Reg-106876-00

Part IV. Items of General Interest
Notice of Proposed
Rulemaking and Notice of
Public Hearing
Revision of Income Tax
Regulations Under Sections
897, 1445, and 6109 to
Require Use of Taxpayer
Identifying Numbers on
Submissions Under the
Section 897 and 1445
Regulations

public hearing will be held in room 6718,
Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations,
Robert W. Lorence, (202) 622–3860; concerning submissions, the hearing, and/or to
be placed on the building access list to attend the hearing, Treena Garrett, (202)
622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act

REG–106876–00
AGENCY: Internal
(IRS), Treasury.

Revenue

Service

ACTION: Notice of proposed rulemaking and notice of public hearing.
SUMMARY: This document contains proposed regulations to require the use of taxpayer identifying numbers on submissions
under sections 897 and 1445. The proposed regulations are necessary to properly identify foreign taxpayers for which
submissions are made for the reduction or
elimination of tax under sections 897 and
1445. The proposed regulations also address miscellaneous items, such as the
amendment to section 1445(e)(3) under the
Small Business Job Protection Act of
1996. This document also provides notice
of a public hearing on these proposed
regulations.
DATES: Electronic or written comments
and requests to speak (with outlines of oral
comments) at the public hearing scheduled
for November 13, 2002, must be submitted by October 23, 2002.
ADDRESSES: Send submissions to: CC:
ITA:RU (REG–106876–00), room 5226
Internal Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC 20044.
In the alternative, submissions may be
hand delivered Monday through Friday between the hours of 8 a.m. and 5 p.m. to:
CC:ITA:RU (REG–106876–00), Courier’s
Desk, Internal Revenue Service, 1111
Constitution Avenue, NW, Washington,
DC. Alternatively, taxpayers may submit
comments electronically directly to the
IRS Internet site at www.irs.gov/regs. The

2002–34 I.R.B.

The collections of information contained in this notice of proposed rulemaking have been submitted to the Office of
Management and Budget for review in accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507(d)). Comments on the collections of information
should be sent to the Office of Management and Budget, Attn: Desk Officer for
the Department of the Treasury, Office of
Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS
Reports Clearance Officer, W:CAR:MP:
FP:S; Washington, DC 20224. Comments
on the collections of information should be
received by September 24, 2002.
The collections of information in this
proposed regulation are in §§ 1.1445–
2(d)(2) and 1.1445–3. The collections of
information relate to the requirement that
notices of nonrecognition or applications
for withholding certificates be filed with
the IRS with respect to (1) dispositions of
U.S. real property interests that have been
used by foreign persons as a principal residence within the prior 5 years and excluded from gross income under section
121 and (2) dispositions of U.S. real property interests by foreign persons in deferred like kind exchanges that qualify for
nonrecognition under section 1031. This
collection of information is necessary for
the proper performance of the functions of
the IRS because it notifies the IRS of dispositions of U.S. real property interests by
foreign persons that otherwise are subject
to taxation under section 897 and the collection of a withholding tax under section
1445 except as provided in these provi-

392

sions. The likely respondents will be individuals and business or other for-profit
institutions.
Estimated total annual reporting burden: 600 hours.
The estimated annual burden per respondent varies from 3 hours to 5 hours,
depending on individual circumstances,
with an estimated average of 4 hours.
Estimated number of respondents: 150.
Estimated annual frequency of responses: On occasion.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information
unless it displays a valid control number
assigned by the Office of Management and
Budget.
Books 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.
Background
Under section 897, a foreign transferor
of a U.S. real property interest (USRPI) is
generally taxed on gain from the disposition of the USRPI as if the taxpayer were
engaged in a U.S. trade or business and as
if such gain were effectively connected
with such trade or business under section
871 or 882 (ECI). As a means to ensure
the collection of the tax, the transferee of
the USRPI generally has a withholding tax
obligation under section 1445, which is
generally 10 percent of the amount realized on the disposition. The withholding
agent must report and pay over the tax
withheld under section 1445 on Form
8288, “U.S. Withholding Tax Return for
Dispositions by Foreign Persons of U.S.
Real Property Interests”, by the 20th day
after the disposition of the USRPI. The
foreign transferor also must report the gain
subject to tax under section 897 by filing
a U.S. income tax return. Any amounts
withheld under section 1445 are credited
against the foreign transferor’s U.S. tax liability.
Withholding under section 1445 can be
reduced or eliminated pursuant to various
nonrecognition provisions (e.g., certain re-

August 26, 2002

organizations under section 368(a)), pursuant to an applicable U.S. income tax
treaty, by reason of the tax-exempt status
of the foreign transferor, or in situations
where the transferor’s maximum tax liability under section 897 is less than the withholding tax. To reduce or eliminate the
amount to be withheld under section 1445,
either the transferor or transferee (acting as
the withholding agent) may request a withholding certificate from the IRS citing the
grounds for the reduction or elimination of
withholding and including any supporting
documentation or other evidence substantiating the request.
A withholding certificate that is issued
by the IRS prior to the disposition of the
USRPI serves to notify the withholding
agent that no withholding or reduced withholding is required. If an application for a
withholding certificate is submitted before
or on the date of the transfer (so it is considered to be pending with the IRS at the
time of transfer), the withholding agent is
not required to file the withholding tax return and pay over the withholding tax until 20 days after the date the IRS mails the
withholding certificate or notice of denial.
See § 1.1445–1(c)(2)(A). An application
for a withholding certificate after the date
of transfer can be combined with an application for an early claim for refund. See
§ 1.1445–3(g).
Under section 6109(a)(1), Treasury and
the IRS have the authority to issue regulations requiring taxpayers to obtain taxpayer identifying numbers (TINs) for
placement on returns, statements, or other
documents for the purpose of securing the
proper identification of taxpayers. Under
the section 6109 regulations, which govern the extent to which foreign persons
must have TINs, a foreign person is not
required to have a TIN for inclusion on a
return, statement, or other document, unless the foreign person: (1) has ECI at any
time during the taxable year, (2) has a U.S.
office, U.S. place of business, or a U.S.
fiscal or paying agent during the taxable
year, or (3) files a tax return, an amended
return, or a refund claim, excluding information returns, statements, or other documents. See § 301.6109–1(b)(2).
Explanation of Provisions
The sections 897 and 1445 regulations
do not require foreign transferors of
USRPIs to provide TINs on withholding

