Revenue Procedure 2014-39

SECTION 9. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Tara N. Ferris of the Office
of Associate Chief Counsel (International). For further information regarding
this revenue procedure, contact Ms. Ferris
or Kamela Nelan at (202) 317-6942 (not a
toll free number).

Rev. Proc. 2014 –39
SECTION 1. PURPOSE AND SCOPE
.01 Purpose. This revenue procedure
provides guidance for entering into a qualified intermediary (QI) withholding agreement with the Internal Revenue Service
(IRS) under § 1.1441–1(e)(5)1. Section 2
of this revenue procedure provides background on the withholding and reporting
requirements of chapters 3, 4, and 61 and
section 3406, and provides a highlight of
changes to the existing QI agreement (included in Revenue Procedure 2000 –12,
2000 –1 C.B. 387 (as amended)). Section
3 of this revenue procedure provides the
application procedures for becoming a QI
and renewing a QI agreement. Section 4
of this revenue procedure provides the
final qualified intermediary withholding
agreement (QI agreement), and provides
that such agreement is not intended to be
modified by a rider. The objective of the
QI agreement is to allow a foreign intermediary to assume the withholding and
reporting obligations for payments of income (including interest, dividends, royalties, and gross proceeds) made to its
account holders or payees through one or
more foreign intermediaries or flowthrough entities.
.02 Entities Eligible to Execute a QI
Agreement. A QI agreement may be entered into by persons described in
§ 1.1441–1(e)(5)(ii) (foreign financial institutions (FFIs), foreign clearing organizations, and foreign branches of U.S. financial institutions or U.S. clearing
organizations). With respect to an FFI, as
defined in § 1.1471–5(d), the FFI may
apply to enter into a QI agreement if the
FFI is able to and agrees to satisfy the
1

requirements and obligations of (1) a participating FFI (including a reporting
Model 2 FFI), (2) a registered deemedcompliant FFI (including a reporting
Model 1 FFI and a nonreporting Model 2
FFI treated as registered deemedcompliant), (3) a registered deemedcompliant Model 1 IGA FFI (as defined in
section 2.17(C) of the QI agreement), or
(4) for a transitional period, a limited FFI.
See § 1.1471–1(b)(91), (111), and (77).
An FFI that is a certified deemedcompliant FFI (including a nonreporting
IGA FFI (as defined in § 1.1471–1(b)(83))
may enter into a QI agreement if the FFI
meets and agrees to assume the obligations of, and to be treated as, a participating FFI (including a reporting Model 2
FFI), a registered deemed-compliant FFI
(including a reporting Model 1 FFI or a
nonreporting Model 2 FFI treated as registered deemed-compliant), or a registered
deemed-compliant Model 1 IGA FFI with
respect to all accounts that it maintains
(even if the FFI does not intend to designate an account as one for which it will act
as a QI). A central bank of issue may enter
into a QI agreement provided that it meets
and agrees to assume the obligations of,
and to be treated as, a participating FFI
(including a reporting Model 2 FFI) or a
registered deemed-compliant FFI (including a reporting Model 1 FFI) with respect
to any account that it maintains and that is
held in connection with a commercial financial activity described in § 1.1471–
6(h) and for which it receives a withholdable payment (as defined in § 1.1471–
1(b)(145)). A foreign branch of a U.S.
financial institution may also apply to enter into a QI agreement provided that either it is a reporting Model 1 FFI, or it
agrees to assume the requirements and
obligations of a participating FFI (including a reporting Model 2 FFI). See
§ 1.1441–1(e)(5)(ii).
An entity that is a territory financial
institution (territory FI) (as defined in
§ 1.1471–1(b)(130)) or a nonparticipating
FFI (as defined in § 1.1471–1(b)(82)) may
not apply for a QI agreement.
The QI agreement described in section
4 of this revenue procedure may apply to
a foreign corporation that is a nonfinancial foreign entity (NFFE, as defined

in § 1.1471–1(b)(80)) described in
§ 1.1441–1(e)(5)(ii)(C) seeking to become a QI to, for example, present claims
of benefits under an income tax treaty on
behalf of its shareholders or other persons
(other than an FFI) for which the foreign
corporation acts as an intermediary and
that the IRS accepts as a qualified intermediary pursuant to § 1.1441–
1(e)(5)(ii)(D). An NFFE that enters into a
QI agreement to act on behalf of its shareholders must meet and agree to assume
the obligations of, and to be treated as, a
direct reporting NFFE under § 1.1472–
1(c)(3). An NFFE that enters into a QI
agreement to act on behalf of persons
other than its shareholders will be required to satisfy the withholding and reporting requirements of §§ 1.1472–1(a)
and 1.1474 –1(i) with respect to any NFFE
that is a beneficial owner for whom the QI
is acting with respect to a withholdable
payment. The QI agreement does not apply to a foreign partnership or foreign
trust. A foreign partnership or foreign
trust may seek to qualify as a withholding
foreign partnership or withholding foreign
trust. See §§ 1.1441–5(c)(2)(ii) and
1.1441–5(e)(5)(v).
.03 Effective Date of QI Agreement.
The QI agreement provided in section 4 of
this revenue procedure applies to a QI
agreement with an effective date on or
after June 30, 2014. An FFI, an NFFE
acting as a QI on behalf of its shareholders, or an NFFE that is a sponsoring entity
that applies for QI status before June 30,
2014 and is issued a GIIN before such
date will have a QI agreement with an
effective date of June 30, 2014. An FFI,
an NFFE acting as a QI on behalf of its
shareholders, or an NFFE that is a sponsoring entity that applies for QI status on
or after June 30, 2014 will have a QI
agreement with an effective date on the
date it is issued a GIIN.
A QI that is an NFFE that is not acting
on behalf of its shareholders and is not a
sponsoring entity and that renews its QI
agreement on or before June 30, 2014 will
have a QI agreement with an effective
date of June 30, 2014, and, if it renews
after June 30, 2014, the effective date of
the QI agreement will be the date of renewal provided in the IRS approval no-

Unless otherwise provided, all citations in this revenue procedure and the QI agreement are to the Internal Revenue Code of 1986 and to the Income Tax Regulations thereunder.

July 14, 2014

150

Bulletin No. 2014 –29

tice. An NFFE that is not acting on behalf
of its shareholders, that is not a sponsoring
entity, and that is applying to obtain QI
status will have a QI agreement with an
effective date on the date it is issued a
QI-EIN.
A QI that has submitted an application
for QI status to the IRS before July 31,
2014 and is approved during calendar year
2014 may act as a qualified intermediary
in accordance with Revenue Procedure
2000 –12 (as amended) until June 30,
2014, as if the QI agreement of such QI
were effective on January 1, 2014 and
expires on June 30, 2014.
.04 Effect on Other Documents. Revenue Procedure 2000 –12, 2000 –1 C.B.
387, is superseded with respect to the requirements of a QI that apply on or after
June 30, 2014. A QI agreement (which
includes any riders to such agreement) in
effect before June 30, 2014 expires on
June 30, 2014. Revenue Procedure 2002–
55, 2002–2 C.B. 435, is revoked.
SECTION 2. WITHHOLDING AND
REPORTING REQUIREMENTS
UNDER CHAPTERS 3, 4, AND 61
AND SECTION 3406
.01 In General.
(A) Withholding and Reporting under
Chapter 4 on Payments Made to Foreign
Financial Institutions and Other Payees.
Section 1471(a) requires a withholding
agent to deduct and withhold a tax equal
to 30 percent on any withholdable payment made to an FFI, unless the FFI
agrees to and complies with the terms of
the FFI agreement to satisfy the obligations specified in section 1471(b) (a participating FFI), is deemed to meet these
requirements under section 1471(b) (a
deemed-compliant FFI), or is treated as an
exempt beneficial owner under § 1.1471–6.
Section 1472(a) requires a withholding
agent to deduct and withhold a tax equal
to 30 percent on any withholdable payment made to an NFFE unless such entity
provides a certification that it does not
have any substantial U.S. owners, provides information regarding its substantial
U.S. owners, or an exception otherwise
applies.
A participating FFI (including a reporting Model 2 FFI) or registered deemedcompliant FFI (including a nonreporting
Model 2 FFI treated as registered deemed-

Bulletin No. 2014 –29

compliant but excluding a reporting
Model 1 FFI) will satisfy its requirement
to withhold under sections 1471(a) and
1472(a) with respect to direct account
holders that are entities by withholding on
withholdable payments made to nonparticipating FFIs and recalcitrant account
holders under the FFI agreement,
§ 1.1471–5(f), or an applicable Model 2
IGA. See the FFI agreement, § 1.1471–
5(f), and the applicable Model 2 IGA for
the additional withholding requirements
that may apply to withholdable payments
made to direct account holders that are
individuals and are treated as recalcitrant
account holders. A reporting Model 1 FFI
or a registered deemed-compliant Model 1
IGA FFI will satisfy its requirement to
withhold under section 1471(a) with respect to direct account holders by withholding on withholdable payments made
to nonparticipating FFIs to the extent required under the applicable Model 1 IGA.
A withholding agent (including a participating FFI or registered deemedcompliant FFI) that is required to withhold on a withholdable payment must
report the payment on Form 1042–S, Foreign Person’s U.S. Source Income Subject
to Withholding.
A participating FFI (including a reporting Model 2 FFI), a registered deemedcompliant FFI (including a reporting
Model 1 FFI and a nonreporting Model 2
FFI treated as registered deemedcompliant), or a registered deemedcompliant Model 1 IGA FFI must also
report certain account information regarding a U.S. account (or U.S. reportable
account) that it maintains to the extent
required under the FFI agreement,
§ 1.1471–5(f), a Model 1 IGA, or a Model
2 IGA, as applicable to the FFI’s chapter
4 status. A participating FFI (including a
reporting Model 2 FFI) or registered
deemed-compliant FFI (other than a reporting Model 1 FFI) must report certain
information about accounts that it maintains that are held by recalcitrant account
holders (or non-consenting U.S. accounts). A participating FFI (including a
reporting Model 2 FFI), registered
deemed-compliant FFI (including a reporting Model 1 FFI and a nonreporting
Model 2 FFI treated as registered deemedcompliant), or registered deemedcompliant Model 1 IGA FFI must, for a

151

transitional period, report certain information about accounts it maintains that are
held by nonparticipating FFIs. A withholding agent (including an FFI with respect to payments made to an NFFE that
were not already reported as made to U.S.
accounts (or U.S. reportable accounts)) is
also required to report withholdable payments made to an NFFE (other than an
excepted NFFE) with substantial U.S. owners on Form 8966, FATCA Report, even
though no withholding is required. See
§§ 1.1472–1(b)(iii) and 1.1474 –1(d) and (i).
(B) Withholding and Reporting under
Chapter 3 on Payments to Foreign Persons. Sections 1441 and 1442 require a
withholding agent to deduct and withhold
a tax equal to 30 percent on any payment
of U.S. source fixed or determinable, annual or periodical (FDAP) income that is
an amount subject to withholding (as defined in § 1.1441–2(a)) made to a foreign
person. A lower rate of withholding may
apply under the Code (e.g., section 1443),
the regulations, or an income tax treaty.
Generally, a withholding agent must also
report the payments on Forms 1042–S regardless of whether withholding is required. See § 1.1461–1(c).
(C) Backup Withholding under Section
3406 and Reporting on Payments to Certain U.S. Persons under Chapter 61. Under sections 6041, 6042, 6045, 6049, and
6050N (chapter 61 or the Form 1099 reporting provisions), payors of interest,
dividends, royalties, gross proceeds from
the sales of securities, and other fixed or
determinable income must report payments made to certain U.S. persons (i.e.,
U.S. non-exempt recipients or presumed
U.S. non-exempt recipients) on the appropriate Form 1099 unless an exception to
reporting applies. See §§ 1.6041– 4(a);
1.6042–3(b)(1)(iii);
1.6045–1(g)(1)(i);
1.6049 –5(b)(12); and 1.6050N–1(c)(1)(i).
Under section 3406, a payor must generally obtain a Form W–9, Request for Taxpayer Identification Number and Certification, from a U.S. payee receiving a
payment reportable on a Form 1099 or
must otherwise backup withhold under
section 3406 and report the payment on
Form 1099.
(D) Coordination of Withholding and
Reporting Requirements under Chapters 3
and 4. With respect a payment that is
subject to withholding under chapter 4, a

July 14, 2014

withholding agent may credit any tax
withheld under chapter 4 against its liability for any tax due with respect to the
payment under chapter 3. A withholding
agent may use a single Form 1042–S to
report information required under both
chapters 3 and 4 with respect to a withholdable payment of U.S. source FDAP
income subject to withholding under
chapter 4 and for which a credit against
the beneficial owner’s chapter 3 liability,
if any, may be claimed. Thus, a withholding agent that reports on Form 1042–S a
withholdable payment that has been withheld upon under chapter 4 may provide
certain information on the same Form
1042–S about the beneficial owner for
purposes of chapter 3. With respect to a
withholdable payment of U.S. source
FDAP income that is not subject to withholding under chapter 4 and that is an
amount subject to withholding (or reporting) under chapter 3, a withholding agent
is also required to report the applicable
chapter 4 exemption code in addition to
the other information required to be reported on Form 1042–S.
For additional coordination of the
withholding and reporting requirements of
a participating FFI (including a reporting
Model 2 FFI), registered deemedcompliant FFI (including a reporting
Model 1 FFI and a nonreporting Model 2
FFI), or a registered deemed-compliant
Model 1 IGA FFI under chapters 3, 4, and
61, and section 3406, see sections
3.01(B), 3.04(B) and 8.04 of the QI agreement.
.02 Responsibilities of Intermediaries
that Enter into the QI Agreement. When
the IRS enters into a QI agreement with a
foreign person, that foreign person becomes a QI. A QI is a withholding agent
under chapters 3 and 4, and a payor under
chapter 61 and section 3406 for amounts
that it pays to its account holders. The
general obligations of a QI as a withholding agent and payor are described in section 1.01 of the QI agreement and are
relevant to whether an event of default
occurs under section 11.04 of the QI
agreement.
.03 Highlight of Changes to the QI
Agreement. A summary of the significant
changes to the existing QI agreement is as
follows:

July 14, 2014

(A) Non-Financial Entities Acting as
QIs. The scope of eligible entities allowed
to apply for and enter into the existing QI
agreement is generally limited to FFIs,
foreign clearing organizations, and foreign branches of U.S. financial institutions
and U.S. clearing organizations. Nonfinancial foreign corporations that sought
to claim treaty benefits on behalf of shareholders or that sought to act as intermediaries for account holders that are unrelated
persons generally could only apply to enter into QI agreements by executing riders
to the agreements because the agreements
did not provide guidance on how an entity
other than an entity described in the preceding sentence could operate as a QI.
The revised QI agreement clarifies that a
non-financial foreign corporation or intermediary is eligible to enter into the QI
agreement and describes the specific requirements for such an entity to the extent
they differ from the requirements applicable to a QI that is an FFI. Thus, for a
non-financial foreign corporation or intermediary, the QI agreement in section 4 of
this revenue procedure may be executed
without the need for any rider to the
agreement. Treasury and the IRS will,
however, consider comments requesting
further revisions to the agreement to address the requirements of QIs that are not
FFIs. Notwithstanding these revisions to
the agreement, a non-financial entity will
require approval from the IRS to obtain
QI status as described in section 3 of this
revenue procedure, and the IRS expects
that foreign flow-through entities entering
into withholding agreements on behalf of
their owners for chapters 3 and 4 purposes
will generally be required to obtain status
as a withholding foreign partnership or
withholding foreign trust.
(B) Coordinating Chapter 4 Requirements of QIs that are FFIs. In the case of
a QI that is an FFI, the revised QI agreement, generally reflecting the provisions
under § 1.1441–1(e)(5), limits status as a
QI to an FFI that is a participating FFI
(including a reporting Model 2 FFI), a
registered deemed-compliant FFI (including a reporting Model 1 FFI and a nonreporting Model 2 FFI treated as registered
deemed-compliant), a registered deemedcompliant Model 1 IGA FFI, a limited
FFI, or under certain conditions a central
bank of issue. An FFI that has entered into

152

a QI agreement will be subject to the
FATCA requirements applicable to its
chapter 4 status for all of the accounts that
it maintains irrespective of whether the
FFI is acting as a QI with respect to such
an account (or with respect to a central
bank of issue, all accounts that it maintains and that are held in connection with
a commercial financial activity and for
which it receives a withholdable payment). When an FFI chooses to act as a QI
with respect to an account that it maintains, the FFI will continue to have the
obligation to comply with its FATCA obligations applicable to its chapter 4 status,
except when such FATCA obligations
have been explicitly modified in the QI
agreement. The agreement also references
a QI’s chapter 4 requirements as required
to coordinate those requirements with the
QI’s other requirements under the QI
agreement.
For example, the QI agreement specifies when a QI’s FATCA requirements
with respect to its account holders (including U.S accounts) will satisfy its chapter
61 reporting obligations for payments
made to its account holders, and when a
QI may provide or receive a withholding
statement that applies this coordination
rule by permitting a QI to allocate payments (or receive payment allocations) to
a chapter 4 withholding rate pool of U.S.
payees. The QI agreement addresses the
coordination rule for chapters 4 and 61
reporting with respect to when a QI assumes or does not assume primary reporting and backup withholding responsibilities under chapter 61 and section 3406.
(C) QIs Acting as Qualified Securities
Lenders (QSLs). The revised QI agreement permits a QI to act as a QSL with
respect to payments of U.S. source substitute dividends consistent with Notice
2010 – 46, 2010 –24 I.R.B. 757. Pursuant
to the QI agreement, a QI that acts as a
QSL is required to act as a QSL with
respect to all U.S. source substitute dividends that it receives as an intermediary
or dealer. The QI agreement is intended to
otherwise incorporate the requirements
applicable to a QSL pursuant to Notice
2010 – 46 or any subsequent guidance prescribing the requirements of the QSL.
(D) Reporting under Section 1472. As
described in section 2.01(A) of this revenue procedure, a QI will be required to

Bulletin No. 2014 –29

withhold under section 1472 to the extent
required in the QI agreement. Regardless
of whether a QI assumes this withholding
obligation under the QI agreement and
regardless of whether the QI is an FFI, a
QI will be required under the agreement to
assume primary reporting obligations for
section 1472 purposes with respect to passive NFFEs that have substantial U.S.
owners (or controlling persons that are
specified U.S. persons) and will not be
required to provide specific payee information to other withholding agents for
purposes of this reporting. A QI will also
be required to act as a direct reporting
NFFE for purposes of reporting its substantial U.S. owners under § 1.1472–
1(c)(4) when it acts as a QI on behalf of its
shareholders.
(E) Private Arrangement Intermediaries (PAIs). Under the existing QI agreement, a QI may enter into an agreement
with another intermediary (private arrangement intermediary or PAI) under
which the PAI would generally fulfill the
obligations of a QI without the need to
execute a QI agreement with the IRS. To
coordinate with the requirements of foreign entities under chapter 4, under the
revised QI agreement, only a QI that is an
FFI is allowed to enter into an agreement
with a PAI. Additionally, to be eligible to
be treated as a PAI, the intermediary must
be a certified deemed-compliant FFI under § 1.1471–5(f)(2) (other than a registered deemed-compliant Model 1 IGA
FFI). To coordinate with the withholding
and reporting requirements of chapter 4,
the QI agreement permits PAIs to allocate
payments to a chapter 4 withholding rate
pool on a withholding statement provided
to a QI that treats the intermediary as a
PAI, in addition to the allowance for a
PAI to allocate payments received from
the QI to chapter 3 withholding rate pools.
The QI agreement also specifies that an
intermediary cannot act as a PAI with
respect to its direct account holders that
are qualified intermediaries, withholding
foreign trusts, withholding foreign partnerships, participating FFIs (including reporting Model 2 FFIs), registered deemedcompliant FFIs (including reporting
Model 1 FFIs and nonreporting Model 2
FFIs treated as registered deemedcompliant), or registered deemedcompliant Model 1 IGA FFIs. Finally, the

Bulletin No. 2014 –29

compliance requirements of a PAI are coordinated with the compliance requirements applicable to a QI in section 10 of
the QI agreement.
(F) Treatment of Certain Partnerships
and Trusts. The revised QI agreement includes in sections 4.05 and 4.06 the joint
account and agency options in sections
4A.01 and .02 of the existing QI agreement, which allow a QI to enter into an
agreement with a nonwithholding foreign
partnership or nonwithholding foreign
trust to apply simplified documentation,
withholding, and reporting requirements
for payments made to these entities. Similar to the modifications applicable to a
QI’s agreement with a PAI, the revisions
to these procedures specify and limit the
chapter 4 statuses required of partnerships
and trusts (including their partners, owners, and beneficiaries, as applicable) to
which a QI may apply the procedures of
sections 4.05 and 4.06.
(G) QI’s Documentation Requirements
for Chapters 3 and 4 Purposes. The revised QI agreement updates the documentation requirements under the existing QI
agreement to reference the documentation
requirements applicable to a QI with respect to payees to which it makes withholdable payments and, with respect to a
QI that is a participating FFI (including a
reporting Model 2 FFI), a registered
deemed-compliant FFI (including a reporting Model 1 FFI or a nonreporting
Model 2 FFI treated as registered deemedcompliant), or a registered deemedcompliant Model 1 IGA FFI, the due diligence requirements applicable to the
FFI’s chapter 4 status. For documenting
its direct account holders for chapters 3
and 61 purposes, the QI agreement retains
the requirement limiting a QI that is an
FFI’s use of documentary evidence to
documentary evidence permitted under
the QI’s know-your-customer rules. Thus,
as under the existing QI agreement, a QI
may act as a QI only in a jurisdiction with
know-your-customer rules approved by
the IRS. The requirements relating to the
use of documentary evidence do not apply
to an NFFE acting as a QI, as such entity
is required to obtain Forms W– 8 and W–9
from its account holders. The QI agreement also incorporates changes to the documentation requirements applicable to a
QI for chapter 3 purposes consistent with

153

the temporary regulations under section
1441 (see T.D. 9658). For example, the QI
agreement modifies the documentation
validity standards for QIs in section 5.10
to account for the reason to know standards applicable to a withholding agent
with respect to an account holder’s claim
of foreign status as reflected in the revisions made by the temporary regulations
to § 1.1441–7(b).
(H) QI’s Presumption Rules and Reliable Association of Payments. Section
5.13(C) of the existing QI agreement
specifies the presumption rules applicable
to a QI, including the presumption rules
applicable to a QI making reportable payments for chapter 61 purposes other than
amounts subject to chapter 3 withholding,
and substantially incorporates the presumption rules for withholding agents and
U.S. and non-U.S. payors under the chapters 3 and 61 regulations as then in effect.
The revised QI agreement modifies the
presumption rules of the existing QI
agreement to coordinate with the presumption rules of chapter 4 with respect to
a payee of a withholdable payment and
with the revisions to the presumption rules
made in the temporary coordination regulations applicable to payors of reportable
payments. See § 1.6049 –5(d)(2) and (3).
The QI agreement also revises the circumstances in which a QI can avoid application of the presumption rules by modifying the rules for when the QI can reliably
associate a payment with valid documentation for how intermediaries and flowthrough entities may provide withholding
statements to withholding agents (including QIs) for chapter 4 purposes.
(I) QI’s Reporting on Form 1042–S.
The QI agreement substantially modifies
the existing QI agreement with respect to
a QI’s Form 1042–S reporting requirements by adding the reporting required
with respect to certain intermediaries and
flow-through entities that provide chapter
4 withholding rate pool information to the
QI on withholding statements. The revised
requirements also reference the Form
1042–S requirements of a QI with respect
to its direct account holders when chapter
4 withholding applies, and allow the QI to
file Forms 1042–S with respect to a chapter 4 withholding rate pool.
(J) QI’s Compliance Procedures. Under the existing QI agreement, unless a QI

July 14, 2014

requested an IRS audit instead of an internal audit or qualified for a waiver, the
QI was required to engage an external
auditor to complete an audit of the second
and fifth full calendar years that the QI
agreement was in effect, and the external
auditor was required to provide its findings directly to the IRS. The revised QI
agreement replaces the external audit requirement with an internal compliance
program. As part of the internal compliance program, a QI is required to designate a responsible officer who will oversee the QI’s compliance with the QI
agreement, make the periodic certifications to the IRS described in section 10.03
of the QI agreement, and provide certain
factual information regarding the QI
which will vary depending on the amount
of reportable amounts received by the QI.
The periodic certification will be required
every three calendar years (including extensions to the agreement). Although the
QI will be required to arrange for the
performance of a periodic review of its
compliance with the QI agreement, the
revised agreement provides more flexibility than the existing agreement with respect to the auditors that will be eligible to
perform the review as well as the content
of the auditor’s report, which will no longer be required to be filed with the IRS
absent a specific request. Additionally, the
auditor’s procedures will be required to
conform to the review procedures outlined
in section 10 of the QI agreement rather
than the more prescriptive audit steps set
forth in Revenue Procedure 2002–55,
thereby permitting the auditor to excise
more judgment regarding the specific
steps required to conduct the review.
(K) Events of Default. The revised QI
agreement specifies that when the QI is
acting as a nonqualified intermediary with
respect to a non-QI designated account (as
defined in section 2.66 of the QI agreement), the QI’s compliance with its obligations under chapters 3 and 61 and section 3406 are factors in determining
whether an event of default has occurred
under section 11.04 of the QI agreement.
(L) Term of the Revised QI Agreement.
For all QIs that enter into the revised QI
agreement, the agreement will expire, unless otherwise previously terminated, on
December 31, 2016. The term of the revised QI agreement is consistent with the

July 14, 2014

term of the FFI agreement. See Revenue
Procedure 2014 –13, as revised by Revenue Procedure 2014 –38, for more information about the FFI agreement.
SECTION 3. APPLICATION FOR QI
STATUS
.01 Prospective QI. A prospective QI
must submit Form 14345, Qualified Intermediary Application, to become a QI. An
application must include the information
required by Form 14345 and any additional information and documentation requested by the IRS. The Form 14345 must
establish, to the satisfaction of the IRS,
that the applicant has adequate resources
and procedures to comply with the terms
of the QI agreement. A prospective QI
must apply for QI status by submitting
Form 14345 to:
Internal Revenue Service
Foreign Payments Practice
Foreign Intermediaries Program
290 Broadway, 12th Floor NW
New York, New York 10007-1867
Attention: QI Applications
Once the QI application is approved,
the IRS will send an approval notice to the
address of the QI provided on Form
14345. The approval notice will include a
QI-EIN for fulfilling the requirements of a
QI under chapters 3, 4, and 61, and section
3406, including making tax deposits and
filing Forms 945, 1042, 1042–S, 1099,
and 8966, and will also instruct a QI
(other than an NFFE that is not acting on
behalf of its shareholders) to submit the
information specified in Form 8957, Foreign Act Tax Compliance Act (FATCA)
Registration,
(“registration
form”)
through the FATCA registration website
available at www.irs.gov/FATCA, to obtain its chapter 4 status as a participating
FFI, registered deemed-compliant FFI, or
direct reporting NFFE and must register
as a QI by providing the information specified for renewal of QI status. An NFFE
that is acting as a sponsoring entity (as
defined in § 1.1471–1(b)(124)) of a direct
reporting NFFE and that obtains QI status
must also register as a QI on the FATCA
registration website by providing the information specified for renewal of QI status. Upon completion of the registration
process, an FFI (other than a limited FFI
or limited branch of an FFI) will be issued

154

a GIIN to be used to identify itself to
withholding agents and to tax administrators for FATCA reporting. In the case of
an NFFE that is not acting on behalf of its
shareholders, the approval notice will provide the date on which the QI-EIN is
issued (which will serve as the effective
date of the QI agreement).
For future years, the IRS intends to
update the online FATCA registration
website to allow prospective QIs to submit a QI application electronically and in
such manner as the IRS may prescribe in
future guidance or other instructions. Until this update to the FATCA registration
website occurs, a prospective QI must
submit to the IRS address identified above
a paper Form 14345.
Except as otherwise provided in future
published guidance, the IRS will not enter
into a QI agreement with an FFI that provides for the use of documentary evidence
obtained under a jurisdiction’s knowyour-customer rules if it has not approved
the “know-your-customer” practices and
procedures for opening accounts. A list of
jurisdictions for which the IRS has received know-your-customer information
and for which the know-your-customer
rules are acceptable is available at: http://
www.irs.gov/Businesses/InternationalBusinesses/List-of-Approved-KYC-Rules.
To request approval of a jurisdiction’s
know-your-customer rules, contact the
KYC coordinator in the Foreign Intermediaries Program at the address provided
above.
.02 Existing QI. An FFI that seeks to
renew its QI agreement as well as register
as a participating FFI, registered deemedcompliant FFI, or limited FFI must do so
by submitting a registration form through
the FATCA registration website available
at www.irs.gov/FATCA. An NFFE that is a
direct reporting NFFE or a sponsoring entity of a direct reporting NFFE must also
renew its QI agreement through the
FATCA registration website. As part of
the FATCA registration process, the QI
must include the information specified in
the registration form and its accompanying instructions. The FFI or NFFE should
ensure that it has provided to the IRS all
of the information that is required to complete its FATCA registration and renew its
QI agreement. Upon completion of the
registration process and approval by the

Bulletin No. 2014 –29

IRS, an FFI (other than a limited FFI) or
NFFE will be issued a GIIN to be used to
identify itself to a withholding agent and
to a tax administration for FATCA reporting. A QI will also retain its QI-EIN to be
used when it is fulfilling the requirements
of a QI under chapters 3, 4, and 61 and
section 3406, including making tax deposits and filing Forms 945, 1042, 1042–S,
1099, and 8966.
A QI that is an NFFE and that is not
acting as a QI on behalf of its shareholders
and is not a sponsoring entity must renew
its QI agreement by submitting a request
for renewal to the Foreign Intermediaries
Program at the address provided in section
3.01 of this revenue procedure.
SECTION 4. QUALIFIED
INTERMEDIARY AGREEMENT
The text of the QI agreement is set
forth below. The IRS will no longer provide signed copies of the QI agreement. A
reporting Model 2 FFI should apply this
Agreement by substituting the term “reporting Model 2 FFI” for “participating
FFI” throughout this Agreement, except in
cases where this Agreement explicitly refers to a reporting Model 2 FFI. A reporting Model 1 FFI and nonreporting Model
2 FFI treated as a registered deemedcompliant FFI should apply this Agreement by substituting the term “reporting
Model 1 FFI” or “nonreporting Model 2
FFI” (as applicable) for “registered
deemed-compliant FFI” throughout this
Agreement, except in cases where this
Agreement explicitly refers to a reporting
Model 1 FFI or nonreporting Model 2 FFI
treated as a registered deemed-compliant
FFI.
THIS AGREEMENT is made under
and in pursuance of sections 1441, 1442,
1471, and 1472 and Treasury Regulation
§ 1.1441–1(e)(5):
WHEREAS, QI has submitted an application in accordance with this revenue
procedure to be a qualified intermediary;
WHEREAS, QI and the IRS desire to
enter into an agreement to establish QI’s
rights and obligations regarding documentation, withholding, information reporting, tax return filing, deposits, and refund
procedures under sections 1441, 1442,
1443, 1461, 1471, 1472, 1474, 3406,
6041, 6042, 6045, 6049, 6050N, 6302,

Bulletin No. 2014 –29

6402, and 6414 with respect to certain
types of payments;
WHEREAS, QI represents that there
are no legal restrictions that prohibit it
from complying with the requirements of
this Agreement;
WHEREAS, if QI is a foreign financial institution (FFI), QI represents that, as
of the effective date of this Agreement, it
has agreed to comply with the requirements of the FFI agreement, in the case of
a participating FFI; § 1.1471– 4(e)(4), in
the case of a limited FFI; § 1.1471–5(f)(1)
or the applicable Model 2 IGA, in the case
of a registered deemed-compliant FFI
(other than a reporting Model 1 FFI); or
the applicable IGA, in the case of a reporting Model 1 FFI or a registered
deemed-compliant Model 1 IGA FFI; and
WHEREAS, if QI is an NFFE that
desires to enter into this Agreement for
purposes of presenting claims of benefits
under an income tax treaty on behalf of its
shareholders, QI represents that it will
comply with the requirements of a direct
reporting NFFE under § 1.1472–1(c)(3);
NOW, THEREFORE, in consideration of the following terms, representations, and conditions, the parties agree as
follows:
SECTION 1. PURPOSE AND SCOPE
Sec. 1.01. General Obligations. When
the IRS enters into a QI agreement with a
foreign person, that foreign person becomes a QI. QI is a withholding agent
under chapters 3 and 4, and a payor under
chapter 61 and section 3406, for amounts
that it pays to its account holders.
If QI is an FFI, the requirements QI has
agreed to as a participating FFI, registered
deemed-compliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI continue to apply in addition to the
requirements under this Agreement. If QI
acts as a QI with respect to an account,
this Agreement will reference QI’s chapter 4 obligations when necessary to facilitate coordination with a QI’s obligations
under chapters 3, 4, and 61, and section
3406, with respect to such account holders. A participating FFI’s obligations are
provided in the FFI agreement, a limited
FFI’s obligations are provided in
§ 1.1471– 4(e)(4), a registered deemedcompliant FFI’s (other than a reporting
Model 1 FFI) obligations are provided in

155

§ 1.1471–5(f)(1), and the obligations of a
reporting Model 1 FFI or a registered
deemed-compliant Model 1 IGA FFI are
provided in the applicable Model 1 IGA.
For purposes of chapter 4, QI must comply with its FATCA requirements as a
participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI (as applicable) with respect to all financial accounts that it maintains, irrespective of whether QI acts as a QI with
respect to an account holder, as well as the
requirements of a withholding agent for
any payee that is a nonparticipating FFI or
NFFE that is not an account holder. If QI
is an FFI, QI must also, pursuant to this
Agreement, assume primary reporting responsibility for purposes of section 1472,
for certain indirect account holders for
which it acts as a QI.
If QI is an NFFE acting as a QI on
behalf of its shareholders, the requirements QI has agreed to as a direct reporting NFFE apply in addition to the requirements under this Agreement, and, to the
extent necessary to facilitate coordination
of its direct reporting NFFE obligations
with its obligations as a QI, the direct
reporting NFFE obligations are incorporated into this Agreement. A direct reporting NFFE’s obligations are provided in
§ 1.1472–1(c)(3). For purposes of chapter
4, if QI is an NFFE acting as a QI on
behalf of its shareholders, QI must comply
with the requirements of a direct reporting
NFFE with respect to any shareholder that
is a substantial U.S. owner as defined in
§ 1.1473–1(b). If QI is an NFFE acting on
behalf of persons other than its shareholders, QI must assume primary reporting
responsibility for purposes of section
1472 for any person for which it acts as a
QI.
For purposes of chapters 3 and 61 and
section 3406, QI must act in its capacity as
QI pursuant to this Agreement for those
accounts that QI holds with a withholding
agent and that QI has designated as accounts for which it acts as a QI. QI is not
required to act as a QI for all accounts that
it holds with a withholding agent. However, QI must, as part of its QI agreement,
materially comply with the requirements
of a withholding agent or payor, as applicable to a nonqualified (foreign) intermediary under chapters 3 and 61 and section

July 14, 2014

3406, for any account for which it does
not (or cannot) act as a QI and for any
payee that is not an account holder. If QI
designates an account as one for which it
will act as a QI, it must act as a QI for all
payments made to that account and obtain
the documentation required under section
5 of this Agreement for such account.
When QI acts as a QI for an account
and assumes primary chapter 3 withholding responsibility for payments to the account, QI must also assume primary withholding responsibility for withholdable
payments made to such account for chapter 4 purposes. If QI acts as a qualified
securities lender (QSL) with respect to
payments of substitute dividends (as defined in section 871(m) and the regulations under that section), QI is required to
act as a QSL and assume primary withholding responsibility for all substitute
dividends received and paid by QI when
acting as an intermediary or dealer with
respect to securities lending and similar
transactions.
If QI acts as a sponsoring entity on
behalf of a sponsored FFI (as defined in
§ 1.1471–1(b)(121)) or sponsored direct
reporting NFFE (as defined in § 1.1471–
1(b)(123)), it must comply with the due
diligence, withholding, reporting, and
compliance requirements of a sponsoring
entity in addition to its requirements under
this Agreement.
Sec. 1.02. Parties to the Agreement.
This Agreement applies to:
(A) QI; and
(B) The Internal Revenue Service.
If QI is an FFI, QI can only designate
an account that it holds as a QI designated
account if the branch of QI that holds the
account operates in a KYC jurisdiction
identified under the QI agreement. QI may
add any jurisdiction in which it operates a
branch that is not initially included in its
QI application without prior IRS approval
if the jurisdiction is one for which the IRS
will enter a qualified intermediary agreement (i.e., the jurisdiction is identified on
the IRS’s Approved KYC List) and QI
updates its information on the FATCA
registration website with respect to such
branch. A branch of a QI that is not subject to the provisions of this Agreement
remains subject to the rules of chapters 3,
4, and 61, and section 3406, as provided in
section 1.01 of this Agreement.

