zambia . . . . . . . . . . .
Zimbabwe . . . . . . . . .
Other Country . . . . . .
Unknown Country . . .

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UY
UZ
NH
VE
VM
VI
VQ
WQ
WF
WI
YM
ZA
ZI
OC
UC

1 These countries are parties to the
United States treaty with the
Commonwealth of Independent States.
2 These countries are covered under
the United States treaty with Australia.
3 These countries are covered under
the United States treaty with France.
4 Northern Ireland is covered under the
United States treaty with the United
Kingdom.
5 Hong Kong is not covered under the
United States treaty with China.