August 26, 2002

tax returns, applications for withholding
certificates, and other notices and elections
unless the foreign transferor otherwise has
previously obtained a TIN. The IRS proposes to amend regulations under sections
897 and 1445 (each discussed in greater
detail below) to require foreign transferors to include TINs on such documents so
that the IRS can better identify the foreign
taxpayer and more easily match the applications, withholding tax returns, notices,
and elections with the transferor’s tax return for compliance purposes. For example, the use of the foreign transferor’s
TIN to match the withholding tax return
with the foreign transferor’s income tax return will facilitate verification of the
amount of withholding tax that the foreign
taxpayer may credit on its return. The use
of the foreign transferor’s TIN also will facilitate verification that the foreign transferor files a U.S. tax return reporting the
transaction (which could be matched
against a withholding tax return and any
application for a withholding certificate
that has been filed).
In most cases, the requirement of including a TIN under the proposed regulations will not impose a new obligation on
the foreign person. Such foreign person
typically will be required to file a tax return for the year in which the property was
sold, which requires the foreign person to
obtain a TIN at that time. Accordingly, the
proposed regulations simply would accelerate the time by which the foreign person is required to obtain a TIN. The IRS
is considering ways to facilitate obtaining
TINs in connection with transactions subject to sections 897 and 1445. For example, the IRS is considering approaches
for combining an application for a reduced
withholding certificate under § 1.1445–3
with an application for a TIN.
1. Section 6109 Regulations
Under section 6109, every person who
makes a return, statement, or other document is required to furnish its TIN as required by regulation. Under the section
6109 regulations, a foreign person generally is required to have a TIN if (1) the
foreign person has ECI at any time during the taxable year; (2) the foreign person has a U.S. office or place of business
or a U.S. fiscal or paying agent during the
taxable year; (3) the foreign person files a
tax return, amended return, or a refund

393

claim (excluding information returns, statements, or documents). § 301.6109–1(b)(2).
A person is required to furnish the TIN of
another person (including a foreign person) when filing a return, statement, or
other document which requires the TIN of
the other person, and the other person is
required to have a TIN under the section
6109 regulations. If the person does not
know the TIN of the other person, the first
person must request it, and if this request
is denied, then the first person must file an
affidavit with the filing so stating. See
§ 301.6109–1(c).
The IRS and Treasury propose to
amend the section 6109 regulations to include a specific reference to the new provisions requiring TINs for foreign
taxpayers under sections 897 and 1445.
The section 6109 regulations would be
amended to provide that foreign persons
will be required to have TINs for placement on any return, statement, or other
document required by the regulations under section 897 or section 1445. See
§ 301.6109–1(b)(2). The section 6109
regulations also would be amended to provide that another person (e.g., the transferee as withholding agent) making a
return, statement, or other document will
be required to furnish the TIN of a foreign
person as required by the regulations under section 897 or section 1445. See
§ 301.6109–1(c).
2. Section 1445 Regulations
(a) § 1.1445–1
In connection with the withholding requirements under section 1445, the transferee generally must report and pay over
any tax withheld by the 20th day after the
date of the transfer. § 1.1445–1(b)(1).
Form 8288 “Withholding Tax Return” and
Form 8288–A “Statement of Withholding”
are used for this purpose. Form 8288–A
serves as a receipt of withholding tax reported and paid over and is stamped by
the IRS upon receipt and mailed to the
transferor. The transferor must attach the
Form 8288–A to its U.S. income tax return to verify the amount of withholding
tax creditable on its return.
Under § 1.1445–1(d), Forms 8288 and
8288–A only require the TIN of the transferor and the transferee to the extent the
transferor and transferee otherwise have
TINs. If the transferee is a U.S. person it

2002–34 I.R.B.

will have a TIN, and if the transferee is a
foreign person, it must have or obtain a
TIN under the section 6109 regulations
when filing a Form 8288 (which is considered to be a tax return). A foreign transferor, however, will not have a TIN for
placement on the Forms 8288 and
8288–A, unless it is otherwise required to
have one under the section 6109 regulations (e.g., the foreign person otherwise
has ECI). The section 1445 regulations
will be amended to provide that the transferors and transferees must have TINs for
placement on the Forms 8288 and
8288–A.
Finally, the section 1445 regulations
provide for various documents (including
applications for withholding certificates) to
be sent to the Assistant Commissioner (International). Section 1.1445–1(g)(10) provides the address of the Assistant
Commissioner (International). Because of
the restructuring of the IRS, the Office of
the Assistant Commissioner (International)
no longer exists, and its duties regarding
the administration of the section 1445
regulations are performed, in general, by
the Philadelphia Service Center. Section
1.1445–1(g)(10) and other provisions in
the section 1445 regulations will be
amended to reflect this change.
(b) § 1.1445–2
Under § 1.1445–2(d)(2), a transferee is
not required to withhold under section
1445, if, by reason of a nonrecognition
provision of the Internal Revenue Code or
a U.S. income tax treaty provision, the
transferor is not required to recognize gain
or loss with respect to the transfer. The
transferor must notify the transferee of the
nonrecognition provision or treaty provision, and the transferee must provide a
copy of the transferor’s notice to the IRS
by the 20th day after the date of the transfer. Section 1.1445–9T specifies the information the notice must contain, such as
identifying information of the transferor, a
description of the transaction, and a brief
summary of the law and facts supporting
the claim of nonrecognition of gain on the
transaction. The notice is required to include a TIN of the transferor only if the
foreign transferor otherwise has a TIN.

2002–34 I.R.B.

The notice forwarded by the transferee to
the IRS must include a cover letter identifying the transferee. The transferee must
include its TIN on the cover letter only if
it has one.
The proposed regulations would withdraw section 1.1445–9T and incorporate it
into § 1.1445–2(d)(2). In addition, the information required for inclusion on the notice would be revised to provide that the
transferor must have a TIN for inclusion
on the notice of nonrecognition. The regulations also would be amended to provide
that the transferee must have a TIN for
placement on the cover letter.
Certificates of Non-foreign Status Under
§ 1.1445–2
Under § 1.1445–2(b), no withholding is
required under section 1445 if the transferor of a U.S. real property interest is not
a foreign person. If the transferor provides
a certificate of non-foreign status to the
transferee of the U.S. real property interest prior to or at the time of the transfer,
the transferee is not required to withhold
under section 1445(a). The certificate of
non-foreign status must certify that the
transferor is not a foreign person, must set
forth the transferor’s name, identifying
number and address, and must contain the
transferor’s signature under penalties of
perjury.
The IRS is considering requiring Form
W–9 to be used as certificates of nonforeign status under § 1.1445–2(b). Form
W–9 generally contains the same information as a certificate of non-foreign status
and currently is used in the context of section 1441 withholding to determine a taxpayer’s non-foreign status. Because Form
W–9 is not now required in real estate
transactions and because payments with
respect to real estate transactions are exempt from backup withholding under
§ 31.3406(g)–2(e) (although Form W–9
can be used to provide the TIN of the
seller to the reporting person required to
report the transaction on Form 1099 under § 1.6045–4(l)), the IRS requests comments on the use of Form W–9 in real
estate transactions to avoid withholding
under section 1445. The IRS believes that
the use of Form W–9 could ease compliance with section 1445.