July 14, 2014

SECTION 2. DEFINITIONS
For purposes of this Agreement, the
terms listed below are defined as follows:
Sec. 2.01. Account. “Account” or “Financial Account” has the meaning given
to that term in § 1.1471–1(b) with respect
to QI’s obligations for chapter 4 purposes
and otherwise means any account for
which QI acts as a qualified intermediary.
Sec. 2.02. Account Holder. If QI is an
FFI, an “account holder” means any person that is a direct account holder or an
indirect account holder of an account that
QI has designated to its withholding agent
as an account for which it is acting as a
qualified intermediary and also includes
any person that receives a payment of a
U.S. source substitute dividend from QI
that is a qualified securities lender acting
as a dealer or intermediary for the payment. If QI is an NFFE acting on behalf of
its shareholders, an “account holder”
means each owner for whom QI is acting
with respect to an amount subject to chapter 3 withholding and, with respect to a
withholdable payment, any direct or indirect owner of QI that is a substantial U.S.
owner. If QI is an NFFE acting as a qualified intermediary on behalf of persons
other than its shareholders, an “account
holder” means any person for whom QI is
acting with respect to a reportable payment.
(A) Direct Account Holder. A direct
account holder is any person who has an
account or ownership interest directly
with or in QI, or, in the case of an NFFE
acting as a qualified intermediary on behalf of persons other than its shareholders,
any person for whom QI is acting with
respect to a reportable payment regardless
of whether such person is the beneficial
owner.
(B) Indirect Account Holder. An indirect account holder is any person who
receives amounts from QI but who does
not have a direct relationship with QI. For
example, a person that holds an account
with a foreign intermediary or an interest
in a flow-through entity which, in turn,
has a direct relationship with QI is an
indirect account holder. A person is an
indirect account holder even if there are
multiple tiers of intermediaries or flowthrough entities between the person and
QI. For chapter 4 purposes, if QI is an

156

NFFE, an indirect account holder includes
any person treated as a substantial U.S.
owner under § 1.1473–1(b).
Sec. 2.03. Agreement. “Agreement”
means this Agreement, all appendices and
attachments to this Agreement, and QI’s
application to become a qualified intermediary. All such appendices, attachments,
and QI’s application are incorporated into
this Agreement by reference.
Sec. 2.04. Amount Subject to Chapter 3 Withholding. An “amount subject
to chapter 3 withholding” is an amount
described in § 1.1441–2(a) regardless of
whether such amount is withheld upon.
An amount subject to chapter 3 withholding shall not include interest paid as part
of the purchase price of an obligation sold
between interest payment dates or original
issue discount paid as part of the purchase
price of an obligation sold in a transaction
other than the redemption of such obligation, unless the sale is part of a plan the
principal purpose of which is to avoid tax
and QI has actual knowledge or reason to
know of such plan.
Sec. 2.05. Amount Subject to Chapter 4 Withholding. An “amount subject
to chapter 4 withholding” is an amount
that is a withhholdable payment (as defined in section 2.91 of this Agreement)
for which withholding is required under
chapter 4 or an amount for which withholding was otherwise applied under
chapter 4.
Sec. 2.06. Assumption of Withholding Responsibility. A QI that assumes
primary chapters 3 and 4 withholding responsibility with respect to payments of
U.S. source FDAP income, or assumes
primary Form 1099 reporting and backup
withholding responsibility, assumes the
primary responsibility for deducting,
withholding, and depositing the appropriate amount from a payment. Generally,
QI’s assumption of primary chapters 3
and 4 withholding responsibility or the
assumption of primary backup withholding responsibility relieves the person who
makes a payment to QI from the responsibility to withhold. Under section 3.05 of
this Agreement, QI generally has primary
Form 1099 reporting and backup withholding responsibility with respect to certain payments even though it does not
assume such responsibility for payments
not described in that section.

Bulletin No. 2014 –29

Sec. 2.07. Backup Withholding.
“Backup withholding” means the withholding required under section 3406.
Sec. 2.08. Beneficial Owner. A “beneficial owner” has the meaning given to
that term in § 1.1441–1(c)(6).
Sec. 2.09. Broker Proceeds. “Broker
proceeds” means gross proceeds (as defined in § 1.6045–1(d)(5)) from a sale that
is reportable under § 1.6045–1(c).
Sec. 2.10. Chapter 3. Any reference to
“chapter 3” means sections 1441, 1442,
1443, 1461, 1463, and 1464.
Sec. 2.11. Chapter 3 Reporting Pool.
A chapter 3 reporting pool means a reporting pool described in section 8.03(B) of
this Agreement.
Sec. 2.12. Chapter 4. Any reference to
“chapter 4” means sections 1471, 1472,
1473, and 1474.
Sec. 2.13. Chapter 4 Reporting Pool.
A chapter 4 reporting pool means a reporting pool described in section 8.03(A) of
this Agreement.
Sec. 2.14. Chapter 4 Status. “Chapter
4 status” means the status of a person as a
U.S. person, a specified U.S. person, an
individual that is a foreign person, a participating FFI, a deemed-compliant FFI, a
restricted distributor, an exempt beneficial
owner, a nonparticipating FFI, a territory
financial institution, an excepted NFFE, or
a passive NFFE.
Sec. 2.15. Chapter 4 Withholding
Statement. A “chapter 4 withholding
statement” is a withholding statement that
contains the name, address, foreign TIN
or U.S. TIN (if any), entity type, and
chapter 4 status of each payee; the amount
allocated to each payee; a valid withholding certificate or other appropriate documentation sufficient to establish the chapter 4 status of each payee and each
intermediary or flow-through entity that
receives the payment on behalf of the payee; and any other information the withholding agent reasonably requests to fulfill its obligations under chapter 4. A
chapter 4 withholding statement is permitted to provide pooled allocation information with respect to payees that are treated
as nonparticipating FFIs.
Sec. 2.16. Chapter 61. Any reference
to “chapter 61” means sections 6041,
6042, 6045, 6049, and 6050N.
Sec. 2.17. Deemed-Compliant FFI.
“Deemed-compliant FFI” means an FFI

Bulletin No. 2014 –29

that is treated, pursuant to section
1471(b)(2) and § 1.1471–5(f), as meeting
the requirements of section 1471(b).
(A) Certified Deemed-Compliant
FFI. “Certified deemed-compliant FFI”
means an FFI described in § 1.1471–
5(f)(2) and includes a nonreporting IGA
FFI, but excludes a nonreporting Model 2
FFI that is treated as registered deemedcompliant.
(B) Registered Deemed-Compliant
FFI. “Registered deemed-compliant” FFI
means an FFI described in § 1.1471–
5(f)(1) and includes a reporting Model 1
FFI and a nonreporting Model 2 FFI that
is treated as registered deemed-compliant.
For purposes of this Agreement, a reference to a registered deemed-compliant
FFI that is providing a chapter 4 withholding rate pool of U.S. payees includes a
registered deemed-compliant Model 1
IGA FFI.
(C) Registered Deemed-Compliant
Model 1 IGA FFI. “Registered deemedcompliant Model 1 IGA FFI” means an
FFI treated as a deemed-compliant FFI
under an applicable Model 1 IGA that is
subject to similar due diligence and reporting requirements with respect to U.S.
accounts as those applicable to a registered deemed-compliant FFI under
§ 1.1471–5(f)(1).
Sec. 2.18. Deposit Interest. “Deposit
interest” means interest described in section 871(i)(2)(A).
Sec. 2.19. Documentary Evidence.
“Documentary evidence” means any documentation obtained under the appropriate
know-your-customer rules (as described
in the Attachments to this Agreement),
any documentary evidence described in
§ 1.1441– 6 sufficient to establish entitlement to a reduced rate of withholding
under an income tax treaty, or any documentary evidence described in § 1.6049 –
5(c) sufficient to establish an account
holder’s status as a foreign person for
purposes of chapter 61. Documentary evidence does not include a Form W– 8 or
Form W–9 (or an acceptable substitute
Form W– 8 or Form W–9).
Sec. 2.20. Documentation. “Documentation” means any valid Form W– 8,
Form W–9 (or an acceptable substitute
Form W– 8 or Form W–9), or documentary evidence as defined in section 2.19 of
this Agreement, including all statements

157

or other information required to be associated with the form or documentary evidence.
Sec. 2.21. Documented Account
Holder. A “documented account holder”
is an account holder for whom QI holds
valid documentation.
Sec. 2.22. Effective Date of the QI
Agreement. For an FFI (other than a limited FFI) or an NFFE that is a direct
reporting NFFE or a sponsoring entity, the
effective date of the QI agreement is the
later of the date on which the IRS issues a
QI-EIN to the QI or the date on which the
IRS issues a GIIN to the QI. For NFFEs
not described in the previous sentence, the
effective date of the QI agreement is the
date provided in the approval notice from
the IRS. For QIs that receive a GIIN prior
to June 30, 2014, the effective date of the
QI agreement is June 30, 2014. For limited FFIs, the effective date of the QI
agreement is the date the FFI completes
its registration on the FATCA registration
website.
Sec. 2.23. Excepted NFFE. “Excepted
NFFE” means a person described in
§ 1.1471–1(b)(41).
Sec. 2.24. Exempt Beneficial Owner.
“Exempt beneficial owner” means a person described in § 1.1471–1(b)(42) and
includes any person that is treated as an
exempt beneficial owner under an applicable Model 1 or Model 2 IGA.
Sec. 2.25. Exempt Recipient. For purposes of Form 1099 reporting and backup
withholding, an “exempt recipient” means
a person described in § 1.6049 – 4(c)(1)(ii)
(for interest, dividends, and royalties), a
person described in § 1.6045–2(b)(2)(i)
(for broker proceeds), and a person described in § 1.6041–3(q) (for rents,
amounts paid on notional principal contracts, and other fixed or determinable income). Exempt recipients are not exempt
from chapter 3 or 4 withholding.
Sec. 2.26. FATCA Requirements as a
Participating FFI, Registered DeemedCompliant FFI, Registered DeemedCompliant Model 1 IGA FFI, or Limited FFI. “FATCA requirements as a
participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI” means—
(A) For a participating FFI or an FFI
that agrees to be treated as a participating

July 14, 2014

FFI, the requirements set forth in the FFI
agreement;
(B) For a limited FFI, the requirements
under § 1.1471– 4(e)(4);
(C) For a registered deemed-compliant
FFI (other than a reporting Model 1 FFI)
or an FFI that agrees to be treated as a
registered deemed-compliant FFI, the requirements under § 1.1471–5(f)(1) or an
applicable Model 2 IGA; or
(D) For a registered deemed-compliant
Model 1 IGA FFI, reporting Model 1 FFI,
or an FFI that agrees to be treated as a
registered deemed-compliant Model 1
IGA FFI or reporting Model 1 FFI, the
requirements under an applicable Model 1
IGA.
Sec. 2.27. Financial Institution (FI).
“Financial institution” or “FI” means an
entity described in § 1.1471–5(d) and includes a financial institution as defined
under an applicable Model 1 or Model 2
IGA.
Sec. 2.28. FFI Agreement. “FFI
Agreement” means an agreement described in § 1.1471– 4(a) and provided in
Revenue Procedure 2014 –3, 2014 –3
I.R.B. 419, as revised by Revenue Procedure 2014 –38 (and any superseding revenue procedure).
Sec. 2.29. Foreign Financial Institution (FFI). “Foreign Financial Institution” or “FFI” means a foreign entity (as
defined in § 1.1473–1(e)) that is a financial institution.
Sec. 2.30. FFI Withholding Statement.
An “FFI withholding statement” means a
withholding statement provided by an FFI
that meets the requirements of § 1.1471–
3(c)(3)(iii)(B)(1) and (2).
Sec. 2.31. Flow-Through Entity. A
flow-through entity is a foreign partnership described in § 301.7701–2 or 3 (other
than a withholding foreign partnership), a
foreign trust (other than a withholding foreign trust) that is described in section
651(a), or a foreign trust if all or a portion
of such trust is treated as owned by the
grantor or other person under sections 671
through 679. For an item of income for
which a treaty benefit is claimed, an entity
is also a flow-through entity to the extent
it is treated as fiscally transparent under
section 894 and the regulations thereunder.
Sec. 2.32. Foreign Person. A “foreign
person” is any person that is not a “United

July 14, 2014

States person” and includes a “nonresident alien individual,” a “foreign corporation,” a “foreign partnership,” a “foreign
trust,” and a “foreign estate,” as those
terms are defined in section 7701. For
purposes of chapters 3 and 4, the term
foreign person also means, with respect to
a payment by a withholding agent (including a qualified intermediary), a foreign
branch (including a foreign disregarded
entity) of a U.S. person that provides a
valid Form W– 8IMY on which it represents that it is a qualified intermediary or
does not agree to be treated as a U.S.
person. A foreign branch of a U.S. person
that is a qualified intermediary is, however, a U.S. payor for purposes of chapter
61 and section 3406.
Sec. 2.33. Foreign TIN. A “foreign
TIN” is a taxpayer identification number
issued by a foreign person’s country of
residence.
Sec. 2.34. Form W– 8. “Form W– 8”
means IRS Form W– 8BEN, Certificate of
Foreign Status of Beneficial Owner for
United States Tax Withholding (Individuals); IRS Form W– 8BEN–E, Certificate
of Status of Beneficial Owner for United
States Tax Withholding and Reporting
(Entities); IRS Form W– 8ECI, Certificate
of Foreign Person’s Claim That Income is
Effectively Connected With the Conduct
of a Trade or Business in the United
States; IRS Form W– 8EXP, Certificate of
Foreign Government or Other Foreign Organization for United States Tax Withholding and Reporting; and IRS Form
W– 8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or
Certain U.S. Branches for United States
Tax Withholding and Reporting, as appropriate. It also includes any acceptable substitute form.
Sec. 2.35. Form W–9. “Form W–9”
means IRS Form W–9, Request for Taxpayer Identification Number and Certification, or any acceptable substitute.
Sec. 2.36. Form 945. “Form 945”
means IRS Form 945, Annual Return of
Withheld Federal Income Tax.
Sec. 2.37. Form 1042. “Form 1042”
means IRS Form 1042, Annual Withholding Tax Return for U.S. Source Income of
Foreign Persons.
Sec. 2.38. Form 1042–S. “Form
1042–S” means IRS Form 1042–S, For-

158

eign Person’s U.S. Source Income Subject
to Withholding.
Sec. 2.39. Form 1096. “Form 1096”
means IRS Form 1096, Annual Summary
and Transmittal of U.S. Information Returns.
Sec. 2.40. Form 1099. “Form 1099”
means IRS Form 1099 –B, Proceeds From
Broker and Barter Exchange Transactions; IRS Form 1099 –DIV, Dividends
and Distributions; IRS Form 1099 –INT,
Interest Income; IRS Form 1099 –MISC,
Miscellaneous Income; IRS Form 1099 –
OID, Original Issue Discount; and any
other form in the IRS Form 1099 series
appropriate to the type of payment required to be reported.
Sec. 2.41. Form 8966. “Form 8966”
means IRS Form 8966, FATCA Report.
Sec. 2.42. Form 1099 Reporting.
“Form 1099 reporting” means the reporting required on Form 1099.
Sec. 2.43. Global Intermediary Identification Number (GIIN). “Global intermediary identification number” or “GIIN”
means the identification number that is as
assigned to a participating FFI, registered
deemed-compliant FFI, direct reporting
NFFE, or sponsoring entity of a direct
reporting NFFE. The term also includes
the identification number assigned to a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI that
is a QI for the purpose of identifying itself
to withholding agents.
Sec. 2.44. Intermediary. An “intermediary” means any person that acts on behalf of another person such as a custodian,
broker, nominee, or other agent or a person that acts as a qualified securities
lender with respect to a payment of a
substitute dividend.
Sec. 2.45. Know-Your-Customer
Rules. The phrase “know-your-customer
rules” refers to the applicable laws, regulations, rules, and administrative practices
and procedures, identified in the Attachments to this Agreement, governing the
requirements of QI to obtain documentation confirming the identity of QI’s account holders for QI designated accounts.
Sec. 2.46. Limited Branch. A “limited
branch” means a branch of a participating
FFI or reporting Model 2 FFI described in
§ 1.1471–1(b)(76). A “limited branch”
also means, with respect to a reporting
Model 1 FFI, a branch of the reporting

Bulletin No. 2014 –29

Model 1 FFI that operates in a jurisdiction
that prevents such branch from fulfilling
the requirements of a participating FFI or
deemed-compliant FFI for purposes of
section 1471, or a branch that is treated as
a nonparticipating FFI solely due to the
expiration of the transitional rule for limited branches under § 1.1471– 4(e)(2)(v),
and which branch (and reporting Model 1
FFI) meets any additional requirements
for such branch as provided in the applicable Model 1 IGA.
Sec. 2.47. Limited FFI. A “limited
FFI” means an FFI described in § 1.1471–
1(b)(77). A “limited FFI” also means,
with respect to a reporting Model 1 FFI, a
related entity (as defined in the applicable
Model 1 IGA) of the reporting Model 1
FFI that operates in a jurisdiction that
prevents such related entity from fulfilling
the requirements of a participating FFI or
deemed-compliant FFI for purposes of
section 1471, or a related entity that is
treated as a nonparticipating FFI solely
due to the expiration of the transitional
rule for limited FFIs under § 1.1471–
4(e)(3)(iv), and which related entity (and
reporting Model 1 FFI) meets any additional requirements for such related entities as provided in the applicable Model 1
IGA.
Sec. 2.48. Marketable Securities. For
purposes of this Agreement, the term
“marketable securities” means those securities described in § 1.1441– 6 for which a
U.S. TIN (or foreign TIN) is not required
to obtain treaty benefits.
Sec. 2.49. Non-Consenting U.S. Account. For purposes of a reporting Model
2 FFI, “non-consenting U.S. account” has
the meaning that such term has under an
applicable Model 2 IGA.
Sec. 2.50. Non-Exempt Recipient. A
“non-exempt recipient” means a person
that is not an exempt recipient under the
definition in section 2.25 of this Agreement.
Sec. 2.51. Non-Financial Foreign Entity (NFFE). A “non-financial foreign entity” or “NFFE” means a foreign entity
that is not a financial institution (including
an entity that is incorporated or organized
under the laws of any U.S. territory and
that is not a financial institution). The term
also means a foreign entity treated as an
NFFE pursuant to a Model 1 or Model 2
IGA.

Bulletin No. 2014 –29

Sec. 2.52. Nonparticipating FFI. A
“nonparticipating FFI” means an FFI
other than a participating FFI, a deemedcompliant FFI, or an exempt beneficial
owner.
Sec. 2.53. Nonqualified Intermediary. A “nonqualified intermediary” is any
intermediary that is not a qualified intermediary. A nonqualified intermediary includes any intermediary that is a foreign
person unless such person enters an agreement to be a qualified intermediary and
acts in such capacity. A nonqualified intermediary also includes an intermediary
that is a territory FI (as defined section
2.78 of this Agreement) unless such institution agrees to be treated as a U.S. person.
Sec. 2.54. Non-U.S. Payor. A “nonU.S. payor” means a payor other than a
U.S. payor as defined in this section 2.83
of this Agreement.
Sec. 2.55. Nonwithholding Foreign
Partnership. A “nonwithholding foreign
partnership” means a foreign partnership
other than a withholding foreign partnership as defined in § 1.1441–5(c)(2)(i).
Sec. 2.56. Nonwithholding Foreign
Trust. A “nonwithholding foreign trust”
means a foreign trust (as defined in section 7701(a)(31)(B)) that is a foreign simple trust or a foreign grantor trust and that
is not a withholding foreign trust.
Sec. 2.57. Overwithholding. The term
“overwithholding” means any amount actually withheld (determined before application of the adjustment procedures described in section 9 of this Agreement)
from an item of income or other payment
that is in excess of the amount required to
be withheld under chapter 4 with respect
to such item of income or other payment,
if applicable, and, in the case of an
amount subject to chapter 3 withholding,
the actual tax liability of the beneficial
owner of the income or payment to which
the withheld amount is attributable, regardless of whether such overwithholding
was in error or appeared correct at the
time it occurred. For purposes of section
3406, the term “overwithholding” means
the excess of the amount actually withheld
under section 3406 over the amount required to be withheld.
Sec. 2.58. Participating FFI. A “participating FFI” means an FFI that has
agreed to comply with the requirements of

159

an FFI Agreement, including an FFI described in a Model 2 IGA that has agreed
to comply with the requirements of an FFI
Agreement (reporting Model 2 FFI). The
term participating FFI also includes a QI
branch of a U.S. financial institution, unless such branch is a reporting Model 1
FFI.
Sec. 2.59. Payee. For chapter 4 purposes, a “payee” means a person described in § 1.1471–3(a). For purposes of
chapter 61, a “payee” means the person to
whom a payment is made. For purposes of
chapter 3, a “payee” means a person described in § 1.1441–1(c)(12).
Sec. 2.60. Payment. A “payment” is
considered made to a person if that person
realizes income, whether or not such income results from an actual transfer of
cash or other property. See § 1.1441–2(e).
For example, a payment includes crediting
an amount to an account.
Sec. 2.61. Payor. A “payor” is defined
in § 31.3406(a)–2 and § 1.6049 – 4(a)(2)
and generally means any person required
to make an information return under chapter 61. The term includes any person that
makes a payment, directly or indirectly, to
QI and to whom QI provides information,
pursuant to this Agreement, so that such
person can report a payment on Form
1099 and, if appropriate, backup withhold.
See sections 3.05 and 3.06 of this Agreement. Also see sections 2.83 and 2.54 of
this Agreement for the definition of U.S.
payor and non-U.S. payor.
Sec. 2.62. Permanent Residence Address. A “permanent residence address”
means an address described in § 1.1441–
1(c)(38).
Sec. 2.63. Presume/Presumption. The
terms “presume” and “presumption” refer
to the presumption rules set forth in section 5.13(C) of this Agreement.
Sec. 2.64. Private Arrangement Intermediary (PAI). A “private arrangement intermediary” or “PAI” is an intermediary described in section 4 of this
Agreement.
Sec. 2.65. Qualified Intermediary. A
“qualified intermediary” is a person, described in § 1.1441–1(e)(5)(ii), that enters
into an agreement with the IRS to be
treated as a qualified intermediary and
acts in its capacity as a qualified intermediary.

July 14, 2014

Sec. 2.66. QI Designated Account. A
“QI designated account” means an account that QI has designated as an account
for which it is acting as a qualified intermediary.
Sec. 2.67. Qualified Intermediary
(QI) EIN. A “qualified intermediary EIN”
or “QI-EIN” means the employer identification number assigned by the IRS to a
qualified intermediary. QI’s QI-EIN is
only to be used when QI is acting in its
capacity as a qualified intermediary. For
example, QI must give a withholding
agent its non-QI EIN, if any, rather than
its QI-EIN, if it is receiving income as a
beneficial owner and a taxpayer identification number is required. QI must also
use its non-QI EIN, if any, when acting as
a nonqualified intermediary. Each signatory to this Agreement must have its own
QI-EIN (to the extent referenced in this
section 2.67).
Sec. 2.68. Qualified Securities
Lender (QSL). A “qualified securities
lender” or “QSL” is a person described in
Notice 2010 – 46, 2010 –1 C.B. 757, or
subsequent published guidance defining
this term. In the case of a QI that acts as a
qualified securities lender with respect to
a payment of substitute dividends (as defined in section 871(m) and the regulations thereunder), such QI is required to
act as a QSL for all U.S source substitute
dividends received by the QI when acting
as an intermediary or dealer with respect
to securities lending and similar transactions.
Sec. 2.69. Recalcitrant Account
Holder. A “recalcitrant account holder”
means an account holder described in
§ 1.1471–5(g).
Sec. 2.70. Reduced Rate of Withholding. A “reduced rate of withholding”
means a rate of withholding under chapter
3 that is less than 30 percent, including an
exemption from withholding.
Sec. 2.71. Reliably Associating a Payment With Documentation. See section
5.13(B) of this Agreement to determine
whether QI can reliably associate a payment with documentation.
Sec. 2.72. Reportable Amount. A “reportable amount” means U.S. source
FDAP income that is an amount subject to
chapter 3 withholding (as defined in section 2.04 of this Agreement), U.S. source
deposit interest (as defined in section 2.18

July 14, 2014

of this Agreement), and U.S. source interest or original issue discount paid on the
redemption of short-term obligations (as
defined in section 2.77 of this Agreement). The term does not include payments on deposits with banks and other
financial institutions that remain on deposit for two weeks or less. It also does
not include amounts of original issue discount arising from a sale and repurchase
transaction completed within a period of
two weeks or less, or amounts described
in § 1.6049 –5(b)(7), (10), or (11) (relating
to certain foreign targeted registered obligations and certain obligations issued in
bearer form).
Sec. 2.73. Reportable Payment. For
purposes of this Agreement, a “reportable
payment” means an amount described in
section 2.73(A) of this Agreement, in the
case of a U.S. payor, and an amount described in section 2.73(B) of this Agreement, in the case of a non-U.S. payor.
(A) U.S. Payor. If QI is a U.S. payor,
a “reportable payment” means, unless an
exception to reporting applies under chapter 61,—
(1) Any reportable amount;
(2) Any broker proceeds from a sale
reportable under § 1.6045–1(c); and
(3) Any foreign source interest, dividends, rents, royalties, or other fixed and
determinable income.
(B) Non-U.S. Payor. If QI is a nonU.S. payor, a “reportable payment”
means, unless an exception to reporting
applies under chapter 61,—
(1) Any reportable amount;
(2) Any broker proceeds from a sale
effected at an office inside the United
States, as defined in § 1.6045–1(g)(3)(iii);
and
(3) Any foreign source interest, dividends, rents, royalties, or other fixed and
determinable income if such income is not
paid outside the United States as described under section 5.13(C)(1) of this
Agreement.
Sec. 2.74. Reporting Model 1 FFI. A
“reporting Model 1 FFI” means an FFI
with respect to which a foreign government or agency thereof agrees to obtain
and exchange information pursuant to a
Model 1 IGA, other than an FFI that is
treated as a nonreporting FFI under the
Model 1 IGA.

160

Sec. 2.75. Reporting Pool. A “reporting pool” is defined in section 8 of this
Agreement.
Sec. 2.76. Responsible Officer. A “responsible officer” of a QI means an officer
of the QI with sufficient authority to fulfill
the duties of a responsible officer as described in section 10 of this Agreement,
including the requirements to periodically
certify and to respond to requests by the
IRS for additional information to review
the QI’s compliance (or that of a PAI).
Sec. 2.77. Short-Term Obligation. A
“short-term obligation” is any obligation
described in section 871(g)(1)(B)(i).
Sec. 2.78. Territory FI. A “territory
FI” means a financial institution that is
incorporated or organized under the laws
of any U.S. territory, excluding a territory
entity that is an investment entity but is
not a depository institution, custodial institution, or specified insurance company
(as defined in §.1471–5(e)(1)(i), (ii), and
(iv), respectively).
Sec. 2.79. Underwithholding. “Underwithholding” means the excess of the
amount required to be withheld under
chapter 3 or 4 or section 3406 over the
amount actually withheld.
Sec. 2.80. Undocumented Account
Holder. An “undocumented account
holder” is an account holder for whom QI
does not hold valid documentation.
Sec. 2.81. U.S. Account. A “U.S. account” is any financial account maintained
by an FFI that is held by one or more
specified U.S. persons or U.S.-owned foreign entities that such FFI reports or elects
to report under the FFI Agreement or
§ 1.1471–5(f), as applicable.
Sec. 2.82. U.S. Branch Treated as a
U.S. Person. A “U.S. branch treated as a
U.S. person” means a U.S. branch of a
participating FFI, registered deemedcompliant FFI, or NFFE that is treated as
a U.S. person under § 1.1441–
1(b)(2)(iv)(A).
Sec. 2.83. U.S. Payor. The term “U.S.
payor” has the same meaning as in
§ 1.6049 –5(c)(5).
Sec. 2.84. U.S. Person. A “U.S. person” (or “United States person”) is a person described in section 7701(a)(30), the
U.S. government (including an agency or
instrumentality thereof), a State of the
United States (including an agency or instrumentality thereof), or the District of

Bulletin No. 2014 –29

Columbia (including an agency or instrumentality thereof). The term “U.S. person” or “United States person” also means
a foreign insurance company that has
made an election under section 953(d),
provided that either the foreign insurance
company is not a specified insurance company (as described in § 1.1471–
5(e)(1)(iv)) and is not licensed to do business in any State, or the foreign insurance
company is a specified insurance company and is licensed to do business in any
State.
Sec. 2.85. U.S. Reportable Account.
A “U.S. reportable account” means a financial account maintained by a reporting
Model 1 FFI or registered deemedcompliant Model 1 IGA FFI that such FFI
reports or elects to report under the applicable domestic law for compliance with
and implementation of FATCA.
Sec. 2.86. U.S. Source FDAP. “U.S.
source FDAP” means amounts from
sources within the United States that constitute fixed or determinable annual or periodical income, as defined in § 1.1441–
2(b)(1).
Sec. 2.87. U.S. TIN. A “U.S. TIN”
means a U.S. taxpayer identification number assigned under section 6109.
Sec. 2.88. Withholding Agent. A
“withholding agent” has the same meaning as set forth in § 1.1441–7(a) for purposes of chapter 3 and as set forth in
§ 1.1473–1(d) for purposes of chapter 4,
and includes a payor (as defined in section
2.61 of this Agreement). As used in this
Agreement, the term generally refers to
the person making a payment to a qualified intermediary.
Sec. 2.89. Withholding Foreign Partnership. A “withholding foreign partnership” or “WP” means a partnership, described in § 1.1441–5(c)(2), that has
entered into a withholding agreement with
the IRS to be treated as a withholding
foreign partnership.
Sec. 2.90. Withholding Foreign
Trust. A “withholding foreign trust” or
“WT” means a trust, described in
§ 1.1441–5(e)(5)(v), that has entered into
a withholding agreement with the IRS to
be treated as a withholding foreign trust.
Sec. 2.91. Withholdable Payment. A
“withholdable payment” means an
amount described in § 1.1473–1(a).