394

(c) § 1.1445–3
Section 1.1445–3 provides procedures
for the reduction or elimination of withholding under section 1445 pursuant to a
withholding certificate issued by the IRS.
A withholding certificate may be issued by
the IRS in cases where the transferor is
exempt from U.S. tax, the transferor’s
maximum tax liability under section 897 is
less than the withholding tax, or where the
transferor or transferee enters into an
agreement for the payment of tax with the
IRS. A withholding certificate that is applied for prior to or on the date of the
transfer notifies the transferee that reduced
or no withholding is required. A withholding certificate that is applied for after a
transfer has been made may authorize a
normal refund or an early refund. Either
the transferor or transferee may apply for
a withholding certificate.
Section § 1.1445–3(b)(2) identifies the
information that must be furnished on an
application for a withholding certificate. It
includes the name and address of the
transferee and the transferee’s TIN, but
only if the transferee has a TIN. It also includes the name and address of all other
parties to the transaction (e.g., transferors)
and their TINs, but only if they have TINs.
The applicant must determine if each party
has a TIN, and if none exists for a particular party, the application must so state. The
regulations would be amended to provide
that the transferee and all other parties
(e.g., transferors) must have TINs for
placement on an application for a withholding certificate. The regulations would
further provide that the application will be
denied if the TINs of all the parties are not
provided.
(d) § 1.1445–5
Under § 1.1445–5, special rules are
provided concerning withholding required
under section 1445(e) on distributions and
other transactions involving domestic or
foreign corporations, partnerships, trusts,
and estates. Paragraph (b)(2) provides that
no withholding is required for transfers of
a USRPI described in section 1445(e) if no
gain or loss is required to be recognized
by a foreign person under a nonrecognition provision of the Internal Revenue

August 26, 2002

Code or a provision of a U.S. income tax
treaty. The entity or fiduciary otherwise required to withhold must deliver a notice of
the nonrecognition transfer to the IRS by
the 20th day after the transfer of the
USRPI. The entity or fiduciary may obtain a withholding certificate from the IRS
to confirm the applicability of a nonrecognition provision, but is not required to
do so.
The notice of a nonrecognition transfer delivered to the IRS must contain a description of the transfer and a supporting
explanation of the claim of nonrecognition treatment, as well as identifying information of the entity or fiduciary
submitting the notice and each foreign person with respect to which withholding
would otherwise be required. The TINs of
the entity or fiduciary and each foreign
person are required to be furnished only if
such persons otherwise have TINs. The
regulations under §1.1445–5(b)(2)(ii)
would be amended to provide that the entity or fiduciary and all foreign persons
must have TINs to be furnished on the notice of nonrecognition.
(e) § 1.1445–6
Section 1.1445–6 provides procedures
for obtaining a withholding certificate for
distributions and other transactions involving domestic or foreign corporations, partnerships, trusts, and estates subject to
withholding tax under section 1445(e) and
§ 1.1445–5. The procedures for obtaining
a withholding certificate are modeled after § 1.1445–3, which provides the procedures for obtaining a withholding
certificate under section 1445(a). Hence,
the entity or fiduciary (acting as withholding agent) or the foreign taxpayer subject
to section 897 can apply for a withholding certificate on the basis that the foreign
person is exempt from U.S. tax, the transferor’s maximum tax liability under section 897 is less than the withholding tax,
or an agreement is entered into by the
transferor or transferee for the payment of
tax.
Section 1.1445–6(b) identifies the information that must be furnished on an application for a withholding certificate. It
includes the name, address of the foreign
taxpayer subject to section 897 and the
foreign taxpayer’s TIN, but only if the taxpayer otherwise has a TIN. The regula-

August 26, 2002

tions will be amended to require the
foreign taxpayer to have a TIN for placement on an application for a withholding
certificate.
3. Section 897 Regulations
(a) § 1.897–3
Section §1.897–3 provides rules enabling a foreign corporation to make a section 897(i) election to be treated as a
domestic corporation for purposes of sections 897 and 1445. A foreign corporation
making a section 897(i) election is subject to all of the rules under section 897
and 1445 that apply to domestic corporations. For example, if a foreign corporation that has made the section 897(i)
election is a USRPHC, interests in it are
USRPIs that are subject to taxation under
section 897 and withholding tax under section 1445. A foreign corporation that
makes an election under section 897(i) is
not treated as a domestic corporation for
purposes of any other provision of the
Code or regulations, except to the extent
that it is required to consent to such treatment as a condition of making the election.
The election under section 897(i) must
include the name, address, and place and
date of incorporation of the foreign corporation and the foreign corporation’s TIN
but only if the foreign corporation otherwise has a TIN. The regulations would be
amended to require the electing foreign
corporation to have a TIN for placement
on the election.
(b) § 1.897–5T
Section § 1.897–5T provides that certain distributions of USRPIs (which otherwise qualify for nonrecognition
treatment) are not subject to section 897 if
any gain from a subsequent disposition of
the USRPIs would be included in gross income of the distributee or transferee receiving the USRPI in the distribution. See,
e.g., § 1.897–5T(c)(2)(i). An interest will
be considered subject to U.S. tax upon its
subsequent disposition only if certain reporting requirements are satisfied. See
§ 1.897–5T(d)(1)(i). Under the reporting
requirements, the distributor must file an
income tax return for the taxable year of
the distribution. The person filing the return must attach a document describing the
distribution or exchange, including the

395

name and address of the distributee, and
its TIN, but only to the extent it has one.
See § 1.897–5T(d)(1)(iii).
The regulations would be amended to
require that the document attached to the
return includes the TIN of the distributee.
This is necessary to properly identify the
foreign distributee which will be subject to
section 897 upon a subsequent disposition
of the USRPI.
4. Miscellaneous Items
(a) § 1445(e)(3)
Section 1445(e)(3) provides that if a
domestic corporation which is a U.S. real
property holding corporation (or at any
time during the preceding five year period
was a U.S. real property holding corporation) distributes property to a foreign
shareholder in redemption of stock under
section 302 or in liquidation of the corporation, the corporation must withhold 10
percent of the amount distributed to the
foreign shareholder. Withholding is not required if the domestic corporation was
“purged” of its U.S. real property holding
corporation status by disposing of all of its
U.S. real property interests within the prior
five-year period and recognizing gain (if
any) pursuant to section 897(c)(1)(B).
Section 1445(e)(3) was amended by the
Small Business Job Protection Act of 1996
(Public Law 104–188, Sec. 1704(c)) to
provide that similar rules apply in the case
of any distribution to which section 301
applies and which is not made out of earnings and profits of the domestic corporation. Because a section 301 distribution by
a domestic corporation to a foreign shareholder is also governed by section 1441
(or 1442 or 1443), the section 1441 regulations provide coordination rules between
withholding under sections 1445 and 1441
(or 1442 or 1443) in the case of section
301 distributions to foreign shareholders
by a domestic corporation which is a U.S.
real property holding corporation or was
one at any time within the prior five-year
period. See § 1.1441–3(c)(4).
In general, § 1.1441–3(c)(4) provides
that a domestic corporation may elect to
withhold on the entire distribution under
section 1441 (or 1442 or 1443), and not
under section 1445, regardless of whether
a portion of the distribution constitutes a
return of basis or capital gain. Alternatively, a domestic corporation may elect to

2002–34 I.R.B.

withhold under both sections 1445 and
1441 (or 1442 or 1443), in which case the
domestic corporation must withhold under section 1441 (or 1442 or 1443) on the
portion of the distribution that is estimated
to be a dividend under § 1.1441–
3(c)(2)(ii)(A) and must withhold under
section 1445(e)(3) on the remainder of the
distribution. A domestic corporation may
withhold a reduced amount on the distribution under section 1445(e)(3) by obtaining a withholding certificate establishing
that the amount of capital gain under section 301(c)(3) is less than the withholding tax otherwise due under section
1445(e)(3).
Section 1.1445–5(e) currently provides
that if a domestic corporation, the stock of
which is a U.S. real property interest, distributes property to a foreign shareholder
in a redemption of stock under section 302
or in liquidation of the corporation, the domestic corporation must withhold 10 percent of the fair market value of the
property distributed to the foreign shareholder. Section 1.1445–5(e) would be
amended to provide that withholding is required in the case of a distribution of property under section 301(c). A crossreference to § 1.1441–3(c)(4), which
provides the coordination rules for withholding between sections 1445 and 1441
(or 1442 or 1443), is provided.
(b) Section 121 exclusion
Prior to the Taxpayer Relief Act of
1997 (Public Law 105–34; 111 Stat. 788)
(TRA 97), section 121 provided a one-time
exclusion from gross income up to
$125,000 for certain gains from the sale of
a principal residence by a taxpayer that
was 55 years or older. The amendment of
section 121 under TRA 97 expanded the
exclusion to all taxpayers (not just those
55 years of age and older) and increased
the amount of the exclusion to $250,000
(or $500,000, in the case of a husband and
wife filing a joint return). Section 121(e)
denies the exclusion to nonresident alien
taxpayers who expatriated from the United
States and are subject to the provisions of
section 877(a).
For section 121 to apply, the taxpayer
must have owned and used the property as
a personal residence for periods aggregating 2 years or more during the 5-year period ending on the date of the sale. Section
121(a). An alien individual who owns and

2002–34 I.R.B.

has used a U.S. real property interest as a
personal residence during the 5-year period prior to the date of sale may nevertheless be a nonresident alien at the time
of sale and subject to sections 897 and
1445. In addition, certain alien individuals (for example, full-time diplomats or
employees of international organizations),
who may own and use a U.S. real property interest as a personal residence at the
time of sale, are treated as nonresident
alien individuals for tax purposes under
section 7701(b).
In connection with the amendments to
section 121, section 1034 was repealed.
Section 1034 had provided for nonrecognition of gain upon the sale of a personal
residence provided that another personal
residence of greater value was purchased
within a specified period of time. Prior to
the repeal of section 1034, withholding
agents could rely on a notice of nonrecognition under § 1.1445–2(b)(2) on certain
section 1034 exchanges because section
1034 exchanges were treated as nonrecognition exchanges for purposes of sections
897 and 1445. See § 1.897–6T(a)(5). Section 121 is not treated as a nonrecognition
exchange for purposes of sections 897 and
1445. See § 1.897–6T(a)(2). Therefore,
withholding agents cannot rely on a notice
of
nonrecognition
under
§ 1.1445–2(b)(2) with respect to the section 121 exclusion, and dispositions of
personal residences entitled to the section
121 exclusion are not entitled to a reduction in withholding absent a withholding
certificate. Accordingly, the withholding
certificate provisions of § 1.1445–3(c) are
proposed to be amended to provide that a
claimed adjustment to the maximum tax liability on the disposition of a U.S. real
property interest will include the section
121 exclusion if the claim includes information establishing that the transferor is
entitled to the benefits of section 121. Because section 1034 has been repealed, the
following regulatory provisions concerning section 1034 will be withdrawn effective on the date of its repeal:
§ 1.897–6T(a)(5), § 1.897–6T(a)(7), Examples 2 and 3, and § 1.1445–9T(b)(6).

held for investment. Section 1031(a)(3)
provides for the exchange of like-kind
property in deferred exchanges, where the
taxpayer has 45 days after it relinquishes
the property to the transferee to identify
replacement property and the transferee
has until the earlier of 180 days or the due
date of the tax return for the year of transfer to deliver such property to the transferor. In cases where there is a simultaneous exchange of like-kind U.S. real
property interests, the foreign transferor
can provide a notice of recognition under
§ 1.1445–2(d)(2) to the transferee, and the
transferee can rely on such notice because
the like-kind exchange will be fully completed on the day of the exchange.
In the case of a deferred like-kind exchange of U.S. real property interests, the
issue has been raised whether the transferee can rely on a notice of nonrecognition under § 1.1445–2(d)(2) when the
exchange is not completed (because of the
45 day and 180 day rule) and the determination of nonrecognition is not known by
the 20th day after receipt of the relinquished property by the transferee (when
it has the obligation to pay withholding tax
and file a withholding tax return, Form
8288). It has been the view of the IRS and
Treasury that the transferee cannot rely on
a notice of nonrecognition in the case of a
deferred like-kind exchange, because the
transferee cannot be assured that the exchange will qualify for nonrecognition
treatment under section 1031. Although
§ 1.1445–2(d)(2) does not apply to section 1031 transactions, taxpayers have requested withholding certificates under
§ 1.1445–3 in the case of deferred likekind exchanges. This practice will be incorporated in the regulations by amending
§ 1.1445–3(c) to provide that taxpayers
may obtain withholding certificates in the
case of deferred like-kind exchanges under section 1031(a)(3) (see also the safeharbor for reverse like-kind exchanges
under Rev. Proc. 2000–37, 2000–2 C.B.
308).
(d) Transfers by an entity treated as a
disregarded entity for U.S. tax purposes