Bulletin No. 2014 –29

Sec. 2.92. Withholding Rate Pool. A
“withholding rate pool” is defined in section 6.03 of this Agreement and includes a
chapter 3 withholding rate pool and a
chapter 4 withholding rate pool.
Sec. 2.93. Withholding Statement.
The term “withholding statement” is defined in section 6.02 of this Agreement.
Sec. 2.94. Other Terms. Any term not
defined in this section has the same meaning that it has under the Code, including
the income tax regulations under the
Code, any applicable income tax treaty, or
any applicable Model 1 or Model 2 IGA
with respect to a QI’s FATCA requirements as a participating FFI, registered
deemed-compliant
FFI,
registered
deemed-compliant Model 1 IGA FFI, or
limited FFI.
SECTION 3. WITHHOLDING
RESPONSIBILITY
Sec. 3.01. Chapters 3 and 4
Withholding Responsibilities.
(A) Chapter 4 Withholding. QI is a
withholding agent for purposes of chapter
4 and subject to the withholding and reporting provisions applicable to withholding agents under sections 1471 and 1472
with respect to its accounts. QI is required
to withhold 30 percent of any withholdable payment made after June 30, 2014, to
an account holder that is an FFI unless
either QI can reliably associate the payment (or portion of the payment) with
documentation upon which it is permitted
to rely to treat the payment as exempt
from withholding under § 1.1471–2(a)(4)
or the payment is made under a grandfathered obligation described in § 1.1471–
2(b). See § 1.1473–1(a) for the definition
of a withholdable payment and the applicable exceptions to this definition. QI is
also required to withhold 30 percent of
any withholdable payment made after
June 30, 2014, to an account holder that is
an NFFE unless either QI can reliably
associate the payment (or portion of the
payment) with a certification described in
§ 1.1472–1(b)(1)(ii) or an exception to
withholding under § 1.1472–1 otherwise
applies.
If QI is a participating FFI or registered
deemed-compliant FFI (other than a reporting Model 1 FFI), QI will satisfy its
requirement to withhold under sections

161

1471(a) and 1472(a) with respect to direct
account holders that are entities by withholding on withholdable payments made
to nonparticipating FFIs and recalcitrant
account holders to the extent required under its FATCA requirements as a participating FFI or registered deemedcompliant FFI. See the FFI Agreement,
§ 1.1471–5(f)(1), or the applicable Model
2 IGA for the additional withholding requirements that may apply to withholdable payments made to direct account
holders that are individuals and are treated
as recalcitrant account holders. If QI is a
reporting Model 1 FFI or a registered
deemed-compliant Model 1 IGA FFI, QI
will satisfy its requirement to withhold
under sections 1471(a) with respect to direct account holders by withholding on
withholdable payments made to nonparticipating FFIs to the extent required under its FATCA requirements as a registered deemed-compliant FFI or registered
deemed-compliant Model 1 IGA FFI. QI
must, however, withhold in the manner
described in sections 3.02 and 3.03 of this
Agreement for when QI assumes or does
not assume primary withholding responsibility for purposes of chapters 3 and 4
regardless of its chapter 4 status.
If QI is a limited FFI, it is treated as a
nonparticipating FFI for chapter 4 purposes, and QI cannot assume primary
chapters 3 and 4 withholding responsibility. QI is not required to withhold to the
extent that its withholding agent has withheld 30 percent of any withholdable payment made to QI after June 30, 2014 or an
exception described above applies.
(B) Chapter 3 Withholding. To the
extent that QI makes a payment of an
amount subject to chapter 3 withholding,
QI is required to withhold 30 percent of
any such payment made to an account
holder that is (or is presumed) a foreign
person unless QI can reliably associate the
payment with documentation upon which
it can rely to treat the payment as made to
a payee that is a U.S. person or as made to
a beneficial owner that is a foreign person
entitled to a reduced rate of withholding.
See section 5 of this Agreement regarding
documentation requirements. With respect an amount subject to chapter 4 withholding that is also an amount subject to
chapter 3 withholding, QI may credit any
tax withheld under chapter 4 against its

July 14, 2014

liability for any tax due under chapter 3
with respect to the payment so that no
additional withholding is required on the
payment for purposes of chapter 3. Nothing in chapter 4 or the regulations thereunder (including the FFI Agreement) or
any applicable IGA relieves QI of its requirements to withhold under chapter 3 to
the extent required in this Agreement.
Sec. 3.02. Primary Chapters 3 and 4 Withholding Responsibility Not Assumed. Notwithstanding sections 1.01 and 3.01 of
this Agreement, QI shall not be required
to withhold with respect to a payment of
U.S. source FDAP income if it does not
accept primary withholding responsibility
under section 3.03 of this Agreement by
electing to be withheld upon under
§ 1.1471–2(a)(2)(iii) for purposes of chapter 4, providing the withholding agent
from which QI receives the payment with
a valid withholding certificate that indicates that QI does not assume primary
withholding responsibility for chapters 3
and 4 purposes, and providing correct
withholding statements (including information regarding any account holders or
interest holders of an intermediary or
flow-through entity that holds an account
with QI, other than a QI that assumes
primary withholding responsibility, withholding foreign partnership, or withholding foreign trust) as described in section
6.02 of this Agreement. See, however,
section 3.03 of this Agreement requiring a
QI that is acting as a QSL for a substitute
dividend payment to assume primary
withholding responsibility for any such
payment made to any account holder receiving a substitute dividend payment.
Notwithstanding its election not to assume
primary withholding responsibility under
chapters 3 and 4, QI shall, however, withhold the difference between the amount of
withholding required under chapter 3 or 4
and the amount actually withheld by another withholding agent if QI—
(A) Actually knows that the appropriate amount has not been withheld by another withholding agent; or
(B) Made an error which results in the
withholding agent’s failure to withhold
the correct amount due (e.g., QI fails to
provide an accurate withholding statement
2

with respect to the payment, including a
failure to provide information regarding
any account holders or interest holders of
an intermediary or flow-through entity
that holds an account with QI to the extent
required in section 6 of this Agreement)
and QI has not corrected the underwithholding under section 9.05 of this Agreement. QI is not required to withhold on an
amount that it pays to another qualified
intermediary that has assumed primary
withholding responsibility with respect to
the payment or to a withholding foreign
partnership or withholding foreign trust.
See section 8 of this Agreement regarding
QI’s responsibility to report amounts subject to withholding under chapter 3 or 4 on
Form 1042–S.
Sec. 3.03. Assumption of Primary Chapters 3 and 4 Withholding Responsibility. QI
(other than a limited FFI), upon notification to a withholding agent, may assume
primary withholding responsibility for
purposes of chapters 3 and 4 by providing
a valid withholding certificate described
in section 6 of this Agreement to a withholding agent that makes a payment of
U.S. source FDAP income to the QI and
by designating on the withholding statement associated with such certificate the
account(s) for which QI assumes primary
withholding responsibility. QI may assume primary withholding responsibility
without informing the IRS. QI is not required to assume primary withholding responsibility for all accounts it holds with
the withholding agent. However, if QI is
acting as a QSL for a substitute dividend
payment, QI must assume primary withholding responsibility for any such payment made to any account holder receiving a substitute dividend payment. If QI
assumes primary withholding responsibility for any account, it must assume that
responsibility under both chapters 3 and 4
for all withholdable payments and
amounts subject to chapter 3 withholding
made by the withholding agent to that
account. To the extent that QI assumes
primary withholding responsibility, QI
shall withhold as described in section 3.01
of this Agreement. QI is not required to
withhold on amounts it pays to another
qualified intermediary that has assumed

primary withholding responsibility with
respect to the payment or to withholding
foreign partnership or withholding foreign
trust. See section 8 of this Agreement
regarding QI’s responsibility to report
amounts subject to withholding on Form
1042–S.
Sec. 3.04. Backup Withholding Under
Section 3406 and Form 1099
Reporting Responsibility.
(A) Backup Withholding. QI is a
payor under section 3406 with respect to
reportable payments. Under section 3406,
unless an exception to backup withholding applies, a payor is required to deduct
and withhold 282 percent from a reportable payment to an account holder that is
a U.S. non-exempt recipient if the U.S.
non-exempt recipient has not provided its
U.S. TIN in the manner required under
that section; the IRS notifies the payor that
the U.S. TIN furnished by the payee is
incorrect; there has been a notified payee
under-reporting described in section
3406(c); or there has been a payee certification failure described in section
3406(d).
(B) Coordination of Chapter 4 Withholding and Backup Withholding. With
respect to a withholdable payment that is
also a reportable payment subject to
backup withholding under section 3406,
QI is not required to withhold under section 3406 if QI withheld on such payment
under chapter 4. See § 31.3406(g)–1(e).
Alternatively, if QI is a participating FFI
or a registered deemed-compliant FFI
(other than a reporting Model 1 FFI), it
may elect to satisfy its obligation to withhold under chapter 4 (or the FFI agreement) on a withholdable payment made to
a recalcitrant account holder that is a U.S.
non-exempt recipient by satisfying its
backup withholding obligation under section 3406 provided that the payment is
also a reportable payment. See section 4
of the FFI Agreement. Nothing in chapter
4 (including the FFI Agreement) or any
applicable IGA relieves QI of its requirements to backup withhold under section
3406 to the extent required by this Agreement.

See section 3406(a) providing that the current applicable rate of backup withholding is the fourth lowest rate of tax applicable under section 1(c).

July 14, 2014

162

Bulletin No. 2014 –29

(C) Form 1099 Reporting. QI is a
payor under chapter 61 and, unless an
exception to reporting applies, it is generally required to report reportable payments made to an account holder that is
(or is presumed to be) a U.S. non-exempt
recipient on the appropriate Form 1099
(Form 1099 reporting). See, however, section 8 of this Agreement for QI’s Form
1099 reporting responsibilities and when
QI is treated as satisfying its Form 1099
reporting responsibilities. If QI reports an
amount subject to withholding under
chapter 4 on Form 1042–S and the payment is also a reportable payment to
which backup withholding otherwise applies, QI is not required to report the payment on a Form 1099. If QI instead elects
to backup withhold (as described in section 3.04(B) of this Agreement), it must
report the amount subject to backup withholding on Form 1099, and it should not
also report the payment on Form 1042–S.
Sec. 3.05. Primary Form 1099 Reporting
and Backup Withholding Responsibility
for Reportable Payments Other Than
Reportable Amounts. QI is primarily responsible for reporting on Form 1099 and
backup withholding on reportable payments other than reportable amounts to
the extent required under this section 3.04
and section 8.06 of this Agreement,
whether or not QI assumes primary Form
1099 reporting and backup withholding
responsibility with respect to reportable
amounts under section 3.07 of this Agreement. Further, no provision of this Agreement which requires QI to provide another
withholding agent with information regarding reportable amounts shall be construed as relieving QI of its Form 1099
reporting and backup withholding obligations with respect to reportable payments
that are not reportable amounts.
(A) U.S. Payor. Except as provided in
section 3.05(C) of this Agreement, if QI is
a U.S. payor, QI has primary Form 1099
reporting and backup withholding responsibility for reportable payments other than
reportable amounts. For example, if QI is
a U.S. payor, it has primary Form 1099
reporting and backup withholding responsibility for payments of foreign source
income as well as all broker proceeds paid
to account holders that are, or are presumed to be, U.S. non-exempt recipients.
See, however, § 31.3406(g)–1(e) provid-

Bulletin No. 2014 –29

ing that a payor is not required to backup
withhold under section 3406 on a reportable payment that is paid and received
outside the United States with respect to
an offshore obligation or on gross proceeds from a sale effected outside the
United States, unless the payor has actual
knowledge that the payee is a U.S. person.
(B) Non-U.S. Payor. If QI is a nonU.S. payor, QI has primary Form 1099
reporting and backup withholding responsibility for broker proceeds described in
section 2.73(B)(2) of this Agreement and
foreign source fixed and determinable income other than income paid and received
outside United States as described in section 2.73(B)(3) of this Agreement, if such
payments are made (or presumed made) to
U.S. non-exempt recipients.
(C) Special Procedure for Broker
Proceeds. If QI is a U.S. payor, QI may
request another payor that is either a U.S.
financial institution or another QI to report
on Form 1099 and, if required, backup
withhold with respect to broker proceeds
from a sale that is effected at an office
outside the United States (as defined in
§ 1.6045–1(g)(3)(iii)) that QI is otherwise
required to report under section 3.05(A) or
(B) and section 8.05 of this Agreement,
provided the other payor actually receives
the broker proceeds. In such a case, QI
will not be primarily responsible for Form
1099 reporting and backup withholding
with respect to broker proceeds, provided
that the other payor agrees to do the reporting and backup withholding and QI
provides all of the information necessary
for the other payor to properly report and
backup withhold. QI, however, remains
primarily responsible for Form 1099 reporting and backup withholding if the
other payor does not agree to report and
backup withhold, or if QI knows that the
other payor failed to do so. If, however,
QI is a participating FFI or registered
deemed-compliant FFI (other than a reporting Model 1 FFI) that reports an account on Form 1099 in order to satisfy its
U.S. account reporting requirement under
chapter 4, as described in section 8.04 of
this Agreement, QI is responsible for reporting on Form 1099 with respect to reportable payments made to such U.S. account and must report in the manner
described in the FFI Agreement.

163

Sec. 3.06. Primary Form 1099 Reporting and Backup Withholding Responsibility For Reportable Amounts Not
Assumed. Notwithstanding sections 1.01
and 3.04 of this Agreement, QI shall not
be required to report on Form 1099 and, if
required, backup withhold with respect to
a reportable amount if QI does not assume
primary Form 1099 reporting and backup
withholding responsibility and it provides
a payor from which it receives a reportable amount the Forms W–9 of its U.S.
non-exempt recipient account holders (or,
if a U.S. non-exempt recipient fails to
provide a Form W–9, information regarding the account holder’s name, address,
and U.S. TIN, if a U.S. TIN is available)
together with the withholding rate pools
(as defined in section 6.03(D) of this
Agreement) attributable to U.S. nonexempt recipient account holders so that
such payor may report on Form 1099 and,
if required, backup withhold. If QI elects
to backup withhold on withholdable payments that are also reportable amounts
made to recalcitrant account holders that
are also U.S. non-exempt recipients, QI
shall not be required to report on Form
1099 and backup withhold with respect to
a reportable amount if it provides a payor
from which it receives a reportable
amount information regarding such recalcitrant account holders. See section 6.03
of this Agreement and section 4 of the FFI
Agreement. If QI reports its U.S. accounts
on Forms 1099 under its FATCA requirements as a participating FFI or registered
deemed-compliant FFI, see section
8.04(A) of this Agreement providing that
QI cannot delegate to a withholding agent
its requirement to report its U.S. accounts.
See sections 3.04 and 8.06 of this Agreement for QI’s obligations regarding Form
1099 reporting and backup withholding
with respect to reportable amounts and see
also section 6.03 of this Agreement for
when QI may provide a chapter 4 withholding rate pool of U.S. payees. If QI
elects not to assume primary Form 1099
reporting and backup withholding responsibility, QI must provide the withholding
agent with such information regarding any
account holders or interest holders of an
intermediary or flow-through entity that
holds an account with QI. Notwithstanding its election not to assume primary Form
1099 reporting and backup withholding

July 14, 2014

responsibility, QI shall backup withhold
and report a reportable amount to the extent required under sections 3.04 and 8.06
of this Agreement if—
(A) QI actually knows that a reportable
amount is subject to backup withholding
and that another payor failed to apply
backup withholding; or
(B) Another payor has not applied
backup withholding to a reportable
amount because of an error made by QI
(e.g., QI failed to provide the other payor
with information regarding the name, address, U.S. TIN (if available), and withholding rate pool for a U.S. non-exempt
recipient account holder subject to backup
withholding, including a failure to provide
information regarding any account holders or interest holders of an intermediary
or flow-through entity that holds an account with QI to the extent required in
section 6 of this Agreement).
QI is not required to backup withhold,
however, on a reportable amount that QI
makes to a withholding foreign partnership, withholding foreign trust, or another
qualified intermediary that has assumed
primary Form 1099 reporting and backup
withholding responsibility with respect to
the payment. QI is also not required to
backup withhold on a reportable amount
that QI makes to an intermediary or flowthrough entity that is a participating FFI,
registered deemed-compliant FFI, or another qualified intermediary that does not
assume primary Form 1099 reporting and
backup withholding responsibility with
respect to the payment provided that such
intermediary or flow-through entity allocates the payment on its withholding
statement to a chapter 4 withholding rate
pool of U.S. payees and the withholding
statement is associated with a valid Form
W-8IMY that provides the applicable certification(s) for allocating the payment to
this pool or allocates the payment on its
withholding statement to a chapter 4 withholding rate pool of recalcitrant account
holders. See section 3.05 of this Agreement for backup withholding responsibility for reportable payments other than reportable amounts. See section 8.06 of this
Agreement regarding QI’s responsibility
to report reportable payments on Form
1099.

July 14, 2014

Sec. 3.07. Assumption of Primary Form
1099 Reporting and Backup Withholding Responsibility. QI may assume
primary Form 1099 reporting responsibility and primary backup withholding responsibility with respect to reportable
amounts without approval from the IRS.
See sections 3.04 and 8.06 of this Agreement for QI’s obligations regarding Form
1099 reporting and backup withholding
with respect to reportable amounts. A QI
that assumes such responsibility is subject
to all of the obligations imposed by chapter 61 and section 3406, as modified by
this Agreement, and QI shall be subject to
any applicable penalties for failure to
meet those obligations. QI shall inform a
payor from which it receives a reportable
amount that it has assumed primary Form
1099 reporting and backup withholding
responsibility by providing the payor with
a valid withholding certificate described
in section 6 of this Agreement and by
designating on the withholding statement
associated with such certificate the account(s) for which QI assumes primary
Form 1099 reporting and backup withholding responsibility. QI may assume
primary Form 1099 reporting and backup
withholding responsibility without informing the IRS.
QI is not required to assume primary
Form 1099 reporting and backup withholding responsibility for all accounts it
has with a payor. However, if QI assumes
primary Form 1099 reporting and backup
withholding responsibility for any account, it must assume that responsibility
for all reportable amounts made by a
payor to that account. QI shall not be
required to backup withhold on a reportable amount it makes to a withholding
foreign partnership, withholding foreign
trust, or another qualified intermediary
that has assumed primary Form 1099 reporting and backup withholding responsibility with respect to the reportable
amount. QI is also not required to backup
withhold on a reportable amount that QI
makes to an intermediary or flow-through
entity that is a participating FFI, registered
deemed-compliant FFI, or another qualified intermediary that does not assume
primary Form 1099 reporting and backup
withholding responsibility with respect to
the payment provided that such intermediary or flow-through entity allocates the

164

payment on its withholding statement to a
chapter 4 withholding rate pool of U.S.
payees and the withholding statement is
associated with a valid Form W– 8IMY
that provides the applicable certification(s) for allocating the payment to this
pool or allocates the payment on its withholding statement to a chapter 4 withholding rate pool of recalcitrant account holders. See section 8 of this Agreement
regarding QI’s responsibility to report reportable payments on Form 1099.
Sec. 3.08. Deposit Requirements. If QI
assumes primary withholding responsibility under chapters 3 and 4 or primary
Form 1099 and backup withholding responsibility, it must deposit amounts
withheld under chapter 3 or 4, or section
3406 at the time and in the manner provided under section 6302 (see § 1.6302–
2). If QI is a non-U.S. payor that does not
assume primary withholding responsibility under chapters 3 and 4 or primary
Form 1099 and backup withholding responsibility, QI must deposit amounts
withheld by the 15th day following the
month in which the withholding occurred.
SECTION 4. PRIVATE
ARRANGEMENT INTERMEDIARIES
AND CERTAIN PARTNERSHIPS
AND TRUSTS
Sec. 4.01. In General. If QI is an FFI
(other than a limited FFI), QI may enter
into a private arrangement with another
intermediary under which the other intermediary agrees to perform all of the obligations of QI under this Agreement, except as modified in section 4.03 of this
Agreement. The agreement between QI
and the other intermediary shall be between the QI and all the offices of the
other intermediary located in a specified
jurisdiction. The specified jurisdiction
must be one for which this Agreement is
available (i.e., IRS has approved the
“know-your-customer” practices). Such
an intermediary is referred to in this
Agreement as a private arrangement intermediary (PAI). By entering into a PAI
agreement, QI is not assigning its liability
for the performance of any of its obligations under this Agreement. Therefore, QI
shall remain liable for any tax, penalties,
interest, and any other sanctions that may
result from the failure of the PAI to meet

Bulletin No. 2014 –29

any of the obligations imposed by its
agreement with QI. QI agrees not to assert
any defenses against the IRS for the failures of the PAI or any defenses that the
PAI may assert against QI. For purposes
of this Agreement, the PAI’s actual
knowledge or reason to know of facts
relevant to withholding or reporting shall
be imputed to QI. QI’s liability for the
failures of the PAI shall apply even
though the PAI is itself a withholding
agent under chapters 3 and 4 and a payor
under chapter 61 and section 3406 and is
itself separately liable for its failure to
meet its obligations under the Code. Notwithstanding the foregoing, QI shall not
be liable for tax, interest, or penalties for
failure to withhold and report under chapters 3, 4, and 61, and section 3406 unless
the underwithholding or the failure to report amounts correctly on Forms 945,
1042, 1042–S, 1099, or 8966 is due to
QI’s or its PAI’s failure to properly perform its obligations under this Agreement.
The PAI is not required to enter into an
agreement with the IRS but must respond
(either directly or through QI) to IRS inquiries related to its compliance review
described in section 10.07 of this Agreement. The IRS may, however, in its sole
discretion, refuse to permit an intermediary to operate as a PAI by providing notice to QI at the address provided in section 12.06 of this Agreement. QI may,
however, appeal the IRS’s determination
by following the notice and cure provisions in section 11.05 of this Agreement.
For purposes of this Agreement, an intermediary shall be considered a PAI only if
the following conditions are met:
(A) The PAI is a certified deemedcompliant FFI (other than a registered
deemed-compliant Model 1 IGA FFI) that
acts as an intermediary with respect to
reportable amounts;
(B) The PAI does not act as an intermediary for a direct account holder that is
a qualified intermediary, withholding foreign trust, withholding foreign partnership, participating FFI, registered deemedcompliant FFI, or a registered deemedcompliant Model 1 IGA FFI;
(C) The PAI is, pursuant to a written
agreement between QI and the PAI (PAI
agreement), subject to all the obligations
of QI under this Agreement, except to the

Bulletin No. 2014 –29

extent modified by sections 4.02 and 4.03
of this Agreement;
(D) For purposes of chapter 4, PAI
agrees to comply with the FATCA requirements applicable to its chapter 4 status as a certified deemed-compliant FFI,
as modified by sections 4.02 and 4.03 of
this Agreement, and is not required to
fulfill QI’s FATCA requirements as a participating FFI, registered deemedcompliant FFI, or registered deemedcompliant Model 1 IGA FFI;
(E) QI identifies the PAI on the
FATCA registration website before the
first payment for which the PAI is operating under the PAI agreement;
(F) The PAI agrees to comply with the
compliance procedures described in section 10.05 of this Agreement, provide QI
with the certification required under section 10.03 of this Agreement for each
certification period in order to allow the
responsible officer of QI to make a certification to the IRS regarding PAI’s compliance, and respond (either directly or
through QI) to IRS inquiries regarding its
compliance review described in section
10.07 of this Agreement, including providing the QI and the IRS with the periodic review report described in section
10.06 of this Agreement;
(G) The PAI furnishes QI with a Form
W– 8IMY and withholding statement described in section 6 of this Agreement as
modified by this section 4.01(G). The PAI
is required to provide QI with Forms W–9
(or, in absence of the form, the name,
address, and U.S. TIN (if available)) of
the PAI’s U.S. non-exempt recipient account holders and the withholding rate
pool information for those account holders as required by section 6.03 of this
Agreement so that the QI (or the payor)
may report on Form 1099 and, if required,
backup withhold. In addition, the PAI is
required to disclose to QI any account
holder of PAI that is a passive NFFE with
one or more substantial U.S. owners (or
one or more controlling persons that is a
specified U.S. person) as defined in
§§ 1.1471–1(b)(74) and 1.1473–1(b), respectively (or the applicable IGA), and the
account holders or interest holders of any
nonqualified intermediary or flow-through
entity, respectively, which has an account
with the PAI, and provide all of the documentation and other information relating

165

to those account holders and interest holders that is required for the QI, or another
withholding agent, to report the payments
made to those account holders and interest
holders to the extent required by sections
8.02(B) and 8.05 of this Agreement. The
PAI is not required to disclose to QI, or
another withholding agent, its direct account holders that are foreign persons
other than a passive NFFE with one or
more substantial U.S. owners (or one or
more controlling persons that is a specified U.S. person); and
(H) The PAI agrees to notify QI if the
PAI no longer meets the requirements for
certified deemed-compliant status and
upon such notification, the agreement between the PAI and QI terminates.
Sec. 4.02. Modification of Obligations for PAI Agreements.
(A) Payments Reportable under
Chapters 3 and 4. The agreement between QI and a PAI must provide that QI
shall report all payments of amounts subject to chapter 3 or 4 withholding made by
the PAI in QI’s Forms 1042 and 1042–S
as if QI had made the payments directly to
the PAI’s account holders. Therefore, QI
shall report payments made to each of the
following types of a PAI’s account holders as follows:
(1) A direct account holder of the PAI
that is a nonparticipating FFI, QI shall
report an amount subject to chapter 4
withholding using the chapter 4 reporting
pool described in section 8.03 of this
Agreement with the PAI reported as the
recipient with respect to the pool.
(2) A direct foreign account holder of
the PAI for which no withholding is required under chapter 4 (other than an intermediary, custodian, nominee, agent, or
flow-through entity described below), QI
shall report an amount subject to chapter 3
withholding using the chapter 3 reporting
pools as described in section 8.03 of this
Agreement with the PAI reported as the
recipient.
(3) A direct foreign account holder of
the PAI that is a nonqualified intermediary
or flow-through entity, QI shall report
payments of amounts subject to chapter 4
withholding with respect to any indirect
account holders of the PAI that the nonqualified intermediary or flow-through entity includes in a chapter 4 withholding
rate pool of nonparticipating FFIs using

July 14, 2014

the chapter 4 reporting pool for such account holders described in section 8.03 of
this Agreement with the nonqualified intermediary or flow-through entity reported
as the recipient and shall report payments
of amounts subject to chapter 3 withholding made with respect to indirect foreign
account holders of the PAI that are not
subject to chapter 4 withholding by reporting the payments as made to specific
recipients under the rules of section 8.02
of this Agreement.
(B) Form 1099 Reporting and
Backup Withholding. The agreement between QI and a PAI must also provide that
QI shall report all reportable payments
made by the PAI in QI’s Forms 945 and
1099 to the extent required under this section 4.02(B). QI shall file Forms 1099 and
backup withhold, if required, on reportable payments made by QI (including by a
PAI) to U.S. non-exempt recipients that
are direct or indirect account holders of a
PAI in accordance with the terms of this
Agreement.
(C) Form 8966 Reporting. The agreement between QI and a PAI must also
provide that QI shall report all withholdable payments made by the PAI on Form
8966 to the extent required under this section 4.02(C). QI shall file Forms 8966 to
report withholdable payments made by QI
(including by a PAI) to passive NFFEs
with one or more substantial U.S. owners
(or one or more controlling persons that is
a specified U.S. person) that are direct or
indirect account holders of a PAI in accordance with section 8.05 of this Agreement.
Sec. 4.03. Other Requirements of
PAI Agreement. QI shall require a PAI to
provide QI with all the information necessary for QI to meet its obligations under
this Agreement. No provisions shall be
contained in the agreement between QI
and a PAI that preclude, and no provisions
of this Agreement shall be construed to
preclude, the PAI’s joint and several liability for tax, penalties, and interest under
chapters 3, 4, and 61, and section 3406 to
the extent that underwithholding, penalties, and interest have not been collected
from QI and the underwithholding or failure to report amounts correctly on Forms
945, 1042, 1042–S, 1099, or Form 8966
are due to a PAI’s failure to properly
perform its obligations under its agree-

July 14, 2014

ment with QI. Nothing in the agreement
between QI and a PAI shall be construed
to limit the PAI’s requirements under
chapter 4 or an applicable IGA. Further,
nothing in the agreement between QI and
a PAI shall permit the PAI to assume
primary chapters 3 and 4 withholding responsibility or assume primary Form 1099
reporting and backup withholding responsibility.
Sec. 4.04. Termination of Arrangement. Except as otherwise provided in
section 4.01(H) of this Agreement, QI
shall cease to treat an intermediary as a
PAI within 90 days from the day QI
knows that the PAI is in default of its
agreement with QI unless the PAI has
cured the event of default prior to the
expiration of such 90-day period. QI must
provide the IRS with notice of any PAI
agreement that has been terminated within
30 days of the termination by removing
the intermediary as a PAI on the FATCA
registration website.
Sec. 4.05. Joint Account Treatment
for Certain Partnerships and Trusts.
(A) In General. If QI is an FFI (other
than a limited FFI), QI may enter an
agreement with a nonwithholding foreign
partnership or nonwithholding foreign
trust that is either a simple or grantor trust
described in this section 4.05(A) to apply
the simplified joint account documentation, reporting, and withholding procedures provided in section 4.05(B) of this
Agreement. QI and a partnership or trust
that apply this section 4.05 to any calendar
year must apply these rules to the calendar
year in its entirety. QI and the partnership
or trust may not apply this section 4.05 to
any calendar year in which the partnership
or trust has failed to make available to QI
or QI’s auditor the records described in
this section 4.05(A) within 90 days after
these records are requested, and the partnership or trust must waive any legal prohibitions against providing such records to
the IRS. If the partnership or trust has
failed to make these records available
within the 90-day period, or if QI and the
partnership or trust fail to comply with
any other requirements of this section
4.05, QI must apply the provisions of
§§ 1.1441–1(c) and 1.1441–5(e) to the
partnership or trust as a nonwithholding
foreign partnership or nonwithholding
foreign trust, must correct its withholding

166

for the period during which the failure
occurred in accordance with section 9.05
of this Agreement, and cannot apply this
section 4.05 to subsequent calendar years.
QI and a partnership or trust that apply
this section 4.05 to any calendar year are
not required to apply this section 4.05 to
subsequent calendar years.
A partnership or trust is described in
this section 4.05(A) of this Agreement if
the following conditions are met:
(1) The partnership or trust is a certified deemed-compliant FFI (other than a
registered deemed-compliant Model 1
IGA FFI), an exempt beneficial owner, or
an excepted NFFE (other than a WP or
WT);
(2) The partnership or trust is a direct
account holder of QI;
(3) None of the partnership’s or trust’s
partners, beneficiaries, or owners is a
flow-through entity or is acting as intermediary for a payment made by QI to the
partnership or trust;
(4) None of the partnership’s or trust’s
partners, beneficiaries, or owners is a U.S.
person and none of its foreign partners,
beneficiaries, or owners is subject to withholding or reporting under chapter 4
(which would include a nonparticipating
FFI and certain passive NFFEs); and
(5) The partnership or trust agrees to
make available upon request to QI or QI’s
auditor for purposes of QI’s compliance
review under section 10 of this Agreement
(including to respond to IRS inquiries regarding its compliance review) records
that establish that the partnership or trust
has provided QI with documentation for
purposes of chapters 3 and 4 for all of its
partners, beneficiaries, or owners.
(B) Modification of Obligations for
QI.
(1) QI may rely on a valid Form
W– 8IMY provided by the partnership or
trust and may rely on a withholding statement that meets the requirements of
§ 1.1441–5(c)(3)(iv) or (e)(5)(iv), and
§ 1.1471–3(c)(3)(iii)(B), if the payment is
a withholdable payment, and that provides
information for all partners, beneficiaries,
or owners together with valid Forms W– 8
or, in the case of a partnership or trust that
is a certified deemed-compliant FFI, documentary evidence listed in the knowyour-customer (KYC) attachment to this
Agreement from each partner, beneficiary,

Bulletin No. 2014 –29

or owner, and, for a withholdable payment, documentation that meets the requirements of § 1.1471–3(d) to establish
the partner’s, beneficiary’s, or owner’s
chapter 4 status. The withholding statement need not provide any allocation information.
(2) QI must treat payments to the partnership or trust as allocated solely to a
partner, beneficiary, or owner that is subject to the highest rate of withholding under chapter 3 and must withhold at that
rate.
(3) QI may include payments made to
the partnership or trust in its chapter 3
reporting pools for direct account holders
of QI for Form 1042–S purposes under
section 8.03(B) of this Agreement.
(4) After QI has withheld in accordance with section 4.05(B)(2) of this
Agreement, it may file a separate Form
1042–S for any partner, beneficiary, or
owner who requests that it do so. If QI
issues a separate Form 1042–S for any
partner, beneficiary, or owner, it cannot
include such partner, beneficiary, or
owner in QI’s chapter 3 reporting pool. If
QI has already filed a Form 1042–S and
included the partner, beneficiary, or owner
in a chapter 3 reporting pool, it must file
an amended return to reduce the amount
of the payment reported to reflect the
amount allocated to the recipient on the
recipient’s specific Form 1042–S. QI may
file a separate Form 1042–S for a partner,
beneficiary, or owner only if the partnership or trust provides a withholding statement that includes allocation information
for the requesting partner, beneficiary, or
owner and only if the partnership or trust
has agreed in writing under section
4.05(A)(5) of this Agreement to make
available to QI or QI’s auditor the records
that substantiate the allocation information included in its withholding statement.
(5) QI may not include any payments
made to a partnership or trust to which QI
is applying the rules of this section 4.05 in
any collective refund claim made under
section 9.04 of this Agreement.
Sec. 4.06. Agency Option for Certain
Partnerships and Trusts. QI may enter
an agreement with a nonwithholding foreign partnership or nonwithholding foreign trust that is either a simple or grantor
trust described in section 4.06(A) of this
Agreement under which the partnership or

Bulletin No. 2014 –29

trust agrees to act as an agent of QI with
respect to its partners, beneficiaries, or
owners, and, as QI’s agent, to apply the
provisions of the QI Agreement to the
partners, beneficiaries, or owners. By entering into an agreement with a partnership or trust as described in this section
4.06, QI is not assigning its liability for
the performance of any of its obligations
under the QI Agreement. QI and the partnership or trust to which QI applies the
rules of this section 4.06 (agency option)
are jointly and severally liable for any tax,
penalties, and interest that may result from
the failure of the partnership or trust to
meet any of the obligations imposed by its
agreement with QI. QI and a partnership
or trust that apply the agency option to
any calendar year must apply these rules
to the calendar year in its entirety. Generally, QI and a partnership or trust that
apply the agency option to any calendar
year are not required to apply the agency
option to subsequent calendar years. If,
however, QI withholds and reports any
adjustments required by corrected information in a subsequent calendar year under section 4.06(B)(2) of this Agreement,
QI must apply the agency option to that
calendar year in its entirety. QI and a
partnership or trust may not apply the
agency option to any calendar year when
the partnership or trust has failed to make
available to QI or QI’s auditor the records
described in section 4.06 of this Agreement within 90 days after these records
are requested, and the partnership or trust
must waive any legal prohibitions against
providing such records to the IRS. If, for
any calendar year, the partnership or trust
has failed to make these records available
within the 90-day period, or if QI and the
partnership or trust fail to comply with
any other requirement of this section 4.06,
QI must apply §§ 1.1441–1(c) and
1.1441–5(e) to the partnership or trust as a
nonwithholding foreign partnership or
nonwithholding foreign trust, must correct
its withholding for the period in which the
failure occurred in accordance with section 9.05 of this Agreement, and cannot
apply the agency option to subsequent calendar years.
(A) A partnership or trust is described
in this section 4.06(A) of this Agreement
if the following conditions are met:

167

(1) The partnership or trust is either a
direct account holder of QI or an indirect
account holder of QI that is a direct partner, beneficiary, or owner of a partnership
or trust to which QI also applies the
agency option.
(2) The partnership or trust is an FFI
that is a certified deemed-compliant FFI
(other than a registered deemed-compliant
Model 1 IGA FFI), an NFFE, or an exempt beneficial owner.
(3) None of the partnership’s or trust’s
partners, beneficiaries, or owners is a
withholding foreign trust, withholding
foreign partnership, participating FFI, registered deemed-compliant FFI, registered
deemed-compliant Model 1 IGA FFI, or
another qualified intermediary acting as
an intermediary for a payment made by QI
to the partnership or trust.
(4) The partnership or trust agrees to
permit QI to treat its direct partners, beneficiaries, or owners as direct account
holders of QI under this Agreement and to
treat its indirect partners, beneficiaries, or
owners as indirect account holders of QI
under this Agreement.
(5) The partnership or trust agrees to
comply with the compliance procedures
described in section 10.05 of this Agreement, provide QI with the certification
required under section 10.03 of this
Agreement for each certification period in
order to allow the responsible officer of
QI to make a certification to the IRS regarding the partnership’s or trust’s compliance with this section 4.06, and respond
(either directly or through QI) to IRS inquiries regarding its compliance review
described in section 10.07 of this Agreement, including providing the QI and the
IRS with the auditor’s report described in
section 10.06 of this Agreement.
(B) Modification of Obligations for
QI.
(1) QI may rely on a valid Form
W– 8IMY provided by the partnership or
trust, together with a withholding statement described in § 1.1441–5(c)(3)(iv) or
(e)(5)(iv) and § 1.1471–3(c)(3)(iii)(B), if
the payment is a withholdable payment,
that includes all information necessary for
QI to fulfill its withholding, reporting, and
filing obligations under this Agreement.
The withholding statement may include
chapter 3 withholding rate pools described
in section 6.03 of this Agreement for part-

July 14, 2014

ners, beneficiaries, or owners that are not
intermediaries, flow-through entities (or
persons holding interests in the partnership or trust through such entities), U.S.
persons, or passive NFFEs with one or
more substantial U.S. owners (or one or
more controlling persons that is a specified U.S. person), and the partnership or
trust need not provide to QI documentation for these partners, beneficiaries, or
owners. The withholding statement may
also include a chapter 4 withholding rate
pool of nonparticipating FFIs described in
section 6.03 of this Agreement for payments of amounts subject to chapter 4
withholding. The partnership or trust is
required to disclose to QI any interest
holder that is a passive NFFE with substantial U.S. owners (or controlling persons that are specified U.S. persons) or
that is a U.S. person, as well as the account holders or interest holders of any
nonqualified intermediary or flow-through
entity, respectively, which has an interest
in the partnership or trust, and to provide
all of the documentation and other information relating to those account holders
and interest holders that is required for the
QI, or another withholding agent, to report
the payments made to those account holders and interest holders to the extent required by sections 8.02(B) and 8.05 of this
Agreement.
(2) Timing of Withholding. QI must
withhold on the date it makes a payment
to the partnership or trust based on a withholding statement provided by the partnership or trust on which QI is permitted
to rely. The amount allocated to each partner, beneficiary, or owner in the withholding statement may be based on a reasonable estimate of the partner, beneficiary,
or owner’s distributive share of income
subject to withholding for the year. The
partnership or trust must correct the estimated allocations to reflect the partner,
beneficiary, or owner’s actual distributive
share, and must provide this corrected information to QI by the due date for QI’s
Forms 1042 and 1042–S (without regard
to extensions) for the calendar year.
(3) Payments Reportable Under
Chapters 3 and 4. The agreement between QI and the partnership or trust must
also provide that QI shall include all
amounts subject to chapters 3 and 4 withholding made by the partnership or trust in

July 14, 2014

QI’s Forms 1042 and 1042–S as if QI had
made the payments directly to the partnership or trust’s partners, beneficiaries, or
owners. QI shall apply the reporting requirements specified in section 4.03(A) of
this Agreement by substituting the term
“partnership or trust” for “PAI.”
(4) Form 1099 Reporting and
Backup Withholding. The agreement between QI and the partnership or trust must
also provide that QI shall include all reportable payments made by the partnership or trust in QI’s Forms 945 and 1099
to the extent required under this section
4.06(B)(4). QI shall file Forms 1099 and
backup withhold, if required, on reportable payments made by QI to U.S. nonexempt recipient that are direct or indirect
partners, beneficiaries, owners of the partnership or trust in accordance with the
terms of this Agreement.
(5) Form 8966 Reporting Requirements. The agreement between QI and the
partnership or trust must also provide that
QI shall report all withholdable payments
made by the partnership or trust on Form
8966 to the extent required under this section 4.06(B)(5). If the partnership or trust
is itself a passive NFFE with one or more
substantial U.S. owners (or one or more
controlling persons that is a specified U.S.
person), or if any of its partners, beneficiaries, or owners is a passive NFFE with
one or more substantial U.S. owners (or
one or more controlling persons that is a
specified U.S. person), QI shall file Forms
8966 to report all withholdable payments
made by QI to any such passive NFFE in
accordance with sections 8.04 and 8.05 of
this Agreement.
(C) Other Requirements of Agency
Agreement. QI shall require the partnership or trust to provide QI with all the
information necessary for QI to meet its
obligations under this Agreement. No provisions shall be contained in the agreement between QI and the partnership or
trust that preclude, and no provisions of
this Agreement shall be construed to preclude, the partnership or trust’s joint and
several liability for tax, penalties, and interest under chapters 3, 4, and 61, and
section 3406, to the extent that the underwithholding, penalties, and interest have
not been collected from QI and the underwithholding or failure to report amounts
correctly on Forms 945, 1042, 1042–S,

168

1099, or 8966 is due to the partnership or
trust’s failure to properly perform its obligations under its agreement with QI.
Nothing in the agreement between QI and
the partnership or trust shall be construed
to limit the partnership or trust’s requirements under chapter 4 as a certified
deemed-compliant FFI, NFFE, or exempt
beneficial owner. Further, nothing in the
agreement between QI and the partnership
or trust shall permit the partnership or
trust to assume primary chapters 3 and 4
withholding responsibility or primary
Form 1099 reporting and backup withholding responsibility.
SECTION 5. DOCUMENTATION
REQUIREMENTS
Sec. 5.01. Documentation Requirements.
(A) Coordination of Documentation
Requirements with Chapter 4.
(1) QI that is an FFI. If QI is an FFI,
QI is required to perform the due diligence procedures for each account holder
for whom QI is acting under its FATCA
requirements as a participating FFI, registered deemed-compliant FFI, registered
deemed-compliant Model 1 IGA FFI, or
limited FFI to determine if the account is
a U.S. account (or U.S. reportable account) and each account holder that is a
nonparticipating FFI and, if applicable,
recalcitrant account holder (or nonconsenting U.S. account). See QI’s
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI to perform due
diligence with respect to each account that
it maintains. To the extent an account
holder receives a payment with respect to
which QI has determined that withholding
is not required under chapter 4, QI shall
obtain, unless already collected, documentation that meets the requirements of
this section 5 to determine whether the
account holder is a foreign person for
which QI is required to withhold under
chapter 3 or a U.S. payee for which QI is
required to backup withhold under section
3406 or report on Form 1099 under chapter 61. See, however, section 8.06 providing the circumstances in which reporting
of U.S. accounts (or U.S. reportable accounts) under its FATCA requirements as
a participating FFI, registered deemed-

Bulletin No. 2014 –29

compliant FFI, or registered deemedcompliant Model 1 IGA FFI satisfies QI’s
Form 1099 reporting responsibilities.
(2) QI that is an NFFE. If QI is an
NFFE, QI is required to determine the
chapter 4 status of each account holder for
whom QI is acting to determine if withholding and reporting apply under section
1471 or 1472 on withholdable payments
made to the account holder. QI is required
to obtain, unless already collected, a valid
Form W– 8 or Form W–9 from each account holder to determine whether QI is
required to withhold under chapter 3 or 4
or report on Form 1099 under chapter 61.
Thus, the allowance in this section 5 for
QI to obtain documentary evidence does
not apply if QI is an NFFE. QI may,
however, obtain appropriate documentary
evidence as additional documentation to
establish the foreign status of an account
holder.
(B) General Documentation Requirements. QI agrees to use its best efforts to obtain documentation from account holders that receive a reportable
payment to determine whether withholding applies or whether a payment is reportable under this Agreement. If QI is an
FFI obtaining documentary evidence, QI
also agrees to adhere to the know-yourcustomer rules that apply to QI with respect to the account holder from whom
the documentary evidence is obtained.
Unless QI can reliably associate a reportable payment with valid documentation
from the account holder under section
5.13(B) of this Agreement, QI shall apply
the presumption rules described in section
5.13(C) of this Agreement to any account
holder that receives a reportable payment
to determine if withholding is required
under chapter 3 or 4 or if backup withholding is required under section 3406. As
set forth in section 11.04 of this Agreement, failure to obtain documentation
from a significant number of direct account holders constitutes an event of default. QI agrees to review and maintain
documentation in accordance with this
section 5 and, in the case of documentary
evidence obtained from direct account
holders, in accordance with the knowyour-customer rules set forth in the Attachments to this Agreement. QI also
agrees, if the performance of external audit procedures is requested by IRS as de-

Bulletin No. 2014 –29

scribed in section 10.07(D) of this Agreement, to make documentation (together
with any associated withholding statements and other documents or information) available upon request for inspection
by QI’s external auditor. QI represents
that none of the laws to which it is subject
prohibits disclosure of the identity of any
account holder or account information to
QI’s external auditor. QI may rely on the
documentation it obtains under this section 5 as the basis for the information it
provides to another withholding agent under section 6 of this Agreement, as well as
to determine its own withholding and reporting obligations.
Sec. 5.02. Documentation for Foreign Account Holders. QI may treat an
account holder as a foreign beneficial
owner of an amount if the account holder
provides a valid Form W– 8 (other than
Form W– 8IMY) or valid documentary
evidence, as described in section 2.19 of
this Agreement, that supports the account
holder’s status as a foreign person. QI
may not treat an account holder that provides documentation indicating that it is a
bank, broker, intermediary, or agent (such
as an attorney) as a beneficial owner unless QI receives a statement, in writing
and signed by a person with authority to
sign such a statement, stating that such
account holder is the beneficial owner of
the income. Further, QI may not reduce
the rate of withholding with respect to an
indirect account holder unless the certification is a valid Form W– 8IMY, and then
only to the extent that QI can reliably
associate the payment with valid documentation that establishes the indirect account holder’s entitlement to a reduced
rate of withholding under chapter 3 and
establishes that withholding does not apply under chapter 4 in the case of a withholdable payment made to the account
holder. See section 5.13(B) of this Agreement for rules regarding reliable association with documentation
Sec. 5.03. Beneficial Owner’s Claim
of Treaty Benefits. To the extent an account holder receives a payment that is
not subject to withholding under chapter
4, QI may not reduce the rate of withholding under chapter 3 based on a beneficial
owner’s claim of treaty benefits unless QI
obtains the documentation required by
section 5.03(A) of this Agreement. In ad-

169

dition, QI agrees to establish procedures
to inform account holders of the terms of
limitation on benefits provisions of a
treaty (whether or not those provisions are
contained in a separate article entitled
Limitation on Benefits) under which the
account holder is claiming benefits.
(A) Treaty Documentation. The documentation required by this section
5.03(A) is as follows:
(1) The account holder has provided a
properly completed Form W– 8BEN or
Form W– 8BEN–E on which a claim of
treaty benefits is made, including the appropriate limitation on benefits and section 894 certifications. A U.S. TIN or foreign TIN shall not be required, however,
if the beneficial owner is a direct account
holder. An indirect account holder is required to have a either a U.S. TIN or
foreign TIN to claim treaty benefits unless
it is claiming treaty benefits on income
from marketable securities;
(2) The account holder has provided
documentary evidence that has been obtained pursuant to the know-yourcustomer rules that apply to the account
holder and the account holder has made
the treaty statement required by section
5.03(B) of this Agreement, if applicable;
or
(3) The account holder provides the
type of documentary evidence required
under § 1.1441– 6 to establish entitlement
to a reduced rate of withholding under a
treaty and the account holder has made the
treaty statement required by section
5.03(B) of this Agreement, if applicable.
(B) Treaty Statement. The treaty
statement required by this section 5.03(B)
is as follows:
[Name of account holder] meets all
provisions of the applicable treaty that are
necessary to claim a reduced rate of withholding, including any limitation on benefits provisions, and derives the income
within the meaning of section 894, and the
regulations thereunder, as the beneficial
owner.
QI is required to obtain the treaty statement required by this section 5.03(B)
from an account holder that is an entity.
QI shall not be required to obtain a treaty
statement required by this section 5.03(B)
from an individual who is a resident of an
applicable treaty country or from the gov-

July 14, 2014

ernment, or its political subdivisions, of a
treaty country.
Sec. 5.04. Documentation for International Organizations. To the extent an
account holder receives a payment that is
not subject to withholding under chapter
4, QI may not treat the account holder
as an international organization entitled to
an exemption from withholding under
section 892 unless the name provided on
the documentation (including a Form
W– 8EXP) is the name of an entity designated as an international organization by
executive order pursuant to 22 United
States Code 288 through 288(f) and the
documentation is valid under section 5.10
of this Agreement. If an international organization is not claiming benefits under
section 892 but under another Code exception, the provisions of section 5.02 of
this Agreement shall apply rather than the
provisions of this section 5.04.
Sec. 5.05. Documentation for Foreign Governments and Foreign Central
Banks of Issue.
(A) Documentation From a Foreign
Government or Foreign Central Bank
of Issue Claiming an Exemption From
Withholding Under Section 892 or Section 895. To the extent an account holder
receives a payment that is not subject to
withholding under chapter 4, QI may not
treat an account holder as a foreign government or foreign central bank of issue
exempt from withholding under section
892 or 895 unless—
(1) QI receives from the account holder
a Form W– 8EXP or documentary evidence establishing that the account holder
is a foreign government or foreign central
bank of issue;
(2) The income paid to the account
holder is the type of income that qualifies
for an exemption from withholding under
section 892 or 895; and
(3) QI does not know, or have reason to
know, that the account holder is a controlled commercial entity as described in
section 892, that the income owned by the
foreign government or foreign central
bank of issue is being received from a
controlled commercial entity, or that the
income is from the disposition of an interest in a controlled commercial entity.
(B) Treaty Exemption. To the extent
an account holder receives a payment that
is not subject to withholding under chap-

July 14, 2014

ter 4, QI may treat an account holder as a
foreign government or foreign central
bank of issue entitled to a reduced rate of
withholding under an income tax treaty
for purposes of chapter 3 if it has valid
documentation that is sufficient to obtain a
reduced rate of withholding under a treaty
as described in section 5.03 of this Agreement.
(C) Other Code Exception. If a foreign government or foreign central bank
of issue is not claiming benefits under
section 892 or under an income tax treaty
but under another Code exception (e.g.,
the portfolio interest exception under section 871(h) or 881(c)), the provisions of
section 5.02 of this Agreement apply
rather than the provisions of this section
5.05.
Sec. 5.06. Documentation for Foreign Tax-Exempt Organizations. To the
extent an account holder receives a payment that is not subject to withholding
under chapter 4, QI may not treat an account holder as a foreign tax-exempt organization and reduce the rate of or exempt the account holder from withholding
for purposes of chapter 3 unless it satisfies
the requirements provided in section
5.06(A), (B), or (C) of this Agreement.
(A) Reduced Rate of Withholding
Under Section 501. QI may not treat an
account holder as a foreign organization
described under section 501(c), and therefore exempt from withholding under
chapter 3 (or, if the account holder is a
foreign private foundation, subject to
withholding at a 4-percent rate under section 1443(b)) unless QI obtains a valid
Form W– 8EXP on which Part IV of the
form is completed.
(B) Reduced Rate of Withholding
Under Treaty. QI may not treat an account holder as a foreign organization that
is tax-exempt on an item of income pursuant to a treaty unless QI obtains valid
documentation as described under section
5.03 of this Agreement that is sufficient
for obtaining a reduced rate of withholding under the treaty and the documentation establishes that the account holder is
an organization exempt from tax under the
treaty on that item of income.
(C) Other Exceptions. If a tax-exempt
entity is not claiming a reduced rate of
withholding because it is a foreign organization described under section 501(c) or

170

under a treaty article that applies to exempt certain foreign organizations from
tax, but is claiming a reduced rate of withholding under another Code or treaty exception, the provisions of section 5.02 or
5.03 (as applicable) of this Agreement
shall apply rather than the provisions of
this section 5.06.
Sec. 5.07. Documentation from Intermediaries or Flow-Through Entities.
QI must apply the presumption rules to a
reportable payment made to a nonqualified intermediary or flow-through entity
that is a direct account holder of QI to the
extent QI fails to obtain the documentation set forth below. If QI receives documentation for the account holders or interest holders of an intermediary or flowthrough entity, as described in this section
5.07, QI must apply the rules of this section 5 to determine the validity of such
documentation.
(A) Withholdable Payments Made to
Nonqualified Intermediaries and FlowThrough Entities Other than Withholding Foreign Partnerships and Withholding Foreign Trusts. With respect to
a withholdable payment made to a nonqualified intermediary or flow-through entity—
(1) QI receives a valid Form W– 8IMY
provided by the nonqualified intermediary
or the flow-through entity receiving the
payment that establishes the chapter 4 status of the intermediary or flow-through
entity; and
(2) If the payment is not subject to
withholding under chapter 4 based on
such entity’s chapter 4 status (or to the
extent the payment is received on behalf
of exempt beneficial owners), QI can reliably associate the payment, within the
meaning of section 5.13(B) of this Agreement, with a withholding statement that
meets the requirements of § 1.1471–
3(c)(iii)(B) that includes the account holders or interest holders of the intermediary
or flow-through entity in chapter 4 withholding rate pools to the extent permitted
or with valid documentation described in
this section 5 provided by account holders
or interest holders of the intermediary or
flow-through entity that are not themselves nonqualified intermediaries or
flow-through entities and that QI can treat
as not subject to withholding under chapter 4.

Bulletin No. 2014 –29

(B) Reportable Payments Other than
Withholdable Payments Made to Nonqualified Intermediaries and FlowThrough Entities (Other than a Withholding Foreign Partnership or
Withholding Foreign Trust). With respect to a reportable payment that is not a
withholdable payment made to a nonqualified intermediary or flow-through entity (other than a withholding foreign partnership or withholding foreign trust)—
(1) QI receives a valid Form W– 8IMY
provided by the nonqualified intermediary
or the flow-through entity regardless of
whether the form includes a chapter 4
status of the nonqualified intermediary or
flow-through entity unless such entity provides a withholding statement allocating a
payment to a chapter 4 withholding rate
pool of U.S. payees; and
(2) QI can reliably associate the payment, within the meaning of section
5.13(B) of this Agreement, with a chapter
4 withholding rate pool of U.S. payees or
valid documentation described in this section 5 provided by account holders or interest holders of the nonqualified intermediary or flow-through entity that are not
themselves nonqualified intermediaries or
flow-through entities.
(C) Reportable Payments Made to
Qualified Intermediaries and Withholding Foreign Partnerships and
Withholding Foreign Trusts. With respect to a reportable payment made to a
qualified intermediary, a withholding foreign partnership, or a withholding foreign
trust, QI receives a valid Form W– 8IMY
provided by the qualified intermediary,
withholding foreign partnership, or withholding foreign trust that includes the entity’s chapter 4 status when required and,
for those payments for which a qualified
intermediary has not assumed primary
chapters 3 and 4 withholding responsibility or primary Form 1099 reporting and
backup withholding responsibility, QI can
reliably associate the payment with withholding rate pools, as described in section
6.03 of this Agreement.
(D) Private Arrangement Intermediaries. If QI has an agreement with a PAI
(see section 4.01 of this Agreement), QI
obtains from the PAI a Form W– 8IMY
completed as if the PAI were a QI that is
an FFI (with the exception that the PAI
must not provide a QI–EIN on the Form

Bulletin No. 2014 –29

W– 8IMY) and QI can reliably associate
the payment with a withholding statement, as described in section 4.01(G) of
this Agreement and the information described in this section 5.07 for any account holders of the PAI that are intermediaries or flow-through entities and the
documentation for any passive NFFE with
one or more substantial U.S. owners (or
one or more controlling persons that is a
specified U.S. person).
(E) Partnership or Trusts to which
QI Applies the Agency Option. If QI has
an agreement with a partnership or trust
under which the partnership or trust
agrees to act as an agent of QI (see section
4.06 of this Agreement), QI obtains from
the partnership or trust a Form W– 8IMY
completed as if the partnership or trust
were a QI that is an FFI (with the exception that the partnership or trust must not
provide a QI–EIN on the Form W– 8IMY)
and QI can reliably associate the payment
with a withholding statement, as described
in section 4.06(B)(1) of this Agreement
and the information described in this section 5.07 for any account holders that are
intermediaries or flow-through entities
and the documentation for any passive
NFFE with one or more substantial U.S.
owners (or one or more controlling persons that is a specified U.S. person).
Sec. 5.08. Documentation for U.S.
Exempt Recipients. QI shall not treat an
account holder as a U.S. exempt recipient
unless QI obtains from the account holder—
(A) A valid Form W–9 on which the
account holder includes an exempt payee
code to certify that the account holder is a
U.S. exempt recipient for purposes of
chapter 4 reporting;
(B) Documentary evidence that is sufficient to establish that the account holder
is a U.S. exempt recipient; or
(C) Documentary evidence that is sufficient to establish the account holder’s
status as a U.S. person and QI can treat the
person as an exempt recipient under the
rules of §§ 1.6045–2(b)(2)(i) or 1.6049 –
4(c)(1)(ii), as appropriate, without obtaining documentation.
Sec. 5.09. Documentation for U.S.
Non-Exempt Recipients. QI shall not
treat an account holder as a U.S. nonexempt recipient unless QI obtains a valid
Form W–9 from the account holder, QI

171

knows an account holder is a U.S. nonexempt recipient, or QI must presume a
person is a U.S. non-exempt recipient to
the extent required under sections
5.13(C)(3) or (4) of this Agreement.
Sec. 5.10. Documentation Validity.
(A) In General. QI may not rely on
documentation if QI has actual knowledge, or reason to know as described in
section 5.10(B) or 5.10(C) of this Agreement, that there is a change in circumstances with respect to the information or
statements contained in the documentation or account information that affects
the reliability of the account holder’s
claim. See § 1.1441–1(e)(4)(ii)(D) for the
definition of change in circumstances. A
change in circumstances affecting withholding information, including allocation
information or withholding rate pools
contained in a withholding statement, will
also cause the documentation provided
with respect to that information to no
longer be reliable. Once QI knows, or has
reason to know, that documentation provided by an account holder is unreliable or
incorrect, it can no longer reliably associate a payment with valid documentation
unless QI obtains the additional documentation described in this section 5.10 to
establish the account holder’s foreign
status.
In addition, if QI becomes aware of
information resulting in the documentation no longer being reliable or correct
and QI has not assumed primary withholding responsibility under chapters 3
and 4, QI agrees that it will promptly
provide a withholding agent with corrected information (e.g., corrected withholding rate pools, corrected Forms W–9,
or corrected U.S. TINs) within 30 days
after QI knows or has reason to know that
the documentation upon which it has relied is unreliable or incorrect. If QI receives notification from the IRS that documentation provided by an account holder
is unreliable or incorrect (e.g., that the
U.S. TIN provided by an account holder is
incorrect), QI shall follow the procedures
set forth in § 31.3406(d)–5. See also QI’s
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI or an NFFE’s
requirements as a withholding agent under

July 14, 2014

sections 1471 and 1472 following a
change in circumstances.
(B) Reason to Know-Direct Account
Holders. If QI is a financial institution as
defined in § 1.1471–5(e), an insurance
company (without regard to whether such
company is a specified insurance company), or a broker or dealer in securities,
QI shall be considered to have reason to
know that documentation provided by a
direct account holder is unreliable or incorrect only if one or more of the circumstances described in this section 5.10(B)
apply. If an account holder has provided
documentation that is unreliable or incorrect under the rules of this section
5.10(B), QI must request new documentation. Alternatively, QI may rely on the
documentation originally provided if the
rules of this section 5.10(B) permit such
reliance based on the additional statements and documentation described in
this section 5.10(B).
(1) General Rules.
(i) QI shall not rely on a Form W–9 if
it is not permitted to do so under the rules
of § 31.3406(h)–3(e) and shall not rely on
a Form W– 8 if it is not permitted to do so
under the rules of § 1.1441–7(b)(4)
through (6).
(ii) QI shall not treat documentary evidence provided by an account holder as
valid if the documentary evidence does
not reasonably establish the identity of the
person presenting the documentary evidence. For example, documentary evidence is not valid if it is provided in
person by an account holder that is a natural person and the photograph on the
documentary evidence, if any, does not
match the appearance of the person presenting the document.
(iii) QI may not rely on documentation
to reduce the withholding rate that would
otherwise apply if—
(a) The account holder’s documentation is incomplete or contains information
that is inconsistent with the account holder’s claim;
(b) QI has other account information
that is inconsistent with the account holder’s claim; or
(c) The documentation lacks the information necessary to establish entitlement
to a reduced rate of withholding.
For example, if an account holder is an
entity and provides documentary evidence

July 14, 2014

to claim treaty benefits and the documentary evidence establishes the account
holder’s status as a foreign person and a
resident of a treaty country but fails to
provide the treaty statement in section
5.03 of this Agreement, the documentary
evidence does not establish the account
holder’s entitlement to a reduced rate of
withholding. However, for purposes of establishing an account holder’s status as a
foreign person or residency under an income tax treaty, documentation shall be
considered inconsistent only if it is unreliable or incorrect under the rules of sections 5.10(B)(2) and (3) of this Agreement.
(2) Rules Regarding Establishment
of Foreign Status.
(i) QI shall not treat documentary evidence provided by an account holder before January 1, 2001, as valid for purposes
of establishing an account holder’s status
as a foreign person if QI has actual knowledge that the account holder is a U.S.
person or if it has a current mailing or
current residence address for the account
holder in the United States.
(ii) QI shall not treat documentation
provided by an account holder after December 31, 2000, as valid for purposes of
establishing the account holder’s foreign
status if QI classified the account holder
as a U.S. person in its account information
or if it does not have a permanent residence address for the account holder. Further, QI shall not treat documentation provided with respect to an account other
than a preexisting obligation (as defined in
§ 1.1441–1(c)(54)) that the QI has documented the foreign status of the account
holder for purposes of chapter 3 or 61
before July 1, 2014, as valid for purposes
of establishing an account holder’s status
as a foreign person if QI has a current
telephone number for the person in the
United States and has no telephone number for the person outside of the United
States. The limit on reason to know described in the preceding sentence with respect to a preexisting obligation (defined
in § 1.1441–1(c)(54)) documented before
July 1, 2014, shall not apply, however, if
QI is notified of a change in circumstances
and as of the date of such notification QI
shall not treat such documentation as valid
for purposes of establishing the account
holder’s foreign status.