(c) Section 1031 like-kind exchanges
Section 1031(a) provides for the nonrecognition of gain or loss on the exchange of like-kind property which is held
for productive use in a trade or business or

396

Under § 1.1445–2(a), a transferee generally has the duty to withhold under section 1445(a) if the transferor is a foreign
person and the transferee is acquiring a
U.S. real property interest. A transferee

August 26, 2002

generally is not required to withhold under section 1445(a) if the transferee receives a certificate of non-foreign status
from the transferor without actual knowledge (or notice from an agent of the transferor or transferee) that the certificate is
false. § 1.1445–2(b)(2). While the transferee is not required to request a certificate of non-foreign status and may rely on
other means to determine the non-foreign
status of the transferor, the transferee will
be subject to the liability imposed under
section 1445 if the transferor is in fact a
foreign person and the transferor has not
received a certificate of non-foreign status. § 1.1445–2(b)(1). Thus, the transferee
may demand a certificate of non-foreign
status and is entitled to withhold under
section 1445 if a certificate of non-foreign
status is not provided. Id.
Taxpayers have inquired about the operation of sections 897 and 1445 where the
legal entity transferring a U.S. real property interest is disregarded as an entity
separate from its owner for U.S. tax purposes, for example, under § 301.7701–3
(disregarded entity). If the transferor is a
disregarded entity, the owner (and not the
entity) is treated as the transferor of property for U.S. tax purposes, including sections 897 and 1445. See, e.g., § 301.7701–
3(a). Accordingly, if a disregarded entity
disposes of a U.S. real property interest
and its owner is a foreign person, the foreign person is treated as the transferor of
the property and is subject to tax under
sections 897 and 1445. If a disregarded
entity disposes of a U.S. real property interest and its owner is a U.S. person, then
the U.S. person is the transferor of the
property and may provide a certificate of
non-foreign status.
In order to clarify the treatment of disregarded entities, the regulations are
amended to provide that a disregarded entity may not provide a certificate of nonforeign status because the disregarded
entity is not the transferor. The sample certifications which an entity may provide to
the transferee with respect to its nonforeign status (as provided in § 1.1445–
2(b)(2)) are amended to include a certifi-

Paragraphs
(g)(1)(i)(B)

August 26, 2002

cation that the entity is not a disregarded
entity for U.S. tax purposes.
Proposed Effective Date
These regulations are proposed to apply to transactions occurring 30 days or
more after the date final regulations are
published in the Federal Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a
regulatory assessment is not required. It
also has been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply to
these regulations, and because these regulations do not impose a collection of information on U.S. small entities, the
Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required.
Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed
rulemaking will be submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment on its
impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments
(preferably a signed original and eight (8)
copies) that are submitted timely to the
IRS. The IRS and Treasury request comments on the clarity of the proposed regulations and how they may be made easier
to understand. All comments will be available for public inspection and copying.
A public hearing has been scheduled
for November 13, 2002, beginning at
10:00 am, in room 6718, Internal Revenue
Building, 1111 Constitution Avenue, NW,
Washington, DC. Because of access restrictions, visitors will not be admitted beyond the Internal Revenue Building lobby
more than 30 minutes before the hearing
starts.
Remove
Director, Foreign Operations District
(“Director”)

397

The rules of 26 CFR 601.601(a)(3) apply to the hearing.
Persons that wish to present oral comments at the hearing must submit timely
written comments and an outline of the
topics to be discussed and the time to be
devoted to each topic (preferably a signed
original and eight (8) copies) by October
23, 2002.
A period of 10 minutes will be allotted to each person for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal author of these regulations is Robert W. Lorence, Jr., of the Office of Associate Chief Counsel
(International). However, other personnel
from the IRS and Treasury Department
participated in their development.
*****
Proposed
Amendments
Regulations

to

the

Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1— INCOME TAXES
Paragraph 1. The authority for part 1
continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. In § 1.897–1, paragraph (p), the
first sentence is amended by adding the
language “or the identification number assigned by the Internal Revenue Service
(see § 301.6109–1 of this chapter)” immediately after the language “United States
social security number”.
Par. 3. Section 1.897–2 is amended as
follows:
For each of the paragraphs listed in the
first column, remove the language in the
second column and add in its place the
language in the third column:

Add
Commissioner, Small Business/Self Employed Division (SB/SE)

2002–34 I.R.B.

Paragraphs
(G)(1)(i), fourth sentence of concluding
text immediately following paragraph
(g)(1)(i)(B)
(g)(1)(iii) heading
(g)(1)(iii)(A), first, fourth, and last sentences
(g)(1)(iii)(A), third sentence

Remove
Director

Add
Commissioner

Director
Director

Commissioner
Commissioner

Director, Foreign Operations
District; 1325 K St. N.W.;
Washington, D.C. 20225

(g)(1)(iii)(B) heading
(g)(1)(iii)(B) introductory text
(g)(1)(iii)(B) concluding text immediately
following (g)(1)(iii)(B)(2)
(g)(1)(iii)(C) both places it appears
(g)(1)(iii)(D) heading
(g)(1)(iii)(D)
(g)(2)(i)(B)
(g)(2)(iii) heading
(g)(2)(iii)(A), first, fourth, and fifth sentence (both places it appears).
(g)(2)(iii)(A), third sentence

Director’s
Director
Director

Commissioner, Small
Business/Self Employed
Division (SB/SE); S C3–413
NCFB, 500 Ellin
Road, Lanham, MD 20706
Commissioner’s
Commissioner
Commissioner

Director
Director
Director
Director
Director
Director

Commissioner
Commissioner
Commissioner
Commissioner
Commissioner
Commissioner

Director, Foreign Operations
District; 1325 K St. N.W.;
Washington, D.C. 20225

(g)(2)(iii)(B) heading
(g)(2)(iii)(B) introductory text
(g)(2)(iii)(B) concluding text immediately
following (g)(2)(iii)(B)(2)
(g)(2)(iii)(C), first and second sentences
(g)(2)(iii)(D) heading
(g)(2)(iii)(D)
(g)(2)(iv), fourth sentence
(h)(2)(v), third sentence

Director’s
Director
Director

Commissioner, Small
Business/Self Employed
Division (SB/SE); S C3–413
NCFB, 500 Ellin Road,
Lanham, MD 20706
Commissioner’s
Commissioner
Commissioner

(h)(4)(ii), first sentence

Par. 4. Section 1.897–3 is amended as
follows:

2002–34 I.R.B.

Director
Director
Director
Director
Assistant Commissioner
(International), Director,
Office of Compliance,
OP:I:C:E:666, 950 L’Enfant
Plaza South, SW, COMSAT
Building, Washington, D.C.
20024
Assistant Commissioner
(International), Director,
Office of Compliance,
OP:I:C:E:666, 950 L’Enfant
Plaza South, SW, COMSAT
Building, Washington, D.C.
20024

1. For each of the paragraphs listed in
the first column, remove the language in

398

Commissioner
Commissioner
Commissioner
Commissioner
Director, Philadelphia
Service Center, P.O. Box 21086,
Drop Point 8731,
FIRPTA Unit,
Philadelphia, PA 19114–0586

Director, Philadelphia
Service Center, P.O. Box
21086, Drop Point 8731,
FIRPTA Unit,
Philadelphia, PA 19114–0586

the second column and add in its place the
language in the third column:

August 26, 2002

Paragraphs
(c), introductory text

Remove
Director of the Foreign
Operations District, 1325 K
St., N.W., Washington, D.C.
20225

(c)(1), introductory text, last sentence

which must set forth

(d)(1), fourth sentence
(d)(2)(i), penultimate sentence
(f)(1), second sentence

Foreign Operations District
Director, Foreign Operations District
Director, Foreign Operations
District, 1325 K St., N.W.,
Washington, D.C. 20225

(f)(1), fifth sentence
(g)(1), second sentence

Foreign Operations District
Director of the Foreign
Operations District

2. In paragraph (c)(1)(i), remove the
parenthetical “(if any)” after the words
“identifying number”.
Par. 5. Section 1.897–5 is added to read
as follows:
§ 1.897–5 Corporate Distributions.
(a) through (d)(1)(iii)(E) [Reserved].
For further guidance, see § 1.897–5T(a)
through (d)(1)(iii)(E).
(d)(1)(iii)(F) Identification by name and
address of the distributee or transferee, including the distributee’s or transferee’s
taxpayer identification number;
(d)(1)(iii)(G) through (d)(4) [Reserved].
For
further
guidance,
see
§ 1.897–5T(d)(1)(iii)(G) through (d)(4).
(e) Effective date. This section is applicable to transfers and distributions after 30
days after publication of final regulations
in the Federal Register.
Par.6. In § 1.897–5T, paragraph
(d)(1)(iii)(F) is revised to read as follows:
§ 1.897–5T
(temporary).

Corporate

distributions

*****
(d) * * * (1) * * *
(iii) * * *
(F) [Reserved]. For further guidance,
see § 1.897–5(d)(1)(iii)(F).
*****

August 26, 2002

§ 1.897–6T [Amended]
Par. 7. Section 1.897–6T is amended as
follows:
1. In paragraph (a)(2), second sentence,
the language “, 1034” is removed.
2. Paragraph (a)(5) is removed and reserved.
3. Paragraph (a)(7), Example 2 and Example 3 are removed and reserved.
Par. 8. Section 1.1445–1 is amended as
follows:
1. In paragraph (c)(1), second sentence,
remove the language “filed with the Internal Revenue Service Center, Philadelphia,
PA 19255” and add in its place the language “filed at the location as provided in
the instructions to Forms 8288 and 8288–
A”.
2. In paragraph (c)(2)(i)(B), second
sentence, remove the phrase “,if any,” after the words “taxpayer identification number”.
3. In paragraphs (d)(1)(i) and (d)(1)(ii),
remove the parenthetical “(if any)” after
the words “identifying number”.
4. In paragraphs (d)(2)(i), (d)(2)
(iv)(B), and (d)(2)(vi)(B), remove the parenthetical “(if any)” after the words “identifying number”.
5. Paragraphs (g)(9) and (g)(10) are revised.
The revisions read as follows:

399

Add
Director, Philadelphia
Service Center, P.O. Box
21086, Drop Point 8731,
FIRPTA Unit,
Philadelphia, PA 19114–0586
which must contain all the following information
Philadelphia Service Center
U.S. Treasury
Director, Philadelphia
Service Center, P.O. Box
21086, Drop Point 8731,
FIRPTA Unit,
Philadelphia, PA 19114–0586
Philadelphia Service Center
Director, Philadelphia
Service Center

§ 1.1445–1 Withholding on dispositions
of U.S. real property interests by foreign
persons: In general.
*****
(g) * * *
(9) Identifying number. Pursuant to
§ 1.897–1(p), an individual’s identifying
number is the social security number or
the identification number assigned by the
Internal Revenue Service (see § 301.
6109–1 of this chapter). The identifying
number of any other person is its United
States employer identification number.
(10) Address of the Director, Philadelphia Service Center. Any written communication directed to the Director,
Philadelphia Service Center is to be addressed as follows: P.O. Box 21086, Drop
Point 8731, FIRPTA Unit, Philadelphia,
PA 19114–0586.
Par. 9. Section 1.1445–2 is amended as
follows:
1. Paragraph (b)(2)(iii) is redesignated
as paragraph (b)(2)(iv), and new paragraph
(b)(2)(iii) is added.
2. Newly
designated
paragraph
(b)(2)(iv)(B) is revised.
3. In paragraph (d)(2)(i)(B), the language “Assistant Commissioner (International)” is removed, and “Director,
Philadelphia Service Center” is added in
its place, and the parenthetical “(if any),”
is removed after the words “identifying
number”.

2002–34 I.R.B.

4. Paragraphs (d)(2)(iii) and (d)(2)(iv)
are added immediately following the concluding text following paragraph
(d)(2)(ii)(B).
5. In paragraphs (d)(3)(iii)(A)(2) and
(d)(3)(iii)(A)(3), the parenthetical “(if
any)” is removed after the words “identifying number”.
The revision and additions read as follows:
§ 1.1445–2 Situations in which withholding is not required under section
1445(a).
*****
(b) * * *
(2) * * *
(iii) Disregarded entities. A disregarded
entity may not certify that it is the transferor of a U.S. real property interest, as the
disregarded entity is not the transferor for
U.S. tax purposes, including sections 897
and 1445. Rather, the owner of the disregarded entity is treated as the transferor of
property and must provide a certificate of
non-foreign status to avoid withholding
under section 1445. A disregarded entity
for these purposes means an entity that is
disregarded as an entity separate from its
owner under § 301.7701–3 of this chapter, a qualified REIT subsidiary as defined
in section 856(i), or a qualified subchapter S subsidiary under section
1361(b)(3)(B). Any domestic entity must
include in its certification of non-foreign
status with respect to the transfer a certification that it is not a disregarded entity.
(iv) * * *
(B) Entity transferor.
“Section 1445 of the Internal Revenue
Code provides that a transferee of a U.S.
real property interest must withhold tax if
the transferor is a foreign person. For U.S.
tax purposes (including section 1445), the
owner of a disregarded entity (which has
legal title to a U.S. real property interest
under local law) will be the transferor of
the property and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the
disposition of a U.S. real property interest by [name of transferor] , the undersigned hereby certifies the following on
behalf of [name of the transferor]:

2002–34 I.R.B.