172

If QI has classified the account holder
as a U.S. person or has an address or sole
telephone number for the account holder
in the United States, QI may nevertheless
treat an account holder that is an individual as a foreign person if QI—
(a) Has in its possession, or obtains,
additional documentary evidence (which
does not contain a U.S. address) supporting the claim of foreign status and a reasonable explanation in writing supporting
the account holder’s foreign status (as defined in § 1.1441–7(b)(12));
(b) Obtains a valid Form W– 8, and the
Form W– 8 contains a permanent residence address outside the United States
and a mailing address, if any, outside the
United States (or if a mailing address is
inside the United States, the account
holder provides a reasonable explanation
in writing supporting the account holder’s
foreign status); or
(c) Has classified the account holder as
a resident of the country in which the
account is maintained; QI is required to
report a payment made to the account
holder annually on a tax information statement that is filed with the tax authority of
the country in which the office that maintains the account is located as part of the
country’s resident reporting requirements;
and that country has a tax information
exchange agreement or an income tax
treaty in effect with the United States.
If QI has classified the account holder
as a U.S. person or has an address or sole
telephone number for the account holder
in the United States, QI may nevertheless
treat an account holder that is an entity
(other than a flow-through entity) as a
foreign person if QI—
(d) Has in its possession, or obtains,
documentary evidence that substantiates
that the entity is actually organized or
created under the laws of a foreign country;
(e) Obtains a valid Form W– 8, and the
Form W– 8 contains a permanent residence outside the United States and a
mailing address, if any, outside the United
States (or if a mailing address is inside the
United States, the account holder provides
additional documentary evidence sufficient to establish the account holder’s foreign status); or
(f) Has classified the entity as a resident of the country where the account is

Bulletin No. 2014 –29

maintained; QI is required to report a payment made to the account holder annually
on a tax information statement filed with
the tax authority of the country in which
the office that maintains the account is
located as part of the country’s resident
reporting requirements; and that country
has a tax information exchange agreement
or an income tax treaty in effect with the
United States.
(iii) With respect to an account other
than a preexisting obligation (defined in
§ 1.1441–1(c)(54)) that QI has documented the foreign status of the account
holder for purposes of chapter 3 or 61
before July 1, 2014, QI shall not treat
documentation as valid for purposes of
establishing an account holder’s status as
a foreign person if it has, either on the
documentary evidence or in its current
customer account files, an unambiguous
indication of place of birth for the individual in the United States. The limit on
reason to know described in the preceding
sentence with respect to a preexisting obligation documented before July 1, 2014,
shall not apply, however, if QI either reviews documentation that contains a U.S.
place of birth or is notified of a change in
circumstances, and, as of the date of such
review or notification, QI shall not treat
such documentation as valid for purposes
of establishing the account holder’s foreign status.
QI may nevertheless treat the account
holder with a U.S. place of birth as a
foreign person if QI—
(a) Has in its possession, or obtains,
documentary evidence evidencing citizenship in a country other than the United
States and obtains a copy of the individual’s Certificate of Loss of Nationality of
the United States; or
(b) Obtains a valid Form W– 8BEN
that establishes the account holder’s foreign status, documentary evidence evidencing citizenship in a country other than
the United States, and a reasonable written
explanation of the account holder’s renunciation of U.S. citizenship or the reason
the account holder did not obtain U.S.
citizenship at birth.
(iv) QI shall not treat documentation as
valid for purposes of establishing an account holder’s status as a foreign person if
the account holder has standing instructions directing QI to pay amounts from its

Bulletin No. 2014 –29

account to an address or an account maintained in the United States. QI may treat
documentation as valid for establishing
foreign status even though the account
holder has such standing instructions if
the account holder provides a reasonable
explanation in writing supporting the account holder’s foreign status (as defined in
§ 1.1441–7(b)(12)) or has both a valid
Form W– 8 establishing foreign status and
documentary evidence establishing foreign status.
(3) Rules for Establishing Residency
Under an Income Tax Treaty.
(i) QI shall not treat an account holder
as a resident under an income tax treaty if
the permanent residence address on a
Form W– 8 is not in the applicable treaty
country or if the account holder notifies
QI of a new permanent residence address
that is not in the treaty country. QI may,
however, rely on the Form W– 8 if the
account holder provides a reasonable explanation for the permanent residence address outside the treaty country or if QI
has in its possession, or obtains, documentary evidence that establishes the claim of
residency in a treaty country.
(ii) QI shall not treat an account holder
as a resident under an income tax treaty if
the permanent residence address on a
Form W– 8 is in the applicable treaty
country but the Form W– 8 contains a
mailing address outside the treaty country
or QI has a current mailing address for the
account holder outside the applicable
treaty country in its account information.
A mailing address that is a P.O. Box,
in-care-of address, or address at a financial institution (if the financial institution
is not a beneficial owner) shall not preclude QI from treating the account holder
as a resident of an applicable treaty country if such address is in the applicable
treaty country. If QI has a current mailing
address for the account holder outside the
applicable treaty country (whether or not
contained on the Form W– 8), QI may
nevertheless treat the account holder as a
resident of the applicable treaty country if
QI—
(a) Has in its possession, or obtains, additional documentary evidence supporting
the account holder’s claim of residence in
the applicable treaty country (and the additional documentation does not contain an
address outside the treaty country);

173

(b) Has in its possession, or obtains,
documentary evidence that establishes
that the account holder is an entity organized in a treaty country (or an entity
managed and controlled in a treaty country, if the applicable treaty so requires);
(c) Knows that the address outside the
applicable treaty country (other than a
P.O. Box, or in-care-of address) for an
entity that is a resident of the applicable
treaty country is the address of a branch of
such entity; or
(d) Obtains a written statement from
the account holder that reasonably establishes entitlement to treaty benefits.
(iii) QI shall not treat documentary evidence as valid for purposes of establishing residency in a treaty country if QI has
a current mailing or current permanent
residence address for the account holder
(whether or not on the documentary evidence) that is outside of the applicable
treaty country, or QI has no permanent
residence address for the account holder.
If QI has a current mailing or current
permanent residence address for the account holder outside of the applicable
treaty country, QI may nevertheless rely
on the documentary evidence if QI—
(a) Has in its possession, or obtains,
additional documentary evidence supporting the account holder’s claim of residence in the applicable treaty country (and
the documentary evidence does not contain an address outside the applicable
treaty country, a P.O. Box, an in-care-of
address, or an address of a financial institution);
(b) Has in its possession, or obtains,
documentary evidence that establishes
that the account holder is an entity organized in a treaty country (or an entity
managed and controlled in a treaty country, if the applicable treaty so requires); or
(c) Obtains a valid Form W– 8 that
contains a permanent residence address
and a mailing address in the applicable
treaty country.
(iv) QI shall not treat documentation as
valid for purposes of establishing an account holder’s residence in an applicable
treaty country if the account holder has
standing instructions for QI to pay
amounts from its account to an address or
an account outside the treaty country unless the account holder provides a reasonable explanation in writing establishing

July 14, 2014

the direct account holder’s residence in
the applicable treaty country or a valid
Form W– 8 that contains a permanent residence address and a mailing address in
the applicable treaty country, or, if the
account holder initially provided a Form
W– 8, documentary evidence establishing
the account holder’s residence in the applicable treaty country.
(C) Reason to Know-Indirect Account Holders. QI shall be considered to
have reason to know that relevant information or statements contained in documentation provided by an indirect account
holder is unreliable or incorrect if a reasonably prudent person in the position of a
qualified intermediary would question the
claims made. QI shall have reason to
know that documentation provided by a
nonqualified intermediary or a flowthrough entity is unreliable or incorrect if
the nonqualified intermediary or flowthrough entity does not provide QI with,
to the extent required, the names of the
indirect account holders, their addresses,
allocation information allocating payments to each indirect account holder, and
sufficient information for QI to report
payments on Forms 1042–S and 1099. In
addition, QI shall have reason to believe
that an indirect account holder is not entitled to a reduced rate of withholding
under an income tax treaty if the nonqualified intermediary or flow-through entity
has not provided sufficient information so
that QI can verify that the indirect account
holder has provided a U.S. TIN or foreign
TIN, if required, and made the necessary
statements regarding limitations on benefits provisions and deriving the income
under section 894 and the regulations
thereunder. See § 1.1441–7(b)(10).
Sec. 5.11. Documentation Validity
Period.
(A) Documentation Other than
Form W–9. QI may rely on valid documentary evidence obtained from account
holders in accordance with applicable
know-your-customer rules as long as the
documentary evidence remains valid under those rules or until QI knows, or has
reason to know, that the information contained in the documentary evidence is incorrect. QI may rely on the representations described in section 5.03 of this
Agreement obtained in connection with
such documentation for the same period

July 14, 2014

of time as the documentation. For establishing an account holder’s chapter 3 status (as defined in § 1.1441–1(c)(45)) or
foreign status for chapter 61 purposes, QI
may rely on a Form W– 8 until its validity
expires under § 1.1441–1(e)(4)(ii) and
may rely on documentary evidence (other
than documentary evidence obtained pursuant to applicable know-your-customer
rules) until its validity expires under
§ 1.6049 –5(c).
(B) Form W–9. QI may rely on a valid
Form W–9 as long as it has not been
informed by the IRS or another withholding agent that the form is unreliable or
incorrect. If QI has primary Form 1099
reporting and backup withholding responsibility, it may rely on a Form W–9 unless
one of the conditions of § 31.3406(h)–
3(e)(2)(i) through (v) apply.
Sec. 5.12. Maintenance and Retention of Documentation.
(A) Maintaining Documentation. QI
shall maintain documentation by retaining
the original documentation, a certified
copy, a photocopy, a scanned copy, a microfiche, or other means that allow reproduction (provided that the QI has recorded
receipt of the documentation and is able to
produce a hard copy). For a direct account, if QI is not required to retain copies
of documentary evidence under its knowyour-customer rules, QI may instead retain a notation of the type of documentation reviewed, the date the documentation
was reviewed, the document’s identification number (if any) (e.g., a passport number), and whether such documentation
contained any U.S. indicia. For direct accounts opened prior to January 1, 2001, if
QI was not required under its know-yourcustomer rules to maintain originals or
copies of documentation, QI may rely on
its account information if it has complied
with all other aspects of its know-yourcustomer rules regarding establishment
of an account holder’s identity, it has a
record that the documentation required
under the know-your-customer rules
was actually examined by an employee
of QI in accordance with the knowyour-customer rules, and it has no information in its possession that would
require QI to treat the documentation as
invalid under the rules of section
5.10(B) of this Agreement.

174

(B) Retention Period. QI shall retain a
record of the account holder’s documentation obtained under this section 5 for as
long as the documentation is relevant to
the determination of QI’s tax liability or
reporting responsibilities under sections
1461, 1474(a), and 3406.
Sec. 5.13. Application of Presumption Rules.
(A) In General. QI shall apply the
presumption rules of section 5.13(C) of
this Agreement if QI cannot reliably associate a payment with valid documentation
from an account holder. The presumption
rules cannot be used to grant a reduced
rate of withholding. For example, the
portfolio interest exception of sections
871(h) and 881(c) shall not apply to a
person that is presumed to be foreign.
Further, QI must apply the presumption
rules when required and may not rely on
its actual knowledge regarding an account
holder’s chapter 4 status or status as a
U.S. or foreign person to apply a reduced
rate of withholding. Notwithstanding the
preceding sentence, QI must rely on its
actual knowledge regarding an account
holder rather than what is presumed under
section 5.13(C) of this Agreement if,
based on such knowledge, it should withhold an amount greater than the withholding rate under the presumption rules or it
should report on Form 1042–S or Form
1099 an amount that would otherwise not
be reported. Failure to follow the presumption rules may result in liability for
underwithholding, penalties, and interest.
(B) Reliably Associating a Payment
with Documentation. A payment can be
reliably associated with documentation if
it is considered reliably associated with
documentation under the rules of
§ 1.1441–1(b)(2)(vii) and, for a withholdable payment, § 1.1471–3(c). Generally,
QI can reliably associate a payment with
documentation if, for that payment, it
holds valid documentation, as described in
this section 5, from the account holder; it
can reliably determine how much of the
payment relates to the valid documentation provided by such account holder; and
it has no actual knowledge or reason to
know, under the requirements of section
5.10 of this Agreement, that any of the
information, certifications, or statements
in or associated with the documentation
are incorrect. Sections 5.13(B)(1) through

Bulletin No. 2014 –29

(5) of this Agreement describe when a
payment is reliably associated with documentation if the payment is made to an
account holder that is an intermediary or
flow-through entity (other than a nonparticipating FFI that is not acting on behalf
of exempt beneficial owners).
(1) Reliably Associating a Payment
with Documentation Provided by a
Nonqualified Intermediary or FlowThrough Entity. Generally, QI can reliably associate a payment with documentation provided by a nonqualified
intermediary or flow-through entity if it
can reliably associate the payment with a
valid Form W– 8IMY provided by the
nonqualified intermediary or flow-through
entity, and it can determine the portion of
the payment that relates to valid documentation associated with the Form W– 8IMY
for an account holder or interest holder of
the nonqualified intermediary or flowthrough entity that is not itself a nonqualified intermediary or flow-through entity;
and the nonqualified intermediary or flowthrough entity provides sufficient information for QI to report the payments on
Form 1042–S, Form 1099, or Form 8966
if reporting is required.
If the payment is a withholdable payment, the Form W– 8IMY must provide
the nonqualified intermediary’s or flowthrough entity’s chapter 4 status to the
extent required for chapter 4 purposes. In
lieu of the nonqualified intermediary or
flow-through entity providing documentation for an account holder that is subject to
chapter 4 withholding, QI can reliably associate a withholdable payment with valid
documentation associated with the Form
W– 8IMY from the nonqualified intermediary or flow-through entity if it can determine the portion of the payment allocable to a chapter 4 withholding rate pool
(to the extent permissible under § 1.1471–
3(c)(3)(iii)(B)).
If the payment is a reportable amount,
QI can reliably associate such payment
with valid documentation provided by a
nonqualified intermediary or a flowthrough entity that is a participating FFI or
registered deemed-compliant FFI if, in
lieu of providing documentation for its
account holders that are U.S. persons,
such nonqualified intermediary or flowthrough entity allocates the payment to a
chapter 4 withholding rate pool of U.S.

Bulletin No. 2014 –29

payees and also certifies on a valid Form
W-8IMY that it meets the requirements of
§ 1.6049 – 4(c)(4)(iii) with respect to any
account holder of an account it maintains
within the meaning of § 1.1471–5(d)(5)
(i.e., a direct account holder) that receives
a payment included in this pool or allocates a payment that is a withholdable
payment to a chapter 4 withholding rate
pool of recalcitrant account holders.
Notwithstanding the preceding sentences in this section 5.13(B)(1), to the
extent a payment is not subject to reporting on Form 1042–S, Form 1099, or Form
8966, QI can reliably associate the payment with valid documentation if it can
determine the portion of the payment that
is allocable to a group of documented
account holders (other than nonqualified
intermediaries or flow-through entities)
for whom withholding and reporting is not
required. For example, QI can treat a payment of short term OID allocable to a
group of documented foreign account
holders as reliably associated with valid
documentation. Further, if the documentation attached to a nonqualified intermediary’s or flow-through entity’s Form
W– 8IMY is documentation from another
nonqualified intermediary or flow-through
entity, then QI must apply the rules of this
paragraph to that other nonqualified intermediary or flow-through entity.
(2) Reliably Associating a Payment
with a Withholding Certificate Provided by Another Qualified Intermediary that Does not Assume Primary
Chapters 3 and 4 Withholding or Primary Form 1099 Reporting and
Backup Withholding Responsibility.
Generally, QI can reliably associate a payment with documentation provided by another qualified intermediary that does not
assume either primary chapters 3 and 4
withholding responsibility or primary
Form 1099 reporting and backup withholding responsibility if it can reliably
associate the payment with a valid Form
W– 8IMY and, if the form is associated
with a withholdable payment, it includes
the qualified intermediary’s chapter 4 status to the extent required for chapter 4
purposes. Additionally, the Form
W– 8IMY must be associated with a withholding statement that allocates the withholdable payment among the chapter 4
withholding rate pools (to the extent per-

175

missible under § 1.1471–3(c)(3)(iii)(B)),
and with respect to a payment of an
amount subject to chapter 3 withholding
that is either not a withholdable payment
or a withholdable payment for which no
chapter 4 withholding is required, that allocates such payment among chapter 3
withholding rate pools for foreign account
holders as described in section 6.03(C) of
this Agreement.
If the payment is a reportable amount,
QI can reliably associate the payment with
documentation provided by another qualified intermediary if the withholding statement allocates the payment to withholding
rate pools attributable to U.S. non-exempt
recipients and the documentation includes
a valid Form W–9 for each U.S. nonexempt recipient account holder for which
the other qualified intermediary is required to report on Form 1099 and, if
required, backup withhold. QI can also
reliably associate a reportable amount
with valid documentation provided by another qualified intermediary that is a participating FFI or registered deemedcompliant FFI if, in lieu of providing
documentation for each U.S. non-exempt
recipient account holder, the qualified intermediary allocates the payment to a
chapter 4 withholding rate pool of U.S.
payees and provides the applicable certification(s) on a valid Form W– 8IMY for
allocating the payment to this pool or allocates a payment that is a withholdable
payment to a chapter 4 withholding rate
pool of recalcitrant account holders. Notwithstanding the preceding sentences in
this section 5.13(B)(2), the presumption
rules shall not apply if a payment cannot
be allocated to each U.S. non-exempt recipient account holder or to a chapter 4
withholding rate pool of U.S. payees to
the extent the alternative procedures of
section 6.03(D) of this Agreement apply.
(3) Reliably Associating a Payment
with Documentation Provided by a
Qualified Intermediary that Assumes
Primary Chapters 3 and 4 Withholding
Responsibility and Does not Assume
Primary Form 1099 Reporting and
Backup Withholding Responsibility.
Generally, QI can reliably associate a payment with valid documentation provided
by another qualified intermediary that assumes primary chapters 3 and 4 withholding responsibility, but not primary Form

July 14, 2014

1099 reporting and backup withholding
responsibility, if it can associate the payment with a valid Form W– 8IMY from
the qualified intermediary and, if the form
is associated with a withholdable payment, it includes the qualified intermediary’s chapter 4 status to the extent required for chapter 4 purposes.
Additionally, the Form W– 8IMY must be
associated with a withholding statement
that allocates a payment that is a withholdable payment or an amount subject to
chapter 3 withholding that is not a withholdable payment among a single withholding rate pool for all account holders
with respect to which the qualified intermediary assumes primary chapters 3 and 4
withholding responsibility.
If the payment is a reportable amount,
QI can reliably associate the payment with
documentation provided by another qualified intermediary if the withholding statement allocates the payment to withholding
rate pools attributable to each U.S. nonexempt recipient, as described in section
6.03(D), and the documentation includes a
valid Form W–9 for each U.S. nonexempt recipient account holder for which
the other qualified intermediary is required to report on Form 1099 and, if
required, backup withhold. QI can also
reliably associate such payment with valid
documentation provided by another qualified intermediary that is a participating
FFI or registered deemed-compliant FFI
if, in lieu of providing documentation for
each U.S. non-exempt recipient account
holder, the qualified intermediary allocates the payment made to the U.S. nonexempt recipient to a chapter 4 withholding rate pool of U.S. payees and provides
the applicable certifications on a valid
Form W– 8IMY for allocating the payment to this pool or allocates a payment
that is a withholdable payment to a chapter 4 withholding rate pool of recalcitrant
account holders. Notwithstanding the preceding sentences in this section
5.13(B)(3), the presumption rules shall
not apply if a payment cannot be allocated
to each U.S. non-exempt recipient account
holder or to a chapter 4 withholding rate
pool of U.S. payees to the extent the alternative procedures of section 6.03(D) of
this Agreement apply.
(4) Reliably Associating a Payment
With Documentation Provided by a

July 14, 2014

Qualified Intermediary that Assumes
Primary Form 1099 Reporting and
Backup Withholding Responsibility.
Generally, QI can reliably associate a payment with valid documentation provided
by another qualified intermediary that assumes primary Form 1099 reporting and
backup withholding responsibility, but not
primary chapters 3 and 4 withholding responsibility, to the extent it can associate
the payment with a valid Form W– 8IMY
from the qualified intermediary that, if the
payment is a withholdable payment, includes the qualified intermediary’s chapter 4 status to the extent required for chapter 4 purposes. Additionally, the Form
W– 8IMY must be associated with a withholding statement that allocates a payment
that is a withholdable payment among
chapter 4 withholding rate pools (other
than a pool of U.S. payees and to the
extent permissible under § 1.1471–
3(c)(3)(iii)(B)) and, with respect to a payment that is an amount subject to chapter
3 withholding but is either not a withholdable payment or a withholdable payment
for which no chapter 4 withholding is
required, allocates the payment among
chapter 3 withholding rate pools for foreign account holders as described in section 6.03(C) of this Agreement, and identifies the portion of the payment for which
QI assumes primary Form 1099 reporting
and backup withholding responsibility.
(5) Reliably Associating a Payment
with Documentation Provided by a
Qualified Intermediary that Assumes
Both Primary Chapters 3 and 4 Withholding Responsibility and Primary
Form 1099 Reporting and Backup
Withholding Responsibility. Generally,
QI can reliably associate a payment with
valid documentation provided by another
qualified intermediary that assumes both
primary chapters 3 and 4 withholding responsibility and primary Form 1099 reporting and backup withholding responsibility if QI can associate the payment with
a valid Form W– 8IMY from the qualified
intermediary that, if the payment is a withholdable payment, includes the qualified
intermediary’s chapter 4 status to the extent required for chapter 4 purposes. Additionally, the Form W– 8IMY must also
designate the accounts for which the other
qualified intermediary is acting as a qualified intermediary and is assuming pri-

176

mary chapters 3 and 4 withholding and
primary Form 1099 reporting and backup
withholding responsibility.
(C) Presumption Rules. With respect
to a withholdable payment made to a foreign entity, if QI is an NFFE, it must
follow the presumption rules of § 1.1471–
3(f) when it cannot reliably associate a
withholdable payment with valid documentation. If QI is an FFI, it must follow
its FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI to determine the
chapter 4 status of an account holder when
it cannot reliably associate a withholdable
payment with valid documentation.
With respect to a payment that is an
amount subject to chapter 3 withholding
that is either not a withholdable payment
or a withholdable payment for which no
chapter 4 withholding is required, the presumption rules are the rules under
§ 1.1441–1(b)(3) that a withholding agent
must follow to determine the status of a
beneficial owner (i.e., as a U.S. person or
foreign person and as an individual or
entity (and the entity’s classification))
when it cannot reliably associate a payment with valid documentation. With respect to a reportable payment (including a
withholdable payment made to an entity)
that is not an amount subject to chapter 3
withholding, the presumption rules are the
rules of § 1.6049 –5(d) that a payor must
follow to determine the status of a payee
(e.g., as a non-exempt recipient) when it
cannot reliably associate a payment with
valid documentation. The presumption
rules are as follows:
(1) Certain Withholdable Payments
Made with Respect to an Offshore Obligation. A withholdable payment paid
outside of the United States as defined
under § 1.6049 –5(e) with respect to an
offshore obligation (as defined in
§ 1.1471–1(b)(88)) that is made to an entity is presumed made to a nonparticipating FFI for purposes of chapter 4. A withholdable payment that is not an amount
subject to chapter 3 withholding, that is
paid outside the U.S. with respect to an
offshore obligation, and that is treated as
made to a payee that is an individual is
presumed made to a U.S. person when the
payee has any of the indicia of U.S. status
that are described in section 5.10(B)(2) of

Bulletin No. 2014 –29

this Agreement. If QI is a participating
FFI or registered deemed-compliant FFI
(other than a reporting Model 1 FFI), see
the rules under its FATCA requirements
as a participating FFI or registered
deemed-compliant FFI for classifying account holders as recalcitrant account holders. If QI is an FFI, see also section 8.06
of this Agreement for whether QI is required to report such payments on Form
1099.
(2) Amounts Subject to Withholding
under Chapter 3 that are Paid with
Respect to an Offshore Obligation. An
amount that is subject to chapter 3 withholding that is not a withholdable payment is presumed made to an undocumented foreign account holder if the
payment is made outside of the United
States with respect to an offshore obligation. If QI is an NFFE or an FFI that is not
required to withhold on recalcitrant account holders pursuant to the terms of an
applicable Model 1 or Model 2 IGA, an
amount subject to chapter 3 withholding
that is a withholdable payment and that is
treated as made to a payee that is an
individual is also presumed made to an
undocumented foreign account holder if
the payment is made outside of the United
States with respect to an offshore obligation. QI must treat an amount described in
this section 5.13(C)(2) as subject to withholding under chapter 3 at a rate of 30
percent on the gross amount of the payment and must report the payment as
made to an unknown recipient on Form
1042–S.
(3) Payments on Certain Short-Term
Obligations. An amount of U.S. source
original issue discount on the redemption
of a short-term obligation is presumed
made to an undocumented U.S. nonexempt recipient account holder regardless of whether paid to an individual or
entity. QI must report an amount described in this section 5.13(C)(3) on Form
1099. QI must backup withhold at 28 percent3 and report such amounts on Form
1099 unless it provides sufficient information to another payor from which it receives such amounts to backup withhold
and report the payments and QI does not
know that the other payor has failed to
backup withhold or report.
3

(4) Foreign Source Income, Broker
Proceeds, and Certain Other Amounts
Made with Respect to an Offshore Obligation. A payment of an amount that is
not a withholdable payment and is not an
amount subject to chapter 3 withholding
(other than payments of short-term OID
described in section 5.13(C) of this Agreement) that is paid outside the United
States with respect to an offshore obligation and that is made to a payee that is an
individual is presumed made to a U.S.
non-exempt recipient when the payee has
any of the indicia of U.S. status that are
described in section 5.10(B) of this Agreement. If the payment is made to a payee
that is an entity, QI must apply the principles of § 1.1441–1(b)(3)(ii), § 1.1441–
5(d)(2), or § 1.1441–5(e)(6) (as applicable) without regard to § 1.1441–
1(b)(3)(ii)(D) for purposes of this
paragraph 5.13(C)(4). For a payment of
gross proceeds for which QI is a broker
under § 1.6045–1, similar rules apply to a
payment made with respect to a sale that
is effected at an office outside the United
States under § 1.6045–1(g)(1)(ii). QI must
report an amount described in this section
5.13(C)(3) as paid to a presumed U.S.
non-exempt recipient on Form 1099 to the
extent required under section 8.06 of this
Agreement. Backup withholding shall not
be required, however, if the exception
provided in § 31.3406(g)–1(e) applies.
(5) Other Payments. For any payment
not covered in sections 5.13(C)(1), (2),
(3), or (4) of this Agreement, see the presumptions rules provided in § 1.1441–
1(b)(3) or § 1.6049 –5(d)(2) (as applicable).
SECTION 6. QUALIFIED
INTERMEDIARY WITHHOLDING
CERTIFICATE AND DISCLOSURE
OF ACCOUNT HOLDERS TO
WITHHOLDING AGENT
Sec. 6.01. Qualified Intermediary
Withholding Certificate. QI agrees to
furnish a qualified intermediary withholding certificate to each withholding agent
from which it receives a reportable
amount as a qualified intermediary. The
qualified intermediary withholding certificate is a Form W– 8IMY (or acceptable
substitute form) that certifies that QI is

acting as a qualified intermediary, contains QI’s QI–EIN, and provides all other
information required by the form. If QI is
acting as a QSL for a substitute dividend
payment, QI must also certify that it is
acting as a qualified securities lender and
provide all other information required by
the form including its QI–EIN. If QI receives a withholdable payment, QI must
certify to its chapter 4 status to the extent
required for chapter 4 purposes, provide
its GIIN (if applicable), and provide the
other information and certifications required on the form. QI must also certify its
chapter 4 status as a participating FFI or
registered deemed-compliant FFI to the
extent QI provides a Form W– 8IMY that
certifies that it meets the requirements of
§ 1.6049 – 4(c)(4)(iii) with respect to any
account holder of an account it maintains
that is included in a chapter 4 withholding
rate pool of U.S. payees on QI’s withholding statement.
Except as otherwise provided in section 6.02 of this Agreement, QI also
agrees to furnish each withholding agent
to whom it provides a Form W– 8IMY
with the withholding statement described
in section 6.02 of this Agreement. QI is
not required to disclose, as part of its
Form W– 8IMY or its withholding statement, any information regarding the identity of a direct or indirect account holder
that is a foreign person or a U.S. exempt
recipient. To the extent QI does not assume primary Form 1099 reporting and
backup withholding responsibility under
section 3.04 or is not excepted from reporting under section 8.04 of this Agreement, QI must provide to a withholding
agent the Forms W–9, or if any such account holder has not provided a Form
W–9, the name, address, and U.S. TIN (if
available), of each U.S. non-exempt recipient account holder on whose behalf QI
receives a reportable amount.
Sec. 6.02. Withholding Statement.
(A) In General. QI agrees to provide
to each withholding agent from which QI
receives reportable amounts as a qualified
intermediary a written statement (the
“withholding statement”) described in this
section 6.02. A withholding statement
shall not be provided to a withholding
agent if QI is a limited FFI receiving a

See section 3406(a) providing that the current applicable rate of backup withholding is the fourth lowest rate of tax applicable under section 1(c).

Bulletin No. 2014 –29

177

July 14, 2014

withholdable payment on behalf of persons other than exempt beneficial owners
or if QI assumes both primary chapters 3
and 4 withholding responsibility and primary Form 1099 reporting and backup
withholding responsibility. The withholding statement forms an integral part of the
Form W– 8IMY. The withholding statement may be provided in any manner, and
in any form, to which QI and the withholding agent mutually agree. For example, QI and the withholding agent may
agree to establish a procedure to furnish
withholding statement information electronically provided that the procedure
meets the requirements of § 1.1441–
1(e)(3)(iv). In addition, QI and the withholding agent must be capable of providing upon request a hard copy of all
withholding statements provided by QI.
The withholding statement shall be updated as often as necessary for the withholding agent to meet its reporting and
withholding obligations under chapters 3,
4, and 61 and section 3406.
(B) Content of Withholding Statement. The withholding statement must
contain sufficient information for a withholding agent to apply the correct rate of
withholding on payments allocable to the
accounts identified on the statement and to
properly report such payments on Forms
1042–S and Forms 1099, as applicable.
The withholding statement must—
(1) Designate those accounts for which
QI acts as a qualified intermediary;
(2) Designate those accounts for which
QI assumes primary chapters 3 and 4
withholding responsibility or primary
Form 1099 reporting and backup withholding responsibility;
(3) If applicable, designate the accounts for which QI is acting as a QSL
with respect to any U.S. source substitute
dividend payments received from the
withholding agent; and
(4) Provide information regarding
withholding rate pools, as described in
section 6.03 of this Agreement.
Sec. 6.03. Chapters 3 and 4 Withholding Rate Pools.
(A) In General. QI shall provide as
part of its withholding statement withholding rate pool information in a manner
sufficient for the withholding agent to
meet its chapters 3 and 4 and backup
withholding responsibilities and its Form

July 14, 2014

1042–S and Form 1099 reporting responsibilities.
(B) Chapter 4 Withholding Rate
Pools. If QI receives a withholdable payment on behalf of its account holders, QI
may allocate the payment to a chapter 4
withholding rate pool. A chapter 4 withholding rate pool is a payment of a single
type of income (e.g., interest or dividends)
that is allocated to payees that are nonparticipating FFIs. If QI is a participating FFI
or registered deemed-compliant FFI
(other than reporting Model 1 FFI), it may
also allocate a witholdable payment to a
chapter 4 withholding rate pool of recalcitrant account holders (if applicable). If
QI is a participating FFI or registered
deemed-compliant FFI receiving a reportable amount that is excepted from reporting under section 8.06(A) of this Agreement (excluding sections 8.06(A)(2) and
(A)(3) of this Agreement when the payment is subject to chapter 4 withholding
and section 8.06(A)(4) of this Agreement), QI may allocate the payment to a
chapter 4 withholding rate pool of U.S.
payees. See section 6.03(D) of this Agreement for the alternative procedures that
may be used in this case.
Further, if QI elects under its FATCA
requirements as a participating FFI or registered deemed-compliant FFI to backup
withhold instead of withholding under
chapter 4 with respect to certain recalcitrant account holders, QI’s withholding
statement must indicate the portion of
such payment subject to backup withholding under section 3406 that is allocated to
such account holders and must provide all
other information relating to such account
holders that is required under chapter 61
for the withholding agent to report with
respect to the payment.
If QI has an account holder that is
another intermediary (whether a qualified
intermediary, a nonqualified intermediary,
or a private arrangement intermediary) or
a flow-through entity, QI may combine
the account holder information provided
by the intermediary or flow-through entity
with QI’s direct account holder information to determine the amounts allocable to
each of QI’s chapter 4 withholding rate
pools described in this section 6.03(B).
(C) Chapter 3 Withholding Rate
Pools. With respect to any portion of the
payment that is attributable to payees for

178

which no chapter 4 withholding is required but is an amount subject to chapter
3 withholding, a chapter 3 withholding
rate pool is a payment of a single type of
income that is subject to a single rate of
withholding (e.g., 0%, 10%, 15%, or
30%) and that is reported under a single
chapter 4 exemption code on Form
1042–S. QI shall determine chapter 3
withholding rate pools based on valid documentation obtained under section 5 of
this Agreement or, if a payment cannot be
reliably associated with valid documentation, on the presumption rules of section
5.13(C) of this Agreement. If QI has an
account holder that is another intermediary (whether a qualified intermediary, a
nonqualified intermediary, or a private arrangement intermediary) or a flowthrough entity (other than a nonparticipating FFI that is not acting on behalf of any
exempt beneficial owners), QI may combine the account holder information provided by the intermediary or flow-through
entity with QI’s direct account holder information to determine the amounts allocable to each of QI’s chapter 3 withholding rate pools with respect to the portion
of the payment allocable to an account
holder to which chapter 4 withholding
does not apply.
(D) U.S. Non-Exempt Recipients
Subject to Backup Withholding or
Form 1099 Reporting and Alternative
Procedures for Allocating Payments on
Withholding Statements. To the extent
QI does not assume primary Form 1099
reporting and backup withholding responsibility and is not excepted from reporting
on Form 1099 under section 8.04 of this
Agreement, QI’s withholding statement
must establish a separate withholding rate
pool for each U.S. non-exempt recipient
account holder that QI is required to report on Form 1099 and has disclosed to
the withholding agent. QI may, by mutual
agreement with the withholding agent, establish a single withholding rate pool (not
subject to backup withholding) for all
U.S. non-exempt recipient account holders for whom QI is required to report on
Form 1099 and has provided Forms W–9
prior to the withholding agent paying any
reportable amounts or, if applicable, designated broker proceeds to which backup
withholding does not apply. QI must establish a separate withholding rate pool

Bulletin No. 2014 –29

for all U.S. non-exempt recipient account
holders subject to backup withholding
prior to the withholding agent paying any
reportable amounts or, if applicable, designated broker proceeds.
Alternatively, QI may include U.S.
non-exempt recipients in a zero rate withholding pool that includes U.S. exempt
recipients and foreign persons for which
no withholding is required under chapters
3 and 4 and section 3406 and may include
payments allocated to a chapter 4 withholding rate pool of U.S. payees in this
pool to the extent permitted to be provided
by QI under section 6.03(B) of this Agreement. If QI chooses the alternative procedure of this paragraph, QI must provide
sufficient information to the withholding
agent no later than January 15 of the year
following the year in which the reportable
amounts and designated broker proceeds,
if applicable, are paid in order to allocate
to each U.S. non-exempt recipient account
holder or to a chapter 4 withholding rate
pool of U.S. payees (when applicable).
Failure to provide such information will
result in the application of penalties to QI
under sections 6721 and 6722 and shall
constitute an event of default under section 11.04 of this Agreement.
SECTION 7. TAX RETURN
OBLIGATIONS
Sec. 7.01. Form 1042 Filing Requirement.
(A) In general. QI (other than a QI that
is a limited FFI) shall file a return on Form
1042, whether or not QI withheld any
amounts under chapter 3 or 4, on or before
March 15 of the year following any calendar year in which QI acts as a qualified
intermediary and makes a payment of an
amount subject to chapter 3 or 4 withholding when acting as a qualified intermediary (including as a QSL) under this
Agreement. If QI is a limited FFI, QI shall
file Form 1042 only if it is required to file
Form 1042–S as described in section 8.01
of this Agreement. A separate Form 1042
must be filed by each legal entity that is a
qualified intermediary covered by this
Agreement. Form 1042 shall be filed at
the address indicated on the form or at the
address at which the IRS notifies QI under
the provisions of section 12.06 of this
Agreement. In addition to the information
specifically requested on Form 1042 and

Bulletin No. 2014 –29

the accompanying instructions, if QI made
any overwithholding or underwithholding
adjustments under §§ 1.1461–2 and
1.1474 –2 and sections 9.02 and 9.05 of
this Agreement, QI must attach a statement setting forth the amounts of any
overwithholding or underwithholding adjustments and an explanation of the circumstances that resulted in the over- or
under- withholding.
(B) Extensions for Filing Returns. QI
may request an extension of the time for
filing Form 1042, or any of the information required to be attached to the form, by
submitting Form 7004, Application for
Automatic Extension of Time to File Certain Business Income Tax, Information,
and Other Returns, on or before the due
date of the return.
Sec. 7.02. Form 945 Filing Requirement. QI shall file a return on Form 945
on or before January 31 following the
calendar year in which QI backup withheld an amount under section 3406. Separate Forms 945 must be filed by each
legal entity that is a qualified intermediary
covered by this Agreement. The form
must be filed at the address specified in
the instructions for Form 945, at the address at which the IRS notifies QI under
the provisions of section 12.06 of this
Agreement, or in accordance with the instructions to file Form 945 electronically.
Sec. 7.03. Retention of Returns. QI
shall retain Forms 945 and 1042 for the
applicable statute of limitations on assessment under section 6501.
SECTION 8. INFORMATION
REPORTING OBLIGATIONS
Sec. 8.01. Form 1042–S Reporting.
Except as otherwise provided in section
8.02 of this Agreement, QI is not required
to file Forms 1042–S for amounts paid to
each separate account holder for whom
such reporting would otherwise be required. Instead, QI shall file a Form
1042–S reporting the pools of income
(“reporting pools”) as determined in section 8.03 of this Agreement. QI must file
its Forms 1042–S in the manner required
by the regulations under chapters 3 and 4
(or in the case of a participating FFI, in the
manner required under the FFI Agreement) and the instructions to the form,
including any requirement to file the
forms magnetically or electronically. Sep-

179

arate Forms 1042–S must be filed by each
legal entity that is a qualified intermediary
covered by this Agreement. Each QI covered by this Agreement may, however,
allow its individual branches to file Forms
1042–S provided that all Forms 1042–S
contain the QI–EIN of the legal entity of
which the branch forms a part and (to the
extent required for chapter 4 purposes) the
GIIN of the branch. Any Form 1042–S
required by this section 8 shall be filed on
or before March 15 following the calendar
year in which the payment reported on the
form was made. QI may request an extension of time to file Forms 1042–S by
submitting Form 8809, Application for
Extension of Time to File Information Returns, by the due date of Forms 1042–S in
the manner required by Form 8809.
Sec. 8.02. Recipient Specific Reporting. QI (whether or not it assumes primary
chapters 3 and 4 withholding responsibility) is required to file separate Forms
1042–S for amounts paid to each separate
account holder as described in this section
8.02. QI must file separate Forms 1042–S
by income code, exemption code, recipient code, chapter 3 or 4 withholding rate
pool, and withholding rate.
(A) QI must file a separate Form
1042–S for each account holder that is a
qualified intermediary, withholding foreign partnership, withholding foreign
trust, or qualified securities lender that
receives from QI an amount subject to
withholding under chapter 3 or 4 (or, in
the case of a qualified securities lender,
that receives a U.S. source substitute dividend payment), regardless of whether
such account holder is a direct or indirect
account holder of QI.
(B) QI must file a separate Form
1042–S for each account holder that is a
nonqualified intermediary or flow-through
entity that is a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI and
that receives an amount subject to chapter
4 withholding from QI that is allocable to
each of such FFI’s chapter 4 withholding
rate pools of recalcitrant account holders,
nonparticipating FFIs, and pool of U.S.
payees, if applicable, regardless of
whether such FFI is a direct or indirect
account holder of QI.
(C) QI must file a separate Form
1042–S for each account holder that is a

July 14, 2014

nonqualified intermediary or flow-through
entity that is not described in section
8.02(B) of this Agreement (other than a
nonparticipating FFI) that receives from
QI an amount subject to chapter 4 withholding allocable to such entity’s chapter
4 withholding rate pool of payees that are
nonparticipating FFIs, regardless of
whether such intermediary or flowthrough entity is a direct or indirect account holder of QI.
(D) QI must file a separate Form
1042–S for each account holder of QI that
is a PAI or a partnership or trust to which
QI applies the agency option that receives
from QI an amount subject to chapter 4
withholding allocable to such entity’s
chapter 4 withholding rate pool of payees
that are nonparticipating FFIs or an
amount subject to chapter 3 withholding
that is either not a withholdable payment
or a withholdable payment for which no
chapter 4 withholding is required and that
is allocable to such entity’s chapter 3
withholding rate pools.
(E) QI must file a separate Form
1042–S for each unknown recipient with
respect to an account holder that is a nonqualified intermediary, flow-through entity, or qualified intermediary that does
not assume primary chapters 3 and 4 withholding responsibility and that receives an
amount subject to chapter 4 withholding
from QI that QI must presume is allocable
to such entity’s chapter 4 withholding rate
pool of payees that are nonparticipating
FFIs under the presumption rule of
§ 1.1471–3(f)(5).
(F) QI must file a separate Form
1042–S for each foreign account holder
(or interest holder) of a nonqualified intermediary or flow-through entity that is a
nonparticipating FFI that is receiving a
payment on behalf of an exempt beneficial
owner (regardless of whether the nonqualified intermediary or flow-through entity is a direct or indirect account holder of
QI) to the extent QI can reliably associate
such amounts with valid documentation
from such nonqualified intermediary or
flow-through entity as to the payment allocable to one or more exempt beneficial
owners. In addition, QI must file separate
Forms 1042–S in the same manner for
each foreign account holder (or interest
holder) of a nonqualified intermediary or
flow-through entity that is described in the

July 14, 2014

preceding sentence and that is a direct or
indirect account holder (or interest holder)
of a PAI of QI or a partnership or trust to
which QI applies the agency option.
(G) QI must file separate Forms
1042–S for each foreign account holder
(or interest holder) of a nonqualified intermediary or flow-through that is receiving an amount subject to chapter 3 withholding that is either not a withholdable
payment or a withholdable payment for
which no chapter 4 withholding is required to the extent QI can reliably associate such amounts with valid documentation from an account holder that is not
itself a nonqualified intermediary or flowthrough entity. In addition, QI must file
separate Forms 1042–S in the same manner for each foreign account holder (or
interest holder) of a nonqualified intermediary or flow-through entity that is described in the preceding sentence and that
is a direct or indirect account holder (or
interest holder) of a PAI of QI or a partnership or trust to which QI applies the
agency option.
Sec. 8.03. Reporting Pools for Form
1042–S Reporting.
(A) Chapter 4 Reporting Pools. Except for amounts required to be reported
under section 8.02 of this Agreement, if
QI is an FFI (other than a limited FFI), QI
shall report all amounts subject to chapter
4 withholding by reporting pools on a
Form 1042–S if those amounts are paid to
direct account holders of QI or to direct
account holders of a PAI of QI or a partnership of trust to which QI applies the
agency option. A separate Form 1042–S
shall be filed for each type of reporting
pool. A chapter 4 reporting pool is a payment of a single type of income (e.g.,
interest, dividends), determined in accordance with the categories of income reported on Form 1042–S, that is allocable
to a chapter 4 withholding rate pool consisting of either recalcitrant account holders, payees that are nonparticipating FFIs,
or U.S. payees. QI must report recalcitrant
account holders in pools based upon a
recalcitrant account holder’s particular
status described in § 1.1471– 4(d)(6), with
a separate Form 1042–S issued for each
such pool.
If QI is an FFI, it may report in a
chapter 4 withholding rate pool of U.S.
payees an account holder that is (or is

180

presumed) a U.S. person and that QI reports as a U.S. account under its applicable FATCA requirements as a participating FFI or registered deemed-compliant
FFI provided that QI is excepted from
Form 1099 reporting with respect to the
payment under section 8.06(A(1) of this
Agreement or sections 8.06(A)(2) and
(A)(3) of this Agreement if the payment is
both excepted from Form 1099 reporting
and not subject to withholding under
chapter 4.
If QI is an NFFE, QI shall report all
amounts subject to chapter 4 withholding
by reporting pools on a Form 1042–S if
those amounts are paid to direct account
holders that are nonparticipating FFIs in a
chapter 4 reporting pool of nonparticipating FFIs. If QI is a limited FFI that is
required to file Form 1042–S because its
withholding agent failed to withhold and
report a withholdable payment made to
QI, QI must report all withholdable payments made to QI on a Form 1042–S in a
chapter 4 reporting pool of nonparticipating FFIs.
(B) Chapter 3 Reporting Pools. Except for amounts required to be reported
under section 8.02 of this Agreement, QI
shall report an amount subject to chapter 3
withholding that is either not a withholdable payment or a withholdable payment
for which no chapter 4 withholding is
required and that is paid to a foreign account holder by reporting pools on a Form
1042–S if those amounts are paid to direct
account holders of QI or to direct account
holders of a PAI of QI or a partnership or
trust described in section 4 of this Agreement. A separate Form 1042–S shall be
filed for each type of reporting pool. A
chapter 3 reporting pool is a payment of a
single type of income that falls within a
particular withholding rate, chapter 3 exemption code, and, if the payment is a
withholdable payment, chapter 4 exemption code as determined on Form 1042–S.
QI may use a single chapter 3 pool reporting code (e.g., QI- withholding rate poolgeneral) for all reporting pools except for
amounts paid to foreign tax-exempt recipients, for which a separate chapter 3 pool
reporting code (e.g., QI- withholding rate
pool- exempt organization) must be used.
For this purpose, a foreign tax-exempt
recipient includes any organization that
is not subject to chapter 3 withholding

Bulletin No. 2014 –29

and is not liable to tax in its jurisdiction of
residence because it is a charitable organization, a pension fund, or a foreign
government.
Sec. 8.04. FATCA U.S. Account
Reporting.
(A) QI that is an FFI. If QI is an FFI,
QI is required to report each U.S. account
(or, in the case of an FFI that is a reporting
Model 1 FFI or a registered deemedcompliant IGA FFI, each U.S. reportable
account) that it maintains and for whom
QI is acting consistent with its FATCA
requirements as a participating FFI, registered deemed-compliant FFI, registered
deemed-compliant Model 1 IGA FFI, or
limited FFI. See QI’s FATCA requirements as a participating FFI, registered
deemed-compliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI to report each account that is a U.S.
account (or U.S. reportable account) that
it maintains. If QI is a participating FFI or
registered deemed-compliant FFI (other
than a reporting Model 1 FFI), QI must
report its U.S. accounts on Form 8966,
FATCA Report, in the time and manner
required under its FATCA requirements
as a participating FFI or registered
deemed-compliant FFI except to the extent QI is reporting under § 1.1471–
4(d)(5) on Form 1099 with respect to its
U.S. accounts. If QI is a reporting Model
1 FFI or registered deemed-compliant
Model 1 IGA FFI, QI must report each
U.S. reportable account on Form 8966 as
required under the applicable Model 1
IGA. QI cannot delegate to its withholding agent its requirements to report U.S.
accounts (or U.S. reportable accounts) under its applicable FATCA requirements as
a participating FFI, registered deemedcompliant FFI, or registered deemedcompliant Model 1 IGA FFI (regardless of
whether QI does or does not assume primary Form 1099 reporting and backup
withholding responsibility under section 3
of this Agreement). See section 8.06 of
this Agreement for when the reporting
described in this section 8.04 satisfies QI’s
Form 1099 reporting responsibilities with
respect to reportable payments under
chapter 61.
(B) QI that is an NFFE. If QI is an
NFFE acting as a qualified intermediary
on behalf of its shareholders, QI shall file
Forms 8966 to report information about

Bulletin No. 2014 –29

any direct or indirect substantial U.S.
owners of QI. QI must report on Form
8966 to the extent required of a direct
reporting NFFE in the time and manner
provided in the instructions to the form.
Such report must include the name, address, and U.S. TIN of each substantial
U.S. owner of QI; the total of all payments
made to each substantial U.S. owner (including gross amounts paid or credited to
the substantial U.S. owner with respect to
such owner’s equity interest in the QI
during the calendar year, which includes
payments in redemption or liquidation (in
whole or in part) of the substantial U.S.
owner’s equity interest in QI); and any
other information as required by the form
and its accompanying instructions.
If QI is an NFFE acting as a qualified
intermediary on behalf of persons other
than its shareholders, QI shall file Form
8966 to report information about each
substantial U.S. owner of a direct account
holder that is an NFFE that is not an
excepted NFFE. QI must report on Form
8966 in the time and manner provided in
§ 1.1474 –1(i)(2). Such report must include the name of the NFFE that is owned
by a substantial U.S. owner; the name,
address, and U.S. TIN of each substantial
U.S. owner; the total of all withholdable
payments made to the NFFE during the
calendar year; and any other information
as required by the form and its accompanying instructions.
Sec. 8.05. Form 8966 Reporting for
Payees that are NFFEs. QI shall file
Form 8966 to report withholdable payments made to an intermediary or flowthrough entity that provides information
regarding an account holder (or interest
holder) that is an NFFE other than an
excepted NFFE with one or more substantial U.S. owners (or one or more controlling persons that is a specified U.S. person
under an applicable IGA). QI must report
on Form 8966 in the time and manner
provided in § 1.1474 –1(i)(2). Such report
must include the name of the NFFE that is
owned by a substantial U.S. owner (or
controlling person); the name, address,
and U.S. TIN of each substantial U.S.
owner; the total of all withholdable payments made to the NFFE during the calendar year (or reportable period under the
applicable IGA); and any other information as required by the form and its ac-

181

companying instructions. QI is not required to report, however, if the
intermediary or flow-through entity certifies on its withholding statement that it is
reporting the account holder (or interest
holder) as a U.S. account pursuant to its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI, or
registered deemed-compliant Model 1
IGA FFI.
Sec. 8.06. Form 1099 Reporting Responsibility. QI shall file Forms 1099
and, unless filing magnetically, Form
1096, for reportable payments made to
persons described in this section 8.06.
Forms 1099 shall be filed on or before the
date prescribed for the particular Form
1099 under chapter 61 and in the manner
required by regulations under chapter 61
and the instructions to the forms (including the requirements for filing the forms
magnetically or electronically). Extensions of the time to file Forms 1099 may
be requested by submitting Form 8809 in
the manner required by the form. If QI is
required to file Forms 1099, it must file
the appropriate form for the type of income paid (e.g., Form 1099 –DIV for dividends, Form 1099 –INT for interest,
Form 1099 –B for broker proceeds). QI
must file Forms 1099 to report a reportable payment other than in the situations
listed in sections 8.06(A) and (B) of this
Agreement.
(A) Reportable Amount. QI must file
a Form 1099 in accordance with the instructions to the form for the aggregate
amount of a particular type of reportable
amount paid to an account holder that is
(or is presumed) a U.S. non-exempt recipient (whether a direct or indirect account
holder). However, QI is not required to
file a Form 1099 and backup withhold on
a reportable amount if—
(1) QI is a non-U.S. payor reporting the
account holder of a U.S. account under its
FATCA requirements as a participating
FFI or registered deemed-compliant FFI
(other than a reporting Model 1 FFI) and
the other conditions of § 1.6049 –
4(c)(4)(i) are satisfied;
(2) QI reports the account holder’s account as held by a recalcitrant account
holder or, in the case of a QI that is a
reporting Model 2 FFI or nonreporting
Model 2 FFI treated as registered deemedcompliant, as a non-consenting account

July 14, 2014

under its FATCA requirements as a participating FFI or registered deemedcompliant FFI and the other conditions of
§ 1.6049 – 4(c)(4)(ii) are satisfied;
(3) QI is a non-U.S. payor that is a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI and
determines that the account has U.S. indicia for which appropriate documentation
sufficient to treat the account as held by a
specified U.S. person has not been provided and reports the account as a U.S.
reportable account and the other conditions of § 1.6049 – 4(c)(4)(ii) are satisfied;
(4) QI has not assumed primary Form
1099 reporting and backup withholding
responsibility with respect to the account
holder’s account and has provided a Form
W–9 to a withholding agent or has provided withholding rate pool information
with respect to such account holder to a
withholding agent to apply backup withholding and QI does not know that the
withholding agent has failed to report or
backup withhold as required;
(5) With respect to an account holder
of an intermediary or flow-through entity
(other than a qualified intermediary) that
is a direct or indirect account holder of QI,
the intermediary or flow-through entity
allocates the payment to a chapter 4 withholding rate pool of U.S. payees and provides a Form W– 8IMY containing a certification that the entity meets the
requirements of § 1.6049 – 4(c)(4)(iii); or
(6) With respect to an account holder
of another qualified intermediary that is a
direct or indirect account holder of QI, the
qualified intermediary allocates the payment to a chapter 4 withholding rate pool
of U.S. payees and provides the applicable
certification on a valid Form W– 8IMY for
allocating the payment to this pool
(B) Reportable Payments other than
Reportable Amounts. QI must file a
Form 1099 for a reportable payment
(other than a reportable amount) paid to
each U.S. non-exempt recipient (whether
a direct or indirect account holder), or to
any account holder that is presumed to be
a U.S. non-exempt recipient under section
5.13(C) of this Agreement. Notwithstanding the previous sentence, QI is not required to file a Form 1099 for a reportable
payment (other than a reportable amount)
paid to a direct account holder that is (or is

July 14, 2014

presumed) a U.S. non-exempt recipient
if—
(1) QI is a non-U.S. payor reporting the
account holder of a U.S. account under its
FATCA requirements as a participating
FFI or registered deemed-compliant FFI
(other than a reporting Model 1 FFI) and
the other conditions of § 1.6049 –
4(c)(4)(i) are satisfied;
(2) QI reports the account holder’s account as held by a recalcitrant account
holder or, in the case of a QI that is a
reporting Model 2 FFI or nonreporting
Model 2 FFI treated as registered deemedcompliant, as a non-consenting account
under its FATCA requirements as a participating FFI or registered deemedcompliant FFI and the other conditions of
§ 1.6049 – 4(c)(4)(ii) are satisfied;
(3) QI is a non-U.S. payor that is a
reporting Model 1 FFI or registered
deemed-compliant Model 1 IGA FFI and
determines that the account has U.S. indicia for which appropriate documentation
sufficient to treat the account as held by a
specified U.S. person has not been provided and reports the account as a U.S.
reportable account and the other conditions of § 1.6049 – 4(c)(4)(ii) are satisfied;
or
(4) With respect to a reportable payment that is broker proceeds paid to a U.S.
non-exempt recipient, QI has applied the
procedures of section 3.05(C) of this
Agreement and QI does not know that the
other payor has failed to report or backup
withhold on the payment as required.
SECTION 9. ADJUSTMENTS FOR
OVER- AND UNDERWITHHOLDING; REFUNDS
Sec. 9.01. Adjustments for Overwithholding by Withholding Agent When
QI Does not Assume Primary Withholding Responsibility. QI, other than a
QI that is a limited FFI, may request that
a withholding agent make an adjustment
for amounts paid to QI when the withholding agent has overwithheld under
chapter 3 or 4 by applying either the reimbursement procedure described in section 9.01(A) of this Agreement or the setoff procedure described in section 9.01(B)
of this Agreement within the time period
prescribed for those procedures. Nothing
in this section shall be interpreted to require a withholding agent to apply the

182

reimbursement or set off procedures under
sections 9.01(A) or (B) of this Agreement.
See § 1.1474 –2(a)(2) for the definition of
overwithholding that applies for purposes
of this section 9 with respect to an amount
withheld under chapter 4.
(A) Reimbursement Procedure. QI
may request a withholding agent to repay
QI for any amount overwithheld and for
the withholding agent to reimburse itself
under the reimbursement procedures described in §§ 1.1461–2(a)(2)(i) and
1.1474 –2(a)(3) by making the request before the earlier of the due date (without
regard to extensions) for the withholding
agent to file Form 1042 and Form 1042–S
for the calendar year of overwithholding
or the date the Form 1042–S is actually
filed with the IRS.
(B) Set-off Procedure. QI may request
a withholding agent to repay QI by applying the amount overwithheld against any
amount which otherwise would be required to be withheld under chapter 3 or 4
from income paid by the withholding
agent to QI under the set-off procedures of
§§ 1.1461–2(a)(3) and 1.1474 –2(a)(4). QI
must make the request before the earlier
of the due date (without regard to extensions) for the withholding agent to file
Form 1042–S for the calendar year of
overwithholding or the date that the Form
1042–S is actually filed with the IRS.
Sec. 9.02. Adjustments for Overwithholding by QI Assuming Primary Withholding Responsibility. QI, other than a
QI that is a limited FFI, may make an
adjustment for amounts paid to its account
holders when QI has overwithheld by applying either the reimbursement or set-off
procedures described in this section 9.02
within the time period prescribed for those
procedures.
(A) Reimbursement Procedure. QI
may repay its account holders for an
amount overwithheld under chapter 3 or 4
and reimburse itself by reducing, by the
amount of tax actually repaid to the account holders, the amount of any subsequent deposit of tax required to be made
by QI under section 3.08 of this Agreement. For purposes of this section
9.02(A), an amount that is overwithheld
shall be applied in order of time (i.e.,
sequentially) to each of the QI’s subsequent deposit periods in the same calendar
year to the extent that the withholding

Bulletin No. 2014 –29

taxes required to be deposited for a subsequent deposit period exceed the amount
actually deposited. An amount overwithheld in a calendar year may be applied to
deposit periods in the calendar year following the calendar year of overwithholding only if:
(1) The repayment occurs before the
earlier of the due date (without regard to
extensions) for filing Form 1042–S for the
calendar year of overwithholding or the
date that the Form 1042–S is actually filed
by QI with the IRS.
(2) QI states on a Form 1042–S (issued, if applicable, to the account holder
or otherwise to a chapter 3 or 4 reporting
pool), filed by March 15 of the calendar
year following the calendar year of overwithholding, the amount of tax withheld
and the amount of any actual repayments;
and
(3) QI states on a Form 1042, filed by
March 15 of the calendar year following
the calendar year of overwithholding, that
the filing of the Form 1042 constitutes a
claim for credit in accordance with
§ 1.6414 –1.
(B) Set-Off Procedure. QI may repay
its account holders by applying the
amount overwithheld against any amount
which otherwise would be required under
chapter 3 or 4 to be withheld from a
payment made by QI to the account holders before the earlier of March 15 of the
calendar year following the calendar year
of overwithholding or the date that the
Form 1042–S is actually filed with the
IRS. For purposes of making a return on
Form 1042 or 1042–S for the calendar
year of overwithholding, and for purposes
of making a deposit of the amount withheld, the reduced amount shall be considered the amount required to be withheld
from such income under chapter 3 or 4.
Sec. 9.03. Repayment of Backup
Withholding. If QI erroneously withholds, as defined under § 31.6413(a)–3, an
amount under section 3406 from an account holder, QI may refund the amount
erroneously withheld as provided in
§ 31.6413(a)–3.
Sec. 9.04. Collective Credit or Refund Procedures for Overwithholding.
If there has been overwithholding on
amounts subject to chapter 3 or 4 withholding paid to QI’s account holders during a calendar year and the amount has not

Bulletin No. 2014 –29

been recovered under the reimbursement
or set-off procedures as described in sections 9.01 or 9.02 of this Agreement, QI,
other than a QI that is a limited FFI, may
request a credit or refund of the total
amount overwithheld by following the
procedures of this section 9.04. QI shall
follow the procedures set forth under sections 6402 and 6414, and the regulations
thereunder, to claim the credit or refund.
No credit or refund will be allowed after
the expiration of the statutory period of
limitation for refunds under section 6511.
(A) Payments for which a Collective
Refund is Permitted. Except as otherwise provided in this section 9.04, QI may
use the collective refund with respect to
all amounts subject to chapters 3 and 4
withholding. With respect to amounts
withheld under chapter 3, QI shall not
include in its collective refund claim tax
withheld on payments made to an indirect
account holder or a direct account holder
of QI that is a nonqualified intermediary
or flow-through entity, and with respect to
amounts withheld under chapter 4, QI
shall not include in its collective refund
claim tax withheld on payments made to
any account holder described in § 1.1471–
4(h)(2).
(B) Requirements for Collective Refund. QI may use the collective refund
procedures under this section 9.04 only if
the following conditions are met:
(1) QI must not have issued Forms
1042–S to the account holders that received the payment that was subject to
overwithholding;
(2) If QI is a participating FFI or registered deemed-compliant FFI, no refund
is sought on behalf of an account holder
that holds an account with QI that is a
U.S. account or U.S. reportable account;
(3) If a refund is sought on the grounds
that the account holder of an amount subject to chapter 3 withholding is entitled to
a reduced rate of tax by reason of any
income tax treaty obligation of the United
States, QI has obtained valid documentation that meets the requirements of section
5 of this Agreement for a reduced rate of
withholding.
(4) QI must submit together with its
amended Form 1042 on which it provides
a reconciliation of amounts withheld and
claims a credit or refund, a copy of the
Form 1042–S furnished to QI by its with-

183

holding agent reporting the taxes withheld
to which the claim relates (if applicable)
and a statement that includes the following information and representations—
(i) The reason(s) for the overwithholding;
(ii) QI deposited the tax for which a
refund is being sought under section 6302
or received a Form 1042–S from its withholding agent showing the amount of tax
withheld, and neither QI nor its withholding agent has applied the reimbursement
or set-off procedure of §§ 1.1461–2 and
1.1474 –2 to adjust the tax withheld to
which the claim relates;
(iii) QI has repaid or will repay the
amount for which refund is sought to the
appropriate account holders;
(iv) QI retains a record showing the
total amount of tax withheld, credits from
other withholding agents, tax assumed by
QI, adjustments for underwithholding,
and reimbursements for overwithholding
as its relates to each account holder and
also showing the repayment (if applicable) to such account holders for the
amount of tax for which a refund is being
sought;
(v) QI retains valid documentation that
meets the requirements of chapter 3 or 4
(as applicable) to substantiate the amount
of overwithholding with respect to each
account holder for which the refund is
being sought; and
(vi) QI has not (and will not) issue a
Form 1042–S (or such other form as the
IRS may prescribe) to any account holder
with respect to the payments for which the
refund is being sought.
Sec. 9.05. Adjustments for Underwithholding. If QI knows that an amount
should have been withheld under chapter
3 or 4 from a previous payment made to
an account holder but was not withheld,
QI may either withhold from future payments made pursuant to chapter 3 or chapter 4 to the same account holder or payee
or satisfy the tax from property that it
holds in custody for such person or property over which it has control. The additional withholding or satisfaction of the
tax owed described in the previous sentence must be made before the due date of
the Form 1042 (not including extensions)
for the calendar year in which the underwithholding occurred. QI’s responsibilities under this section 9.05 will be met if

July 14, 2014

it informs a withholding agent from which
it received the payment of the underwithholding and the withholding agent satisfies the underwithholding.
Sec. 9.06. Underwithholding After
Form 1042 Filed. If, after a Form 1042
has been filed for a calendar year, QI, QI’s
auditor, or the IRS determines that QI has
underwithheld tax for such year, QI shall
file an amended Form 1042 to report and
pay the underwithheld tax. QI shall pay
the underwithheld tax, the interest due on
the underwithheld tax, and any applicable
penalties at the time of filing the amended
Form 1042. If QI fails to file an amended
return, the IRS shall make such return
under section 6020 and assess such tax
under the procedures set forth in the Code.
SECTION 10. COMPLIANCE
PROCEDURES
Sec. 10.01.
(A) In General. QI is required to adopt
a compliance program under the authority
of a responsible officer or, if QI adopts a
consolidated compliance program, under
the authority of a responsible officer of a
Compliance QI (as described in section
10.02(B) of this Agreement). QI’s compliance program must include policies,
procedures, and processes sufficient for
QI to satisfy the documentation, reporting,
and withholding requirements of this
Agreement and sufficient for a responsible
officer of QI (or Compliance QI) to make
the certifications required under section
10.03 of this Agreement. QI must also
perform or arrange for the performance of
a periodic review described in section
10.04 of this Agreement. As part of the
responsible officer’s certification, QI must
provide to the IRS the factual information
referenced in section 10.03(C) of this
Agreement. QI must also satisfy the requirements of section 10.06 of this Agreement with respect to the report covering
the periodic review, and must comply
with the IRS review described in section
10.07 of this Agreement.
(B) Coordination with FATCA Requirements as a Participating FFI, Registered Deemed-Compliant FFI, Registered Deemed-Compliant Model 1 IGA
FFI, or Limited FFI and, for a Direct
Reporting NFFE, the Requirements of
§ 1.1472–1(c)(3). As a condition for
maintaining QI status, QI must comply

July 14, 2014

with its FATCA requirements as applicable to its chapter 4 status (including any
applicable compliance procedure) with respect to each branch operating under this
Agreement. Therefore, QI must, as part of
the compliance procedures described in
this section 10 (including the periodic review described in section 10.04 of this
Agreement and in making the periodic
certification described in section 10.03 of
this Agreement) determine whether it is
compliant with its FATCA requirements
as a participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3), with respect to its QI designated
accounts. See the compliance procedure,
if any, required under QI’s FATCA requirements as a participating FFI, registered deemed-compliant FFI, registered
deemed-compliant Model 1 IGA FFI, or
limited FFI and, in the case of a direct
reporting NFFE with respect to all accounts that it maintains or all of its shareholders. If QI is a participating FFI or
direct reporting NFFE, QI will be able to
make the certification described in section
10.03 of this Agreement, and the FFI
Agreement, to the extent provided in future published guidance or other instructions.
10.02. Responsible Officer. QI must
appoint an individual as a responsible officer as defined in section 2.76 of this
Agreement. The responsible officer must
be identified on the FATCA registration
website as QI’s responsible party and, as
the responsible officer for purposes of
compliance with its FATCA requirements
as a participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3). The responsible officer (or the
responsible officer’s designee) must establish a compliance program that meets
the requirements of this section 10.02 and
must make the periodic certifications to
the IRS described in section 10.03 of this
Agreement. The responsible officer of QI
must be an officer of QI with sufficient
authority to fulfill the duties of a responsible officer described in this section 10.
The responsible officer (or a delegate ap-