1. [Name of transferor] is not a foreign
corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and
Income Tax Regulations);
2. [Name of transferor] is not a disregarded entity as defined in § 1.1445–
2(b)(2)(iii);
3. [Name of transferor]’s U.S. employer identification number is _______;
and
4. [Name of transferor]’s office address
is -----------------------------------------------.
[Name of transferor] understands that
this certification may be disclosed to the
Internal Revenue Service by transferee and
that any false statement contained herein
could be punished by fine, imprisonment,
or both.
Under penalties of perjury I declare that
I have examined this certification and to
the best of my knowledge and belief it is
true, correct, and complete, and I further
declare that I have authority to sign this
document on behalf of [name of transferor].
[Signature(s) and date]
[Title(s)]”
*****
(d) * * *
(2) * * *
(iii) Contents of the notice. No particular form is required for a transferor’s notice to a transferee that the transferor is not
required to recognize gain or loss with respect to a transfer. The notice must be
verified as true and signed under penalties of perjury by the transferor, by a responsible officer in the case of a
corporation, by a general partner in the
case of a partnership, and by a trustee or
equivalent fiduciary in the case of a trust
or estate. The following information must
be set forth in paragraphs labeled to correspond with the designation set forth as
follows—
(A) A statement that the document submitted constitutes a notice of a nonrecognition transaction or a treaty provision
pursuant to the requirements of § 1.1445–
2(d)(2);
(B) The name, identifying number, and
home address (in the case of an individual)
or office address (in the case of an entity)
of the transferor submitting the notice;

400

(C) A statement that the transferor is
not required to recognize any gain or loss
with respect to the transfer;
(D) A brief description of the transfer;
and
(E) A brief summary of the law and
facts supporting the claim that recognition
of gain or loss is not required with respect
to the transfer.
(iv) No notice allowed. The provisions
of this paragraph (d)(2) do not apply to
exclusions from income under section 121
and to non-simultaneous like-kind exchanges under section 1031 where the
transferee cannot determine that the exchange has been completed and all the
conditions for nonrecognition have been
satisfied at the time it is otherwise required
to pay the section 1445 withholding tax
and file the withholding tax return (Form
8288, “U.S. Withholding Tax Return for
Dispositions by Foreign Persons of U.S.
Real Property Interests”). In these cases,
the transferee is excused from withholding only upon the timely application for
and receipt of a withholding certificate under § 1.1445–3 (see § 1.1445–3(b)(5) and
(6) for specific rules applicable to transactions under sections 121 and 1031).
*****
Par. 10. Section 1.1445–3 is amended
as follows:
1. For each of the paragraphs listed in
the column below, remove the language
“Assistant Commissioner (International)”,
and add “Director, Philadelphia Service
Center” in its place.
Paragraphs
(b)(1), first sentence
(f)(1), first sentence
(f)(2)(iii), heading
(f)(2)(iii), first sentence
(g), third sentence, introductory text
2. In paragraph (b)(1), last sentence, remove the language “of this section” and
add “, and to the extent applicable, paragraph (b)(5) or (6) of this section” in its
place.
3. Paragraph (b)(2) is revised.
4. Paragraphs (b)(5) and (b)(6) are
added.
5. In paragraphs (f)(3)(i) and (g)(1), remove the parenthetical “(if any)” after the
words “identifying number”.

August 26, 2002

The revision and additions read as follows:
§ 1.1445–3 Adjustments to amount
required to be withheld pursuant to
withholding certificate.
*****
(b) * * *
(2) Parties to the transaction. The application must set forth the name, address,
and identifying number of the person submitting the application (specifying whether
that person is the transferee or transferor),
and the name, address, and identifying
number of other parties to the transaction
(specifying whether each such party is a
transferee or transferor). The Service will
deny the application if complete information, including the identifying numbers of
all the parties, is not provided. Thus, for
example, the applicant should determine if
an identifying number exists for each
party, and, if none exists for a particular
party, the applicant should notify the particular party of the obligation to get an
identifying number before the application
can be submitted to the Service. The address provided in the case of an individual
must be that individual’s home address,
and the address provided in the case of an
entity must be that entity’s office address.
A mailing address may be provided in addition to, but not in lieu of, a home address or office address.
*****
(5) Special rule for exclusions from income under section 121. A withholding
certificate may be sought on the basis of a
section 121 exclusion as a reduction in the
amount of tax due under paragraph
(c)(2)(v) of this section. The application
must include information establishing that
the transferor, who is a nonresident alien
individual at the time of the sale (and is
therefore subject to sections 897 and 1445)
is entitled to claim the benefits of section
121. For example, a claim for reduced
withholding as a result of section 121 must
include information that the transferor occupied the U.S. real property interest as his
or her personal residence for the required
period of time.
(6) Special rule for like-kind exchanges
under Section 1031. A withholding certificate may be requested with respect to a
like-kind exchange under section 1031 as
a transaction subject to a nonrecognition

August 26, 2002

provision under paragraph (c)(2)(ii) of this
section. The application must include information substantiating the requirements
of section 1031. The IRS may require additional information during the course of
the application process to determine that
the requirements of section 1031 are satisfied. In the case of a deferred like-kind
exchange, the transferee is excused from
withholding only if the transferee or transferor submits an application for a withholding certificate prior to or on the date
of transfer, in which case the withholding
tax will be placed in escrow pursuant to
procedures established by the IRS and ultimately paid to the IRS if the withholding certificate is denied or released for the
benefit of the taxpayer if the withholding
certificate is granted. See § 1.1445–1(c)(2)
for rules concerning delayed reporting and
payment where an application for a withholding certificate has been submitted to
the IRS prior to or on the date of transfer.
*****
§ 1.1445–4 [Amended]
Par. 11. In § 1.1445–4, paragraph
(c)(2), second sentence, is amended by removing the language “Assistant Commissioner (International)” and adding
“Director, Philadelphia Service Center” in
its place.
Par. 12. Section 1.1445–5 is amended
as follows:
1. In paragraph (b)(2)(ii), first sentence,
remove the language “Assistant Commissioner (International)” and add “Director,
Philadelphia Service Center” in its place.
2. In paragraphs (b)(2)(ii)(B) and
(b)(2)(ii)(C), remove the parenthetical “(if
any)” after the words “identifying number”.
3. Paragraph (b)(8)(iii) is revised.
4. In paragraph (c)(3)(v), first and fifth
sentences, remove the language “Assistant
Commissioner (International)” and add
“Director, Philadelphia Service Center” in
its place.
5. Paragraph (e)(1)(ii) is revised.
6. Paragraph (e)(2) is redesignated as
paragraph (e)(3), and new paragraph (e)(2)
is added,
7. In newly designated paragraph
(e)(3)(iii)(B), remove the language
“§ 1.1445–5(e)(2)(iii)(B)”
and
add
“§ 1.1445–5(e)(3)(iii)(B)” in its place; and