184

pointed by the responsible officer) must
also serve as the point of contact for the
IRS for all issues related to this Agreement and for complying with IRS requests
for information or additional audit procedures under section 10.07 of this Agreement.
(A) Compliance Program. The responsible officer (or the responsible officer’s designee) must establish a program
for QI to comply with the requirements of
this Agreement that includes the following—
(1) Written Policies and Procedures.
The responsible officer (or designee) must
ensure the drafting and updating, as necessary, of written policies and procedures
sufficient for QI to satisfy the documentation, withholding, reporting, and other
obligations of this Agreement with its
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI and, in the case of
a direct reporting NFFE, its requirements
under § 1.1472–1(c)(3). Such written policies and procedures must include a process for employees of QI to raise issues to
the responsible officer (or the responsible
officer’s designee) that concern QI’s compliance with this Agreement.
(2) Training. The responsible officer
(or designee) must communicate such policies and procedures to any line of business of QI that is responsible for obtaining, reviewing, and retaining a record of
documentation under requirements of section 5 of this Agreement; making payments subject to withholding under section 3 of this Agreement; or reporting
payments and accounts as required under
sections 7 and 8 of this Agreement. This
includes any line of business that is responsible for the performance of the due
diligence procedures under its FATCA requirements as a participating FFI, registered deemed-compliant FFI, registered
deemed-compliant Model 1 IGA FFI, or
limited FFI and, in the case of a direct
reporting NFFE, its requirements under
§ 1.1472–1(c)(3).
(3) Systems. The responsible officer
(or designee) must ensure that systems
and processes are in place that will allow
QI to fulfill its obligations under this
Agreement and its FATCA requirements
as a participating FFI, registered deemed-

Bulletin No. 2014 –29

compliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3). For example, in order fulfill QI’s
obligations to report on Forms 1042–S,
1099, and 8966 under section 8 of this
Agreement, QI must establish systems for
documenting account holders and for recording the information with respect to
each such account that QI is required to
report under that section.
(4) Monitoring of Business Changes.
The responsible officer (or designee) must
monitor business practices and arrangements that affect QI’s compliance with
this Agreement, including, for example,
QI’s acquisition of lines of businesses or
accounts that give rise to documentation,
withholding, or reporting obligations under this Agreement and its FATCA requirements as a participating FFI, registered deemed-compliant FFI, registered
deemed-compliant Model 1 IGA FFI, or
limited FFI and, in the case of a direct
reporting NFFE, its requirements under
§ 1.1472–1(c)(3).
(5) Periodic Review. The responsible
officer (or designee) must designate an
auditor that meets the qualifications described in section 10.04(A) of this Agreement to perform the periodic review as
described in section 10.05 of this Agreement.
(6) Periodic Certification. The responsible officer (or designee) must make
the periodic certification as described in
section 10.03 of this Agreement, including ensuring that corrective actions are
taken in response to any material failures
(as defined in section 10.03(D) of this
Agreement) of QI’s compliance with this
Agreement and its FATCA requirements
as a participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3).
(B) Election for a Consolidated
Compliance Program. The IRS, in its
discretion, may permit a consolidated
compliance program that includes two or
more QIs that are members of a group of
entities under common ownership when
the QIs: (i) operate under a uniform compliance program for purposes of this

Bulletin No. 2014 –29

Agreement; (ii) share practices, procedures, and systems subject to uniform
monitoring and control; and (iii) are subject to a consolidated periodic review that
includes a review of internal controls and
testing of transactions relevant to this
Agreement with respect to each QI in the
consolidated compliance program. Each
QI that is a member of a consolidated
compliance program must designate a
Compliance QI to act on its behalf, and
the responsible officer of the Compliance
QI must comply with the identification
and periodic certification requirements for
the QI consolidated compliance program
as the IRS may prescribe in future guidance or other instructions.
10.03. Periodic Certification by Responsible Officer. On or before July 1 of
the calendar year following the certification period, QI must make either the certification described in section 10.03(A) or
(B) of this Agreement. The initial certification period is the period ending on the
third full calendar year that this Agreement is in effect (including renewals of
this Agreement). Subsequent certification
periods will be every three calendar years
following the initial certification period
(including renewals of this Agreement).
QI (or its Compliance QI) must make the
certifications of compliance in such manner as the IRS may prescribe in future
guidance or other instructions. The responsible officer must consider the results
of QI’s periodic review described in section 10.05 of this Agreement in making
the periodic certification.
(A) Certification of Effective Internal Controls. The responsible officer
must certify to the following and disclose
any material failures that occurred during
the certification period or during any prior
period if the material failure was not disclosed as part of a prior certification or
written disclosure made by QI to the
IRS—
(1) QI has established a compliance
program that meets the requirements described in section 10.02(A) or (B) (if applicable) of the QI Agreement that is in
effect as of the date of the certification and
during the certification period;
(2) A periodic review was conducted
for the certification period in accordance
with sections 10.04 through 10.06 of the
QI Agreement, and based on the review

185

and other steps taken by QI, QI maintains
effective internal controls over its documentation, withholding, and reporting obligations under the QI Agreement and under its FATCA requirements as a
participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3);
(3) Based on the periodic review and
other information known to the responsible officer, there are no material failures,
as defined in section 10.03(D) of the QI
Agreement, or, if there are any material
failures, such failures are identified as part
of this certification as well as the actions
taken to remediate such failures and to
prevent their reoccurrence by the date of
this certification;
(4) With respect to any failure to withhold, deposit, or report to the extent required under the QI Agreement, QI has
corrected such failure by paying any taxes
due (including interest and penalties) and
filing the appropriate return (or amended
return); and
(5) All PAIs of QI and partnerships and
trusts to which QI applies the agency option have provided the responsible officer
of the QI with a certification of effective
controls meeting the requirements of this
section 10.03(A) of the QI Agreement and
have represented to QI that there are no
material failures, as defined in section
10.03(D) of the QI Agreement, or have
disclosed any such failures to QI and the
actions taken by the PAI, partnership, or
trust to remediate such failures.
(B) Qualified Certification. If the responsible officer has identified an event of
default or a material failure that QI has not
corrected as of the date of the certification,
the responsible officer must certify to the
following statements—
(1) The responsible officer (or designee) has identified an event of default as
defined in section 11.04 of the QI Agreement, or has determined that, as of the
date of the certification, there are one or
more material failures as defined in section 10.03(D) of the QI Agreement with
respect to QI’s compliance, its PAI’s compliance, or the compliance of a partnership
or trust to which QI applies the agency
option and that appropriate actions will be

July 14, 2014

taken to prevent such failures from reoccurring;
(2) With respect to any failure to withhold, deposit, or report to the extent required under the QI Agreement, QI will
correct such failure by paying any taxes
due (including interest and penalties) and
filing the appropriate return (or amended
return); and
(3) The responsible officer (or an officer of the PAI or partnership or trust to
which QI applies the agency option) will
respond to any notice of default (if applicable) or will provide to the IRS, to the
extent requested, a description of each
material failure and a written plan to correct each such failure.
(C) Factual Information. At the same
time QI provides the periodic certification,
QI must also provide certain factual information regarding its accounts, withholdable payments, and amounts subject to
chapter 3 withholding and must certify as
to the accuracy of the information. The
information requested will be limited to
certain account information and payments
of reportable amounts reviewed as part of
QI’s periodic review procedure described
in section 10.05 of this Agreement. The
IRS will consider the reportable amounts
received by QI during the certification period to determine the extent of the factual
information to request. The IRS will prescribe in future published guidance or
other instructions the factual information
that the QI is required to report with the
periodic certification and the manner such
information must be reported.
(D) Material Failures.
(1) Material Failures Defined. A material failure is generally a failure of QI to
fulfill the requirements of this Agreement
or its FATCA requirements as a participating FFI, registered deemed-compliant
FFI, registered deemed-compliant Model
1 IGA FFI, or limited FFI and, in the case
of a direct reporting NFFE, its requirements under § 1.1472–1(c)(3). For purposes of the certifications described in
section 10.03(A) and (B) of this Agreement, a material failure is limited to the
following:
(i) QI’s establishing of, for financial
statement purposes, a tax reserve or provision for a potential future tax liability
related to QI’s failure to comply with this
Agreement or its FATCA requirements as

July 14, 2014

a participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3).
(ii) QI’s failure to establish written policies, procedures, or systems sufficient for
the relevant personnel of QI to take actions consistent with QI’s obligations under this Agreement or its FATCA requirements as a participating FFI, registered
deemed-compliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3).
(iii) A criminal or civil penalty or sanction imposed on QI (or any branch or
office thereof) by a regulator or other governmental authority or agency with oversight over QI’s compliance with AML/
KYC procedures to which QI (or any
branch or office thereof) is subject and
that is imposed due to QI’s failure to
properly identify account holders under
the requirements of those procedures.
(iv) A finding (including a finding
noted in the periodic review report described in section 10.06 of this Agreement) that QI failed to, for one or more
years covered by this Agreement,—
(a) Withhold an amount that QI was
required to withhold under chapter 3 or 4
or under section 3406 as required under
section 3 of this Agreement;
(b) Provide information sufficient for
another withholding agent to perform
withholding and reporting to the extent
required when QI does not assume primary chapters 3 and 4 withholding responsibility or primary Form 1099 reporting and backup withholding responsibility;
(c) Provide allocation information as
described in section 6.03(D) of this
Agreement (regarding U.S. non-exempt
recipient account holders) by January 15
required by that section when QI applies
the alternative withholding rate pool procedures;
(d) Make deposits in the time and manner required by section 3.08 of this Agreement or fail to make adequate deposits to
satisfy its withholding obligations, taking
into account the procedures under section
9 of this Agreement;

186

(e) Report or report accurately on
Forms 1099 as required under section 8.06
of this Agreement or provide information
to the extent QI assumes primary Form
1099 reporting and backup withholding
responsibilities;
(f) Report or report accurately on
Forms 1042 and 1042–S under sections
8.02 and 8.03 of this Agreement;
(g) Report or report accurately on
Form 8966 under sections 8.04 and 8.05
of this Agreement;
(h) Report or report accurately its U.S.
accounts (or U.S. reportable accounts) or,
in the case of a direct reporting NFFE, its
substantial U.S. owners as required under
its FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI and, in the case of
a direct reporting NFFE, its requirements
under § 1.1472–1(c)(3).
(i) Withhold an amount required to be
withheld or report accurately with respect
to U.S. source substitute dividend payments or make timely and adequate deposits of tax due with respect to such
payments for which QI is a QSL and acts
as a dealer or intermediary.
(2) Limitations on Material Failures.
A failure described in section 10.03(D)(1)(iv)
of this Agreement is a material failure
only if the failure was the result of a
deliberate action on the part of one or
more employees of QI to avoid the requirements of this Agreement with respect
to one or more account holders of QI or
was an error attributable to a failure of QI
to establish or implement internal controls
sufficient for QI to meet the requirements
of this Agreement. Regardless of these
limitations for certification purposes, QI is
required to correct a failure to withhold or
deposit tax under section 3 or to report
under section 8 of this Agreement by depositing the amount of tax required to
have been withheld and by filing the appropriate return (or amended return).
Sec. 10.04. Requirements for Periodic Review.
(A) Independent Auditor. The periodic review may be performed by an internal auditor that is an employee of QI
(internal auditor), an internal auditor that
is an employee of a Compliance QI in the
case of a consolidated compliance program, or a certified public accountant, at-

Bulletin No. 2014 –29

torney, or third-party consultant (“external auditor”), or any combination thereof.
(1) Internal Auditor. QI may designate an internal auditor to perform the
periodic review (or a portion of the periodic review) only when the internal auditor is competent with respect to the requirements of this Agreement and QI’s
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI and, in the case of
a direct reporting NFFE, its requirements
under § 1.1472–1(c)(3). The internal auditor must also be able to report findings
that reflect the independent judgment of
the auditor. The internal auditor must not
report directly to the responsible officer or
any other officer or employee of QI with
direct authority over employees performing functions in connection with QI’s obligations under this Agreement and QI’s
FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI and, in the case of
a direct reporting NFFE, its requirements
under § 1.1472–1(c)(3). The IRS has the
right to request the performance of the
periodic review by an external auditor if
the IRS, in its sole discretion, reasonably
believes that the auditor selected by QI
was not independent or did not perform
an effective periodic review under this
Agreement.
(2) Internal Auditor of the Compliance QI. The Compliance QI may designate an internal auditor to perform the
consolidated periodic review (or a portion
of the consolidated periodic review). See
section 10.02(B) of this Agreement. The
internal auditor of the Compliance QI
must meet the requirements of section
10.04(A)(1) of this Agreement with respect to both the Compliance QI and each
QI that is a member of the consolidated
compliance program.
(3) External Auditor. QI may engage
an external auditor that is a certified public accountant, attorney, or third-party
consultant that is regularly engaged in the
practice of performing reviews of client’s
policies, procedures, and processes for
complying with accounting, tax, or regulatory requirements (including for assisting clients in determining such compliance). The external auditor must be

Bulletin No. 2014 –29

independent of QI under the standards applicable to a certified public accountant
with respect to the engagement or, in the
case of an auditor other than a certified
public accountant, any standard of independence otherwise applicable to the auditor for such an engagement. The external auditor is not required to make an
attestation or render an opinion regarding
QI’s compliance with this Agreement or
QI’s compliance with its FATCA requirements as a participating FFI, registered
deemed-compliant
FFI,
registered
deemed-compliant Model 1 IGA FFI, or
limited FFI and, in the case of a direct
reporting NFFE, its requirements under
§ 1.1472–1(c)(3), but the auditor must be
able to perform the periodic review as
specified in section 10.05 of this Agreement and provide the report described in
section 10.06 of this Agreement. QI must
permit the external auditor to have access
to all relevant records of QI for purposes
of performing the audit, including information regarding specific account holders.
Additionally, the engagement between the
external auditor and QI must impose no
restrictions on QI’s ability to provide the
report described in section 10.06 of this
Agreement to the IRS. However, the external auditor is not required to divulge
the identity of QI’s account holders to the
IRS. QI must permit the IRS to communicate directly with the external auditor,
and any legal prohibitions that prevent the
IRS from communicating directly with the
auditor must be waived.
Sec. 10.05. Scope and Timing of Review. The responsible officer of QI (or of
the Compliance QI) must require the auditor to perform a review of the QI’s internal controls, test a sample of transactions and accounts related to QI’s
documentation, withholding, reporting,
and other obligations under this Agreement and its FATCA requirements as a
participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI and, in the case of a direct reporting
NFFE, its requirements under § 1.1472–
1(c)(3), and identify deficiencies in meeting these obligations. Unless otherwise
approved by the IRS, the review must
include the steps described in section
10.05(A) of this Agreement. The review
may include recommendations for either

187

corrective actions or enhancements to
QI’s compliance program. QI is required
to arrange for the performance of one review for the certification period to evaluate QI’s documentation, withholding, and
reporting practices for the most recent calendar year. The review is not required to
include statistical sampling procedures for
testing transactions, but must require that
the auditor document its methodology for
sampling determinations.
(A) Documentation. The auditor
must—
(1) Verify that QI has training materials, manuals, and directives that instruct
the appropriate QI employees how to request, collect, review, and maintain documentation in accordance with this Agreement, including procedures for identifying
and communicating changes in circumstances;
(2) Review QI’s account opening procedures and interview QI’s employees, to
determine if appropriate documentation is
requested from account holders and, if
obtained, that it is reviewed and maintained in accordance with this Agreement;
(3) Verify that QI follows procedures
designed to inform account holders that
claim a reduced rate of withholding under
an income tax treaty about any applicable
limitation on benefits provision;
(4) Review QI’s accounts, using a sample of QI designated accounts, to ensure
that QI obtained documentation that meets
the general requirements described in sections 5.01 through 5.09 of this Agreement;
(5) Review QI’s accounts, using a sample of QI designated accounts for which
treaty benefits are claimed, to ensure that
QI obtained the treaty statements required
by section 5.03(B) of this Agreement;
(6) Review information, using a sample of QI designated accounts, contained
in account holder files to determine if the
documentation validity standards of section 5.10 of this Agreement have been
met. For example, the auditor must verify
that changes in account holder information (e.g., a change of address to a U.S.
address or change of account holder status
from foreign to U.S.) are being conveyed
to QI’s withholding agent;
(7) Review QI’s accounts, using a sample of QI designated accounts, to ensure
that QI is obtaining, reviewing, and maintaining documentation in accordance with

July 14, 2014

its FATCA requirements as a participating
FFI, registered deemed-compliant FFI,
registered deemed-compliant Model 1
IGA FFI, or limited FFI and, in the case of
a direct reporting NFFE, its requirements
under § 1.1472–1(c)(3);
(8) Review accounts, using a valid
sample of U.S. non-exempt recipient account holders, to determine if QI obtained
Forms W–9, and, if QI does not assume
primary Form 1099 reporting and backup
withholding responsibility, that QI transmitted those forms to a withholding agent
consistent with this Agreement;
(9) Review QI’s agreements with its
PAIs and the partnerships or trusts described in section 4 of this Agreement to
ensure that the obligations imposed meet
the requirements provided in section 4 of
this Agreement; and
(10) For a QI that is a QSL, review a
sample of transactions for which QI acts
as a QSL to determine whether QI has
documented the status of persons to which
QI pays U.S. source substitute dividends
under the general requirements described
in sections 5.01 through 5.09 of this
Agreement.
(B) Withholding Rate Pools. The external auditor must—
(1) Verify that QI has training materials, manuals, and directives that instruct
the appropriate QI employees how to determine chapters 3 and 4 withholding rate
pools based on documentation and the
presumption rules;
(2) Interview employees responsible
for determining chapters 3 and 4 withholding rate pools to ascertain if they are
adequately trained to determine those
pools and that they follow adequate procedures for determining those pools;
(3) Review QI’s procedures for preparing the withholding statements associated
with QI’s Forms W– 8IMY and verify that
the withholding statements provided to
withholding agents convey complete and
correct information on a timely basis;
(4) Perform test checks, using a valid
sample of account holders assigned to
each withholding rate pool, and cross
check that assignment against the documentation provided by, or the presumption rules applied to the account holder,
the type of income earned, and the withholding rate applied;

July 14, 2014

(5) Verify, if QI is using the alternative
procedure for U.S. non-exempt recipients
described in section 6.03(D) of this
Agreement, that QI is providing sufficient
and timely information to withholding
agents that allocates reportable payments
to U.S. non-exempt recipients; and
(6) With respect to a partnership or
trust described in section 4.05 of this
Agreement, if applicable, perform test
checks, using a valid sample of account
holder documentation for the selected
partners, owners, or beneficiaries and records of each type of reportable amount
paid by QI to the entity, to determine
whether the highest rate of withholding
applicable to each type of reportable
amount was applied.
(C) Withholding Responsibilities.
The auditor must—
(1) To the extent QI has assumed primary chapters 3 and 4 withholding responsibilities, perform test checks, using a
valid sample of recalcitrant account holders and nonparticipating FFIs, to verify
that QI withheld the proper amounts under
chapter 4;
(2) To the extent QI has assumed primary chapters 3 and 4 withholding responsibility, perform test checks, using a
valid sample of foreign account holders
for which no withholding is required under chapter 4 based on the payees chapter
4 status, to verify that QI withheld the
proper amounts under chapter 3 (including properly applying the exemptions
from chapter 4 withholding);
(3) To the extent QI has not assumed
primary chapters 3 and 4 withholding responsibility, verify that QI has fulfilled its
responsibilities under section 3.02 of this
Agreement when failing to provide the
required information to a withholding
agent to withhold on payments;
(4) To the extent QI has assumed primary Form 1099 reporting and backup
withholding responsibility, perform test
checks using a valid sample of U.S. nonexempt recipient account holders to verify
that QI backup withheld when required;
(5) To the extent QI has not assumed
primary Form 1099 reporting and backup
withholding responsibility, perform test
checks using a valid sample of U.S. nonexempt account holders to verify that QI
fulfilled its backup withholding responsi-

188

bilities under sections 3.04 through 3.06
of this Agreement;
(6) Verify that amounts withheld by QI
were timely deposited in accordance with
section 3.08 of this Agreement; and
(7) To the extent that QI acts as a QSL,
determine that QI withheld when required
on U.S. source payments of substitute dividends.
(D) Return Filing and Information
Reporting. The auditor must—
(1) Obtain copies of original and
amended Forms 1042 and 945, and any
schedules, statements, or attachments required to be filed with those forms, verify
that the forms have been filed, and determine whether the amounts of income,
taxes, and other information reported on
those forms are accurate by—
(i) Reviewing work papers used to prepare these forms;
(ii) Interviewing personnel responsible
for preparing these forms;
(iii) Reviewing copies of Forms
1042–S that withholding agents have provided QI to determine whether QI properly reported the amount of taxes withheld
by other withholding agents on Form
1042;
(iv) Reviewing account statements and
correspondence from withholding agents;
(v) Determining that adjustments to the
amount of tax shown on Form 1042 (and
any claim by QI for refund or credit)
properly reflect the adjustments to withholding made by QI using the reimbursement or set off procedures under section
9.02 of this Agreement and are supported
by sufficient documentation;
(vi) Reconciling amounts shown on
Forms 1042 with amounts shown on Form
1042–S (including the amount of taxes
reported as withheld);
(vii) In the case of collective credits or
refunds, reviewing the statements attached
to amended Forms 1042 filed to claim a
collective refund, ascertain their accuracy,
and—
(a) Determine the causes of any overwithholding reported and ensure QI did
not issue Forms 1042–S to persons whom
it included as part of its collective credit
or refund;
(b) Determine that QI repaid the appropriate account holders and that the amount
of the claim is accurate and supported by
adequate documentation; and

Bulletin No. 2014 –29

(c) Determine that QI did not include
payments made to a partnership or trust
described in section 4.05 of this Agreement.
(2) Obtain copies of original and corrected Forms 1042–S and Forms 1099
filed by QI together with the work papers
used to prepare those forms, and determine whether the amounts reported on
those forms are accurate by—
(i) Reconciling payments and tax reported on Forms 1042–S received from
withholding agents with amounts (including characterization of income) and taxes
reported by QI as withheld on Forms
1042–S and determining the reason(s) for
any variance;
(ii) Reviewing the Forms W– 8IMY,
and the associated withholding statements, that QI has provided withholding
agents;
(iii) Reviewing a valid sample of account statements issued by QI to account
holders;
(iv) Interviewing QI’s personnel responsible for preparing the Forms 1042–S
and, if applicable, Forms 1099, and the
work papers used to prepare those forms;
and
(v) Determining, in the case in which
QI utilized the reimbursement or set-off
procedure, that QI satisfied the requirements of section 9.02 of this Agreement
and that the adjusted amounts of tax withheld are properly reflected on Forms
1042–S.
(3) Obtain copies of original and
amended Forms 8966, and determine
whether the amounts of income and other
information reported on Forms 8966 are
accurate by—
(i) Reviewing a sample of U.S. accounts (or U.S. reportable accounts) to
determine that such accounts were reported in accordance with QI’s FATCA
requirements as a participating FFI, registered deemed-compliant FFI, registered
deemed-compliant Model 1 IGA FFI, or
limited FFI;
(ii) If QI is an NFFE acting as a qualified intermediary on behalf of its shareholders, confirming that any direct or indirect shareholders that are substantial
U.S. owners were reported in accordance
with § 1.1472–1(c)(3);
(iii) If QI is an NFFE acting as a qualified intermediary on behalf of persons

Bulletin No. 2014 –29

other that its shareholders, confirming that
if QI is acting on behalf of a passive
NFFE with substantial U.S. owners, withholdable payments made to the passive
NFFE and the information regarding its
owners were reported;
(iv) Confirming with respect to any
nonqualified intermediary or flow-through
entity that provides information regarding
an account holder (or interest holder) that
is an NFFE (other than an excepted
NFFE) with one or more substantial U.S.
owners (or controlling persons) that such
substantial U.S. owners (or controlling
persons) were reported to the extent required under section 8.04(B) of this
Agreement;
(v) Reviewing a sample of the documentation provided by a PAI or a partnership or trust to which QI applied the
agency option to determine that QI reported on Form 8966 to the extent required under section 4 of this Agreement;
(vi) Reviewing work papers used to
prepare these forms; and
(vii) Interviewing personnel responsible for preparing these forms.
(E) Significant Change in Circumstances. The auditor must verify that in
the course of the audit it has not discovered any significant change in circumstances, as described in section 11.03(A),
(D), or (E) of this Agreement.
Sec. 10.06 Periodic Review Report.
(A) In General. The performance of
the periodic review must be documented
in a written report addressed to the responsible officer of QI and must be available to the IRS upon request (with a certified translation into English if the report
is not in English). The report must describe the scope of the review and the
steps performed to evaluate internal controls and test transactions, including the
methodology for sampling determinations. The report must identify any deficiencies noted by the auditor, including
those deficiencies that the auditor concludes are material failures, and may include explanatory footnotes to clarify the
results of the report. Recommendations
may be included but are not required to be
provided in the report.
(B) PAI Certification. Any PAI with
which QI has an agreement must provide
a written certification to QI as described in
section 10.03 of this Agreement regarding

189

its compliance with the requirements of
the PAI agreement. Such certification
must be available to the IRS upon a request made as part of the review described
in section 10.07 of this Agreement (with a
certified translation into English if the certification is not in English).
(C) Partnership or Trust to which
QI Applies the Agency Option. Any
partnership or trust to which QI applies
the agency option must provide a written
certification to QI as described in section
10.03 of this Agreement regarding its
compliance with the requirements of its
agreement with QI. Such certification
must be available to the IRS upon a request made as part of the review described
in section 10.07 of this Agreement (with a
certified translation into English if the certification is not in English).
(D) Retention of Report. The report
and certifications described in this section
10.06 must be retained by QI (or the Compliance QI) for as long as this Agreement
is in effect.
Sec. 10.07. Compliance Review.
(A) In General. Based upon the certifications made by the responsible officer
and the disclosure of material failures, the
information reported on Forms 945, 1042,
1042–S, 1099, and 8966 filed with the IRS
during the certification period, or otherwise at IRS’s discretion for compliance
purposes, the IRS may initiate requests of
QI under this section 10.07.
(B) Periodic Review Report. The IRS
may request through written correspondence to the responsible officer of QI (or
the Compliance QI) a copy of QI’s periodic review report that was issued for any
prior certification period or the periodic
review report of any PAI or partnership or
trust to which QI applied the agency option that QI has an agreement during the
current certification period (with a certified translation into English if the report is
not in English). QI is required to provide
the report within 30 calendar days of such
request.
(C) Correspondence Review. The
IRS may, in its discretion, conduct additional fact finding through a correspondence review. In such a review, the IRS
will contact the responsible officer of QI
(or the Compliance QI) in writing and request information about QI’s compliance
with this Agreement or the compliance of a

July 14, 2014

PAI or a partnership or trust to which QI
applied the agency option, including, for
example, information about documentation, withholding, or reporting processes,
its periodic review, and information about
any material failures that were disclosed
to the IRS (including remediation plans).
The IRS may request phone or video interviews with employees of QI (and the
Compliance QI), PAI, or a partnership or
trust to which QI applied the agency option as part of the IRS’s correspondence
review. QI is required to respond in a
reasonable time to any such requests.
(D) Additional Review Procedures.
In limited circumstances, the IRS may
direct QI (or the Compliance FFI) or any
PAI, partnership, or trust described in section 4 of this Agreement with which QI
has an agreement to perform additional,
specified review procedures. The IRS reserves the right to require QI (or the Compliance QI) or a PAI, or a partnership or
trust to which QI applied the agency option to engage an external auditor to perform the additional review procedures regardless of whether such auditor
performed the periodic review. The IRS
will provide the responsible officer of the
QI with a written plan describing the additional review procedures and will provide a due date of not more than 120 days
for the QI to provide to the IRS a report
covering the auditor’s findings.
SECTION 11. EXPIRATION,
TERMINATION AND DEFAULT
Sec. 11.01. Term of Agreement. This
Agreement begins on the effective date of
the QI Agreement and expires on December 31, 2016 unless terminated under section 11.02 of this Agreement. This Agreement may be renewed as provided in
section 11.06 of this Agreement.
Sec. 11.02. Termination of Agreement. This Agreement may be terminated
by either the IRS or QI prior to the end of
its term by delivery of a notice, in accordance with section 12.06 of this Agreement, of termination to the other party.
The IRS, however, shall not terminate this
Agreement unless there has been a significant change in circumstances, as defined
in section 11.03 of this Agreement, or an
event of default has occurred, as defined
in section 11.04 of this Agreement, and
the IRS determines, in its sole discretion,

July 14, 2014

that the significant change in circumstances or the event of default warrants
termination of this Agreement. The IRS
shall not terminate this Agreement if QI
can establish to the satisfaction of the IRS
that all events of default for which it has
received notice have been cured within
the time period agreed upon. The IRS
shall notify QI, in accordance with section
11.05 of this Agreement, that an event of
default has occurred and that the IRS intends to terminate the Agreement unless
QI cures the default or establishes that no
event of default occurred. A notice of
termination sent by either party shall take
effect on the date specified in the notice,
and QI is required to notify its withholding agent of the date that its status as a QI
is terminated.
If QI is a limited FFI, this Agreement
will terminate upon the termination of
QI’s limited FFI status on December 31,
2015, unless QI enters into an FFI agreement or obtains status as a registered
deemed-compliant FFI or a registered
deemed-compliant Model 1 IGA FFI.
Sec. 11.03. Significant Change in
Circumstances. For purposes of this
Agreement, a significant change in circumstances includes, but is not limited
to—
(A) An acquisition of all, or substantially all, of QI’s assets in any transaction
in which QI is not the surviving legal
entity;
(B) A change in U.S. federal law or
policy, or applicable foreign law or policy, that affects the validity of any provision of this Agreement, materially affects
the procedures contained in this Agreement, or affects QI’s ability to perform its
obligations under this Agreement;
(C) A ruling of any court that affects
the validity of any material provision of
this Agreement;
(D) A material change in the knowyour-customer rules and procedures set
forth in any Attachment to this Agreement;
(E) A significant change in QI’s business practices that affects QI’s ability to
meet its obligations under this Agreement;
(G) If QI is a limited FFI, termination
of status as a limited FFI after December
31, 2015 and failure of QI to enter into an
FFI Agreement or obtain status as a registered deemed-compliant FFI or regis-

190

tered deemed-compliant Model 1 IGA
FFI;
(H) If QI is an FFI, termination of its
status as a participating FFI, registered
deemed-compliant FFI, or registered
deemed-compliant Model 1 IGA FFI;
(I) If QI is an NFFE acting as a QI on
behalf of its shareholders, if it fails to
meet its requirements as a direct reporting
NFFE under § 1.1472–1(c)(3); or
(J) If QI is acting as a sponsoring entity
on behalf of a sponsored FFI or sponsored
direct reporting NFFE, if it fails to comply
with the due diligence, withholding, reporting, and compliance requirements of a
sponsoring entity.
Sec. 11.04. Event of Default. For purposes of this Agreement, an event of default occurs if QI fails to perform any
material duty or obligation required under
this Agreement and the responsible officer
had actual knowledge or should have
known the facts relevant to the failure to
perform any material duty. An event of
default includes, but is not limited to, the
occurrence of any of the following:
(A) QI fails to implement adequate
procedures, accounting systems, and internal controls to ensure compliance with
this Agreement;
(B) QI underwithholds a material
amount of tax that QI is required to withhold under chapter 3 or 4 or backup withhold under section 3406 and fails to correct the underwithholding or to file an
amended Form 1042 or 945 reporting, and
paying, the appropriate tax;
(C) QI makes excessive refund claims;
(D) Documentation described in section 5 of this Agreement is lacking, incorrect, or unreliable for a significant number
of direct account holders;
(E) QI files Forms 945, 1042, 1042–S,
1099, or 8966 that are materially incorrect
or fraudulent;
(F) If QI is an FFI, QI fails to materially comply with its FATCA requirements
as a participating FFI, registered deemedcompliant FFI, registered deemedcompliant Model 1 IGA FFI, or limited
FFI;
(G) If QI is an NFFE acting as a QI on
behalf of its shareholders, QI fails to materially comply with its requirements as a
direct reporting NFFE under § 1.1472–
1(c)(3); or if QI is a sponsoring entity, QI
fails to materially comply with the due

Bulletin No. 2014 –29

diligence, withholding, reporting, and
compliance requirements of a sponsoring
entity;
(H) QI fails to materially comply with
the requirements of a nonqualified intermediary under chapters 3 and 61, and
section 3406 with respect to any non-QI
designated account.
(I) QI fails to perform a periodic review when required or document the findings of such review in a written report;
(J) QI fails to cooperate with the IRS
on its compliance review described in section 10.07 of this Agreement;
(K) QI fails to inform the IRS of any
change in the know-your-customer rules
described in any Attachment to this
Agreement within 90 days of the change
becoming effective;
(L) QI fails to inform the IRS within 90
days of any significant change in its business practices to the extent that change
affects QI’s obligations under this Agreement;
(M) QI fails to inform the IRS of any
PAI of QI, as described in section 4 of this
Agreement;
(N) QI fails to cure a material failure
identified in the qualified certification described in section 10.04 of this Agreement
or identified by the IRS;
(O) QI makes any fraudulent statement
or a misrepresentation of material fact
with regard to this Agreement to the IRS,
a withholding agent, or QI’s auditor;
(P) The IRS determines that QI’s auditor is not sufficiently independent to adequately perform its audit function and QI
fails to arrange for a periodic review conducted by an auditor approved by the IRS;
(Q) An intermediary with which QI
has a PAI agreement is in default with that
agreement and QI fails to terminate that
agreement within the time period specified in section 4.04 of this Agreement; or
(R) A partnership or trust to which QI
applies the agency option is in default
with that agreement and QI fails to terminate that agreement within the time period
specified in section 4.06 of this Agreement
Sec. 11.05. Notice and Cure. Upon
the occurrence of an event of default, the
IRS will deliver to QI a notice of default
specifying each event of default. QI must
respond to the notice of default within 60
days (60-day response) from the date of

Bulletin No. 2014 –29

the notice of default. The 60-day response
shall contain an offer to cure the event of
default and the time period in which to
cure or shall state why QI believes that no
event of default occurred. If QI does not
provide a 60-day response, the IRS will
deliver a notice of termination as provided
in section 11.02 of this Agreement. If QI
provides a 60-day response, the IRS shall
either accept or reject QI’s statement that
no default has occurred or QI’s proposal
to cure the event of default. If the IRS
rejects QI’s contention that no default has
occurred or rejects QI’s proposal to cure
the event of default, the IRS may offer a
counter-proposal to cure the event of default with which QI will be required to
comply within 30 days. If QI fails to provide a 30-day response, the IRS will send
a notice of termination in accordance with
section 11.02 of this Agreement to QI,
which QI may appeal within 30 days of
the date of the notice by sending a written
appeal to the address specified in section
12.06 of this Agreement. If QI appeals the
notice of termination, this Agreement
shall not terminate until the appeal has
been decided. If an event of default is
discovered in the course of an audit, the
QI may cure the default, without following the procedures of this section 11.05, if
the external auditor’s report describes the
default and the actions that QI took to cure
the default and the IRS determines that the
cure procedures followed by QI were sufficient. If the IRS determines that QI’s
actions to cure the default were not sufficient, the IRS shall issue a notice of default and the procedures described in this
section 11.05 shall be followed.
Sec. 11.06. Renewal. If QI is an FFI,
an NFFE acting on behalf of its shareholders, or an NFFE that is a sponsoring entity
and intends to renew this Agreement, it
must submit a registration for renewal to
the IRS on the FATCA registration website in accordance with the instructions to
Form 8957 or as otherwise provided in
published guidance. This Agreement will
be renewed only upon the agreement of
both QI and the IRS.
A QI not described in the preceding
paragraph must renew its QI agreement by
submitting a request for renewal to the
Foreign Intermediaries Program at the address provided in section 12.06 of this
Agreement.