401

remove the language “paragraph
(e)(2)(iii)(B)” and add “paragraph
(e)(3)(iii)(B)” in its place.
The revisions and additions read as
follows:
§ 1.1445–5 Special rules concerning
distributions and other transactions by
corporations, partnerships, trusts and
estates.
*****
(b) * * *
(8) * * *
(iii) Distributions by certain domestic
corporations to foreign shareholders. The
provisions of section 1445(e)(3) and paragraph (e)(1) of this section, requiring withholding upon distributions in redemption
of stock under section 302(a) or liquidating distributions under Part II of subchapter C of the Internal Revenue Code by
U.S. real property holding corporations to
foreign shareholders, shall apply to distributions made on or after January 1, 1985.
The provisions of section 1445(e)(3) and
paragraph (e)(1) of this section requiring
withholding on distributions under section
301 by U.S. real property holding corporations to foreign shareholders shall apply to distributions made after August 20,
1996. The provisions of paragraph (e) of
this section providing for the coordination
of withholding between sections 1445 and
1441 (or 1442 or 1443) for distributions
under section 301 by U.S. real property
holding corporations to foreign shareholders apply to distributions after December
31, 2000 (see § 1.1441–3(c)(4) and (h)).
*****
(e) * * * (1) * * *
(ii) There is a distribution of property in
redemption of stock treated as an exchange under section 302(a), in liquidation of the corporation pursuant to the
provisions of Part II of subchapter C of the
Internal Revenue Code (sections 331
through section 341), or with respect to
stock under section 301 that is not made
out of earnings and profits of the corporation.
(2) Coordination rules for Section 301
distributions. If a domestic corporation
makes a distribution of property under section 301 to a foreign person whose interest in such corporation constitutes a U.S.
real property interest under the provisions
of section 897 and the regulations there-

2002–34 I.R.B.

under, then see § 1.1441–3(c)(4) for rules
coordinating withholding obligations under sections 1445 and 1441 (or 1442 or
1443)).
*****
Par. 13. Section 1.1445–6 is amended
as follows:
1. The section heading and paragraph
(b)(3) are revised.
2. For each of the paragraphs listed in
the column below, remove the language
“Assistant Commissioner (International)”
and add “Director, Philadelphia Service
Center” in its place.
Paragraphs
(f)(1), first sentence
(f)(2)(iii), heading
(f)(2)(iii)
(g), introductory text, second sentence
3. Paragraphs (f)(3)(i) and (g)(1) are
amended by removing the parenthetical
“(if any)” after the words “identifying
number”.
The revision reads as follows:
§ 1.1445–6 Adjustments pursuant to
withholding certificate of amount
required to be withheld under section
1445(e).
*****
(b) * * *
(3) Relevant taxpayers. An application
for withholding certificate pursuant to this
section must include all of the following
information: the name, identifying number, and home address (in the case of an
individual) or office address (in the case of
an entity) of each relevant taxpayer with
respect to which adjusted withholding is
sought.

2. In paragraph (b)(2)(vi), remove the
period at the end of the paragraph and add
“; and” in its place.
3. Paragraph (b)(2)(vii) is added.
4. In paragraph (c), first and third sentences, remove the language “or (vi) of
this section” and add “(vi), or (vii) of this
section” in its place.
The addition reads as follows:
§ 301.6109–1 Identifying numbers.
******
(b) * * *
(2) * * *
(vii) A foreign person whose taxpayer
identifying number is required to be furnished on any return, statement, or other
document as required by the income tax
regulations under section 897 or 1445.
*****
Robert E. Wenzel,
Deputy Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on July
25, 2002, 8:45 a.m., and published in the issue of the
Federal Register for July 26, 2002, 67 F.R. 48823)

Par. 14. Section 1.1445–9T is removed.

PART 301—PROCEDURE AND ADMINISTRATION
Par. 15. The authority for part 301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 16. Section 301.6109–1 is amended
as follows:
1. In paragraph (b)(2)(v), remove the
word “and”.

2002–34 I.R.B.

DATES: Written and electronic comments
must be received by October 30, 2002.
Requests to speak (with outlines of oral
comments to be discussed) at the public
hearing scheduled for, December 3, 2002,
at 10 a.m. must be received by, November 12, 2002.
ADDRESSES: Send submissions to:
CC:IT:A:RU (REG–106879–00), room
5226, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand
delivered between the hours of 8:00 a.m.
and 5:00 p.m. to CC:ITA:RU (REG–
106879–00), Courier’s Desk, Internal
Revenue Service, 1111 Constitution
Avenue,
NW,
Washington,
DC.
Alternatively, taxpayers may submit
comments electronically directly to the
IRS Internet site at www.irs.gov/regs.
The public hearing will be held in room
4718, Internal Revenue Building, 1111
Constitution Avenue, NW, Washington,
DC.

Dual Consolidated Loss
Recapture Events

FOR FURTHER INFORMATION CONTACT: Concerning the regulations,
Kenneth D. Allison or Kathryn T. Holman,
(202) 622–3860 (not a toll-free number);
concerning submissions and the hearing,
Sonya M. Cruse, (202) 622–7180 (not a
toll-free number).

REG–106879–00

SUPPLEMENTARY INFORMATION:

Notice of Proposed
Rulemaking and Notice of
Public Hearing

Paperwork Reduction Act
AGENCY: Internal
(IRS), Treasury.

Revenue

Service

*****
§ 1.1445–9T [Removed]

also proposes conforming changes to the
current regulations and provides notice of
a public hearing on these proposed regulations.

ACTION: Notice of proposed rulemaking and notice of public hearing.
SUMMARY: This document contains proposed regulations under section 1503(d)
regarding the events that require the recapture of dual consolidated losses. These
regulations are issued to facilitate compliance by taxpayers with the dual consolidated loss provisions. The proposed
regulations generally provide that certain
events will not trigger recapture of a dual
consolidated loss or payment of the associated interest charge. The proposed regulations provide for the reporting of certain
information in such cases. This document

402

The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Management and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the
collection of information should be sent to
the Office of Management and Budget,
Attn: Desk Officer for the Department of
the Treasury, Office of Information and
Regulatory Affairs, Washington, DC
20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance
Officer, W:CAR:MP:FP:S, Washington,
DC 20224. Comments on the collection of
information should be received by September 30, 2002. Comments are specifically requested concerning:

August 26, 2002