191

SECTION 12. MISCELLANEOUS
PROVISIONS
Sec. 12.01. QI’s application to become
a qualified intermediary, all Appendices
and Attachments to this Agreement, and,
the following are hereby incorporated into
and made an integral part of this Agreement:
(a) If QI is an FFI, its FATCA requirements as a participating FFI, registered
deemed-compliant
FFI,
registered
deemed-compliant Model 1 IGA FFI, or
limited FFI; or
(b) If QI is an NFFE acting as a QI on
behalf of its shareholders, its requirements
as a direct reporting NFFE under
§ 1.1472–1(c)(3).
This Agreement, QI’s application, and
the Appendices and Attachments to this
Agreement constitute the complete agreement between the parties.
Sec. 12.02. This Agreement may be
amended by the IRS if the IRS determines
that such amendment is needed for the
sound administration of the internal revenue laws or internal revenue regulations.
This Agreement will only be modified
through published guidance issued by the
IRS and U.S. Treasury Department. Any
such modification imposing additional requirements will in no event become effective until the later of 90 days after the IRS
provides notice of such modification or
the beginning of the next calendar year
following the publication of such guidance.
Sec. 12.03. Any waiver of a provision
of this Agreement is a waiver solely of
that provision. The waiver does not obligate the IRS to waive other provisions of
this Agreement or the same provision at a
later date.
Sec. 12.04. This Agreement shall be
governed by the laws of the United States.
Any legal action brought under this
Agreement shall be brought only in a
United States court with jurisdiction to
hear and resolve matters under the internal
revenue laws of the United States. For this
purpose, QI agrees to submit to the jurisdiction of such United States court.
Sec. 12.05. QI’s rights and responsibilities under this Agreement cannot be assigned to another person.
Sec. 12.06. Except as otherwise provided in the instructions to Form 8957,

July 14, 2014

notices provided under this Agreement
shall be mailed registered, first class airmail. All notices sent to the IRS must
include the QI’s name, QI-EIN, GIIN (if
applicable), and the name of its responsible officer. Such notices shall be directed
as follows:

To the IRS:
Internal Revenue Service
Foreign Payments Practice
Foreign Intermediaries Team
290 Broadway, 12 Floor NW
New York, New York 10007-1867
To the QI:
The QI’s responsible officer. Such notices shall be sent to the address indicated
in the QI’s registration or application (as
may be amended).
Sec. 12.07. QI, acting in its capacity as
a qualified intermediary or in any other
capacity, does not act as an agent of the
IRS, nor does it have the authority to hold
itself out as an agent of the IRS.
SECTION 13. EFFECTIVE DATE
The effective date of this revenue procedure is June 27, 2014.
SECTION 14. PAPERWORK
REDUCTION ACT
The collections of information contained in this revenue procedure have
been reviewed and approved by the Office
of Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507) under control number 15451597.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays
a valid control number assigned by the
Office of Management and Budget.
The collections of information are contained in sections 3 and 4 of this revenue
procedure regarding (1) the application
procedures for QI status and withholding
agreements, and (2) the provisions of the
QI withholding agreement requiring record retention or maintenance, and any
communication or contact with the IRS or
the account holders. This information will
be used to enable the IRS to determine
whether to enter into a withholding agree-

July 14, 2014

ment with the QI applicant and, if accepted, to verify the QI’s compliance with
the agreement. The collection of information is required to obtain a QI withholding
agreement. The likely respondents are
business or other for-profit institutions.
The estimated total reporting and/or recordkeeping burden is 301,018 hours.
The estimated average annual burden
is 30 minutes for a QI account holder, and
2.093 hours for a QI, depending on the
individual circumstances. The estimated
number of recordkeepers is 88,504.
The estimated frequency of responses
is on occasion. Books or records relating
to a collection of information must be
retained as long as their contents may
become material in the administration of
any internal revenue law. Generally, tax
returns and tax return information are confidential, as required by 26 U.S.C. 6103.
SECTION 15. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Tara N. Ferris of the Office
of Associate Chief Counsel (International). For further information regarding
this revenue procedure contact Ms. Ferris
at (202) 317-6942 (not a toll free number).

Rev. Proc. 2014 – 42
SECTION 1. PURPOSE
This revenue procedure provides guidance regarding a new, voluntary Annual
Filing Season Program designed to encourage tax return preparers who are not
attorneys, certified public accountants
(CPAs), or enrolled agents (EAs) to complete continuing education courses for the
purpose of increasing their knowledge of
the law relevant to federal tax returns. In
addition, this revenue procedure modifies
and supersedes Revenue Procedure 81–
38, 1981–2 C.B. 592, regarding limited
practice before the IRS by individuals
who are not attorneys, CPAs, or EAs.
SECTION 2. BACKGROUND
The accuracy of tax return preparation
is essential to effective tax administration.
More than half of the United States’ taxpayers rely on paid tax return preparers to
assist them in preparing their federal tax

192

returns annually. While 40% of paid tax
return preparers are credentialed as attorneys, CPAs, or EAs, most of the other
60% of paid tax return preparers lack any
kind of professional credential or license.
Basic competency for paid tax return preparers is essential to accurate return preparation, improved tax compliance, effective tax administration, and protecting
taxpayers from preparer errors.
To further these goals, in 2011 the
Treasury Department and the IRS published regulations under 31 U.S.C. § 330
(which are reprinted in Treasury Department Circular No. 230 (Circular 230)) that
established registered tax return preparers
(RTRPs) as a new category of practitioner
and prohibited an individual who was not
an attorney, CPA, EA, or RTRP from
preparing tax returns for compensation.
Circular 230 also set forth the requirements for RTRPs, which included passing
a minimum competency examination and
completing continuing education annually. Under these regulations, RTRPs
were permitted to engage in limited practice by representing taxpayers before the
IRS during an examination with respect to
tax returns and claims for refund that the
RTRP prepared and signed. At the same
time, provisions in Circular 230 allowing
any unenrolled or unlicensed tax return
preparer to engage in limited practice by
representing taxpayers during an examination of a return prepared and signed by
the tax return preparer were removed.
In February 2014, the D.C. Circuit
Court of Appeals in Loving v. IRS, 742
F.3d 1013 (D.C. Cir. 2014), held invalid
the portion of Circular 230 regulating
RTRPs as practitioners practicing before
the IRS. Accordingly, the RTRP program
is no longer in effect. In the Fiscal Year
2015 Budget, the Administration proposed that Congress provide the Treasury
Department and the IRS with legislative
authority to regulate tax return preparers.
See General Explanations of the Administration’s Fiscal Year 2015 Revenue
Proposals. Until legislation is enacted, the
Treasury Department and the IRS have
established an Annual Filing Season Program designed to encourage tax return
preparers who are not attorneys, CPAs, or
EAs to improve their knowledge of federal tax law. An unenrolled tax return
preparer who successfully completes

Bulletin No. 2014 –29

continuing education courses related to
federal tax law will generally have a better
understanding of the tax law necessary to
represent a taxpayer before the IRS during
an examination than an unenrolled individual who has not taken any continuing
education courses related to federal tax
law. Accordingly, this revenue procedure
also modifies and supersedes Revenue
Procedure 81–38, and in its place provides
rules permitting unenrolled tax return preparers who have an Annual Filing Season
Program Record of Completion to represent taxpayers during examination in certain limited circumstances.
SECTION 3. SCOPE.
The Annual Filing Season Program described in this revenue procedure is voluntary and no tax return preparer is required to participate. Further, any
individual may apply for and receive an
Annual Filing Season Program Record of
Completion if he or she meets the requirements of this revenue procedure.
This revenue procedure does not restrict any individual from preparing and
signing tax returns and claims for refund
nor does it change the requirement that
paid tax return preparers must obtain a
Preparer Tax Identification Number
(PTIN). See Treas. Reg. § 1.6109 –2.
An Annual Filing Season Program Record of Completion is not required for an
attorney, CPA, EA, enrolled actuary, or
enrolled retirement plan agent to represent
taxpayers before the IRS as described in
section 10.3 of Circular 230. This revenue
procedure does not in any way affect or
limit the ability of attorneys, CPAs, or
EAs to represent taxpayers before the IRS.
The rules governing the practice of such
persons before the IRS are set forth in
Circular 230.
SECTION 4. ANNUAL FILING
SEASON PROGRAM
.01 In general. An application for the
Annual Filing Season Program must be
made in accordance with this revenue procedure and the requirements set forth by
the IRS in forms, instructions, or other
appropriate guidance. An application for
the Annual Filing Season Program will
not be considered if the applicant does not

Bulletin No. 2014 –29

comply with the requirements of this section.
.02 Record of Completion. Upon verification that the requirements in section 4
of this revenue procedure have been met,
the IRS will issue a Record of Completion
to the applicant. The Record of Completion is valid only with respect to tax returns or claims for refund prepared and
signed during the calendar year for which
the Record of Completion is issued.
.03 Form of application. Applicants
must apply for the Annual Filing Season
Program by using the online PTIN application system or on paper, using the IRS
Form W–12, IRS Paid Preparer Tax Identification Number (PTIN) Application and
Renewal (or successor form), as prescribed by the form’s instructions. The
applicant must sign the application under
penalties of perjury and include any required supporting information and documentation required by forms, instructions,
or other appropriate guidance. Applications must be received by April 15 of the
year for which the Record of Completion
is sought, and no applications received
after that date will be considered.
.04 Period of applicability. The Record
of Completion is effective for one calendar year. Once issued, the Record of Completion is effective for tax returns and
claims for refund prepared and signed
from the later of January 1 of the year
covered by the Record of Completion or
the date the Record of Completion is issued until December 31 of that year. For
example, if an application is submitted on
February 15, 2015, and a Record of Completion is issued on February 25, 2015, the
tax return preparer’s 2015 Record of
Completion will be effective for tax returns and claims for refund prepared and
signed from February 25, 2015 through
December 31, 2015.
.05 Application requirements.
(1) PTIN. Applicants must be eligible
for and obtain a PTIN, or timely renew
their existing PTIN, in accordance with
the requirements of Treas. Reg.
§ 1.6109 –2. The PTIN must be valid for
the year for which the Record of Completion is sought.
(2) Federal tax filing season refresher
course.
(a) Requirement. Only applicants who
successfully complete an annual federal

193

tax filing season refresher course (refresher course) that is administered by an
IRS-approved continuing education provider (described in section 5 of this revenue procedure) are eligible to participate
in the Annual Filing Season Program. The
refresher course must generally cover tax
law and filing requirements relevant to
Form 1040 series returns and schedules.
The refresher course must be 6 hours and
must include a test of the material presented during the course that is given at
the end of the course. The test must be a
minimum of 100 questions. To successfully complete the refresher course, the
applicant must pass the related test by
answering 70% of the questions correctly
(or a higher percentage if set forth in
forms, instructions, or other appropriate
guidance).
(b) Exceptions. The following applicants are not required to take the refresher
course as a condition of eligibility to apply for a Record of Completion:
(i) Attorneys, CPAs, and EAs described in section 10.3 of Circular 230;
(ii) Individuals who passed the RTRP
examination; and
(iii) Tax return preparers who are licensed or registered by any state, territory,
or possession of the United States, including a Commonwealth, or the District of
Columbia after passing an examination
covering federal tax matters, and tax return preparers who have passed an examination covering federal tax matters administered by an entity recognized by the
IRS as an eligible entity for purposes of
this section. A list of states and other
entities recognized by the IRS as offering
an examination that qualifies for purposes
of this exception will be posted on IRS.gov. Applicants who qualify for this exception must, upon request, present proof
of their license, registration, or passage of
an approved examination as required by
the IRS in forms, instructions, or other
appropriate guidance.
(3) Continuing education.
(a) Applicants required to complete the
refresher course. Applicants required to
complete the refresher course must successfully complete 18 hours of continuing
education from an IRS-approved continuing education provider (described in section 5 of this revenue procedure) during
the calendar year prior to the year for

July 14, 2014

which the Record of Completion is
sought. The total hours completed must
consist of 2 hours of ethics or professional
responsibility, 10 hours of federal tax law
topics, and 6 hours of federal tax law
updates. For example, to receive a Record
of Completion that will be effective for
tax returns and claims for refund prepared
and signed during the 2016 calendar year,
an applicant must have completed 18
hours of continuing education meeting the
requirements of this section 4.05(3) during the 2015 calendar year. Applicants
who successfully complete the refresher
course described in section 4.05(2) will
have satisfied the requirement to take 6
hours of federal tax law updates.
(b) Applicants exempt from the refresher course. Applicants exempt from
the refresher course must successfully
complete 15 hours of continuing education from an IRS-approved continuing education provider during the calendar year
prior to the year for which the Record of
Completion is sought. The total hours
completed must consist of 2 hours of ethics or professional responsibility, 10 hours
of federal tax law topics, and 3 hours of
federal tax law updates.
(c) Transition rule. Applicants for the
Annual Filing Season Program for the
2015 calendar year are required to complete 11 hours of continuing education
during 2014. For applicants who must
complete the refresher course, the refresher course will satisfy 6 hours of the
11-hour requirement; the other 5 hours
must consist of 3 hours of federal tax law
topics and 2 hours of ethics or professional responsibility. Applicants not required to take the refresher course must
complete 8 hours of continuing education
consisting of 3 hours of federal tax law
updates, 3 hours of federal tax law topics,
and 2 hours of ethics or professional responsibility.
(4) Consent to be subject to duties and
restrictions of Circular 230. As a prerequisite to participation in the Annual Filing
Season Program and receiving a Record
of Completion, an applicant must consent
to be subject to the duties and restrictions
relating to practice before the IRS in subpart B and section 10.51 of Circular 230
for the entire period covered by the Record of Completion.
.06 Restrictions on eligibility.

July 14, 2014

(1) Ineligible individuals. The following individuals are ineligible to participate
in the Annual Filing Season Program:
(a) An individual who is disbarred, suspended, or disqualified from practice before the IRS under Circular 230, during
the period for which the individual is disbarred, suspended, or disqualified.
(b) An individual who has been convicted of a felony involving a financial
matter, tax matter, or other violation of the
public trust within the 5-year period preceding the date of the application to participate in the Annual Filing Season Program.
(c) An individual who is enjoined from
representing persons before the IRS, preparing tax returns, or engaging in other
conduct subject to injunction under section 7407, for the time period during
which the injunction is in effect.
(d) An individual who engaged in misconduct that would have violated Circular
230 if the individual were subject to Circular 230, including knowingly providing
false or misleading information, or participating in providing false or misleading
information, to the IRS.
(e) An individual who is not in compliance with his or her personal federal tax
obligations (including employment taxes
for which the applicant is personally liable), for the period of such noncompliance. The fact that the applicant is
in a dispute with the IRS regarding a
federal tax liability or has entered into an
installment agreement (which is not in
default), an offer-in-compromise, or both
to satisfy a federal tax liability will not be
treated as non-compliant with a personal
federal tax obligation for purposes of this
section.
(f) An individual who has his or her
Annual Filing Season Program Record of
Completion revoked under section 7 of
this revenue procedure, for the period that
the IRS determines, based on the facts and
circumstances, that such individual is ineligible.
(g) An individual who does not comply
with the requirements of this revenue procedure.
.07 Solicitation restrictions. A tax return preparer who receives a Record of
Completion may not use the term “certified,” “enrolled,” or “licensed” to describe
this designation or in any way imply an

194

employer/employee relationship with the
IRS or make representations that the IRS
has endorsed the tax return preparer. A tax
return preparer who receives a Record of
Completion for a calendar year may represent that the tax return preparer holds a
valid Annual Filing Season Program Record of Completion for that calendar year
and that he or she has complied with the
IRS requirements for receiving the Record
of Completion.
SECTION 5. APPROVED
CONTINUING EDUCATION
PROVIDERS
The refresher course and other continuing education requirements described in
section 4 must be administered by continuing education providers defined in
section 10.9 of Circular 230 and approved
by the IRS in accordance with the requirements of Revenue Procedure 2012–12,
2012–2 I.R.B. 275, and as prescribed in
forms, instructions, or other appropriate
guidance.
SECTION 6. REPRESENTATION
BEFORE THE IRS BASED ON
PREPARING AND SIGNING A
RETURN
.01 Representation of taxpayers before
the IRS. This section permits unenrolled
tax return preparers who obtain a Record
of Completion to represent taxpayers before the IRS during an examination of a
tax return or claim for refund that they
prepared and signed (or prepared if there
is no signature space on the form), provided the individual (1) had a valid Annual Filing Season Program Record of
Completion for the calendar year in which
the tax return or claim for refund was
prepared and signed; and (2) has a valid
Annual Filing Season Program Record of
Completion for the year or years in which
the representation occurs. The representation permitted under this section does not
permit an individual who has a Record of
Completion to represent the taxpayer before appeals officers, revenue officers,
Counsel, or similar officers or employees
of the IRS.
.02 Modification and Superseding of
Revenue Procedure 81–38. Revenue Procedure 81–38 allows an unenrolled tax
return preparer to represent a taxpayer

Bulletin No. 2014 –29

during an examination if the tax return
preparer prepared and signed the taxpayer’s return that is under examination (or
prepared the taxpayer’s return that is under examination if there is no signature
space on the form).
Revenue Procedure 81–38 is modified
and superseded for tax returns and claims
for refund prepared and signed (or prepared if there is no signature space on the
form) after December 31, 2015. Unenrolled tax return preparers may not rely on
Revenue Procedure 81–38 to represent
taxpayers during an examination of a tax
return or claim for refund prepared or
signed after December 31, 2015. However, unenrolled tax return preparers may
rely on Revenue Procedure 81–38 to represent taxpayers during an examination of
a tax return or claim for refund prepared
and signed (or prepared if there is no
signature space on the form) on or before
December 31, 2015.
.03 Compliance with Circular 230.
Representation of a taxpayer before the
IRS under the authority of this section is
governed by Circular 230.
SECTION 7. REVOCATION AND
PROTEST
.01 Revocation.
(1) Individuals who fail to comply with
the duties and restrictions relating to practice before the IRS in subpart B and section 10.51 of Circular 230 or with any of

Bulletin No. 2014 –29

the requirements described in this revenue
procedure will have their Record of Completion revoked and may be prohibited
from participating in the Annual Filing
Season Program in the future based on the
facts and circumstances, including the act
that resulted in the noncompliance.
(2) Individuals who represent a taxpayer under the authority of section 6.01
of this revenue procedure who violate Circular 230 during the course of that representation will have their Record of Completion and ability to represent a taxpayer
before the IRS under this revenue procedure revoked and other sanctions may be
imposed.
.02 Protest.
(1) Prior to any revocation of a Record
of Completion pursuant to section 7.01, an
individual will be informed in writing of
the reason(s) for revocation. The individual may, within 30 days after the date of
the IRS notice of revocation, file a written
protest, as prescribed by the IRS in forms,
instructions, or other appropriate guidance, to demonstrate why the Record of
Completion should not be revoked. If an
individual’s Record of Completion is revoked, the revocation is effective for the
entire calendar year for which the Record
of Completion would have been valid had
the revocation not occurred.
(2) An individual who has been determined to be ineligible to participate in the
Annual Filing Season Program under sec-

195

tion 4.06 of this revenue procedure may,
within 30 days after the date of the IRS
notice of ineligibility, file a written protest, as prescribed by the IRS in forms,
instructions, or other appropriate guidance, to demonstrate why the individual is
not ineligible to participate in the Annual
Filing Season Program.
SECTION 8. EFFECT ON OTHER
DOCUMENTS
Revenue Procedure 81–38 is modified
and superseded for tax returns and claims
for refund prepared and signed (or prepared if there is no signature space on the
form) after December 31, 2015.
SECTION 9. EFFECTIVE DATE
Except for section 6, this revenue procedure is effective as of June 30, 2014.
Section 6 is effective for tax returns and
claims for refund prepared and signed (or
prepared if there is no signature space on
the form) after December 31, 2015.
SECTION 10. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Hollie M. Marx of the Office
of the Associate Chief Counsel (Procedure and Administration). For further information regarding this revenue procedure contact Hollie M. Marx on (202)
317-6844 (not a toll free number).

July 14, 2014

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior published position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confusion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously published ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A

and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in
a ruling that lists previously published rulings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a period of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.

Abbreviations
The following abbreviations in current
use and formerly used will appear in material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.

Bulletin No. 2014 –29

ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

July 14, 2014

Numerical Finding List1
Bulletins 2014 –27 through 2014 –29

Announcements:
2014-2, 2014-28 I.R.B. 120

Notices:
2014-40, 2014-27 I.R.B. 100
2014-41, 2014-27 I.R.B. 97

Proposed Regulations:
REG-121542-14, 2014-28 I.R.B. 119

Revenue Procedures:
2014-26,
2014-27,
2014-29,
2014-38,
2014-39,
2014-42,

2014-27
2014-27
2014-28
2014-29
2014-29
2014-29

I.R.B.
I.R.B.
I.R.B.
I.R.B.
I.R.B.
I.R.B.

26
41
105
131
150
192

Revenue Rulings:
2014-14, 2014-27 I.R.B. 12
2014-20, 2014-28 I.R.B. 101

Treasury Decisions:
9668,
9669,
9670,
9671,

2014-27
2014-28
2014-29
2014-29

I.R.B.
I.R.B.
I.R.B.
I.R.B.

1
103
121
124

1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2014 – 01 through 2014 –26 is in Internal Revenue Bulletin
2014 –26, dated June 30, 2014.

July 14, 2014

ii

Bulletin No. 2014 –29

Finding List of Current Actions on
Previously Published Items1
Bulletins 2014 –27 through 2014 –29

Announcements:
2012-11
Supplemented by
Ann. 2014-2, 2014-28 I.R.B. 120
2013-11
Supplemented by
Ann. 2014-2, 2014-28 I.R.B. 120

Revenue Procedures:
1981-38
Superseded by
Rev. Proc. 2014-42, 2014-29 I.R.B. 192
1981-38
Modified by
Rev. Proc. 2014-42, 2014-29 I.R.B. 192
2000-12
Superseded by
Rev. Proc. 2014-39, 2014-29 I.R.B. 150
2002-55
Revoked by
Rev. Proc. 2014-39, 2014-29 I.R.B. 150
2012-38
Superseded by
Rev. Proc. 2014-27, 2014-27 I.R.B. 26
2012-46
Superseded by
Rev. Proc. 2014-26, 2014-27 I.R.B. 41
2014-13
Modified by
Rev. Proc. 2014-38, 2014-29 I.R.B. 131
2014-13
Superseded by
Rev. Proc. 2014-38, 2014-29 I.R.B. 131

Treasury Decision:
2005-47
Obsoleted by
T.D. 9668 2014-27 I.R.B. 1

1

A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2014 – 01 through 2014 –26 is in Internal Revenue Bulletin 2014 –26, dated June 30, 2014.

Bulletin No. 2014 –29

iii

July 14, 2014

INDEX

EMPLOYMENT TAX—Cont.

Internal Revenue Bulletins 2014 –27 through
2014 –29

Summons Interview Regulations Under Section 7602
(REG–121542–14) (TD 9669) 28, 103
Regulations:
26 CFR 301.7602–1 is amended to add new paragraph (b)(3)
pertaining to summons interviews. (TD 9669) 28, 103
26 CFR 1.1361– 4, amended; 1.1361– 4T, removed;
31.3121(b)(3)–1, amended; 31.3121(b)(3)–1T, removed;
31.3127–1, added; 31.3127–1T, removed; 31.3306(c)(5)–1,
amended; 31.3306(c)(5)–1T, removed; 301.7701–2, amended; 301.7701–2T, removed; extending religious and family
member FICA and FUTA exceptions to disregarded entities;
regulations regarding the indoor tanning services excise tax
and disregarded entities (TD 9670) 29, 121

The abbreviation and number in parenthesis following the index
entry refer to the specific item; numbers in roman and italic type
following the parentheses refer to the Internal Revenue Bulletin in
which the item may be found and the page number on which it
appears.

Key to Abbreviations:
Ann
Announcement
CD
Court Decision
DO
Delegation Order
EO
Executive Order
PL
Public Law
PTE
Prohibited Transaction Exemption
RP
Revenue Procedure
RR
Revenue Ruling
SPR
Statement of Procedural Rules
TC
Tax Convention
TD
Treasury Decision
TDO
Treasury Department Order

ESTATE TAX
Summons Interview Regulations Under Section 7602 (REG–
121542–14) (TD 9669) 28, 103
Regulations:
26 CFR 301.7602–1 is amended to add new paragraph (b)(3)
pertaining to summons interviews. (TD 9669) 28, 103

ADMINISTRATIVE

EXCISE TAX

Annual Filing Season Program (RP 42) 29, 192
Regulations Governing Practice Before the Internal Revenue
Service (REG–138367– 06) (TD 9668) 27, 1
Regulations:
31 CFR 10.1, revised; 10.3, revised; 10.22, revised; 10.31,
revised; 10.35, revised; 10.36, revised; 10.37, revised;
10.52, revised; 10.81, revised; 10.82, revised; 10.91, revised. (TD 9668) 27, 1
Announcement to Discontinue the Internal Revenue Bulletin
Index (Ann 27) 28, 120
Substitute Forms Preparation for Certain Information Returns
(RP 27) 27, 41

Extending religious and family member FICA and FUTA exceptions to disregarded entities; regulations regarding the indoor
tanning services excise tax and disregarded entities (TD 9670)
29, 121
Summons Interview Regulations Under Section 7602 (REG–
121542–14) (TD 9669) 28, 103
Regulations:
26 CFR 301.7602–1 is amended to add new paragraph
(b)(3) pertaining to summons interviews. (TD 9669) 28,
103
26 CFR 1.1361– 4, amended; 1.1361– 4T, removed;
31.3121(b)(3)–1, amended; 31.3121(b)(3)–1T, removed;
31.3127–1, added; 31.3127–1T, removed; 31.3306(c)(5)–1,
amended; 31.3306(c)(5)–1T, removed; 301.7701–2, amended; 301.7701–2T, removed; extending religious and family
member FICA and FUTA exceptions to disregarded entities;
regulations regarding the indoor tanning services excise tax
and disregarded entities (TD 9670) 29, 121
26 CFR 54.9815–2708, as amended (TD 9671) 29, 124
Rules relating to 90 day waiting period limitation (TD 9671) 29,
124

EMPLOYEE PLANS
Regulations:
26 CFR 54.9815–2708, as amended (TD 9671) 29, 124
Rules relating to 90 day waiting period limitation (TD 9671) 29, 124
Weighted average interest rates
Segment rates for June 2014 (Notice 41) 27, 97

EMPLOYMENT TAX

GIFT TAX

Extending religious and family member FICA and FUTA exceptions to disregarded entities; regulations regarding the indoor
tanning services excise tax and disregarded entities (TD 9670)
29, 121
Publications:
1223, General Rules and Specifications for Substitute Forms
W–2c and W–3c (RP 29) 28, 105
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), and Schedule R (RP 26)
27, 26

July 14, 2014

Summons Interview Regulations Under Section 7602 (REG–
121542–14) (TD 9669) 28, 103
Regulations:
26 CFR 301.7602–1 is amended to add new paragraph
(b)(3) pertaining to summons interviews. (TD 9669) 28,
103

iv

Bulletin No. 2014 –29

INCOME TAX
Credit for carbon dioxide Sequestration (Notice 40) 27, 100
FFI Agreement for Participating FFI and Reporting Model 2 FFI
(RP 38) 29, 131
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for: July
2014 (RR 20) 28, 101
Summons Interview Regulations Under Section 7602 (REG–
121542–14) (TD 9669) 28, 103
Publications:
1223, General Rules and Specifications for Substitute Forms
W–2c and W–3c (RP 29) 28, 105
4436, General Rules and Specifications for Substitute Form
941 and Schedule B (Form 941), and Schedule R (RP 26)
27, 26
Qualified Intermediary (QI) Agreement (RP 39) 29, 150
Regulations:
31 CFR 10.1, revised; 10.3, revised; 10.22, revised; 10.31,
revised; 10.35, revised; 10.36, revised; 10.37, revised;
10.52, revised; 10.81, revised; 10.82, revised; 10.91, revised. (TD 9668) 27, 1
26 CFR 301.7602–1 is amended to add new paragraph (b)(3)
pertaining to summons interviews. (TD 9669) 28, 103
Regulations Governing Practice Before the Internal Revenue
Service (REG–138367– 06) (TD 9668) 27, 1
Substitute Forms Preparation for Certain Information Returns
(RP 27) 27, 41
Underpayment and overpayments, quarter beginning: July 1,
2014 (RR 14) 27, 12

SELF-EMPLOYMENT TAX
Extending religious and family member FICA and FUTA exceptions to disregarded entities; regulations regarding the indoor
tanning services excise tax and disregarded entities (TD 9670)
29, 121
Regulations:
26 CFR 1.1361– 4, amended; 1.1361– 4T, removed;
31.3121(b)(3)–1, amended; 31.3121(b)(3)–1T, removed;
31.3127–1, added; 31.3127–1T, removed; 31.3306(c)(5)–1,
amended; 31.3306(c)(5)–1T, removed; 301.7701–2,
amended; 301.7701–2T, removed; extending religious and
family member FICA and FUTA exceptions to disregarded
entities; regulations regarding the indoor tanning services
excise tax and disregarded entities (TD 9670) 29, 121

SPECIAL ANNOUNCEMENT
Annual Filing Season Program (RP 42) 29, 192

Bulletin No. 2014 –29

v

July 14, 2014

Internal Revenue Service
Washington, DC 20224
Official Business
Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

CUMULATIVE BULLETINS
The contents of the weekly Bulletins were consolidated semiannually into permanent, indexed, Cumulative Bulletins through the
2008 –2 edition.

INTERNAL REVENUE BULLETINS ON CD-ROM
Internal Revenue Bulletins are available annually as part of Publication 1796 (Tax Products CD-ROM). The CD-ROM can be
purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)
or by calling 1– 877–233– 6767. The first release is available in mid-December and the final release is available in late January.

We Welcome Comments About the Internal Revenue Bulletin
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
(www.irs.gov) or write to the IRS Bulletin Unit, SE:W:CAR:MP:P:SPA, Washington, DC 20224.